DWC Announces CY 2020 PAR & FCA Audit Standards

State law (Labor Code §§129 and 129.5) requires 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 afternoon, the DWC announced that the 2020 ratings, based on 2016-2018 audit results, will be lower than they were in 2019.  The 2020 PAR standard will be 1.32020; the full compliance audit standard will be 1.60183.                       

What do these numbers mean to you?  

1)  Audited adjusting locations receiving a PAR rating of 1.32020 or lower must pay any unpaid   compensation, but no penalties; while those with a PAR performance rating of 1.32021 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 1.60183 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 1.60184 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 2020 is $108.11.  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. 

More details on the performance standards that the DWC will use in 2020 profile audit reviews and full compliance audits are on the Audit Unit web site, www.dir.ca.gov/dwc/audit.html. 

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