Friday, January 16, 2009, 09:33 PM - Top ten listsYou're ready to look ahead. I can understand that.
But as the transition from Bush to Obama occurs along the Potomac, it's time to take a last look at how labor fared under the Bush Presidency.
Workers' compensation is not a federal law, so Bush had no direct effect on state workers' compensation benefits. But his term had major impact on workers generally.
The Bush Administration rolled out the red carpet for business and industry. Unions and the interests of workers took a back seat. There was nothing subtle about George W's labor policy.
Historians in future years will sift through the Bush record on civil liberties, national security, the "Bush Doctrine", immigration law enforcement and presidential powers. Partisans will debate whether some of his measures made us more or less safe. Economists will debate the impact of 2 wars and the role of Bush and Greenspan's Fed in the great financial unraveling we're seeing unfold.
But the record on labor issues is more straightforward. Most worker advocates didn't like the Bush labor policy; management did.
Yet, there were a handful of bipartisan surprises that will please workers. But those were few and far between.
What follows is a list of the major developments regarding workers during the eight years of Bush.
1. Under Bush, OSHA fell asleep on the job. The Occupational Safety and Health Association (OSHA) is tasked with setting and enforcing standards for safe and healthful workplaces. Problems at OSHA during the Bush years included the following:
-Draft regulations and warnings on workplace hazards were withdrawn or delayed, including regs on air contaminants, hazardous chemicals, ionizing radiation, berylliuum and silica, brake linings, glycol ethers, tuberculosis, crane safety and many other hazards
-Political appointees and industry lobbyists ignored OSHA staff recommendations that were based on scientific studies, creating a pattern of sweetheart collusion with industries OSHA was tasked to regulate. Regulatory functions were politicized.
-Confusion over OSHA's mission. Bush's first OSHA director announced that employers, not the nation's workers, were OSHA's customers.
-proposed new "risk assessment rules" that would change the way work hazards are regulated
-in a new January 2009 "midnight" regulation, issued a new OSHA Field Operations Manual
For more information on OSHA under Bush , here's a piece by R. Jeffrey Smith in the Washington Post, "Under Bush, OSHA Mired in Inaction":
http://www.washingtonpost.com/wp-dyn/co ... 24_pf.html
For particulars on OSHA and occupational health & safety developments under Bush, I recommend the archives on the excellent blog www.thepumphandle.wordpress.com
2. Bush's National Labor Relations Board (the "NLRB") rolled back labor protections. The NLRB is the agency which is charged with policing labor cases, giving it great influence over national labor policy. Under Bush's tenure the following are notable:
-Many workers lost labor law protection including temps, graduate teaching assistants, and workers in rehabilitation programs
-Double standards were applied to supervisors' anti-union and pro-union conduct
-Work rules that discouraged organizing activity were permitted
-In IBM Corp., the NLRB ruled that non-union employees have no Weingarten rights (the right to have a co-worker present during a disciplinary hearing), overturning a precedent that went back to 1975
-Standards for fair elections were weakened
- Remedies for labor law violations were weakened
-Union busting lockouts were permitted
-Employers were excused for many violations
-Rules were relaxed to allow employers who acquire a unionized workplace the right to immediately begin efforts to decertify the union
(MV Transportation, a 2002 NLRB decision)
-Employers were required to post information on how workers could begin to decertify a newly organized union
Altogether, the Bush NLRB made organizing a union more difficult and gave employers additional tools to chill workers' exercise of their rights.
Less than 8% of American workers are now covered by union contracts.
A summary of these developments involving the NLRB can be found in this July 13, 2006 report by the U.S. House of Representatives Committee on Education and the Workforce:
http://www.changetowin.org/fileadmin/pd ... -13-06.pdf
3. Bush appointees to the U.S. Supreme Court joined in the Ledbetter v. Goodyear Tire & Rubber case. In Ledbetter the Supreme Court rejected an equal pay lawsuit by Ms. Ledbetter, ruling that the 180 day statute of limitations for equal pay lawsuits ran from the date the pay was agreed to, not from the date Ledbetter discovered that she was paid less than men doing the job.
Here's a link to an earlier blog post I did on this issue:
http://workerscompzone.com/index.php?en ... 603-162015
4. The Bush Department of Labor in November 2008 published final rules implementing amendments to FMLA (the Family and Medical Leave Act). Although these regulations, effective 1/16/09, contain some provisions, including notice requirements, that will we welcomed by employees, they are on balance more favorable to business interests. For a summary of the FMLA regs, check this legal update by Jackson Lewis, a major law firm that represents employers:
http://www.jacksonlewis.com/legalupdate ... m?aid=1563
A good summary on the notice requirements under the new regs is here:
http://ohioemploymentlaw.blogspot.com/2 ... -mean.html
http://ohioemploymentlaw.blogspot.com/s ... amendments
The regs have some privacy rights implications:
http://privacyblog.littler.com/2009/01/ ... employers/
5. On March 20, 2001 Bush signed a Congressional Resolution of Disapproval which killed an ergonomics standard that had been under development in the Clinton Administration. The ergonomics rules were designed to prevent repetitive stress injuries and to reduce the amount of and severity of on-the- job injuries. In 2002 a national advisory commission on ergonomics was formed, but the safety advisory committee was stacked with a 3-1 ratio of management to worker advocates. Comprehensive replacement regulations were never issued. Instead, the emphasis has been on encouraging "voluntary" measures by businesses.
