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Bob Young

For Press Release:

CWCI Reform Analysis Tracks TD Outcomes

A new California Workers’ Compensation Institute analysis of temporary disability (TD) claim outcomes following the enactment of the 2004 reform bill (SB 899) that overhauled the state’s workers’ compensation system shows ongoing reductions in the cost and duration of TD, improved injury reporting times, and only minor changes in the types of injuries that result in lost time payments.

Using a sample of 279,000 California workers’ compensation TD claims with 2002-2005 injury dates, CWCI compared pre- and post-reform data on the amount of TD paid and duration of temporary disability (total number of paid TD days) at 12- and 24-month benchmarks, the time it took for the injuries to be reported, as well as the percentage of claims involving long-term injuries that were exempt from SB 899’s two-year cap on TD payments. After controlling for statutory benefit increases that took effect in 2003, 2004 and 2005, the study showed the average amount of TD paid in the first year after the first TD payment declined 11.4 percent, while after two years, the amount of TD paid averaged 15 percent less. Those results reflect reductions in temporary disability duration, as the post-reform claims averaged 12.3 fewer days of paid TD one year after the first payment (-13.3 percent), and nearly 21 fewer days after two years (-17.4 percent).

Prompt reporting is often key to arranging appropriate treatment, containing costs and facilitating return to work, and the post-reform TD data show the average reporting time from the injury date to employer notice improved 37 percent, while employer to claims administrator notice time improved 15 percent — an overall drop of 23 percent in the elapsed time from the injury date to the claims administrator notice. The study also found TD claims remain concentrated in a small number of injury categories, as the top three categories (medical backs without spinal cord injury; shoulder, arm, knee or lower leg sprains; and minor wounds and skin injuries) accounted for half of all TD claims in California, and the top 20 categories comprised more than 96 percent of TD claims, both before and after the reforms took effect. The proportion of temporary disability claims for injuries such as amputations and severe burns that are exempt from the two-year TD cap remained low, declining from 5.3 percent to 4.4 percent under SB 899.

Additional information, charts, tables and data on post-reform TD claim experience are included in CWCI’s full report, “Analysis of California Workers’ Comp Reforms: Part 2: TD Outcomes, Accident Years 2002-2005,” which is posted in the Research section of the Institute’s website at www.cwci.org.