Hear Ye, Hear Ye......Calling all soothsayers to Dr. J's Big Crystal Ball Booth. Come hither from ye lien trials and your AMA assessments....Come let your imagination fly through the twists and turns of the Future!

Those who may at the end of 2012 recognize a perfect score shall hereby be entitled to a beverage at the Oakland saloon of your choice.

Here, in no particular order, are your choices, with "none" as an option for each item. In some instances there are may be more than one "correct" answer:

1. With regard to multiple current vacancies on the California Workers' Compensation Appeals Board, in 2012 Governor Brown will: a) Leave the seats vacant, thereby achieving some budgetary cost savings; b) appoint some political figures to the WCAB; c) eventually appoint experienced attorneys to the WCAB; d) appoint some non-lawyer members; e) none

2. The expanding lien problem widely perceived as plaguing the California comp system will: a) continue to grow; b) recede somewhat as the effects of expanding MPN use and the Valdez case take effect; c) be addressed by attempted regulations and legislation that are ultimately NOT adopted in 2012; d) be the subject of adopted regulations or legislation that by the end of 2012 do begin to reduce liens in comp cases; e) none

3. Regarding Obamacare and the comp system, by the end of 2012:
a) Key elements of Obamacare will have been declared unconstitutional, leaving Obamacare having no impact on workers' comp; b) Employers will continue a trend toward dropping employer-sponsored health coverage, raising fears of a spike in claims of workers desperate to get some coverage for various health maladies; c) Obamacare survives 2012 court challenges, more workers get coverage and the pressure on workers' comp systems decreases; d) Obamacare survives and it becomes apparent that increased coverage for those previously uninsured will lead to doctor shortages and access problems which may affect workers' comp; e) none

4. Up in River City at California's capitol, 2012 will be a legislative :
a) Dud, as key stakeholders shy away from efforts at any comprehensive reform, preferring the current stasis; b) Another year of minor tinkering, as in 2011; c) A tumultuous year, with several stakeholder groups unveiling a comprehensive reform package that sets off a major political war in the capitol, divisions among some labor groups and squabbles among some stakeholders; d) A historic year, with a consensus driven deal worked out among stakeholders and approved the the Governor; e) None

5. By the end of 2012, the much-criticized WCAB "EAMS" computer adjudication system will be:
a) Still under study, with little apparent change; b) Scrapped; c) Getting better, with incremental changes and adaptations; d) Modified in a major way to make it more user friendly; e)none

6. On the regulatory front, 2012 will be:
a) Very active, with the DIR taking up liens, copy service costs, physician payment rates, compound drug pricing, MPN rules, utilization review rules and QME rules; b) moderately active, with the DIR completing a couple of the issues listed in a), but holding off on some of the Schwarzenegger 12-point cost savings initiative issues; c) Inactive, with the DIR deferring to negotiations among stakeholder groups over cost-savings that might offset a benefits increase; d) Active principally only on regulatory issues mandated by statute; e) None

7.2012 will be:
a) a slow year in the courts, with few significant workers' comp decisions; b) a year in which the Ogilvie case goes back up to the WCAB and Court of Appeal; c) notable more for WCAB en banc decisions than for Court of Appeal decisions; d) a year in which conflicting Court of Appeals decisions emerged on a key workers' comp issue; e) none

8. Average workers' comp premium rates charged California employers will in 2012:
a) remain stable; b) actually decrease, as carriers bid for business in a 2012 economy that continues to struggle; c) increase somewhat, as carriers claim the need for cost increases due to increased medical cost inflation; d) increase dramatically, with carriers claiming that they need double digit increases to cover loss ratios; e) none

9. Hot issues in California workers' comp in 2012 will be:
a) what can be done to control medical costs and loss adjustment expenses in workers comp; b) whether to scrap the current QME system; c) the financial impact of the Almaraz/Guzman and Ogilvie cases on the industry; d) the underground economy and its effect on the comp system; e) none

10. California faces a long list of visible hot button issues: dueling initiatives to reform California's budget and taxation system, the solvency of the unemployment insurance fund, efforts to reform public pensions, efforts to reform the California's DREAM Act, implementation of healthcare reform, school and UC funding, the future of the Occupy movement, to name a few. At the end of 2012 we will find that:
a) workers' comp was hardly a blip on the 2012 radar: b) workers' comp joined the hot button issue camp; c) political horse trading on some issue(s)
had implications for workers' comp; d) workers' comp stakeholders were beginning to look towards the Gavin Newsom, Dave Jones and Kamala Harris era; e) none

You can e-mail your answers to me at jyoung@boxerlaw.com.

