The Workers’ Compensation Insurance Rating Bureau of California has released its Quarterly Experience Report. This report is an update on California statewide insurer experience valued as of March 31, 2022.

Written premium for 2021 was 1.4% below that for 2020 and is the lowest since 2012. Premium declined sharply beginning in the second quarter of 2020 due to the economic downturn resulting from the pandemic. The modest decrease in written premium for 2021 was driven by continued insurer rate decreases offsetting growth in employer payroll.

However written premium for the first quarter of 2022 is 22% above that for the first quarter of 2021 and 5% above that for the first quarter of 2020 (which was pre-pandemic).

The average charged rate for the first quarter of 2022 is 3% below that of 2021 and is the lowest in decades. In the September 1, 2022 filing, the WCIRB proposed an average 7.6% increase in advisory pure premium rates. Nonetheless, in the Decision on the Filing, the Insurance Commissioner did not approve any change in the average advisory pure premium rate.

The projected loss ratio for 2021, including COVID-19 claims, is 5 points above that for 2020 and 11 points above that for 2019. Projected loss ratios have been growing steadily since 2016.

The projected combined ratio for 2021, including COVID-19 claims, is 7 points higher than in 2020 and 33 points higher than the low point in 2016. Excluding COVID-19 claims, the projected combined ratio for 2021 is 110% and the projected ratio for 2020 is 99%, which are still higher than recent prior years.

Combined ratios have been growing in California due to insurer rate decreases and modest growth in average claim severities.

Indemnity claims had been settling quicker through the first quarter of 2020, primarily driven by the reforms of SB 863 and SB 1160. Average claim closing rates have plateaued in 2021 and 2022 but remain lower than the immediate pre-pandemic period.

Cumulative trauma (CT) claim rates increased through 2016 to be 80% above the 2005 level. CT claim rates were relatively consistent from 2016 through 2019. Preliminary data shows a sharp increase in CT claim rates in 2020, likely driven by shifts in claim patterns during the pandemic period. In particular, the 2020 increase in CT claim rates is largest in industry sectors that had the largest job losses in 2020.

Projected total claim severity for 2021, excluding COVID-19 claims, is 1% below 2020 but 12% above 2017. Following several years of flat indemnity severities, the projected indemnity severity for 2021 is 2% higher than 2020 and 19% higher than 2017. Recent growth in indemnity claim severities has been in part driven by higher-than-typical average wage inflation over the last two years.

The full WCIRB Quarterly Experience Report – As of March 31, 2022 is in the Research section of the WCIRB website.

In 2015, Wood Ranch USA, Inc. hired Sunny Gallo to work as a server for its chain of restaurants.

As a condition of her employment with Wood Ranch, she was required to sign an arbitration agreement and to agree to the terms of the employee handbook. The employee handbook reinforces the parties’ agreement that they will look to the California Arbitration Act, including its “procedural provisions,” ‘to conduct the arbitration and any pre-arbitration activities.”

Her employment was terminated in March 2018. In January 2020, she sued Wood Ranch for compensatory and punitive damages on nine different causes of action based upon alleged discrimination and harassment on the basis of gender and religion.

Wood Ranch moved to compel arbitration. The trial court in July 2020 granted the motion and stayed the pending court proceedings. The agreed upon arbitrator was affiliated with the American Arbitration Association (AAA). Both parties were asked to pay necessary fees which Gallo paid, but the November 4 due date came and went without any payment from Wood Ranch.

AAA extended the payment time to December 4, 2020 warning that the arbitration would be closed if not paid on time. On December 10, 2020 Wood Ranch paid the $1,900 fee which was two days late.

On December 16, 2020, plaintiff filed a motion to vacate the trial court’s prior order compelling arbitration, which was granted. The court ruled that Code of Civil Procedure sections 1281.97 and 1281.99 were not preempted by the Federal Arbitration Act.

Wood Ranch appealed. The Court of Appeal affirmed the trial court in the published case of Gallo v Wood Ranch USA Inc., B311067 (July 2022).

In 1961, the California Legislature enacted the California Arbitration Act (CAA) (§ 1280 et seq.) as a way to protect the right of private parties to resolve their disputes through the “efficient, streamlined procedures” of arbitration.

Perceiving that employees and consumers were being placed in a “procedural limbo” when they were forced to sign arbitration agreements by entities who subsequently refused to pay the necessary fees to allow the arbitrations to move forward, in 2019 the California Legislature enacted Code of Civil Procedure sections 1281.97, 1281.98 and 1281.99.

These provisions obligate a company or business who drafts an arbitration agreement to pay its share of arbitration fees by no later than 30 days after the date they are due, and specify that the failure to do so constitutes a “material breach of the arbitration agreement” that gives the employee or consumer, in addition to a mandatory award of attorney fees and costs related to the breach as well as other discretionary sanctions, the options of either (1) continuing in arbitration with the company or business paying attorney fees and costs related to the arbitration as a whole or (2) withdrawing from arbitration and resuming the litigation in a judicial forum.