6. Following the 9/11 World Trade Center attack, the Bush adminstration pressured the EPA to tone down reports about potential health hazards from the event and the resulting cleanup. This was detailed in a report by the EPA inspector general.
7. Black lung regulations were suspended by a federal judge at the behest of Bush administration attorneys. These regulations, which had gone into effect in 2001, were aimed at streamlining claims by miners suffering mine-related disease.
8. Bush issued several executive orders aimed at union organizing ( note: several of these were later nixed by the courts):
-An order to bar so-called "project labor agreements" on federally sponsored construction projects. These agreements have been commonplace since World War II
-An order to end rights when there is a change in federal contractors. This was aimed at changing a rule that bound federal contractors to rehire displaced workers when there was a change in contractors, a rule that discouraged turnover in low-wage jobs.
-An order requiring government contractors to post notices advising workers how to object to union dues. The order did not require that explanation of the right to organize a union be posted.
9. Bush allocated relatively little money to labor law enforcement.
-The 2009 Fiscal Year budget request for labor law enforcement by Bush's Department of Labor allocated $2,500 per union to investigate unions and $26.08 per employer. As an AFL-CIO blogger noted, "President Bush wants to spend almost 100 times more per union to make sure they comply with the laws than to make sure employers comply with the law".
-Bush cut back in many areas of enforcement, but expanded enforcement of the Landrum-Griffin Act, a law which empowers the Secretary of Labor to audit union finances and internal union affairs.
-Meanwhile, money for mine safety, OSHA enforcement, and wage and hour law enforcement actually had as of 2007 dropped significantly below 2001 levels.
10. Workers found themselves working harder and longer in what writer Steven Greenhouse has called "The Big Squeeze" . The American economy was more and more leveraged and in hock to Asian economies, with huge continuing trade imbalances. Enemies of globalization and privatization argued that workers were losing ground as part of a grand transnational "shock doctrine". CEO pay soared but worker pay did not, as outsourcing and waves of downsizing created worker anxiety through much of Bush's term, only to end with a drastic economic collapse in late 2008. As energy and other commodity prices climbed (until 2008), the middle class lifestyle was increasingly under pressure as many workers lost health coverage, employers abandoned 401k contributions, employees faced furloughs, and the social compact between workers and management frayed.
11. The struggle over immigrant labor continued. Unable to strike a politically acceptable deal on immigration reform, Bush leaves office with immigration reform still a political "third rail". Although the public will probably support some sort of immigration amnesty solution in exchange for some sort of increased enforcement mechanism against entry and employment of future illegal immigrants, a compromise was never reached. High profile enforcement against immigrant workers and employers was stepped up, particularly in the later years of the Bush presidency. Industries such as meat and poultry processors and car washes were found to be heavy employers of undocumented workers (as well as violators of wage and hour and safety laws). Efforts to create a social security number verification system ran into legal challenges. As the Bush presidency ended, the Department Of Homeland Security has delayed proposed E-Verify rules til February 2009, giving the Obama administration an opportunity to put its own stamp on immigration work rule policy.
Meanwhile a late 2008 Bush regulation to the agricultural guestworker program (the H2-A program) allows agricultural employers to hire temporary foreign guest workers if there are not enough domestic workers able or willing to fill the jobs. Critics include some who oppose immigration altogether and also farmworker advocates, who fear this will result in lower wages, slashed protections and labor abuses.
To understand some of these concerns, check this:
http://texascivilrightsreview.org/phpnu ... mp;thold=0
http://www.dallasnews.com/sharedcontent ... 60737.html
11.On the positive side, as part of a negotiated compromise with Congress, Bush did sign the Americans With Disabilities Amendments Act of 2008. The 2008 amendments (which were not as favorable to workers as S.1881, the "ADA Restoration Act" which had been proposed) were designed to restore the originally intended definition of disability under the ADA, thus making the ADA law more useful to workers (note: despite the 2008 amendments, most California employment lawyers still prefer to file cases under the California FEHA law rather than in federal court under the ADA). Court decisions over the years had narrowed the ADA's definition of disability. Included in this bill is a provision making it clear that (with the exception of eyeglasses), the determination of disability is to be made without considering the impact of mitigating measures. Other improvements included in the law include a clarification that a condition which "substantially limits" means "materially restricts" rather than the more difficult standard "prevents or seriously restricts". Also, added was a provision that "an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active".
12. In May 2008 Bush signed the Genetic Information Nondiscrimination Act. Genetic Information is now added to the list of prohibited discrimination categories (along with race, sex, national origin etc.) It is now illegal for an employer to refuse to hire, discharge, or discriminate
against an employee because of genetic information.
13. On May 15, 2002 Bush signed the "No-FEAR Act" (the Notification and Federal Employee Antisdiscrimination and Retaliation Act of 2002). The law, passed with bipartisan support, bans federal managers and supervisors from engaging in unlawful discrimination and retaliation and requires agencies to fund awards out of their budgets.Support for this law was sparked by a jury verdict that found the EPA had violated the rights of a staffer who had reported mine safety violations.
14. After Democrats took control of the House of Representatives in 2007, Bush did sign a minimum wage increase which was part of Speaker Nancy Pelosi's quick action plan. The bill, The Fair Mimimum Wage Act of 2007, raised the minimum wage to $7.25 per hour. President Bush signed only after the minimum wage bill was loaded up with $4.8 billion in tax breaks for business.