If you have predictions for significant 2012 California workers' comp events,
please share them. Confidentiality respected for those who request it.

Quiz connoisseurs may enjoy last year's quiz, "2011 California Workers' Comp Quiz":
http://workerscompzone.com/index.php?en ... 102-095809

Here is a link to the 2009 quiz:
http://workerscompzone.com/index.php?m= ... 107-115444

Stay tuned.

Julius Young
www.boxerlaw.com

What were the top 10 developments in California workers' comp in 2011?2011 was not a blockbuster year in California workers' comp, although a few things do stand out. Here's my list, in no particular order:

1. TRANSITION FROM SCHWARZENEGGER ADMINISTRATION TO THE JERRY BROWN APPPOINTED DIR/DWC

In 2011 Brown appointees Christine Baker and Rosa Moran took the reins at the Department of Industrial Relations and the Division of Workers' Compensation respectively. Inheriting a slew of immediate problems including difficulties with EAMS, lack of staffing at some WCAB district offices, and the Medical Unit, Baker and Moran have launched some initiatives to tackle these problems, but with money in short supply, solutions may be incremental. 2011 did not see much activity on the rulemaking front, and a number of the Schwarzenegger Administration's 12-point cost saving measures remain in limbo.
At year's end it was unclear whether in 2012 the DIR/DWC will move aggressively on various systemic cost-savings issues or whether the DIR/DWC will hold back to see if stakeholders can hammer out a deal.
Several bills that Brown signed will require DWC implementation (see below).
Meanwhile, over at the WCAB, Brown appointed Commissioner Ronnie
Caplane to be the Chairperson of the WCAB, succeeding outgoing Chair Joe Miller. As Caplane became chair the WCAB had a number of empty commissioner slots, and at year's end it was not clear how quickly Brown would act to fill those slots.

2. MEAGER CHANGES FOLLOW 2011 LEGISLATIVE SESSION

Injured workers and labor advocates who hoped the Governor would sign significant legislation in 2011 remedying injustices from SB 899 were disappointed.
Brown vetoed bills that would have simplified the job retraining voucher process (AB 211) , prohibited discrimination in apportionment determinations (AB 1155) , allowed workers under specified circumstances to draw more than 104 weeks of TTD if they were recuperating from surgery (AB 947), and have required that utilization reviews be done by California doctors (AB 584).
Brown did sign bills requiring the DWC to develop a voc rehab expert fee schedule (AB 1168), requiring the DWC to develop streamlined notices
(AB 335), requiring the DWC to regulate the allowable costs of compounded medications (AB 378), and requiring proof of workers' comp coverage when renewing a contractors license (AB 397).
In casting his vetoes, Brown specifically noted that some of these changes would be approved only as part of a broader overall reform.

3. PREMIUM RATES APPEAR TO BE RELATIVELY STABLE AFTER INSURANCE COMMISSIONER AND WCIRB ADOPT NEW ADVISORY RATE METHODOLOGY

2011 was the first year in which the California Department of Insurance and the WCIRB used a new methodology to determine the advisory "pure premium rate". California Insurance Commissioner Dave Jones adopted $2.33 as an advisory pure premium rate and noted that the
"average filed pure premium rate" in early 2011 was $2.37 per $100 of payroll and the "average charge rate" was $2.38 per $100 of payroll, down from 2003 average charged rates of $6.29 per $100 of payroll.
While rate-setting changes may result in increases for some employee classifications, it appears that rates paid by employers overall have remained very stable at a time that the California economy was weak.
Also noteworthy was news by the WCIRB that the calendar loss ration for the first 9 months of 2011 had decreased from the 2010 calendar loss ratio.
For a link to a post on the topic of rate trends , see "Proof in the Pudding":
http://workerscompzone.com/index.php?m= ... 109-213717

Also adding cheer for California employers was a 28% reduction in assessments authorized by Labor Code 62.5 and 62.6. These assessments fund the Workers' Compensation Administration Fund, the UEBTF, the SIF fund, Cal-OSHA, Labor Standards enforcement and the Workers' Comp Fraud Account. According to the DIR, reduction in assessments were "acieved through fiscal controls put in place by Governor Brown".

