Menu Close

Employees Can Sue for Even Technical ICRAA Disclosure Violations

WorkCompAcademy

In June 2018, Tina Parsonage applied for a sales associate position at Wal-Mart. She accepted a conditional offer of employment, subject to passing a background check. As part of the process, she electronically acknowledged a “Background Report Disclosure” and signed a “Background Report Authorization” form. The disclosure document was 14 pages long, with the California-specific section starting on page 9.

This section informed her that Wal-Mart would obtain an investigative consumer report, which could include details about her character, reputation, personal characteristics, and mode of living. However, instead of identifying a single investigative consumer reporting agency, it listed six possible agencies, along with their addresses, websites, and phone numbers. It instructed her to call Wal-Mart Global Security to determine which one was used. The document also summarized relevant provisions of the Investigative Consumer Reporting Agencies Act (ICRAA, Civ. Code § 1786 et seq.), but Parsonage later alleged it violated ICRAA by not being a standalone disclosure, failing to clearly identify the specific agency, omitting a checkbox to request a copy of the report, and lacking proper certification to the agency.

Wal-Mart obtained the report from First Advantage Background Services Corp., one of the listed agencies, and mailed Parsonage a copy with a cover letter identifying the agency. Despite the alleged violations, Parsonage passed the check and began employment on June 15, 2018. In September 2021, she filed a lawsuit against Wal-Mart in San Diego Superior Court, asserting a single cause of action for ICRAA violations.

She claimed the disclosure was not clear and conspicuous, not standalone, and otherwise noncompliant. Parsonage sought statutory damages of $10,000 per violation (or actual damages if greater), attorney fees, costs, and punitive damages. She did not initially allege specific harm but later claimed the report contained inaccuracies (e.g., misstating offenses as involving a commercial vehicle, which could imply work-related misconduct), depriving her of the chance to correct them easily and potentially risking future job denials.

Wal-Mart moved for summary judgment solely on the ground that Parsonage lacked standing under ICRAA, arguing her claims involved mere “technical violations” without any concrete injury or harm, such as an adverse employment action. The trial court agreed, granting summary judgment in Wal-Mart’s favor. It reasoned that Parsonage suffered no injury because she was hired, received the report she authorized, and faced no adverse consequences from any inaccuracies. The court dismissed her concerns about potential lost opportunities as speculative and unmaterialized, emphasizing the absence of harm to her interest in a fair and accurate report.

The Court of Appeal reversed the trial court’s judgment in the published case of Parsonage v. Wal-Mart Associates -D083831 (February 2026). It directed the trial court to vacate its order granting summary judgment to Wal-Mart, allowing Parsonage’s claim to proceed.

The appellate court held that ICRAA confers standing based solely on a violation of its requirements, without needing to show concrete injury or actual damages beyond the statutory breach. This conclusion stemmed from the statute’s plain language in Civil Code § 1786.50, which makes an employer or agency liable for failing to comply with any ICRAA provision regarding an investigative consumer report, allowing recovery of “[a]ny actual damages… or… ten thousand dollars ($10,000), whichever sum is greater.” The court interpreted this as authorizing the $10,000 sum as a remedy for the violation itself, emphasizing that California law – unlike federal Article III requirements – permits the Legislature to grant standing for statutory violations absent concrete harm, treating such breaches as invasions of legally protected interests.

The court distinguished California standing from federal “injury-in-fact” mandates, noting that ICRAA’s legislative history supports this view: enacted in 1975 to address shortcomings in the federal Fair Credit Reporting Act (FCRA) and prior state laws, ICRAA aimed to ensure stringent notice, consent, and accuracy in consumer reports for employment purposes, protecting privacy and enabling corrections. Amendments increasing the minimum recovery from $300 to $10,000 were intended to incentivize compliance and deter violations, not to compensate for proven harm. Comparisons to sister statutes like the Consumer Credit Reporting Agencies Act (CCRAA) and FCRA highlighted ICRAA’s unique structure, which omits qualifiers like “damages as a result of” and focuses on noncompliance.

