Calif. Temporary Disability Workers’ Comp Claim Costs Down 6.1%

June 22, 2010

Temporary disability outcomes in California’s $8 billion workers’ compensation system have continued to improve since the enactment of 2004 reform legislation, new research from the California Workers’ Compensation Institute reports. Ongoing reductions were noted in both the cost and duration of TD, and only a marginal increase in the percentage of claims involving amputations, severe burns, chronic lung disease and other serious injuries that are exempt from the two-year cap on TD payments, according to the report.

The Institute analysis updates two earlier studies on post-reform temporary disability outcomes by reviewing data from nearly 300,000 California workers’ compensation TD claims with 2002 through March 2008 injury dates. The study compares pre- and post-reform data on the amount of TD paid and the duration of temporary disability (total number of paid TD days) at 12 and 24 months following the initial payment, as well as the percentage of claims involving long-term injuries that the 2004 reform bill exempted from the two-year cap on TD payments. After adjusting for the statutory benefit increases that took effect in 2003, 2004 and 2005, the results show that the average amount of TD paid in the first year after the initial payment declined 6.1 percent (from $6,212 to $5,836) between the pre- and post-reform periods, while at the two-year benchmark, the average amount of paid TD was 8.2 percent less ($8,396 versus $7,707). The analysis also confirmed reductions in TD duration, as the post-reform claims averaged 8.4 fewer days of paid TD one year after the first payment, and 3.2 fewer days at the two-year valuation.

The study also notes that the proportion of temporary disability claims involving any of the nine injury categories that are exempt from the 2-year TD cap has shown little change since the reforms were implemented in April 2004. These cases accounted for only 5.8 percent of all post-SB 899 TD claims versus 5.1 percent of the pre-reform TD cases, with most of the exempt claims involving amputations, severe burns and lung disease.

Additional analyses, graphics and data on post-reform TD claim experience are included in CWCI’s full report, “Temporary Disability Outcomes in California Workers’ Compensation, Accident Years 2002-2008,” which is posted in the research section of the Institute’s website at www.cwci.org.

Source: CWCI

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