HomeMy WebLinkAboutMINUTES - 04012003 - D6 TO:.. BOARD OF SUPERVISORS
FROM: John Sweeten, Counter Administrator Con '
DATE: April 1, 2003 �` � � r� Costa
SUBJECT: Receive and affirm recommendations _:
made in Report on Workers' ;t County
Compensation Program
SPECIFIC REQUEST(S)OR RECOMMENDATION($)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
Receive and affirm the recommendations made in this report.
BACKGROUNDIREASONS FOR RECOMMENDATION:
The purpose of this report is to identify the adverse trends financially impacting our Workers'
Compensation Program. These adverse trends are due to recent legislation increasing benefit
payments, rising medical casts and an enhanced workers' compensation benefits package
provided in accordance with various labor agreements unique to our County.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON APRIL 1 2003 APPROVED AS RCOMMENDED X OTHER X
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
AND ENTERED ON THE M€NUTESS OF THE BOARD
X UNANIMOUS (ABSENT NONE � OF SUPERVISORS ON THE DATE SHOWN,
AYES: NOES:
ABSENT: ABSTAIN:
DISTRICT I-�I fi�t7ACAN'T ATTESTED APtIL 1, 2003
C:Wy DocumentsSoard 0rdemkBO200"O-WCRepert.doc JOHN SWEETEN,CLERK OF THE BOARD OF
Contact: Ron Harvey SYPERVISORS AND COUNTY ADMINISTRATOR
Cc: Risk Management `
Auditor-Controller BY DEPUTY
ADDENDUM TO ITEM D.6
April 1, 2003
On this day the Board of Supervisors considered accepting a report from the County
Administrator and Risk Manager on the proposed changes to the County's Workers'
Compensation Program.
The following members of the public presented testimony:
Lou Paulson, 112 BlueRidge Drive,Martinez, (Contra Costa Firefighters) Local 1230;
Rollie Katz, P.O. Box 222, Martinez, (Local 1-PEU);
Ralph A. Hernandez, 2718 Barcelona Drive, Antioch, (County Workers Compensation
Program);
Carl Piercey, 923 Carol Lane, Lafayette;
The Board discussed the matter, and Supervisor Glover moved to make the following
recommendations,which was seconded by Supervisor Gioia:
• DIRECTED the County Administrator to present a plan and budget for a
comprehensive, County-wide injury prevention and ergonomic program to reduce
the frequency of j ob-related injuries during budget deliberations;
• DIRECTED the County Administrator to develop a plan, on July 1, 2003,to
assume responsibility for directing care for injured employees during the first 30
days following a claimed injury, pursuant to the Labor Code;
• DIRECTED the County Administrator to prepare a proposal for Board
consideration during budget hearings for an occupational medical program staffed
by occupational medical professionals dedicated to the treatment of industrially
injured employees;
• DIRECTED the County Administrator to seek to reopen union contracts for the
limited purpose of amending the current salary continuation program; and
• DIRECTED the County Administrator to seek to reopen union contracts for
purposes of amending the current 3-hours medical appointment benefit.
After further discussions, the vote on the motion was as follows:
AYES: Supervisors Gioia, Uilkema, Glover, and DeSaulnier
NOES: None
ABSENT: Nome
ABSTAIN: None
DISTRICT III SEAT VACANT
The motion passed.
Report on
CONTRA COSTA COUNTY'S
WORKERS' COMPENSATION
PROGRAM
PREPARED BY: RISK. MANAGEMENT DIVISION
OFFICE OF THE COUNTY ADMINISTRATOR
s�
MARCH 27, 2003
TABLE OF CONTENTS
ISUMMARY....................................................................................................................................1
IIANALYSIS......................................................................................................................................2
A. REQtAREMENTS OF WORKERS'COMPENSATION..............................................................................2
B. THE COUNTY'S PROGRAM..............................................................................................................2
C. THE COUNTY'S PROGRAM COMPARED TO OTHER COUNTIES............................................................3
D. COSTS OF THE PROGRAM................................................................................................................4
E. AB 749.....................................................................................................................................6
IIIRECOMMENDATIONS................................................................................................................8
IVCONCLUSION...............................................................................................................................9
GLOSSARY......................................................................................................................................... 10
APPENDIX A-COUNTY COMPARISONS.....................................................................................11
APPENDIX B-CONTRA COSTA COUNTY PROGRAM COST DRIVER ANALYSIS............... 12
APPENDIX C--SALARY CONTINUATION POLICY ANALYSIS................................................. 13
APPENDIX D-OCCUPATIONAL MEDICAL SERVICES.............................................................14
APPENDIX E-ERGONOMIC INJURY PREVENTION PROGRAM............................................15
APPENDIX F-AVERAGE OCCUPATIONAL DISABILITY DURATION.................................... 16
I SUMMARY
Workers' compensation claim costs in California have been rising steadily since 1997. In
FY99-00 Contra Costa County paid$13.1 million dollars in workers' compensation
benefits.By FY00-01 workers' compensation benefit payments reached$18.2 million, an
increase of almost 39%.These increases have been dramatic and it is projected they will
continue.
Fiscal Year WC Payments % increase Salary Continuation Total
Only from prior Payments
ear
FY99-00 $13.1 million $1.3 Million $14.1 Million
FYOO-01 $14.8 million 13% $1.1 Million $15.9 Million
FY01-02 $18.2 million 23% $1.3 Million $19.5 Million
With the passage of AB 749,the new workers' compensation law effective January 1,
2003,workers' compensation"disability"benefits increase substantially. The County
can anticipate that the costs will continue to grow and may grow beyond the County's
ability to pay without impacting other programs.
The purpose of this report is to clarify Contra Costa County's responsibilities under
California's workers' compensation laws and to identify ways, if not to decrease our
costs,to slow the rate of the increase.
Recommendations include:
• Employing an Occupational Medical Program,either within.the County's Health
Services Department,or external to the County with a private provider,
• Assume the responsibility of overseeing the first 30 days of medical treatment,
• Implement a proactive injury prevention and ergonomic program,
• Modify the County's salary continuation.program,
• Modify the County's(up to)3-hour allowance for time of to attend medical
appointments, and implement alternatives that would be beneficial to both the
County and the employee,
1
II ANALYSIS
A. Requirements of Workers' Compensation.
Workers' compensation is a no fault benefit delivery system. It was enacted for the
purpose of minimizing the economic loss suffered by injured workers(or dependents)
due to work-related injuries, illnesses or even death.
It is mandated that every employer,public or private,doing business in the state of
California provide workers' compensation benefits through insurance or by self-
insurance.
elfinsurance. Employers choosing to fund their own losses may, by virtue of the State's
authority, be permitted to"self-insure." Strict scrutiny is applied when granting
permission to self-insure since all losses to injured employees must be paid. The County
is self-insured and self-administered.
