Injured workers underpaid?

A state-sponsored study says insurance payments fell shy by $40 million per year.

January 19, 2004

By Andy Furillo -- Bee Staff Writer

California workers injured on the job have been underpaid by hundreds of millions of dollars over the past decade by insurance adjusters who miscalculate their disability benefits, researchers have found.

A state-commissioned study on California's workers' compensation market has conservatively estimated the underpayments at $40 million a year. Citing testimony at a 1998 state Senate hearing, a Los Angeles-area attorney who is seeking restitution for the injured workers has pegged the losses at more than twice the $40 million figure -- amounting to more than $1 billion over the past 13 years.

"The insurance companies are retaining these monies and are not tendering them to the injured workers, nor are they passing those savings back to their policyholders, small-business owners who over the last few years have really felt the pinch of increasing premiums," said Nick Kazandjieff, the Sherman Oaks workers' comp applicants lawyer who has filed a class-action case to recoup the underpaid funds.

According to Department of Industrial Relations audits for 2002, the underpayments affect about 15 percent of the examined cases and total a little less than $1,500 per injured worker. The underpayments mostly occur as a result of erroneous computations and other miscalculations by insurance adjusters in an increasingly complex system, according to researchers, and they represent a microscopic percentage of payments in a system that is projected by the Workers' Compensation Insurance Rating Bureau to pay out $21 billion in indemnity and medical benefits this year.

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