Denial Rate of California COVID-19 Claims ‘Very Comparable’ to Rate for Non-Covid Claims

Nancy Grover

Sarasota, FL ( – The workers’ compensation system has been taking heat for the rate of denied COVID-19 claims. But new figures out of California shed new light on the numbers.

“In the early stages of COVID-19 we were concerned about comments on the high [claim] denial rates,” said Alex Swedlow, president of the California Workers Compensation Institute. “Depending on the month you are looking at, the denial rates have been vacillating from the 30 [percentages] to the high 40s. We wanted some context to explain the denial rate differences from non-COVID claims.”

The first quarter of 2020 logged a denial rate of 44 percent for COVID claims. That dropped to 37 percent for the 4th quarter, still substantially higher than the rejection rate for claims overall.

To get behind the numbers CWCI conducted surveys to determine why there were such large differences. Input from 20 insurance carriers and 13 self-insured companies revealed that the majority of denied COVID-19 claims during the 4th quarter fell within three categories:

  • Medical verification; the test for coronavirus was negative, or no PCR test conducted. 58 percent of the denials fell into this category.
  • Reporting errors; either the worker was not an employee of the policyholder, or the positive test result was not alleged as industrial. This comprised nearly 10 percent of denied claims.
  • Non-industrial; the worker was not exposed to the virus at work or withdrew the claim or failed to cooperate.

“We wanted to level set the playing field,” Swedlow explained. “Many reasons [for denied claims] are so unique to COVID they don’t create a fair comparison to other denial rates.”

Medical verification and reporting errors were eliminated to determine a more realistic comparison of COVID and non-COVID claim denial rates. “We started with a 4th quarter 2020 denial rate of 37 percent, and got an adjusted denial rate of 11 percent,” Swedlow said. “Compared to the non-COVID rate, there was virtually no difference. So the actual denial rate was very comparable to the non-COVID denial rate.”

The change in numbers comes after multiple states implemented laws that said certain workers with COVID-19 were presumed to have contracted the virus through their work and were, therefore, entitled to workers’ compensation – barring proof to the contrary. The subject has been contentious in the industry.

“The issue around denial rates was used as a reason to push presumption laws all over the country. They are getting denied at dramatically higher rates,” said Mark Walls, VP of Strategic Analysis and Communications at Safety National. “At the end of the day, that’s not really happening. A lot were [denied] because they didn’t actually have COVID.”

The comments from Swedlow and Walls came during at session at the virtual annual conference of Out Front Ideas with Kimberly [George] and Walls.

COVID Claim Costs

Workers’ compensation costs for COVID-19 claims are generally very low – except when they are not. “Ninety-nine percent of closed claims as of July 2021 had total incurred losses of been $1,000 and $25,000. Almost 88 percent were less than $2,500,” said Tim Stanger, VP of Claims for Safety National. “Of the 1 percent of claims that are greater than $100,000, 89 percent are between $100,000 and $1 million, and 11 percent are over $1 million.”

Stanger cited several claims from municipalities that were greater than $1 million. They included

  • A 57-year-old firefighter with prolonged ventilation. He has significant lung issues and an exacerbation of an underlying heart condition ($3 million inc)
  • A 70-year-old jailer who passed away ($2.2million inc)
  • A 48-year-old police officer who passed away ($1.8million inc)
  • A 43-year-old police officer who passed away ($1.9million inc)

Several cases involved possible lung transplants, which have projected costs between $1.2 million and $2 million.


Among the changes brought on by the pandemic was the increased use of telehealth. Where virtual medical visits represented less than 1 percent of pre-pandemic workers’ compensation claims among Sedgwick’s clients, the percentage jumped to 20 at one point. Currently, it’s stabilized at around 10 percent.

“I think telehealth is here to stay,” said Max Koonce, chief Claims officer at Sedgwick. “The question is just where does it play.”

But telehealth may have a positive though unexpected impact on workers’ compensation claims. There is anecdotal evidence of better patient engagement.

“We did see shorter duration of total temporary disability days and also in surgical cases, we saw a reduction in the time individuals were away from work,” Koonce said. “We are continuing to watch that information to see what impact” it will have.

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