DWC Announces CY 2022 PAR & FCA Audit Standards

State law (Labor Code §§129 and 129.5) requires the DWC to conduct profile audit reviews (PARs) of all workers’ compensation adjusting locations at least once every five years.  Each year the Division calculates overall claim operation performance ratings based on composite scores for such measures as payment of accrued and undisputed indemnity; late first payment of temporary disability and first notice of salary continuation; late first payment of permanent disability and death benefits; late subsequent indemnity payments; and provision of notices with qualified medical evaluator and agreed medical evaluator advice.  The Division then uses the ratings from the last three years to set standards for upcoming audits.

This morning, the DWC announced that the 2022 audit standards, based on 2018-2020 audit results.  The PAR standard for 2022 will be 1.68032; the full compliance audit standard will be 1.95657. 

What do these numbers mean to you?  

1)   Audited adjusting locations receiving a PAR rating of 1.68032 or lower must pay any unpaid   compensation, but no penalties; while those with a PAR performance rating of 1.68033 or higher face a full compliance audit (FCA) and an additional sample of indemnity claims will be audited. 

2)   Full Compliance Audit subjects with an FCA performance rating of 1.95657 or less must pay any unpaid compensation plus penalties for all violations involving unpaid & late paid compensation.  If an FCA subject’s FCA performance rating is 1.95658 or higher, an additional sample of denied claims and the expanded sample of indemnity claims will be audited.  DWC will assess penalties for all violations per 8CCR §10111 – 10111.2. 

The DWC also announced that the Severity Rate standard for 2022 is $129.56.  This is the average unpaid indemnity per file divided by the average for the furthest three of the last four years audited and is used along with the frequency rate of violations for unpaid indemnity on randomly audited claims to calculate the PAR performance standard for the payment of accrued and undisputed indemnity.                  

The Audit Unit has posted more information on the 2022 PAR and FCA standards, as well as the 2020 Audit Unit Annual Report and the Ranking Report, on its web site, www.dir.ca.gov/dwc/audit.html. 

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