Sunday, August 28, 2011, 08:12 AM - Political developmentsThe continuing narrative of the GOP both nationally and at the state level
will be jobs, jobs, jobs.
Whether President Obama can rise to the occasion with his soon to be announced jobs initiative remains to be seen. Jerry Brown unveiled a proposal this week, but that plan already appears mired in controversy:
http://www.sacbee.com/2011/08/26/386244 ... -plan.html
California's Republican Party is fractured and weak. But its narrative is consistent, and it stresses a connection between job creation/job retention and workers' comp.
Take for instance the piece by Assembly Republican leader Connie Conway of Visalia that's featured in Jon Fleischman's Flash Report website which mentions three pending workers comp bills, AB 375, AB 1175, and SB 432:
http://www.flashreport.org/featured-col ... 2609043848
One can't help but notice Conway's reference to Texas Governor (and Presidential candidate) Rick Perry. Perry is already picking up some notable support in the comp community. CHSWC commission member Sean McNally
was listed as an event sponsor in a fundraising invitation for Perry that was widely circulated this week.
But let's dig a bit deeper than Conway's soundbites:
For those who haven't been following this year's California legislative process, AB 375 (Skinner) would create the first presumption for private employees. Here (at some length) is the Senate Appropriations Committee analysis of AB 375:
"AB 375 would provide, with respect to hospital
employees, who provide direct patient care in an acute care
hospital, that the term "injury" include a blood borne
infectious disease or methicillin-resistant Staphylococcus
aureus (MRSA) that develops or manifests itself during the
period of the person's employment with the hospital. This bill
would further create a disputable presumption that the above
injury arises out of and in the course of the person's
employment if it develops or manifests, as specified."
According to the Committee Analysis:
"MRSA is a bacterium responsible for difficult-to-treat
infections. MRSA are by definition strains of Staphylococcus
aureus that are resistant to a large group of antibiotics
including penicillins and cephalosporins. Under this bill, if a
hospital employee who provides direct patient care in an acute
care hospital develops a blood borne infection or MRSA skin
infection, it is presumed the injury arose out of and in the
course of employment and is therefore, compensable."
The analysis notes some of the issues surrounding this bill:
"This bill specifies that the bloodborne infectious disease
presumption shall be extended to a hospital employee following
termination of service for a period of 180 days, commencing with
the last date actually worked. The MRSA presumption shall be
extended to a hospital employee following termination of service
for a period of 90 days commencing with the last day worked."
"The state has seven general acute care hospitals operated by the
California Department of Corrections and Rehabilitation (3) and
the Department of Development Services (4)."
"Most state employees receive industrial disability leave, which
is full gross pay less the amount deducted for taxes for the
first month and two-thirds of full gross pay thereafter. There
is no maximum on industrial disability leave and can be received
for up to one year. State hospital employees are eligible to
supplement their industrial disability leave benefits with any
paid leave credits they have to bring the amount up to their
regular earnings amount. After one year, the state employee is
eligible for up to one year of temporary disability benefits.
Non state hospital employees may receive temporary disability
benefits for up to 104 weeks. In 2011, a year of workers'
compensation temporary disability benefits for an employee may
be up to $51,307.88, increasing to $52,546.00 ($1,010.55 x 52
weeks) in 2012. "
"If a licensed vocational nurse or registered nurse (several job
classifications are involved in providing direct patient care)
working in a state acute care hospital contracts a bloodborne
infectious disease or MRSA, the cost could range from
approximately $33,000 to $65,000 for one year of industrial
disability leave benefits. The employee would be eligible for
up to 52 weeks of temporary disability benefits after exhausting
the industrial leave benefits or $52,546.00 (in 2012). "
"Staff notes AB 947 (Solorio), also on the committee's file,
would allow the extension of temporary disability benefits under
specified conditions for up to 240 weeks. Also, there are
potentially thousands of state employees who provide direct
patient care in settings other than acute care hospitals. For
example, in 2009, of the 3,891 registered nurses in Bargaining
Unit 17, roughly two-thirds are "level of care" nurses providing
or supervising direct patient care in mental health hospitals,
youth and adult correctional institutions, developmental
centers, and the state's veterans' homes."
