Cost and Coverage Differences For California’s Workers’ Compensation Benefits: A Comparison of Benefits and Qualification Criteria For California And Selected States Presented At: The Western Risk & Insurance Association Meeting January 2002 San Diego by Patricia Cheshier, Ph.D. California State University, Sacramento

2 Statement: “California’s workers’ compensation benefits rank below the national average in dollar terms but among the highest in premiums” Ellis (2001) Roberts (2001) (Fletcher (2001) Why: “More extensive breadth of benefits, higher administration costs, more litigation in system, higher claims costs per covered employee” Safety & Health (2001) Ellis (2001) NCCI (2001) WCRI (2000) Holloway (2001)

3 Sources of Data: Workers Compensation State Laws -Tables of Benefits. U.S. Department of Labor, Employment Standards Administration, Office of Workers’ Compensation (2001) 2001 Analysis of State Workers’ Compensation Benefits U.S. Chamber of Commerce (2001) 2001 State Codes and Regulations NAIC WCRI Benchmarks Workers Compensation Research Institute (2000) National Council on Compensation Insurance

STATECACTFLGAMAPATXWI Average Medical Cost Per Claim $5390$4372$5779$6180$2999$5277$7650$5200 Average # of Visits Per Claim Average Cost Per Visit Per Claim 28.5 $ $ $ $ $ $ $ $343 Average # of Services Per Visit Average Payment Per Service 3.3 $ $ $ $99 N/C3.4 $ $ $127 Table 1.Medical Claim Costs & Utilization WCRI Benchmarks (2000)

STATECAFLILMINYORTX MEDICAL BENEFITS- Amt. Pd. No Time/ Money Limits $10 Co-Pay After Max. Improvement No Time/ Money Limits No Time/ Money Limits No Time/ Money Limits No Time/ Money Limits No Time/ Money Limits PERMANENT/ TEMPORARY TOTAL DISABILITY Amt. Pd. 66.7% (66.7% SAWW) Max = $490/Wk. 66.7% (100% OF SAWW) Max = $571/Wk. 66.7% (133% OF SAWW) Max = $956/Wk. 80% of Spendable Earnings (90% OF SAWW) Max.= $644/Wk. 66.7% Max = $400/Wk. 66.7% (100% OF SAWW) Max = $629/Wk. 75% (100% OF SAWW) Max = $533/Wk. PHYSICAL REHAB. VOCATIONAL REHAB. No Stated Limit $16,000 & 52 Wks TDD Max. Same As Medical Benefits $5000 Max. Drug Rehab. 52 Wks. No Stated Limit No Stated Limit No Stated Limit 104 Wks. Same As Medical Benefits No Stated Limit No Stated Limit TTD Max. 21 Mos. No Stated Limit No Stated Limit Table 2.Differences In Amounts Paid For Benefits

STATECAFLILMINYORTX DEATH BENEFITS $5000 $4200$6000Fee Schedule 10 Times The SAWW $6000 Table 2. (cont).Differences In Amounts Paid For Benefits

Differences In State Statutes That May Affect Qualifying For Workers’ Compensation Benefits

STATECAFLILMINYORTX TYPE OF LAW 1 Compulsory/ Insurance Required Same EXEMPTIONS: 2 BY NUMBER OF EMPLOYEES: BY TYPE OF EMPLOYMENT: AGRICULTURAL DOMESTIC SERVICE No Exemptions < 52 hrs. in Preceding 90 days or < $100. < 4 Employees Yes, If <5 Regular or < 12 Seasonal Employees Yes, Excluded No Yes, If <400 Aggregate Man-days Per Quarter Yes, Excluded < 3 Employees Yes, If <3 Employees Per 13 Weeks Yes, If <35Hrs/ Wk. For 13 Wks. No Yes, If < $500 Paid in Prev.Yr Yes, If < 40 Hrs/wk No Exemp- tions Yes, Certain Circum- Stances No Yes, Employees Of Inde- pendent Contractors Yes, Excluded Analysis of Workers Compensation Laws. U.S. Chamber of Commerce, Statistics & Research Center. 2. State Workers’ Compensation Laws - Tables. Department of Labor, Office of Workers’ Compensation Programs. Table 3. Differences In Coverage Requirements & Employments Excluded

STATECAFLILMINYORTX WAITING PERIODS 3 Days- For TTD- Retroactiv e After 14 Days 7 Days- Retroactive After 20 Days 3 Days- TTD- Retroactiv e After 13 Days 7 Days- Retroact ive After 2 Wks. (Immedi ate if Death 7 Days- Retroactiv e After 14 Days 3 Days- TTD- Retroactive After 14 Days (Immediate if Inpatient) 7 Days- Retroacti ve After 4 Wks. Table 4. Differences In Waiting Periods For Benefits

