The legislature is back in session.

But tax collections continue to miss budget targets, so the spectre of the budget continues to haunt California.

This is the reality. It's not a happy backdrop for those of us in the applicant bar and labor who hoped that a change of administrations and a solid Democratic legislative majority would lead to some significant substantive gains for workers.

We'll see in coming weeks how some of the bills play out.

Already, however, there is pushback from within Brown's Administration.
The Department of Finance has apparently expressed concern about the cost to the state of a bill that would loosen the Draconian 104 week cap on temporary disability benefits.

Anthony York has written a good piece in the Los Angeles Times, "Jerry Brown Scales Back Ambitions as Fiscal Picture Remains Shaky", focusing on the situation in which Brown finds himself. Brown now licks his wounds from one budget fight and considers the reality that other budget fights may be around the corner.

York's piece should be required reading for anyone who is interested in the politics of workers' comp:
http://www.latimes.com/news/local/la-me ... 0235.story

Stay tuned.

Julius Young
www.workerscompzone.com
www.boxerlaw.com

With the legislature coming back into session this week, we'll get a better sense of what workers comp bill are really moving and what is stalling.

In a prior post I noted the particularly heated debate over a bill to require fitted rather than flat sheets in hotels, a bill aimed at reducing housekeeper injuries at hotels.

AB 1136 (Swanson) is also under consideration. This bill, aimed at reducing
hospital worker lifting injuries, would require lift equipment or special lifting teams. Many hospital workers and nurses are injured in the process of moving or turning patients.

Both of these bills would undoubtedly save back-end money, i.e. workers' comp costs. So would aggressive Cal-OSHA enforcement in many industries.

But California's Cal-OSHA program is woefully understaffed, and Federal budget cutbacks and California's deteriorating budget outlook do not bode well for such regulatory agencies.

In a perfect world it would probably be better to deal with these issues through the OSHA regulatory process. But that's complicated, and thus we have these bills being pushed.

Here's a good piece by Patrick McGreevey, "Bill Would require Fitted Sheets at Hotels to Protect Housekeepers", from today's Los Angeles Times:
http://www.latimes.com/news/local/la-me ... rint.story

Brown would probably like to support these, advanced by some of his friends in California organized labor, including nurses and hotel workers. And hotels and hospitals are not the kinds of industries that can choose to move to less regulated states such as Texas or Nevada.

But one can imagine the headlines that will appear on the Drudge Report if such bills are enacted, "California government intrudes into your hotel room".

To see how this all comes out,stay tuned.

Julius Young
www.workerscompzone.com
www.boxerlaw.com

Today the California Supreme Court issued its opinion in the case dealing with the start of COLA calculations for life pension and permanent total disability cases.

The case, Baker v. WCAB (formerly known as the Duncan v. WCAB case and before that as the XYZZ case), is a big loss for severely disabled workers and a win for employers and carriers.

At issue was the proper interpretation of Labor Code 4659(c) which provides for a cost of living increase for injuries after January 1, 2003 for workers entitled to receive a life pension or total permanent disability.

The California Supreme Court rejected the COLA start date
adopted by the WCAB, which was the January 1 date after the date of injury.

Also rejected was the start date used by the 6th District Court of Appeals, a COLA start date calculated back to January 1, 2004 regardless of the date of injury.

Although cases of 70% and up are not all that frequent in California's workers' comp system, the workers who qualify for 100% permanent total disability or 70% and above are workers with very substantial disabilities.

Today's decision means that such workers will see the COLA payments do little to protect them from the ravages of inflation.

Let's take an example of a "life pension case" (note that COLAs apply to permanent total cases a s well).

Consider a 40 year old carpenter, a member of a construction trades union, who falls off a scaffold on 1/1/2006, causing a broken pelvis, traumatic brain injuries and the need for repeated surgeries.

The carpenter will be entitled to TTD for up to 104 weeks under the state's 104 week TTD limit, so TTD will end 1/1/2008.

After repeated surgeries he is declared at "maximal medical improvement" and rated at 90% (assume he is found able to maintain a mimimal "future earning capacity").

That 90% will entitle him to payments of $230 per week over 753.25 weeks, which is about 14.5 years.

So by the time he is 56 years old (around the year 2022) he will be entitled to a "life pension" of $231.92 a week until he dies.

Under today's decision, that's when the COLA calculations start being applicable. So the 56 year old worker gets no protection from the ravages of inflation over the years til 2022. Going forward from 2022 he will qualify for COLA adjustments.

Whether this is a valid interpretation of the COLA statute might be argued by various legal scholars.

From a policy standpoint, however, the Supreme Court's interpretation offers little protection to the most disabled workers.

Some in the employer and insurance industry may be celebrating their victory today. The industry has been very concerned about the cost impact of COLAs even though they are relatively rare.

But to this observer, today's decision is a reminder that those studying the future direction of the comp system need to keep in focus the welfare of the most disabled workers and the adequacy of their benefits.

Here is a link to the opinion in Baker v. WCAB, currently available on the Supreme Court's website:
http://www.courtinfo.ca.gov/opinions/do ... 179194.PDF

Julius Young
www.boxerlaw.com

According to a press release issued today, the WCIRB Governing Committee has voted to authorize the WCIRB to file proposed 2012 "pure premium rates".

The rate filing will be coming by August 19.

