Workers Compensation in California

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Workers Compensation in California

• Gabe Brown
• Bryan Snitselaar
• Eric Tennison
• Felipe Trevino
• Marjan Elahi

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History

• California Workers Compensation law was passed in
  1913 to shield employers from liability and
  provide employees with benefits for workplace
  injuires.
• Once passed workers compensation was mandatory
  for all employers in the state.
• Guarantees 3 types of benefits Medical care for
  the injury, Indemnity cash payments for lost
  wages rehabilitation services to enable
  claimants to return to work.

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Workers Compensation Movie

• DWC Movie Put a link here if possible

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California Plan Specifics

• Benefits
• Medical Care
• First Aid Treatment
• Temporary Disability
• Permanent Disability
• Vocational Rehabilitation
• Death Benefits

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Laws

• California employers must provide Workers
  Compensation benefits to employees under the
  California Labor Code Section 3700.
• Executive officers and directors of companies
  must be covered in the policy unless they fully
  own the corporation.
• Fine for not having Workers Compensation is 1000
  per employee.

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Regulation

• Purchase Insurance through insurance company or
  the STATE FUND
• They can also self insure

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California Workers CompensationMarket Share by
Type of Insurer
Note California Insurers are defined as
private insurers who write at least 80 of their
workers compensation business in California.
Source Workers Compensation Insurance Rating
Bureau of California (WCIRB)
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BillsSB 228 AB 227

• Medical Treatment
• Chiropractic Physical Therapy Visits
• Using Generic drugs
• Late payment penalty increase
• Pricing Issues
• Calls for development of online rating of 50
  largest insurers.
• Fraud Penalties
• Increase to 150,000 or twice the amount of fraud.

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Workers Compensation Reform Accountability

1. Fight Fraud Abuse
2. Qualified doctors in charge of treatment
3. Base treatment decisions on facts and evidence.
4. Guarantee fair compensation for real injuries.
5. Balance the rights of injured workers with the
   interests of their employers.

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California Workers Compensation Average Rate
Per 100 of Payroll 1989-2003
Source Workers Compensation Insurance Rating
Bureau of California (WCIRB)
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State Comparison
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Fraud

• Abuse is defined as using the system for
  something other than it was intended.
• Fraud Occurs when there is clear intent to
  misrepresent injuries or fabricate injuries.

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Workers Compensation Fraud in California

• Different types of fraud in California
• Employee fraud
• Employer fraud
• Medical fraud.

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Employee Fraud

• Include claims fraud by workers who report
  accidents that never happened, exaggerate the
  severity of their injury or try to collect for a
  non-work related event or file a claim just prior
  to a plant closing or seasonal layoff.

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Employer Fraud

• Premiums fraud, is perpetrated by employers that
  try to reduce costs by underreporting payroll,
  placing employees in improper job
  classifications, providing an improper business
  address or misrepresenting the companys loss
  history.

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Medical Fraud

• Medical providers can also commit fraud by
  submitting claims that reflect an upcoding of
  the injury to support higher fees, switching to
  products that are not indicated or billing for
  services that were never rendered.

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Proposed Solutions

• Employers improve safety training.
• Two bills AB 227 SB 228.
• Put a CAP on Litigation.
• Governor Arnolds Reform, November ballot.

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Effects of the solutions

• Establishing a risk management program.
• Reduction of 11.3 billion overall with SB227 and
  AB228
• A cap on litigation would ensure lower costs and
  ultimately benefit the system.
• Alternative Dispute Resolution.

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Recommendations for California

• Senate Bill 227 and Assembly Bill 228
• Training employees/ risk management program
• Cap on Litigation with utilization of ADR
• Large Deductible

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Employee Benefit Wheel

• Internal
• Total Compensation Strategies
• Wants vs. Needs
• Cost Issues
• HR Management Philosophy
• Business Objectives

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Employee Benefits Wheel

• External
• Competition
• Inflation
• Legal Requirements
• Taxation
• Benefit Innovation

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Company Web Sites

• http//www.cna.com
• http//firemansfund.com
• http//thehartford.com
• http//scif.com
• http//travelers.com
• http//icwgroup.com

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Work Comp Web Sites

• www.reformworkerscomp.com
• www.wcirbonline.org
• www.departmentofinsurance.ca.gov

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Any Questions?