This appeal presented a question of first impression: Are these provisions preempted by the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.)?

The court of appeal held that they are not because the procedures they prescribe further – rather than frustrate – the objectives of the FAA to honor the parties’ intent to arbitrate and to preserve arbitration as a speedy and effective alternative forum for resolving disputes.

Workers’ compensation claim frequency among California’s private self-insured employers hit the highest level since 2007 last year as both medical-only and indemnity claim volume rose according to a California Workers’ Compensation Institute (CWCI) review of initial data from the state Office of Self-Insurance Plans (OSIP).

OSIP’s annual summary of private self-insured data, issued this July, is the first snapshot of California private, self-insured claims experience for cases reported in 2021.

It includes the total number of covered employees, medical-only and indemnity claim counts, and total paid and incurred losses on those claims through the end of the year. The latest summary reflects the experience of private self-insured employers who covered 2.39 million California employees last year (vs. 2.34 million in the 2020 initial report) and who reported 93,430 claims in 2021, 8% more than the 86,503 claims noted in the 2019 initial report.

The breakdown by claim type shows private self-insured employers reported 48,766 medical-only claims in 2021 (up 11.4% from 43,799 in 2020, the first year of the pandemic), though that was still 5.7% below the pre-pandemic total of 51,545 claims in 2019).

Indemnity claim volume, on the other hand, increased in both of the last two years, climbing from 34,307 claims in 2019 to 42,724 claims in 2020, then climbing to 44,664 claims last year. The latest claim count translates to an overall frequency rate of 3.92 claims (2.05 medical-only and 1.87 indemnity) per 100 private self-insured employees, the highest combined rate since 2007, with indemnity claim frequency reaching the highest level in at least 15 years.

The increase in claim volume and claim frequency helped drive up first report total paid and incurred losses.

The OSIP data show paid losses on the 2021 private self-insured claims through the fourth quarter totaled $314.8 million, 17.3% more than the first report total for 2020, as total paid indemnity (primarily temporary disability payments) climbed by $22.2 million (16.3%) to $158.7 million, and total paid medical increased by $24.3 million (18.4%) to $156.1 million.

Meanwhile, total incurred losses (paid benefits plus reserves for future payments) rose to $839.8 million, up $97.4 million, or 13.1% from the comparable 2020 figure, as total incurred indemnity at the first report increased by $36.8 million (12.0%) to $342.6 million and total incurred medical increased by $60.6 million (13.9%) to $497.2 million.

Aside from the higher claim volume, increases in the average paid and incurred losses at the first report also contributed to the growth in total paid and incurred losses, as both hit all-time highs in 2021, increasing to $3,370 and $8,988 respectively.

OSIP’s summary of private self-insured’s calendar year 2021 data, follows the December 2021 release of public self-insured claims data for fiscal year 2020/2021. OSIP private and public self-insured claim summaries from the past 20 years are posted at http://www.dir.ca.gov/SIP/StatewideTotals.html. CWCI members and subscribers may log on to the Communications section of the CWCI website www.cwci.org to view a summary Bulletin with more details, analyses, and graphics.

On March 12, 2020, John Rogers filed a putative class action in the Superior Court of the City and County of San Francisco alleging that Lyft misclassified its drivers as independent contractors, rather than as employees. The complaint asserted a single claim for failure to provide paid sick leave under Labor Code section 246. He then filed an ex parte application for an emergency preliminary injunction seeking to enjoin Lyft from classifying its drivers as independent contractors.

The hearing on the ex parte application was set for March 19, 2020. However, on that day, Lyft removed the case to federal court under the Class Action Fairness Act of 2005 (28 U.S.C. § 1332(d)). Plaintiffs submitted their emergency preliminary injunction request to the Federal District Court for the Northern District of California that same day. Lyft then filed a motion in the district court seeking to compel individual arbitration of Rogers’ claims.

The district court granted in part and denied in part Lyft’s motion to compel arbitration. (Rogers v. Lyft, Inc. (2020) 452 F.Supp. 3d 904, 909)  Finally, the court determined that it lacked jurisdiction as to plaintiffs’ claim for public injunctive relief (id. at p. 919), remanding the case back to the superior court to resolve whether the claim actually sought a private injunction, which would be subject to arbitration, or a public injunction, which would be exempt from arbitration.

Upon remand, plaintiffs filed another ex parte application for an emergency preliminary public injunction in the superior court, seeking to enjoin Lyft from “misclassifying its drivers in California as independent contractors and thereby denying these workers their rights under the Labor Code” and under two municipal ordinances pertaining to sick leave.

On remand the superior court granted Lyft’s motion to compel arbitration, and denied the plaintiff’s request for an injunction after concluding that the request was for a public injunction and that a denial of the injunction would not cause plaintiffs to suffer irreparable harm. Two days later, plaintiffs filed their notice of appeal of both of these rulings. The California Court of Appeal dismissed the appeal of both issues in the unpublished case of Rogers v Lyft – A160182 (July 2022).