STATECAFLILMINYORTX PERMANENT DISABILITY AMOUNTS PAID 66.7% Max = $490/Wk. (66.7% of SAWW) (UI Offset) Max. Period = Life 66.7% Max = $571/Wk. (100% of SAWW) (S.S. & UI Offsets) Max. Period = Disability Duration 66.7% Max = $956/Wk. (133.3% of SAWW) Max. Period = Life 80% of Spendable Earnings Max.= $644/Wk. (90% of SAWW) (UI Offset) Max. Period = Disability Duration 66.7% Max = $400/Wk. (SAWW N/A) Max. Period = Disability Duration 66.7% Max = $629/Wk. (100% of SAWW) (S.S. Offset) Max. Period = Disability Duration 75% Max = $533/Wk. (100% of SAWW) Max. Period = Life or 401 Wks. For Some Table 5. Permanent Disability Benefit Differences Source: State Workers’ Compensation Laws. U.S. Dept. of Labor, Employment Standards Administration, Office of Workers’ Compensation Programs, Division of Federal Employees’ Compensation.

STATECAFLILMINYORTX MEDICAL BENEFITS- Amt. Pd. No Time/$ Limits $10 Co- Pay Poss ible No Time/ $ Limits No Time/$ Limits No Time/$ Limits No Time/ $ Limits No Time/ $ Limits PHYSICIAN SELECTION Employer – Initial Selection (Free Choice After Time Period) Employer Selection Employee Choice Employer – Initial Selection (Free Choice After Time Period) Employee Choice From State Agency Approved List Employee Choice Employee Choice From W.C. Committee List TYPES OF PROVIDERS COVERED Physicians, Psychologists, Acupuncturists Optometrists, Dentists, Podiatrists, Chiropractors, Nurses, Physical Therapists, MFC’s, CSW’s Table 6. Medical Benefits: Differences In Providers Covered & Choices Allowed

STATECAFLOR OCCUPATIONAL INJURY DEFINITION “injury …arising out of & in… course of employment… “proximately caused by… employment” “psychiatric injury… compensable… if not due to termination… within… 6 months of hiring” “personal injury…from accident arising out of and in the course of employment” “major contributing cause” “accident … unexpected or unusual event … that happens suddenly” “not “mental or nervous injury due to stress, fright, or excitement only… aggravation of a venereal disease… or due to habitual use of alcohol or controlled substances or… due to fear or dislike for an individual because of race, color, ….” “bodily injury… arising out of & in the course of employment “major contributing cause” “mental injury… if not due to … stress” Table 7. Differences In Definitions In Statute

STATECAFLOR PERMANENT DISABILITY DEFINITION “in determining percentages, account taken of “nature of injury … occupation … age of employee” in considering the “diminished ability of such injured employee to compete in an open labor Market” “anatomic or functional…loss… as a percentage of the body as a whole” “percentage of body as a whole” Table 7 cont. Differences In Definitions In Statute

STATECAFLILMINYORTX VOCATIONAL REHAB. PHYSICAL REHAB. Mandatory Payments Usually Capped at $16,000 Max. Duration =52 Wks. Under Medical Benefits Max. Pd.= Costs Max. Duration =104 Wks. Max. = None Stated Under Medical Benefits Max. = By Disability Max.= None Stated Table 8.Rehabilitation Benefit Differences

STATECAFLILMINYORTX Amt. Determined On Individual Case Basis May Be Added To Award Amt. Determined By Agency 20% first $5,000; 15% next $5,000 10% for Balance May Be Added To Award Amt. Determined By Agency 20% May Be Added To Award Amt. Determined By Agency 30% Rule Timed Payments May Be Added To Award Amt. Determined By Agency Amt. Determined On Individual Case Basis May Be Added To Award Amt. Determined By Agency 25% to Max. of $2,500 May Be Added To Award Amt. Determined By Agency 25% May Be Added To Award Amt. Determined By Agency Table 9. Differences In Allowances For Attorneys’ Fees

Table 10. Summary GREATER COVERAGE IN CALIFORNIALESS COVERAGE IN CALIFORNIA Number of Employees and Occupations Covered Dollar Amount of Wage Loss Provided Types of Medical Providers CoveredChoice of Medical Provider Definition of Disability Attorney Payments Percent of Occupational Contribution To Injury Psychiatric Injury Coverage