The California Division of Workers' Compensation issued administrative penalties totaling a little more than $1 million following 36 random and four targeted audits in 2024 that found $442,661 in unpaid compensation.

The division, in its latest Profile Audit Review report, said about 10% of the 2,698 claims reviewed in 2024 had unpaid indemnity benefits. The division reports $201,696 in unpaid temporary disability or salary continuation benefits and $195,770 in unpaid permanent disability. An additional $44,158 in self-imposed increases for late payments was outstanding, as was $1,038 in other interest and penalties. 

All told, the DWC's Audit and Enforcement Unit identified 4,531 violations with potential penalties of $1.35 million. However, not all penalties are subject to collection, and after waiving fines for subjects that passed the initial audit stage, the division collected $1,010,939.

The annual audits start with a review of randomly selected claims files. Thirty-two shops scored 1.545 or lower during this initial review and were not assessed any penalties. They were, however, ordered to make good on the $85,888 in unpaid compensation that auditors identified.

Three of the eight shops that failed the Profile Audit Review and were subject to the first round of the Full Compliance Audit notched passing scores of 1.84625. Combined, they were ordered to pay more than $100,000 in unpaid benefits and assessed more than $72,000 in fines for unpaid or late payments, including:

• Tristar Risk Management in San Diego was fined $14,336 and ordered to pay $47,241 in unpaid benefits found on 15 claims.
• CNA Financial in Lisle, Illinois, was fined $28,010 and ordered to pay $18,618 in unpaid benefits on 14 claims.
• Gallagher Bassett Services in Aliso Viejo was fined $29,736 and ordered to pay $34,438 in unpaid benefits on 27 claims.

The five shops that failed the first part of the Full Compliance Audit were ordered to pay more than $250,000 in outstanding compensation and fined more than $935,000 for all identified violations, including:

• Protective Insurance Co. in Carmel, Indiana, was fined $158,676 and ordered to pay $15,440 in outstanding benefits on 23 claims.
• Sedgwick Claims Management Services Inc. in Riverside was fined $294,588 and ordered to pay $95,044 in unpaid benefits on 42 claims.
• Ryder System Inc. in Alpharetta, Georgia, was fined $256,436 and ordered to pay $40,181 owed on 18 claims.
• Broadspire in Brea was fined $215,302 and ordered to pay $103,867 in unpaid benefits owed across 28 claims.

Berkeley Casualty Co. in Birmingham, Alabama, the last shop to fail the Full Compliance Audit, was fined $13,855. The company had no outstanding compensation, but the division's report indicates auditors reviewed only 12 files in total — compared to more than 100 for each of the other shops that were assessed fines — and identified 77 violations.

The division's report doesn't provide granular details about violations for individual subjects.

Failure to comply with the requirement to provide notice of the qualified medical evaluator and agreed medical evaluator process remains the most commonly cited violation. It has accounted for 23% to 41% of citations in each year since 2020, the earliest year for which an audit report is available on the division's website.

The 1,141 citations for failure to comply with the notice requirement represent a quarter of all violations cited in 2024. The division assessed a combined $112,577 in penalties for the violation.

Failure to pay or object to medical treatment expenses was the second most common violation, with 650 citations and $174,566.40 in penalties.

Late first payment of temporary disability benefits resulted in 588 citations and $178,266.20 in penalties, while failure to pay any TD or salary continuation benefits yielded 237 citations and $157,007 in fines.

Late payment of subsequent indemnity benefits accounted for 452 citations and $95,885.60 in penalties.

The 2024 audit report is here.

The 2024 audit ranking is here.