The court rejected Wal-Mart’s reliance on cases like Limon v. Circle K Stores Inc 84 Cal.App.5th 671 (2022) 300 Cal.Rptr.3d 572, and Muha v. Experian Information Solutions Inc.,106 Cal.App.5th 199 (2024) 326 Cal. Rptr. 3d 622 which required injury for FCRA/ICRAA standing in state court under a “beneficial interest” test (akin to federal injury-in-fact). It found this test inapplicable beyond writ of mandate contexts and inconsistent with ICRAA’s deterrent purpose. Since Parsonage alleged violations (e.g., non-standalone disclosure obscuring the agency), she had standing; Wal-Mart’s motion addressed only standing, not merits, warranting reversal.

View More

FTC v Express Scripts Litigation Settlement Should Lower Drug Prices

WorkCompAcademy

The Federal Trade Commission secured what it claims is “a landmark settlement” with one of the nation’s largest pharmacy benefit managers (“PBMs”), Express Scripts, Inc., and its affiliated entities (collectively “ESI”). The settlement requires ESI to adopt fundamental changes to its business practices that increase transparency, are expected to drive down patients’ out-of-pocket costs for drugs like insulin by up to $7 billion over 10 years, bring millions of dollars in new revenue to community pharmacies each year, and advance key healthcare priorities.

The FTC’s settlement resolves the Commission’s lawsuit against ESI, which alleges that ESI artificially inflated the list price of insulin drugs by using anticompetitive and unfair rebating practices, and impaired patients’ access to lower list price products, ultimately shifting the cost of high insulin list prices to vulnerable patients.

https://news.workcompacademy.com/2026/Parsonage-v-Wal-Mart-Associates-D083831.PDF. The complaint alleges that this system pushed insulin manufacturers, among others, to compete for preferred formulary coverage based on the size of rebates off the list price rather than net price, which ultimately benefitted the PBMs, including ESI, which keep a portion of the inflated rebates. According to the FTC’s complaint, the inflated list prices hurt patients whose out-of-pocket payments like copays and coinsurance are tied to the list price of the drug.

ESI, under the FTC’s proposed consent order, has agreed to:

– – Stop preferring on its standard formularies high wholesale acquisition cost versions of a drug over identical low wholesale acquisition cost versions;
– – Provide a standard offering to its plan sponsors that ensures that members’ out-of-pocket expenses will be based on the drug’s net cost, rather than its artificially inflated list price;
– – Provide covered access to TrumpRx as part of its standard offering upon relevant legal and regulatory changes;
– – Provide full access to its Patient Assurance Program’s insulin benefits to all members when a plan sponsor adopts a formulary that includes an insulin product covered by the Patient Assurance Program unless the plan sponsor opts out in writing;
– – Provide a standard offering to all plan sponsors that allows the plan sponsor to transition off rebate guarantees and spread pricing;
– – Delink drug manufacturers’ compensation to ESI from list prices as part of its standard offering;
– – Increase transparency for plan sponsors, including with mandatory, drug-level reporting, providing data to permit compliance with the Transparency in Coverage regulations, and disclosing payments to brokers representing plan sponsors;
– – Transition its standard offering to retail community pharmacies to a more transparent and fairer model based on the actual acquisition cost for a drug product plus a dispensing fee and additional compensation for non-dispensing services;
– – Promote the standard offerings to plan sponsors and retail community pharmacies; and
– – Reshore its group purchasing organization Ascent from Switzerland to the United States, which will bring back to the United States more than $750 billion in purchasing activity over the duration of the order.

The Commission vote to accept the consent agreement for public comment was 1-0, with Commissioner Meador recused.

The public will have 30 days to submit comments on the proposed consent agreement package. Instructions for filing comments appear on the docket. Once processed, they will be posted on Regulations.gov.

View More

Entities Related to Convicted Felon Dr. Grusd in 8th Year of Lien Litigation

WorkCompAcademy

Beverly Hills Radiologist Ronald Grusd and two of his corporations, California Imaging Network Medical Group and Willows Consulting Company, were sentenced in federal court in June 2018 after a jury trial in December resulted in convictions on 39 felony fraud counts. He was sentenced to 10 years in custody and a fine of $250,000. His companies, California Imaging Network and Willows Consulting Company, were each required to pay a $500,000 fine, and an additional $15,600 in special assessments.