15. In 2006, President Bush signed the Pension Protection Act of 2006.
This bill requires companies who have underfunded pensions to pay more premiums to the Pension Benefit Guarantee Corporation and closed some loopholes in employer pension funding practices. In addition, the bill gave workers greater control over how their accounts are invested, raised the amount that employers were allowed to invest in their own plans, and increased some disclosure requirements. Given the 2008-2009 financial meltdown, many pension funds are under extreme financial stress.
But enough looking backwards for now.
We can expect the Obama administration to launch prompt initiatives to reverse some of the Bush-era labor law developments. I'll be here to cover some of these developments, an important backdrop for California workers.
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Tuesday, December 30, 2008, 03:11 PM - Top ten listsAs always, the huge California workers' comp industry continues to be an area of great controversy. In 2008 the 2003 and 2004 reforms continued to settle in, but there were important new developments.
There are many possible items for a Top 10 list for California workers' comp in 2008. Here, in no particular order, are my picks:
1. GOVERNOR ISSUES VETO OF COMP BILLS
Intent on protecting the interests of business interests and loathe to make changes in his signature legislative success, Governor Schwarzenegger vetoed a group of bills passed by the Democratic-dominated legislature. Among the bills vetoed:
-a bill to reverse some of SB 899's sharp cuts in permanent partial disability benefits was vetoed for the third year in a row.
- a bill that would have explicitly prohibited discrimination in the application of apportionment statutes was nixed by a veto.
- Also vetoed was a bill that would have required California licensure of utilization review physicians
-and a bill that would have prevented abuses in workers' comp "cottage industries".
2. EAMS MAKES A ROCKY DEBUT
The California Division of Workers' Compensation unveiled the new computer management system, EAMS . Several years in the planning process by the DWC with lead contractor Deloitte and software contractor Curam, EAMS has been a subject of great anticipation and concern among comp world stakeholders.
One can only assume that the system will be upgraded over time, but as 2008 ends, attorneys, judges, and WCAB file clerks who are happy with the system are hard to find. Complaints run the gamut: forms that are too lengthy and confusing for practitioners and clients, extra work tasks occasioned by quirks in the system, poor training, lack of a coherent strategy for rolling out EAMS regulations and forms, lack of uniformity as to how to handle legacy cases, calendar delays and more.
EAMS appears to be a system best designed for data mining rather than practical interface with thousands of users.
The consensus seems to be that the system gets a "D". Unless substantial progress can be made, this assessment may be a stain on the record of Court Administrator Keven Star, currently off on extended military leave. It was under Star's watch when many of the key decisions on EAMS architecture were developed.
3. APPELLATE COURTS CONTINUE TO INTERPRET 2003/2004 REFORMS
Appellate court activity slowed somewhat in 2008, but important issues continued to be resolved. The California Supreme Court rendered its decision in SCIF v. WCAB (Sandhagen). The Sandhagen court noted that "An employer may not bypass the utilization review process and instead invoke section 4062's provisions to dispute an employee's treatment request".
In Fagundes-Guerrero the Court of Appeal rejected a challenge to the 24-visit chiropractic cap.
In Foster v. WCAB the 3rd District Court of Appeal ruled that where independent injuries result in concurrent periods of temporary disability, the 104 week two-year limitation runs concurrrently.
In Hertz v. WCAB (Aguilar) the 6th District Court of Appeal rejected a finding of permanent total disability under the LeBoeuf theory where the worker's non-feasibility was said to be due to language and literacy factors.
And at year end the comp community was awaiting a decision by the 1st District Court of Appeal in Benson v. Permanente Medical Group. Benson is an appeal of a WCAB en banc decision that rejected the decades-old Wilkinson doctrine. Unless Benson is overturned, separate injuries which become stationary at the same time will be usually be rated individually rather than rated as one. The 2nd District Court of Appeal is considering two cases (Vikitis and Forzetting) with Benson-type issues.
4. INSURERS CONTINUED TO REAP LARGE PROFITS IN THE CALIFORNIA WORKERS COMP MARKET BUT WARN REFORM SAVINGS DWINDLING
Overall premiums collected declined, but WCIRB statistics revealed that carriers continued to do extemely well in the California market. According to WCIRB statistics as of September 2008, loss ratios had deteriorated somewhat, but were projected at 52% of premium collected, a very favorable ratio by historic standards. Combined losses and overhead were 87% of premium. This was the 5th year in a row where insurer losses and expenses were significantly below premium collected.
Meanwhile, the WCIRB called for a 16% increase in comp premiums. This recommendation was rejected by Insurance Commissioner Poizner, who countered with a non-binding recommendation of a 5% increase. Most carriers came in with rates closer to Poizner's figure, casting further doubt on the WCIRB's forecasting.
In September 2008 the California Workers Compensation Institute noted concern about rising costs, particularly medical costs. Although the CWCI noted that usage of medical networks was increasing,certain medical costs, including opioid medical costs, had increased at high rates.
Raids by the Economic and Employment Enforement Coalition in 2008 continued to find many California employers without comp insurance, cornfirming a 2007 study for CHSWC that claimed that uninsured employers were defrauding the system of billions in premiums.
