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State By State Analyses – ALAE Allocated Adjustment Expenses – WCRI Blogging Live


ALAE Allocated Adjustment Expenses

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The ALAE Allocated Adjustment Expenses of state by state analyses.

State by State Comparison of ALAE – represent 10 to 20% across States

Moderator- Ramona Tanabe

California highest overall

Medical Management ALAE – Highest states are Louisiana and New Jersey- interesting that the top two did not include California

There has been a steady Medical Management Expense increase over the last twelve years – 4-11%

Texas had an increase in ALAE medical management expenses even though medical costs decreased.   HB 7 caused a sharp increase in ALAE  medical expenses.    Informal networks were eliminated by Texas, only certified networks

In my humble opinion,  HB 7 harmed the WC community as the informal networks were very critical to cutting workers comp costs in Texas.

New Jersey actually had a 14% medical management cost in 2003.   By 2014, the medical management ALAE  increased to 23%.

The bottom line is that the medical management costs (ALAE) were justified by the decrease in medical costs- for most states. 

Litigation Costs

Defense attorney expenses were the highest across the states by far.    The state with the highest average amount of litigation ALAE was California.

The legal expenses seemed to be centered around:

  • The complexity of the state WC system
  • Length of process
  • Inefficiencies in the state WC system

Is there a right amount of medical legal medico-legal expenses across the states?  Is there a benchmark amount?  Are these caused by inefficiencies in the cost reduction systems.

ALAE is one of those areas where much more research needs to be conducted as it is not discussed as much as it should be overall.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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