IR # 96-33
Thursday, August 20, 1996

Christine Baker
(415) 557-1304

Commission Releases First Report on Workers' Compensation Medical-Legal Reforms

SAN FRANCISCO -- The California Commission on Health and Safety and Workers' Compensation has released the first report from its study of the impact of the 1993 Reform Act on California's workers' compensation program.

The study was conducted by the UC DATA Survey Research Center at the University of California at Berkeley under contract with the Commission. The study, based upon data provided by the Workers' Compensation Insurance Rating Bureau (WCIRB), found that recent reforms to the medical-legal process in the state's workers' compensation system have produced a dramatic impact on the costs and frequency of medical-legal examinations.

The cost of medical-legal exams on Permanent Partial Disability (PPD) claims shows a steep decline since its peak during the 1991 accident year. For the insured community, the costs of medical-legal exams performed on PPD claims (measured at 40 months after the beginning of the accident year) has declined more than 84 percent from a high of $394.5 million for the 1991 accident year to an estimated $64.5 million for the 1994 accident year. The drop represents a savings of $333 million.

The average cost per exam has declined nearly 38.6 percent: from $987 for 1991 accident year claims to an estimated $606 for 1994 accident year claims.

The 1989 and 1993 reforms attempted to reduce the number of medical-legal reports by forensic doctors. Survey data indicates that these efforts to deal with the "dueling docs" syndrome have proven successful. The average number of exams per claim has declined by half, from 2.2 exams for the 1991 accident year to an estimated 1.1 exams for the 1994 accident year. This decline is reflected in a drop in the number of represented cases. Exams in unrepresented cases remains consistently lower and has changed little.

Additionally, the study found significant reductions in the number and cost of psychiatric medical-legal examinations. The costs of psychiatric related medical-legal exams dropped from $93.8 million in the 1991 accident year to $5.9 million in the 1993 accident year. The cost of psychiatric exams dropped by $87.6 million, a savings of nearly 93 percent on the cost of medical-legal exams. This represents 28 percent of the overall reduction in all medical-legal cost during those years.

The study also looked at the effect of arbitration and mandatory settlement conferences, introduced to reduce the need for hearings and decisions, and to speed the resolution of cases. Data from the WCIRB survey suggest that the new resolution mechanisms have not accomplished these goals.

The Commission on Health and Safety and Workers' Compensation, created by the workers' compensation reform legislation of 1993, is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct continuing examinations of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases, and to examine those programs in other states.

A copy of this report can be obtained by writing to Christine Baker, Executive Officer, Commission on Health and Safety and Workers' Compensation, 30 Van Ness Avenue, Suite 2122, San Francisco, CA 94102; by calling (415) 557-1304; or by faxing a request to (415) 557-1385. The report is also available through the Department of Industrial Relations' Internet servers' Commission on Health and Safety and Workers' Compensation home page. The address is