At the 2016 WCIRB Conference a panel discussed some of the geographic variations in costs seen in the California workers’ compensation system. This was a compendium of a variety studies done by WCIRB and CWCI.
California has significant differences in wage levels and occupations by geographic area in the state. There are also variations in the unemployment rate as areas outside the LA Basin and Bay Area have significantly lower unemployment rates. Outside of the major cities, the main industry is agriculture.
Claim costs in the LA Basin are significantly higher than the rest of the state. This was illustrated by the results from several studies which were presented:
- From 2010 to 2014 the LA Basin has had a 13% increase in frequency. The rest of the state showed a decrease of 6%. In NCCI states during that same time period there was an 11% frequency decrease.
- Statewide 31% of claims are indemnity. Their highest rate of indemnity claims tends to be in the counties with higher unemployment.
- The statewide average of indemnity claims with permanent disability is 48%. In the LA basin the average is closer to 55%.
- The cumulative trauma rate in the LA Basin has more than doubled since 2005. The statewide average for CT claims is 7% of all claims but in the LA Basin the rate is double that.
- CT claims in the LA Basin are far more likely to have attorneys, be filed post-termination, and involve claims of psychiatric injury. 90% of the CT claims in the LA Basin have attorneys involved compared to 61% for the rest of the state. 45% of the claims CT claims filed in the LA Basin are post-termination claims.
- Medical severity is higher in Southern California compared to Northern California.
- There is variation on co-morbid items by region. The northern counties have higher obesity rates, while the LA Basin has higher rates of mental health issues. The percentage of claims with pre-existing mental health issues in the LA Basin are double what is seen in other parts of the state.
- LA County accounts for 22% of all opioids paid for in California workers compensation.
- The northern counties receive much higher dosages of opioids than the rest of the state.
- Compound drugs are almost exclusively seen in the LA Basin.
- The statewide average days from injury to report to employer are 15.5 days. The reason for this significant lag is all the CT claims in California. In LA County the average is 24 days.
- The paid loss development patterns in the LA Basin are much longer than the rest of the states, again due to the higher frequency of CT claims in that area.
- Statewide 47% of indemnity claims have attorneys. the highest is LA County at 58%. All the LA Basin has attorney rates greater than 50%.
- Average ALAE in the LA Basin is 27% higher than the rest of the state.
- The biggest differential comes in defense attorney fees which are significantly higher in the LA Basin compared to the rest of the state.
- Total medical lien filings in LA County are several times higher than the rest of the state.
- The LA Basin accounts for the majority of the IMR filings in the state.