The total of all costs related to County of Los Angeles liability and workers’ compensation claims increased by $45.0 million to $577.5 million, which represents an 8.4 percent increase over FY 2013-14. Hilda Solis, chair of the Los Angeles County Board of Supervisors, said in a statement that the increase is “an urgent call for introspection and action.” She added that she was “particularly concerned” with the costs of defending the Sheriff’s Department in excessive-force and officer-involved shooting cases.
The County’s Self-insured Workers’ Compensation Claim Administration Program is the largest local governmental program in the State of California. It is responsible for administering over 27,500 open workers’ compensation claims with approximately 11,000 new workers’ compensation claims reported annually. The Risk Manager’s Message stated “as the largest risk cost driver for the County, the Workers’ Compensation system continues to be the main focus for this fiscal year.
The cost of county workers’ compensation claims rose from $342.2 million in 2014 to $359.3 million last year despite the decrease in claims by 395 to 10,550, which represents a 3.6 percent decrease over FY 2013-14. The increased cost of claims is attributed to the statutory increase in weekly permanent disability rates since medical expenses and temporary disability benefits showed modest decreases.
The Sheriff’s Department made up the largest share of those payouts, with $123.7 million in 2015, up from $110.6 million the year before. If that were not bad enough, the cost of lawsuits against the Los Angeles County Sheriff’s Department jumped 50% from 2014 to 2015 – an increase driven largely by multimillion-dollar payouts in excessive-force and jail death cases.
Medical expenses are the largest single component of the workers’ compensation program cost. During FY 2014-15, the Program received over 409,000 bills from medical service providers. Back in FY 2011-12, a PBM was established to improve the evaluation of drug therapies prescribed to County injured workers. Evaluating the final quarter of FY 2014-15 against program inception baseline data demonstrates the increased utilization of generic drugs to 78.7% (an increase of 18.4% over the baseline). Increased home delivery to 14.2% (an increase of 75.3% over the baseline). And increased PBM Network penetration to 92.5% (an increase of 35.2% over the baseline).
In FY 2012-13, pharmacists from the PBM identified significant use of costly compound medications on the workers’ compensation program. CEO staff utilized data mining capabilities provided by the PBM to identify questionable compound medication prescription patterns. In FY 2014-15, efforts continued to reduce the use and costs of unwarranted compound medication by focused utilization review protocols.
Employment Practices Liability (non-Workers’ Compensation) claims increased by 35 to 193, which represents a 22.1 percent increase over FY 2013-14. The cost of claims and lawsuits increased by $7.1 million to $21.1 million, which represents a 50.5 percent increase over FY 2013-14. Six claims had expenses greater than $500,000 and represented 35 percent of this total ($7.5 million). These allegations include wrongful termination, whistleblower, sexual harassment, and failure to promote.