5. WORKERS AND THINK TANKS NOTED THE SYSTEM IS NOT WORKING
The current system came under criticism from workers and some system researchers.
In a November 2008 report prepared for CHSWC, UC Berkeley researcher Frank Neuhauser claimed that California state disability (SDI), funded by workers, is subsidizing California workers' comp. Neuhauser's research finds that up to 8.4% of work injuries and two-thirds of occupational diseases are being misclassified as non-industrial. Neuhauser also noted that SDI delivers benefits at a cost of about $.05 per dollar of SDI benefits whereas workers' comp costs $2.40 to deliver $1 in benefits.
Neuhauser called for integrating workers' comp and SDI. The publisher of workcompcentral.com, David DePaolo, issued an impassioned call for rethinking the system overall. But with the Governor and the legislature failing to advance healthcare reform in California, all eyes at the end of 2008 turned to see what the incoming Obama administration will propose on healthcare and how that might affect workers' comp.
Disabled workers received no relief from low permanent disability awards. Several post 2004 studies (including sudies by UC Davis and UC Berkeley researchers and the DWC's own figures) had shown that awards are reduced by as much as 50% or more from pre-2004 levels.
A legislative PD fix was vetoed by the Governor in September. The DWC unveiled a tentative proposal for a revision of the rating schedule which would result in a small PD increase, but at the end of 2008 that proposal appears to be in administrative limbo.
Meanwhile, WCIRB figures released in 2008 demonstrated that insurer overhead (ALE and ULAE) had risen and that when broker commissions and insurer overhead are added together, the cost of middlemen/overhead is as much as 60% of the benefits paid to or on behalf of disabled workers.
Concerns about system benefit adequacy went unaddressed. Worker advocates continued to note that benefits to workers seemd to be dwarfed by the interests of system stakeholders.
6. THE STATE COMPENSATION INSURANCE FUND RECEIVED NEW MANAGEMENT CONTINUED UNDER SCRUTINY
SCIF, California's largest comp insurer, has had its share of problems over the past few years. A scandal over arrangements with directors and certain "safety groups". A scathing audit and resulting legislative investigation. Removal of two executives in 2007 and resignation of 3 board members.
New management was at the helm in 2008, but problems persisted. New management sought to "rebrand" SCIF with a new image. Yet, SCIF was haunted by word that its loss-adjustment expense ratio had tripled to 38.4% over the past six years as its market share decreased from 50% to around 20% of the California market.
A Department of Insurance report noted that SCIF was bloated; SCIF had staffed up to process increased claim volume, but had not decreased staff as its market share declined. As the year ended it was not clear whether furloughs and layoffs proposed the the Governor would apply to SCIF (or the WCAB district offices for that matter) and whether this might provide impetus to SCIF to shed some of its overhead.
7. RECESSION RESULTS IN HIT TO SELF-INSURERS FUND
As both the national and California economies rapidly deteriorated in the fall of 2008, the parent of AIG teetered on the verge of bankruptcy before receiving government bailout rescue funding. Several other corporate parents of California comp insurers found themselves under pressure due to exposure to the subprime mortage fiasco.
A major corporate casualty of the economic downturn (and alleged chicanery by venture capitalists who took over the company) was major retailer Mervyn's. Since Mervyn's was self-insured, its comp obligations have been transferred to the California Self-Insurers' Security Fund.The projected exposure is said to be around $19 million.
In November 2008, fund manager Jeff Pettegrew was quoted as noting that the Self-Insurers Fund has adequate funding in place to absorb Mervyn's claims. According to an article in workcompcentral. com, Pettegrew noted that the Alternative Security Fund's 355 members have $5.5 billion in assets and "a recent actuarial report by Oliver Wyman concluded that the fund could withstand a major recession, pandemic or major earthquake".
With a number of companies having trouble in the current business climate, we may not have seen the end of this story.
8. ADMINISTRATIVE INACTION AND ACTION
As 2008 ends, it's apparent that the DWC has been in no hurry to finalize a number of long-promised regulatory changes. Among the regulations that have gone through multiple drafts and repeated public comment are:
-proposed new QME regulations
-proposed medical treatment utilization schedule (MTUS) regs, which would add chronic pain treatment guidelines consistent with the ODG guidelines and postsurgical treatment guidelines
Also of note on the regulatory front was the departure of DWC Medical Director Anne Searcy. Searcy headed to a position with Zenith Insurance.
9. THE SUN SETTING ON VOCATIONAL REHABILITATION
As the year ended, voc rehab for workers injured before 1/1/04 was considered by many to be sunseting 1/1/09 per Labor Code 139.5. If so, this marks a historic end to a benefit that was a pillar of the workers' comp benefits package for decades (note; workers injured after 1/1/04 may qualify for a lesser benefit, a schooling voucher).
In an e-mail, Neil Sullivan, deputy commissioner of the WCAB noted that after 1/1/09 the WCAB has jurisdiction to preside over "whether or not injured workers might be entitled to new or additional vocational services or benefits on or after 1/1/2009".The Rehab Unit as we have known it is gone as of 1/1/09.
What is not clear is whether the WCAB will have any statutory basis to award future voc rehab services or benefits after 1/1/09. You can expect litigation over this issue in 2009.
10. QME POOL SHRINKING
In June DWC Administrative Director Carrie Nevans noted in remarks at a CSIMS conference that 1,000 QMEs had dropped out of the California workers comp system over the past five years. At a time when evaluations under the AMA guidelines have become more complex, the graying and thinning of the pool of QMEs has been of great concern to many system observers.
