The Bankrupt City of Stockton California
The largest bankrupt city in the nation – Stockton, CA is self insured with CorVel as the Third Party Administrator (TPA). Stockton’s Workers Comp program seems to still be a fully funded self insured program.

One of the Five Keys To Saving Workers Comp $$ was being implemented at the time of the bankruptcy filing. Stockton had initiated a medical treatment provider network (MPN) to cut medical treatment costs. The MPN was very likely part of the CorCare network.
Stockton’s Risk Services department requires that all employees initially treat with one of three medical clinics. This is a very conservative cost-saving approach to reducing Workers Comp medical costs. The MPN will also enable Stockton and CorVel to better administer their return to work program.

The one area of concern on Stockton’s Workers Comp program is the benefits integration program. Workers Comp is meant to be a standalone program. That is why 2/3 of an injured employee’s wage is paid to them TAX FREE. Basically, the employee is being paid full wages as there is no tax on the Workers Comp benefits.
Stockton is now using the employee’s leave time to integrate with Workers Comp payments to make sure they are being paid FULL SALARY. Actually, Stockton is paying their injured employees that are out of work approximately 125% of their pre-injury wage. This overpayment will remove any of the built-in motivations to return to work.
Workers Comp laws, rules, benefits, etc. were put in place to make the injured employee be as whole as possible while recovering from their injuries. Stockton needs every dime they can find right now as they are out of $$$. The benefit integration program is a mistake that will cancel out any of the savings from the MPN they wisely put in place.
©J&L Risk Management Inc Copyright Notice