The state of California mandates that an employee who sustains a job-related injury or
illness is entitled to, among other benefits:
1) "reasonable" medical treatment,to cure or relieve from the effects of the injury."
(Labor Code Sec. 4600).
2) tax-free disability benefits(known as temporary disability)on a temporary basis
during periods where the employee is unable to work due to the injury. These
benefits are paid based on an employee's earnings at the time of the injury. It is
generally calculated to be two-thirds of an employee's average weekly earnings.
There are statutory minimum and maximum weekly payment rates.
3) permanent disability compensation if the injury/condition results in decreasing the
employee's abililty to compete in the open labor market,
4) vocational rehabilitation services if the employee is unable to return to the same job
due to the effects of the injury or condition,
5) death benefits in the event the cause of death resulted from the employment.
B. The County's Program.
In addition to the state-mandated benefits,the County enhances its workers'
compensation benefit package, in accordance with various Memoranda of Understanding
and Management Regulations. Excluding safety members(who receive full salary in lieu
of temporary disability benefits under the Labor Code'),the County program provides:
l) in lieu of temporary disability benefits, a"salary continuation"program whereby
permanent employees receive 86/0 of their regular monthly salary,tax-free,during
any period of compensable temporary disability up to 365 (aggregate)days for each
injury. No charge is made against sick leave or vacation accruals for these payments,
' Labor Code Sec.4850
2
2) up to three hours per day without loss of pay or benefits if an employee has returned
to work and is required to leave work to attend medical appointments. There is no
charge made against sick leave or vacation accruals,
3) the County has not exercised its right to direct the employee's medical care for the
first 30 days following the injury.
C. The County's Program Compared to other Counties.
Detailed comparison of workers' compensation loss data with other counties is contained
in Appendix A.Key policy differences between the counties are listed below.
Alameda County—provides 80%salary continuation for up to 365 aggregate days.
Alameda County directs employees to selected medical clinics during the first 30 days
following the injury,unless the employee pre-designates a physician.
San Mateo County—provides 100%salary continuation for 90 days;thereafter the state-
mandated benefits are paid. San Mateo County directs the employee's medical care for
the first 30 days following the injury,unless the employee pre-designates a physician.
Sun Bernardino County--provides 100%salary continuation for 40 hours. After this
period is exhausted the employee may use accrued sick leave or vacation accruals to
mare up the difference between the state mandated weekly benefit and regular salary.
Saul Bernardino County directs an employee to selected medical clinics during the first 30
days following the injury,unless the employee pre-designates a physician.
,Sacramento County—does not provide a salary continuation program. An employee
may use sick leave or vacation accruals to make up the difference between the state
mandated weekly benefit and regular salary. Otherwise,only the state mandated benefits
are paid. Sacramento County directs employees to selected medical clinics during the
first 30 days following the injury, unless the employee predesignates a physician.
Santa Clara County—provides no salary continuation program. It only pays the state
mandated weekly benefit. An employee is allowed to use available sick leave and
vacation accruals to make up the difference between the state mandated weekly benefit
and regular salary. Santa Clara County directs the medical care for the first 30 days
following the injury,unless the employee pre-designates a physician.
City and County of San Francisco—provides no salary continuation program,only
paying the state mandated benefits.The City and County of San Francisco directs the
medical care for its employees to selected clinics or SF General for the first 30 days
following the injury,unless the employee pre-designates a physician.
3
D. Casts of the Program.
What drives the costs of the County's Workers' Compensation Program`!
Two important factors in assessing the cost of a workers' compensation program are
claim "frequency"and claim "severity"
Claim frequency is essentially the number of claims reported over a given period of time.
Claim severity is essentially the amount of money that is ultimately paid on a claim.
Several factors can negatively impact both claim frequency and claim severity. For
example, historically, frequency will increase when economic conditions throughout the
state become unstable or when unemployment increases.
The County's frequency history
The County's claim frequency(number of workers' compensation claims reported
annually)has been relatively stable for the past three fiscal years(from FY99-00 to
FY01-02). The number of claims reported for each fiscal year averaged approximately
1,346.
For the first six months of FY02-03 there has been an increase in frequency of
approximately 12%, compared to the two prior fiscal years. During the first 6 month of
FY02-03,680 claims have been reported compared to 596 reported in the first 6 months
of FY01-02 and 625 claims reported in the first 6 months of FY00-01.
fihe severity factor
One key factor that has had a major impact on statewide claim severity is the rising cost
of medical care.This rise is partially due to inflation. For example,the workers'
compensation industry has documented a substantial increase in the cost of
pharmaceuticals.-"Pharmaceutical fees have more than doubled since 1995,making them
one of the fastest growing medical cost drivers."z Another example is medical over-
utilization(frequency of medical treatment)which has experienced significant increases
since the late 1990's.3 Nate that protracted treatment typically results in longer periods of
time off work and has been tied to increased permanent disability compensation
payments or settlements°.
The second key factor affecting severity is the rising cost of disability. Disability duration
and benefit rate increases for both temporary and permanent impairment benefits have
contributed to the rise. Prior to January 1, 2003,the maximum weekly temporary
disability rate was$490 based on earnings of$735 and above per week. Since January 1,
2003,the maximum has been increased to$602 per week. With the enactment of AB749,
weekly disability benefits have increased more than 22%from previous levels. Appendix
z California Workers'Compensation Institute No.02-17- 11/19/02
3 California Workers' Compensation Institute No.01-23 12/24/01,WCRI Media Release 3/25/02
d Workers'Compensation Research Institute Media Release 12130/02
4
B provides a detailed analysis of the County's cost drivers. (Also see discussion below on
AB`149)
The County has experienced sharp increases in claim severity
The County has experienced sharp increases in the medical payments made on claims
over the past three fiscal years(FY99-00, FY00-01,FY01-02)with FYO1-02 seeing the
greatest increase. The County's workers' compensation payment history has revealed
that three medical payment categories exceed$1,000,000 per year:
• Chiropractic treatment,
• medical doctors,and
• hospital fees.
Chiropractic care has experienced the most significant growth. Physicians and
chiropractors can directly influence claims costs(severity)because their opinions
regarding medical care and duration of disability are given great weight even when there
is evidence of a lack of objectivity. ,Treating physicians are given the presumption of
z''correctness by the Labor Cade. The employer is then left with disputing this presumption
while at the same time saddled with the responsibility for providing"reasonable medical
treatment...". Reasonable treatment is generally defined by case law. In recent years
there has been a liberal interpretation of the definition.
