Study Finds L.A. Area Accounts for California's Increased Claim Frequency

 “...'bad apple' attorneys who try to take advantage of the workers’ compensation system are one factor in the higher claim frequency in Southern California. Problems have resulted from reform measures in SB 863...which have allowed some to exploit the system."   Alan Gurvey

Differences in workers’ compensation claims in the Los Angeles area are again in the spotlight, as a new report says the five-county Southland is responsible for driving up indemnity claim frequency for the state as a whole.

The report, from the California Workers’ Compensation Insurance Rating Bureau, identified late reporting of claims and a greater proportion of cumulative injury claims as factors in the increased claim frequency in the Golden State. And the growth of cumulative injury claims in the Los Angeles basin has outpaced the rest of the state, reaching 14.9 per 100 indemnity claims in 2014, compared to 8.4 per 100 claims in the Bay Area and 7.4 per 100 claims in the rest of the state.

“Clearly, it’s the LA area that’s driving the increase in frequency,” WCIRB Chief Actuary Dave Bellusci said during a Thursday webinar on the report, which was released last week.

The rate of indemnity claims in California steadily declined from 1991, when it was 49.5 per 1,000 workers, through the mid-2000s, when the rate leveled off at about 14.5 in 2008, according to WCIRB data. In 2010, the indemnity claim frequency in California rose by 6.5%, mirroring a trend that was seen around the U.S. as employees returned to the workforce as the recession ebbed.

But in NCCI states, indemnity-claim frequency dropped in each of the four years following 2010, while, in California, the frequency increased in 2012 and 2013 and was flat in 2014.

When WCIRB broke down the data by geographic areas, indemnity-claim frequency was up in the five-county Los Angeles area from 2012 to 2014, while it dropped in each of those years in the remainder of the state. The study considers the LA area to include Los Angeles, Orange, Riverside, San Bernardino and Ventura counties.

Tony Milano, WCIRB vice president and actuary, said one possible factor for the increased claim frequency in California after 2010 is that the state, which was hit especially hard by the recession, remained in recovery mode longer than other states.

“The (economic) recovery is definitely one of the factors,” Milano said.

Inexperienced workers also seem to be contributing to the frequency of indemnity claims, according to the WCIRB report. Workers with less than two years of experience accounted for half of indemnity claims in 2015, an increase from 44% in 2009.

Why the increased claim frequency has been pronounced in the Los Angeles area is a bit unclear, Milano said. He said one reason might be the mix of industry, with more construction jobs in the Southland compared to a greater proportion of white-collar jobs in the Bay Area.

Milano and Bellusci were asked by a webinar participant about possible solutions to the increasing claim frequency. But the presenters said they’d leave potential regulatory or legislative solutions to others.

Differences between the Los Angeles area and the rest of the state have become an increased focus for the workers’ compensation industry.

The question of why workers’ compensation claims filed in the Los Angeles area are more expensive than in other parts of the state was the topic of an oversight hearing last month by the Senate Committee on Labor and Industrial Relations.

During the hearing, held at Downey City Hall, a representative of the California Workers’ Compensation Institute pointed to several differences in claims filed in Los Angeles, including higher costs, a higher proportion of permanent disability claims, a higher rate of attorney involvement and more mental health disorders diagnosed.

Alan Gurvey, managing partner of Rowen, Gurvey & Win in Sherman Oaks, said on Thursday that “bad apple” attorneys who try to take advantage of the workers’ compensation system are one factor in the higher claim frequency in Southern California. Problems have resulted from reform measures in SB 863, Gurvey said, which have allowed some to exploit the system.

“There is clearly a problem with misuse of the workers’ compensation system,” he said.

And while it’s relatively easy to file a questionable claim for a cumulative injury such as carpal tunnel syndrome, which has no specific date of injury, Gurvey said any changes made to the system must still recognize claimants with legitimate cumulative injuries.

 “Do not take away the benefits of the legitimately injured people,” he said.

Published on 01/15/2016 by WorkCompCentral, authored by Elaine Goodman