"Most persons recover from job injuries but some continue to have
medical problems. Permanent disability is any lasting disability
that results in a reduced earning capacity after maximum medical
improvement is reached. If a person's injury or illness results
in permanent disability the person is entitled to permanent
disability benefits, even if he or she is able to return to
work. Permanent disability benefits are limited. If a person
loses income, permanent disability benefits may not cover all
the income lost and if the person experiences losses unrelated
to ability to work, permanent disability benefits will not cover
"A doctor makes the determination if an injury or illness caused
permanent disability. The doctor also determines if any of the
disability was caused by something other than the work injury
(for example, a previous injury or other condition) in a process
known as apportionment. The disability is stated as a
percentage which equals a specific dollar amount, depending on
the date of the injury and the person's average weekly wages at
the time of injury. If the person was injured on or after Jan.
1, 2005, the permanent disability award may be increased or
decreased by 15 percent, depending on whether the person worked
for an employer with 50 or more employees and the employer
offers a salary continuation program and the person accepts or
declines regular, alternative or modified work. Permanent
disability benefits are normally paid when temporary disability
benefits end and a doctor has indicated the person has some
permanent effects from a workplace injury. A person with a
disability rating of less than 70 percent would receive $230
weekly. A person with a disability rating of more than 70
percent would receive $270 weekly. These amounts have not
changed since 2006."
"In addition to temporary and permanent disability benefits, a
person could incur substantial medical costs. For example,
lifetime health care costs for a person with hepatitis B have
been estimated at $65,000 in the absence of liver
transplantation ($100,000 for hepatitis C). Hepatitis C infects
about three and a half more times as many people in the United
States than does hepatitis B and more than 80 percent of
hepatitis C patients will develop chronic liver disease, as
compared to only 20 percent of hepatitis B patients. The cost
per liver transplantation is in the range of $280,000 for one
year. Continuing medical care can run in the hundreds of
thousands of dollars over a person's lifetime. According to one
estimate, the lifetime cost of medical care for an HIV patient
was $618,900 which also noted that total treatment costs are
increasing. Ironically, this may be because better treatment
options are increasing total costs by prolonging life.
According to one estimate, the cost to treat a MRSA infection
can range from $1,000 to $7,500 or more if extensive
hospitalization is required."
"This bill may result in increased Medi-Cal costs in non-contract
hospitals, because the allowable costs of hospital cost reports
include workers' compensation expenditures. Any increase may be
minor as the state is moving toward a diagnosis-related system
for reimbursing hospitals and is not negotiating any new
contracts and costs would be spread across all payors. This bill
could increase costs to the University of California (UC) which
operates five hospitals. There are an estimated 385 non-state
acute care hospitals and 140,000 full time employees subject to
the bill. In general, the cost for a state hospital employee
and a non state hospital employee with a bloodborne infectious
disease presumption or a MRSA presumption would be in the first
year cost difference between industrial disability leave
benefits and temporary disability benefits. The state (and UC)
would likely appropriate additional funding for increased
workers' compensation costs and private employers would likely
experience higher workers' compensation premiums."
"Existing presumptions (see Labor Code Sections 3212 to 3213.2)
are extended to a member following termination of service for a
period of three calendar months for each full year of the
requisite service, but not to exceed 60 months (120 months for a
cancer presumption for police and firefighters) in any
circumstance, commencing with the last date actually worked in
the specific capacity. AB 2754 (Bass) Chapter 684/2008 added
Labor Code 3212.8 to provide this presumption for members of a
sheriff's office, or police or fire departments of cities,
counties, districts, or other public or municipal corporations
or political subdivisions and active firefighting members of the
Department of Forestry and Fire Protection or any other county
forestry or firefighting department or unit. Most law
enforcement and firefighting personnel are covered under Labor
Code 4800 and receive benefits equal to their full salary."