The County has also experienced growth in disability benefits(temporary and
permanent),that significantly affects claim severity. In FY00-01 the County paid$3.2
million dollars in temporary disability alone. This increased to$3.7 million.in FY01-02.
Temporary disability payments are projected to reach$4.7 million for FY02-03,an
increase of 47%from FY00-01 figures.
In total,the County paid$13.1 million in total workers' compensation benefits in FY
1999-2000,$14.8 million in FY00-01 and$18.2 million in FY 2001-2002.This does not
include the cost of salary continuation payments estimated to be$1.2 million. See
Appendix C.
Repetitive Motion Injuries—"RMI's"(carpal tunnel,tendonitis,etc.)are the fastest
growing type of injuries and typically affect claim frequency and claim severity. The
increase in injuries reported for these types of claims have largely resulted from the
automation of office systems.
RMI injuries are among the most expensive injuries$. Collectively these claims can cost
in the hundreds of thousands of dollars. This is largely due to the expansiveness of the
treatment plans,often misdiagnosed conditions, lengthy periods of temporary disability,
the necessity of vocational retraining and extensive levels of permanent disability.
To this end, an effective injury prevention program employing ergonomic solutions can
help to reduce the incidence of these injuries and reduce County workers' compensation
claim costs. (See the Recommendations section).
s BLS Website—Bureau of Labor Statistics,Survey of Occupational Injuries and Illnesses-Year 2000
5
The County's salary continuation pay program.
Of the counties surveyed,Contra Costa County's salary continuation program is the most
generous, paying 86%of the employee's regular monthly salary,tax-free. It provides the
highest percentage of continuing pay for up 365 (aggregate)days per each injury.
The County's salary continuation program is noteworthy for assisting injured employees
in maintaining financial security while recovering from a job related injury or illness.
The County has generously supported its employees in this fashion, since most injured
employees are not impacted by a loss of income during their temporary disability period.
Please refer to Appendix C for an analysis of the County's salary continuation program.
The program,however, is very costly. With continued pressures on the workers'
compensation system and budgets in general, it is not financially feasible to continue this
program at this level.
The 3-hour time off provision.
The County's allowance for absence from work for up to three hours per day to attend
medical appointments without loss of pay or benefits is a generous auxiliary benefit. It
has a significant impact on the County(the department)to the extent that the absence
results in a loss of productivity. Since the allowance is for"up to 3 hours per day"and is
unlimited, it is possible for an employee to be absent from work for as much as 15 hours
per week for an unlimited period of time.
Additional concerns pertain to how, or by whom, the work will be completed. This can
result in overtime costs and morale issues for coworkers who must fill in for the absent
employee. For example,when an employee is absent to attend a medical appointment,
coverage for the work must be arranged.Coworkers may be required to work overtime to
complete the work. Overtime pay or compensatory time off becomes an additional direct
cost to the department.
Clearly the severity of the loss the department bears is greatly impacted by the number of
employees who need time off to attend medical appointments and the frequency of care.
Aside from the loss caused by the absence,the department pays the employee's wages for
the hours missed since the employee is not using sick leave or vacation accruals to cover
the absence. This is a costly benefit to maintain in its present form.
E. AB 749
The Governor signed AB 741 in February 2002 with an effective date of January 1,2003.
The bill increased the statutory weekly disability benefits. There are new minimum and
maximum temporary disability benefit rates. For injuries on or after January 1, 2003 the
maximum weekly benefit will be$602,a 22+% increase. The legislation established
increases for every year until 2006,at which time the rates will be indexed according to
state wage data.
6
Other benefit increases were also included in AB 749 pertaining to the permanent
disability benefits. The increases are exponential in nature and at this point are too
difficult to quantify until the payments are actually made. It is clear,however, that the
payment rates are not as"fixed"as they have been in years past.
For example, an injury in 2002 with a permanent disability rating of 10%would be paid
in weekly increments for 30.25 weeks at$140 per week(the maximum at this
percentage)for a total payout of$4,235. The same rating for an injury occurring in 2003
would yield a total payout of$5,596.50. The table below compares the cost of the same
permanent disability rating for different injury years.
Permanent Disability
Year of Injury Rating Total Payment
2002 10% $4,235.00
2003 10% $5,596.00
2004 10% $8,050.00
2006 10% $9,257.50
Further,the statutory weekly rates the employee is entitled to increases based on the level
of the permanent disability. To illustrate,an injury in 2002 that produces a 20%
permanent disability rating would be paid weekly for 70.50 weeks at$160 per week(the
maximum at this percentage)for a total payout of$11,280. The same rating in 2003
would be paid at$185 per week for a total payout of$13,042.50.
AB 749 also increased death benefits from$125,000 up to$320,000(in 2006),based on
the qualifying number of dependents. A new provision includes payments payable to a
physically or mentally incapacitated minor for the life of the minor. The current law
terminates death benefits when the dependent reaches the age of majority.
Moreover,due to significant questions in the interpretation of the new law, litigation will
be necessary to clarify those issues. Litigation costs will need to be considered when
evaluating costs to the County.
The County's claim severity has mirrored increases experienced by employers on a
statewide basis. Those increases were largely due to escalating medical and disability
costs. With the advent of AB 749 the County can anticipate continued cost increases that
will exert significant upward pressure on the County's workers' compensation program.
Cost increases that result from AB 749 will significantly impact departments by
increasing annual charges to cover the increased costs.
Do increased costs impact tine County's Workers'Compensation Frust Fund?
YES.
Each year an actuarial analysis is done of the workers'compensation program. The
County contracts with an actuarial firm,Millman USA. Among other factors,the actuary
analyzes the County's frequency history, severity of claims paid, and reserves set aside to
Workers'Compensation Research Institute Excerpt—California Workers'Comp Advisor—1129103
7
pay those claims. Based on available information at the time of the review,they make a
projection of what the ultimate costs will be to pay the County's claims.
Projections will typically change on a yearly basis as more information is obtained(i.e. as
costs are paid out on claims and adverse developments realized). Recommendations
regarding contribution to the funds are based on this information.
Clearly, if the funding levels are insufficient to pay future liabilities,the workers'
compensation program can be seriously compromised.
III RECOMMENDATIONS
The issues identified in this report require a comprehensive solution. The escalation of
workers' compensation costs is a complex problem that requires a coordinated injury
prevention effort combined with implementation of all available loss mitigation
strategies.The recommendations provided below were designed to maximize cost
reductions and are intended to provide the County with a comprehensive solution that
addresses all key cost factors.Implementation details and estimated net cost to the
County are identified for each recommendation in the applicable appendix section.
ons are to:
Direct the County Administrator to present during budget deliberations a plan and
budget for a comprehensive,County-wide, injury prevention and ergonomic program
to reduce the frequency of job related injuries. (See Appendix E).
