Sunday, July 20, 2008, 09:24 PM - Political developmentsTwo and a half years.
That's how long it has been since the California Commission on Health and Safety and Workers' Compensation (CHSWC) recommended that the 2005 permanent disability rating schedule (the 2005 PDRS) be revised (note: I'll provide links to some of these studies at the end of this post)
Let's recap some history.
In its early 2006 report, CHWSC noted that 3 studies (including one by a UC Davis professor and one from UC Berkeley as well as a study done by AMA expert Christopher Brigham) documented sharp drops in PD average ratings. Several of the studies showed reductions of over 55% in average ratings, not even counting the "zeros" under the AMA impairment system.
In 2007, a followup UC Berkeley study documented a dip of over 41% in PD ratings under the 2005 schedule.
Throughout 2006 and 2007, the Schwarzenegger administration continued to stall on an administrative fix to the 2005 PDRS. Seeking a legislative solution, the legislature passed bills in 2006 and 2007 (SB 815) which would have raised benefits. A third attempt, SB 1717 (Perata)
will likely reach the Governor's desk this session.
Insurers had a feast during this time. Statistics from reports by the WCIRB (Workers Compensation Insurance Rating Bureau) show that in the 4 year period between 2004 and 2007, benefits paid to or on behalf of injured workers (including indemnity benefits and various forms of medical treatment) averaged around 37% of premium dollars collected. During most of these years insurer overhead and profits far exceeded
benefits paid on behalf of workers. Insurers enjoyed record loss ratios.
A July 18, 2008 bulletin from the California Workers Compensation Institute notes that permanent disability benefits in CY 2007 were 13.1% of CY 2007 insurer payments. Agent and broker fees amounted to almost 2/3 of payments for permanent partial disability, and loss adjustment/defense costs exceeded payouts for permanent disability.
Permanent partial disability ratings are , of course, no longer based on subjective factors of disability. Workers are now compensated for objectively measureable impairments which in many cases are career altering, affecting activities of daily living , and which diminish quality of life.
Governor Schwarzenegger had pledged in 2003 that "I never want to hurt any one of the workers or the people that get the benefits".
Meanwhile, the DWC performed a 3 part study. Phase I analyzed return-to-work rates for injured workers with permanent disability. Phase II had 3 steps:
Step 1: Three-year wage loss for workers injured 10/1/2000 to
Step 2: Correlated return-to-work rates and indemnity payments to
determine uncompensated wage loss under the "old" (1997) PDRS
Step 3: Compared ratings in the 2005 PDRS
Those studies were completed by May 2007.
The DWC continued to stall.
A revision of the 2005 PDRS was not unveiled until Spring 2008, over 2
years after CHSWC had recommended a prompt schedule revision. If adopted, the revision would not go into effect until 1/1/09 and would do nothing for workers injured before 1/1/09.
As drafted, the 2009 PDRS would restore only approximately 1/3 of the
permanent disability that was reduced by the 2005 schedule (not even counting the problem of the AMA "zeros").
In its February 2006 report, CHSWC noted the "vexing" problem of adequacy. The CHSWC report noted that:
"It has been stated that compensation benefits should, on average, replace two-thirds of the wages lost as a result of a compensable injury. In practice, states arrive at widely varying replacement rates depending on each state's solution to the tension between adequacy and affordability".
Under the Governor's proposal an amputated foot would be worth $36, 108 (as opposed to the current $28,820) whereas in Oregon the foot is worth $149,423 and the national average is $80,000.
Adequacy and affordability. PD is 13.1% of insurer payouts.
Adequacy and affordability is a debate we ought to have.
So here we are. Hearings begin tomorrow in Los Angeles and continue in Oakland on Tuesday.
Tomorrow I'll be doing a primer on some of the concepts used in the CHSWC and DWC studies that are critical in the debate over the PDRS.
Be sure to check back on Tuesday for more.
Here is the promised link to the 2006 CHSWC report:
http://www.dir.ca.gov/CHSWC/Reports/CHS ... 3-2006.pdf
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Saturday, July 19, 2008, 10:09 AM - Political developmentsWhether you're in SoCal or the Redwood Empire, take note of the important public hearings to be held this coming week in Los Angeles and Oakland.
The subject? The Schwarzenegger administration's proposal for adjustments to the permanent disability rating schedule. The proposed amendments to the schedule would raise permanent disability benefits for disabled workers by about 16% overall, an increase that comes nowhere close to restoring cuts made since 2005. Because of the way the proposed schedule changes are structured, many disabled workers would see negligible increases or no increase at all.
