Summary of Bills
Effective 1/1/2017, California Bills SB1160 and AB1244 have amended the California Labor Code as part of an ongoing effort to rid the California Workers’ Compensation system of fraud and abuse. In addition to suspending service providers previously convicted of fraud/abuse from participating in the CA Workers’ Compensation system, California is now prepared to dismiss dormant liens – a key marker for litigated and potentially fraudulent claims.
Employer Impact
California’s step forward in cleaning up dormant liens is significant for employers as it presents an opportunity to reduce Workers’ Compensation costs if handled properly. A filed lien requires Workers’ Compensation providers to set aside reserves for a Workers’ Compensation claim. Claim reserves initiate a domino effect on an employer’s Experience Modification Rating, which drives up future insurance premiums - even if a claim is not paid out. Immediate closure of claims associated with dormant liens is a necessary step in reducing reserves and future Workers’ Compensation costs.
Next Steps
A full audit of service providers, medical clinic partners, and open claims is recommended for all California employers who may have been affected by Workers’ Compensation fraud. Claims with associated suspect liens can be closed immediately if experts are engaged, resulting in a reduction in future Workers’ Compensation costs.
For more information, or to initiate a Workers’ Compensation Claims Audit, contact Jennifer Lund at jlund@globalriskcap.com.
Jennifer A. Lund is a Senior Vice President of Claims and Risk Control Services at Global Risk in Los Angeles. For more information regarding claims and risk control services, contact jlund@globalriskcap.com
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