That's the list. In a coming post I'll list links to many of the studies cited in this piece. In the meanwhile, you can use the search box feature on the right column to read posts I've done in 2008 on all these issues.
In coming posts I'll feature a quiz on projected events and trends for 2009. Stay tuned. Happy New Year to my readers.
(you can subscribe to the blog by clicking on the RSS reader button on the lower right corner under "most Recent Entries")
Saturday, January 5, 2008, 11:05 AM - Top ten lists2008 promises to be an active year in California workers' comp.
Here is my subjective list (in no particular order) of the top things to watch for in 2008. I'll include links to prior posts I've done on some of these issues.
1. APPOINTMENT OF NEW WCAB MEMBERS
The statewide Workers' Compensation Appeals Board currently has vacancies since the terms of Janice Jamison Murray and William O'Brien recently expired. Unless reappointed, Commissioners Frank Brass and James Cuneo's terms will expire soon. And Commissioner Alfonso Moresi has yet to be confirmed by the legislature. The Governor has a chance to further shape the WCAB by appointing members who will interpret the law for years to come. There is widespread disappointment among applicants' attorneys, many judges and even some defense attorneys with the quality-and results-of the WCAB's work over the past few years. Nevertheless, Schwarzenegger's administration does have to be credited with appointing highly qualified industry veterans to the WCAB slots so far.
2. WCAB ACTION ON BOUGHNER
The WCAB has had the Boughner case under study for some time and will be rendering a decision this year. Boughner is the case in which a San Francisco workers' compensation judge ruled that the permanent disability rating schedule adopted in 2005 (the 2005 PDRS) is invalid.
You can find a pdf version of the case by clicking here:
If the WCAB upholds Judge Duncan's decision that the 2005 PDRS is invalid, there will be immense pressure on the Division of Workers' Compensation to revise the rating schedule... which brings us to #3...
3. REVISION OF THE 2005 RATING SCHEDULE
Carrie Nevans, DWC Administrative Director, has indicated that a revised schedule is in the works and will likely be unveiled sometime in early 2008. In meetings with stakeholders and in public statements, she has indicated that the revision will add some money for permanent disabilities-perhaps in the $150 million range systemwide. Part of this is likely to be achieved by rebalancing ratings to increase ratings for certain body parts such as the spine. The schedule is likely to be prospective (meaning that the benefits of any increase only affects cases after the date the new schedule goes into effect). If the WCAB upholds the Boughner decision finding the 2005 PDRS invalid, perhaps the 2008 revision of the schedule could be made retroactive.
For a link to my post "Nevans Predicts Adjustments in PD Schedule", click here:
http://www.workerscompzone.com/index.ph ... 217-073806
4. EAMS WILL DEBUT
The California workers' compensation board is going paperless. It's called EAMS, and it will be making its debut in the summer of 2008 with some sneak previews beforehand.
Managed by WCAB Court Administrator Keven Star, WCAB consultant Glenn and Shor, WCAB judge Neil Robinson, in conjunction with Deloitte Consulting, EAMS is a massive undertaking to bring the WCAB up to snuff with modern technology. Using at least four major database programs (Curam, FileNet, Cognos and CyberSource), EAMS promises to increase WCAB efficiency.
Also being designed are courtrooms which will be EAMS-friendly. Medical reports and exhibits will be uploaded electronically. Lawyers and judges will have 24/7 access to files. Unrepresented applicants will be able to upload documents at special kiosks.
All of this takes money. From what I've heard, things seem to be on track, but with such a big project, you can usually expect the unexpected.
5. ACTION ON THE OFFICIAL MEDICAL FEE SCHEDULE
The current medical fee schedule regs were adopted in 2007 and can be seen here:
http://www.dir.ca.gov/dwc/DWCPropRegs/O ... alRegs.pdf
In 2007, the DWC contracted with the Lewin Group to do a study in preparation for the 20008 update to the OFMS (Offical Medical Fee Schedule).
For years, California has compensated physicians by using CVRS, the California Relative Value Scale. This year, the DWC will probably switch over to the RBVRS system. A little fuzzy on your acronymns? RBVRS stands for Resource Based Relative Value Scale. It's a federal system from the Centers for Medicare and Medicaid Services, and it's used by many other states for computing compensation for workers' comp physicians.
Many doctors-including the California Society of Industrial Medicine and Surgery-have been concerned about the switch-over. In some states that adopted RBVRS, the payments to specialists decreased, causing an exodus of doctors from the system. That's not what the California comp system needs now, since there's already been many doctors leaving the system. To see posts on that topic-"Hasta La Vista Chico", "Wouldn't Touch It With a Ten Foot Pole", and "Exodus"-click here:
So the action on OFMS this year is likely to have great significance. One big issue is whether the revised OFMS will or won't be revenue-neutral. You can expect some developments on this by this spring.
6. ALBERTSON'S VS. WEXFORD AND THE EXCESS COVERAGE MARKET
In a Los Angeles lawsuit, the parent company of Albertson's has challenged the way Wexford Underwriters (handling CNA and TIG excess insurance coverage) was interpreting excess coverage policy language. Basically, excess coverage is a type of insurance coverage which kicks in when losses on a claim or claims reach a certain dollar level.
