A recent study has confirmed what many of you already knew: California employers pay the highest workers' compensation costs in the nation – by a wide margin.
Although the study by the Oregon Department of Business and Consumer Services has ranked California consistently among the most expensive states for more than a decade, we have not been tagged with the #1 spot since 2004.
So, why does California continue to be so expensive? Some of the reasons include:
California has among the highest medical costs per workers’ compensation claim in the nation, and higher-than-average costs per claim for cash benefits. Since 2005, average costs per claim have increased by $30,000.
California’s rate of work injury claims per 1,000 workers is 46% higher than the national median. Since 2012, California’s “claim frequency” has been increasing, even as the rate in most states has declined. This includes a higher-than-average rate of “permanent disability” claims and an increase in claims involving cumulative trauma and those filed post-employment, particularly in the Los Angeles region.
Although reforms enacted in 2012 (SB 863) ushered in new tools to reduce litigation and improve efficiency, the projected “savings” from these measures were put toward increasing benefits for injured workers by more than $1 billion. Whether these cost offsets will be sufficient to fully pay for the benefit increase remains to be seen. Meanwhile, employer costs have continued to increase since 2012 and the reforms are highly vulnerable to new abuses and legal rulings that run counter to the legislature’s intent. In other words, while there are some signs that the system is improving, the high costs in California’s system could still get worse. 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. We look forward to continuing to work with you to move California closer to this goal.