Dear WCAN Member,

As part of WCAN’s mission to keep its members informed of recent events and trends affecting California’s workers’ compensation system, following is a brief summary on the latest news.

The average cost of a California workers compensation indemnity claim reached a record high of $66,922 for 2011, according to the California Workers' Compensation Institute. This is approximately $20,000 more than the cost of an average claim in 2005 and reflects significant increases in costs for medical treatment, income benefits and the costs associated with resolving claims. The Institute also estimates that workers’ compensation insurers expect the amount paid out in claims for accident year 2011 to reach an eight-year high of $8.4 billion.

As a way to reduce unnecessary costs to employers, the California Senate Committee on Labor and Industrial Relations passed SB 959 (Lieu) on May 9. This measure would eliminate the duplicate, or “pass through,” payments made for implantable devices in spinal surgery. The California Workers' Compensation Institute has estimated that separate billing for implants added $55 million in costs to California’s workers’ compensation system in 2008. Recent stories in the Wall Street Journal and San Jose Mercury News highlight how the “pass through” has become an abused profit center in workers’ compensation that has coincided with a significant increase in surgical procedures at some facilities.

The Senate Rules Committee voted unanimously on May 2 to confirm the appointments of Christine Baker as the director of the Department of Industrial Relations and Rosa Moran as the administrative director of the Division of Workers’ Compensation. Both candidates received broad support from stakeholders in the workers’ compensation system and restated their goal of increasing permanent disability benefits by finding offsetting cost reductions for employers. WCAN members were active in sending letters to members of the Rules Committee and we appreciate your involvement.

The confirmation process now moves to the floor of the Senate for a full vote. You can still send a letter in advance of the full Senate vote by clicking here.

The Department of Industrial Relations and Division of Workers’ Compensation concluded their statewide listening tour on April 30. At their confirmation hearing, both Baker and Moran relayed the testimony they heard from system stakeholders, including frustration about the complexity, cost and abuses in California’s system. According to the Department, “Review and analysis of the verbal and written comments is now ongoing. Once the analysis is complete, the comments will be posted for public review.”

Please contact us with any questions or comments at [email protected].