BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted W. Lieu, Chair Date of Hearing: June 29, 2011 2011-2012 Regular Session Consultant: Gideon L. Baum Fiscal:Yes Urgency: No Bill No: AB 1168 Author: Pan Version: As Introduced February 18, 2011 SUBJECT Workers' compensation: vocational expert fee schedule. KEY ISSUE Should the Legislature require the administrative director of the Division of Workers' Compensation adopt, after public hearings, a fee schedule that establishes reasonable maximum fees paid for services provided by vocational experts? PURPOSE To set reasonable maximum fees for services provided by vocational experts. ANALYSIS Existing law establishes a workers' compensation system that provides benefits to an employee who suffers from an injury or illness that arises out of and in the course of employment, irrespective of fault. This system requires all employers to secure payment of benefits by either securing the consent of the Department of Industrial Relations to self-insure or by securing insurance against liability from an insurance company duly authorized by the state. Existing law requires the administrative director of the Division of Workers' Compensation (DWC) to adopt and periodically revise an Official Medical Fee Schedule (OMFS) to establish reasonable maximum medical fees for medical services, including physician services and medical-legal expenses. (Labor Code §§ 5307.1 & 5307.6) This bill would require the administrative director of the Division of Workers' Compensation to adopt, after public hearings, a fee schedule that establishes reasonable maximum fees paid for services provided by vocational experts, including, but not limited to, vocational evaluations and expert testimony determined to be admissible by the appeals board. This bill would also prohibit a vocational expert from being paid, and the Workers' Compensation Appeals Board (WCAB) from allowing, fees in excess of those set in the fee schedule. COMMENTS 1. Vocational Experts and Existing Fee Schedules Currently, the Labor Code is silent as to the fees for vocational experts. Prior to 2004, the Labor Code contained vocational rehabilitation services provided by vocational counselors. They were covered by a fee schedule and their services were cost contained through statute. In 2004, the Legislature passed SB 899 (Poochigian), Chapter 34, Statutes of 2004, which completely overhauled the workers' compensation system. As part of that reform, the vocational rehabilitation structure was dramatically altered, eventually sun-setting in 2009. As was discussed above, many medical professions have their fees capped through a fee schedule. These include physicians, Qualified Medical Examiners (QME), Agreed Medical Examiners (AME), chiropractors, and physical therapists. The same is true of medical-legal evaluations, which are evaluations done by either a primary treating physician, QME, or AME which is to develop a narrative medical report for the purposes of proving or disproving a contested medical fact or workers' compensation benefit. These evaluations usually Hearing Date: June 29, 2011 AB 1168 Consultant: Gideon L. Baum Page 2 Senate Committee on Labor and Industrial Relations include face to face visit(s) with the injured worker, review of records, and addressing medically complex issues, such as causation and apportionment. 2. Ogilvie and the Use of Vocational Experts: In 2009, the Workers Compensation Appeals Board (WCAB) found in Ogilvie v. City and County of San Francisco that permanent disability ratings were rebuttable. This successful rebuttal of the permanent disability rating was successful in part due to the expert testimony and reports provided by two certified vocational rehabilitation counselors. The Ogilvie case is currently being appealed, and therefore the final details on how and when a permanent disability rating can be disputed remain unclear, but the use of vocational experts by injured workers and employers to refute permanent disability rating findings is almost certain to continue for the foreseeable future. This bill does not touch upon the issues raised in Ogilvie or any of the related cases. Rather, AB 1168 seeks to provide a fee schedule to set maximum fees if and when a vocational expert is used by either an injured worker or an employer. This would bring fee practices for vocational experts in line with other workers' compensation services, as well as historical norms. 3. Possible Amendments: The opposition has raised several concerns (which will be discussed in detail below) that the Committee may wish to review. First, the opposition is concerned that the admissibility standard currently present in the bill will prevent payment for services rendered due to attorney error or legal issues outside of the scope of the report or testimony, denying the expert payment. Second, the opponents believe that the use of the term "reasonable maximum fees paid for services" is not present in other fee schedule statutes and therefore is not appropriate here. Hearing Date: June 29, 2011 AB 1168 Consultant: Gideon L. Baum Page 3 Senate Committee on Labor and Industrial Relations Therefore, the committee may wish to do the following: 1) On page 2, line 5, strike "maximum" and insert "hourly"; 2) On page 2, line 7, strike "admissible" and insert "reasonable, actual, and necessary" and on page 2, line 10, strike "set forth" and strike all of line 11 and insert "allowed as reasonable, actual, and necessary". The language on "reasonable, actual, and necessary" is based on Costa v. Hardy Diagnostic and SCIF (2007), a case where the WCAB dealt with reimbursement for rebutting permanent disability ratings, and is therefore reflective of existing case law. 4. Proponent Arguments : Supporters note that fee schedules are the norm in workers' compensation. They also point out that allowing the AD to adopt the schedule after public hearings, as opposed to adopting a statutory schedule, provides the flexibility to adjust compensation levels over time. Delegation of this duty to the AD is also common in the workers' compensation system. Employer supporters also note that "Ýt]he imposition of fee schedules in workers' compensation is an issue of fairness to employers. More importantly, controlling administrative costs in the workers' compensation system ensures that workers' compensation dollars are preserved for injured worker benefits." 5. Opponent Arguments : Opponents have taken an 'oppose unless amended' position, arguing that that this bill places unreasonable and excessive burdens in place for vocational experts to be paid appropriately. Opponents believe that the bill as currently written will make it very difficult for a vocational expert to be appropriately paid for services rendered, thereby hurting injured workers and preventing them from receiving the expert testimony they need. Opponents request that: Hearing Date: June 29, 2011 AB 1168 Consultant: Gideon L. Baum Page 4 Senate Committee on Labor and Industrial Relations 1) The requirement that they only be paid upon their testimony being found admissible be removed; 2) That billing in excess of the medical the schedule be allowed in the event of extraordinary circumstances, as is currently allowed with medical-legal reports; and 3) Revising the fee schedule requirement so that charging at the fee schedule is considered prima facie evidence that the fees are reasonable. 6. Prior Legislation : AB 228 (Alarcon), Chapter 639, Statutes of 2003, establishes the existing fee schedule structure for medical services. SUPPORT Acclamation Insurance Management Services Allied Management care Alpha Fund Association of California Insurance Companies California Applicants' Attorneys Association California Association of Joint Powers Authorities California Chamber of Commerce California Coalition on Workers Compensation California Grocers Association California Joint Powers Authorities California Manufacturers & Technology Association California Special Districts Association California State Association of Counties CSAC Excess Insurance Authority League of California Cities OPPOSITION American Board of Vocational Experts (Unless Amended) Career Associates Inc. (Unless Amended) Cascade Disability Management (Unless Amended) Hall Associated Rehabilitation Consultants (Unless Amended) International Association of Rehabilitation Professionals/California Chapter (Unless Amended) Work-Wise, Inc. (Unless Amended) Hearing Date: June 29, 2011 AB 1168 Consultant: Gideon L. Baum Page 5 Senate Committee on Labor and Industrial Relations Eight (8) Individuals Hearing Date: June 29, 2011 AB 1168 Consultant: Gideon L. Baum Page 6 Senate Committee on Labor and Industrial Relations