Worker compensation claims in the City of Santa Monica fell for the first time in history this fiscal year.

The value of all open claims (known as total program liabilities) fell by 5 percent this year while the number of new claims (claim frequency) fell by 14 percent. The total program expenses fell by three percent.

The program covers medical and indemnity payments, claim settlements approved by staff and general claim and cost trends as required by law. Staff said the cost reductions were likely a mix of systemic savings generated by cost control efforts and temporary reductions due to COVID-induced cuts to city operations.

According to a report given to Council this week, the city spent approximately $12.5 million on medical treatment and indemnity payments for injured employees this fiscal year, down from $12.8 million in the prior fiscal year. Medical costs increased by about $100,000 to $4.9 of the $12.5 million total. Indemnity payments, covering temporary and permanent disability, dropped from $8 million to $7.6 million.

Staff said that during FY 2019-20, the City settled 106 claims with a total value of $2,621,075 compared to 150 claim settlements in FY 2018-19 with a total value of $4,133,833.

The report said that claims were on track to match the previous year prior to the COVID crisis and that the declines are due to fewer city employees being on the job with the Big Blue Bus accounting for the largest share of the reduction (38 fewer claims this year).

While costs fell this year, staff said the prognosis for the future is not good as new claims suggest future cases will be costly. Specifically, 27 percent of new claims were for “cumulative trauma” injuries that resulted from repetitive physically or mentally demanding tasks over long periods of time.

“The cumulative trauma injury claims are common in an aging workforce, and typically involve several body parts and legal representation, making them extremely costly,” said the report.

Total costs were projected to increase by 5 percent for the year before the mid-March emergency order shuttered many services. Staff said there was good news in an analysis of temporary disability payments and a 25% reduction in payments made to sworn public safety employees. The report said sworn law public safety employees receive 100 percent of their pay while recovering and often require additional costs to backfill their positions.

Program liabilities fell to $31 million, a $1.6 million reduction that is attributed to a cost management program. According to the report, participants in the program lost 41 days compared to 127 days for non participants and participant payments averaged $29,031 compared to $120,865 for non participants.

“The “Wow, that’s Fast” Program is designed to help reduce the number of litigated workers’ compensation claims from sworn personnel by providing them with a comprehensive case management service without the fees that attorneys charge,” said the report. “This, in turn, helps to reduce program costs by lowering medical expenses, 4850 disability benefits, permanent disability expenses, and legal expenses.”

The city also saved money by reassigning some injured workers to jobs that could be accomplished despite their injury.

A pilot program to determine the most cost-effective model for managing claims also bore fruit reducing total liabilities for BBB (the pilot agency) from $7.4 million to $5.6 million.

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