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Workers’ compensation costs continue to rise as the City of Santa Monica spent $6.9 million on injured employees in fiscal year 2013-14. Costs grew 12 percent, or $850,000, over the previous year, according to city risk managers. According to the report in the Santa Monica Daily Press, claim frequency remains high and older city employees in physically demanding jobs are experiencing more severe injuries. These older employees are requiring costly and intensive medical treatment, like back surgeries and knee replacements. Even city officials tasked with handling these matters are having medical problems: Two employees in the Workers’ Compensation Unit were out on extended (non-industrial) medical leave.

“Relative to indemnity payments, the Workers’ Compensation Reform legislation enacted by the State in 2012 increased the permanent disability benefit payment schedule by 30 (percent) over a two year period,” city officials said. Most of the administrative costs stayed the same, with the exception of legal costs, which rose 11 percent. If the worker hires legal representation, city officials said, they are, in turn, required to hire one.

Medical costs made up $3.6 million worth of total costs. Lost wages and residual impacts from injuries comprised another $3.3 million. Of the latter category, about half, $1.6 million, covered temporary disabilities while the other half, about $1.7 million, covered permanent disabilities. There were 86 claims settled last fiscal year compared to 55 settlements in the year before. “The City is controlling what it can,” the report said. “These efforts, however, are not sufficient to offset the financial impact of the internal/external factors dogging the program. Given this, Risk Management staff expects the City’s workers’ compensation costs to continue to rise. There are no ‘magic bullets’ to reverse this trend in the short-term, and as such, the City can expect to increase its contribution to the Workers’ Compensation Self Insurance Fund during the next two-year budget cycle.”

The rising costs, city officials said, are not going to disappear. “Staff predicts this trend will continue into the next two-year budget cycle and result in higher contributions to the Workers’ Compensation Self Insurance Fund,” they said. City officials have, they said, saved some money by making some changes. They are, for instance, returning injured employees to modified positions while they recover. This program saved nearly a quarter million dollars according to the report. “The City also revamped the medical bill review process and selected a new medical bill review provider this past year,” city officials said. “The new provider enables the City to obtain better pricing on medical procedures through accessing more cost-effective insurance plans.” This move saved between $100,000 and $200,000 according to city officials.