Wexford took the position that claims should not be lumped together in computing when excess coverage was triggered. Rather, Wexford's position was that each individual injury had to be dealt with as a separate occurrence for purposes of determining when Albertson's self-insurance retention ended and insurer excess coverage began. Albertson's position is that under the Wilkinson case, multiple injury awards may be combined.
As of early 2008, this lawsuit is still pending. Funny thing, though. In December 2008, the WCAB decided the Benson case, throwing out the decades-old Wilkinson doctrine.
If the Benson decision survives appellate court scrutiny, there may be less need for excess coverage, since permanent disability awards will be lower. But that's hard to quantify, and to the extent that medical treatment is a cost driver in serious injury cases, there will always be a market for excess insurance.
But back to Benson...
7. BENSON, SANDHAGEN, SMITH, VAIRA AND MORE
The California courts will be deciding some important workers' comp issues this year. Two cases are already awaiting California Supreme Court argument. Smith v. WCAB and Amar v. WCAB are cases dealing with whether an insurer is liable for paying attorney fees for a worker's attorney who fights an informal denial of treatment where there is a future medial award. State Compensation Insurance Fund vs. WCAB (Sandhagen) deals with utilization review procedures, including issues regarding use of untimely utilization review reports in the litigation process.
Dianne Benson vs. The Permanente Medical Group is a recent en banc decision from the WCAB. You can see my post on the decision here:
http://www.workerscompzone.com/index.ph ... 214-205644
The Benson decision is being appealed. The result in Benson is a 2007 Christmas present of huge magnitude to insurers who are already reaping record profits. The issue-whether successive or concurrent injuries to the same body part which stabilize at the same time must be rated separately-is so important that it is likely to work its way through the courts in other cases.
It's likely there will be a lot of appellate court activity on the issue of risk-based apportionment. Is it legal to deduct for age based or age related "causes" of disability? My post on the ACLU and AARP challenge to age-based apportionment in the Vaira case can be found here:
http://www.workerscompzone.com/index.ph ... 206-122056
Vaira itself was remanded to the WCAB, but any day now, there will be a decision from the 3rd District Court of Appeal in Fitzgerald vs. WCAB (see link here to "Vaira and Fitzgerald":
http://www.workerscompzone.com/index.ph ... 223-122254
8. MARKET CONDUCT UTILIZATION REVIEW ABUSE PROBES
A continuing chorus of complaints in California workers' comp comes from workers and doctors over problems with utilization reviews. Treatment is denied where the carrier failed to give the utilization reviewer adequate information. Treatments costing less that the UR review are often sent to UR anyway. Some carriers allow the claims examiner little latitude in authorizing treatment, thus forcing UR of most every requested treatment. And the UR reviewer may fail to make itself available to discuss the treatment at a time convenient to a busy doctor's schedule. These are but a few of the common complaints.
In 2007, the DWC unveiled utilization review enforcement regulations.
You can see those here:
http://www.dir.ca.gov/dwc/DWCPropRegs/U ... sFinal.pdf
In 2008, Insurance Commissioner Poizner will probably unveil the results of a market conduct study of UR practices of six insurers. Meanwhile, the DWC will be doing its own audits under the 2007 regulations, some on a targeted basis and some as part of routine five-year claims performance audits. There could be penalties imposed of up to $50,000 under the DWC regs.
9. POIZNER AUDIT OF THE WCIRB AND EXPERIENCE RATING SYSTEM
In an earlier post, I dubbed the California Workers Compensation Insurance Rating Bureau as the gang that can't shoot straight. See my post on that here:
http://www.workerscompzone.com/index.ph ... 024-095337
Insurance Commissioner Poizner-the likely Republican choice to succeed Schwarzenegger-has announced plans to audit the WCIRB after the WCIRB completes its own internal review. Also on tap is a look at the experience rating system that's so unpopular among many California employers, many of whom continue to pay high rates not because of insurance rates per se but rather because of their x-mod factor.
There will always be workers' comp activity in Sacramento. Cynical folks note that comp is a "juice" issue. The comp system generates billions, and stakeholders with cash are willing to spend the cash to promote (or defend) their interests.
But this year, the Sacramento scene is murky at the moment. Unless term limits reform passes-which seems unlikely-Nunez and Perata will be goners. Would Perata be replaced as the State Senate's big honcho by Alex Padilla, Darrell Steinberg, or a compromise candidate? And on the Assembly side, who might emerge? Joe Coto? Charles Calderon? It's not clear at this juncture who will emerge as the champion of worker interests in the capitol leadership.
All of this maneuvering will be taking place in the midst of what's likely to be a nasty fight over what sort of budget cuts or revenue increases will occur to balance a budget that's over $14 billion out of whack during difficult economic times.
As a result, workers' comp activity at the capitol in 08 is likely to be modest. One area that may be a priority for some employers is a bill streamlining employer obligations in the return to work/voucher/reasonable accommodation process.
There's other stuff to watch, of course. The report of the fraud working group. CHWSC studies that are ongoing. Attrition in the number of attorneys representing disabled workers. Increasing numbers of unions looking at carve outs. Healthcare reform at the state and national level.
Experiments with 24-hour care. The unveiling of the AMA Guides 6th edition (California currently mandates use of the 5th edition). Court decisions clarifying use of labor market testimony to rebut the rating schedule per the Costa case. These are some of the runner-up items to watch.
