California Workers’ Compensation – North vs South

At the 2015 California Coalition on Workers’ Compensation Annual Conference, a panel discussed the huge disparity in claims costs between northern and southern California.  The panel consisted of:

• Alfonso Moresi – Commissioner, Workers’ Compensation Appeals Board and partner in law firm Laughlin, Falbo, Levy and Moresi
• Richard Newman – Chief Judge for the California Department of Industrial Relations
• Mark Priven – Principal with Bickmore Risk Services

The litigation rates in Southern California are much higher than the rest of the state, accounting for approximately 75% of the total court opening filings statewide. Along the same lines, the number of workers’ comp judges in Southern California is also significantly higher than the rest of the state so that they can process this high volume.

For those that practice in both areas of the state, there is a significant difference in the level of professionalism and conduct in the courts and there are also procedural differences seen in the different areas. By statute, the procedures in the two areas should be the same but, in practice, that is not the case. One of the major differences is that lawyers in Southern California usually will not settle claims without an appearance before the Board. Most plaintiff attorneys in the South do not even meet with their clients until the Board hearing and they use that first Board appearance as their initial meeting spot. In Northern California, judges will sanction attorneys who show up for a hearing unprepared.

Insurance carrier rates are 11-32% higher in the Los Angeles area versus the rest of the state. This trend is only in the LA area, not the San Diego area, therefore it is not a Southern California trend.

For public entity self-insured employers, claims costs in the LA area are 15-20% higher than the rest of the state. One-third of this is due to increased frequency, and two-thirds is due to higher individual claim costs.

Even though liens have decreased significantly state-wide after SB 863, the liens that still exist are overwhelmingly from the LA area. Although lean filings are significantly down, there remains a huge backlog of these cases that were filed in the fourth quarter of 2012 before the lien activation fee took effect.

Another interesting aspect noted by actuarial analysis is that compliance audit scores for TPAs and carriers in the LA area are notably worse than the rest of the state. The thought is that claims in the LA area are more complex, which leads to worse audit scores – but there is no firm evidence of this.

The panel felt that much of the cultural differences seen in LA could be corrected if judges consistently enforced the rules of procedures that the rest of the state follows. Judges in the LA area are notorious for making up their own rules and not enforcing procedures and handing out sanctions where appropriate. There is also an inconsistent use of forms between different areas of the state.