2. Direct the County Administrator to develop a plan, effective 7/l/03,to assume
responsibility for directing medical care for injured employees during the first 30
days following a claimed industrial injury,pursuant to the Labor Code.
3. Direct the County Administrator to prepare a proposal for Board consideration during
budget hearings,for an occupational medical program staffed by occupational
medical professionals dedicated to the treatment of industrially injured employees.
(See Appendix D) ---
4. Direct the County Administrator to seek to reopen union contracts for the limited
purpose of amending the current salary continuation program. (See Appendix F)
5. Direct the County Administrator to seek to reopen union contracts for purposes of
amending the current 3-hour medical appointment benefit.
8
IV CONCLUSION
An indication of the vulnerability of the workers' compensation system in this state is the
fact that many insurers specializing in workers' compensation insurance have opted out
of underwriting workers' compensation insurance in California. Recently, State
Compensation Insurance Fund,the insurer of last resort in this state, announced that in
some instances they may have to stop providing new workers' compensation insurance
due to financial deterioration. Even more significant is the fact that seven insurance
carriers have become insolvent in California in the last four years.
The cost of workers' compensation, like that of several other County programs mandated
by the State,continues to grow at a rate which the County's general purpose revenues
cannot keep pace. It is imperative, in the absence of significant corrective legislation
from Sacramento,that the County take steps in cooperation with its employees to reduce
the frequency and severity of workers' compensation cases,and to dramatically slow the
growth in workers'compensation costs.
9
GLOSSARY
Temporary Disability(TD)--Temporary disability benefits are provided to injured employees
who are unable to work due to the effects of an industrial injury.TD benefits are calculated based
on 66 2/3%of the employee's average weekly wage. This amount,under AB749, is now subject
to a maximum limit of$602 per week for injuries occurring on or after 1/1/03.Prior to AB749,
the statutory maximum limit was $490 per week. Til benefits continue until an employee is
determined to have reached Permanent and Stationary Status by their treating physician.
Permanent Disability (PD)-Permanent disability benefits are provided to those employees that
are left with a permanent physical residual as a result of their industrial injury. These benefits are
determined medically and are assigned a percentage disability, which indicates the magnitude of
their disability(See Labor Code section 4658, 4660).These benefits are paid in addition to any
temporary disability benefits that might be owed.
Indemnity Claims--indemnity claims are workers' compensation claims with exposure for
temporary disability payments and/or permanent disability payments.These claims are sometimes
referred to as"lost-time"claims since temporary disability payments are made when an employee
loses time from work. Indemnity claims are much more costly than Medical-only claims and
remain open for a much longer period of time.
Medical-only Claims—As the name implies,Medical-only claims are claims that result in only
minor medical care.No disability is associated with these types of claims and the severity is
much lower as the only exposure is minimal medical treatment costs. Medical-only claims
typically are closed within a short period of time,usually 3 to 6 months.
Permanent and Stationary(P&S)--Otherwise known as "P&S",this is a legal workers'
compensation term which indicates the employee has reached a medical plateau where further
care is unlikely to significantly improve the level of disability. A medical professional,such as a
doctor or a chiropractor, determines when an injured employee has reached a level that is
permanent and stationary.The finding of P&S triggers an end to temporary disability benefits and
may result in provision of permanent disability payments and/or vocational rehabilitation
benefits.
10
Appendix A -- County Comparisons
Appendix A - County Comparisons
Contra Costa Risk Management commissioned a comparison study to assess how its
workers' compensation program compared with other similarly sized counties. This study
focused on evaluating similarities and differences between County policies and workers'
compensation exposures and costs. Counties selected for this comparison were chosen
based on size(employee population), geography(Northern California), and exposure
(annual claim frequency).
The selected Counties are: Alameda County, Santa Clara County, Sacramento County,
San Mateo and San Joaquin County.
The table below summarizes basic statistical information from each county for FY01-02.
Open
Employees Wages Reported Indemnity
Corm All Paid WC Claims Claims
Alameda 10,050 $ 553,991,041 1,153 1,053
Contra Costa 9,716 $638,657,179 1,175 1,671
Sacramento 15,104 $619,183,511 1,745 2,305
San'Jo in 7,183 $310,000,000 901 633
San Mateo 5,445 $254,557,782 684 807
Santa Clara 17,166 $964,920,962 1,751 1,511
Each county contacted provided information on selected program elements. These
elements are key in that they influence workers' compensation costs either directly or
indirectly. Each of the selected counties were asked questions pertaining to.
Modified duty implementation,
Use of initial 30 day medical control, and
♦ Salary continuation benefits.
Here are the responses from each County:
Alameda County
♦ Alameda County has a voluntary modified duty program. Departments are
encouraged to provide temporary modified duty work when ever possible.
r The County exercises its right to direct employees to County approved medical
providers during the initial 30 days, unless the employee has properly pre-designated
a physician.
♦ The County provides a salary continuation program up to 80%of the employees
salary. This benefit is provided for up to 365 cumulative days. Taxes are withheld
from the salary continuation benefit portion.
Appendix A—Courdy Comparisons 1
Contra Costa.County
♦ Contra Costa County has a voluntary modified duty program. Departments are
encouraged to provide temporary modified duty work whenever possible.
The County does not exercise its right to direct employees to County approved
medical providers during the initial 30 days.
♦ The County provides a salary continuation program up to 86%of the employee's
salary. This benefit is provided for up to 365 cumulative days. Taxes are not withheld
from the salary continuation benefit portion.
Sacramento County
t Sacramento County has a voluntary modified duty program. Departments are
encouraged to provide temporary modified duty work whenever possible.
* The County exercises its right to direct employees to County approved medical
providers during the initial 30 days,unless the employee has properly pre-designated
a physician.
Sacramento County does not provide a salary continuation program. Injured
employees are able to use their sick leave or other leave balances only to supplement
their workers' compensation disability benefit.
San Joaquin Coup
♦ San Joaquin County has a voluntary modified duty program. Departments are
encouraged to provide temporary modified duty work whenever possible.
♦ The County exercises its right to direct employees to County approved medical
providers during the initial 30 days,unless the employee has properly pre-designated
a physician.
♦ San Joaquin County does not provide a salary continuation progra n-L Injured
employees are able to use their sick leave or other leave balances only to supplement
their workers' compensation disability benefit.
San Mateo County
♦ San Mateo County has a voluntary modified duty program. Departments are
encouraged to provide temporary modified duty work whenever possible.
The County exercises its right to direct employees to County approved medical
providers during the initial 30 days,unless the employee has properly pre-designated
a physician.
r San Mateo County provides 90 days of salary continuation. Injured employees are
provided 100%of their salary for 90 calendar days. After that they may use their sick
leave or other leave balances only to supplement their workers' compensation
disability benefit.
