Up in Calaveras County today, some 2,000 frogs were waiting to compete for the world frog jumping championship. According to today's New York Times piece by Jesse McKinley, these frogs are kept in a cool, dark place. Limited to 3 jumps, they cool their webbed heels listening to soft rock or smooth jazz.
Apparently a 1986 entrant, Rosie the Ribeter, holds the record: 21 feet, 5 3/4 inches.
But there's trouble in Angels Camp. It seems that different groups are competing to run the 80 year old festival. Squabbles over the direction of the frog jumping contest have divided local townspeople and the frog jockeys who maintain the frogs.
I guess misery loves company. So, after spending a week contemplating the troubled state of California's workers' comp system, workerscompzone isn't surprised that there are struggles over something even so innocent as the event inspired by one of Mark Twain's tall tales.
What happened in California workers' comp this past week?
An analysis by insurance consultant Mark Gerlach revealed that since the 2004 Schwarzenegger workers' comp reforms, insurer profits in California have exceeded benefits paid to injured workers (including medical treatment, temporary disability and permanent wage loss impairment payments). Unfortunately, the current California workers' comp system seems more reptilian than one designed for mammals (or amphibians).
News came that the California Court of Appeal has decided to hear arguments in a case which will address the validity of apportionment in a case where the worker alleges that the apportionment is illegally based on age and gender factors.
The case, Vaira v. WCAB, involves a 76 year old woman whose award was reduced because the judge found that some of her disability was caused by underlying osteoporosis, a condition common in older women. I'll be posting more on this case at a later date. But it highlights a critical issue: to what extent is apportionment legal if the apportionment singles out factors that are based on age, sex, race or other features of groups who are protected by anti-discrimination laws. When does apportionment under California law to the "degenerative aging process" cross the line and become discriminatory?
Gee, if a frog jockey steps on the foot of a frog and the frog does not jump well up at Angels Camp, is part of the "cause" the frog's underlying age? Just something to consider for you to consider as you drink your Frog's Leap chardonnay...
And, this week, there was continuing uncertainty in California workers' comp over whether the "old" or the "new" rating schedule applies. No fewer than nine cases are pending in California Appellate courts on this issue (workcompcentral.com reported that the Sacramento Court of Appeal has three, the 6th District Court of Appeal out of San Jose has three, and the San Francisco-based 1st District Court of Appeal has four. And there may well be more).
Not to mention that at least one workers' comp judge has found the new schedule arbitrary, capricious, and invalid.
Judge Declares Schedule of Payments to Permanently Disabled Workers is Illegal
By Julius Young
Governor Schwarzenegger has recently promised to fix California’s healthcare, claiming that his 2004 reforms “fixed” the California workers' comp system. But recent developments in California workers’ comp reveal a system that remains broken. Like the declaration of victory in Iraq by President Bush on an aircraft carrier several years ago, Schwarzenegger’s claims that he “fixed comp,” despite constant repetition, are misleading.
Insurer profits now exceed workers’ benefits according to a study released on April 30, 2007 by an industry rate-setting organization, the Workers' Compensation Insurance Rating Bureau (WCIRB). Since enactment of Schwarzenegger’s SB 899 in 2004, insurer profits have totaled $27.7 billion and benefits to workers (including medical treatment, temporary disability payments and permanent disability benefits for diminished earning capacity) have totaled $19.8 billion. That’s right. In what is fundamentally a social program designed to care for injured and disabled workers, benefits paid out to workers and to their medical providers were less than insurer profits!
How much was paid to workers? WCIRB figures show that in 2004, out of total premiums of $23.6 billion, benefits paid to workers were $7.8 billion. In 2005, total premiums were $21.4 billion, but benefits paid to workers were only $5.8 billion. By 2006, total premium had shrunk to $16.6 billion, but benefits to workers amounted to only $6.2 million.
Weekly benefits for permanently disabled workers in California are now 4th lowest in the nation.
Want some examples? The following are from a U.S. Chamber of Commerce comparative analysis of state workers’ comp laws. The national average award for loss of a leg at the hip is $114,522. In California it is $61,435, 6th lowest in the nation. Loss of an eye? The national average award is $74,558. In California it’s $17,714, lowest in the nation. For loss of a foot, the national average is $80,977. In California it’s $28,820. Loss of a thumb? California’s benefits are 7th lowest in the nation.
Many employers have benefited from lower workers’ comp premiums, but even with lower premium volume, comp insurers have managed to maintain huge profits due to the fact that benefits to workers have been reduced. Keep in mind that these figures do not factor in additional insurer profits from investment income.
A May 2007 decision by a San Francisco workers’ comp judge cast a cloud over Schwarzenegger's claims that the comp system is “fixed” and a successful model for healthcare reform. In the case, Boughner vs. Comp USA, Judge Jacqueline Duncan issued a 51-page ruling, concluding that the new California rating system is invalid. Finding that SB 899 required that the new rating schedule be based on empirical data, Duncan gave failing marks to the Schwarzenegger administration staffers who designed the new disability rating schedule.
Meanwhile, multiple studies, including one undertaken by CHSWC, the California Commission on Health, Safety and Workers’ Compensation, have shown that permanent disability income replacement benefits to disabled workers have been cut by over 50%. An administration study of the issue is being undertaken, but Schwarzenegger appears to be in no rush to address the issue.
