BILL ANALYSIS Ó AB 375 Page 1 Date of Hearing: May 4, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 375 (Skinner) - As Introduced: February 14, 2011 Policy Committee: InsuranceVote:8 - 4 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill establishes several workers' compensation presumptions for direct patient care workers at acute care hospitals statewide. Specifically, this bill: 1)Establishes presumptions that blood-borne infectious diseases, neck or back impairment, and methicillin-resistant Staphylococcus aureus (MRSA) arise from employment for the purposes of workers' compensation benefits. 2)Requires the workers' compensation benefits to include payment for: a) Full hospital b) Surgical c) Medical treatment d) Disability indemnity e) Death benefits 3)Extends to 180 days the period beyond separation from hospital employment during which a hospital employee may rely on the presumption relating to blood-borne infectious disease. 4)Extends to 90 days the period beyond separation from hospital employment during which a hospital employee may rely on the presumption relating to MRSA or back and neck injuries. FISCAL EFFECT Potential workers compensation cost increase in the range of $2.5 million (various public funds). Those costs would be AB 375 Page 2 partially offset by the minor administrative savings associated with reducing the number of dispute resolutions. 1)To the extent this legislation makes it easier for injured employees to receive workers compensation benefits, hospitals could experience increased workers' compensation costs by application of the presumption to hospital employees who provide direct patient care. Of the almost 150,000 employees affected by this bill, 20% (30,000) are employed in public hospitals. Public hospitals are self-insured for workers' compensation claims, rather than paid through premiums. Payments are treated in a pay-as-you-go manner. Therefore, an increase in costs may have an impact on public and GF funds. 2)The fiscal impact of adding these presumptions is unknown. Currently, back and neck injuries make up approximately 20% of all workers compensation claims and infections account for one-quarter of one percent. Given these low rates, it is unlikely that adding these presumptions would increase costs significantly. However, for every 1% increase in the number public health care employees who file workers' compensation claims each year, it would increase workers compensation costs by approximately $2.5million (various public funds). 3)Minor administrative savings, likely less than $300,000 (various funds), to the extent adding these presumptions simplifies the administration of these cases and reduces the number of dispute resolutions, it would result in savings to partially offset the increased costs. Based on Workers Compensation Insurance Board (WCIB) data, self-insured employers and the state spend over $800 million a year (20% of program costs) in loss adjustment expenses and approximately half of those expenses are for dispute resolution. Based on this current expenditure data and the assumption that adding these presumptions will significantly reduce, if not eliminate, the need for dispute resolutions for workers with these illnesses and injuries, at least $285,000 in savings would result from the 1% increase in claims additional noted above. 4)Unknown cost pressure, to the extent this bill causes an increase in workers compensation claims that impact the overall costs for public and private hospitals, which could increase pressure on the Medi-Cal program to increase reimbursements rates. AB 375 Page 3 COMMENTS 1)Rationale . This bill is sponsored by the California Nurses Association to establish workers' compensation presumptions for approximately 150,000 health care workers statewide. Approximately 20% of those affected workers are employed by public hospitals. Workers' compensation presumptions, currently limited primarily to the public sector, have been established to both account for increased risk in certain types of work and to provide administrative simplification for the most common work place injuries and illnesses in a particular field. The author and sponsor of this bill indicate nurses should join public safety professionals in having such presumptions due to the hazardous nature of their work with respect to musculoskeletal injuries and infection. 2)Background . California workers' compensation law provides that workers are provided compensation benefits when an injury or illness arises out of and in the course of employment. Current law specifies that certain medical conditions suffered by public safety officers (e.g., cancer, hernia, heart trouble, pneumonia, tuberculosis, blood-borne infectious disease, meningitis, and exposure to biochemical substances) are presumed to have arisen in the course of employment. 3)Policy Considerations for the Legislature . This legislation affects both public and private employees. Current workers compensation presumptions are provided only to public safety employees (firefighters, police officers, life guards, etc.), who for the most part are public sector employees. The Legislature should consider whether or not workers compensation presumptions should be provided for private sector employees. 4)Related Legislation . AB 664 (Skinner) of 2009 and AB 1994 (Skinner) of 2010 proposed similar provisions to this bill. Both bills were held on this committee's suspense file. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081 AB 375 Page 4