Industrial Cancers in California's Workers' Compensation System

Evidence on Earnings Losses and Disability Benefits

by Michael Dworsky, Carolyn M. Rutter

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Research Questions

  1. What level of earnings losses is experienced by workers who file workers' compensation claims for industrial cancer in California?
  2. What are the average benefit payments and wage replacement rates for these workers?
  3. Among workers with industrial cancer, is there evidence of gender differences in earnings losses, benefits, or wage replacement rates?
  4. How have reforms to permanent disability benefits implemented in 2013 affected compensation for industrial cancers?

California's workers' compensation system requires employers to provide medical care and disability (or indemnity) benefits to workers who experience workplace injuries and illnesses, including occupational cancer. The adequacy of disability benefits for workers with occupational cancer is an issue of considerable public concern. In response to concerns over potential gender bias in disability compensation, the California State Legislature has passed several bills that would have modified the disability rating process for cancer. All of these bills were vetoed by former Governor Jerry Brown.

This report was requested in Governor Brown's September 2018 veto message for Assembly Bill 749 and was commissioned by the state Department of Industrial Relations in order to inform the ongoing debate over compensation for industrial cancer in California. In this report, the authors conduct an empirical analysis of earnings losses, disability ratings, and benefit payments for occupational cancer claims in the California workers' compensation system.

This report builds on other recent RAND research on earnings losses and postinjury outcomes for workers who experience occupational injuries and illnesses in California, including a study on musculoskeletal disorders among firefighters. The intended audience consists of legislators and other policymakers in California, stakeholders with an interest in the health and safety of public safety workers, and policymakers in other states who are considering how occupational cancers should be compensated in the workers' compensation system.

Key Findings

Workers with cancer claims in California are overwhelmingly—but not exclusively—public safety workers covered by presumptions

  • There are substantial differences in worker characteristics and claim outcomes between workers with and without coverage by cancer presumptions.
  • Differences across occupations in mortality, claim denials, and earnings losses suggest that presumptions exert a powerful influence on claiming behavior and have succeeded in reducing barriers to claim filing for public safety workers covered by the presumptions.

Cancer leads to substantial earnings losses for most workers, but outcomes vary widely across occupation groups

  • As a proportion of their earnings, losses experienced by firefighters and peace officers with cancer claims were less severe than losses for the average injured worker who received indemnity benefits.
  • No earnings losses were detected for lifeguards who filed cancer claims.

Permanent disability and death benefits are responsive to differences in earnings losses across occupation groups, but pretax wage replacement rates still vary widely across occupations

  • It appears likely that differences in earnings losses across occupations reflect differences in severity of disability, as suggested by patterns of benefit receipt and mortality.

No evidence of widespread gender differences in earnings losses, disability ratings, or benefit payments within occupations was found

  • Available data do not support the conclusion that women who file cancer claims experience worse labor market outcomes or systematically different levels of compensation than male workers in the same occupational groups who file cancer claims.
  • Estimates were imprecise, however, due to the limited number of female workers with cancer claims.

Recommendations

  • Linkage of the data used in this study to the California Cancer Registry would be the most reliable way to produce the site-specific estimates of earnings losses that would be necessary to develop an empirically grounded benefit schedule or develop other alternatives to current rating methods.
  • To understand the effect of presumptions on claiming behavior or the existence of barriers to claim filing among workers currently covered by presumptions, it may be necessary to link the state cancer registry to public agency personnel records or administrative data on earnings and employment.
  • The small number of cancer claims filed by women limited this study's ability to examine gender differences in outcomes. An alternative approach to evaluating gender bias in the disability rating system might be to conduct an audit or correspondence study in which trained actors or hypothetical case files are rated by practicing qualified medical examiners.
  • Workers' compensation data have important limitations for studying cancer. Future research on this topic should seek to link workers' compensation data with outside data sources containing more complete information on primary cancer site, stage at diagnosis, and receipt of cancer treatment, including treatment that is not initially billed to workers' compensation. Such data sources might include group health or retiree health insurance claims from large public employers or the California Cancer Registry.
  • Eventually, the California Health Care Cost Transparency Database might also be used to examine cancer treatment and patient out-of-pocket costs for commercially insured workers who do not file workers' compensation claims.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Data and Methods for Studying Earnings Loss and Benefits Due to Occupational Cancer

  • Chapter Three

    Earnings Losses and Benefit Payments for Workers with Occupational Cancer Claims

  • Chapter Four

    Earnings Losses and Benefit Payments for Workers with Occupational Cancer Claims by Gender

  • Chapter Five

    Conclusion and Policy Implications

Research conducted by

This research was commissioned by the California Department of Industrial Relations (DIR) and conducted by the RAND Institute for Civil Justice, part of the Justice Policy Program within RAND Social and Economic Well-Being.

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