CWCI’s latest report in its research series tracking changes in California workers’ compensation following the enactment of 2004 reforms (SB 899) shows that although the average amounts of TD paid on lost-time claims at 12 and 24 months are still less than they were before the reforms took effect, average TD payments for recent injuries are rising, and are approaching pre-SB 899 levels.
The new analysis, updating a study issued last year, is based on data from 392,722 California workers’ compensation lost-time claims with 2002-2007 injury dates. After grouping the claims into pre- and post-reform subsamples based on injury date, the Institute calculated and compared the average TD paid and the average TD duration (total number of paid TD days) at 12 and 24 months after the first payment; the elapsed time to employer and carrier notification; the distribution of TD claims by diagnostic category; the percentage of claims involving long-term injuries exempt from SB 899’s 2-year cap on TD payments; and the percentage of non-exempt injuries in which more than 2 years of TD benefits were paid.
After controlling for temporary disability rate increases that took effect in 2003, 2004 and 2005, the study found that the average amount of TD paid in the first year after the initial payment declined 2.6% in the post-reform period, while after 2 years, total TD payments averaged 6.1% less. Similarly, the post-reform TD claims averaged 2.3 fewer days of paid TD in the first year (-2.2%) and 7.3 fewer days after 2 years (-5.7%). These post-reform reductions, however, were far less than those noted in the earlier study. A breakdown of the payments by accident year showed that after a brief decline immediately after SB 899 took effect in 2004, the average amounts of TD paid at the 12- and 24-month valuations began to climb in AY 2005, with the latest figures nearing pre-reform levels.
The study also found improved notification times under SB 899. Among post-SB 899 TD claims, the average time from the injury date to employer notice declined 33%, while employer to carrier notice was 31% faster, for an overall improvement of 32% in the elapsed time from injury to carrier notice. TD claims remain concentrated in a small number of injury categories, with the top four diagnoses accounting for half of all TD claims in California, and the top 20 diagnoses comprising 81.5% of TD claims. Though the mix of TD injuries did change, most notably with fewer “medical back” claims under SB 899, the proportion of claims involving severe and chronic injuries that are exempt from the 2-year TD cap remained low, hovering around 5%.
More information, graphics and data on changes in TD claim experience under SB 899 are included in CWCI’s Research Update, “Analysis of California Workers’ Comp Reform Monitoring, Part 3: TD Outcomes, Accident Years 2002-2007.” The report is posted under Research on the Institute’s website at www.cwci.org.