DWC Issues PAR and FCA Standards for 2027

State law (LC §§129 and 129.5) requires the DWC Audit and Enforcement Unit to conduct profile audit reviews (PARs) of all workers’ compensation adjusting locations at least once every five years. Each location’s claims administration performance is evaluated in five key areas:

• payment of accrued and undisputed indemnity;
• timeliness of the first temporary disability payment or first notice of salary continuation;
• timeliness of the first permanent disability or death benefit payment;
• timeliness of subsequent indemnity payments; and
• provision of notices with qualified medical evaluator and agreed medical evaluator advice.

DWC uses audit results from the last three years to establish performance standards for upcoming audits.

This afternoon, the Division announced the 2027 audit standards, based on the 2023-2025 audit results. The PAR standard for 2027 will be 1.67327, while the full compliance audit (FCA) standard will be 2.14192. What do these numbers mean to you?

1. PAR subjects receiving a performance rating of 1.67327 or lower must pay any outstanding compensation but will not be subject to administrative penalties. Those with a PAR rating of 1.67328 or higher will undergo an expanded FCA that includes a review of additional indemnity claims.
2. FCA subjects with a performance rating of 2.14192 or lower must pay any outstanding compensation and will face administrative penalties for violations involving unpaid or late-paid compensation. If an FCA subject’s performance rating is 2.14193 or higher, DWC will conduct an expanded audit that includes additional samples of denied indemnity claims. Penalties will be assessed for all applicable violations in accordance with 8 CCR §§10111-10111.2.

DWC also announced that the 2027 Severity Rate standard is $165.60, up from $160.65 in 2026. The severity rate is the average unpaid indemnity per file divided by the average for the furthest three of the last four years audited. It is used, along with the frequency rate of violations for unpaid indemnity on randomly audited claims, to calculate the PAR performance standard for payment of accrued and undisputed indemnity.

For comparison, the 2026 PAR standard was 1.58582, and the FCA standard was 1.81845. Thus, both performance thresholds increased for 2027, as did the severity rate standard.

More information on the 2027 PAR and FCA performance standards is posted on the DWC Audit and Enforcement Unit’s web page here.

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