Stay tuned. I'll be covering it all.
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Tuesday, January 1, 2008, 11:50 PM - Top ten listsIn California, 2007 was generally a year of transition in California workers' comp.
Some old cases are being played out under a mixture of old and new rules. But for many workers, the 2003 and 2004 reforms are controlling.
Insurers are very happy with the results, as are most large employers and self-insured groups. Meanwhile, worker "horror stories" continued to mount.
Here are the top ten events and trends in California workers' comp in 2007. Over the past year, I've covered most of these repeatedly, so check my blog archives to learn more:
1. INSURERS & EMPLOYERS WIN MAJOR VICTORIES IN THE COURTS
In 2007, the California Supreme Court made its first ruling on the ambiguities of the 2004 comp reform. The court's ruling in Welcher allowed an earlier percentage disability award to be deducted from a percentage award for a later injury, resulting in a claimant receiving $3,360 for a work-caused amputation.
Insurers have also prevailed in a number of appellate cases where the issue was whether the new post-2005 disability rating schedule should be applied to pre-2005 injuries. As a result, the courts have adopted a narrow interpretation of the law on what criteria is required for a worker to be grandfathered in under the old (and more favorable) rating system.
Toward year end, insurers were victorious at the statewide Workers' Compensation Appeals Board level, which ruled that the decades-old Wilkinson case no longer applies. The result? A worker who has successive injuries to the same body part while working for the same employer may be required to have each injury rated separately. Caution: this case, Benson, will probably be appealed and thus the final outcome is still in doubt.
2.COMP PREMIUM RATES HAVE NOT INCREASED
Indemnity claim frequency has continued to decline in California as have comp insurance rates generally. For example, the California Workers' Compensation Insurance Rating Bureau reported in November 2007 that the average insurer premium is now $2.92 per $100 of payroll, down 55% from average rates charged in 2003. In November 2007, Insurance Commissioner Steve Poizner rejected a WCIRB rate hike recommendation. Most carriers have elected to not raise rates at this time.
3. INSURER PROFITS CONTINUE AT RECORD LEVELS
Nationally, comp carriers have done well over the past several years. But insurers have done spectacularly well in California recently. For accident year 2006, loss ratios were at 36% of premium dollar collected (note: final 2007 figures are not yet publicly available), and there is every reason to believe this trend will continue. Insurer profits now exceed the cost of medical and indemnity benefits paid to or on behalf of injured workers.
4. TURMOIL AT THE STATE'S LARGEST COMP INSURER
In 2007, there was turmoil at California's largest comp insurer, the State Compensation Insurance Fund (SCIF). Resignations of directors and executives resulted as well as termination of arrangements with certain broker "safety groups." An audit of SCIF revealed multiple areas of mismanagement. SCIF's market share has tumbled to about half of what it was in 2003.
5. MODEST LEGISLATIVE REFORMS
Faced with a Governor whose signature issue is workers' comp reform, most 2007 legislative efforts to change the comp system failed to reach the Governor's desk or were vetoed. Among bills vetoed was a bill to raise benefits for permanently disabled workers and a bill to speed up the provision of educational vouchers to workers unable to return to work with their employer due to injury.
Bills that did make it included a bill to allow the Division of Workers' Compensation to adopt standards loosening the numeric cap on post-surgical physical therapy treatments. Also successful was a bill allowing an injured worker to draw his or her two years of temporary disability over a five-year period rather than just two years from the date of commencement of temporary disability.
6. GROWING CONCERN ABOUT THE COST OF EMPLOYER FRAUD IN THE SYSTEM
In 2007, there were several high profile employer fraud "busts." In Placer County, two Bel Air Market managers, Nichole Leddy and Amy Looper, pleaded no contest to charges of workers' comp fraud for encouraging injured employees not to file workers' compensation claims. In Monterey County, Smurfit-Stone Packaging and Pinnacle Urgent Care Clinic were charged with multiple felony counts for dissuading employees from filing workers' compensation claims for on-the-job injuries.
These high-profile prosecutions followed news that appeared almost weekly of sweeps by agents from the State Division of Labor Standards Enforcement and the Economic & Employment Enforcement Coalition. The sweeps revealed that many employers in California are either not paying comp insurance or are under-reporting payroll. Landscaping businesses, janitorial services, car washes, farms, restaurants, garment manufacturers, and construction industry firms are but just a few of the types of businesses which were found to have problems in 2007.
A major study by UC Berkeley researcher Frank Neuhauser revealed that the cost to the system may run into the billions. Meanwhile, the Fraud Assessment Commission approved a 12.9% increase in the assessment employers pay to fund workers' comp fraud efforts and a 25 member working group of system stakeholders has been formulating a report to Insurance Commissioner Poizner on the problem.
7. DEBATE CONTINUED ABOUT THE VALIDITY AND ADEQUACY OF THE
2005 PERMANENT DISABILITY RATING SCHEDULE
A bill to raise permanent disability benefits carried by Senate Pro tem Don Perata was vetoed by the Governor. Meanwhile, the Schwarzenegger Administration revealed the results of its ongoing study of wage losses of injured workers within the system. Studies by UC Berkeley researchers have shown that workers subject to the 2005
permanent disability rating schedule receive sharply lower benefits for permanent disabilities.
