Senator John M. W. Moorlach (R-Costa Mesa) issued the following statement today after the California State Auditor, directed by the Joint Legislative Audit Committee, released an audit finding at least 10 state agencies purchasing Workers’ Compensation Insurance from State Compensation Insurance Fund (State Fund), a nonprofit enterprise established by the California Legislature in 1914, are paying millions of dollars more than necessary to provide benefits to their employees.
“Given today’s concerning news, I appreciate the analysis done and the report prepared, as well as agree with the recommendations by the office of California State Auditor Elaine M. Howle, CPA.
“First, the California Department of Human Resources (CalHR) should provide a benefit analysis comparing the cost of obtaining workers’ compensation insurance through the Master Agreement vs purchasing directly from State Fund. I commend CalHR for agreeing to implement the Auditor’s recommendation.
“Second, the California Legislature should grant CalHR the authority to obtain the necessary data to compare insurance versus master agreement costs.
“Third, State Fund needs to create a policy for ‘to provide settlement authorization requests to agencies at least 30 days before settlement conferences.’ State Fund failed to achieve this for eight of the 15 claims the auditor reviewed. I call on State Fund to reconsider this request and implement the policy.
“Lastly, a review of rates paid to qualified medical evaluators should be considered.”
California State Auditor Report 2019-106 was conducted at the request of Senator Moorlach. A sample of 10 of the 32 agencies that purchase insurance through State Fund was audited and found to have paid an average of $5.7 million per year in premiums. These 10 agencies could have used the recommended Master Agreement to save the state $20 million during the period reviewed from fiscal year 2013-14 through fiscal year 2017-18. It is possible the opportunity costs could be three times that if the 32 agencies following the same practice were also audited.
This article was released by the Office of Senator John Moorlach.