There's been great concern about employers at the precedent that would be set with presumptions being extended to private employers. And there is concern about the costs to the state that the bill would entail.
Another bill mentioned in Conway's piece is AB 1175. But that's not a workers' comp bill.
Conway also mentions the controversy over fitted versus flat sheets.
That's SB 432 (De Leon), the bill to require fitted sheets in hotels. Currently SB 432 is not set for another legislative hearing:
http://www.leginfo.ca.gov/pub/11-12/bil ... story.html
The text of AB 375 (which has been repeatedly amended this session) can be found here:
http://www.leginfo.ca.gov/cgi-bin/postq ... or=skinner
The text of SB 432 (already amended several times) can be found here:
http://www.leginfo.ca.gov/pub/11-12/bil ... sm_v96.pdf
What SB 432 and AB 375 appear to have in common is that they are both sponsored by powerful labor unions and both targeting specific conditions
(hospital MRSA infections and hotel housekeeper back injuries) that many believe to be linked to significant numbers of work injuries in those industries.
Since there are still going to be hotels and hospitals whether or not these bills are passed and signed, they are in and of themselves unlikely to be "job killers". But the GOP narrative seeks to link Democrats, liberals and the legislature to the concept of job killer. That's a dangerous position for a politician to be in these days.
That's the dilemma for the Brown Administration as we head towards the end of the legislative year.
Tuesday, August 23, 2011, 10:32 PM - Understanding the CA WC systemAs late August torpor sets in, go make yourself a Negroni, put your feet up, fire up Horace Silver on the stereo and treat yourself to some of the latest stats from the good folks over at CWCI, the California Workers' Compensation Institute.
Today CWCI has released a new study on California workers' compensation temporary disability benefit costs.
Not surprisingly, the average number of paid TD days at 12 months and 24 months post-injury fell somewhat in the years after the 2004 reforms but has been trending up since 2008.
But the trend does not appear earth-shattering. In 2009, for example, the average number of TD days paid at 12 months was 102.5 versus 109.2 in 2004. The average adjusted TD paid was $6,050 at 12 months in 2009 versus $5,436 in 2005.
After 2008 workers can receive a maximum of 104 weeks of TD over a 5 year period from the date of injury, of course. From 2004 to 1/1/08 workers were limited to 104 weeks of TD from when TD commenced, meaning when TD was first paid.
In Sacramento a bill has been under consideration (AB 947) which would allow TD to be paid up to 240 weeks under some circumstances .
AB 947 would include language allowing payment of TD up to 240 weeks where a primary treating physician, AME or QME indicated that further treatment was required for the patient to become permanent and stationary.
Employers are concerned about the costs of the bill. The bill has been placed in the Appropriations Committee suspense file, but like other bills under late session consideration, could be moved or could be dead.
The current version of AB 947 can be seen here:
http://www.leginfo.ca.gov/pub/11-12/bil ... en_v96.pdf
An analysis of AB 947 is available here:
http://www.leginfo.ca.gov/pub/11-12/bil ... _comm.html
The CWCI research report can be found here:
Tuesday, August 23, 2011, 09:25 PM - Understanding the CA WC systemIf you read my last post you may be pouring over the WCIRB's "rate filing" documents.
But you can take the green eyeshades off for a moment.
The conventional wisdom is that workers comp costs will remain flat. That's
the assessment of the Sacramento Bee's business writer Dale Kasler, who notes in a piece in The Bee that "Workers' compensation premiums will probably stay about the same in California next year".
Kasler observes that:
"The filing was unusual because the bureau normally seeks double-digit increases. Bureau spokesman Jack Hannan said claims costs are rising but current premiums are "pretty close" to where they should be.
Typically, the bureau seeks a hefty increase and the insurance commissioner rejects it. Ultimately, insurers are free to price premiums as they see fit.
