Workers’ compensation costs on the decline

The costs of workers’ compensation in California is declining due to reforms that now require employees to receive treatment from doctors who are part of a medical establishment that is associated with each place of employment.

The change, which took effect in April 2004, prohibits workers from receiving excessive or unnecessary trips to the doctor, which cost employers money and raise compensation insurance rates.

“In the past, employers were only in control for the first 30 days of a (workers’ compensation) claim, then the worker would go find their own doctor,” said Susan Garde, State of California division of workers’ compensation spokesperson.

After 30 days, an employee is free to go to any doctor of his or her choosing to receive further medical treatment of his or her work-related injury.

One problem arose when some doctors began abusing the system by continuing to administer treatments on patients longer than what was needed, Garde said.

There were heavy temptations on the doctors’ part to have the injured workers return for further treatments, since every visit meant more money for them, Garde said. Under these new reforms, certain guidelines are set to prevent this mistreatment. The doctors must provide evidence that further visits and treatments are necessary in order to improve the injured worker’s condition.

According to Rick Rice, California secretary of labor, there have been cases where patients made several hundred visits to doctors using the same claim, causing costs to rise. Compounding the problem was the fact that insurance companies not only pay for injured workers’ medical treatments, but also pay for temporary disability benefits, which is usually two-thirds of lost wages, until the employee is able to return to work. The point of the reforms, he said, was to stop this type of abuse and lower the costs of workers’ compensation.

The costs were getting so high that some insurance companies began to pull out of the workers’ compensation business altogether.

Businesses that could not find insurance elsewhere turned to the California State Compensation Insurance Fund, Garde said. But now that costs are coming down, more of the insurance companies that stopped issuing workers compensation years ago are returning to insure workers.

The changes are most likely to affect workers involved in heavy amounts of manual labor for eight hours or more per day, such as construction workers and roofers. These workers are considered to be high-risk and are most costly to insure because of their high propensity for injury. A workplace, such as an office building, where the most common injuries tend to be stress related, are not expected to feel as much of an effect by the new rules.