According to evidence presented at trial, Grusd and his companies paid kickbacks for patient referrals from multiple clinics in San Diego and Imperial counties in order to fraudulently bill insurance companies over $22 million for medical services. Grusd negotiated with various individuals, including a primary treating physician, the payment of kickbacks for the referral of workers’ compensation patients for various medical services, including MRIs, ultrasounds, Shockwave treatments, toxicology testing and prescription pain medications.

Gonzalo Ernesto Paredes was the office administrator for an entity called Advanced Radiology, owned by Ronald Grusd. A jury in a state court trial found Paredes guilty of 35 counts of offering or delivering compensation for workers’ compensation patient referrals and 16 counts of concealing an event affecting an insurance claim. The Court of Appeal affirmed the conviction in the unpublished case of People v. Gonzalo Ernesto Paredes.  

Now, approximately 8 years later, a long list of lien claimants related to Grusd continue a long procedural history of litigation starting in 2016 involving the consolidation of the liens for purposes of discovery based on evidence produced indicating a likelihood of fraudulent activity including unlawful referral for kickbacks.

In the WCAB case of Julieta Jiminez v Don Miguel Foods – case SAU135220 pending in the Van Nuys District Office – Lien claimants Ronald S. Grusd, M.D., Inc.; California Imaging Network Medical Group, Inc.; The Oaks Diagnostics, Inc., Dba Advanced Radiology Of Beverly Hills; Beverly Hills Magnetic Imaging Medical Associates, Inc., Allied Imaging Of California, Inc., California Sleep Apnea Centers, Inc., Peace Of Mind Scans, Inc., Pacific Radiology Network, Inc., California Radiology Institute, Inc., California Radiology Network, Inc., Pacific Radiology Group Of California, Inc., Capital Health Centers, Inc., are listed as “Real Parties in Interest/Lien Claimants” in the case who are seeking recovery on bills and liens filed in the consolidated cases associated in some way with Dr. Grusd.

The WCAB just granted an Opinion and Order Granting Petition for Removal and Decision After Removal in this case. The real parties in interest and lien claimants in this consolidated matter seek removal of the Order Compelling Attendance at Deposition and Production of Documents of Centro Legal Internacional, Inc. issued on February 3, 2025 by a workers’ compensation administrative law judge (WCJ). The Order compelled the person most knowledgeable/qualified (PMK) of Centro Legal Internacional, Inc., as to various categories of inquiry identified in the subpoena issued by the carriers in these consolidated proceedings, and to produce the documents requested to be produced in that subpoena.

Lien claimants contend in their Petition that lien claimant Ronald S. Grusd, M.D. was not convicted for any conduct related or involving Centro; Centro is not referenced in the indictment, superseding indictment, trial, conviction, or sentencing of Dr. Grusd; and, there was no evidence introduced or produced during any of the criminal proceedings against Dr. Grusd suggesting that Dr. Grusd had any involvement with Centro. Therefore, the Order attempts to compel information and documents unrelated to the conviction against him and/or the Labor Code section 139.21 suspension of Dr. Grusd and is therefore an unwarranted and prejudicial deviation from relevant issues.

The question in these special lien proceedings is whether any of the lien claimants identified above have rebutted the presumption in section 139.21, subdivision (g), by a preponderance of the evidence. If so, the WCJ then has the option pursuant to subdivision (i) to fully adjudicate those liens not subject to the presumption, or to return them to the district office having venue over the case.

The WCAB panel noted that “the WCJ did not issue an opinion on decision with the Order, and after review of the record of these special lien proceedings, we find no orders, findings of fact, pleadings, and/or other documentary or testimonial evidence as to any of the preliminary factual questions required by section 139.21, subdivisions (e) through (j) (see section II, supra), and therefore cannot conduct a meaningful review of the Order or lien claimants’ allegations.”

