COVID-19 Claims Growing Among California Workers

workers' compensation claims

The number of COVID-19 workers’ compensation claims in California has seen a steady climb, reaching a total of 31,612 from when the pandemic started until the end of July, according to the latest figures from the Division of Workers’ Compensation.

In July, 9,515 California workers filed COVID-19 workers’ compensation claims, as well as 74 coronavirus-related worker deaths ― bringing the total to 140 fatalities. The total claims account for 10% of all claims filed between January and July, despite the first claims being filed only in March.

These numbers are fluid and are certain to grow as more claims are filed after the fact, as there are often time lags in claims filings.

For example:

May claims ― As of July 6, there were 3,889 claims, but as of Aug. 10 the number had risen to 4,606.

June claims ― As of July 6, there were 4,438 COVID-19 workers’ comp claims. But as of Aug. 10, that figure for June claims had more than doubled to 10,528. 

Based on these claims development stats, the California Workers’ Compensation Institute projects there could ultimately be 29,354 COVID-19 claims with July injury dates and 56,082 COVID-19 claims with January through July injury dates.

Who is filing claims?

The top five sectors reporting COVID-19 workers’ compensation claims during the first seven months of the year are:

  • Health care workers (40% of all claims)
  • Public safety/government workers (6%)
  • Retail workers (8%)
  • Manufacturing (7%)
  • Transportation (5%).

Handling workers’ comp claims

In early May, Governor Gavin Newsom signed an executive order extending workers’ compensation benefits to California employees who contract COVID-19 while working outside of their homes during the state’s stay-at-home order.

To qualify for the presumption, all of the following conditions must be met:

  • The worker must test positive for or be diagnosed with COVID-19 within 14 days after a day they worked at your jobsite at your direction.
  • The day they worked at your jobsite was on or after March 19.
  • Your jobsite is not their home or residence.
  • If your worker is diagnosed with COVID-19, the diagnosis was done by a medical doctor and confirmed by a positive test for COVID-19 within 30 days of the date of the diagnosis.

Even when an employee is presumed to have become ill from COVID-19 at work, the employer may dispute that conclusion. In such a case, however, you bear the burden of proving that the injury or illness did not occur at work.

The executive order does not apply to COVID-19-related claims, regardless of date of injury, that were accepted by the claims administrator as compensable prior to May 6.

All of the typical workers’ compensation benefits apply:

Medical care ― Reasonable and necessary medical treatment paid for by your employer to help you recover from an injury or illness caused by work.

Temporary disability benefits ― Payments if you lose wages because your injury prevents you from doing your usual job while recovering.

Permanent disability benefits ― Payments if you don’t recover completely.

Supplemental job displacement benefits ― Vouchers to help pay for retraining or skill enhancement if you don’t recover completely and don’t return to work for your employer.

Death benefits – Payments to your spouse, children or other dependents if you die from a job injury or illness.

The takeaway

If you have an employee who is working on site and who tests positive for COVID-19, you should let them know about their rights to file for workers’ compensation if they miss work and/or need treatment.

The state’s insurance commissioner has approved new rules that bar insurers from using any COVID-19 claims against your experience modifier (X-Mod), so it won’t hurt your workers’ compensation experience if a worker files a claim.

More Older Workers’ Comp Claims Being Settled as COVID-19 Brings Uncertainty

One bit of good news coming from the COVID-19 pandemic is that the economic downturn has boosted efforts to close older workers’ comp claims that have been lingering as both sides cannot agree on a settlement.

Due to the financial pain brought on by the sudden downturn, injured workers who have been reluctant to settle their claims have been coming forward to close them, according to workers’ comp attorneys.

The injured workers are often settling their claims for less than they were demanding before. One lawyer told Business Insurance magazine that he was seeing claimants come in with offers that were on average 10% lower than previously.

