Not all of the interesting action in Sacramento this week has been at the legislature. On Tuesday, there was a meeting of the Fraud Assessment Commission up in the River City.

The commission heard a report from Tom Veale, the president of Tristar Risk Management. Focusing on third-party administrators in workers' comp (known as "TPAs"), Veale noted a a number of fraudulent schemes in the TPA industry. TPAs administer claims for many large employers, as well as school districts and other public entities.

According to Veale, the economics of the TPA industry in California are bad. The 2004 SB 899 reforms have apparently resulted in negative growth as the overall amount of claims filed has gone down and the payouts decreased.

Veale was quoted by workcompcentral.com as noting that Tristar has discovered both "hard fraud" and "soft fraud" in many cases that Tristar audited after it replaced a prior TPA handling the file.

What types of fraud? Paying exorbitant amounts for durable medical equipment to supplier companies linked to the TPA. Referral kickback arrangements for referring cases to particular law firms. Charging "phantom costs" to cases such as billing for transportation services that were never provided to the injured worker. Increasing TPA billing revenues by the unnecessary use of "utilization review," thus turning the utilization review process created by SB 899 into a cash cow for the TPA and companies linked to it. TPA schemes that misrepresent to employers the number of adjusters on staff (thus creating much heavier adjuster caseloads than advertised, and poor claims handling as a result).

All in all, pretty shocking stuff from an industry insider. More evidence that all is not well in the current system.

The Fraud Assessment Commission website can be found here:
http://www.insurance.ca.gov/0300-fraud/ ... orkers-com

Stay tuned.

Julius Young
www.boxerlaw.com
*

The legislature wound up their regular session in the wee hours this morning.

Among the bills passing yesterday (on their way to "enrollment," which is a step on the way to the Governor's desk) were AB 338 (Coto) and AB 1073
(Nava).

The Coto bill will allow workers to draw 2 years of temporary disability over a longer period. The Senate Floor Analysis can be seen by clicking here:
http://www.leginfo.ca.gov/pub/07-08/bil ... floor.html

Also passing was AB 1073 (Nava), a bill to loosen therapy session limits for post-surgical cases.

Also making it was the Migden bill, SB 942. You can see the analysis here:
http://www.leginfo.ca.gov/pub/07-08/bil ... floor.html

More on SB 942 later, since it is yoked to AB 1636, the Mendoza retraining voucher bill I discussed several posts ago.

Meanwhile, check out the op-ed piece in today's San Jose Mercury by Attorney Gil Stein, supporting SB 936, which passed Tuesday and now is headed to the Governor's desk. Stein's piece is here:
http://www.mercurynews.com/portlet/arti ... siteId=568

Stay tuned.

Julius Young
www.boxerlaw.com
*

As my last post noted, the legislature approved SB 936 (Perata) yesterday; it's a bill to increase permanent disability benefits.

Today I couldn't help but wonder whatever became of the sister bill of SB 936 (Nunez). Regular readers of this blog may recall that AB 1212 would have required the Schwarzenegger administration to make administrative adjustments to PD by revising the permanent disablity rating schedule (something Carrie Nevans of the DWC has pledged to do eventually, but without a timeframe).

Voila! It looks like AB 1212 was gutted and amended recently. Now AB 1212 is a bill approving a gaming compact between the state and the San Manuel Band of Mission Indians! I love the legislative process...

Tomorrow, I'll be covering what occurred on the last day of the regular legislative session. What comp bills were passed. What weren't. And in the coming few days I'll be recapping what worthy employee-rights bills were passed. But keep in mind that many of these bills face an uncertain future in the Governor's office. I'll be covering the Governor's signing statements or veto messages.

Stay tuned.

Julius Young
http://www.boxerlaw.com/news.html
*

There was more action yesterday on bills to change the 2-year temporary disability cap (AB 338 sponsored by Joe Coto) and to loosen the 24-visit therapy cap (AB 1073 by Pedro Nava).

AB 338, which has been amended recently, passed the California Senate on a 37 to 3 vote (Machado, McClintock and Aanestad voting no). It returns today to the Assembly, where it will surely pass. In a future post, I'll be discussing it more, but you can see the bill in pdf format by clicking here:
http://www.leginfo.ca.gov/pub/07-08/bil ... en_v95.pdf

AB 1073 survived a 21-13 vote in the California Senate, and returns today to the Assembly. Interestingly, it was supported by several of the so-called "Mod Squad" business-oriented Democrats. The text of the bill can be seen here:
http://www.leginfo.ca.gov/pub/07-08/bil ... en_v97.pdf

I'll be doing more in depth on AB 1073 later. Briefly, though, it requires the Division of Workers' Compensation to draft regulations applicable to post-surgery cases that would lift medical treatment caps in those situations. The administration would be required to draft post-surgical treatment utilization rules. Earlier versions of AB 1073 simply lifted the caps, but the current version allows the administration to set the standards by the administrative rule-making process.

There was a vote on the Perata bill to increase PD benefits, SB 936. The bill passed the Assembly on a 46 to 31 vote, basically along party lines. You can see the tally of how the vote went in the Assembly by clicking here:
http://www.leginfo.ca.gov/pub/07-08/bil ... floor.html

The text of SB 936 is viewable here:
http://www.leginfo.ca.gov/pub/07-08/bil ... en_v98.pdf

SB 936 had already cleared the California Senate on June 4 on a 24 to 14 vote. Almost everyone expects the Governor to veto this bill. Perhaps its only hope would be if there is a trade-off with the Governor on some other issue more important to him. But remember, workers' comp is his
"signature issue' and one of the few "successes" he claims, even though the system is still very troubled.

Stay tuned. I will try to mop up reports on other bills as the session comes to a close.

Julius Young
http://www.boxerlaw.com/verdicts.html
*

A health care reform package, AB 8, was passed by the legislature today. But the package is dead on arrival. Gov. Schwarzenegger will probably veto this bill within the next week and call for a special legislative session to focus on health care reform.

It's an issue of great importance to many injured workers, since so many lose the group health benefit coverage for themselves and their families. Work injuries frequently thrust workers into the burgeoning ranks of the uninsured.

AB 8 would attack the problem of California's millions of uninsured people, but would do so in part by taxing employers up to 7.5% of payroll. Schwarzenegger favors a lower employer contribution, and there has been much wrangling over whether coverage will be universal (everyone) and who will pay (should doctors and hospitals pay special provider fees... ahem... taxes?)

A special session could resolve these issues. Or it could kick the can down the road to a 2007 initiative. Or initiatives. Single payer advocates could resurrect plans for an initiative. Health care insurers could develop their own proposals.

Today the California Nurses Association demonstrated against AB 8, noting that the proposal did not go far enough in reforming the health care system. On the other hand, Blue Cross has been opposing AB 8. And the bill got no Republican support in the legislature.

Guess the current crop of GOP legislators philosophy is "just say no." But, as some observers have noted, that's hardly an adequate platform for a modern political party to inspire an electorate that is unhappy with the current state of affairs (one in five Californians is uninsured, and local budgets are often strained by operating public hospitals that are required to serve the uninsured).

So on to a special session we go. One question that may come up is the concept of "24 hour care," merging health care with workers' comp. More on that another time.

Stay tuned. The regular legislative session is winding up, and several key workers' comp bills will either live or die in the next few days. In the past year, there have been major cutbacks by the California traditional news media in coverage of the Sacramento scene, so it's not an easy thing to follow.

Julius Young
www.boxerlaw.com
*