California now ranks among the lowest of the 50 states in payouts to injured workers for many types of disabilities according to statistics from a U.S. Chamber of Commerce comparative study of state comp laws.
In a speech at a mid-October Huntington Beach conference, DWC Administrative Director Carrie Nevans announced that a 2008 revision of the permanent disability rating schedule was in the works. Nevans indicated that awards would likely increase for disabilities to certain body parts (spines and hands) and decreased for some other body parts. The revision was not announced by the end of 2007 and it's not clear when the proposed revision will come. Nevans did project that the revision will restore at least $150 million in cuts that had been made. But this addition-though welcome-is likely to do little to quell
arguments that a system that pays out less to workers than insurer profits is a flawed, unacceptable system.
Meanwhile, a San Francisco workers' compensation judge-Jacqueline Duncan-ruled in the Boughner case that the 2005 system was invalid because its adoption did not comply with the law. Boughner is currently on appeal to the statewide Workers' Compensation Appeals Board.
8. DEBATE OVER THE VALIDITY OF RISK BASED APPORTIONMENT
AARP (American Association of Retired Persons), the ACLU (American Civil Liberties Union) and the Impact Fund joined the debate over California's apportionment law which requires apportionment to causes of a disability. In Lois Vaira vs. WCAB, the California Court of Appeal rejected apportionment based on age, remanding the case to the WCAB for more proceedings. However, the Vaira court appeared to leave the door open for apportionment to age-caused conditions. A second risk factor apportionment case, Fitzpatrick, was argued at the same court just before the end of the year. Whatever the outcome of that case, the "risk factor apportionment" issue will likely remain a hotly contested issue in other cases for several years to come.
9. THE SHRINKING POOL OF COMP DOCTORS
Both anecdotal observations by system veterans and several studies have noted that the supply of treating and evaluating doctors in California's workers' comp system has dwindled. The DWC has noted a 25% dropoff in the number of evaluating QMES. And a 2007 UCLA study evaluated the effect of fee schedules on the system. In some less densely populated areas of California, the dropoff in treating specialists and QMEs has left the system with a complete lack of treating and evaluating physicians.
The DWC has hired a consulting firm-the Lewin Group- to evaluate the medical fee schedule, which has not been restructured in decades. Whether the recommendations will be revenue neutral is not clear at this time.
10. TURNOVER AT THE BOARD
As 2007 ended, the terms of WCAB commissioners William O'Brien and Janice Jamison Murray expired. Soon to expire are the terms of commissioners Brass and Cuneo. Commissioner Alfonso Moresi has never been confirmed. The appointments to the open slots were not announced by the end of 2007, leaving the WCAB-which interprets the law-in a state of great flux.
To see the workerscompzone archives on these topics, click on the archives folders on the right-hand menu bar.
In the coming week, I'll be doing a list of hot upcoming issues to watch in 08 as well as a quiz for those bold enough to make some projections.
Monday, January 1, 2007, 07:30 PM - Top ten listsAs 2006 turns to 2007, here is my list of the top 10 California workers' comp stories in 2006:
1. In December 2006, the Workers' Compensation Insurance Rating Bureau released startling statistics on California workers' comp. Insurers reaped record 46% profits (after payment of claims and insurer overhead, not counting investment earnings on
premium dollars) in 2005, even though rates for employers had decreased significantly.
2. Gov. Schwarzenegger vetoes SB 815. SB 815 would have raised benefits for some permanently disabled workers to compensate for the effects that the 2004 reforms have had on awards and settlements for workers with permanent partial disabilities.
3. The 2 year limitation on temporary disability (passed as part of the 2004 reforms) began to hit many workers who have been off work for more than 2 years awaiting or recovering from surgery.
4. The California Courts of Appeal and the California Supreme Court began to hear cases interpreting ambiguities in the 2004 workers' comp reforms. Due to conflicting Court of Appeal decisions, the chairman of the statewide Workers' Comp Appeals Board announced a moratorium on hearing cases involving apportionment issues (issues as to what is the cause of the disability or what deductions are allowable for other prior awards).
5. The Commision of Health, Safety and Workers Compensation (known as CHWSC or "cheese whiz") called for a change in the schedule for rating permanent partial disabilities. The Schwarzenegger administration responded by announcing that it is awaiting the results of its own study.
6. In the Costa case, the statewide Workers' Comp Appeals Board rejected an attempt to throw out the entire current schedule for rating permanent partial disabilities, but indicated it will, in some cases, allow vocational expert testimony to rebut the results under the rating schedule.
7.A Santa Cruz attorney representing injured workers was murdered by his client and an injured worker was arrested after having brought a weapon to the Oakland WCAB. Both events sent a chill through the system, reminding attorneys and insurers that worker frustration can lead to violence.
8. Frequent disputes arose as to whether particular pre-1/1/05 injuries were covered under the "old schedule" (pre-AMA guidelines) or the new rating system. A confusing set of fact patterns and analysis in various cases contributed to great uncertainty among claimants, lawyers and judges.
9. The Schwarzenegger administration unveiled regulations that will provide for some audits of and penalties for improperly performed insurer medical treatment reviews (so-called "utilization review").
10. Governor Schwarzenegger was re-elected, guaranteeing that any significant change in the system over the next 4 years will have to come with his administration's blessing.
In future posts, I will provide detailed commentary on many of these events. Stay tuned, though, for my next post: projections for the top stories of 2007.