California Costliest State for Workers’ Comp, Report Shows

By | October 20, 2014

A state-by-state ranking of workers’ compensation premiums, one that states reportedly use as a motivational call to improve their systems, seems to call for even more reform of California’s recently reformed system.

Despite major workers’ comp reforms signed into law in 2012 the Golden State easily tops the 2014 Oregon Workers’ Compensation Premium Rate Ranking Summary, a list of average premiums paid by employers that the Oregon Department of Consumer and Business Services puts out every two years.

The latest report was issued on Oct. 8. The 2014 median value was $1.85 per $100 of payroll, a drop of 2 percent from the $1.88 median in the 2012 study, according to the report.

Premium rates ranged from a low of 88 cents in North Dakota to California’s $3.48. In the next state behind California, Connecticut, premiums paid are 61 cents lower.

What’s clear is that California has more work to do to bring employer costs more in line with what employers in other states pay for workers’ compensation.

It’s an unacceptable position to be in considering all the reforms that were made two years ago, said Workers’ Compensation Action Network spokesman Jerry Azevedo.

“Try as we might to reform California’s workers’ compensation system, employers here continue to bear the heaviest cost burden in the nation — by a wide margin,” Azevedo said.

Azevedo noted that the same study has consistently ranked California among the most expensive states for more than a decade.

Azevedo said the report reflects that any savings created by the reforms enacted in 2012 with Senate Bill 863, designed to reduce litigation and improve efficiency, were put toward increasing benefits for injured workers by more than $1 billion.

Oregon ranked 43rd on the list, the best performance since the list first started to be complied in the late 1980s, according to Jay Dotter, who put together the report.

When the state first began tracking premium rankings it was to show how much reforms were needed to reduce workers’ comp costs in Oregon, Dotter said.

“We knew that Oregon’s workers’ comp rates were high,” Dotter said.

The state ranked 6th on the first report.

Following that Oregon initiated reforms that included reducing litigation and sending contested workers’ comp cases through newly created administrative review processes, according to Dotter.

“We got the attorneys out as much as possible,” he said.

Oregon’s workers’ comp rates began dropping rapidly, falling well below average for the nation, according to Dotter.

“We dropped quickly over the next two studies down into the 30s,” he said.

Over the past few studies Oregon has stayed comfortably in the high 30s to 40s in rankings.

Other states have taken note of their rankings and initiated reforms in the past, according to Dotter.

Hawaii’s workers’ comp administrators flagged their top 15 ranking in 2006 by putting notice of the poor performance on a state website and publicizing it to help champion reforms that were eventually passed, Dotter said.

The state was ranked 27th on the latest report.

In the 2012 report California was third on the list with $2.92 per $100 of payroll, so in the two years since Gov. Jerry Brown signed into law the reforms of SB 863 premiums have jumped 56 cents.

To be fair to California’s efforts to reform the system, aside from the increase in benefits to injured workers, many changes made by SB 863 did not take effect immediately.

Still, Azevedo believes the state’s dubious ranking could mean more reforms are needed.

“What’s clear is that California has more work to do to bring employer costs more in line with what employers in other states pay for workers’ compensation,” he said. “SB 863 was clearly not a cost-cutting reform.”

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