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Report Shows Record Healthcare Sector Bankruptcies in 2023

Gibbins Advisors, a lhealthcare restructuring advisory firm, has issued its latest report analyzing healthcare sector Chapter 11 bankruptcy cases filed from 2019 to 2023 for companies with more than $10 million in liabilities.

According to the report, there were 79 Healthcare Bankruptcy Filings in 2023 which made it the highest of the last five years, with the next closest being 2019 which saw 51 cases. Case volumes in 2023 were over 3 times the level seen in 2021 and over 1.7 times the level in 2022.

Large Healthcare Bankruptcy Filings with liabilities over $100 million surged in 2023, reaching 28 filings compared to only 7 in 2022 and 8 in 2021.

While the number of Healthcare Bankruptcy Filings increased across six consecutive quarters through Q3 2023, there was a decline from Q3 to Q4 2023. While the number of cases in the second half of 2023 approximate those in the first half of 2023, it is yet unclear if lower volumes in Q4 2023 indicate an emerging trend.

Senior care and pharmaceutical subsectors comprised almost half the total healthcare bankruptcy filings in 2023, consistent with previous trends.

Of particular note, hospital bankruptcy filings spiked in 2023 with 12 filings compared to a total of 11 filings from the prior 3 years combined.

We saw a dramatic increase in healthcare bankruptcy filings in 2023, continuing the trend which began in mid-2022″ said Clare Moylan, Principal at Gibbins Advisors. “Key observations from 2023 are the return of large bankruptcy cases with over $100 million in liabilities, and a spike in hospital filings, both of which appear to primarily be a result COVID-19 pandemic-related protections ending.”

Some of the recent data was surprising” said Tyler Brasher, Director at Gibbins Advisors. “Total healthcare filings spiked in Q3 and then receded in Q4 2023, and there were no senior care bankruptcies filed in Q4 2023 when we expect to see about 5 per quarter. We will closely monitor in 2024 to see if the market is changing”.

“Despite the absence of senior care bankruptcy filings in Q4 2023, based on our knowledge of the market we expect to see senior care bankruptcies return in 2024” said Brasher. “As for total case volume, we are seeing a lot of distress in healthcare as the market remains very challenging for providers, so we expect to see continued levels of healthcare bankruptcies in 2024 that we saw last year.”

“As we anticipated, restructuring activity in the hospital sector increased markedly in 2023 and we expect to see a continuation of that level of distress this year as hospitals, particularly rural and standalone hospitals, work through challenging profitability, liquidity and leverage dynamics,” said Moylan.

UCSF Health To Buy Two Bay Area Struggling Hospitals:

UCSF Health has signed a definitive agreement with Dignity Health to acquire Saint Francis Memorial Hospital and St. Mary’s Medical Center, along with associated outpatient clinics in San Francisco. The organization hopes to close the transaction in spring 2024.

Building on decades of collaboration between the organizations, the acquisition ensures that two of San Francisco’s longest-serving community hospitals – and the unique services they provide – remain accessible to San Franciscans.

“St. Mary’s and Saint Francis have a proud history of providing comprehensive health care in San Francisco,” said Suresh Gunasekaran, president and chief executive officer of UCSF Health. “This is an opportunity to honor that legacy, expanding access and enhancing care for our neighbors while reinforcing UCSF Health’s deep commitment to our hometown.”

UCSF Health has committed to maintaining Saint Francis and St. Mary’s existing services, ensuring patients have convenient local access for their primary and specialty care needs. UCSF Health has also committed to retention of the employees of both hospitals. Preserving these historic hospitals will keep patients connected with their care providers and maintain vital services like the Bothin Burn Center, the Gender Institute, the McAuley Adolescent Psychiatric Unit, and the Sister Mary Philippa Health Center at a time when communities are losing health care options.

“Saint Francis Memorial Hospital and St. Mary’s Medical Center have cared for the most vulnerable among us and offered specialized services not available at any other local care sites,” said Dr. Richard Podolin, cardiologist and chair, Dignity Health St. Mary’s Medical Center Community Board. “The transition of ownership and investment by UCSF Health will ensure these hospitals carry this legacy forward, providing access to high-quality, patient-centered care and services to all San Franciscans.”

Saint Francis and St. Mary’s will retain their open medical staffs, a departure from the faculty-based structure at UCSF Health’s other hospitals. Ensuring local doctors can continue to practice at each location preserves critical, longstanding patient-provider relationships and supports San Francisco’s diverse medical community.

In recognition of their long history of caring for San Franciscans and deep roots in the community, and as the newest addition to the UCSF Health system, the two hospitals’ new names will be UCSF Health Saint Francis Hospital and UCSF Health St. Mary’s Hospital.

UCSF Health plans to build on the strengths of the hospitals, including their dedicated community physicians and employed staff, by expanding key services such as cardiology and surgery in the first year. Initial plans also include bolstering hospital medicine programs and both emergency departments to better support care providers and improve patients’ experience.

Shelby Decosta, president of the UCSF Health Affiliates Network, a longtime UCSF Health leader and Dignity Health alum, will have executive oversight over the two hospitals.

Moving beyond the complex specialty care it is known for, UCSF Health is making a meaningful shift toward incorporating convenient and comprehensive community-based care into its health system. These investments will also open unused bed space in both hospitals for patients who need primary and specialty care in San Francisco.

In the near term, increasing staffing and resources at Saint Francis and St. Mary’s will allow more patients across San Francisco to be seen at the currently under-utilized hospitals and will help UCSF Health see more patients with complex health conditions at its other sites, including the new hospital at Parnassus Heights opening in 2030.

Bringing Saint Francis and St. Mary’s into the health system also expands access to UCSF Health’s internationally renowned experts and highly specialized, innovative care. Connecting both hospitals’ community-based care with the clinical excellence of UCSF Health’s academic medical center will help enhance already strong patient outcomes, quality and safety.

Consistently ranked as one of the top hospitals in the United States, UCSF Medical Center was named to the Honor Roll of the nation’s best hospitals by U.S. News & World Report for 2023-2024. The medical center was also listed among the country’s top 10 hospitals in seven specialties: neurology/neurosurgery, geriatric care, psychiatry, cancer, autoimmune disorders, pulmonology/lung surgery, and ophthalmology.

Census Bureau Drops Controversial Disability Statistics Proposal

The U.S. Census Bureau is no longer moving forward with a controversial proposal that could have shrunk a key estimated rate of disability in the United States by about 40%, the bureau’s director said Tuesday in a blog post.

According to the report by NPR, the announcement comes just over two weeks after the bureau said the majority of the more than 12,000 public comments it received about proposed changes to its annual American Community Survey cited concerns over changing the survey’s disability questions.

“Based on that feedback, we plan to retain the current ACS disability questions for collection year 2025,” Census Bureau Director Robert Santos said in Tuesday’s blog post, adding that the country’s largest federal statistical agency will keep working with the public “to better understand data needs on disability and assess which, if any, revisions are needed across the federal statistical system to better address those needs.” A controversial Census Bureau proposal could shrink the U.S. disability rate by 40%

The American Community Survey currently asks participants yes-or-no questions about whether they have “serious difficulty” with hearing, seeing, concentrating, walking and other functional abilities.

To align with international standards and produce more detailed data about people’s disabilities, the bureau had proposed a new set of questions that would have asked people to rate their level of difficulty with certain activities.

Based on those responses, the bureau was proposing that its main estimates of disability would count only the people who report “A lot of difficulty” or “Cannot do at all,” leaving out those who respond with “Some difficulty.” That change, the bureau’s testing found, could have lowered the estimated share of the U.S. population with any disability by around 40% – from 13.9% of the country to 8.1%.

That finding, along with the proposal’s overall approach, sparked pushback from many disability advocates. Some have flagged that measuring disability based on levels of difficulty with activities is out of date with how many disabled people view their disabilities. Another major concern has been how changing this disability data could make it harder to advocate for more resources for disabled people.

Santos said the bureau plans to hold a meeting this spring with disability community representatives, advocates and researchers to discuss “data needs,” noting that the bureau embraces “continuous improvement.”

In a statement, Bonnielin Swenor, Scott Landes and Jean Hall – three of the leading researchers against the proposed question changes – said they hope the bureau will “fully engage the disability community” after dropping a proposal that many advocates felt was missing input from disabled people in the United States.

“While this is a win for our community, we must stay committed to the long-term goal of developing better disability questions that are more equitable and inclusive of our community,” Swenor, Landes and Hall said.

Employer Costs and Attorney Fees Awarded Only in Frivolous FEHA Cases

Neeble-Diamond’s lawsuit against Hotel California stated both statutory and nonstatutory causes of action arising out of her alleged status as an employee of Hotel California. The trial court entered judgment in favor of Hotel California after a jury concluded Neeble-Diamond was an independent contractor, rather than an employee. The judgment provided “[c]osts to be determined pursuant to any timely-filed memorandum and/or motions.”

Hotel California then filed a cost memorandum as well as a separate motion seeking an award of attorney fees. Neeble-Diamond opposed the motion for attorney fees, but filed no motion to tax costs until after she was served with a proposed amended judgment which included the costs.

The trial court denied the motion for attorney fees, explaining that as a prevailing defendant in a case seeking recovery under FEHA, Hotel California was entitled to attorney fees only if Neeble-Diamond’s FEHA claims were objectively frivolous, and it had made no such showing in its moving papers. In its ruling, the court noted the same rule applied to both attorney fee and cost awards in a FEHA case, citing Williams v. Chino Valley Independent Fire Dist. (2015) 61 Cal.4th, 97, 115 (Williams) [“[a] prevailing defendant . . . should not be awarded fees and costs unless the court finds the action was objectively without foundation when brought, or the plaintiff continued to litigate after it clearly became so”].

Neeble-Diamond attempted to file an untimely motion to tax costs, claiming her failure to have done so earlier was the result of excusable attorney error. The trial court denied relief from the late filing, concluding the attorney neglect was not excusable, and denied the motion to tax costs as untimely. The court then signed an “amended judgment” that included an award of $180,369.41 in costs to Hotel California.

Neeble-Diamond appealed from an order awarding costs in excess of $180,000 to prevailing defendant Hotel California By the Sea (Hotel California). She argues the award must be reversed because her complaint alleged causes of action based on the California Fair Employment and Housing Act (FEHA) (Gov. Code, § 12900 et. seq.), and the court cannot award costs to a defendant unless it makes a finding that the FEHA claims were objectively frivolous.

The Court of Appeals agreed, and reversed in the published case of Neeble-Diamond v Hotel California By the Sea – G061425 (February 2024).

As a general rule, the prevailing party in a lawsuit is entitled to recover allowable costs. (Code Civ. Proc., § 1032, subd. (b) [“[e]xcept as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding”].) Section 1033.5 specifies the items that are “allowable as costs under Section 1032.” (§ 1033.5, subd. (a).)

A different rule, however, applies in FEHA cases. In Williams v. Chino Valley Independent Fire Dist., 347 P. 3d 976, 61 Cal.4th 97, our Supreme Court held that Government Code section 12965, subdivision (b), “governs cost awards in FEHA actions, allowing trial courts discretion in awards of both attorney fees and costs to prevailing FEHA parties.” (Williams, supra, 61 Cal.4th at p. 99.)

Government Code section 12965, subdivision (c)(6), codifies the Williams rule: “In civil actions brought under this section, the court, in its discretion, may award to the prevailing party, including the department, reasonable attorney’s fees and costs, including expert witness fees, except that, notwithstanding Section 998 of the Code of Civil Procedure, a prevailing defendant shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.”

Thus, when the defense prevails in a FEHA action, it has no automatic right to recover costs under section 1032; instead, it must move the court to make a discretionary award of such costs, based in part on a specific finding that the action was frivolous.

Hotel California made no motion for an award of discretionary costs. Instead, it filed a cost memorandum that amounts to a request for the clerk to award the costs a prevailing party would be entitled to as a matter of right under section 1032. Because Hotel California failed to file the necessary motion for costs, as it had for attorney fees, it forfeited any such claim and Neeble-Diamond had no obligation to respond to its ineffective cost memorandum.

We consequently conclude the court erred by signing an “amended judgment” that included an award of $180,369.41 in costs to Hotel California.

No Extraterritorial Application of California & Federal Whistleblower Law

Plaintiff Tayo Daramola, a Canadian citizen, is a former employee of Oracle Canada, resided in Montreal at all relevant times. Daramola’s offer letter from Oracle stated that Daramola would be assigned to an office in Canada, but Daramola worked remotely. His employment agreement with Oracle stated that it was governed by Canadian law.

By logging into Oracle’s computer systems, Daramola could conduct business and collaborate with colleagues in the United States, including employees of Oracle America. Both Oracle America and Oracle Canada are wholly owned subsidiaries of Oracle Corporation, a California-based company that develops and hosts software applications for institutional customers.

One such Oracle product was the “Campus Store Solution,” a subscription software service for college bookstores. In July 2017, Daramola was assigned as lead project manager for the implementation of Campus Store Solution at institutions of higher education in Texas, Utah, and Washington.

Daramola came to believe that Campus Store Solution was defrauding customers. The product was billed as an e-commerce platform with specific functionalities, but Daramola thought Oracle had no way of delivering the promised features, at least at the agreed-upon price. Daramola reported the suspected fraud to Oracle America and the SEC.

After doing so, Daramola was removed as a project manager. Daramola’s supervisor at Oracle America, Douglas Riseberg, offered Daramola an opportunity to work on another Campus Store Solution project, but Riseberg revoked the offer when Daramola again expressed his unwillingness to take part in fraud. Riseberg also downgraded Daramola’s job performance rating. Believing he had no other option, Daramola resigned from the company. He sent his resignation letter to an HR representative of Oracle Canada in Montreal and copied his “U.S. manager,” Matthew Posey.

Daramola then filed a lawsuit in federal court in California against Oracle America, Riseberg, and other Oracle America employees. Daramola claimed that the defendants violated the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, 15 U.S.C. § 78u-6(h)(1), and California law, Cal. Lab. Code § 1102.5, by retaliating against him for protected whistleblower activity.

After allowing jurisdictional discovery, the district court dismissed the claims underFederal Rule of Civil Procedure 12(b)(6). The court concluded that the anti-retaliation provisions in the two Acts do not apply extraterritorially, and that here, applying those provisions would be extraterritorial because Daramola’s principal worksite was in Canada. The California law claims “founder[ed] on the same extraterritoriality barrier.” Because Daramola had already amended his complaint twice before, the district court dismissed the case with prejudice.

Darmola appealed. The 9th Circuit Court of Appeals was asked to decide whether the whistleblower anti-retaliation provisions in the Sarbanes-Oxley and Dodd-Frank Acts apply outside the United States, and, if not, whether this case involves a permissible domestic application of the statutes. Its answer to both questions was no and it affirmed the dismissal in the published case of Daramola v Oracle America -22-15959 (February 2024).

The question in this case is whether either of these anti-retaliation provisions apply to Daramola, a Canadian working out of Canada for a Canadian subsidiary of a U.S. parent company.

To answer that question, the Court of Appeals applied a well-known principle of statutory interpretation known as the “presumption against extraterritoriality.” See, e.g., Abitron Austria GmbH v. Hetronic Int’l, Inc., 600 U.S. 412, 417 (2023); RJR Nabisco, Inc. v. European Cmty., 579 U.S. 325, 335 (2016); United States v. Alahmedalabdaloklah, 76 F.4th 1183, 1202-03 (9th Cir. 2023). That presumption is this: “It is a longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.” Abitron, 600 U.S. at 417 (quoting Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 255 (2010)). Presumptively, “foreign conduct is generally the domain of foreign law.” Id. (alteration omitted) (quoting Microsoft Corp. v. AT&T Corp., 550 U.S. 437, 455 (2007)).

This same reasoning disposes of Daramola’s state law claims. Daramola alleged that Oracle’s retaliation violated California’s labor laws and its public policy, as reflected in Cal. Bus. & Prof. Code § 17200.

Analogous to the federal presumption against extraterritoriality, California presumes that its legislature does “not intend a statute to be ‘operative, with respect to occurrences outside the state, . . . unless such intention is clearly expressed or reasonably to be inferred from the language of the act or from its purpose, subject matter or history.’” Sullivan v. Oracle Corp., 254 P.3d 237, 248 (Cal. 2011) (quoting Diamond Multimedia Sys., Inc. v. Superior Court, 968 P.2d 539, 553 (Cal. 1999)).

WCAB Declines to Extend Premises Line Rule for Injured Worker

Justin Tharpe was employed by Arcata Forest Products. He alleged injury occurred to his right ankle on January 30, 2023 during his uncompensated lunch break while he was visiting his friend, Joe Zavala, on a nearby, but non-adjacent, property known as the Figas Construction property.

Applicant contended that the location of the alleged injury, i.e., the Figas Construction property, is controlled by Arcata Forest Products, where: 1) applicant’s boss, Robert Figas, owns both properties, and 2) Arcata Forest Products occasionally uses or stores a piece of equipment at the Figas Construction property.

However, unrebutted evidence showed that Mr. Figas and his wife owned the Figas Construction property as a corporate entity separate from Arcata Forest Products. Robert Figas made this very clear during trial, stating that “Figas Construction[] is a separate business owned by [him] and his wife ¶…as a limited liability company….That property is not owned by Arcata Forest Products.”

The WCJ ordered that applicant take nothing by way of his claim. Reconsideration of this order was denied in the panel decision of Tharp v Arcata Forest Products -ADJ17462575 (January 2024).

Applicant’s argument raises the widely recognized workers’ compensation rule known as the “going and coming rule,” which precludes compensation for injuries suffered during the course of a local commute to a fixed place of business at fixed hours in the absence of certain exceptional circumstances. However, injuries sustained by an employee while going to or coming from the place of work upon premises “owned or controlled” by the employer are generally deemed to have arisen out of and in the course of the employment. (California Casualty Indem. Exchange v. IndustrialAcci. Com. (1943) 21 Cal.2d 751, 757-758 [8 Cal.Comp.Cases 55]; see also Gonzalez v. Dept. of Indus. Rels. (February 8, 2019, ADJ11121478) [2019 Cal. Wrk. Comp. P.D. LEXIS 52, *9].)

Here, applicant contends that the place of injury, namely, the Figas Construction property, was owned or controlled by his employer such that his injury occurred on employment premises and would therefore be deemed AOE/COE.

The fact that Arcata Forest Products may have brought (or stored) a piece of equipment at the Figas location does not satisfy the premises line rule.

At trial, applicant testified that Mr. Figas stored machines near Mr. Zavala’s trailer on the Figas Construction property. However, Mr. Zavala testified that he did “not think Arcata Forest Products stores anything on the lot where he lives except for perhaps a water truck.” Mr. Figas and Ms. Moug testified that Arcata Forest Products did not use that property for equipment storage.

After considering the discrepancies in the testimony, the WCJ ultimately concluded: “Even if Arcata Forest Products occasionally stored a piece of equipment on Figas Construction property or loaned a forklift to Figas Construction that is not a sufficient nexus between the two…properties to warrant calling the Figas location the premises of Arcata Forest Products.”

The WCAB panel agreed “with the WCJ that the occasional presence of a piece of equipment does not establish that Arcata Forest Products ‘controlled’ the Figas property for the purposes of the premises line rule.

“In summary, applicant asks us to extend the premises line rule to circumstances where he has offered no evidence that he suffered an injury at a time that the employer-employee relationship existed. Applicant simply did not present sufficient evidence that he injured himself on premises controlled or owned by his employer, and we decline to extend the premises line rule to the facts of this case.”

$40 Million Statewide Medical Insurance Scammers Sentenced

The Santa Clara County Superior Court sentenced the last of 15 defendants who were running a massive statewide insurance scam in which they set up a telemarketing company to push overpriced and unneeded prescriptions and medical devices to thousands of Californians.

The defendants – mostly Los Angeles residents – scammed about $40 million from insurance companies in the largest medical fraud case ever prosecuted in Santa Clara County. They called themselves “The Care Group.”

Seven defendants were sentenced to felonies and eight defendants to misdemeanors, with punishments including county jail.

“This group used people’s pain and illnesses to criminally enrich themselves,” District Attorney Jeff Rosen said. “They tried to hide behind a maze of dozens of shell corporations and straw owners. We found them anyway – and now they will pay back their victims and be held accountable.”  

The multi-year, multi-agency investigation to unravel the complex scheme was called C.R.E.A.M. (Cash Rules Everything Around Me.)  

Between 2015 to 2020, the defendants committed fraud on a massive state-wide scale by operating an illicit call center (Global Marketing) from their Beverly Hills offices on Wilshire Blvd. (The Care Group), a durable medical device company (California General DME), and six pharmacies located in Southern California. They targeted unwitting patients throughout the state, including in Santa Clara County, filling, and billing thousands of fraudulent prescriptions for items like neck braces and pain creams.  

The scheme involved purchasing and turning small pharmacies into pain cream and medical device mills that only fulfilled prescriptions signed by doctors who received thousands of dollars in “kick-backs.” The defendants selected pain creams and devices for their high reimbursement rates. For instance, the defendants would bill insurance companies upwards of $4,000 for medication that could be purchased for a few hundred dollars. The prescribing doctors rarely met with or spoke to the patients.  

To create an aura of legitimacy, the telemarketers from Global Marketing would say they were from the “Physician’s Network” or “Doctor’s Network.” These were not real companies.  

At least five insurance carriers were defrauded of approximately $40 million dollars throughout the state of California, with a loss of approximately $2.3 million occurring in Santa Clara County. As part of the negotiated disposition, the defendants paid more than $8.3 million in restitution – making this the largest lump sum restitution recovery for victims in an insurance fraud case prosecuted by the Santa Clara County’s District Attorney’s Office. The money will be used for victim restitution.  

The investigation was spearheaded by the District Attorney’s Office Bureau of Investigation in collaboration with the California Department of Insurance, and with assistance from California State Board of Pharmacy and the San Mateo, Monterey, and Los Angeles County district attorneys’ offices.

Pomona Valley Hospital Overbilled $1.4M For Prescription Meds

Pomona Valley Hospital Medical Center has agreed to pay nearly $2.1 million to resolve allegations that it overbilled Medi-Cal for prescription medication purchased and reimbursed under a federal drug pricing program, the Justice Department announced today.

The settlement agreement finalized on Wednesday is the result of voluntary disclosures Pomona Valley made in 2021 and 2023. After an internal audit,

Pomona Valley determined that it overbilled the United States and California, which jointly fund Medi-Cal, a government-funded program that provides health coverage for low-income individuals in California.

According to the settlement agreement, from December 2016 through September 2021, Pomona Valley improperly charged higher “usual and customary” costs, rather than lower “actual acquisition costs,” as required under the 340B Drug Pricing Program, which requires drug manufacturers to provide outpatient medication to eligible health care organizations at significantly reduced prices.

The overbilling allegedly resulted from Pomona Valley billing for its usual costs following a federal court’s temporary stay of the implementation of the California law requiring 340B providers to bill Medi-Cal at actual acquisition cost rates. But once the court lifted the temporary ban, Pomona Valley failed to implement actual acquisition cost pricing. Pomona Valley ultimately overbilled the United States and California approximately $1.4 million.

Pomona Valley has agreed to pay the United States $873,730 and California $1,225,954 to resolve the allegations, bringing the total settlement amount to nearly $2.1 million.

After making its voluntary disclosure, Pomona Valley cooperated with the investigation by federal and state authorities.

The settlement was negotiated by Assistant United States Attorney Jack D. Ross and auditor Gabriel Lam of the Civil Fraud Section, along with the U.S. Department of Health and Human Service’s Office of Inspector General and the California Department of Justice.

The settled claims are allegations only, and Pomona Valley has not admitted any wrongdoing.

NCCI Releases Q4 2023 “Upbeat” Quarterly Economics Briefing

How healthy is the US labor market?

On the surface, the December employment report released in early January looked strong. Headline job growth of 216,000 is a robust figure that exceeded the Bloomberg consensus estimate of 170,000. The unemployment rate held steady at 3.7% and average hourly earnings surprised to the upside, growing 0.4% month over month and 4.1% year over year, relative to expectations of 0.3% and 3.9%, respectively.

In its January Labor Market Insights report,Labor Market Insights, NCCI, January 5, 2024. it remained upbeat about the health of the labor market following the December employment report.

In this Economic Outlook for Q4 paper, NCCI will discuss the reasons for its relatively favorable view, detailing the evolution of the labor market in 2023 and why it remain positive on the labor market and the economy heading into 2024.

In 2023, the economy added a net 2.7 million jobs. This is a significant slowdown after 2021 and 2022 saw net job gains of 7.3 million and 4.8 million, respectively.

But these years’ growth partially reflects a bounce back after the economy lost 9.3 million jobs in 2020. In the five years prior to the pandemic, the economy added an average of 2.3 million jobs per year. As we entered (or at least approached) a “new normal” in 2023, it was natural to expect employment growth to slow back towards a steady-state pace.

Indeed, NCCI expects that employment growth will continue to slow in 2024 as the labor market continues to approach a more balanced state of supply and demand. But that slowing is not necessarily a bad thing.

In 2023, there were numerous downward revisions to employment data, but NCCI does not view this as a major indicator of labor market weakness. Establishment survey data from the monthly employment report that the Bureau of Labor Statistics produces is notoriously prone to near-term revisions. Since more accurate employment counts are not available until multiple quarters later, NCCI accepts the inadequacies of the survey data to gain a real-time assessment of how the economy is evolving.

While 2023 revisions have mostly been in one direction (down), post-revision data remains consistent with the story of a labor market that has mostly recovered from the pandemic and is experiencing slower, steadier growth.

On average, the initial labor market reports in 2023 overestimated employment growth by about 37,000 jobs per month. Had the initial print been correct throughout the year, 2023 would have seen a net gain of 3.1 million jobs, indicating an even stronger labor market than already suggested by the 2.7 million adds.

At an industry level, the payroll picture looks much healthier than the employment picture. Thanks primarily to continued elevation in wage growth, nearly all sectors experienced payroll growth close to or above 5% in 2023. Overall payroll gains, a key metric for workers compensation, remained robust.

The full report is available to learn more.

CWCI Reports Workers’ Comp Inpatient Care Declined by 51.1%

The number of inpatient hospitalizations in the California workers’ compensation system declined 51.1% between 2012 and 2022, spurred by declining claim volume, technological advances and changes in Medicare rules that allow more outpatient procedures, the elimination of redundant payments for spinal surgery hardware, and the expansion of evidence-based guidelines for spinal fusions and other surgeries.  

A new analysis by the California Workers’ Compensation Institute (CWCI) uses data on 28.7 million inpatient hospital stays with 2012 through 2022 discharge dates compiled by the California Department of Health Care Access and Information (HCAI) to measure and compare the use of inpatient services and procedures covered by workers’ compensation, Medicare, Medi-Cal and private coverage.  Workers’ comp is by far the smallest of those payer systems, and excluding hospital stays related to pregnancy, childbirth, and newborns, which are not part of the system, the study found that the number of workers’ comp inpatient stays has declined from 21,505 (0.9% of the total for all four payer groups) in 2012 to 10,516 (0.4%) in 2022.  Between 2021 and 2022, the number of workers’ comp hospitalizations declined by 5.6%, bringing the total decline over the past 11 years to 51.1%.  In comparison, the number of hospital stays paid under private coverage fell 23.5% over that same period, while Medicare hospital stays were only down 1.4%, and those paid by Medi-Cal increased by 45.7% due to surging Medi-Cal enrollments following passage of the Affordable Care Act in 2014.

The CWCI analysis notes that the decline in the number of workers’ comp inpatient stays dates back more than a decade, fueled by fluctuations in the number and types of work injury claims, the adoption of utilization review and independent medical review programs requiring that treatment meet evidence-based medicine standards, and a sharp reduction in the number of spinal fusions.  The most recent data suggest that many of those factors continue to help contain the volume of workers’ comp inpatient stays, as unlike the other systems where inpatient hospitalizations have rebounded after falling sharply in 2020 (the first year of the pandemic), workers’ comp inpatient stays have continued to drop.  The one exception is inpatient spinal fusions, which were up 5.0% between 2020 to 2022, driving spinal fusion hospital stays back up to 18.7% of all workers’ comp inpatient discharges in 2022, the highest proportion since 2016.  

The historical data also show that in the 8 years prior to the pandemic, diseases and disorders of the respiratory system (MDC 04) accounted for 2.5% to 3.0% of all workers’ comp inpatient stays, but with the introduction of COVID claims into the system, that percentage jumped to 7.4% in 2020 and 7.0% in 2021 before falling back to 3.7% in 2022.  With the recent decline in COVID-related hospitalizations, the distribution of workers’ comp inpatient stays by diagnosis shifted back toward pre-pandemic levels.  In 2022, diseases and disorders of the musculoskeletal system and connective tissue were the predominant diagnostic category, representing 60.3% of injured worker inpatient stays, followed by diseases and disorders of the nervous system, accounting for 6.2%.

The breakdown of Surgical vs. Medical (non-surgical) stays across the different payer systems shows that Surgical stays remain far more prevalent in workers’ comp, accounting for 68.4% of inpatient discharges in 2022, compared to 24.1% for Medicare, 20.9% for Medi-Cal, and 31.6% for private coverage.  Among the workers’ comp Surgical hospitalizations, those associated with various types of spinal fusions declined 58.8% between 2012 and 2022, but they still ranked first among Surgical stays and continued to account for a much higher proportion of the Surgical procedures in workers’ comp than in other systems, representing 18.7% of the workers’ comp inpatient surgeries in 2022 compared to 1.3% of the Medicare surgeries, 0.6% of the Medi-Cal surgeries, and 1.8% of the surgeries paid by private coverage.  Joint replacements (major hip and knee joint replacements or reattachment of a lower extremity) represented 8.8% of injured worker inpatient surgeries in 2022, compared to 0.5% in Medi-Cal, 1.0% in private coverage, and 1.5% in Medicare.

Notably, the study found that the decline in workers’ comp inpatient surgeries has been moderated somewhat by the growing number of injured worker spinal fusions and total joint replacements performed on an outpatient basis.  Data from HCAI and CWCI’s Industry Research Information System database  showed that the percentage of spinal fusions provided on an outpatient basis jumped from 0.8% in 2014 to 13.3% in 2022, while the percentage of major joint replacement or revision surgeries performed on an outpatient basis increased from 0.8% in 2014 to 25.9% in 2022, with the biggest increases occurring after Medicare removed these procedures from its “Inpatient Only” list, which is used to determine the appropriate setting for workers’ comp procedures.  

CWCI has issued a Research Update Report on its study, “Utilization of Inpatient Care in California Workers’ Compensation, 2012-2022.”  CWCI members and subscribers can access the report and a summary Bulletin at  Others can purchase a copy for $18 at