Today (January 17) the DWC will be holding hearings in Oakland on proposed revisions to the QME regs. The hearing is slated to begin at 10 am in the auditorium of the Elihu Harris State Building.

Changes in the QME regs are being watched closely by all major workers'comp stakeholders. Under current law, QMEs wield tremendous power in California's comp system. Disputed issues over medical treatment, disability status and permanent disability rating are resolved by QMEs.

The number of QMEs doing evaluations has dropped considerably. Meanwhile, there's been growth of mega-evaluation groups that have doctors available with offices all over the place. In a post last year I noted that one of Boxer & Gerson's clients was sent to panel QME evaluation at a tanning salon.

The proposed regs would tighten up some-but not enough-on abuses by doctors gaming the system with muliple evaluation locations to advance their doc in the box business.

Few of the more experienced, thoughtful QMEs (many of whom are members of CSIMS, the California professional organization for industrial medicine examiners)are signed up with these groups.As a result, many lawyers and judges believe that the quality of medical-legal evaluations in California has declined at the very time when the legal issues have become more complex in comp cases.

I'll continue covering the issue, albeit on a reduced schedule over the next week. I'm currently posting this from an internet cafe in Siem Reap, Cambodia where I'm visiting the Angkor Wat, the 12th century Hindu/Buddhist temple complex that's on the short list of the world's top architectural treasures. Think Laura Croft Tomb Raider.

Stay tuned.

Julius Young
www.boxerlaw.com

Gov. Schwarzenegger announced three appointments to the WCAB yesterday.

Re-appointed (as I predicted) were James Cuneo and Frank Brass. Cuneo and Brass have been in the majority in most of the WCAB's decisions over the past several years. It's a board that, in close cases, has given the nod toward the insurance industry position (citing the intent of SB 899 to reduce comp costs) rather than the employee position (note: the Labor Code still does have a provision for liberal construction of the law in favor of the employee).

Also appointed was Deirdre Lowe, a Northern Californian. Ms. Lowe is a longtime partner with the San Francisco office of Hanna, Brophy et al. Her husband, Michael Lowe, continues as a partner at H&B's San Francisco office. On a personal level, Lowe is one of the nicest people you'll ever meet (as are Brass and Cuneo). Her appointment will eventually require confirmation by the California Senate.

I've known Ms. Lowe since my early days in Sacramento practicing with Eugene Treaster. Back then, Deirdre Lowe was an applicants' attorney with Green and Azevedo. There she worked with Don Green, longtime lobbyist for the California Applicants Attorneys. That office turned out to be a generator of many creative attorneys. Other alumni there include Michael Marks (formerly of Finnegan, Marks & Hampton in San Francisco), one of the top defense attorneys in California who later has consulted on appellate issues from his Vermont abode.

With these picks, Schwarzenegger continues the pattern of appointing experienced defense attorneys to the WCAB. Cuneo, Brass and Lowe join Alfonso Moresi on the board. Also on the board is Ronnie Caplane and Joseph Miller.
Interestingly, all are Northern Californians except Miller.

Schwarzenegger has another vacancy to fill. There had been rumors that one of the candidates was Oakland defense lawyer Steve Jiminez. But Jiminez died tragically in his sleep about a week ago at the age of 52, leaving many friends in the industry shocked at his untimely demise.

These appointments will shape the law in California for years to come.

Stay tuned.

Julius Young
(you can see my bio here: http://www.boxerlaw.com/attorney_bios/julius_young.html)
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2007 was a tough year for SCIF. 2008 promises to be a year of change for SCIF as well.

SCIF. It's California's largest workers' comp insurer, the quasi-public State Compensation Insurance Fund. SCIF competes with other carriers in the market.

SCIF's market share has dived over the past few years from roughly half of the market to one quarter of the market. The fund may be grossly overstaffed, having ballooned with personnel several years ago as its share expanded. Sorta like a giant star that expands and then contracts.

2007 brought investigations-criminal, as well as from the legislature and the insurance commissioner. An audit revealed major problems at SCIF.

There will be a bill this year to change SCIF's governance. Hearings will be held on January 30 at the State Senate Banking, Finance and Insurance Committee.

John Howard's piece in today's Capitol Weekly does a good job of summarizing the recent history on SCIF. You can see the piece here:
http://www.capitolweekly.net/article.ph ... 3bkjnq8s6m

And to see the audit report itself, look at the attached post - "Audit of SCIF Shows Largest Comp Insurer Ran Amok":
http://www.workerscompzone.com/index.ph ... 212-010631

Stay tuned.

Julius Young
www.boxerlaw.com
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2008 promises to be an active year in California workers' comp.