If you're an injured worker, labor official, or someone advocating for workers, you may want to consider attending the hearings to show your concern on the issue. There will be an opportunity for members of the public to speak, although you can attend without speaking. There is no fee to attend and you can just show up.
Here are the details:
Monday July 21 10am to 5pm (or conclusion of business)
at the Los Angeles Ronald Reagan State Office Building auditorium
300 South Spring Street
Los Angeles CA 90013
Tuesday July 22, 2008
at the Oakland Elihu Harris State Office Building auditorium
1515 Clay Street
Oakland CA 94612
Various advocacy groups wil be testifying. But these forums will provide disabled workers with a rare opportunity to be heard on the issue as well.
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on the right column below the "Most Recent Entries")
Tuesday, July 15, 2008, 09:58 PM - Political developmentsThink the big multinational insurers writing California workers' comp are immune from the current credit meltdown?
Look at today's news about AIG. The insurer may be facing a $7 billion loss this quarter. Potential writedowns over the next several quarters may equal $20 billion, according to a recently released analysis quoted on Bloomberg.com today. See it here:
http://www.bloomberg.com/apps/news?pid= ... refer=home
That's some real money. AIG's stock fell by 8.5% today.
The losses aren't in workers' comp. Indeed, if anything, California comp profits have been an element buoying the company during its recent
But these sorts of results show how some carriers in the California comp
market have tied their fortunes to the tiger's tail of arcane debt instruments. The collapse of these houses of cards threatens to swamp our whole financial system.
In our economy there has been a disturbing trend toward off the books transactions. Look at this item regarding concerns re $1.1 trillion of Citicorp off the books assets(Citicorp is parent of Travelers Insurance):
http://www.bloomberg.com/apps/news?pid= ... refer=home
Banks-particularly regional banks-may be the next dominoes to fall.
How strong some of the large insurers are remains to be seen.
Don't forget that debt rating agencies essentially "enabled" some pretty risky practices in debt-credit swaps. We really don't know the extent to which some of the large insurers have exposure in the current economic meltdown, and it's not clear that insurers have come clean.
It's an issue I'll continue to follow.
Forgive the judge, the doctor, the attorney, or the disabled worker who can't get too excited about AIG or Travelers losing that utilization review dispute about the injured worker's gym membership request.
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Friday, July 11, 2008, 12:11 AM - Political developmentsThe universe's background noise is cosmic background radiation. It's a measurable phenomenon-and a component of the "Big Bang" theory of how it all got started (hold it there: don't go asking me to answer the question "why is there not nothing"; that's beyond the scope of this blog).
Some theoretical physicists and cosmologists speculate about the existence of superstrings, cosmic tubes of energy, perhaps left over from the universe's early days. Some have theorized that the superstrings-if they exist- may oscillate, forming background gravitational waves.
I know, I know. This is too much to contemplate right now.String theory? You're really just wondering if you'd look good in that string bikini or how much it will cost to fill your gas tank or whether there's any decent gelato to be had on a hot summer evening or whether Fannie Mae and Freddie Mac will survive without a transfusion of federal taxpayer bailout cash, or whether Sy Hersh may be right and before year's end Israel will attack Iran with tacit U.S. support before Iran's nuclear program achieves success.
I'll soon be doing my list of the top 10 developments in California for the first half of 2008. But I'm thinking background noise tonight. Background noise, workers comp style......Developments in labor law, employment law, and in the economy that is the backdrop for workers' comp.
Here's a list of some of items that recently caught my eye:
-The U.S. National Institute for Occupational Safety and Health released figures showing that while workplace fatalities decreased for most groups, they rose for Hispanics. Many were doing high risk jobs.
The link to a Forbes Magazine piece on the study is here:
http://www.forbes.com/forbeslife/health ... 16264.html
-A June 2008 Wall Street Journal article revealed that many corporate CEOs have arranged for "golden coffins". What? Think lavish death payouts in the event they die in office. In some instances the "golden coffin" is over $100 million. The link:
http://online.wsj.com/article/SB1213059 ... s_page_one
-different countries have different approaches to health. In Japan, there's now a mandatory national waist-measuring law. The goal?
