Workers Comp Zone


The pressure on the California workers’ comp system to deal with the COVID-19 crisis is mounting.

Should first responders, medical personnel and “essential workers” who are diagnosed with COVID receive a presumption that the virus was contracted at work?

If there is no presumption, workers can still pursue a COVID claim, but they would have to go through a more time-consuming process to establish that their COVID illness arose out of and in the course of their employment.

A number of other states have moved forward with various forms of such a presumption, some through legislative action and some by gubernatorial order. There are also some who favor creation of a federal fund to cover claims of essential workers who get COVID.

In California, some labor organizations have called on the Governor to issue an order for such coverage. Whether the Governor has the power to do that is likely to be disputed.

And in the California legislature we now have a proposed bill, AB 664, that would extend a COVID industrial presumption to police, fire and “health care employees who provide direct patient care in an acute care hospital”. AB 664, authored by California Assembly members Cooper and Gonzalez, does not in its current form extend a COVID presumption to other “essential workers” who have extensive public contact, such as grocery store and pharmacy workers or various retail and delivery people.

Interestingly, the State Compensation Insurance Fund has announced that it will treat essential worker claims with a confirmed COVID diagnosis as industrial. Here is the SCIF statement on their policy:

“Effective immediately, accepting any claim by an essential worker—as defined by Governor Newsom’s Executive Order N-33-20—for a diagnosed case of COVID-19 regardless of whether or not that worker can demonstrate the virus was contracted during the course of employment. The diagnosis must include a confirmed positive test for COVID-19 and must occur during the period of time between when the Governor issued his stay-at-home order and before that order is lifted. This action effectively replaces the Essential Worker Support Fund announced earlier, as all employees who would have been covered under that fund are now entitled to full workers’ compensation benefits. We currently estimates these added benefits will require approximately $90 million in addition to the previously committed funds for a total of $115 million. We will still provide temporary disability benefits to any covered essential worker who must self-quarantine if they are not covered by another source.”

Assemblyman Tom Daly, Chair of the California Assembly’s Insurance Committee, asked the WCIRB to assess the system cost of possible COVID presumptions. In response, the WCIRB prepared an April 2020 research brief analyzing projected costs of a presumption that COVID is work-related. The study separates out projected costs for health care workers and first responders from costs of a presumption for other essential workers.

Whether their assumptions and methodology are correct may be subject to debate, but if accurate, the costs projected by the WCIRB are astronomical. Depending on what percentage of first responders and healthcare workers have COVID claims, the costs range from $1.2 billion if 4% get COVID to $18.1 billion if 60% get COVID. With other “essential workers’, the projected cost range is from $1 billions (if 0.8% get COVID) to $15.6 billion (if 12% get COVID).

On April 23 the WCIRB held a webinar on their research brief, but unfortunately the time format did not allow for much in the way of public questioning. This research will likely become a matter of contention as hearings proceed at the Sacramento Capitol.

For one thing, the WCIRB estimates that loss adjustment expense (i.e.”friction costs”) with a conclusive COVID presumption will be the same as for other current claims, 36.1%. That would seem to ignore that AOE/COE determinations would not be required,  utilization review likely much reduced, etc.

Clearly the WCIRB is suggesting much higher costs than SCIF’s  announcement projected, i.e. SCIF indicated in its announcement that it was committing $205 million ($115 million plus an additional $90 million) to cover these cases.

In a question submitted to WCIRB during the webinar, I asked for comment on SCIF’s estimates in comparison to the WCIRB research brief estimates. It would seem that either SCIF’s cost estimates are way low or that the WCIRB numbers are really inflated.

SCIF’s announcement was conclusory, so we don’t know their underlying research on the estimated costs of their decision to accept these claims. But if there is an easy explanation for the difference in the SCIF and WCIRB projections, I am not seeing it.

Opponents of presumptions for COVID will undoubtedly argue that if the high end of the range of WCIRB numbers are close to being accurate, this will be a budget buster for the comp system overall. They will likely contend it will cause a major rise in workers comp rates at a time that employers are struggling to stay open and put additional pressure on public entity budgets at a time they are bleeding cash.  

Proponents will argue that we can’t abandon the first responders and health care personnel who continue to step forward to deal with this health scourge. Why should those workers have to struggle to have their claims approved?

This could be quite a brawl in Sacramento.

Here is a link to AB 664:

The announcement by SCIF can be found here:

The April 2020 WCIRB research brief “Cost Evaluation of Potential Conclusive Presumption COVID-19 Presumption in California Workers’ Compensation” can be seen here:

During the webinar it was announced that the slides from the April 23 WCIRB webinar will be posted on the WCIRB website within a few days.

Stay tuned.

Julius Young