The following are California Specific Facts and Statistics regarding Workers’ Compensation
1. Why are litigation cost so high in California
- There are over 500,000 insured employers conducting business in California.
- 72% of California workers hired workers compensation lawyers to handle their claims?
- Benefit and expense payments for temporary disability claims with an attorney average $30,319 versus $5,598 for those without; while payments on permanent disability claims with an attorney average $66,208 versus $25,300 for those without.
2. Why claims become litigated:
- Reasons for delay of benefits: 36%
- Ongoing medical treatment, 17%
- Employer delay, 17%
- Lawyer delay, 14% and finding a lawyer/negotiating, 16% other
3. What are some other reasons why the cost is on the rise?
- The average California medical benefit per claim is among the highest in the country with costs more than 90% above the countrywide median.
- This high cost of medical benefits is not driven by treatment costs, but are driven by the length of time a claim remains open and medical benefits are paid.
- California has the highest ratio of loss adjustment expenses (expenses associated with investigating and settling claims) to losses in the country.
4. What are some of the cost drivers
- Temporary disability and permanent partial disability comprise over 90% of indemnity benefits in California.
5. Is it any area in the state that costs more than the others?
· Indemnity claim frequency was approximately 20% higher in the Los Angeles Basin and San Joaquin Valley areas and approximately 33% lower in the Bay Area.
6. Have the reforms to the system worked?
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Despite workers’ compensation reform in California, the litigation rate has nearly doubled for all workers' compensation claims and more than tripled for claims involving lost time.