Workers' comp was an enormous issue several years ago, when California's costs were among the nation's highest. Former Gov. Arnold Schwarzenegger signed into law a major overhaul of the system, and premiums fell dramatically. Even though prices have crept up the past four years, they're still 60 percent cheaper than they were at their peak in 2003".
Read more: http://www.sacbee.com/2011/08/23/385681 ... z1VuxFCOyT
If California workers' comp costs are stable, the Governor and Insurance Commissioner Jones will be happy.
The nightmare political scenario would be rapidly increasing workers' comp costs in a recessionary economy, with pressures to make "all cuts" in a system which has in many ways already cut injured workers to the bone.
So if insurance costs aren't rising appreciably, it gives room to stakeholders to make some positive changes which will cut some fat from the system, give some players a haircut, and spread some of the savings to workers.
Monday, August 22, 2011, 09:55 PM - Understanding the CA WC systemToday's rate filing by the WCIRB is a treasure trove of data and graphs on California's workers' comp system.
All hundreds of pages of it.
This "rate filing" is different. Ordered by former Insurance Commissioner Steve Poizner and current Insurance Commissioner Dave Jones to change the methodology of the pure premium rate process, the WCIRB has filed according to a different yardstick.
In coming posts I'll highlight some of the more interesting stats and trends gleaned from the report. But today, let's talk process.
A June 21, 2011 letter from Insurance Commissioner Dave Jones sets out the rationale for the change. Jones noted that prior methodology did not include information on current insurer filed rates and instead focused on changes sought from the last approved pure premium rates.
Pure premium rates are advisory only and in the past have not necessarily been indicative of what was actually charged employers. Continuing a process started by Poizner, Jones noted that the prior pure premium rate setting process "has contributed to the public's confusion regarding current workers' compensation rates and premiums charged to employers".
Jones noted that:
"Since the prior approved pure premium rate is advisory and does not reasonably or accurately reflect current insurer filed pure premium rates,
manual rates, or charged rates, and thus does not have sufficient relationship to insurance market conditions, I direct the WCIRB to discontinue its practice of using the last approved advisory pure premium
rate level as the basis for the proposed change in its future pure premium
rate filing analyses."
Wow, you're probably thinking that watching paint dry is more interesting than reading this stuff.
But these changes in reporting will likely prove beneficial in tethering the advisory rate process to the real world.
In a press release accompanying the January 1, 2012 Pure Premium Rate filing, the WCIRB stated:
"Today, the WCIRB submitted its January 1, 2012 Pure Premium Rate Filing to the California Department of Insurance (CDI) containing pure premium rates proposed to be effective January 1, 2012. These pure premium rates represent the anticipated cost of losses and loss adjustment expenses expected to be incurred on policies incepting on or after January 1, 2012. In prior filings, the WCIRB proposed rates that were benchmarked to the approved pure premium rates; however, this has led to a misunderstanding among the public that a change in the approved pure premium rates will have a direct and commensurate impact on the rates filed and charged by insurers. In order to mitigate this misunderstanding and provide more meaningful information regarding insurer rates, the pure premium rates proposed in this filing are benchmarked to the average insurer filed pure premium rate and additional information regarding industry average filed and charged rates is provided in the WCIRB's filing.
The average of the 494 classification pure premium rates proposed in the filing is $2.33 per $100 of payroll. This average proposed pure premium rate is 1.8% less than the corresponding average of insurer filed pure premium rates of $2.37 as of July 1, 2011. "
The WCIRB's figures claim that the "Industry Average Charged Rate" for the 1st quarter of 2011 was $2.38 per $100 of payroll.
Public hearings on the proposed 2012 rate filing will be announced soon.
Meanwhile, get out your green eyeshades and pour over the report, which includes an Executive Summary as well as Parts A and B, loaded with stats:
Friday, August 19, 2011, 09:06 AM - Understanding the CA WC systemCHWSC has now posted online a report about EAMS, the workers' compensation electronic case management system.
As most stakeholders know, it's not a happy report. The assessment, done by Renee Taylor Consulting, Inc., identifies many areas which need improvement.
