Just when the comp community thought furloughs were over, they're back again.

The California Supreme Court has agreed to hear the legality of last year's furloughs. But that case will not be decided for some time.

With efforts to reduce state worker pay to minimum wage levels tied up in Sacramento County Superior Court and with the state budget negotiations at an impasse, Schwarzenegger has reverted to state worker furloughs.

This time SCIF employees will be exempted. Also to be exempted are employees of some agencies that bring in money, like the Franchise tax Board. And some workers who recently agreed to contract concessions
in bargaining are excluded from furloughs.

Noticeably absent from those exempted are employees of the Department of Industrial Relations, including employees of the California Division of Workers' Compensation. Yet again the Governor has refused to acknowledge that employer assessments supposedly create a user funded system.

In January 2010 the Legislative Analyst Office (LAO) questioned salary reductions of state personnel funded through targeted and user funded mechanisms. The LAO noted that "the administration has not put forth a credible rationale" why reductions should be extended to personnel expenses funded by special funds, federal funds or other non-governmental funds".

A bill was introduced to address this issue. SBX8 29, carried by California Senate Pro Tem Darrell Steinberg, proposed to exempt employees funded at least 95% by sources other than the General Fund. The bill was vetoed by the Governor:
http://www.leginfo.ca.gov/cgi-bin/postq ... =steinberg

So unless there's a quick budget agreement, it's likely we'll be back to furloughs soon. Despite court battles over their legality, no court order was able to stop the furloughs during the 2009 budget cycle.

Most DWC personnel prefer the furloughs to pay cuts. At least they can use the time off.

I was told by several DWC employees that they made up in overtime pay what they would have been paid but for the furloughs. So some employees may do OK.

Some attorneys have told me that they have coped with the furlough days be scheduling depositions, informal settlement conferences and mediations on furlough blackout days.

But the undeniable effect of the furloughs is that the doors of the hosue of justice are blacked out three days per month. Trial time is reduced, and the wait for getting a case on calendar will be longer.

All of this in a user funded system....

Here's a link to a post I did, "Assessing Assessments", which quotes extensively from a piece done by David DePaulo, publisher of Workcompentral.....In trenchant comments, DePaulo rails against the disconnect between large increases in assessments and furloughs...
Check it out:
http://www.workerscompzone.com/index.ph ... 129-222117

Stay tuned.

Julius Young
www.boxerlaw.com

We're heading to mid-summer.

Many of us have more interest in the ice cream flavors at the shop down the road than we do in what workers' comp cases are up on a writ or when that think tank is releasing another study.

Gotta hand it to California. We are cutting edge here. My favorite local shop in Berkeley is now into herbal and spice based ice creams. Allspice. Lemon Thyme. Bay Leaf.

But if you're reading this space instead of Wiki-leaked documents about treacherous Pakistani double dealing, you must be hard core.

And so you'll want to know that Joe Matthews sees another workers' comp reform coming.

Mathews is an astute observer. Those who never read his history of the Schwarzenegger recall of Gray Davis might want to pick up a copy. That's "The People's Machine: Arnold Schwarzenegger and the Rise of Blockbuster Democracy":
http://www.amazon.com/Peoples-Machine-S ... 1586482726

After all, you should know a little history. Who were the carrot people, after all? They are still very much around.

Mathews, a former L.A. Times reporter, is now a senior fellow at the New America Foundation and the author of "California Crackup: How Reform Broke the Golden State and How We Can Fix It".

Mathews notes that there are four major legs to the workers' comp table.

Employers are one leg, of course. Insurers are another. Medical providers are a third leg. Labor and the attorneys who represent workers are a fourth leg.

Mathews observes that six years after the 2004 reforms:
"the aggrieved parties are injured workers and medical providers who have found it difficult to get paid."

Continuing, Matthews claims that :
"they have a third leg of the four- legged stool joining them; insurers have seen a big decline in their premiums (for reasons that are disputed). Only businesses remain happy."

Since I started doing the blog I've had a number of employer lobbyists assure me that employers and insurers were joined at the hip, happy with the reforms and in constant contact.

That embrace may be starting to sour a bit.

Stay tuned.

Soon I''ll be posting about the Top 10 Developments in California Comp in the 1st half of 2010. I'll also be covering the 6th District Court of Appeal Decision in Guzman which will likely be coming down shortly.
And I'll be making an announcement about a major new project I'm involved in.

Here's a link to the Joe Mathews piece:
http://www.nbclosangeles.com/blogs/prop ... 75014.html

Julius Young
www.boxerlaw.com

"Workers' comp insurance becomes money loser"......

That's the title of a piece released today by Dan Walters, veteran political columnist of the Sacramento Bee.

Walters is widely admired in Sacramento and other political circles for his decades of experience as observer of the California scene.

Among the points made by Walters:
-in 2006, insurers earned nearly 27% on employer paid premiums of $17.3 billion
-premiums dropped to $9.1 billion in 2009

Walters essentially notes what I've been saying for some time.

Insurers reaped record profits in the early years after the 2003 & 2004 California comp reforms. Benefits paid to or on behalf of workers during those early years were a pitiful percentage of premium paid by employers.