Here is the press release, quoted in entirety:

"Today, the WCIRB Governing Committee voted to authorize the WCIRB to file proposed January 1, 2012 pure premium rates. The proposed 2012 pure premium rates will reflect the anticipated cost of losses and loss adjustment expense expected to be incurred on policies incepting on or after January 1, 2012. As directed by the Commissioner, the WCIRB, in its January 1, 2012 filing to be submitted on or about August 19, 2011, will benchmark its proposed pure premium rates to the average insurer filed pure premium rates rather than the current advisory pure premium rates. In addition, the filing will analyze average insurer filed and charged rates as well as the impact of underlying system costs on pure premium rates. "

"The January 1, 2012 pure premium rates to be proposed by the WCIRB for each of approximately 500 industry classifications are projected to average $2.33 per $100 of payroll. This is 1.8% less than the corresponding average of insurer filed pure premium rates as of July 1, 2011. "

"While projected cost levels remain below pre-reform levels, the proposed 2012 pure premium rates reflect continued deterioration in experience since the reforms of 2002 through 2004 were fully implemented in 2005. Specifically, since 2005, the average cost of medical per indemnity claim has increased by 40%, the average cost of indemnity has increased by 31%, and the average cost of allocated loss adjustment expense per indemnity claim has increased by 55%. "

The press release concludes by noting "The WCIRB's filing and related materials will be available in the Regulatory Filings section of the WCIRB website once it is submitted to the California Department of Insurance on or about August 19, 2011."

The WCIRB was ordered to adopt new methodology in its rate request proceedings, so it will be interesting to see how the numbers play out.

An e-mail blast this afternoon from Brad Cain of the Workers' Comp Executive claimed that the requested rate increase would be substantial, though Cain noted that his publication was "working to nail down hard numbers."

What is interesting at this point is the numbers comparing the growth in various kinds of costs.

Indemnity costs increases have lagged way behind rising medical costs.

And the increase in "the average cost of allocated loss adjustment expense" is a whopper. Up by 55% since 2005, loss adjustment expenses have increased almost twice as fast as indemnity costs.

One can only look forward to the details in the filing, but it appears that the expenses of loss control are blowing out the doors.

Julius Young
www.workerscompzone.com
www.boxerlaw.com

A decision rendered today by the California Court of Appeals, 3rd District, is likely to be of wide interest to the California workers' comp industry.

The decision in Salas V. Sierra Chemical Co. was authored by Justice Andrea Hoch and joined by Justice Vance Raye and Justice Harry Hull. Hoch is well known in workers' comp circles, having served as Administrative Director of the Division of Workers' Compensation for a while after the 2004 reforms.
Hoch adopted the 2005 PD rating schedule and later served Schwarzenegger as a legal adviser.

Salas v. Sierra Chemical is actually an employment law/FEHA case. But it may have impact on workers' comp discrimination cases under Labor Code 132A.

Salas sustained several injuries at Sierra Chemical, which employed him on a seasonal basis for its swimming pool chemical business. When recalled after a layoff, Salas was told he would have to produce a full release. Salas alleged that the employer had a "100% healed" policy. The allegation was that Sierra Chemical failed to make reasonable accommodation for his disability and failed to engage in an interactive process to consider reasonable accommodations.

Salas had not been terminated, but the reasonable accommodation issue arose in the context of refusal to rehire.

The case was not a typical employment law case. Rather, Salas v. Sierra Chemical examines the interface between immigration law violations and refusal to hire cases.

Salas apparently was using a Social Security number that actually belonged to a resident of North Carolina. On I-9 and W-4 documents he had included the same false Social Security number. Affidavits filed by Salas failed to convince the court that there was a triable issue of fact regarding the legitimacy of his papers.

The court found the refusal to hire lawsuit barred on two grounds:
-the "after-acquired evidence doctrine" applied, barring his claim since he had no right to be rehired given the company policy of refusing to hire applicants who submit a false Social Security number
-the "unclean hands' doctrine barred his claim. The court stated that
"In light of the nature of the misrepresentation, the fact that it exposed Sierra Chemical to penalties for submitting false statements to federal agencies, and the fact that Salas was disqualified from employment by means of governmental requirements, we conclude that Salas's claims are also barred by the doctrine of unclean hands."

Salas argued that Senate Bill 1818, a 2002 California law, precluded application of after-acquired evidence and unclean hands doctrines based on his immigration status.

The SB 1818 argument was rejected by the Court of Appeals, which noted that while current California law provides that undocumented workers are entitled to "all protections, rights, and remedies available under state law", that SB 1818 did not expand the law to allow undocumented immigrants to maintain failure to hire claims.

It's quite likely that this case will be appealed to the California Supreme Court, which may or may not decide to hear the case. It won't surprise me if the case is eventually heard there, particularly since the legislative history and intent of SB 1818 is involved.

But at the moment, undocumented workers will not be eligible for backpay in failure to rehire claims.

Presumably the same logic would apply to Labor Code 132A claims in a failure to rehire context, since 132A includes backpay and reinstatement remedies.

Here's a link to the opinion in Salas vs. Sierra Chemical:
http://www.courtinfo.ca.gov/opinions/do ... 064627.PDF

Stay tuned.

Julius Young
www.workerscompzone.com
www.boxerlaw.com