The Workers’ Compensation Insurance Rating Bureau of California will propose a 5.7% average reduction in pure premium rates for workers compensation insurers in 2020, the agency announced Wednesday.

If adopted, this would be the ninth consecutive pure premium rate decrease since 2015, with reductions totaling approximately 44% since, the Oakland, California-based agency said in a statement.

Continued downward loss development, acceleration in claim settlements, sharply declining pharmaceutical costs and continued decline in the number of liens being filed are among the reasons for the reduction over 2019 rates, Dave Bellusci, WCIRB’s executive vice president and chief actuary, said in a presentation to the rating agency’s governing committee Wednesday, according to the statement.

Despite these the downward trends, Mr. Bellusci cautioned that loss adjustment expenses remain high and that medical and indemnity average claim severities are beginning to rise at levels closer to their historical norms, according to the statement.

The agency expects to submit its filing to the California Department of Insurance later this month, according to the statement.

In the first half of 2019, NCCI tracked approximately 668 state and federal workers compensation bills. A total of 415 bills were in states where NCCI provides ratemaking services. As of the end of June, 84 bills were enacted.

Legislation impacting first responders continued to be a hot topic this year with 122 related bills considered in 2019. The first responder bills address compensability for certain cancers and other diseases, as well as compensability for post-traumatic stress disorder (PTSD).

In 2019, at least 26 states considered legislation addressing workers compensation coverage for mental-only injuries, such as PTSD, for first responders. To date, eight states (Connecticut, Idaho, Louisiana, Nevada, New Hampshire, New Mexico, Oregon, and Texas) passed legislation addressing benefits for first responders with PTSD in 2019. In addition, Utah passed legislation establishing a working group to study the compensability of mental stress claims from first responders.

Other legislative trends include bills addressing medical cost containment measures, such as fee schedules and treatment guidelines; and court/legal issues such as arbitration and subrogation. These trends are very similar to 2018’s legislative trends.

There are now 11 states, plus the District of Columbia, that have legalized the recreational use of marijuana. In addition, the majority of states (33 plus DC) have legalized the medical use of marijuana, while another 14 states have legalized the use of CBD oil/nonpsychoactive forms of marijuana under certain circumstances. As of June 30, only three states (Idaho, Kansas, and Nebraska) do not have any laws legalizing marijuana in some form.

During the 2019 legislative session, several states considered legislation to authorize the reimbursement of medical marijuana in workers compensation. Those states include Hawaii, Kansas, Maine, Maryland, New Jersey, New York, and Vermont. As of June 30, none of the bills passed.

Rhode Island passed legislation that does not prohibit reimbursement but provides that employers and workers compensation carriers are not required to pay for medical marijuana. The Rhode Island legislation also states that an employer may not refuse to employ or otherwise penalize a person solely for their status as a medical marijuana cardholder, with certain exceptions.

Nevada enacted legislation that prohibits an employer from denying employment because a prospective employee tests positive for marijuana in a preemployment drug screening test. The new law contains exceptions for certain prospective employees, including firefighters and emergency medical technicians.

Utah passed legislation that, in part, allows certain insurers to issue workers compensation coverage to a cannabis production establishment or a medical cannabis pharmacy in the state.

In 2019, nine states considered legislation addressing prescription drugs in workers compensation. At least two states, Illinois and Nebraska, proposed adopting an evidence-based drug formulary. Other states considered legislation to restrict the use of opioids in workers compensation. Legislation proposed in New York would include medical marijuana as a “prescription drug” for workers compensation purposes.

Expect workers’ compensation insurance rates in California to continue to fall, with total written premium expected to drop by $1 billion or more for 2019 despite the positive impacts of continued economic growth, a new report shows.

“We’re experiencing more than a $2 billion impact of lower rates,” said David Bellusci, executive vice president and chief actuary of the Workers’ Compensation Insurance Rating Bureau of California.

Bellusci on hosted a webinar – summarized in a report in the Insurance Journal – to give a rundown on the WCIRB’s just-released 2019 State of the System report.

Even with the falling written premium, the report portrays a healthy worker’s comp market in California that’s “very nonconcentrated,” with several hundred insurers participating, according to Bellusci.

Last year was the sixth consecutive year the industry has posted a combined loss and expense ratio below 100. The combined ratio was 90 in 2018. The ratio hit a high in 1999 of nearly 200 percent. “It’s been probably the most stable period we’ve seen,” Bellusci said. He expects the combined ratio to begin to go up, somewhat due to a modest rise in severity trends, but it will be largely due to declining rates. Bellusci said the ratio may get pushed into the mid- to higher-90s for 2019.

More than an additional $1 billion in payroll each year is being generated by economic growth. However, lower rates are reducing total written premium by more than $2 billion annually, according to Bellusci.

Written premium is expected to a total of $15.7 billion in 2019, down from $17 billion in 2018. Written premium has been on the decline since 2016 when it was $18.1 billion.

Reforms from SB 863 passed in 2012 have saved the workers’ comp system roughly $3 billion annually, with significant savings from lien cost, spinal surgeries and pharmaceutical costs, the report shows.

Despite recent rate decreases, California’s workers’ comp rates remain high compared with other states. Oregon does a state-by-state comparison every other year using Oregon’s industry mix as a control. The report last showed California’s workers’ comp rates at $2.87 per $100 of payroll compared with a nationwide average of $1.70. Bellusci attributed the state’s poor showing in that report to California’s high frequency of permanent disability claims, the long duration of medical payouts and high frictional costs.

