Friday, July 29, 2011, 02:03 PM - Political developmentsThe Ogilvie case has now been decided by the California Court of Appeals, 1st District.
The opinion acknowledges that the 2005 PD rating schedule is rebuttable but rejects a mathematical formula devised by the WCAB for doing so.
The 1st District did not decide the details on Ogilvie's case, remanding the matter to the Workers' Compensation Appeals Board for more condisderation.
Although the opinion appears to give little guidance regarding the specifics of how the schedule may be rebutted, it is notable that the court states:
"In certain rare cases, it appears the amalgamation of data used to arrive at a diminished future earning capacity adjustment may not capture the severity or all of the medical complications of an employee's work-related injury."
The court notes that:
"A scheduled rating may be rebutted when a claimant can demonstrate that the nature or severity of the claimant's injury is not captured within the sampling of disabled workers that was used to compute the adjustment factor".
Concluding, the court says that:
"Thus, we conclude that an employee may challenge the presumptive scheduled percentage of permanent disability prescribed to an injury by showing a factual error in the calculation of a factor in the rating formula or application of the formula, the omission of medical complications aggravating the employee's disability in preparation of the rating schedule, or by demonstrating that due to industrial injury the employee is not amenable to rehabilitation and therefore has suffered a greater loss of future earning capacity than reflected in the scheduled rating."
More on these developments later.
Meanwhile, you can access the opinion here:
http://www.courtinfo.ca.gov/opinions/do ... 126344.PDF
Friday, July 29, 2011, 08:01 AM - Political developmentsWorkers' comp heating up?
That's the thesis of a piece published today by Dan Walters in the Sacramento Bee. Walters notes a "burgeoning political debate" over the direction of the system.
According to Walters:
"Insurers have also complained about losing money on compensation, but Schwarzenegger and former Insurance Commissioner Steve Poizner opposed multiple efforts by the industry to sharply increase premiums.
The WCIRB's report says that during 2010, insurers' operating expenses, payments to injured workers and medical care outstripped premium income by $1.5 billion, lending credence to their pleas for premium boosts."
Walters observes "With Democrat Jerry Brown now governor, Democrat Dave Jones now insurance commissioner and Democrats controlling both legislative houses, there are new moves to effect change and put pressure on Brown to undo the much-criticized administrative rules."
Walters notes that "At the same time, however, business groups contend that raising employers' costs will impede recovery from recession and discourage rehiring the million-plus workers who have lost jobs.
Although California's workers' comp costs have dropped sharply since 2004, they're still fifth highest in the nation, according to an Oregon state agency's study, and a third higher than the national median."
Walters closes by noting "It's another issue, like the budget and water, that Brown finds familiar as he returns to the governorship after a 28-year absence. He tried and failed to overhaul workers' compensation during his first stint as governor."
It's a safe bet that Jerry Brown would be happy to never hear the two words "workers' compensation" again. So pieces from seasoned Capitol observers like Walters aren't welcome news for Brown.
Workers' comp may become a hot topic again, but for the moment Walters has probably overstated it.
It's likely that we'll see the Governor sign some of the less costly measures working their way through this year's legislative session. But major changes, including a new PD rating schedule, will require negotiations among the key stakeholders in order to achieve savings.
Here is a link to the complete Walters piece:
http://www.sacbee.com/2011/07/29/v-prin ... ation.html
Tuesday, July 26, 2011, 10:41 PM - Political developmentsSome people like to fool around with dummies.
Some are dummies.
Years ago I had a roommate who would put an inflatable doll in the passenger seat as he drove across the San Francisco Bay Bridge in the carpool lane. It worked for awhile, but he eventually paid a stiff price after being pulled over by the CHP.
Before that, one of my fellow college students pulled a similar trick, installing a mannequin in his seat during a college-required assembly.
But you'd think a doctor would know better than to pose as having performed work that wasn't performed.
That's what Los Angeles psychiatrist Kristine Eroshevich is now accused of having done. Eroshevich is said to have billed SCIF for work that was performed by others. Eroshevich has been in the public eye before in connection with her role as treater of Anna Nicole Smith.
The allegations-centered around misrepresentations in the QME process- are in a complaint filed against Eroshevich by the Medical Board of California. The complaint is viewable here:
http://documents.latimes.com/anna-nicol ... iscipline/
Monday, July 25, 2011, 08:32 AM - Political developmentsThe Disneyland conference of CCWC wrapped up last Friday with a panel analyzing the current state of California's workers' comp system.