Here is my subjective list (in no particular order) of the top things to watch for in 2008. I'll include links to prior posts I've done on some of these issues.

1. APPOINTMENT OF NEW WCAB MEMBERS
The statewide Workers' Compensation Appeals Board currently has vacancies since the terms of Janice Jamison Murray and William O'Brien recently expired. Unless reappointed, Commissioners Frank Brass and James Cuneo's terms will expire soon. And Commissioner Alfonso Moresi has yet to be confirmed by the legislature. The Governor has a chance to further shape the WCAB by appointing members who will interpret the law for years to come. There is widespread disappointment among applicants' attorneys, many judges and even some defense attorneys with the quality-and results-of the WCAB's work over the past few years. Nevertheless, Schwarzenegger's administration does have to be credited with appointing highly qualified industry veterans to the WCAB slots so far.

2. WCAB ACTION ON BOUGHNER
The WCAB has had the Boughner case under study for some time and will be rendering a decision this year. Boughner is the case in which a San Francisco workers' compensation judge ruled that the permanent disability rating schedule adopted in 2005 (the 2005 PDRS) is invalid.
You can find a pdf version of the case by clicking here:
http://www.workerscompzone.com/boughner.pdf
If the WCAB upholds Judge Duncan's decision that the 2005 PDRS is invalid, there will be immense pressure on the Division of Workers' Compensation to revise the rating schedule... which brings us to #3...

3. REVISION OF THE 2005 RATING SCHEDULE
Carrie Nevans, DWC Administrative Director, has indicated that a revised schedule is in the works and will likely be unveiled sometime in early 2008. In meetings with stakeholders and in public statements, she has indicated that the revision will add some money for permanent disabilities-perhaps in the $150 million range systemwide. Part of this is likely to be achieved by rebalancing ratings to increase ratings for certain body parts such as the spine. The schedule is likely to be prospective (meaning that the benefits of any increase only affects cases after the date the new schedule goes into effect). If the WCAB upholds the Boughner decision finding the 2005 PDRS invalid, perhaps the 2008 revision of the schedule could be made retroactive.
For a link to my post "Nevans Predicts Adjustments in PD Schedule", click here:
http://www.workerscompzone.com/index.ph ... 217-073806

4. EAMS WILL DEBUT
The California workers' compensation board is going paperless. It's called EAMS, and it will be making its debut in the summer of 2008 with some sneak previews beforehand.
Managed by WCAB Court Administrator Keven Star, WCAB consultant Glenn and Shor, WCAB judge Neil Robinson, in conjunction with Deloitte Consulting, EAMS is a massive undertaking to bring the WCAB up to snuff with modern technology. Using at least four major database programs (Curam, FileNet, Cognos and CyberSource), EAMS promises to increase WCAB efficiency.
Also being designed are courtrooms which will be EAMS-friendly. Medical reports and exhibits will be uploaded electronically. Lawyers and judges will have 24/7 access to files. Unrepresented applicants will be able to upload documents at special kiosks.
All of this takes money. From what I've heard, things seem to be on track, but with such a big project, you can usually expect the unexpected.

5. ACTION ON THE OFFICIAL MEDICAL FEE SCHEDULE
The current medical fee schedule regs were adopted in 2007 and can be seen here:
http://www.dir.ca.gov/dwc/DWCPropRegs/O ... alRegs.pdf

In 2007, the DWC contracted with the Lewin Group to do a study in preparation for the 20008 update to the OFMS (Offical Medical Fee Schedule).
For years, California has compensated physicians by using CVRS, the California Relative Value Scale. This year, the DWC will probably switch over to the RBVRS system. A little fuzzy on your acronymns? RBVRS stands for Resource Based Relative Value Scale. It's a federal system from the Centers for Medicare and Medicaid Services, and it's used by many other states for computing compensation for workers' comp physicians.
Many doctors-including the California Society of Industrial Medicine and Surgery-have been concerned about the switch-over. In some states that adopted RBVRS, the payments to specialists decreased, causing an exodus of doctors from the system. That's not what the California comp system needs now, since there's already been many doctors leaving the system. To see posts on that topic-"Hasta La Vista Chico", "Wouldn't Touch It With a Ten Foot Pole", and "Exodus"-click here:
http://www.workerscompzone.com/search.php?q=chico
So the action on OFMS this year is likely to have great significance. One big issue is whether the revised OFMS will or won't be revenue-neutral. You can expect some developments on this by this spring.