“As one very significant example, we do not find the suspension order(s) in the record, or any related documents regarding the underlying criminal conviction(s) admitted into evidence. In other words, the record here is inadequate for a full or meaningful review of the discovery ordered in relation to the scope of section 139.21 special lien proceedings…”

“Unfortunately, the WCJ’s Report in this matter does not cure the failure to issue an opinion on decision. The WCJ explains why the deposition and document production as to Centro is being compelled but failed to include ‘a summary of the [substantial] evidence received and relied upon and the reasons or grounds upon which the determination was made.’ “

For these reasons the Order Compelling Attendance at Deposition and Production of Documents of Centro Legal Internacional, Inc. issued on February 3, 2025 was rescinded, and this consolidated matter was returned to the to the trial level for further proceedings consistent with this decision.

View More

2026 Young Worker Leadership Academy Set For February 12-14

WorkCompAcademy

The Commission on Health and Safety and Workers’ Compensation (CHSWC) announced the annual California Young Worker Leadership Academy will be held at University of California, Los Angeles (UCLA), February 12 through 14, 2026.

The Young Worker Leadership Academy (YWLA) is an all-expense paid three-day event that provides high school students with hands-on leadership training experience that focuses on workplace safety, rights, and responsibilities. The YWLA goals are to:

– – Teach youth about workplace health and safety.
– – Provide participating youth opportunities to develop specific action plans to promote young workers’ health and safety in their communities, especially during Safe Jobs for Youth Month in May each year.
– – Encourage alumni and youth mentors to participate in future academies and develop a statewide network of young health and safety promoters.
– – Help youth promote both workplace health and safety and injury prevention.

The 2026 academy will include interactive workshops where participants will get to know each other, learn about workplace health and safety, and learn how to make positive changes in their communities.

The Young Worker Leadership Academy is jointly developed by the University of California, Berkeley’s Labor Occupational Health Program (LOHP) and the University of California, Los Angeles’ Labor Occupational Safety and Health (LOSH) program.

The academy is part of the statewide Worker Occupational Safety and Health Training and Education Program (WOSHTEP), administered by CHSWC in the Department of Industrial Relations. This is the 22nd consecutive year the academy has hosted young workers in this leadership activity.

The 2026 academy received additional sponsorship from the James Irvine Foundation, State Fund, UCLA LOSH, and UC Berkeley LOHP.

CHSWC is charged with examining California’s health and safety and workers’ compensation systems and recommending administrative or legislative modifications to improve their operation. The commission was established to conduct a continuing examination of the workers’ compensation system and of the state’s activities to prevent industrial injuries and occupational illnesses and to examine those programs in other states.

View More

February 2, 2026 – News Podcast

WorkCompAcademy

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Lien Consolidation Orders Require Reasons & Summary of Evidence. Fed Court Uses Rule 23(d) to Limit Arbitration Opt Out Abuse. Current Status of Non-Compete Clauses in Employment Contracts. New QME Process Regulation Section 55.1 in Effect on April 1. The DWC Proposes New Regulation Restricting Depo Fees. Study Shows California’s Heat Standard and Reduction in Deaths. BLS Reports Employer-Reported Workplace Injuries Down 3.1%. Gallup Poll of 22K Workers Shows Increases in AI Use.

View More

Illegible Fine Print May Not Invalidate Arbitration Agreement

WorkCompAcademy

Evangelina Yanez Fuentes applied for a job at Empire Nissan and was given an employment application packet, which included a document titled “Applicant Statement and Agreement.” This document contained an arbitration provision requiring arbitration of all disputes arising from her employment. The agreement was printed in a very small, blurry font that was nearly illegible, consisting of a dense, lengthy paragraph filled with complex sentences, legal jargon, and statutory references.

Fuentes was given only five minutes to review the entire packet, was told to hurry because the drug testing facility was closing, and was informed that the documents related to her application, references, and drug testing. She was not told about the arbitration clause, given a chance to ask questions, or provided a copy after signing. The agreement also stated that any modifications must be in writing and signed by the company’s president.

Later, while employed, Fuentes signed two nearly identical confidentiality agreements at Empire Nissan’s request. These prohibited her from usurping business opportunities or disclosing confidential information and trade secrets. They allowed Empire Nissan to seek injunctions, legal remedies, and attorney fees in the event of a breach, and stated that they superseded all prior agreements on those topics. The copies in the record lacked the president’s signature.