While this appeal was pending, Proposition 22 passed on November 3, 2020, abrogating Assembly Bill No. 5. In doing so, Proposition 22 declared “app-based drivers” to be independent contractors – not employees – if the rideshare company (in this case, Lyft) provides those drivers with specific wage and hour protections. (See Bus. & Prof. Code. §§ 7451, 7453.) Proposition 22 took effect on December 16, 2020.

Proposition 22 was declared unconstitutional by a different trial court judge last year, but an appeal is pending.

In their opening brief, plaintiffs purport to appeal from the superior court’s “grant of Lyft’s Petition to Compel Arbitration,” which they assert “is appealable pursuant to [Code of Civil Procedure] section 1294 [subdivision](a).” The Court of appeal said that “this assertion is manifestly incorrect.”

Civil Code of Procedure section 1294, subdivision (a) provides: “An aggrieved party may appeal from . . . [a]n order dismissing or denyinga petition to compel arbitration.” (Italics added.) Here, the superior court granted Lyft’s petition to compel arbitration.

In any event, in their reply brief plaintiffs change course, expressly stating that they are not appealing from the order compelling arbitration. Accordingly, to the extent plaintiffs purport to appeal from the superior court’s order granting the motion to compel arbitration, the appeal on this issue was therefore dismissed.

In their opening brief, plaintiffs expressly waive any argument as to “whether an injunction remains appropriate following the passage of Proposition 22,” acknowledging that “a decision on the applicability of Proposition 22 would need to be addressed by the Superior Court in the first instance.” However, they assert that this case “presents a live case and controversy” because Lyft drivers would have received paid sick leave during the COVID-19 pandemic if the injunction had issued, and a reversal here would entitle them to this incidental relief. On this basis, they contend that they “still have a live claim for incidental relief.” Alternatively, they argue that this appeal should be heard because it “presents an important question of state law.”

Lyft contends that the only remaining issue in this appeal, the denial of plaintiffs’ request for an emergency preliminary public injunction ordering Lyft to reclassify its drivers as employees, should be dismissed as moot because plaintiffs “have expressly abandoned the preliminary injunction request that is the entire basis for this interlocutory appeal.”

The court of appeal agreed with Lyft that the appeal from the denial of the emergency preliminary injunction is moot and should be dismissed.

Shannon Liss-Riordan, an attorney for the Lyft drivers, said they are “disappointed in the decision and are considering our options, including petitioning the California Supreme Court for review.”

Amazon inaugurated its migration into the health care industry some time ago when it launched an online pharmacy and telemedicine service almost everywhere in the United States.

And then last year Amazon announced the expansion of Amazon Care, which dispenses “high-quality medical care and advice’ 24 hours a day, 365 days a year, with a goal of delivering the service through companies of all sizes to their employees nationwide.

Taking this initiative even further, this week Amazon and primary-care provider One Medical announced that they have entered into a definitive merger agreement under which Amazon will acquire One Medical.

One Medical says it is is a human-centered, technology-powered national primary care organization on a mission to make quality care more affordable, accessible, and enjoyable through a seamless combination of in-person, digital, and virtual care services that are convenient to where people work, shop, and live.

Amazon still makes most of its revenue from orders placed through its online stores, and most of its profit from its cloud computing arm. Both of those businesses were built almost entirely in house. But Amazon’s largest acquisitions show the company is willing to buy growth in markets that are adjacent to its core competencies.

Before One Medical, Amazon’s two largest acquisitions ever were its $13.7 billion purchase of grocery chain Whole Foods in 2017 and its $8.45 billion purchase of film and television distributor MGM Studios last year.

MGM and Whole Foods deals also tie back to the company’s Prime subscription offering, which gives it a steady stream of recurring revenue from millions of consumers and encourages loyalty. One Medical could follow that same template. Amazon has already added pharmacy benefits to Prime.

Amazon has dabbled in healthcare for several years. Amazon bought PillPack in 2018 for $750 million, then rolled out its own online pharmacy. It also launched Amazon Care, a service that has both telehealth and in-person offerings, first for its own employees before opening it up to other employers last year. The offering competes with One Medical.

Amazon will acquire One Medical for $18 per share in an all-cash transaction valued at approximately $3.9 billion, including One Medical’s net debt. Completion of the transaction is subject to customary closing conditions, including approval by One Medical’s shareholders and regulatory approval. On completion, Amir Dan Rubin will remain as CEO of One Medical.

One Medical is a U.S. national human-centered and technology-powered primary care organization with seamless digital health and inviting in-office care, convenient to where people work, shop, live, and click. One Medical’s vision is to delight millions of members with better health and better care while reducing costs, within a better team environment. One Medical’s mission is to transform health care for all through a human-centered, technology-powered model. Headquartered in San Francisco, 1Life Healthcare, Inc. is the administrative and managerial services company for the affiliated One Medical physician-owned professional corporations that deliver medical services in-office and virtually. 1Life and the One Medical entities do business under the “One Medical” brand.