California Workers' Compensation Challenges to Watch and Lessons to Learn

California is often perceived to be a trendsetter when it comes to fashion, art and entertainment. Everything appears more glitzy in California and comes with a higher price tag.

For many businesses operating in the state, this shine has given way to an increasingly complex regulatory and operating environment. Few areas illustrate this view more vividly than the California’s workers’ compensation system. 

With many eyes across the country turned to the coastal state, it is important to monitor current challenges that California employers face in order to avoid or side-step any unintended or ill-conceived consequences. With these challenges come many tried and true lessons to share that have applicability in virtually any operational setting or geographical venue.

California is unique in its legislative environment. Employers must contend with many regulatory challenges in managing their workers’ compensation programs. A great example is California Senate Bill 1159 that was signed into law in September of 2020. The new legislation declared a rebuttable presumption for all workers who test positive for COVID-19. It impacted how COVID-19 workforce exposures were tracked, reported and managed throughout the state. Moreover, the law went into effect immediately upon signature, forcing employers to look for innovative solutions to ensure compliance.

California is also a state in which a low threshold of compensability drives significant litigation  costs. Litigation can be tied to any number of issues including seeking apportionment relating to permanent disability and other benefits; cumulative trauma injuries and their causes and origin; or legislative interpretation associated with new laws and regulations such as expanding presumptions.

While not unique to California, workers’ compensation costs can also be driven up by unscrupulous service providers that use the injured worker as a vessel for enrichment.  Misaligned incentives can increase costs as in the case of ill-intentioned attorneys or doctors preying on injured workers. Fraud may surface due to provider billings for procedures that were never performed; intentional under-reporting or misclassification of payroll by employers; or employees who file false claims. Such collective actions can strain and already cost-ridden system.

The good news is there are many tried and true strategies shown to improve outcomes and results for both the employer and employee.

Advocacy and engagement continue to be effective and positively impact the injury management and recovery process. This includes making an effort to identify an employee’s needs; providing access to quality medical care; taking time to  explain treatment options; outlining the claims process; and being available to answer questions at every step along the way.  Because each employee’s injury and needs are different, the resulting care plan will also be unique.

Effective communication can be used to resolve many issues or problems associated with work-related injuries. Communication should be a focus from the time the injury is reported until the claim is closed. 

Workers’ compensation is a complex system and injured workers are confronted with  many intimidating terms such as recorded statement, claims investigation, and subrogation.  Too often, legal language takes precedence over simplicity and conversation. Much of an injured worker’s apprehension and distrust can be alleviated by using simple, direct, and empathetic communications. 

Moreover, employees today have come to expect information on demand. Technology can help meet these expectation and improve the overall claims experience. Many self-service tools, portals or apps give the employee access to the information they need on a 24/7 basis.  In addition to tools that can help ease the administrative burden, technology can also be used to deliver information that can be used to facilitate healing and recovery.

Return to work is also powerful medicine for injury recovery. It has been statistically shown that the longer a employee is out of work, the less likely they are to return. Further, employees that return to work seem to heal sooner and return to pre-injury condition more quickly, thereby driving down both medical and indemnity costs. It is important to remember that the injured worker is not the enemy; most employees have never been injured, and they simply want to get better and return to a productive way of life, including work.

Many times workers’ compensation success comes down to doing the right thing.  Workers’ compensation professionals should treat injured workers the way they would want to be treated. This means providing access to quality medical care, communicating information and updates, offering assistance with unfamiliar administrative requirements, and issuing payments on a timely basis. Injured workers want to know they are valued and working with professionals who genuinely care about their recovery and well-being.

Change is constant. As we move from “what now” to what’s next” we must do so by adapting, adjusting, remaining nimble and eagerly embracing change.

By Scotty Benton

Scotty Benton, ARM AIC, vice president workers' compensation practice, is responsible for supporting Sedgwick's workers’ compensation operations by focusing on continued development of best practices, ensuring administration of claims in accordance with best practices and in full compliance with legal, regulatory and jurisdictional requirements as well as driving quality initiatives. He plays a pivotal role in helping Sedgwick meet and exceed quality standards and deliver optimal claims outcome. Scotty has more than 30 years of industry experience. He has worked for insurance carriers and third party administrators. He started his tenure in the industry as a claims examiner and progressed through roles of increasing responsibility, including vice president. He has operational know-how and regulatory and compliance expertise across multi-state jurisdictions and particularly in-depth knowledge of the California workers' compensation system.

Share This Article: