Courts and Costs

Litigation ‘More Than Tripled’ for Lost Time Claims

High-cost driver: One in nine workers' comp claims in California involves attorneys.
By: | March 14, 2014

One out of every nine California workers’ comp claims between accident years 2005 and 2010 involved an applicant attorney, defense attorney, or both, said the California Workers’ Compensation Institute. The attorney involvement rate for indemnity claims is 38.1 percent at an average cost of $62,652 — nearly eight times the average for those claims without attorneys.

The CWCI studied the attorney involvement rate to “assess statewide and regional levels of attorney involvement, average benefit and expense payments, and the average number of paid temporary disability days for claims that involved attorneys compared to those that did not,” according to the report. It is aimed at providing a benchmark to measure the impact of the 2012 legislative reforms on attorney involvement and frictional costs in the state’s workers’ comp system.

CWCI’s research on attorney involvement began in 1975. At the time, about 6 percent of all claims and roughly 12 percent of lost time claims involved litigation.

“In the four decades since then, California lawmakers have enacted major workers’ compensation reforms on multiple occasions, usually with the stated intent of reducing friction and expense within the system,” the report said. “Yet, despite those efforts, the litigation rate has nearly doubled for all workers’ compensation claims, and more than tripled for claims involving lost time.”

The report included the following findings:

  • Benefit and expense payments for temporary disability claims with an attorney average $30,319 versus $5,598 for those without; while payments on permanent disability claims with an attorney average $66,208 versus $25,300 for those without.
  • Ninety percent of indemnity claims that involve attorneys are permanent disability cases while about 10 percent are temporary disability cases.
  • On average, temporary disability claims with attorneys result in 74.5 paid temporary disability days, which is triple the average for temporary disability claims without attorneys. Among permanent disability claims, those with attorneys average 128.1 paid TD days, or nearly double the average for those without, which works out to an average of 122.8 paid TD days for all indemnity claims with attorneys, or four times the average for indemnity claims without.

The authors reported “significant regional variations” with Southern California, especially the Los Angeles Basin, having far more attorney involvement than in the north.

“Although some litigation is endemic to workers’ compensation as valid disputes arise in any statutory system, as the CWCI noted 25 years ago in its study on the causes of litigation in workers’ compensation, ‘premature, unnecessary litigation must be eliminated if the California workers’ compensation system is to meet its constitutional imperative: To accomplish substantial justice in all cases expeditiously, inexpensively, and without encumbrance of any character,'” the report concluded.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

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