Appendix A—County Comparisons 2
Santa Clara County
♦ Santa Clara County has a voluntary modified duty program. Departments are
encouraged to provide temporary modified duty work whenever possible.
r The County exercises its right to direct employees to County approved medical
providers during the initial 30 days, unless the employee has properly pre-designated
a physician.
♦ Santa Clara County does not provide a salary continuation program Injured
employees are able to use their sick leave or other leave balances only to supplement
their workers' compensation disability benefit.
In addition to program policy differences, loss data was analyzed to determine what
impact, if any, these policies might have on workers' compensation costs. The data used
in this comparison was secured from the FY01-02 Self-Insurers Annual Report submitted
by each County to the State Department of Insurance, Self-Insurance Plans. The
following table provides statistical comparisons of key program ratios. The individual
measurements in the table below are explained in more detail in the following notes.
Rankings in the table below are color coded as follows: Highest, Second,Third.
A. B. C. D. E. F.
All data is
from FY01-02 WC Claims WC Paid in Avg. Avg. Medical Open Lost time Salary
Filed per FY01-02 Indemnity Paid per cases as a Continuation
100 per Paid per Reported Claim percent of Percentage
Employees Employee Reported In FY01-02 Annual Claims and duration
County Claim in Reported
FYOI-02
Alameda 11.5 $ 1,542 $ 8,415 5,025 91% 80%to 365
days
Contra Crista 12.1 S 1.463 $ 6.130 $ 5,664 142% 86%to 365
days
Sacramento 11.6 $ 1,029 $4,417 $4,487 132'% 0%
San Joa uin 12.9 $ 1,010 $4,133 $3,705 70% 0%
San Mateo 12.6 $1,140 $4,748 $4,329 118% 100%to 90
days
Santa.Clara 10.2 $890 $4,467 $4,263 1 86% 0%
County
Average 11.8 $1,179 S5,435 $4,579____ 107%
If Contra Costa County's average indemnity and average medical paid were reduced to
the County Average shown in the table above,Contra Costa County would have paid
$2,444,000 less in workers' compensation benefits in FY01-02.
A. The number of workers' compensation claims filed per 100 employees is one
measure of injury frequency. This measure looks at the relative frequency of injuries
for a given employee population. The higher the number,the more frequently injuries
Appendix A—County Comparisons 3
Appendix B — Centra Costa County Program Cost Driver Analysis
The fallowing analysis of Contra Costa County's workers' compensation trends is
targeted at identifying the primary program cost drivers. In conducting this analysis, data
from the County's workers' compensation claims system was obtained dating,back four
years to FY99-00.
General Trends
Over the last three years,the number of workers' compensation claims reported annually
have remained essentially unchanged Claim Frequency by Fiscal year
until FY02-03. The Claim Frequency
by Fiscal Year chart shows that annual 'a1D
claims reported have hovered around 14M
1,345 claims during the last three fiscal0°
years(FY99-00 to FY01-02). The table °°°
below shows the total number of claims awD
reported for each fiscal year.FY02-03 ego
figures are at the end of 6 months. 4M
FY02-03 frequency is approximately pro
16%higher than prior years at the 6 i
month mark. 1Nb ?Wks 3W 4kb SW 6N4s 7Wb 8W 9W 1JNb 11Nb VW
Fiscal Year Number of Claims
FY99-00 1,331
FYOO-01 1,359 Total WC Payments
FY01-02 1,349 2°
FY02-03* 680
Although claim frequency has been ,s
stable, workers' compensation costs
have risen steadily over the last several 1 tit
years. Annual workers' compensation M
benefit payments have grown from
$13.1 million in FY99-00 to $18.2 s
million in FY0 1-02,an increase of
39%. For the first 6 months of FY02-
03, $9.9 million has already been paid. FM-00 FYOO-01 FY01-02 FY02.03•
*It is projected that this figure will
reach$19.8 million by the end of the fiscal year.
Medical Costs
Medical is the single largest component of the County's workers' compensation costs
comprising 43%of total benefits paid in FY01-02. Medical costs grew significantly
(56%)from FY99-00 to FY01-02.
Appendix B-Program Cast Drivers 1
While medical costs have risen statewide(inflation),the growth here is likely due more
to over utilization of medical services(possible over treatment)than medical cost
inflation. This is evident in the Average Medical Paid chart below.
The average Medical Paid/Claim chart shows the increase in medical costs over the last
several years. The most significant increase occurred in FY01-02, but growth is evident
in the prior year as well. Payment analysis reveals three medical categories that exceed
$1,000,000 annually in payments: chiropractic care, hospital charges and payments to
physicians.
Chiropractors and physicians Avg.Medical PaIdClatm
directly influence claim costs
because their recommendations
and opinions impact current and
future medical costs and the $' 5°
extent/duration of disability. The
Labor Code provides employers '
with the right to direct i
employees to an employer
selected medical provider for y
00
treatment the first 30 days
following an injury. This enables ,
the employer to determine
causation, define the scope of the s
injury and secure a diagnosis and f f I :E i _ f
a treatment plan and prognosis. P
The County currently does not ��` "FY` °# a cn c
utilize this option.
Savings in medical costs can be achieved through two methods; 1) implement employer
control of treatment during the first 30 days, 2)utilize medical providers with
occupational medical expertise to address causation, disability duration and treatment.
Temporary Disability Casts
Temporary disability costs account for 21%of total workers' compensation benefits paid
in 1~Y01-02. Employees who are disabled as a result of their injury are entitled to
temporary disability benefits. These benefits are mandated by the State of California and
are based on the employee's average weekly earnings. Prior to 1/1/03,the maximum
temporary disability rate had been capped at $490 per week,effective 1/1/03,AB749
increased the maximum weekly amount by 22.6%to$602 per week. The objective of the
relatively low temporary disability rate is to motivate injured employees to recover and
return to work as soon as practical as there is no financial incentive to remain disabled.
However, Contra Costa County provides its employees with salary continuation benefits
that make up the difference between the temporary disability rate and 86%of the
employee's normal wages(safety personnel are entitled to 100%pursuant to Labor Code
Appendix B-Program Cost Drivers 2
are occurring. In this measure of frequency, Contra Costa ranks third highest with an
injury frequency of 12.1 injuries per 100 employees.
B. This measurement looks at the amount of workers' compensation payments made
during the fiscal year per employee. It provides a measure of the,annual cost of
workers' compensation benefits relative to employee population, one measure of
severity. Higher amounts indicate greater workers' compensation benefit
expenditures per employee. Contra Costa ranks second in this measurement.
