BILL ANALYSIS Ó AB 947 Page 1 ASSEMBLY THIRD READING AB 947 (Solorio) As Amended April 27, 2011 Majority vote INSURANCE 8-4 ----------------------------------------------------------------- |Ayes:|Solorio, Charles | | | | |Calderon, Carter, Feuer, | | | | |Hayashi, Skinner, Torres, | | | | |Wieckowski | | | | | | | | ----------------------------------------------------------------- -------------------------------- |Nays:|Hagman, Grove, Miller, | | |Olsen | | | | -------------------------------- SUMMARY : Allows payment of temporary disability (TD) benefits for more than 104 weeks under certain circumstances. Specifically, this bill : 1)Authorizes, for injuries occurring on or after January 1, 2012, payment of TD benefits for more than 104 weeks during a period within five years of the date of injury, but in no case more than 240 weeks of TD benefits. 2)Limits the circumstances where the extended TD benefits are available to cases where medical treatment beyond 104 weeks is needed to achieve maximum medical improvement (MMI), and where the injured worker has not caused a delay in medical treatment due to a willful failure to undergo recommended treatment that is necessary to achieve MMI. EXISTING LAW : 1)Provides for a comprehensive system of workers' compensation benefits for employees who are injured on the job, including TD benefits, which are a partial wage replacement benefit, during the period of time that an injured worker is unable to work while recovering from the injury. 2)Specifies that, for injuries on or after April 19, 2004, an AB 947 Page 2 injured worker is entitled to TD benefits for up to 104 weeks within a two year period commencing with the first payment of TD benefits. 3)Specifies that, for injuries on or after January 1, 2008, an injured worker is entitled to TD benefits for up to 104 weeks within a five year period commencing with the date of injury. 4)Provides that workers with certain listed injuries or conditions are not subject to the 104 week cap, but instead may be compensated with TD benefits for up to 240 weeks during the five year period commencing with the date of injury. 5)Provides that TD benefits are payable until the injured worker is "permanent and stationary" (P&S), which is the point where the injured worker's medical condition is not likely to improve with additional treatment. FISCAL EFFECT : Undetermined but potentially significant costs to the state's workers' compensation program if more injured state employees receive TD benefits for a longer period of time while recovering from their injuries. COMMENTS : 1)Purpose . The author introduced this bill to address circumstances where medical treatment that is required to cure the injured worker's injuries takes longer, through no fault of the injured worker, than the 104 weeks of TD benefits allowed by law. These are cases involving substantial injuries where the injured worker is simply not able to work during the recovery period. The most common example would be cases where conservative treatments are attempted for an extended period, but ultimately surgery, with an extended recovery period, is deemed the appropriate treatment. 2)Retroactivity concerns . In the prior version of the bill, the extended TD benefits were not limited to injuries occurring on or after the bill's effective date. Insurers expressed concerns that they would be obligated to pay benefits for injuries where they had not collected premium for the full scope of the risk. The current version of the bill cures this problem by ensuring that the new rules apply only for injuries that occur on or after January 1, 2012. AB 947 Page 3 3)P&S vs. MMI . The "permanent and stationary" standard has long been the rule in California law to measure when TD ends, and permanent disability and other benefits begin. In 2004, the reform legislation adopted the American Medical Association (AMA) Guides to the Evaluation of Permanent Impairment, 5th Edition, as the source for measuring impairment suffered by an injured worker. The Guides use the terminology "maximum medical improvement," defined as a medical condition that "is well stabilized and unlikely to change substantially in the next year with or without medical treatment." It is the functional equivalent of P&S. 4)Decisions left to physicians . The bill provides that it is up to the physician treating the injured worker to determine whether continued treatment is needed. If it is needed, the injured worker can receive additional TD for the duration of the treatment and related recovery period. While the 104 week limitation was adopted as a hard cap, the specific duration was viewed, in 2004, as a reasonable estimation of how long it would take in most cases to reach P&S. It is clear, however, that some cases are more complex, and longer medical treatment is needed. In this regard, the bill also provides that extended TD benefits are not available if the medical treatment is continuing due to willful delays caused by the injured worker. 5)Opposition . Employers are opposed to the bill, arguing that the 104 week cap was one of the major reforms that have helped control workers' compensation costs. In most cases, they argue, extending the duration of TD benefits does little to improve medical treatment, but rather causes cases to be delayed, with negative implications for both injured workers and employers. Employers also argue that the language of the bill, even with the new amendments, is too open-ended and would allow any physician to extend TD benefits in most cases. In particular, the California Association of Joint Powers Authorities (CAJPA) suggests that a study be conducted to determine whether there are cases that require extended TD, and to identify those types of cases. Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086 FN: 0000556 AB 947 Page 4