4. TRANSITION AND TURMOIL AT STATE COMPENSATION INSURANCE FUND CONTINUES

At SCIF, transition and turmoil continued. Early in 2011 SCIF announced plans to lay off up to 1,800 workers, a move contested by SEIU Local 1000. Later in the year a severance agreement was reached between SCIF and the union that represents many SCIF employees.
Overall, staff morale at SCIF plunged to new lows as SCIF leadership made moves to trim costs and staff and close various offices.
At year's end SCIF announced a $50 million dividend for policyholders, its first since 2001.

5. WCAB VALDEZ DECISION REINFORCES TREND TOWARD INCREASING USE OF MEDICAL PROVIDER NETWORKS

A 2011 study by the California Workers Compensation Institute showed that usage of medical provider networks (MPNs) had continued to rise since 2004.
Meanwhile, an en banc ruling from the WCAB, Elayne Valdez v. Warehouse Demo Services, found that where unauthorized treatment is obtained outside a validly established and properly noticed MPN, reports from the non-MPN doctors are inadmissible, and may not be relied on.
Here is a link to my initial Valdez post:
http://workerscompzone.com/index.php?en ... 420-223325
But despite Valdez, in Southern California many applicant attorneys continue to circumvent MPNs based on carrier non-compliance with MPN regulations. A midyear seminar at the CAAA convention discussed dozens of scenarios where MPNs might be found out of regulatory compliance, enabling applicant to "take control" and choose a non-network provider. Still, at year''s end it appears that Valdez will likely trip up those applicant attorney practice models that routinely attempt to circumvent MPNs.

6. MANDATED REVISION OF PERMANENT DISABILITY SCHEDULE STILL NOT ACCOMPLISHED

By statute, California's permanent disability rating schedule is supposed to be revised every five years. In 2010 the Schwarzenegger Administration declined to adopt a revise of the 2005 PDRS, citing the fragile California economy.
Although the DWC may now be allocating some staff resources to the issue, 2011 saw no public leadership by the DIR/DWC on the issue. Various stakeholder groups have met with the DIR/DWC to discuss possible cost savings.
At year's end it was still unclear whether the DIR/DWC would take the lead in outlining its vision of a plan for cost-savings that would fund a PD increase or whether nothing will be done until a stakeholder consensus emerges.

7. LIEN BACKLOG CONTINUES TO PLAGUE CALIFORNIA SYSTEM

Lien backlogs continued to choke the California WCAB district offices at several California boards, principally in Southern California. The issue has been studied by CHSWC staff, which presented a comprehensive report on the scope of the problem that was adopted by CHSWC in January 2011. The CHSWC report included 28 recommendations for dealing with the problem of liens.
SB 863 (Lieu), a bill to tighten limitations periods on liens, did not make it through the legislative gauntlet.
As 2011 ends it is not clear what the DIR/DWC intends to do on many of the CHWSC recommendations. Proposed rulemaking by the WCAB has not been finalized:
http://www.dir.ca.gov/WCAB/WCABPropRegsJul2011.htm

8. EMPLOYERS WIN IN COURT ON COLA ISSUE

In 2011 the California Supreme Court issued an opinion in Baker vs. WCAB (formerly known as Duncan v. WCAB and before that as the XYZZ case), handing injured workers a defeat. At issue was the proper interpretation of California's COLA statute, Labor Code 4659(c) which applies a COLA to injuries after 1/1/03 where the worker is 70% disabled or above (i.e. permanent total or eligible for a "life pension" as disabled between 70% and 99%). Here is a link to my post on the case:
http://workerscompzone.com/index.php?en ... 811-121111

9. WORKERS PREVAIL IN COURT IN OGILVIE CASE
Advocates for disabled workers scored a win at the California Court of Appeals, First District in the case of Ogilvie v. City and County of San Francisco. The issue was over whether the "adjustment factor" in the 2005 PDRS could be rebutted by vocational testimony and whether the court would uphold the formula for doing so adopted by the WCAB in its en banc Ogilvie II decision.
Under the decision by the Court of Appeals, First District, the schedule can be rebutted by showing a factual error in calculation the rating formula, by showing the omission of medical complications in the preparation of the schedule, or by demonstrating a greater loss of future earning capacity than reflected in the scheduled rating. In so holding, the Court equated the pre SB 899 standard of lack of ability to compete in the open labor market with the SB 899 standard of diminished future earning capacity.
The California Supreme Court declined to hear the case. But since the Court of Appeals, First District had remanded the case back to the WCAB for further factual determination, we may yet hear more about Ogilvie in 2012.
At year's end the meaning of the decision and methodologies permissible under Ogilvie are still subject to debate in the comp legal world.
Moreover, it is thought that advocates of reform will try to take away "the cases" (Ogilvie and Guzman) as part of a deal for a revised benefit schedule.

