Prices keep going up for just about every component of expense, including housing, groceries, and medical care. The figure at which your claim will settle is also subject to inflationary pressure. Medical expenses and wages are significant factors in settlement value calculations.
Medical Expense
The June 2023 issue of Business Insurance included an article about the effect of an increase in the Medicare medical service payment rate. California workers compensation medical fee schedules are largely gauged to 120% of Medicare rates. Consequently, the workers compensation community can expect an increase in medical expenses.

Medicare’s move affects civil as well as workers compensation claims. Medicare’s adjustment presages other insurers increasing their payments to medical care providers. Providers are facing increased costs to operate their facilities. More than half of California’s hospitals are losing money. Adequate payment is important for keeping medical services available. Payment increases raise the cost of current medical expenses as well as future treatment.

But wait, you may say, because of the collateral source rule, in most– but not all– liability cases, the amount paid by a health insurer is inadmissible. Care providers’ inflationary pressures are likely to trigger an increase in the billed rates, even though the amount they receive from insurers is much less. This affects not only special damages, but also general damages for pain and suffering which are often tied to the specials. An increase in compensatory damages could also trigger an increase in punitive damages in some cases.

To cover the increased cost of medical care, health insurers are raising their premium rates. According to the California Department of Managed Care, premium increases ranged from a 4.1% increase in 2022 for large group coverage to 7.0% in 2023 for CalPERS (the plan for public entity workers) enrollees. Individuals buying Affordable Care Act policies in 2023 faced average premium increases of 5.6%.

One technique for settling injury cases is to provide a vehicle for providing future health insurance rather than projected medical expenses. That workaround does not avoid inflation-fueled price increases.

Wages
To keep up with inflation, workers are asking for wage increases. A low unemployment rate adds urgency to employers’ responsibility to provide adequate compensation. Certainly, there are other economic factors which affect jobs in a specific industry. However, the compensation scales needed to retain necessary employees will rise.

Injury claimants will claim damages for lost wages at a higher level. A cost of living adjustment for future lost earnings will start at this higher base amount and, depending on the prospective disability period, may justify calculating larger annual increases than in the past.

Workers Compensation attorneys are already familiar with annual increases in disability payment rates.

What To Do Now
Most cases settle too late. Parties don’t feel compelled to settle until trial is imminent. Meanwhile, years pass. Well before our current inflationary spiral, I have seen the value of cases dramatically escalate while attorneys insist on turning over every rock in discovery.

Litigation is stressful. Claimants may suffer from a lack of resources which worsens their situation. That does not benefit any party. The smart move is to thoroughly and promptly research your case and then actively pursue settlement.

Closing a case works to all participants’ advantage. Mediation can make it happen.

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