Lucky you.

Undoubtedly thouands of Californians are online right now....reading the latest news about Paris Hilton's upcoming jail time, Lindsay Lohan's latest attempt at rehab, Katie Couric's poor ratings, where Britney Spears had lunch and whether she was wearing underwear under her outfit, and all the other burning questions in our celebrity-obsessed culture.

But you're here, on workerscompzone. And while the days get longer and longer, I'm covering the 2007 California legislative healthcare debate. It's a debate of great interest to many disabled workers, many of whom eventually lose their group medical coverage.

It's also a debate that makes Blue Cross unhappy. Blue Cross has the blues. Like all of the major California group health insurers, Blue Cross opposes SB 840, the "single payer" health plan bill sponsored by Senator Sheila Kuehl .

But Blue Cross is alone among the major California health providers in opposing Governor Schwarzenegger's healthcare reform package. Blue Cross is no small insurer. It insures roughly one fourth of the individuals who have coverage in California. Blue Cross PPOs and HMOs have been significantly more profitable than its nearest competitors, HealthNet and Pacificare. And according to California Department of Insurance figures, Blue Cross profits have been as high as 27% on many of its plans.

Blue Cross (and its parent company Wellpoint) have the blues over Schwarzenegger's proposal which would require that 85% of premium dollar go to patient care. According to an analysis of state regulatory data done by the San Jose Mercury, Blue Cross spends between 51 % to 79% of premium dollars on patient care, depending on the particular plan. Remind you of California workers' comp, where insurers may be spending only slightly more than a third of premium dollar on worker benefits?

Blue Cross also demands that it retain the right to cherry pick who it insures. Pretty good business model. Insure only the healthy.

And Blue Cross is getting aggressive with its insureds. They won't hesitate to sue you to recoup payouts if they provide care for conditions they claim weren't properly disclosed, even if the error was inadvertent.
Better make sure your spouse doesn't estimate your weight if they help you fill out your application!

Take a look at the amazing story of how they yanked coverage from Steven Hailey, a California accident victim, causing him to depend on a permanent bladder catheter. Deeply in debt and permanently disabled after Blue Cross refused to cover his treatment, Hailey sued. Hailey's case against Blue Cross is pending at the California Court of Appeal.
Blue Cross takes the position that they can yank coverage if there were any errors in the application, whether intentional or inadvertent.

But back to Sacramento. Blue Cross is now pitted aginst Aetna, Kaiser, Blue Shield, Safeway, other major corporations and the Governor. The trade off that may emerge is that cherry picking will not be allowed, but universal coverage will be required. And employers and workers will be required to pony up. Restaurant owners, small business owners and some in labor unions aren't pleased.

See the Sacramento Bee piece by Dan Weintraub by clicking here:
http://www.sacbee.com/110/v-print/story/170883.html

To read the San Jose Merc piece on Blue Cross, click here:
http://www.mercurynews.com/portlet/arti ... siteId=568

The LA Times story on the bladder catheter coverage issue can be found here:
http://www.latimes.com/business/la-fi-i ... 3950.story

For more information on some of these issues, check these links to earlier posts on workerscompzone:
"The $12,000 Broken Rib"
http://www.workerscompzone.com/index.ph ... 4e069ef8f9
"Who Shall Pay?"
http://www.workerscompzone.com/index.ph ... 4e069ef8f9

Stay tuned.

Julius Young
www.boxerlaw.com

Should California's workers' compensation system be abolished?

Yes, according to a provocative article by political analyst Frank Russo, editor of the influential blog California Progress Report. You can read Russo's article by clicking here:

http://www.californiaprogressreport.com ... s_com.html

California's workers' comp system has few fans. Employers call it a poison on the economy. Legislators have found it to be a political tar pit. Looking back over the past 25 years, there have been few times when major system stakeholders were not seriously chafing at the system. Historically, there were a handful of dominant parties in any legislative negotiations: insurers, manufacturers and the lawyers for injured workers. Change occurred when two of the three stakeholders struck a deal, freezing the other side out. Liberal Democrats (think Jesse Unruh, Leo McCarthy, David Roberti, Howard Berman, Willie Brown) running the California Senate and Assembly who were sympathetic to labor interests managed to "keep the wolf at the door".

In 2003 and 2003, with Arnold Schwarzenegger leading the way and Senate Pro Tem John Burton at the legislative helm, the wolf got inside the door.

Despite Governor Schwarzenegger's press releases that he has fixed the system, it is becoming more and more apparent that the current system is seriously troubled. Income replacement benefits paid to disabled workers have been drastically cut. Benefits paid to workers are only approximately a third of total premium dollars collected. (for links to prior posts on this, click on this:

http://www.workerscompzone.com/index.ph ... 4e069ef8f9

and this:

http://www.workerscompzone.com/index.ph ... 4e069ef8f9

Is Russo's call for the system to be abolished a vision of future political struggles? Will the health care reform debate have implications for the future of California workers' comp?

Stay tuned.

Julius Young
www.boxerlaw.com

The California Supreme Court has just released its decision in the Brodie and Welcher cases. The 2 martini lunch went out of fashion a few years ago, but I suspect quite a few employers and insurers will be popping the champagne corks at lunch today.

