State Wasted $20 Million on Workers’ Comp Premiums, Audit Finds

Ten state agencies reviewed by the state auditor cumulatively wasted more than $20 million by buying workers’ compensation insurance that was more expensive than necessary, the auditor reported November 21.

In fiscal year 2017-18, nearly 190 agencies provided workers’ compensation benefits through a state master agreement administered by the State Compensation Insurance Fund – a “public enterprise fund” created in 1913 – while 32 agencies opted to purchase insurance directly from the fund.

“The 10 agencies we reviewed who purchased insurance from State Fund consistently paid more in premiums than they would have paid had they provided benefits under the master agreement,” the auditor reported. “These 10 agencies collectively paid an average of $5.7 million per year in premiums to State Fund but would have paid an average of less than $1.6 million per year under the master agreement, saving the State more than $20 million.”:

The auditor additionally found that a lack of qualified medical evaluators has delayed appointments for medical evaluations, “resulting in State Fund automatically denying some claims and employees having to wait longer to receive benefits or return to work.”

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