10. DIR CONTINUES TO FOCUS ON THE UNDERGROUND CALIFORNIA ECONOMY

As 2011 came to a close, a hearing at California's Capitol reminded observers of the huge problem known as the "underground economy".
Testimony by DIR director Christine Baker noted that out of a sample of 1,498 employers identified by EDD , over 25% were found by the Workers Compensation Insurance Rating Bureau to be lacking insurance coverage.
Baker's testimony noted that it appears that many employers are misclassifying or buying just enough coverage to stay under the radar.
Here is a link to my post on the topic:
http://workerscompzone.com/index.php?en ... 210-162217

Notable on this topic is SB 459, which will allow fines of up to $15,000 per violation for willful misclassification of an employee. Penalties of up to $25,000 can be assessed if there is a "pattern and practice" of willful misclassification of employees.

That's my list for 2011.

In a post coming soon I'll be featuring a quiz about predictions for California workers' comp in 2012. Meanwhile, here is a link to my quiz for 2011:
http://workerscompzone.com/index.php?m= ... 102-095809

To put all this in perspective, here is a link to the Top 10 Developments in California Workers Comp in 2010:
http://workerscompzone.com/index.php?m=12&y=10

The Top 10 Developments in California Workers Comp in 2009 is here:
http://workerscompzone.com/index.php?m= ... 101-104842


Julius Young
www.boxerlaw.com

It's that time of year when our collective unconscious is focusing on sugar plums, flying reindeer and roasting chestnuts.

You deserve such relaxing delights. After all, if you're reading this you survived fistfights at the mall over teaser sales merchandise, copper thieves who hoped to harvest your home wiring, and you're just glad that the Stux worm is slithering somewhere in Tehran rather than coursing through your laptop.

Pat yourself on the back for surviving another year in our hoary culture. Time to put your feet up and think back on the year.

But wait.

There's a little drama left yet in the quickly passing 2011 California workers' comp scene.

It's a drama...a lawsuit actually....given prominent coverage by Workcompcentral's Western Bureau Chief Greg Jones in a recent article on www.workcompcentral, titled "California Lawsuit Alleges Defense Firm Encouraged Fraudulent Billing".

The piece by Jones covers a wrongful termination lawsuit filed against a large statewide workers' comp firm, Adelson, Testan, Brundo & Jiminez.
(my disclosure here: I have worked with an alum of the Adelson firm but have not discussed this matter with that person. Also, at any given time I have probably have at least one or two dozen active applicant cases being litigated against defendants repped by various Adelson firm offices, but I have no inside knowledge about the firm's billing and personnel practices and I respect many of the firm's individual attorneys).

The plaintiff in the lawsuit is Richard Unitan, an attorney who joined the Adelson firm after a decades long career in Southern California.

Indications are that the lawsuit will be a slugfest. Managing partner and firm founder Steve Testan has been quoted as vehemently challenging the allegations of Unitan and his counsel, Jeffrey K. Winikow.

Unitan charges that he was dismissed for failing to bill at a level that "is virtually impossible to achieve with accurate and honest billing practices".
Specifically, Unitan appears to be charging that Adelson attorneys were required to bill a minimum of 3,000 hours per year and that the structure of the firm's billing and timekeeping requirements encouraged attorneys to churn and put "a good deal of fiction into billing statements".

This is alleged to be done in "incremental billing", where lawyers bill at hourly fractional rates in 1/10 of an hour increments.

There are a variety of billing arrangements used by California workers' comp defense firms, including some "flat fee" billing arrangements.

If this case proceeds to trial it may provide a fascinating window into the economics of workers' comp defense practice. But if 3,000 hours is the de facto standard at a firm, that's a lot of hours.

Could it be true that compressed defense billing rates encourage insurance defense firms to pad their bills?

This sort of issue was at the heart of a nasty dispute several years ago in San Francisco, when civil litigation firm Tarkington, O'Connor & O'Neal was accused of billing irregularities and overbilling. The Tarkington firm eventually won a verdict against its insurer over comments that the insurer's auditor had made to the press about the firm's billing practices. The situation was different than the Unitan Vs. Adelson situation, but it's a reminder that reputations are fragile and that it's good to withhold judgment until one has the facts.

