As 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:
http://www.cwci.org/research.html

Stay tuned.

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

If 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.

Stay tuned.

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

Today'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:
https://wcirbonline.org/wcirb/resources/rate_filings/2012_rate_filings.html

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





CHWSC 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."

Stay tuned.

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

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