Q3 – 2023 – November 1, 2023
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Research Updates to CWCI’s Interactive Applications Through December 2022: Claims Monitoring, Rx Drug, Regional Scorecard, and Medical Services. These four CWCI online applications, which provide data and analytic tools for CWCI members who log on to the Research section of our website, were updated with data through December 2022. In addition, the Institute’s COVID-19/Non-COVID-19 Interactive Application, providing detailed data on COVID-19 claims and comparative data on Non-COVID-19 claims, was updated every two weeks through June 12. Bulletin (10/9/23) (members only) COVID/NonCOVID App Update (9/22/23) (public) Claims Monitoring: Medical & Indemnity Development, AY 2013 – AY 2022 Indemnity Claims. A CWCI analysis of data from the IRIS database tracks average California workers’ comp total losses per indemnity claim since the implementation of SB 863 through the first three years of the pandemic and breaks out the data to show both paid medical and paid indemnity loss trends. The study also looks at 24-month loss trends for claims from five key industry sectors and for claims from injured workers living in 7 distinct regions of the state as well as from workers living out of state.Executive Briefing (6/21/23) (members only) Research Update Report (9/25/23) (members only) Bulletin (9/25/23) (members only) News Release (9/25/23) (public) Comparison of Average Indemnity Paid on AY 2020 Claims by Industry: CWCI quantifies disparities in the average number of paid TD days and the average amounts of indemnity paid on AY 2020 claims at 24 months for claims from 10 key industry sectors. Average paid TD days at the 2-year benchmark across all sectors was 118 days, but results ranged from 96 days of TD for Agriculture and Health Care claims to 150 days for Transportation and Warehousing claims. Notably, the AY 2020 data include COVID-19 claims, which affected each sector differently, with the health care sector being the hardest hit by COVID claims in the first year of the pandemic, as health care workers accounted for nearly 1/3 of AY 2020 COVID claims in Calif. Retail workers were also hit fairly hard by COVID in the first year of the pandemic, filing 10% of the COVID claims. In contrast, workers in agriculture, construction, and wholesale trade represented less than 2.5% of the AY 2020 COVID claims. Executive Briefing (9/28/23) (members only) Geographic Shift in Indemnity Claim Volume. CWCI’s Regional Scorecard App, updated with claims data valued as of 12/31/22, shows L.A. Co. remained the #1 region in the state for indemnity claims after the pandemic hit, but its share of the indemnity claims fell from 28.0% in 2019 to 24.0% in AY 2021. In the first year of the pandemic, L.A. Co. was hard hit by job losses, as employment fell by 12.9% from 4.99 million workers (26.6% of the employed workforce) at the end of 2019 to 4.35 million workers (25.5% of the employed workforce) at the end of 2020 — a 1-year loss of 644,000 jobs, or 37.6% of the 1.71 million jobs lost statewide between December 2019 and 2020. In contrast, with the transition to remote work and migration to outlying areas, and some regions hit harder by job losses, the Central Valley and Inland Empire/Orange Co. saw their share of indemnity claims increase by 2.3 and 1.4 percentage points respectively in 2020, while the Bay Area’s share fell 1.5 points, San Diego and N. Counties/Sierra saw no change, and the Central Coast edged down 0.3 points. Statewide employment rebounded in 2021, as 1.06 million Californians returned to work, led by L.A. Co., which regained 350,100 of the jobs lost the prior year – 1/3 of the 2021 statewide job gain. Despite that gain, L.A. Co.’s share of the indemnity claims fell another 2.1 percentage points to 24.0%, while Inland Empire/Orange Co. reversed course as its share of the indemnity claims fell 1.3 points. The Bay Area saw the biggest increase in 2021, as its share of the indemnity claims rose 2.1 percentage points, climbing above its pre-pandemic share as the economy recovered, while the Central Coast (+0.5 points) and the N. Co.s/Sierra (+0.3 points) saw slight increases in their share of the indemnity claims. Indemnity claim distributions by region could still change, especially for AY 2021, if there is a wave of late filings, as are typical with CT claims, which