In Workcompcentral, Jones notes that plaintiff attorney Winikow claims that Unitan was the victim of a corporate culture that encourages and pressures attorneys to act not in the best interests of their clients to resolve disputes efficiently, but rather in the best interest of the law firm. Testan is quoted as saying that incremental billing is standard in the defense industry and that Unitan was terminated for a number of reasons unrelated to billing requirements.

Keep your eye on this one in 2012.

Julius Young
www.workerscompzone.com
www.boxerlaw.com

My longtime law partner Mike Gerson was awarded a well-earned honor last week: the Barry Williams Lifetime Achievement award, bestowed by the East Bay Chapter of CAAA.

Barry Williams was a legendary figure in California workers' compensation before his untimely death. Williams had always been noted for his encyclopedic knowledge of California workers' compensation law and his tenacious representation of workers. Although Williams never received the appointment to the statewide WCAB that he had sought, Williams' career and memory lives on among many of those who had the pleasure of working with him.

Having worked with both Barry and Mike, it was doubly a treat to see Gerson get this award.

Unlike some lawyers who may be in it "just for the money', Mike has always had a passion to represent the underdog and an interest in the development of the law.

Since my office is adjacent to his, I've often had the difficult task of telling Mike to pack up and go home for dinner. As the nights wear on, Mike has often been oblivious to time, caught up in preparing for trial or formulating case strategy.

Time and time again I've seen him achieve superior results, cutting through the legal fog with his wit and persistence.

Thinking about this reminded me of an old newsletter message Mike had written in 1990 while serving as statewide president of the California Applicants Attorneys Association.

Here are some excerpts from that 1990 piece:

"Recently, I trudged my way back from the Board with the worries of the world heavy on my shoulders. The defendants ran the clock on an all-day trial that took 14 months to calendar, and another four months might go by before a new trial date gets set."

"I was fatigued, depressed and frustrated by a system for which I continuously apologize to our clients. representing injured workers has become overwhelmingly distressing. As I heard my office, I thought "My God! I do do good for injured workers!" And as I thought this, I chanted under my breath as I marched, "I do do good". I swung open the office door exalting-"I'm a do-gooder, that's what I am! And I'm proud of it"."

"Enthusiastically, I reached for my 50-or-so messages and the stack of incoming mail, and said hello and good-bye to my secretary as she left for the day. So began my typical work day at 5 p.m."

"This type of work requires commitment, sympathy and compassion for the victims of work injuries, and a passion to help others. You either have this kind of passion or you don't."

It's this sort of philosophy which has distinguished Gerson over the years.

Like professionals and business people who excel in any field, the true leaders in this type of law have a vision and a commitment that is genuine.

It's been my great pleasure to work with Mike over the decades, and I'm thrilled to see him be honored.

Stay tuned. In the coming week I'll be doing a post on the Top 10 Developments in California Workers' Comp.

Julius Young
www.workerscompzone.com
www.boxerlaw.com
Workers' Comp in 2011

One of the things I've always liked about the "comp community" is the sense that most of the comp attorneys, QME doctors, and WCAB staff have a sense of loyalty to the system.

That sense of collegiality was on display at yesterday's effort in Oakland to help the needy at holiday time. THe occasion was the Oakland Mayor's Toy Drive.

An event at Boxer & Gerson that was co-sponsored by Hanna & Brophy netted hundreds of toys for kids and several thousand dollars which will allow the program to buy more toys.

Embattled Oakland Mayor Jean Quan attended and spoke to an audience of judges, doctors and attorneys about the great need in these challenging economic times. Quan indicated that on the first day for toy program sign-ups over 1,000 Oakland kids were registered.

Quan indicated that Bay Area food banks were considerably down in resources.

A note of special mention and thanks to the folks who worked hard to make the toy event a success: Maria Sager of Boxer & Gerson and Keith Epstein of Hanna & Brophy.

Hopefully the various comp communities at boards around the state can find inspiration in this sort of event to help fill needs that aren't being met.

Also, a word of congratulations here to Christine Baker, who has been appointed to head the Department of Industrial Relations. Baker had previously been serving as Acting Director.

Stay tuned. In the coming weeks I'll be assessing the top developments in workers' comp in 2011 and giving a year end quiz for those who have a crystal ball for 2012.

Julius Young
www.workerscompzone.com
www.boxerlaw.com