In 2026, the California Division of Workers’ Compensation (DWC) will audit claims administrators to assess compliance with workers’ comp laws. These audits, conducted every five years, will use performance standards developed by DWC based on audit results from 2022-2024.

Performance of the adjusting locations is measured in five areas of claims administration:

• The payment of accrued and undisputed indemnity
• The late first payment of temporary disability / first notice of salary continuation
• The late first payment of permanent disability and death benefits
• The late subsequent indemnity payments
• The provision of notices with Qualified Medical Evaluator/Agreed Medical Evaluator advice

Those selected for an audit will undergo an initial Profile Audit Review (PAR). Those with scores less than or equal to 1.58582 must correct unpaid compensation, but will face no penalties. Those with scores greater than or equal to 1.58583 will then have to undergo a Full Compliance Audit (FCA).

For those escalated to an FCA, entities with scores less than or equal to 1.81845 will see penalties applied for unpaid or late compensation. Those with scores greater than or equal to 1.81846 will have their denied claims audited and additional penalties assessed.

The Severity Rate, used to calculate penalties for underpaid or delayed compensation, is set at $160.65 for 2026.