A new California Workers’ Compensation Institute (CWCI) analysis of closed and resolved work injury claims from accident years 2005 through 2010 finds that statewide, attorneys were involved in 11.6 percent of all claims (including medical-only cases), 38 percent of lost-time claims and 80 percent of permanent disability claims. The study also confirms that the area in and around Los Angeles remains a hotbed for California workers’ compensation litigation, especially compared to Northern California — including San Francisco and most of the Bay Area — where attorney involvement rates on lost-time claims are nearly 15 percentage points lower.
Medical-only claims make up about ¾ of all California workers’ comp claims, but because less than 2 percent of them involve an attorney, and those that do account for less than 1 percent of workers’ comp benefits statewide, the Institute study focuses on a sample of 262,490 closed and resolved indemnity claims with 2005 through 2010 injury dates. These claims, all of which involved either temporary and/or permanent disability payments, accounted for $7.6 billion in total payments – nearly $7.1 billion in medical and indemnity benefits, and another $523 million in allocated loss adjustment expenses (ALAE). A total of 99,913 (38.1 percent) of these indemnity claims involved an applicant attorney, a defense attorney, or both, with paid benefits and expenses on those claims averaging $62,652 ($57,679 benefits + $4,973 ALAE ) which translates to $6.26 billion, or 82 percent of all payments in the indemnity claim sample.
Though the attorney involvement rate for closed and resolved indemnity claims statewide was 38 percent, as in past studies, litigation was more prevalent in the Los Angeles Basin, where 46 percent of all lost-time cases in Los Angeles County involved an attorney. The attorney involvement rate also was above the statewide level in Orange County, Ventura/Santa Barbara/San Luis Obispo Counties, and in the Inland Empire, though it was slightly below the statewide rate in San Diego. In comparison, attorneys were involved in 34 percent of similar cases in San Jose, which was the highest rate in Northern California, while the rate for rest of the Bay Area was 31.4 percent, well below the statewide rate. Limiting the analysis to just permanent disability (PD) claims, the study found attorney involvement rates ranging from a low of 75.2 percent of the Bay Area PD claims to 83.8 percent of the PD claims in Los Angeles County. The study also found Orange and Los Angeles Counties and the Inland Empire have the lowest closure rate for attorney involvement claims in the state, while average claim costs are among the highest.
CWCI has published more details, including regional data on attorney involvement rates, claim payments and closure rates in a report, “Attorney Involvement in California Workers’ Compensation, AY 2005-2010, which is available to CWCI members and nonmember subscribers who log in to the Institute’s website at www.cwci.org.