This is a BIG win for employers and insurers.

The claimants most impacted by Brodie/Welcher are claimants with pending cases who have disabilities over 70% but who had prior disability ratings or whose disability is partially attributable to other "causes".

Brodie/Welcher endorses an "apportionment formula" allowing insurers to subtract percentages of disability from percentages rather than dollars from dollars. This makes a huge monetary difference for some claimants.

As an example, look at what this means for Mr. Welcher. The Welcher case involved a dispute about how to compensate Welcher for a 2001 cumulative trauma knee injury.

Welcher had been awarded 62:5% for a 1990 injury when his right arm and leg were caught in a conveyor belt. But he kept working. The 2001 injury resulted in an amputation below his right knee. The workers' comp judge found that his overall disability was 71%.The monetary value of a 71% rating is $100,165 plus a small weekly life pension of $42.52 per week.

Welcher argued that the proper compensation formula was to start with $100,165 (i.e. 71%) and then to deduct the monetary value of the award for his 1990 injury (62:5% was $32,193). Several California Courts of Appeal agreed. Welcher's net recovery for his permanent disability due to the amputation would have been approximately $68,000 for the amputation injury.

But the California Supreme Court rejected this interpretation of the law.

What will Mr. Welcher receive for his amputation injury under the court's decision in Brodie/Welcher? $3,360. Yes, $3,360 for his amputation injury. Pathetic compensation for a severe injury.

In a post later this week I will be discussing the real-world impact of the decision. In the meanwhile, you can read the decision here:
http://www.courtinfo.ca.gov/opinions/do ... 146979.PDF

Stay tuned. Workerscompzone will continue giving you straight talk on California's troubled workers' comp system. You can click on the icons to the right to subscribe.

Julius Young
www.boxerlaw.com

The California Supreme Court has decided the Welcher, Brodie and Dykes cases on apportionment. The court announced today that it will release the decision at 10 AM on Thursday May 3rd.

I will be posting tomorrow on the decision and what it means for claimants. The issue to be decided is how apportionment works under SB 899, the Schwarzenegger workers' comp reforms. If there was a prior award, can the insurer subtract the prior percentage from the later percentage, or must the percentages be converted into dollars and then converted? Or are there other appropriate formulas?

The issue may seem very abstract to many workers, but it will have a huge impact on the value of many cases. Some workers reading this could see their settlement or award reduced in drastic fashion depending on the outcome of Welcher/Brodie.

Court watchers have cautioned against reading too much into the questions asked at a California Supreme Court oral argument. Nevertheless, there has been much gloom among applicant attorneys who felt that the court's questions did not bode well for the position of injured workers.

And a big question looms over the particular result in Welcher/Brodie.

Will the court give great latitude to the argument that SB 899 was the result of a workers' comp crisis, thus resolving ambiguities in favor of insurers and employers? Will this "legislative intent" override the legislative mandate that workers' comp law be liberally construed to protect the worker? The tone of the court's decision may affect many pending appellate cases on a range of post SB-899 issues.

To see the California Supreme Court notice of forthcoming decision, click here:
http://www.courtinfo.ca.gov/courts/supreme/SF050307.PDF

Check back on workerscompzone on Thursday morning for an analysis.

Julius Young
www.workerscompzone.com

I've always been a fan of straight-talking political consultant James Carville. During the 1992 presidential campaign by Bill Clinton, Carville created a key slogan for the campaign -- "It's the economy, stupid."

For California workers' comp, the slogan should now read, "It's the employer fraud, stupid."

Perhaps, like Clinton, California Division of Workers/ Comp Administrative Director Carrie Nevans and California Labor and Workforce development Agency Secretary Vicky Bradshaw (and her Labor Standards Enforcement agency) need such a KISS sign in their offices (keep it simple, stupid!).

Think I'm off base? Look at the kind of headlines that keep popping up:

-garment industry enforcement task force discovers many Los Angeles employers lack comp coverage (February 2007) (similar results were found in a March 2007 Bay Area sweep)
-car wash sweep in L.A. brought over 30 citations for failure to carry comp insurance (March 2007); a sweep last week in Fresno, Tulare and Kern County car washes found 69 workers at 5 businesses lacking coverage
-restaurant investigation in Sacramento, Sutter and Yuba counties revealed that over half the restaurants had no comp coverage (February 2007)

These are only a few examples of a huge problem. Labor standards enforcement is poor. Lack of comp coverage is rampant in some industries. In some industries, the comp coverage issue may be intertwined with immigration law enforcement issues.

And then there is another problem. The problem of employer under-reporting of payroll and employee mis-classification. A BLOCKBUSTER report delivered last Friday to the California Commission on Health, Safety and Workers' Compensation (CHSWC or "Cheese Whiz") by UC Berkeley researchers Frank Neuhauser and Colleen Donovan documented that California employers under-reported up to 23% of their payroll! This cost insurers billions, unfairly disadvantaged honest employers, and injected serious dysfunction into California's workers' comp system. In my next post I'll look further at the Neuhauser report to CHSWC.

Stay tuned for more straight talk.

Julius Young
www.boxerlaw.com