For years, liens have been one of the biggest drains on the California workers compensation insurance system, costing employers and insurers hundreds of millions every year in loss adjustment expenses. SB863 made substantial changes to California’s workers comp system and 2012, including changes to the statute of limitations to file a lien, the lien claim filing fees, and the independent bill review process.
Legal battles still raging
The lien filing fees have been a huge point of contention since SB863 was passed. The fees were supposed to help clear the massive backlog of liens choking the system, but medical providers have been arguing that SB863 is unconstitutional. They’ve been waging an uphill battle to have the fees overturned, and they were recently handed a huge defeat when the U.S. Ninth Circuit court upheld the fee requirements. Those plaintiffs are now taking the issue all the way to the U.S. Supreme Court.
Will the SB863 reforms have a lasting impact?
Only time will tell, but there are already indications that people are finding new ways to work around the system and the lien load is growing again. One thing is for certain – liens continue to drive up claim costs for employers and insurers, and create an administrative burden for everyone.
For more information on the lien process, see the FAQ on the State of California website.
Liens aren’t the only WC issue facing California employers
The California Workers Compensation Insurance Rating Bureau recently released its 2015 report on the state of the California workers compensation system. Among the findings, claim frequency was up 3 percent from 2010 to 2014, even though most other states reported an 11 percent decline in claim frequency during the same time period. With more hiring in construction and manufacturing in recent years, more inexperienced workers are on the job, and fifty percent of injured workers in California in 2015 had less than two years on the job, compared with 41 percent in 2010. Cumulative injury claims are also up, representing almost 18 percent of California indemnity claims in 2014, up from 11.8 percent in 2010.
A few other findings from the report:
- California still has the highest WC premium rates in the country
- Indemnity claim frequency in 2014 was about 11% above that for 2009
- The average California medical benefit per claim is among the highest in the country, with costs more than 90 percent above the countrywide median
- California has the highest ratio of loss adjustment expenses to losses in the nation
Bottom line for employers: workers compensation insurance will continue to be one of your biggest challenges going forward, so your risk management and claims intervention strategies are as crucial as ever.
Keep your workers comp costs under control by:
- Minimizing workplace injuries with smart hiring and onboarding, thorough safety training, and a safe workplace
- Reporting and investigating claims immediately to preserve facts and fight fraud
- Aggressively managing medical costs
- Developing a robust return to work program
Need more advice on controlling your workers compensation insurance costs? Contact the experts at Republic Capital, and make sure to download our free report to find out how much your company could potentially save by self-insuring its work comp plan. Get it here.