Overall claim frequency in California has remained relatively flat, although the frequency of cumulative trauma claims continues to grow – particularly in the Los Angeles Basin and San Diego areas, the report shows. The L.A.-Long Beach area had a 32 percent higher frequency than the state average when controlled for industrial mix and wage levels, the report shows.

Earlier this year the Los Angeles District Attorney charged operators of,Technical School, Inc., doing business as Technical College, Inc., and Graduates Do Succeed Institute, doing business as GDS Institute with workers’ compensation fraud arising out of the use of SJDB vouchers.

Now, 23ABC News reports that a Bakersfield vocational training business is being investigated by the California Department of Insurance for alleged workers’ compensation fraud, according to court documents obtained by 23ABC News.

The court documents show the CDI is looking into the practices of Instituto Hispano Americano , located on Chester Avenue in Central Bakersfield.

A search warrant requested by the CDI shows multiple insurance companies contacted the department in 2018 over concerns of suspected fraud dating back to 2013.

One report, from Berkshire Hathaway Homestate Company, included as much as $248,600 in suspected fraud since 2013. The insurance company reached out to CDI in March of 2018 after suspicious arose about educational vouchers redeemed by Instituto Hispano Americano. BHHC told CDI they believed the services for the vouchers were not provided.

The education vouchers, according to the warrant, are from the California workers’ compensation system known as Supplemental Job Displacement Benefit. The vouchers are used to pay as much as $6,000 for educational and retraining or skill enhancement for workers who are injured on the job, suffering a permanent partial disability, according to the court documents.

Insurance Company of the West, in May of 2018, also reached out to CDI to report suspected fraud related to Instituto Hispano Americano. The insurance company told investigators the business allowed ineligible students to enroll in a training program without passing a required exam.

According to the documents, when ICW requested the students’ exam results, “[t]he results were on a non-descript [sic] letter, with basic typing and no letterhead. The score also appeared seemingly high at 118.” Results from four additional students were also forwarded showing “three out of the four claimants scored 118, and the fourth scored 123.”

Another insurance company, Zenith Insurance, also reported suspected fraudulent test results from Instituto Hispano Americano.

Citizens of Humanity LLC, designs, markets, and manufactures blue jeans and other apparel under the trademark “Citizens of Humanity.” Noe Abarca worked in Citizens’s quality control department, separating and inspecting boxes of jeans from February 2006 until his termination on August 28, 2012.

After approximately four months with Citizens, Abarca started experiencing pain in his chest and clavicle area, which became more intense when lifting. The pain worsened and in July of 2012, the pain became unbearable.

His direct supervisor, Augustina Manzano, instructed him to see a doctor and referred him to Citizens’s head of human resources, Alma Casas, who did not advise Abarca to fill out a workers’ compensation claim form, so Abarca was not aware that he could file a claim for injury.

Abarca saw a doctor who issued a work restriction that Abarca was “unable to lift heavy objects” and that “15 to 20 lbs is the most” he could lift. The certificate also said that Abarca could return to work only doing “light work” from July 24, 2012 through August 24, 2012.

Two business days after the restriction expired, Citizens terminated Abarca. On the day of his termination, Casas, who Citizens entrusted to oversee employee terminations, thanked Abarca for his work, but said his services were no longer needed. Abarca insisted that he could continue inspecting jeans, but Casas responded that Citizens could not accommodate him.

On the day of his termination, Casas instructed Abarca to complete a workers’ compensation claim form which she did not explain and Abarca did not understand. This was the first workers’ compensation claim form that Abarca filled out. Under the heading, “Date employer first knew of injury,” Casas instructed Abarca to write, “August 28, 2012,” that same day.

Abarca sued Citizens for: retaliation, disability discrimination, failure to engage in the interactive process, failure to provide reasonable accommodation, failure to prevent/remedy discrimination and retaliation under the Fair Employment and Housing Act (FEHA), and wrongful termination in violation of public policy.

The jury awarded Abarca a total of $100,000 in compensatory damages: $35,000 for past lost earnings; $20,000 in other past economic loss; $45,000 in past non-economic losses including mental suffering; and nothing for future non-economic losses. The jury also awarded Abarca $550,000 in punitive damages.

The Court of Appeal affirmed the judgment in the unpublished case of Abarca v. Citizens of Humanity, LLC.

One of the eight issues raised on appeal by Citizens was judicial estopple. Citizens contended that judicial estoppel bars Abarca’s claims because, in his successful application for disability benefits, Abarca represented that he was unable to work, but then sued Citizens for lost wages contending that he could have worked all along. According to Citizens, Abarca cannot reconcile the conflict between the finding that he was “temporarily totally disabled” for purposes of receiving state disability benefits and his present claim for lost wages.

Cleveland v. Policy Management Systems Corp., supra, 526 U.S. at page 807 held that an employee should have the opportunity to explain how she can be both entitled to disability and recover lost wages in a disability discrimination action based on her ability to perform at her job with reasonable accommodations.

Abarca’s explanation at trial was that he could have continued working for Citizens had they continued to honor his work restriction. This is critical because disability determinations do not consider whether an employee can perform his job duties with reasonable accommodations.