Moderated by CCWC lobbyist Jason Schmelzer, panelists included insurance industry exec Mark Webb and Michael Nolan of the California Workers' Compensation Institute. There speaking on behalf of doctors active in the system was Steve Cattolica of CSIMS. President-elect of CAAA Brad Chalk showed up to speak for the applicant attorneys. John Riggs of Disney, a major employer, participated, as did Sean McNally of Grimmway Farms. Rounding out the panel was retired workers' comp judge and author David O'Brien, now a defense attorney with the Floyd, Skeren firm.
Although Angie Wei of the California Labor Federation had originally been slated to join the panel, Wei (who like McNally is on the CHSWC commission) was not present.
One session wasn't enough to solve all the comp world's problems.
But I had the sense that if we could get these guys holed up for a weekend and there were a few bottles of good wine and scotch on hand, progress could have been made.
That's not to say that each of the panelists doesn't see one of the others as the ultimate scourge in the system. But at least the tone of discussion bode well for future negotiations.
The discussion jumped around quite a bit. Here are my notes summarizing (not strictly quoting and admittedly selective) a few of the more interesting observations made by some of the panelists:
It's worth looking at the Oregon system with adequate benefits and prompt medical care. Oregon focuses on return to work and helping workers get a job rather than punishing employers for not taking employees back
Following a discussion or the relationship between rates, premiums, and combined ratios, he noted that the threat of carrier insolvency is low, and with poor returns in the bond market and property & casualty lines, "where else can they put their money?"
Noted that PD indemnity benefits were greatly reduced. But "frictional costs" of cost containment have skyrocketed
Frictional costs are a problem. There's too much litigation. But yes, some of the prior reforms need to be improved. The system still needs to be uniform and predictable. On medical issues, dispute resolution process systems in private insurance seem to work and may be a model.
Interested in looking with Angie Wei and the Administration at whether we do some of these things in a less litigious way than in the past
Thinks we should be looking at the delta between what self-insureds and insureds pay to settle a claim. Points out the 300% increase in cost-containment costs. Notes that adjustment to the physician fee schedule
are not likely to have a large impact on premiums, estimating a 6-cent impact.
SB 899 may have swung too far to the right. He's concerned with trends where attorneys and claimants "add in body parts that make the person sicker'.
Changing elements in the system may have unintended consequences. The DWC and the legislature needs to decide on some policy issues like opioids, compound drugs, and medical foods.
Remember that insurance is by its nature risk transfer and risk sharing. Self-insureds may have ways of dealing with their risk via captives and excess carriers
California has a terrible system and it needs reform. Many states stop paying out PD when a person is 65 or on Social Security. Some states have a "deductible"; they don't pay money out for PD at the lower PD percentages. Why are judges needed to approve settlements in cases where there is a lawyer? Judges spend too much time dealing with liens and approving settlements.
Employers and adjusters care about workers
Applicant attorneys see the problem cases. If the worker's treatment is going well and things are being authorized that worker may not come to an attorney
PD is a flashpoint, but medical costs are the cost driver. Certain segments of PD need to be enhanced, but there can be unintended consequences. There is room to enhance PD. But how much cost savings are needed? Is a 1:1 offset enough? If premiums are on the verge of rising then a 1:1 offset will not satisfy employers. There's room for political compromise. On the medical side there is stuff that regulators need to deal with, such as compound drugs and medical foods.
The medical-legal process needs revamping. Expansion of body part allegations is a problem. Perhaps dispute resolution should be taken away from the attorneys and the WCAB and managed administratively.
Almaraz-Guzman was also mentioned.
UR is sometimes a problem. Need to look at independent medical review and how it works in group medical. Perhaps it would make sense to pay higher rates to physicians if that would eliminate some of the UR disputes.Medical licensing boards need to do a better job of training and disciplining occ med doctors. HCOs are better at reducing frictional costs.
There's room to increase PD. There needs to be focus on bringing down medical costs.
Need to rethink the system as a return to work system, not a disability system. . Not sure why employers are not using HCOs. MPNs need to look more like HCOs.
RAND studies showed PD benefits were inadequate before the reforms. The reforms led to a 50-70% drop in PD. Against this a 16% PD adjustment is too low. Cost containment costs are the growing problem now.
There needs to be a focus on safety as well. Historically, some carriers have offered safety training and evaluation to policyholders.
We should raise the threshold for proving sleep disorder claims
Chalk fielded a comment from prominent Southern California attorney Lynn Peterson which charged that in Southern California there are a group of out of control applicant attorneys, some of whom who may be using cappers and having their ads paid for by doctor groups.
Peterson suggested that CAAA needs to find a more active way to manage those attorneys. Chalk questioned whether they were CAAA members but indicated some willingness to look into it. Someone (my notes are not clear) noted that peripheral players in the system such as unscrupulous lawyers and doctors do not have enough penalties for bad behavior.
