California’s workers’ compensation system returned more than $1 million in administrative penalties through audits in 2024, according to a newly released annual report from the California Division of Workers’ Compensation’s Audit & Enforcement Unit.

The report details the results of 40 audits conducted on insurers, self-insured employers and third-party administrators, covering nearly 2,700 claim files statewide. Auditors identified 4,531 violations and assessed more than $1.35 million in penalties, with approximately $1.01 million ultimately subject to collection.

These findings offer another window into ongoing compliance problems within the workers’ compensation system. Among the most concerning statistics in the report was that auditors found unpaid indemnity benefits in more than 10% of reviewed claims. As a result, the Audit Unit issued 275 notices of compensation due totaling more than $442,000, including unpaid temporary and permanent disability benefits owed to injured workers. The report also found that eight audit subjects failed initial performance reviews and were moved into more extensive compliance audits, with five ultimately failing the second-stage review entirely, receiving penalties for all violations found.

The findings of this audit show the limits of the current enforcement structure. Although thousands of violations were identified, 32 of the 40 audited entities avoided financial penalties because they met or exceeded minimum performance standards under California law. Even where violations were found, many employers and carriers were required to only pay benefits that should have been issued in the first place.

Separately, the Audit & Enforcement Unit reported handling 560 complaints in 2024, recovering an additional $1.18 million in payments to injured workers and providers through complaint-driven investigations.

This report reinforces concerns that delays, underpayments and claims-handling violations remain persistent features of the system rather than isolated incidents. It also emphasizes the critical role applicants’ attorneys continue to play in identifying compliance failures and ensuring injured workers receive the benefits they are legally entitled to.

As enforcement challenges and audit findings continue to undermine injured workers, the need for strong advocacy and accountability within the system remains as important as ever.

This opinion by the California Applicants' Attorneys Association communications team is republished, with permission, from the CAAA website.