California’s Division of Workers’ Compensation has announced the performance standards it will use to audit workers’ compensation claims-adjusting locations in calendar year 2027. The thresholds determine when reviews expand and how administrative penalties apply, with different rules for initial reviews and full compliance audits.
The Oct. 19 announcement concerns 2027 audits, not an immediate change to employer benefit obligations. DWC based the standards on audit results from 2023 through 2025. Its Audit and Enforcement Unit reviews every location handling California workers’ compensation claims at least once every five years.
Initial review threshold
For the initial profile audit review, the 2027 performance threshold is 1.67327. Locations rated at or below that level must pay outstanding compensation but will not face administrative penalties. A rating of 1.67328 or higher triggers a full compliance audit covering additional indemnity claims.
The reviews examine five areas: payment of accrued and undisputed indemnity; timely first temporary disability payments or notices of salary continuation; timely first permanent disability or death benefit payments; timely subsequent indemnity payments; and notices containing Qualified Medical Evaluator or Agreed Medical Evaluator advice.
Expanded audits and penalties
The full compliance audit threshold is 2.14192. Locations rated at or below that level must pay outstanding compensation and face administrative penalties for violations involving unpaid or late-paid compensation. That penalty treatment differs from the initial profile review, where ratings at or below the threshold carry no administrative penalties.
A full compliance audit rating of 2.14193 or higher triggers another expansion, adding samples of denied indemnity claims. DWC says penalties at that stage apply to all applicable violations under the state’s audit penalty regulations.
DWC also set the 2027 severity rate standard at $165.60. The agency says it will post more information about the calendar-year 2027 standards on its Audit and Enforcement Unit webpage.