After working for about two and a half years, Fuentes took medical leave for cancer treatment. A year later, she requested a brief extension, but Empire Nissan terminated her employment. Fuentes then filed a lawsuit alleging wrongful discharge and related claims. Empire Nissan moved to compel arbitration based on the agreement in the application packet.

The trial court denied Empire Nissan’s motion to compel arbitration. It found a high degree of procedural unconscionability due to the agreement’s illegible format, complex language, and the rushed circumstances under which Fuentes signed it without a meaningful opportunity to review or negotiate.

For substantive unconscionability, the court found a low to moderate degree, citing the “fine-print terms” as indicative of unfairness (relying on precedents like OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111,128 and  Davis v. TWC Dealer Group, Inc.(2019) 41 Cal.App.5th 662,674) and interpreting the confidentiality agreements as carving out claims (like unfair competition or trade secret violations) that only Empire Nissan would bring, exempting them from arbitration. The court did not address Fuentes’s separate argument that no valid agreement existed due to the illegible format and presentation precluding her assent.

The Court of Appeal reversed the trial court’s denial and directed it to grant the motion to compel arbitration. The Supreme Court of California, in turn, reversed the Court of Appeal’s judgment and remanded the case to the trial court for further proceedings in the case of Fuentes v. Empire Nissan -S280256 (February 2026)

The Court of Appeal held that illegibility and small print were relevant only to procedural unconscionability, not substantive, disagreeing with Davis and criticizing its interpretation of “fine-print terms” in Kho as referring to font size rather than hidden unfair terms. Relying on a strong policy favoring arbitration, it interpreted the confidentiality agreements as requiring arbitration of all claims, including those under them, because any modification to the arbitration agreement needed the president’s signature, which was absent. Thus, it found no substantive unconscionability and declined to address procedural unconscionability.

The Supreme Court disagreed, clarifying that a contract’s format (like small, illegible print) is generally irrelevant to substantive unconscionability, which focuses on the fairness of terms, but high procedural unconscionability (present here due to oppression from the rushed process and surprise from the illegible, jargon-filled text) requires close scrutiny of terms for one-sidedness.
It found ambiguity in whether the confidentiality agreements superseded the arbitration mandate for employer-favored claims, rejecting the Court of Appeal’s pro-arbitration presumption as violating equal treatment of contracts.

The Supreme Court noted an unresolved factual question about whether the president signed the confidentiality agreements, lacking a record because Empire Nissan never raised it below. It also held the Court of Appeal erred by directing arbitration without allowing the trial court to consider Fuentes’s unaddressed argument that no valid contract formed due to precluded assent.

The case was remanded for the trial court to resolve these issues, potentially with further evidence and briefing, emphasizing that even low substantive unconscionability could render the agreement unenforceable given the high procedural element. Chief Justice Guerrero dissented, arguing the agreements required arbitration and that remand was unjustified without party briefing on certain issues.

View More

DOI Proposes California FAIR Plan Legislation

WorkCompAcademy

The California Insurance Commissioner and Assembly Insurance Committee Chair Lisa Calderon announced new legislation to overhaul the FAIR Plan, strengthening claims handling, expanding coverage options, and improving transparency for wildfire survivors. The Make It FAIR Act enacts key reforms identified in the California Department of Insurance’s recent Report of Examination, which found the FAIR Plan had failed to comply with 17 critical recommendations related to financial condition, corporate governance, and consumer protections.

The Department’s Report of Examination – the most comprehensive review of the FAIR Plan in decades – revealed systemic problems that have left wildfire survivors struggling with delays, denials, and inconsistent claims decisions, particularly after the 2025 Los Angeles wildfires, the largest urban wildfire disaster in state history.