C. The average indemnity paid per claim measures the total cost of disability associated
with workers' compensation claims in FY01-02. This measurement is affected by the
duration of disability and any resultant permanent impairment. Higher figures
indicate greater disability duration and/or elevated levels of permanent impairment.
This figure reflects only the amount paid during FY01-02. Contra Costa ranks second
highest in this category.
D. The average medical paid per claim measures the cost of medical associated with
workers' compensation claims during FY01-02. This measurement reflects the total
cost of medical benefits relative to the number of claims reported during the fiscal
year. Higher payments indicate greater utilization of medical benefits. Contra Costa
County ranks highest of the 6 counties.
E. Open lost time claims as a percentage of annual claim reported measures the
magnitude of existing lost time claims relative to annual claim frequency. The highest
cost workers' compensation claims involve lost time. This measurement vermes that
higher number of lost-time claims results in higher overall workers' compensation
costs. Contra Costa County ranks highest in this measurement.
F. Salary continuation benefits are provided by three counties. Contra Costa provides
the highest benefit amount,making up 86'/0 of the employee salary for up to 365
aggregate days of disability. Contra Costa does not withhold taxes from salary
continuation benefits. Alameda also provides salary continuation benefits but only up
to 800x'0 of the employee's salary. Alameda withholds taxes from these benefits. San
Mateo also provides salary continuation benefits of 100%of the employee's salary
but for 90 days only.
Conclusion
All surveyed counties have implemented temporary modified duty programs to reduce
the duration of work-related disability and all but Contra Costa exercise initial 30-day
medical control. Three counties(Alameda, Contra Costa, San Mateo)provide a salary
continuation benefit in addition to the State mandated temporary disability benefit. Only
Alameda and Contra Costa have salary continuation benefits for up to 365 days. Contra
Costa's salary continuation benefit is higher than Alameda's and is not subject to income
tax withholdings, unlike Alameda.
Appendix A—County Comparisons 4
Of the two Counties(Alameda and Contra Costa)that provide a significant salary
continuation benefit, both exhibit the two highest average indemnity and medical
payments in the study(rank first and second) and have the two highest rankings for
workers' compensation benefits paid per employee. Contra Costa does not withhold taxes
from its salary continuation benefit whereas Alameda does.
Contra Costa is the only county that ranks in the top three in every measured category.
These statistics would suggest that Contra Costa's workers' compensation program is
relatively more costly than the other Counties in this comparison.
♦ Contra Costa ranks first in three categories; Average Medical Paid per Reported
Claim, Open Lost Time Claims as a Percent of Claims Reported,and Salary
Continuation.
r Contra Costa ranks second in 2 program measurements; Average Indemnity Paid per
Reported Claim and WC Paid per Employee in FY0102.
* Contra Costa ranked third in Injuries per 100 employees.
Appendix A—County Comparisons 5
Appendix B — Contra Costa County Program Cost giver Analysis
12
4850) for up to 365 days. At the County's current salary continuation rate of 86%,injured
employees are financially better off being disabled under workers' compensation than
working(see Appendix Q. Employees(in tax bracket of 15%or higher)actually take
home more money on disability than while working since workers' compensation
benefits and the County salary continuation benefit are not taxed.
The County can potentially reduce temporary disability costs by revising its salary
continuation level below 86%and/or reduce the duration that salary continuation is
provided. Any changes in this area will take up to a year before savings will be realized
as existing cases will likely continue under the existing 365 day entitlement
Total Potential Fiscal Impact
Workers' compensation benefit payments have increased steadily over the last several
years. From FY99-00 to FYOO-41 benefit payment increased more than 13%. From
FYOO-01 to FYO1-02 benefit payment increase another 22.6%. in total, benefits paid
exceeded 18M in FYOI-02(not including salary continuation). With the benefit
increases that go into effect 1/1/43,total WC benefits are expected to increase in FY02-
03.'Given this situation it is unlikely that benefit payments will fill below current levels.
Efforts must be directed at reducing the rate of growth.
The table below provides a summary of the actual amounts paid by benefit category
(Medical and Temporary Disability) in FYOO-01 and FY41-02. FY02-03 figures are
projected based on the growth rates seen in FYO1-02. The projected temporary disability
casts for FY02-03 also include the 22.61/16 rate increase effective 1/1/03. Permanent
disability, vocational rehabilitation benefits and allocated expenses add another$6.5M
annually to workers' compensation costs.
CaMetory FY00-01 FY01-02 FY02-03 Proiected
Medical $ 6,216,530 $7,802,942 $ 9,792,692
Teat Disability $ 3,238,894 $ 3,750,971 $4,778,737
Sub-Total $9t455141 $ 11,553913 $ 14571429
Permanent Disability,
Vocational
Rehabilitation, $ 5,305,956 $ 6,543,410 $ 6,785,145
E uses
Grand Total $ 14,761,375 $ 18,497,324 $ 19,779,242
Based on the table above, a reduction in the rate of growth of these benefits would
potentially yield significant savings. IfFY02-03 benefit payments grow at the same pace
as FYO1-02,the County can expect to pay$14.57M in medical and temporary disability
benefits alone. A 10%reduction in total benefits costs for FY02-03 would yield savings
of approximately$1.46M. A 15%reduction would yield savings of$2.19M in these two
categories alone.
Appendix B-Progr=Cost Drivers 3
Appendix C -- Salary Continuation Policy Analysis
13
Appendix C - Salary Continuation Policy Analysis
This analysis looks at the difference in take home earnings for employees who are working vs.
those who are off work collecting temporary disability and salary continuation. Under State
workers' compensation laws, employees who are disabled as a result of an industrial injury are
entitled to temporary disability benefits(66 2/3%of their weekly earnings).The current maximum
weekly temporary disability payment is $602.The County's salary continuation program provides
additional non-taxed payments to these employees up to 86%of their normal salary. The
County's benefit is cumulative up to a total of 365 days.
The conclusion is that the County's salary continuation program inadvertently provides some
employees who are off work due to an industrial injury with higher take home earnings than when
they are working. County employees collecting salary continuation benefits take home
approximately 6 to 12%more money than when working their normal duties depending on their
tax bracket.The example below assumes an effective tax rate of 20%(combined federal and
state).Essentially,employees with an effective tax rate greater than 14%will take home more
money while on.workers' compensation disability under the salary continuation program than if
they were working.