Controlling costs and promoting better health. The link:
http://www.sfgate.com/cgi-bin/article.c ... amp;type=p
-labor had a setback in the U.S. Supreme Court as the court struck down a California law (enacted in 2000 under Gray Davis) making it illegal for companies receiving $10k or more in state contracts from using such funds to campaign against labor organizing drives. The link:
http://www.sfgate.com/cgi-bin/article.c ... amp;type=p
-in another U.S. Supreme Court case, employees won a victory over employers in an age discrimination case. The case, Meacham vs. Knolls,
puts the burden on employers defending against age discrimination claims to show that the layoff was based on reasonable factors other than age. The case is found here:
http://www.supremecourtus.gov/opinions/ ... 6-1505.pdf
-a Los Angeles Times article noted that the trend has been for employers to cut sick leave benefits, reducing the allowable days or lumping the days with vacation benefits. Now, some cities and states are
considering legislation to expand paid sick leave (this includes California, where AB 2716 is pending in the legislature). Here's the LA Times piece by Shari Roan:
http://www.latimes.com/features/health/ ... 6224.story
-again, from the L.A. Times, a story on how employers use federal ERISA law as a shield against lawsuits challenging denials of health, life, retirement and disability benefits. The piece, by Mark Sherman, is here:
http://www.latimes.com/business/la-fi-e ... 3711.story
-and a good piece by Victoria Colliver in the San Francisco Chronicle about treatment denials by group health carriers:
http://www.sfgate.com/cgi-bin/article.c ... &type=
-employers looking for ways to compress workweeks, allowing workers to work four ten hour days rather than five eight hour days, allowing workers to save gas and commuting time:
http://signonsandiego.printthis.clickab ... tnerID=616
-and on Arnold Schwarzenegger: is the Governor facing "donor fatigue"?:
That's some background noise to chew on for those of us who deal with employers and workers in the the comp system each day.
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Sunday, July 6, 2008, 08:08 PM - Medical treatment under WCDouble dipping.
That can be good or bad.
One of my favorite things is being on a summer car trip, rolling into a small town just about anywhere (what a peculiarly American, 20th century endeavor!), finding a Tastee Freez or Dairy Queen. Going for a cone of soft ice cream, asking for a double dip.
Less appealing are the double dippers at a party. Perhaps you remember the famous Seinfeld episode. George Costanza is caught re-dipping a chip into the dip after he has already taken a bite. Timothy objected, noting that it was like George was putting his "whole mouth in the dip". Defiant, George proclaimed "You dip the way you want to dip, I'll dip the way I want to dip".
What a jerk. Few of us want to kiss everyone we meet at the party food table.
Legally speaking, double dipping isn't usually favored.
They're on the losing end of "Sandhagen".
The California Supreme Court has finally issued its opinion in State Compensstion Insurance Fund v. WCAB and Brice Sandhagen. The issue there was whether SCIF was legally entitled to double dip.
Where SCIF had available to it the utilization review process ("UR"), could SCIF use the Labor Code 4062 process instead (or in addition to) the UR process where it wanted to object to a medical treatment recommendation? To have allowed this would have meant that SCIF was entitled to double dip.
No, the California Supremes said. SCIF's process for objecting to a medical treatment recommendation was under Labor Code 4610, not under the QME dispute resolution process of Labor Code 4062. In so holding, the court noted that 4610 is a statutory scheme requiring employers to conduct utilization review when resolving requests for medical treatment where they choose to modify, delay or deny treatment.
In Sandhagen, SCIF did use the UR process, but not within the statutory timeframe. The court noted that Labor Code 4610 requires treatment decisions in a timely fashion, "not to exceed five working days from the receipt of information reasonably necessary to make the determination, and in no event more than 14 days from the date of the request for treatment" (with additional timeframes under limited circumstances).
Had SCIF prevailed, insurers would have been empowered to stall treatment requests in many cases. Even if it blew the UR timeframes (or even if its own UR reviewer approved the treatment), the insurer would have been able to object, forcing the worker to go through a lengthy QME process (requesting a QME, selecting a QME, waiting for the QME exam date, waiting for the QME report, and perhaps waiting for supplemental QME reports, a deposition of the QME, yada yada, yada).
That's why Sandhagen is an important victory for workers.
Kudos to Maugerite Sweeney of Redding, whose compassionate career on behalf of disabled workers now features a victory on their behalf at the California Supreme Court.
(you can subscribe to the blog by clicking on the RSS button on the lower right column under most recent entries; in a post this week I'll be looking at the Top 10 Events in California Workers Comp for the 1st Half of 2008)