The Make It FAIR Act would improve coverage and claims handling by the insurance company-run FAIR Plan. The legislation would enact reforms outlined in a comprehensive Report of Examination completed last month by the Department. The comprehensive examination evaluated the FAIR Plan’s financial conditions, corporate governance, and controls to protect policyholders across 32 areas – finding that in more than half of them, the FAIR Plan had not started or fully implemented the Department’s recommendations. The legislation would require the FAIR Plan to make significant operational and governance changes to meet Californians’ needs, while market improvements take hold, such as:

– – Implementing a more comprehensive homeowners coverage option like other insurance companies. Current FAIR Plan residential policyholders must buy a separate insurance policy — at an additional cost — to have coverage for water damage, liability if someone is injured on their property, and other standard coverages. This is unacceptable, and the FAIR Plan has been fighting Commissioner Lara in court to prevent this change since 2019.
– – Hiring more staff to manage its increasing operational needs and workload as well as expeditiously address consumer claims and complaints.
– – Expediting policyholders in returning to the regular market by improving clearinghouse programs created by the State Legislature. The Department found only some insurance companies participate in the program, undermining the Legislature’s intent in creating the programs.
– – Adopting a three-to-five-year strategic plan, like other insurance companies, to anticipate changes in the market, improve policy handling, and assist people in leaving the FAIR Plan under Commissioner Lara’s Sustainable Insurance Strategy.
– – Improving transparency by providing public access to meetings and documents of the FAIR Plan’s Governing Committee and Subcommittees, including mandating the creation of an Annual Report discussing the year in review, governance updates, premium rate information, catastrophe response plans, strategic plans, and initiatives to enhance and improve policyholder service and related metrics.
– – Prioritizing policyholders’ resilience from climate change by adopting a formal climate risk assessment, while reporting climate-related financial risks in line with how more than 85% of the national insurance markets report risks based on the standards established through the National Association of Insurance Commissioners.
– – Creating a formal capital and liquidity management plan like other insurance companies to protect from unexpected events such as major wildfires or storms.

The Make It FAIR Act builds on reforms the Insurance Commissioner advanced after the Los Angeles wildfires, including new wildfire safety grants, expanded insurance discounts, faster claim payouts for survivors, extended non-renewal protections for businesses, stronger FAIR Plan financial safeguards, and modernized insurance laws to increase transparency and accountability.

View More

P/C Market to Have Lowest Net Combined Ratio in Decade

WorkCompAcademy

The U.S. property/casualty (P/C) insurance industry exhibited resilience in 2025 and is forecast to have its lowest Net Combined Ratio (NCR) in over a decade. This comes despite the Los Angeles wildfires in January 2025, ongoing tariffs, and other geopolitical risks entering the fray. These findings are detailed in P/C Economics and Underwriting Projections: A Forward View from the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner.

“Overall, the P/C insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty. In particular, P/C replacement costs could still see significant increases in 2026, weighing on overall P/C performance.”  Léonard added that a rise in the unemployment rate toward the critical 5.0% level over the next six months could trigger an economic contraction or even a recession.

Key Highlights:

– – The collection of economic data was impacted by the U.S. government shutdown in Q4 2025, leading to data delays and gaps. Available economic data points to P/C underlying growth slowing, particularly for premium volume. Additionally, political and geopolitical risks are increasing.
– – P/C Aggregate Net Premium Growth across all P/C lines for 2025 is expected to be 5.9%, further slowing relative to 2024’s growth rate.
– – Homeowners’ 2025 Net Combined Ratio is forecast at 99.6 points, on par with 2024 despite losses from the Los Angeles fires in Q1 2025
– – Personal Auto’s 2025 Net Combined Ratio is forecast at 94.4 points, an improvement from 2024, while Net Written Premium Growth is expected to have slowed to 3.6%, the lowest level since 2020.
– – General Liability and Commercial Auto are the only major lines forecast to remain above a  Net Combined Ratio of 100 points, though gradual improvements are expected for both lines in 2026–2027.
– – Workers’ Compensation continues to perform strongly, with Net Combined Ratios forecast to range from high 80s to low 90s in 2025-2027.

“We’re on track to achieve the lowest Net Combined Ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. “Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry.”

Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, added, “General Liability faces continued challenges. Our 2025 Net Combined Ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years,” he said. “While conditions may improve in 2026-2027, profitability remains a hurdle. Our General Liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment. While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends.  We anticipate additional premium growth will be needed to improve General Liability profitability.”