often originate in L.A. Co., but as it stands, the data suggest a sharp reduction in L.A. Co’s share of indemnity claims in the first 2 years of the pandemic, while the Central Valley and other outlying regions saw their share of the indemnity claims increase. Executive Briefing (8/17/23) (members only) Highlights of WCIRB’s Q1 2023 Report on WC Insured Experience. WCIRB’s Q1 2023 Experience Report shows Total DWP (gross of deductible credits) increased 14% between 2021 and 2022 as the state’s economy continued to recover from the pandemic, driving up employee wages and covered payroll. Premium continued to grow in Q1 2023, coming in at $4.4 billion, 7% more than the total DWP for Q1 2022. Premium rates continued to fall in 2022, with insurers charging an average of $1.72/$100 of covered payroll, down 8% from the 2021 level and the lowest average charged rate in decades. The avg charged rate in Q1 2023 was the same as the avg for 2022, $1.72/$100 of covered payroll, but in response to WCIRB’s proposed 0.3% increase in the advisory pure premium rates included in the Sept. 1 Rate Filing, Ins. Commissioner Lara approved an avg 2.6% decrease. The percent of open indemnity claims, excluding COVID claims, that closed in the next year fell from 36% to 32% in 2021, but since then has rebounded, climbing to 33% in 2022 and 34% in 2023. The projected loss ratio, including COVID claim costs, fell from 67% in AY 2021 to 64% in AY 2022, the first decline in 5 years. With premium up and modest changes in claim frequency and severity, WCIRB projects the combined loss + expense ratio for 2022, including COVID claims, will be105%, down from 112% in 2021. Executive Briefing (8/17/23) (members only) COVID Claim Volume. The CDC reported a 40% jump in COVID hospitalizations in Calif from July to early August, w/the 14-day statewide average of hospitalized patients standing at 1,055 as of Aug 5, up from the 754 for the week ending on July 6. But the July 24 update to CWCI’s COVID Claim App showed that there had not yet been an increase in the monthly tally of COVID WC claims, which had declined steadily from a peak of 4,837 claims in December. As of 7/24, COVID claim counts since the spring showed 1,951 claims reported for March; 1,268 for April; 1,069 for May; and 743 for June; for a total of 5,031 reported COVID claims for that 4-month span, vs. 21,793 claims reported for the same 4-month period of 2022. CWCI projects there will ultimately be 5,133 COVID claims from March – June of this year, less than a quarter of the 21,954 projected for the corresponding period in 2022, but with COVID hospitalizations up, CWCI will keep an eye out for a late summer surge in COVID WC claims. Executive Briefing (8/17/23) (members only) Updated IMR Data through June 2023 Shows Increase in IMR Volume. After hitting a new low in 2022 as claim volume declined during the pandemic and prescription drug disputes plummeted following the adoption of the Formulary and Pain Management and Opioid Guidelines, the number of IMR decision letters in the California workers’ compensation system rose 4.1 percent in the first half of 2023, marking the first increase since 2018 according to a new CWCI analysis. Bulletin (7/31/23) (members only) News Release (7/31/23) (public) CWCI Quantifies Litigation Rates by Region & Industry. CWCI’s Regional Scorecard App updated with data on AY 2008-2022 claims valued through 12/31/22 notes that for the 5-year period ending in December 2022, 43% of indemnity claims statewide involved an attorney. The regional data show attorney involvement was highest in L.A. County (54%) and the Inland Empire/Orange County (48%); was below the statewide rate in San Diego County (41%) and the Central Coast (40%); and was lowest in the Central Valley (36%), the Bay Area (35%) and the N. Counties/Sierra (30%). The data on attorney involvement by industry, shows manufacturing had the highest litigation rate, with 54% of 2018-2022 indemnity claims from that sector involving an attorney – 11 points above the all-industry rate of 43% – followed by Clerical Office Work (class code 8810), where 50% of the indemnity claims had attorneys. Litigation rates were below average in Health Care and Transportation (36% and 39% respectively) but matched the all-industry rate in Construction and were slightly above average for Retail (45%); Ag (46%) and Food Service (47%). However, within