Overview

California's Division of Workers’ Compensation Audit & Enforcement Unit has reported significant findings from its 2024 audits, identifying over $1 billion in administrative penalties that are subject to assessment. The audits, which included both routine and targeted reviews, revealed numerous violations among insurers, self-insured employers, and third-party administrators.

In total, the unit conducted 40 audits, covering nearly 2,700 claim files, and cited thousands of violations, leading to substantial penalties. However, a portion of these penalties was not subject to assessment due to compliance by some audit subjects.

Key details

  • The audits were conducted by the Division of Workers’ Compensation Audit & Enforcement Unit.
  • A total of $1.01 billion in administrative penalties was identified for assessment in 2024.
  • 40 audits were completed, including 36 routine profile audits and 4 targeted audits.
  • 2,698 claim files were reviewed during these audits.
  • 4,531 violations were cited, resulting in total administrative penalties of $1.35 million.
  • Out of the total penalties, $336,588 was not subject to assessment due to compliance by 32 audit subjects.
  • The remaining penalties subject to collection totaled $1,010,939.
  • Of the penalties subject to collection, $852,263 has been collected, while $158,676 remains outstanding.
  • Eight audit subjects did not meet the Profile Audit Review standard and were subjected to full compliance audits.
  • Five of these subjects failed the second-stage review and were assessed penalties for all violations.
  • 32 audit subjects, or 80%, met or exceeded the Profile Audit Review standard and were not assessed penalties.
  • Audits revealed unpaid indemnity in 10.19% of the reviewed claims.
  • 275 notices of compensation due were issued, totaling $442,661.

Context

The findings from these audits highlight ongoing issues within California's workers' compensation system, particularly concerning compliance and the payment of due compensation. The audits serve as a mechanism to ensure that employers and insurers adhere to state regulations.

What happens next

Following the audits, the Division of Workers’ Compensation will likely continue to monitor compliance and enforce penalties where applicable. The outstanding penalties may be pursued to ensure that all due compensation is paid to claimants.

What we don't know yet

Details regarding the specific nature of the violations and the identities of the audit subjects are not confirmed. Additionally, information on the reasons for non-compliance and the future plans for addressing these issues remains undisclosed.