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A proposed new law in California, Senate Bill 335, seeks to compress the time for investigating a reported occupational injury or illness from 90 days to 45 days while increasing the employer’s liability for medical treatment benefits during the investigation period from $10,000 to $17,000.

Regarding penalties,S B 335 proposes a return to pre-reform penalties that allowed non-discretionary, uncapped, and compounded penalties. Under these old rules, penalty amounts were tied to the entire amount of a particular benefit that had been paid out. In mature cases with large medical treatment and/or indemnity costs, 10 percent of the specie of benefit could reach tens of thousands of dollars for a single penalty.

The CWCI just prepared and published a comprehensive analysis of this proposed law. It concluded that it is unlikely that claims adjusters can unilaterally expedite the investigation process without unintended consequences.

Claims investigation is a complex process requiring documentation from multiple sources, few of which are within the control of the claims adjuster.

Claims adjusters can only begin an investigation upon notification of a claimed injury from an injured worker, their employer, or attorney. The number of days between the date of injury and the employer’s notification can be influenced by several factors, including the type of injury or illness, employee’s occupation, when and where the injury occurred, and whether or not there were witnesses.

One of the more significant confounding factors that can delay timely reporting is California’s relatively unique high rate of cumulative trauma claims, which are estimated to account for up to one out of every six indemnity claims..

The analysis of the data by CWCI authors shows that at 90 days following employer notification, more than 97 percent of all reported claims have a compensability decision, but at 45 days, only 85.2 percent of all claims have been accepted or rejected, a relative difference of 13 percent.

The analysis also shows that at 45 days, 63 percent of claims that are ultimately denied remain under investigation. Among the claims that are ultimately denied, 54 percent receive medical treatment within the 90-day investigation period, while 28 percent receive medical treatment within the first 45 days of the investigation.

Following the employer’s notification of an injury, the average cost of medical treatment reached $735 at 45 days and $1,372 at 90 days. In 1.4 percent of these claims the $10,000 limit is met or exceeded during the 90-day investigation period, while in 0.6 percent of the claims the $10,000 limit is met or exceeded within 45 days.

For claims that are ultimately denied, medical treatment during the 90-day investigation period averaged $734, with only 1.0 percent of the denied claims involving medical treatment costs greater than $6,500, and 0.5 percent of the denied claims reaching or exceeding the $10,000 limit.

Decreasing the investigation period to 45 days would actually reduce access to medical treatment and would likely increase the number of provisional denials.