Workers Compensation is expected to continue delivering favorable underwriting results through 2025, supported by stable Net Written Premium trends, disciplined risk management, and favorable prior accident year development. “NCCI’s latest loss ratio trends continue to show declines,” said Donna Glenn, NCCI chief actuary. “In the current environment, modest year-to-year decreases are still expected.” Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.”

View More

New Section 111 Reporting Audit Process Begins in 2026

WorkCompAcademy

CMS Section 111 refers to the Medicare Secondary Payer (MSP) mandatory reporting requirements under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). It obligates Responsible Reporting Entities (RREs) – such as liability insurers, no-fault insurers, workers’ compensation plans, and self-insured entities – to report information about Medicare beneficiaries who have primary coverage or receive settlements, judgments, awards, or other payments (including Total Payment Obligation to the Claimant or TPOC, and Ongoing Responsibility for Medicals or ORM). The goal is to ensure Medicare acts as a secondary payer where appropriate and to facilitate recovery of conditional payments.

This year, audits become part of CMS’s enforcement mechanism for Section 111 compliance, specifically targeting Non-Group Health Plans (NGHP) like workers’ compensation, liability, and no-fault insurance. These audits focus on verifying timely reporting of MSP occurrences. According to official CMS guidance, audits commenced in January 2026 and are conducted quarterly thereafter.

New Audit Process

– – Selection: CMS randomly selects 250 new MSP records per quarter from all accepted Section 111 submissions during the review period, plus records from non-Section 111 sources (e.g., self-reports from beneficiaries or providers). The sample is proportionate to the volume of Group Health Plan (GHP) and NGHP records.
– – Focus Areas: Audits check for timeliness, requiring reports within 365 days of key dates like the settlement date, funding delayed beyond TPOC date, or assumption of ORM. Non-Section 111 records are also reviewed if no matching Section 111 report exists within that window.
– – Compliance Review: RREs are notified only if potential non-compliance is identified. They can provide mitigating evidence (e.g., documentation of good-faith efforts). If non-compliance is confirmed, CMS issues an Informal Notice, followed by a Notice of Proposed Determination (with 60 days to request a hearing), and potentially a Final Determination.
– – Timeline Notes: The compliance “clock” started on October 11, 2024, for reportable events on or after that date. Enforcement via Civil Money Penalties (CMPs) applies prospectively from October 11, 2025. First notices of potential CMPs may issue as early as March 2026.

Informal Notice- Intention to Impose a Civil Money Penalty

– – First letter (Notice) issued when a noncompliant record was identified on CMS’ quarterly audit.
– – A CMP is not being assessed at this point, rather, the RRE’s noncompliant record is identified along with the associated information so that an RRE may investigate the record.
– – The process to submit mitigating information, in an attempt to explain or defend technical or administrative issues resulting in the noncompliance is outlined in this letter. Mitigating evidence must be submitted to CMS within 30 days of receipt of the Informal Notice. This is the opportunity for RREs to explain why a CMP should not be imposed.

As of the 2026 adjustment, the maximum daily penalty for NGHP reporting non-compliance is $1,512 (up from $1,428 in 2024).  Late Reporting Timeframe Penalty per Day:

– – More than 1 year but less than 2 years late $357 per day.
– – More than 2 years but less than 3 years late $714 per day.
– – More than 3 years late $1,512 per day.
– – Maximum per instance: $365,000

More information about the new audit process, and compliance with Section 111 is available on the CMS website.

View More

January 26, 2026 – News Podcast

WorkCompAcademy

Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: Ventura Staffing Company to Pay $650K for Fake Comp Policies. WorkWhile to Pay $4.1M to Resolve Misclassification Case. Drug Prices Up 4% as PBM Federal/State Regulations Increase. DWC Posts Reminder for Submission of Annual Report of Inventory. California WARN Act Changes Effective January 1, 2026. Congress Proposes Changes to Federal WARN Act. Bristol Myers Squibb & Microsoft AI-Driven Lung Cancer Detection. WCRI Reports on Injectable Therapies in Workers’ Compensation.

View More