Aging workforce seen as liability for future worker compensation claims

Claims against the city for job-related injury or illness are at their lowest levels in more than five years but the good news will likely be short lived as an aging workforce is predicted to file more costly claims going forward.

The City of Santa Monica pays millions of dollars every year in workers compensation to employees injured or sickened on the job. During the 2021-22 fiscal year, the exact amount was $14.8 million, an 8% increase from the previous year, according to a report released last week by Chief Financial Officer Gigi Decavalles-Hughes. However, the total value of all open claims against the city fell from $31.6 million in the 2020-21 year to $28 million in the 21-22 year

“The reduction in open claim inventory is due to a very large increase in claim settlements via compromise and release agreements, which allow the City to close out settled claims completely,” the report stated.

The increase in expenses in the 2021-22 year is reflective of more claims being settled, the report explained. It showed a decrease in the total number of open claims to 588, down from 612 the year before. While the city paid out more per claim last year than the year before, the report explains claim specifics are highly variable.

“The number and value of settlements tend to fluctuate from year to year due to the severity and timing of injuries, and the willingness of injured employees to settle claims,” it said.

The City was also able to offset some costs in the most recent fiscal year by recovering $296,573 from third parties responsible for city employees’ work-related injuries.

The City is required to provide benefits to workers who are hurt or become ill as a result of the job and file compensation claims with the city in lieu of suing. This may include coverage of medical costs and payments to make up for lost wages or any ongoing physical impairment.

The report also noted a “concerning” trend in an increase of a certain type of claim that has the potential to be more costly.

“A significant number of new claim filings are for cumulative trauma injuries that are the result of performing repetitive physically and/or mentally demanding tasks over long periods of time,” it stated. “The cumulative trauma injury claims are common in an aging workforce, and typically involve several body parts and legal representation, making them extremely costly”

The report said that as Santa Monica’s current workforce ages and is made up of a higher proportion of older individuals, these types of injuries will likely become more prevalent and more expensive to the city.

“The cumulative trauma claims are nearly impossible to avoid given that under California workers’ compensation regulations, the employer is responsible for a physical injury if the job contributed to at least one percent of the injury,” said the report.

Cumulative trauma injuries accounted for 53% of news claims filed during 2021-22 fiscal year, compared to 35% during 2020-21, and 27% during 2019-20.

The City has several programs in place with the aim of reducing the cost of workers compensation claims, including providing case management services and opportunities for work placements tailored to injured employees physical capabilities.

The number of new claims filed with the City did not change from the previous fiscal year, remaining at 261, its lowest point in ten years.

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