California Study Says Workers’ Comp Law Accomplished Goal

October 29, 2009

An attempt to reform the permanent disability rating schedule in California has produced a 6 percent reduction in attorney involvement and in the average amount paid on claims at 36 months.

Those are two main findings from a new report issued by the Oakland-based California Workers’ Compensation Institute. The report looked at the impact of Senate Bill 899, which was passed into law in 2004.

The law implemented a new permanent disability rating schedule based on guidelines put together by the American Medical Association, among others. It was intended to bring greater consistency and uniformity into the rating system, thereby preventing much dispute in permanent disability claims.

The law also has allowed the Workers’ Compensation Appeals Board to apportion a percentage of the liability for a permanent disability to an employer.

The Institute’s report analyzed information from 201,081permanent disability claims, from two year periods both before and after the new law was passed.

Other findings included:

There was an increase in the percentage of permanent disability claims that received at least one permanent disability payment at 12, 24, and 36 months after injury.

There was a relative increase of 33 percent in the claim closure rate for attorney involvement claims at 36 months.

There was 5 percent reduction in the average amount paid on attorney involvement claims.

The report concludes: “Initial PD benefit payments increased, the initial PD payment occurred sooner, claim closure rates increased and average claim payments at three years post injury decreased. Thus the legislative intent of the 2004 reform bill seem to have been at least partially accomplished.”

The report notes that two fairly recent adjudications by the Workers’ Compensation Appeals Board in permanent disability cases–Almaraz/Guzman and Ogilvie–may have undermined some of the consistency imposed by the law.

Many workers’ compensation insurance companies are waiting to see how these decisions are going to play out in costs, and eventually, rates.

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