6. ALBERTSON'S VS. WEXFORD AND THE EXCESS COVERAGE MARKET
In a Los Angeles lawsuit, the parent company of Albertson's has challenged the way Wexford Underwriters (handling CNA and TIG excess insurance coverage) was interpreting excess coverage policy language. Basically, excess coverage is a type of insurance coverage which kicks in when losses on a claim or claims reach a certain dollar level.
Wexford took the position that claims should not be lumped together in computing when excess coverage was triggered. Rather, Wexford's position was that each individual injury had to be dealt with as a separate occurrence for purposes of determining when Albertson's self-insurance retention ended and insurer excess coverage began. Albertson's position is that under the Wilkinson case, multiple injury awards may be combined.
As of early 2008, this lawsuit is still pending. Funny thing, though. In December 2008, the WCAB decided the Benson case, throwing out the decades-old Wilkinson doctrine.
If the Benson decision survives appellate court scrutiny, there may be less need for excess coverage, since permanent disability awards will be lower. But that's hard to quantify, and to the extent that medical treatment is a cost driver in serious injury cases, there will always be a market for excess insurance.
But back to Benson...

7. BENSON, SANDHAGEN, SMITH, VAIRA AND MORE
The California courts will be deciding some important workers' comp issues this year. Two cases are already awaiting California Supreme Court argument. Smith v. WCAB and Amar v. WCAB are cases dealing with whether an insurer is liable for paying attorney fees for a worker's attorney who fights an informal denial of treatment where there is a future medial award. State Compensation Insurance Fund vs. WCAB (Sandhagen) deals with utilization review procedures, including issues regarding use of untimely utilization review reports in the litigation process.
Dianne Benson vs. The Permanente Medical Group is a recent en banc decision from the WCAB. You can see my post on the decision here:
http://www.workerscompzone.com/index.ph ... 214-205644
The Benson decision is being appealed. The result in Benson is a 2007 Christmas present of huge magnitude to insurers who are already reaping record profits. The issue-whether successive or concurrent injuries to the same body part which stabilize at the same time must be rated separately-is so important that it is likely to work its way through the courts in other cases.
It's likely there will be a lot of appellate court activity on the issue of risk-based apportionment. Is it legal to deduct for age based or age related "causes" of disability? My post on the ACLU and AARP challenge to age-based apportionment in the Vaira case can be found here:
http://www.workerscompzone.com/index.ph ... 206-122056
Vaira itself was remanded to the WCAB, but any day now, there will be a decision from the 3rd District Court of Appeal in Fitzgerald vs. WCAB (see link here to "Vaira and Fitzgerald":
http://www.workerscompzone.com/index.ph ... 223-122254

8. MARKET CONDUCT UTILIZATION REVIEW ABUSE PROBES
A continuing chorus of complaints in California workers' comp comes from workers and doctors over problems with utilization reviews. Treatment is denied where the carrier failed to give the utilization reviewer adequate information. Treatments costing less that the UR review are often sent to UR anyway. Some carriers allow the claims examiner little latitude in authorizing treatment, thus forcing UR of most every requested treatment. And the UR reviewer may fail to make itself available to discuss the treatment at a time convenient to a busy doctor's schedule. These are but a few of the common complaints.
In 2007, the DWC unveiled utilization review enforcement regulations.
You can see those here:
http://www.dir.ca.gov/dwc/DWCPropRegs/U ... sFinal.pdf

In 2008, Insurance Commissioner Poizner will probably unveil the results of a market conduct study of UR practices of six insurers. Meanwhile, the DWC will be doing its own audits under the 2007 regulations, some on a targeted basis and some as part of routine five-year claims performance audits. There could be penalties imposed of up to $50,000 under the DWC regs.

9. POIZNER AUDIT OF THE WCIRB AND EXPERIENCE RATING SYSTEM
In an earlier post, I dubbed the California Workers Compensation Insurance Rating Bureau as the gang that can't shoot straight. See my post on that here:
http://www.workerscompzone.com/index.ph ... 024-095337
Insurance Commissioner Poizner-the likely Republican choice to succeed Schwarzenegger-has announced plans to audit the WCIRB after the WCIRB completes its own internal review. Also on tap is a look at the experience rating system that's so unpopular among many California employers, many of whom continue to pay high rates not because of insurance rates per se but rather because of their x-mod factor.

