Highs and Lows in Cali: Largest Workers’ Comp Settlement Ever and Rate Reduction Rule

04.26.2017


By Angela Underwood

California (WorkersCompensation.com) – The juxtaposition of the largest workers’ compensation settlement in the state with the California Department of Insurance considering a rate reduction proves the Golden state is on a positive streak.  

The state is on the hook for $10 million to an injured worker who settled the largest workers’ compensation claim in the nation’s history under the coming and going rule, and it has been deemed doable to reduce its rate for the fifth year in a row.

Not bad, California, not bad.

The Workers’ Compensation Rating Bureau Governing Committee (WCIRB) authorized the lower mid-year pure premium rate filing for submission to the California Department of Insurance (CDI), and the advisory pure premium rate stats at 16.5 percent lower than the corresponding industry and 7.8 percent fewer than the amount proposed by the insurance commissioner.

Real savings is being offered in California with assumed advisory pure premium rates averaging $2.02 per $100 of payroll. “This is the fifth consecutive proposed advisory pure premium rate decrease since the middle of 2015 (in California there are often two advisory pure premium rate changes per year) totaling almost 30 percent since that time,” according to WCIRB officials, David Bellusci, executive vice president, and Sharon Faggiano-Callaway, managing director of customer experience.

“These decreases have largely been driven by the success of Senate Bill 863. In general, while costs remain high compared to many other states, the system in California appears relatively healthy,” they added.

Meanwhile California attorney Christopher Asvar has set the bar high, becoming the record setting esquire in a $10 million dollar workers’ compensation suit settled over the coming and going rule.

According to the Northern California Record, Judge Roger Tolman approved the record-breaking settlement. “In this case, because she was driving home from a work assignment in special circumstances and 2:30 a.m. not being during normal commuting hours, the case was able to be filed as a workers’ compensation case,” reports the Northern California Record of the coming and going rule. 

Barry Bloom, principal of the The bdb Group, and Editor-in-Chief of the “California Workers’ Compensation Handbook” said the going and coming rule is an exception in CA workers’ compensation that is relatively common and has been applied for many years.

“The rule was adopted by the California Supreme Court in 1916. The case law exceptions to the standard are voluminous and deal with many different factual sets,” said Bloom in an email to WorkersCompensaiton.com. He cited a similar and significant 1972 case Hinojosa v WCAB. “In addition, CA Labor Code 3202 requires the liberal construction of the law in favor of the injured. Likewise, any interpretation of the going and coming rule is to be resolved in favor of coverage.”

News of the $10 million settlement agreement comes in contrast to news out of the state’s rating bureau, who according to an April 6 Insurance Journal report was able to once again decrease rates. Two of the biggest drivers were sustained acceleration in claim settlement and recent indemnity claim frequency decreases.

“The advisory pure premium rate reduction of the last several years were largely driven by the success of the Senate Bill 863 reforms signed into law in 2012,” Bellusci and Faggiano said. “These reforms increased benefits to workers with permanent disability while at the same time reducing system costs and thereby premium rates. That said, even with these savings California remains a high cost state.”

Collaboration is key, according to the officials. “What is important is that the WCIRB accurately assesses the data and renders appropriate pure premium rates recommendations to the California Department of Insurance that properly reflect the projected cost of indemnity and medical benefits (losses) and the costs of administering those benefits,” Bellusci and Faggiano said.

Meanwhile Bloom said the largest state settlement monetary values are unique. “I'm not sure the issues or the application of the going and coming rule is exceptional. I don't think this case will have an effect on future similar cases,” he said.

“Exceptions to the rule allowing for compensability have been applied when an employer pays the employee’s wages or travel expenses during the commute; if the employee is on a ‘special mission;’ if the employment poses a ‘special risk;’ if the employer controls the employee's method of transportation; or if the employer does not provide the employee a regular place of employment,” Bloom said. While the plaintiff can now collect on the global settlement, in the meantime California Department of Industrial Relations Director Christine Baker delivered a report on the recent rate reduction.

“The 2012 reforms in SB 863 sought to increase benefits and improve care to injured workers while controlling rising costs for employers,” Baker said. “Not only did benefits for injured workers increase by 30 percent, but an anticipated rate spike was prevented. Employers have had four consecutive rate reductions, and today’s recommendation will continue that trend.”

Frank Neuhauser, Project Director Survey Research Center/UC DATA Archive

University of California, Berkeley said in an email neither the bureau or the department play an active role in decreases or increases.

“They are basically passive observers of market forces, legislation, regulation and case law, as well as underlying trends in medical inflation,” he said, adding, “The declines in CA are mostly driven because rates were too high in the recent past, the bureau and CDI overshot the mark, anticipating higher costs than developed.”

The CDI announced a May 3, 2017 public hearing to consider the WCIRB’s July 1, 2017 rate filing.  

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