New CWCI data on temporary disability (TD) claim experience in California workers’ compensation since the enactment of 2004 reforms (SB 899) shows that average TD benefit payments and paid TD days have been increasing in recent years, with average TD paid 12 months after the initial payment on accident year (AY) 2009 claims nearly matching the pre-reform level noted in AY 2004, while the average paid at 24 months on AY 2008 claims exceeding the pre-reform high.
The new study, updating research from 2008, 2009, and 2010, reflects data from 315,500 California workers’ compensation lost-time claims with January 2002 through June 2009 injury dates. Grouping the claims into pre- and post-reform subsamples based on the date of injury, the authors calculated and compared the average TD paid and the average TD duration (total number of paid TD days) at 12 and 24 months after the first payment. After adjusting the payment data to control for TD increases that took effect during the study period, the authors found that average first-year TD payments for all post-reform claims (April 19, 2004 through June 2009 injuries) was 4.8% less than the average for pre-reform claims (January 2002-April 19, 2004 injuries), while after 2 years, total TD payments averaged 2.2% less. The post-reform TD claims averaged 2.9 fewer days of paid TD in the first year (-3.1%), but 1.5 additional days after 2 years (+1.1%). These post-reform reductions in paid TD, however, were far less than those documented by earlier studies, so the authors also calculated the average payments by accident year, which revealed that average TD payments fell immediately after the reforms, but bottomed out in 2005 and are now trending up. The latest 12-month results show first-year TD payouts on AY 2009 claims averaged $6,050, up 11.3% from the post-reform low and just below the pre-reform level of $6,071 for early AY 2004 claims; while the 24-month results show average TD payments of $9,255 on AY 2008 claims, up 13.4% from the post-reform low and above the pre-SB 899 high of $8,994 in AY 2002. TD duration is also well above the post-reform lows, with the average number of paid TD days at the 12-month valuation up by 12.7 days (+14.1 percent), and by 10.9 days (+8.7 percent) at the 24-month valuation.
More information, graphics and data on recent trends in TD claim experience are included in CWCI’s Research Update, “TD Outcomes in California Workers’ Compensation, Accident Years 2002-2009.” The report is posted under Research on the Institute’s website at www.cwci.org.