each sector, attorney involvement varied sharply by region, with the N. Counties/Sierra having the lowest litigation rates (ranging from 24.0% in Food Service to 38.0% for Clerical Office Work – class code 8810) in all industries except Health Care (where it ranked 2nd behind the Central Valley). On the flip side, L.A. County had the highest litigation rates (ranging from 44.2% in Health Care to 70.7% in Agriculture) in all sectors except Transportation (where it ranked 2nd behind the Inland Empire/Orange County) and Clerical (where it ranked 3rd behind the Central Coast and the Inland Empire/Orange County). Executive Briefing (7/25/23) (members only) Cost-Driver Medications in the Top California Workers’ Comp Therapeutic Drug Groups: Part 3, Musculoskeletal and Ulcer Drugs. The final report in a 3-part research series on workers’ comp medications that represent a relatively small share of the dispensed prescriptions within their therapeutic drug group, but due to their high average reimbursements, account for a disproportionate share of the total drug spend within their group. Part 3 of the series focuses on 3 Musculoskeletal and 3 Ulcer Drugs. Report to the Industry (7/13/23) (members only) Bulletin (7/13/23) (members only) News Release (7/13/23) (public) Updates to CWCI’s Interactive Applications Through December 2022: Claims Monitoring, Rx Drug, Regional Scorecard, and Medical Services. These four CWCI online applications, which provide data and analytic tools for CWCI members who log on to the Research section of our website, were updated with data through December 2023. In addition, the Institute’s COVID-19/Non-COVID-19 Interactive Application, providing detailed data on COVID-19 claims and comparative data on Non-COVID-19 claims, was updated every two weeks through June 12. Interactive Tool (6/30/23) (members only) Executive Memo (7/24/23) (members only)
Statutory/Regulatory Minimum Wage Updates. The minimum wage for all Calif employers, regardless of size, will increase from $15.50 to $16/hr as of 1/1/24 – a response to a requirement that the minimum wage be adjusted to reflect the 6.16% increase in the CPI for the 12 months ending June 30. In addition the minimum annual salary for the white-collar overtime exemption will increase from $64,480 to $66,560 ($5,546.67 per month); the minimum wage for employees who must provide and maintain hand tools and equipment customarily required by the trade or craft will increase from $31 to $32/hr; and the minimum compensation for employees who qualify for an inside sales exemption from overtime will increase from $48,360 to $49,920/yr. Executive Briefing (9/28/23) (members only) Legislation Awaiting Action by the Governor. the Legislature sent more than 900 bills to the governor to sign or veto by Oct. 14, including a few WC bills. These include 4 presumption bills (AB 699, AB 1145, SB 623, and SB 391), AB 336, a labor-backed bill that would require contractors to report classs codes on their WC policies to the CSLB and require the CSLB to publish the endorsed classifications and the name of the contractor’s WC insurer on its website; AB 621 which would allow families of state safety members, peace officers, and firefighters killed on the job to collect both CalPERS and WC death benefits in the same manner as local public safety workers and CHP officers; SB 686, which would remove a 50-year-old exclusion of domestic workers from Cal-OSHA rules; and SB 553, which would require most employers to maintain a log of violent incidents and investigations, train employees on how to report incidents w/o fear of retaliation, and allow employees to petition for a restraining order. In July, the Governor signed AB 489, which extends the current law that allows WC claims administrators to provide disability indemnity payments via a prepaid card until 1/1/25. Two WC bills that failed to make it to the Governor: SB 631, a CAAA-backed bill that would have required DWC, in collaboration w/UC Berkeley, to prepare an analysis on gender equity in WC; and SB 636, a CSIMS-backed bill that would have required UR doctors on private sector claims to be licensed in Calif. CWCI’s annual review of enacted legislation will be released after the Governor’s 10/14/23 deadline to sign or veto bills. Executive Briefing (9/28/23) (members only) Legislative Update. State lawmakers reconvened in August with 900+ bills to address as the 2023 session wound down with no major push for WC reform. A handful of bills to extend presumptions (SB 623, SB 391, AB 699, and AB 1145 remained alive, along w/2 bills from Sen. Cortese: SB 631, which would require DWC and UC Berkeley to prepare a comparative analysis on gender equity in WC; and (SB 636) which would require doctors who conduct UR on treatment requests on private sector claims be licensed in Calif, which would slow the UR/IMR process as the supply of Calif-licensed UR physicians in specialties such as orthopedics is already limited. AB 1213, which would exempt from the 104-week TD cap any TD paid or owed while a disputed medical request goes through IMR if the request is approved was also still active, but a CWCI analysis provided to state lawmakers found that the change to the TD cap would drive up IT and admin expenses, but only provide a nominal increase in TD to less than 0.3% of all claims. Amendments had to be made by 9/ 8, and the last day for bills to be passed was 9/14. The governor then had until 10/14 to act on bills put before him, after which CWCI will prepare a summary of enacted WC legislation. Executive Briefing (8/17/23) (members only) Minimum Wage News. The Dept of Finance announced that the minimum wage for Calif employers, regardless of size, will increase from $15.50 to $16/hr as of 1/1/24. Under state law, once the minimum wage hit $15/hr, the state Finance Director had to determine if the minimum wage should be adjusted for inflation and, if so, either increase it by 3.5% or the actual change in the CPI. For the year ending 6/30, the CPI was up 6.16%, so the Finance Director opted for a 3.5% increase. Minimum salaries for exempt FTEs will also go up from $64,480/yr ($5,373.34/mo) to $66,560/yr ($5,546.67 per mo). Many cities and counties also have minimum wage requirements for non-exempt employees working w/in their jurisdictions that exceed the state’s, but only the state minimum determines the minimum requirements for exempt employees. Also of note: the “Calif Living Wage Act,” an initiative approved for the Nov 2024 ballot, would increase the state’s minimum wage for employers w/26 or more employees to $18/hour on 1/1/25 and increase the minimum wage for employers w/25 or fewer employees to $18/hour on 1/1/26, w/annual adjustments for inflation thereafter. Executive Briefing (8/17/23) (members only) Pure Premium Advisory Rate Cut. On July 11, Ins. Commissioner Lara announced a 2.6% cut in the Calif WC pure premium advisory rate to an avg $1.46 per $100 of payroll for new and renewal policies effective 9/1/23. According to CDI, the rate decrease was due to further market stabilization, faster claim settlements, a reduction in the volume of medical services per claim and a declining percentage of claims with PD. “This year’s rate continues the pre-pandemic trend of decreasing costs brought on by workers’ compensation reform,” Lara said in a news release. “While our economy continues to grow, insurance companies should be sharing the savings and benefits of increased stability with California’s businesses and workers.” The new advisory rate is 14.6% below than the industry-filed avg pure premium rate of $1.71 (as of 1/1/23) and is below the $1.50 avg rate that was recommended by the WCIRB, which would have been a 0.3% increase over the avg advisory rate approved a year earlier. Executive Briefing (7/25/23) (members only) Newsom Signs Bill Extending Use of Debit Cards in WC. On July 13 Gov. Newsom signed AB 489 which extends for one year a pilot program that allow insurers to use debit cards to pay indemnity benefits. The pilot program, set to expire at the end of 2023 will now continue until 1/1/25. The push toward the use of debit cards in WC took root in 2018, when SB 880 amended LC §4651 to allow TD and PD to be paid via prepaid debit cards if the injured worker provided written consent and was not charged fees for anything other than an expedited replacement card, out-of-network ATM fees on the 3rd and subsequent withdrawal per deposit, and foreign transaction fees. SB 880 also required CHSWC to prepare a report on the pilot program by the end of 2022, noting the number of employees who enrolled, the cash value of benefits sent via prepaid card, and the number of employees who opted out of the program. That report, however, was never completed, so last year, state lawmakers passed AB 2148 extending the sunset date for the report and the pilot program from January 2023 to January 2024, while AB 489 provides a 2nd extension until January 2025. Executive Briefing (7/25/23) (members only) OSHA Injury Reporting: Back to the Future… Fed-OSHA announced in July that it is reinstating Obama-era rules for work injury and illness reporting for large employers that were suspended by the Trump Administration. Under the final rule filed on July 17, employers in specified high-hazard industries that have 100 or more employees will need to electronically file injury and illness reports (OSHA Forms 300 and 301) to Fed-OSHA which will use the data for “strategic outreach and enforcement” to reduce harm to workers. The extra reporting requirements are in addition to the annual reporting of the Form 300A summary that companies w/in these industries that have 20 to 249 employees are already required to file. The new requirement will also apply to employers with more than 250 employees in less hazardous industries. Executive Briefing (7/25/23) (members only)
Legal Calif Supreme Ct Ruling on Take-Home COVID… On 7/6/23, the Calif Supreme Court ruled in Kuciemba v. Victory Woodworks, Inc., that WC exclusive remedy did not bar a negligence lawsuit brought against an employer for injuries suffered by an employee’s spouse after the employee allegedly contracted COVID-19 at work and then gave it to his wife at home, but that the employer owed no duty of care—a necessary element in a negligence case—to prevent the spread of the illness to the spouse. In arriving at their decision, the justices considered the application of the derivative injury rule, which provides that 3rd-party injuries that are “collateral or derivative of” an employee’s injuries are barred by exclusive remedy; and in this case found that, although the employee’s infection was a necessary factual step that led to the spouse’s illness, her claim was not legally dependent on the injuries suffered by the employee because it was not necessary for the spouse to allege or prove the existence of an injury to the employee in order to succeed on her claim. But, the court also ruled that the employer did not owe the spouse a duty of care because even though it was foreseeable that an employer’s negligence in permitting the spread of COVID-19 will cause members of the employee’s household to contract the disease, recognizing a duty of care to non-employees in this context would impose “an intolerable burden on employers and society in contravention of public policy.” While the Court found an exception to the duty of care here, it also noted that social conditions surrounding COVID-19 have evolved since the start of the pandemic, and would likely continue to do so, stating “We acknowledge that the calculus might well be different in the future.” CWCI participated as joint amicus w/the US & Calif Chambers of Commerce in this case. A Significant Decision summary of the ruling was distributed to member company Legal contacts and is posted in the Legal section of our website here Significant Decision Summary (9/12/19) (members only) Executive Briefing (7/25/23) (members only) Executive Memo (7/7/23) (members only)
Other Naloxone Awareness in the Workplace. Spurred by fentanyl deaths, the number of drug overdose deaths in the U.S. climbed from less than 20K in 2001 to more than 73K in 2021 according to the CDC and the National Safety Council (NSC) reports overdose deaths now represent 9% of workplace deaths – up 536% from 2011 to 2021. In response, the NSC launched a “Respond Ready Workplace” campaign to distribute materials to raise awareness about opioids and the need for the antidote naloxone in workplaces. The campaign will guide employers on how to obtain and incorporate naloxone into 1st aid kits and provide resources to train employees on administering the drug should the need arise at work. Executive Briefing (9/28/23) (members only) CWCI Quarterly Summary. Quarterly listings of all CWCI publications, including publication dates, brief summaries of each topic and the various formats in which the information is available (e.g., research report, Bulletin, Executive Briefing, news release), so users can choose the level of detail they want to view. Listings include live links so users can click into the CWCI website to access specific documents quickly and easily. |