Lets not forget about the effect of co-morbidities in the system, as we see lots of clients with underlying diabetes and other conditions
With that, the panel ran out of time. Nothing was solved, but a number of the themes are clear, and many of the primary areas of concern were mentioned. But with labor unions not represented, an important voice was not included.
Still, it would be good to see these discussions more often. On a desert island, with some bottles of wine or scotch, who knows what might evolve?
Thursday, July 21, 2011, 01:53 PM - Political developmentsAs yesterday's post noted, workerscompzone is at Disneyland, site of the
premier employer-side conference on California workers' comp.
Many readers may be interested in the keynote address given by Christine Baker, Director of the California Department of Industrial Relations, at today's luncheon.
Newly appointed DWC head Rosa Moran will be reporting to Baker, the DIR head. Baker noted that Moran will be finishing up her work as a WCAB judge within the next three weeks and then assuming her duties.
To my knowledge it is the first address given by Baker since she assumed this role. Baker's input is likely to be pivotal in what happens on the legislative and regulatory front with the system.
As a disclosure, I should note that I've consulted with Ms. Baker and her staff on several projects and studies while she was at CHSWC. With years of experience in many roles in the workers' comp system, she has a firm grasp on the system's issues and the metrics behind the issues.
The conference is being covered by some excellent journalists who cover the workers' comp beat, Greg Jones of Workcompcentral (www.workcompcentral.com) and Brad Cain of the Workers' Comp Executive (www.wcexec.com). Readers can may wish to check those publications for their perspective as well.
The address was short on specifics about policy changes, but did reveal what the emphasis of the Brown Administration is likely to be in workers' comp matters.
Without my editorializing, here are summaries of some of the key points made by Ms. Baker today:
-the DIR is looking to "consolidate" and "streamline"; with money being tight they will "have to do more with less". In some instances that may mean "breaking down silos", "prioritizing" and determining "core functions". This approach will also apply to other DIR agencies including Cal-OSHA, Labor Standards Enforcement, etc.
-Permanent disability benefits can be raised by reducing excessive costs elsewhere in the system
-labor enforcement is important; they will be sampling employers with 5 or more employers and doing targeted enforcement
-there should be focus on reducing unnecessary liens and the disputes that cause them; most of the liens involve medical issues.
-with EAMS , although there is "more right than wrong", there are many problems and the plan is to implement conclusions of a recent EAMS study "where possible"; there's a need to streamline EAMS and WCIS
-the DIR acknowledges that the 2004 reforms resulted in a 50-65% reduction in PD
-the Administration is concerned that premium increases could damage the economy and therefore there is a need to reduce underlying cost drivers and "look for solid savings"
-medical benefits are the fastest growing component of California workers' comp and closing some loopholes "could save tens of millions"
-a goal should be to simplify the system where possible and the administration will weigh costs and benefits of changes. Overall, the administration seeks adequate benefits for workers and employer costs consistent with a recovering economy.
-on the WCIS (workers' comp information system), there are many gaps in WCIS data and this needs to be addressed. The DWC needs the data, the information
-fee schedules will be a focus
-the DIR's goal is to have the worker get appropriate treatment, to get the worker back to work where medically appropriate; the DIR seeks a balance, where there are adequate benefits for workers and where the costs to employers are fair. The goal is to restore the balance while restoring the California economy
-in an answer to several questions about who would be at the table in meetings with stakeholders, baker assured the group that employers would be included
-in response to concerns that many feel the AME/QME process is broken, Baker noted that the DIR would take a look at the process and requested ideas on how to fix it
-in response to a question of whether medical dispute resolution could be taken out of the WCAB and resolved in some other way, Baker mused as to whether savings could be achieved and whether labor would want to bargain with that
-noted that she had met with Governor Brown for a 3 hour strategic meeting on the California economy and that the Governor is concerned with increasing costs to employers in this economy
-in response to a question on whether the General Fund was tapping into DIR money that is "user funded", Baker said that is not the case
-in answer to a question about whether applicant attorneys have a place at the table in system negotiations, Baker noted that the two key voices are labor and management but that applicant attorneys represent workers and have a role just as insurance companies have a role.
-responding to a question on a revision of the 2005 PDRS that did not occur in 2010 as mandated by statute, Baker noted that if the DIR can't find things to offset increased costs, it might have to be done legislatively but that they don't want a "tidal wave of costs"
-asked a general question about whether the Brown Administration had decided about some of the bills making their way through the legislature, Baker did not indicate Brown's position on specific bills