10. SACRAMENTO
There will always be workers' comp activity in Sacramento. Cynical folks note that comp is a "juice" issue. The comp system generates billions, and stakeholders with cash are willing to spend the cash to promote (or defend) their interests.
But this year, the Sacramento scene is murky at the moment. Unless term limits reform passes-which seems unlikely-Nunez and Perata will be goners. Would Perata be replaced as the State Senate's big honcho by Alex Padilla, Darrell Steinberg, or a compromise candidate? And on the Assembly side, who might emerge? Joe Coto? Charles Calderon? It's not clear at this juncture who will emerge as the champion of worker interests in the capitol leadership.
All of this maneuvering will be taking place in the midst of what's likely to be a nasty fight over what sort of budget cuts or revenue increases will occur to balance a budget that's over $14 billion out of whack during difficult economic times.
As a result, workers' comp activity at the capitol in 08 is likely to be modest. One area that may be a priority for some employers is a bill streamlining employer obligations in the return to work/voucher/reasonable accommodation process.

There's other stuff to watch, of course. The report of the fraud working group. CHWSC studies that are ongoing. Attrition in the number of attorneys representing disabled workers. Increasing numbers of unions looking at carve outs. Healthcare reform at the state and national level.
Experiments with 24-hour care. The unveiling of the AMA Guides 6th edition (California currently mandates use of the 5th edition). Court decisions clarifying use of labor market testimony to rebut the rating schedule per the Costa case. These are some of the runner-up items to watch.

Stay tuned. I'll be covering it all.

Julius Young
http://workerscompzone.com/static.php?p ... 6d259248fa
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In California, 2007 was generally a year of transition in California workers' comp.

Some old cases are being played out under a mixture of old and new rules. But for many workers, the 2003 and 2004 reforms are controlling.

Insurers are very happy with the results, as are most large employers and self-insured groups. Meanwhile, worker "horror stories" continued to mount.

Here are the top ten events and trends in California workers' comp in 2007. Over the past year, I've covered most of these repeatedly, so check my blog archives to learn more:

1. INSURERS & EMPLOYERS WIN MAJOR VICTORIES IN THE COURTS
In 2007, the California Supreme Court made its first ruling on the ambiguities of the 2004 comp reform. The court's ruling in Welcher allowed an earlier percentage disability award to be deducted from a percentage award for a later injury, resulting in a claimant receiving $3,360 for a work-caused amputation.
Insurers have also prevailed in a number of appellate cases where the issue was whether the new post-2005 disability rating schedule should be applied to pre-2005 injuries. As a result, the courts have adopted a narrow interpretation of the law on what criteria is required for a worker to be grandfathered in under the old (and more favorable) rating system.
Toward year end, insurers were victorious at the statewide Workers' Compensation Appeals Board level, which ruled that the decades-old Wilkinson case no longer applies. The result? A worker who has successive injuries to the same body part while working for the same employer may be required to have each injury rated separately. Caution: this case, Benson, will probably be appealed and thus the final outcome is still in doubt.

2.COMP PREMIUM RATES HAVE NOT INCREASED
Indemnity claim frequency has continued to decline in California as have comp insurance rates generally. For example, the California Workers' Compensation Insurance Rating Bureau reported in November 2007 that the average insurer premium is now $2.92 per $100 of payroll, down 55% from average rates charged in 2003. In November 2007, Insurance Commissioner Steve Poizner rejected a WCIRB rate hike recommendation. Most carriers have elected to not raise rates at this time.

3. INSURER PROFITS CONTINUE AT RECORD LEVELS
Nationally, comp carriers have done well over the past several years. But insurers have done spectacularly well in California recently. For accident year 2006, loss ratios were at 36% of premium dollar collected (note: final 2007 figures are not yet publicly available), and there is every reason to believe this trend will continue. Insurer profits now exceed the cost of medical and indemnity benefits paid to or on behalf of injured workers.

4. TURMOIL AT THE STATE'S LARGEST COMP INSURER
In 2007, there was turmoil at California's largest comp insurer, the State Compensation Insurance Fund (SCIF). Resignations of directors and executives resulted as well as termination of arrangements with certain broker "safety groups." An audit of SCIF revealed multiple areas of mismanagement. SCIF's market share has tumbled to about half of what it was in 2003.

5. MODEST LEGISLATIVE REFORMS
Faced with a Governor whose signature issue is workers' comp reform, most 2007 legislative efforts to change the comp system failed to reach the Governor's desk or were vetoed. Among bills vetoed was a bill to raise benefits for permanently disabled workers and a bill to speed up the provision of educational vouchers to workers unable to return to work with their employer due to injury.
Bills that did make it included a bill to allow the Division of Workers' Compensation to adopt standards loosening the numeric cap on post-surgical physical therapy treatments. Also successful was a bill allowing an injured worker to draw his or her two years of temporary disability over a five-year period rather than just two years from the date of commencement of temporary disability.