Then came the housing crisis, the fall of Bear Stearns and Lehman and AIG, the tanking of the economy, and soaring unemployment.

As premium has declined (in large part because of a weak economy), costs have risen, especially medical costs.

In a number of other posts I've noted that cost containment and overhead expenses have risen sharply as a percentage of premium written.

So there's been less margin, leading the Schwarzenegger DWC to refuse to comply with the statutory mandate to revise the permanent disability rating schedule to increase benefits.

Meanwhile, benefits for workers with permanent disabilities were cut.
Using figures from a WCIRB 2008 Legislative Monitoring report, intended statutory reductions in permanent disability reduced permanent partial disability payments by $600 million. This included reductions due to changes in the law of "apportionment", PD reductions for a "return-to-work adjustment", and reductions in the number of weeks of disability paid out for many injuries.

Moreover, worker attorneys charge that PD benefits have been effectively cut by the 2005 permanent disability rating schedule and the refusal to amend the PDRS.

But as time went on, industry profits have been squeezed.

Citing the recent report from the Workers' Compensation Insurance Rating Bureau, Walters notes that "...insurers lost $1.5 billion on workers' compensation insurance policies last year after breaking even in 2008."

Walters acknowledges that insurers have been clamoring for rate increases. But Insurance Commissioner Poizner refused to recommend rate increases, and most insurers have been loathe to raise rates very much. Walters notes that there will be a new Insurance Commissioner elected in 2010.

Walters predicts that the stage is set for more workers' comp battles in the future, "making it a key, if little known, aspect of the gubernatorial duel" in the current Governor's race.

The WCIRB report, "2009 California Workers' Compensation Losses and Expenses" can be found here:
https://wcirbonline.org/wcirb/resources/data_reports/pdf/2009_loss_and_expenses.pdf

Stay tuned.

Julius Young
www.boxerlaw.com

Flash from the workerscompzone green eyeshades department, always seeking out future trends for your reading pressure,,,,er, pleasure.

30% of California doctors are over 60 years old. That's well above the national average.

Six out of nine California regions now have a primary care physician shortage. Only the Bay Area, Orange County and Sacramento meet primary care access standards.

Los Angeles, the Central Coast, the Inland Empire and the San Joaquin Valley and San Diego are among the regions underserved by primary care doctors.

As the population ages, this trend is likely to increase. Expanded coverage under the Obama healthcare reforms may exacerbate physician shortages.

Meanwhile, specialists are distributed unevenly among the various California metro areas.

The stats are all in a report of the California Healthcare Foundation in a study by Craig Paxton of Cattaneo and Stroud, a healthcare consulting firm. The study has many nifty graphs and charts, comparing physician access among many metro areas.

The study is found here:
http://www.chcf.org/~/media/Files/PDF/C ... es2010.pdf

Its a study that merits close analysis by workers' comp stakeholders.
Will tomorrow's workers' comp system be struggling to attract treating doctors? Should future regulatory and legislative fixes consider the effect on attracting doctors to comp? Should there be more organized attempts to train doctors for occupational medicine?

Stay tuned.

Julius Young
www.boxerlaw.com

July 20.

That's the deadline for comment on the latest version of the California physician fee schedule. An earlier version of of a revised physician fee schedule has been modified.

The initial proposal was supposedly "budget neutral". With this new version, costs have been added into the system, supposedly funded from cuts in spinal hardware costs and cuts in ambulatory surgical center fees.

The initial proposal followed the release of a study by the The Lewin Group on introduction of RBRVS into the California workers' comp fee schedule.
The Lewin Group study can be found here:
http://www.dir.ca.gov/dwc/RBRVSLewinRep ... rt2010.pdf

Many physicians were highly critical of the first proposed fee revision.

The DWC walks a fine line here. There is enormous pressure to find system cost savings. Medical costs have been increasing significantly (along with loss control costs). Unless medical costs are under control, it's hard to see how indemnity benefits will be brought to adequate levels.

But there needs to also be attention to keeping doctors in the system.
My recent post, "To Treat of Not to Treat", examined this from the perspective of some of the doctors. The question raised was whether it was worth it for doctors to take workers' comp cases:
http://www.workerscompzone.com/index.ph ... 707-091110

The comment forum on the revision to the fee schedule is open til July 20th:
http://www.dir.ca.gov/dwc/DWCWCABForum/ ... hedule.htm

Here is a link to the comments posted so far (note: the DWC often takes down these links after the comment period expires):
http://www.dir.ca.gov/dwc/ForumDocs/Phy ... mments.pdf

Among the comments so far, comments from neurologists and physical medicine doctors are particularly notable. The commenting doctors note that reimbursements for diagnostic procedures such as EMG/NCV testing would be substantially reduced. This would lead to an exodus of neurologists from the comp system, they predict.

As reimbursement schedules are adjusted, someone's ox is likely to get gored. But these changes can substantially affect worker access to treatment.

That's why it's good for doctors to give their input now, up front.

Stay tuned.

Julius Young
www.boxerlaw.com