Problems with Delotitte's management of the project and Curam and FileNet software problems are detailed in the report.
Here is a link to the report, titled "Electronic Adjudication Management System Information technology Needs Assessment Report Deliverable" which was summarized yesterday in a presentation by Ms. Taylor at the CHSWC meeting in Oakland:
http://www.dir.ca.gov/chswc/Reports/201 ... Report.pdf
Rather than crying over spilled milk, Christine Baker at the DIR and Rosa Moran at DWC will be looking for ways to improve EAMS.
But for those who wish to "drill deeper" into all of this and what happened on this controversial project, it's interesting to look at the comments profferred by Deloitte in rebuttal.
A July 27,2011 letter sent by Stephan Long of Deloitte's Ranch Cordova office has now been posted on the DWC website along with comments on the EAMS report offered by the California Applicants Attorneys Association.
Included with Long's later is a copy of a "Participation Management" list for a 3/1/07 meeting at the DIR office in Oakland, presumably documenting those who were involved in the the early EAMS planning.
Long concludes his rebuttal of the Taylor report by claiming:
"RTC’s report acknowledges the value EAMS provides to many stakeholders and recognizes that “[t]he problems EAMS has experienced are typical of large-system implementation efforts and can be addressed with additional resources, improved scanners, and increased training.”
We stand firmly behind our EAMS work and know that collaboration with our client has enabled California to improve access to information and DWC’s processing of workers’ compensation cases. Deloitte met every requirement of the RFP; we involved a broad base of stakeholders; we used leading, industry-standard products; and we completed our work under warranty.
It is common for end users to desire enhancements and upgrades once they begin using a system on a daily basis. While some EAMS users would now like the system to do more than it was designed to do, the lack of such additional functions does not mean that the system’s original requirements were not satisfied. Unfortunately, no comprehensive maintenance and operations organization – typical for a system the size of EAMS – was put in place by DIR OIS to address issues after the warranty period.
We respectfully request that Deloitte be given the opportunity to be interviewed by RTC and that the final EAMS IT Needs Assessment Report correct the misstatements in the draft report. We will make our team available at RTC’s convenience to answer any questions and to provide detailed information to support the facts outlined above. We are prepared to do everything we can to help RTC’s final report present an accurate and complete view of EAMS before you vote to endorse its contents."
Here is a link to the public comments on the EAMS report, which include the comments by Long on behalf of Deloitte:
http://www.dir.ca.gov/chswc/Reports/201 ... Report.pdf
Unfortunately for Deloitte, Renee Taylor Consulting's report appears to be sufficiently thorough and convincing.
As consultants, one would expect that Deloitte would have documented concerns that it had about the adequacy and functionality of the EAMS system being designed for a multibillion dollar workers comp system with thousands of varied users. I'm not aware of any memos that have surfaced documenting that Deloitte expressed those types of concerns.
In any event, the EAMS project will never be a project that Deloitte wants to brag about.
Here is the CHSWC statement on the EAMS report:
"The Commission on Health and Safety and Workers' Compensation (CHSWC) approved the “EAMS Needs Assessment” report for final release and posting together with the written public comments that the Commission received during the comment period.
The Division of Workers’ Compensation (DWC) and Workers’ Compensation Appeals Board (WCAB) monitor the administration of workers’ compensation claims and provide administrative and judicial services to assist in resolving disputes that arise in connection with claims. DWC procured an Electronic Adjudication Management System (EAMS) in August 2008.
The “EAMS Needs Assessment” report describes the findings of an independent review in order to assess the gaps between the original requirements for EAMS and the system’s demonstrated capabilities, and provides forward recommendations for closing those gaps. This report was prepared using stakeholder interviews and document reviews.
CHSWC is charged with examining the health and safety and workers’ compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct a continuing examination of the workers’ compensation system and of the state’s activities to prevent industrial injuries and occupational illnesses and to examine those programs in other states."