6. GROWING CONCERN ABOUT THE COST OF EMPLOYER FRAUD IN THE SYSTEM
In 2007, there were several high profile employer fraud "busts." In Placer County, two Bel Air Market managers, Nichole Leddy and Amy Looper, pleaded no contest to charges of workers' comp fraud for encouraging injured employees not to file workers' compensation claims. In Monterey County, Smurfit-Stone Packaging and Pinnacle Urgent Care Clinic were charged with multiple felony counts for dissuading employees from filing workers' compensation claims for on-the-job injuries.
These high-profile prosecutions followed news that appeared almost weekly of sweeps by agents from the State Division of Labor Standards Enforcement and the Economic & Employment Enforcement Coalition. The sweeps revealed that many employers in California are either not paying comp insurance or are under-reporting payroll. Landscaping businesses, janitorial services, car washes, farms, restaurants, garment manufacturers, and construction industry firms are but just a few of the types of businesses which were found to have problems in 2007.
A major study by UC Berkeley researcher Frank Neuhauser revealed that the cost to the system may run into the billions. Meanwhile, the Fraud Assessment Commission approved a 12.9% increase in the assessment employers pay to fund workers' comp fraud efforts and a 25 member working group of system stakeholders has been formulating a report to Insurance Commissioner Poizner on the problem.

7. DEBATE CONTINUED ABOUT THE VALIDITY AND ADEQUACY OF THE
2005 PERMANENT DISABILITY RATING SCHEDULE
A bill to raise permanent disability benefits carried by Senate Pro tem Don Perata was vetoed by the Governor. Meanwhile, the Schwarzenegger Administration revealed the results of its ongoing study of wage losses of injured workers within the system. Studies by UC Berkeley researchers have shown that workers subject to the 2005
permanent disability rating schedule receive sharply lower benefits for permanent disabilities.
California now ranks among the lowest of the 50 states in payouts to injured workers for many types of disabilities according to statistics from a U.S. Chamber of Commerce comparative study of state comp laws.
In a speech at a mid-October Huntington Beach conference, DWC Administrative Director Carrie Nevans announced that a 2008 revision of the permanent disability rating schedule was in the works. Nevans indicated that awards would likely increase for disabilities to certain body parts (spines and hands) and decreased for some other body parts. The revision was not announced by the end of 2007 and it's not clear when the proposed revision will come. Nevans did project that the revision will restore at least $150 million in cuts that had been made. But this addition-though welcome-is likely to do little to quell
arguments that a system that pays out less to workers than insurer profits is a flawed, unacceptable system.
Meanwhile, a San Francisco workers' compensation judge-Jacqueline Duncan-ruled in the Boughner case that the 2005 system was invalid because its adoption did not comply with the law. Boughner is currently on appeal to the statewide Workers' Compensation Appeals Board.

8. DEBATE OVER THE VALIDITY OF RISK BASED APPORTIONMENT
AARP (American Association of Retired Persons), the ACLU (American Civil Liberties Union) and the Impact Fund joined the debate over California's apportionment law which requires apportionment to causes of a disability. In Lois Vaira vs. WCAB, the California Court of Appeal rejected apportionment based on age, remanding the case to the WCAB for more proceedings. However, the Vaira court appeared to leave the door open for apportionment to age-caused conditions. A second risk factor apportionment case, Fitzpatrick, was argued at the same court just before the end of the year. Whatever the outcome of that case, the "risk factor apportionment" issue will likely remain a hotly contested issue in other cases for several years to come.

9. THE SHRINKING POOL OF COMP DOCTORS
Both anecdotal observations by system veterans and several studies have noted that the supply of treating and evaluating doctors in California's workers' comp system has dwindled. The DWC has noted a 25% dropoff in the number of evaluating QMES. And a 2007 UCLA study evaluated the effect of fee schedules on the system. In some less densely populated areas of California, the dropoff in treating specialists and QMEs has left the system with a complete lack of treating and evaluating physicians.
The DWC has hired a consulting firm-the Lewin Group- to evaluate the medical fee schedule, which has not been restructured in decades. Whether the recommendations will be revenue neutral is not clear at this time.

10. TURNOVER AT THE BOARD
As 2007 ended, the terms of WCAB commissioners William O'Brien and Janice Jamison Murray expired. Soon to expire are the terms of commissioners Brass and Cuneo. Commissioner Alfonso Moresi has never been confirmed. The appointments to the open slots were not announced by the end of 2007, leaving the WCAB-which interprets the law-in a state of great flux.

To see the workerscompzone archives on these topics, click on the archives folders on the right-hand menu bar.

In the coming week, I'll be doing a list of hot upcoming issues to watch in 08 as well as a quiz for those bold enough to make some projections.

Stay tuned.

Julius Young
www.boxerlaw.com
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