Employee Weekly WC Weekly Weekly Weekly Take Weekly Annualized
Weekly Disability Earnings under Take home home Ditferen a per
Earnings Payment 86% Salary earnings earnings on in Eamings Salary cont.
per State labor Cont. Program after WC While on WC Plan
Code taxes 20%
$500 $333 $430 $400 $430 +$30 +$1,560
$750 $500 WS $600 $645 +$45 +$2,340
$1,000 $602 $860 $800 $860 +$60 +$3,120
$1,2',50 $602 $1,075 $1,000 $1,075 +$75 +$3,900
$1,5M $602 $1,29{1 $1,200 $1,290 -x$90 +$4,680
$1,750 $602 $1,505 $1,44X1 $1,5#75 +$105 +$5,460
Column A lists the various weekly earnings in this example.These figures represent an employee's normal
weekly earnings.
Column B is the applicable Temporary Disability payment mandated by the State for the respective Weekly
Earnings figure in column A.
Column C lists the applicable take home amount for an employee who is temporarily disabled clue to an
industrial injury under the County's salary continuation program.Amounts listed are 86%of the Weekly
Earnings figure listed in column A.
Column i1 is the take home earnings of working employees after takes.,assuming an effective total tax rate
of 20%(combined federal and state taxes).Employees in higher tax brackets will benefit more from the
salary continuation program.
Column E is the take home earnings for employees who are on WC disability and collecting salary
continuation benefits.These benefits are not taxed.
Column shows the weekly difference in take home earnings between employees who are working and
those who are on WC disability and collecting salary continuation benefits.Disabled employees take home
Appendix C—Salary Continuation Analysis l
more money than working employees under every instance in this comparison.A positive figure in this
column indicates higher take home earnings while disabled than while working full duty.
Column G is the annualized amount in Column F.
The departments,through the payroll system., fund the salary continuation cost. Total annual costs
for the salary continuation program were obtained from the Auditor-Controller for the three fiscal
years FY99-00,FYOO-0I and FYO1-02.The table below summarizes salary continuation and
workers' compensation temporary disability payments. Salary continuation costs on a per
employee basis have jumped significantly from FY00-01 to FYO1-02, by more than 30%.
Employee count figures are those reported to the State Department of Insurance, Self-Insurance
Plaits Division via the annual Self-Insurers Annual Report.
Fiscal Year Salary Temporary Total Cost #of Salary Cont.
Continuation Disability Employees cost per
Employee
FY99-00 $ 1,349,789 $ 1,064,521 $2,414,310 12,359 $109.22
FYOO-01 $ 1,110,972 $ 1,824,892 $2,935,864 11 P7 $100.93
FYOI-02 $ 1,281,140 $ 1,777,573 $3,058,713 9,716 $131.86
As can be seen, salary continuation benefits average more than$1.2 million annually. A reduction
in the duration of salary continuation benefits from the 365 aggregate days will provide the
greatest financial savings. Savings ultimately may reach$800,000 to$1,000,000 annually based
on a reduction in the duration of salary continuation benefits from 365 to 60 days.
Appendix C—Salary Continuation Analysis 2
Appendix D — Occupational Medical Services
14
Appendix b--Occupational Medical Services
California's workers' compensation system is a complex and costly no-fault system that relies
exclusively on the medical community to determine, assess and dictate disability duration and
medical treatment. As a result, it is critical to the effective management of workers' compensation
exposures for medical treatment and evaluations to take place with knowledgeable occupational
health professionals who are familiar with the concepts of occupational injury causation and
apportionment. They must be capable of distinguishing between temporary aggravations of pre-
existing conditions vs.new causal events to assist in separating out industrial events from non-
industrial conditions or disease processes.The concepts of "permanent and stationary",
"permanent disability",and"qualified injury worker"present significant financial exposures to
the County and require medical professionals familiar with these concepts.Absent these
capabilities,the County's ability to manage and contain medical costs can be significantly
hampered causing workers' compensation costs to escalate rapidly'.
The majority of employees who sustain industrial injuries currently seek medical treatment at the
County medical facility.These treatment costs are paid by the workers' compensation program Jn
the form of medical expenditures. Physicians that do not have occupational medicine expertise
staff the County medical facility.If the County medical facility is interested in establishing an
occupational medical facility with appropriately trained physicians,this would greatly assist in
containing the County's growing workers' compensation medical costs.
In the event the medical center is unable to secure occupational medical expertise, occupational
medical services are readily available in the public sector and can be employed with no net
increase in medical cost to the County.The County currently pays for medical care provided by
the County medical facility. The cost of this medical care would simply be shifted from the
County medical facility to an outside occupational medical clinic. Because all workers'
compensation related medical treatment is subject to a state mandated industrial medical fee
schedule, all charges are subject to the fee schedule reductions.
Net additional cost to the County is expected to be zero.The potential benefit is an increased
capability to contain and control workers'compensation claim costs through improved medical
and disability management capabilities,expedited resolution of permanent disability status and
vocational rehabilitation issues.
3 WCR1 Media Release 12/27102
Appendix D—Occupational Medical Services
Appendix E — Ergonomic Injury Prevention Program
is
Appendix E --Ergonomic Injury Prevention Program
Data from the Bureau of Labor and Statistics(BLS)identifies musculoskeletal disorders(MSH
more commonly referred to as RMI or repetitive stress injuries)as the leading cause of
occupational disability. BLS data shows that RMI type injuries:
➢ Account for one-third of all work-related lost-time injuries,
➢ Account for the highest duration of disability, averaging more than 19 days away from work,
73%more than the next highest injury type
➢ Carpal Tunnel injuries,the most common type of RMI averages 27 lost workdays, 35%more
than the next leading injury type.
In recognition of these injuries,Cal OSHA,the state Occupational Health and Safety
Administration implemented General Industry Safety Carder,Article 106 in July 1997.More
commonly referred to as the State Ergonomic Standard,employers in California are required to
"establish and implement a program designed to minimize RMIs".Prevention programs must
"include a work-site evaluation,control of exposures which have cause RMIs and training of
employees"exposed to RMIs in the work place. Data from the County Risk Management
department documents the financial exposure on workers'compensation RMI injuries to exceed
$5.3 million over the last 3.5 years with the number of claims categorized as RMI increasing 40%
from FY98-99 to FY00-01.
In light of the above,Contra Costa County Risk Management has expressed an interest in
implementing a comprehensive,coordinated County-wide ergonomic program to reduce the
incidence and severity of employee work-site injuries. Furthermore,the County desires a program
that would effectively comply with the State's Ergonomic Standard.The objectives and key goals
of the ergonomic program are:
➢ To identify and address ergonomic issues in the work-place so that prevention efforts can be
employed to reduce employee injuries,particularly injuries caused by repetitive motions,
➢ Provide training to department management and employees when significant RMI exposures
are identified,
➢ To facilitate required ergonomic changes to prevent or reduce disability associated with
occupational injuries,
Y To provide cost effective and timely ergonomic solutions to employees with occupational
injuries and to prevent injuries from becoming lost-time claims.