This is an important development for employers who have legacy workers’ compensation claims that have stayed open as the injured worker remains on permanent disability and may also still be receiving ongoing or sporadic medical treatment. Employers want to close these claims because the longer they stay open, the more they end up costing the insurer, and hence it drives up the employer’s workers’ comp costs.

One of the most unpredictable parts of older claims is unexpected adverse claims cost development, particularly if the injured worker develops new medical complications that are an outgrowth of or related to the original injury claim.

When that happens, the workers’ comp carrier will also have to pick up the tab for that treatment, further driving up the cost of the claim and affecting the employer’s workers’ comp experience.

Work with your insurer

In a white paper, global insurance giant Marsh recommends that employers try to work with their insurers to proactively settle these older claims to save money in the near and long term, and to reduce the prospects of the claim deteriorating further given the “uncertainty about the post-COVID-19 economic environment.”

Marsh said that businesses should take a strategic approach to closing these old claims by working with their insurer’s claims adjuster and using analytics and claims inventory management tools to identify complex claims and focus on settling them first.

Another smart move is to stay in close contact with injured employees to help them navigate the workers’ comp system. And if they are at home on the mend, the employer should make a point to regularly reach out to them to see how they are healing up and if they have questions about their claim and the process for returning work.

This is one of the best ways to reduce the chances of an injured worker becoming disgruntled and hiring a lawyer to litigate their claim, which will usually drive up the cost of the claim in addition to the time they are away on workers’ comp disability.

Insurers are also feeling the effects of the COVID-19-related economic downturn, which gives them an incentive to try to settle old claims so they don’t have that uncertainty of how much they will eventually end up paying for the claim.

The downturn has also forced some insurers to consider laying off claims representatives as they deal with the prospect of lower premium volumes.

Injured workers may also have an incentive to get their claims closed by receiving a lump-sum payment now, which they may need due to the poor economic environment.

The takeaway

If you have any legacy workers’ comp claims that are still being paid, you may want to consider reaching out to your insurer to see if there is a possibility of getting the injured worker to renegotiate a settlement so you can get the claim closed. The longer it stays open and because of the uncertainty brought on by the pandemic, it would behoove any employer to take this step.

New Rule Simplifies X-Mod Calculation, Encourages Reporting First Aid Claims

A new method for calculating workers’ compensation experience modifications (X-Mods) took effect in California on Jan. 1.

The Workers’ Compensation Insurance Rating Bureau of California has created a new simplified formula for calculating X-Mods as part of its efforts to add more transparency to the process. The new formula excludes the first $250 of every claim for the X-Mod computation, no matter how large or small the claim is.

This also means that if an employer pays, say, $200 for first aid on a minor workplace injury, they are required to report it as a claim. Doing so will not affect their X-Mod in any way, no matter how many first aid claims they have.

The goal is to encourage employers to report all claims, even those that may require minimal medical treatment or first aid.

Examples:

  • If you have a $10,000 primary threshold and you have a claim that ends up costing $6,000, the amount used to compute your X-Mod would be $5,750.
  • If you have a $10,000 primary threshold and you have a claim that ends up costing $17,000, the amount used for calculating your X-Mod would be $9,750.
  • If you have a claim that’s valued at $250 or less, the claim will still show on your experience rating worksheet, but it will not be used at all when calculating your X-Mod.

Does this affect your current X-Mod?

Yes. Any claim incurred against policies incepting during the experience period for your 2019 experience modification, which includes 2015, 2016 and 2017 policy years, will be used in the X-Mod computation at $250 less than its reported value.

Claims costing $250 or less will be shown on worksheets, but will not be used in X-Mod calculation.

Reporting first aid claims is required

Workers’ comp regulations require that all claims that cost some amount of money to treat must be reported to your workers’ comp carrier, which in turn must report to the Rating Bureau so that it can accurately keep workers’ comp records on employers that are experience rated.

The rules have already been on the books for years, but the problem of non-reporting became too great, so the Rating Bureau has stepped up to encourage employers to follow the rules. And in this case, it can’t work against you.