Workers' Compensation and Legacy Claim Costs Soar in Santa Monica

The Santa Monica, California City Council presented a report recently indicating that workers’ compensation claims and subsequent additional costs are on the rise.  Claims from public transportation and first responders are the reasons behind the frequency of claims, as well as the severity of the injuries.  City Hall estimates they will spend upwards of $1.7 million more on workers’ compensation claims this year over last year if the trends noted in the first half of fiscal year 2015-16 continue.

According to Risk Manager Deb Hossli, “the City has positioned itself to whether the impact of this on a short-term basis through a combination of increasing departmental contributions to the Workers’ Compensation Self-Insurance Fund by 30% ($3 million) in FY 2015-16 and maintaining this contribution level into FY 2016-17, and making a one-time $5 million contribution to the Fund in FY 2014-15.”  Hossli went on to state, “Rather, the City needs to continue to vigilantly extract every efficiency and/or dollar savings from existing cost control measures and be open to trying unconventional methods that could take years to yield results.  Consequently, it would be wise for the City to prepare for continued higher workers’ compensation well into the future.”

Of particular note within this report was attention given to workers’ compensation claims that have been open since 1979.  The cost of these claims alone has increased from $23.6 million in 2014 to $27.3 million as of December 31, 2015.  Many of these files are what are referred to as legacy claims, or old dog files.  These claims, while relatively few in number, represent a large percentage of the overall costs to the City’s workers’ compensation program.

Legacy Claim Solutions specializes in resolving these specific types of claims.  Legacy files are a different animal in any workers’ compensation program, and a special approach must be utilized that is often outside of the “normal” approach to setting a traditional workers’ compensation claim.  While this latest news shines the spotlight on Santa Monica, this issue is not unique to them as legacy claims exist in every workers’ compensation program across the country.  While it is impossible to settle every outstanding claim, it would be a wise decision for any self-insured employer, TPA, insurer, and excess carrier to implement a program that is dedicated to specifically addressing these costly legacy files.