Anticipated cost to the County is expected to be approximately$110,000 annually for program
administration and$250,000 annually in ergonomic evaluations and equipment purchases.Not all
of these costs will be additional as individual County departments current expend an unknown
amount on ergonomic equipment. Data from the workers'compensation program reveals that
approximately$85,000 was spent in FY01-02 for post injury ergonomic evaluations and
equipment. We estimate net additional costs to be approximately$275,000 annually.
The County's average workers'compensation claim ultimately costs the County$15,600 per
claim.Based on this average,the ergonomic injury prevention program would break even by
preventing 17 workers' compensation injuries annually or a reduction in annual frequency by 1%.
A 5%reduction in injury frequency would translate into a savings of over$1.1 million in
workers'compensation benefit costs.
Appendix E—Ergonomic Injury Prevention Program
Appendix F Average Occupational Disability Duration
16
Appendix F —Average Occupation Disability Duration
We believe that changes to the salary continuation program may help to reduce the financial
incentives for employees to continue on disability yet ensure that injured and disabled employees
continue to receive adequate compensation during the acute stages of their recovery.
With the increase in the maximum weekly workers' compensation disability rate to$642 from
$490,more employees will receive adequate disability benefits while recuperating from their
industrial injuries.
We secured disability days data from the County's 2002 OSHA log(OSHA requires calendar
year reporting). It is clear that the vast majority of occupational injuries do not require 365 days
of disability. The OSHA log data indicates that the average duration of lost time associated with
the County's occupational injuries in 2442 is 63.83 days.
Based on this figure,if the County reduces the duration of the salary continuation benefit to the
average disability duration(i.e. 60 days),rather than an arbitrary 365 days, it would:
- help to reduce the windfall that some injured employees receive while on disability and
- reduce the financial incentive to seek extended disability times.
- at the same time, granting salary continuation for up to 60 days would provide benefits to
the majority of employees during the acute stages their recovery.
We anticipate that the County will incur no additional costs as a result of this change and will
likely see a financial savings through the reduction in disability duration and decreased salary
continuation payments.
Contra Costa County
Workers'Compensation
Report
Prepared By Rude Managosmmnt Division
Offio+of the County Administrator
Outline
1 Key Issues facing Contra Costa's workers'
compensation program
1 Contra Costa's trends
1 Comparison with other counties
1 Program Cost Drivers
1 Solutions
I Potential savings
Key Issues
I Lack of initial Medical Control and access to
occupational medical expertise
I Salary Continuation program provides
financial incentive to remain disabled
1 Escalating frequency of work related injuries
combined with increasing claim severity
1 AB749
1
Annual VIC Claim Frequency
x,3oo
1,200 t... -
e Seo
soo
300
0
1PY99-00 rYoa-e1 FYel-e2 IrY02-69
■#y.r acaaf�Proj
Annual WC Cash Flow
20
16 --,h.
14
fi
a
2 t
0
FY99.00 FY068x PYe1-02 YY02-63`
•Ftyedei
{fr Madkal Ola d mohy\Lspe
Average Medical paid
Average Medical P&W per Claim by Feral Year
S9� --
se4e
$780
5600
5500
3x04
53M
5200
5100
S0
FY"-" FY00A1 FYBS-02 FY02-03
2
Average Indemnity Paid
Avenge Indemnity Paid W lndemnRY Claim
61,00 j$1,a88$1,988Sw
$20wo "0"1 "042 "#2103
A8749
1 Effective 1/1/03
1 Increases temporary disability by 22.6%in
2003,another 20.9%in 2004
1 Increases permanent disability costs and
duration
1 Estimated to cost California employers an
additional$2.5 to$4 billion in the first year.
County Comparisons
County Claims/100 WC Paid/ Open Claims/
Employ— Employee Reported
Alameda Us $1.642 91%
Contra Coma 12.1 142%
Sacramento 11.6 51,029
&m Joaquin 12.9 51,020 70%
San Mateo 81,140 118%
Santa Clara 10.2 $890 86%
Average 11.8 5IJ79 1471%
3
County Comparisons (cno..ol
Avg.Ind Paid/ Avg,Med.Paid/ Salary Continuation
County Reported Claim Reported Claim Policy
Alameda 58,415
Contra Costa $5,664 86%up to 365 days
Sacramento $4,417 $4,487 Bone
Son Joaquin $4,133 13,705 Hone
San Mateo $4,748 $4,329 140%up to 90 days
Santa Clara $4,467 $4,263 None
Average $5,435 54,$79
Key differences
1 Contra Costa does not exercise initial 30 day
medical control
I Relatively high injury frequency
I The most generous salary continuation program of
the titres Counties that offer it
I High number ofopen claims
! Ranked in the top 3 in every measurement
Salary Continuation
Working Salary Continuation
Weekly Earnings $1,406 NIA
Workers`Comp N/A $602
(Temporary Disability)
Continuation Pay NIA $258
Tax(20°10) $(200) NIA
Take Home $800 $858
Annualized(Take Home) $41,600 $44,616
4
Salary Continuation Costa
Humber of Salary cont.
Fiscal Year Salary Cont. E1111010yeas C n t Per
Ecut SIPEmplovee
FY99-00 $1,349,789 12,359 $109.22
FYOO-01 $1,110,972 11,807 $100.93
FY01-02 $1,281,140 9,716 $131.86
Medical Coat Containment
I Initial 30 day control not utilized
I County medical facility not staffed with occupational
medical specialists
1 Treater opinion dictates treatment type and duration,
disability duration and permanency,work restrictions
I Treater opinion is presumed correct(Lc4o62.9)
Summary
1 Cost escalation in both medical and indemnity
benefits and AB749 pushing up WC costs
1 County benefits help to escalate costs in an already
costly system
I Increasing workers'compensation cash flaws
complicated by rising injury frequency
I Lack ofinitial medical control limits effectiveness of
medical cost containment efforts
J
Solutions
I Injury Prevention and Ergonomic Program to reduce
frequency of work related injuries
I Exercise initial medical control and employ
occupational medical specialist to define injury
scope,diagnosis and treatment plan
I Modify salary continuation program
Modify 3-hour medical appointment benefit
Potential savings
I Average cost per claim$15,600,reduction in
frequency of 5%produces a net savings of$1.1
million
I Potential$900,000 to$1,000,004 disability cost
savings annually from shortened salary continuation
duration
I Reduction in medical costs of 5%would result in
$394,147 in savings annually.
Croncluslon
I Reduce injury frequency to reduce future Workers'
Compensation costs and exposures
I Leverage medical controls provided by Labor Code
to contain medical costs
I Eliminate or reduce inequitable salary continuation
program compensation
I Contain rapid growth of Workers'Compensation
costs