Last year, Schwarzenegger vetoed a benefits increase bill, SB 815, authored by Senate President Pro Tem Don Perata. This year, both Perata and Assembly Speaker Fabian Nunez are back with bills to address the issue.
But the elephant in the room may be insurer profits. Can there be benefits which adequately compensate disabled workers if insurer overhead and profits are well over one half of premiums paid by employers? How long can the Governor maintain that he fixed a system that pays out such pitiful benefits? Does the Governor have a plan to address adequacy of benefits? And when will the press begin to focus on the sad state of California’s workers’ comp system? A system that remains broken.
Starting in 1979, Julius Young has represented thousands of individuals who have sustained life-changing injuries or illnesses while on the job. His goal is to secure the medical treatment his clients need and the maximum benefits they are allowed so they and their families can survive potentially devastating injuries. A partner of Boxer & Gerson since 1988, he practices workers’ compensation and disability law in Oakland.
Think I’m overstating the case? Look at the pie charts below. Think these charts are exaggerated? They are based on figures from the industry itself. You can look online to find the Workers’ Compensation Insurance Rating Bureau Summary of 2006 Insurer Experience which was released by the WCIRB on April 30, 2007.
Since enactment of SB 899 in 2004, insurer profits totaled $27.7 billion and benefits to workers (including medical treatment, temporary disability and permanent disability income replacement benefits) totaled $19.8 billion.
Insurer profits now exceed workers’ benefits. Governor Schwarzenegger may have “fixed” the system, but it was a fix allowing the insurers to belly up to the trough. E-eye e-eye o!
Look at the charts.
Julius O. Young, Esq.
This week, there was news of an explosion of the gopher population in the Canadian prairie. One rancher was quoted as saying gophers were multiplying faster than he could load his gun.
Tornadoes in Chad. Earthquakes in Tibet. Heatwave causing death of a tiger in Bangladesh. Sicily's Mt. Etna spewing lava. And starving vulture attacks in southern Spain. The earth is a busy place.
In the workerscompzone things were busy, too. Here are some key events of the past week (Note: links to information on all of these are listed at the tail end of this post):
1. A workers' comp judge in San Francisco gave former Division of Workers' Compensation Director Andrea Hoch an "F" for the new workers' comp rating schedule that was adopted for disability ratings under the AMA impairment rating scheme. In an exhaustive 51-page decision, Judge Jacqueline Duncan found that the new permanent disability rating schedule does not comply with the intent of the legislature in enacting SB 899 in 2004. This decision will be appealed, but could have major ramifications in many cases. I'll be covering this further over the coming weeks.
2. The Los Angeles Times reported that there was a Sacramento meeting to discuss adjustments in permanent disability benefits held Friday. Marc Lifsher of the LA Times, who covers workers' comp issues, noted that participants included staffers from the offices of California Senate Pro Tem Don Perata and Assembly Speaker Fabian Nunez with representatives from labor unions, large employers, insurance companies and attorneys for injured workers. The meeting is under wraps of course, but workerscompzone will cover information as it surfaces. You can expect rumors in the rumor mill to be multiplying as fast as those Canadian prairie dogs pretty soon.
3. Senator Perata's bill to double PD benefits (over a period of several years), SB 936, passed from committee on a 3-2 party line vote. At this point, SB 936 is quite similar to SB 815, which was passed by the legislature in 2006, only to be shot down by a Schwarzenegger veto.
And -- like the Spanish vulture plague -- expect lobbyist attacks on whatever is passed this year.
4. The California Division of Workers' Compensation sent its final version of medical treatment guidelines off for approval to the California Office of Administrative Law (OAL) for approval. These new treating guidelines continue to use the ACOEM guidelines as the standard for medical treatment in California workers' comp. The guidelines now use acupuncture guidelines that have been borrowed from Colorado.
5. The National Council on Compensation Insurance (NCCI) unveiled its study of workers' comp nationally. Medical and pharmacy costs are now the major expense in comp claims, surpassing workers' comp indemnity payouts for temporary and permanent disabilities. Medication cost increases are noted to be rising especially.
You can actually download a copy of Judge Jacqueline Duncan's decision rejecting the "new schedule" by scrolling to my May 11 post
"Workers' Comp PD Schedule Ruled Invalid":
For the other stories, note that you can click the following:
-Re the meeting of legislative staffers:
http://www.latimes.com/business/la-fi-c ... s-business
-Re the medical treatment guidelines:
http://www.dir.ca.gov/dwc/DWCPropRegs/M ... ations.htm
-Re the national comp insurance study:
http://www.ncci.com/NCCI/article2.aspx? ... 07_SOL.htm
Check out the new look of boxerlaw.com!
You can download a copy of the decision by clicking here.
I’ll be posting more on it over the weekend. It is potentially very significant to claimants who were injured after 1/1/05 (and to many workers hurt before 1/1/05 who may not fall within the “exceptions” that would place them under the “old” schedule). Meanwhile, if you are a claimant reading this, you should note that this decision will be appealed. It is not binding on other workers’ comp judges, but may well be followed by many of them until the statewide WCAB tells them otherwise. The statewide Workers' Compensation Appeals Board will be forced to deal with this issue.
Julius O. Young, Esq.