BILL ANALYSIS Ó
SB 863
Page 1
Date of Hearing: August 31, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
SB 863 (De Leon) - As Amended: August 30, 2012
SENATE VOTE : Not relevant
SUBJECT : Workers' compensation
SUMMARY : Enacts major reforms to the workers' compensation
system. Specifically, this bill :
1)Eliminates one of the two pathways for chiropractors to
qualify as Qualified Medical Evaluators (QME).
2)Limits the number of office locations that a QME may file with
the Division of Workers' Compensation (DWC) to 10.
3)Reduces the scope of evaluations that QMEs perform by
establishing an Independent Medical Review system (IMR),
patterned after the existing IMR process implemented by the
Department of Managed Health Care (DMHC) for resolving health
insurance disputes, to resolve medical treatment issues.
4)Establishes a hierarchy of standards that are to be applied by
IMR, with the Medical Treatment Utilization Schedule adopted
by the AD as the highest source for evaluating the
appropriateness of medical treatment, followed by the same
ranked standards that apply to HMOs under the Knox-Keene Act.
5)Eliminates the Workers' Compensation Appeals Board's (WCAB)
authority to adjudicate medical treatment disputes that are
directed to the IMR process.
6)Permits the employee to provide new information to the IMR not
reviewed by utilization review (UR), provided the employee
gives this additional information to the employer to allow the
employer an opportunity to reconsider based on this
information.
7)Allows the employee to appeal a UR decision by requesting an
IMR either immediately after the UR decision or after getting
a second utilization review with addition information.
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8)Makes the results of the IMR process binding on all parties,
absent clear and convincing evidence of fraud or conflict of
interest, that the AD acted in excess of his or her authority,
that the decision was the result of bias relating to protected
classes, or that the decision was the result of a plainly
erroneous express or implied finding of fact that is a matter
of ordinary knowledge and not a matter that is subject to
expert opinion.
9)Prohibits the WCAB or a court to make a determination on a
medical matter in the event of a reversal of an IMR decision,
and instead requires that the matter be returned to IMR, for
additional appropriate proceedings.
10)Establishes penalties in the event an employer fails to
notify an injured worker of his or her right to IMR, or fails
to implement a decision by IMR favorable to the injured
worker.
11)Provides that a reversal of a UR decision by IMR is not
necessarily an unreasonable delay in providing treatment
within the meaning of the provisions that penalize an insurer
or employer for unreasonably denied treatment.
12)Adopts findings and declarations of Legislative intent with
respect to the IMR process and its value to injured workers
and to the workers' compensation system.
13)Establishes an Independent Bill Review (IBR) process to take
medical billing disagreements out of the jurisdiction of the
WCAB adjudication system under rules similar to the IMR
process.
14)Adopts a severability clause for the IMR provisions.
15)Provides for the Administrative Director (AD) of the DWC to
contract with qualified organizations to implement the IMR and
IBR functions, subject to detailed conflict of interest rules
and substantive responsibilities, as specified.
16)Contains findings relating to the need to contract for IMR
and IBR services.
17)Repeals several outdated annual reporting requirements.
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18)Prohibits Professional Employer Organizations (PEOs) and
temporary staffing agencies from becoming self-insured for
workers' compensation purposes, and requires any of these
entities that are currently self-insured to become insured by
January 1, 2015.
19)Requires public agencies that are self-insured to submit
specified data to the Department of Industrial Relations (DIR)
for purposes of policy analysis, and directs the Commission on
Health and Safety and Workers' Compensation (CHSWC) to conduct
a study of public sector self-insured programs.
20)Provides that the costs incurred by DIR in administering the
public sector workers' compensation program are to be paid
from the Workers' Compensation Administration Revolving Fund
(user funding as opposed to General Fund.)
21)Repeals the requirement that a second opinion be obtained in
cases of spinal surgery, and instead would resolve questions
of appropriateness of spinal surgery in the IMR process.
22)Streamlines the Agreed Medical Evaluator (AME) and QME
process to eliminate unnecessary delays and friction in the
system.
23)Provides that a report by a physician procured independently
by an injured worker cannot be the sole basis of an award for
compensation, but that a QME or authorized treating physician,
when the QME or authorized treating physician is preparing a
report, shall address any such report and indicate whether he
or she agrees with the findings or conclusions of the
independently procured physician, and there reasons therefore.
24)Establishes a prohibition for any interested party in the
workers' compensation system to have a financial interest in
another entity to which it is referring a party for services,
or for which it is paying or receiving compensation, if the
employer is paying the charges; provided that financial
interests in affiliated entities in claims handling are
subject to mandatory disclosure rather than this prohibition.
25)Increases aggregate Permanent Disability (PD) benefits by
approximately $740 million per year, phased in over a two-year
period, and adjusts the formula for calculating the benefit
amount so that compensation amounts more accurately reflect
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loss of future earnings, and to ensure that no class of
injured workers receive a lower award than under the present
system.
26)Eliminates sleep disorder and sexual dysfunction "add-ons" to
primary injuries that do not include these injuries when
calculating the level of PD, but require all appropriate
medical treatment for these injuries.
27)Eliminates the diminished future earnings capacity from the
determination of permanent disability, and limits the
definition of permanent disability to include only a
consideration of how age and occupation affects the overall
classification of employment of the injured worker, rather
than the individual injured worker's ability to compete in the
open labor market or reduction of future earnings.
28)Limits psychological add-ons when calculating a PD rating to
cases involving catastrophic injury or that involved a violent
workplace incident.
29)Provides that all permanent disability awards are increased
by a multiplier of 1.4.
30) Establishes a return to work program administered by the
Director of the DIR, funded with $120,000,000 annually from
the workers' compensation revolving fund, for the purpose of
making supplemental payments to workers whose PD benefits are
disproportionately low in comparison to their earnings loss.
31)Requires the Director to adopt regulations to establish
eligibility for these payments, based on studies conducted by
the Director in consultation with the Commission on Health and
Safety and Workers' Compensation (CHSWC).
32)Provides that in enacting the bill adding these changes to
the PD system, it is not the intent of the Legislature to
overrule the holding in Milpitas Unified School District v.
Workers' Comp. Appeals Bd. (Guzman) , which established that
the presumption that an AMA Guides rating is correct is
rebuttable by evidence presented by the injured worker.
33)Clarifies that an insurer or employer can pay for physical
medicine treatments in excess of the 24-visit cap without that
payment constituting a blanket waiver of the cap.
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34)Provides that a chiropractor who has reached the 24-visit cap
cannot serve as the injured worker's primary treating
physician.
35)Eliminates the requirement that a Medical Provider Network
(MPN) have non-occupational medicine specialists constitute at
least 25% of the physicians in the network.
36)Requires an MPN to obtain a written acknowledgement from a
physician that the physician agrees to be in the MPN.
37)Requires all MPNs to have a "medical access assistant" staff
person or persons, who need not be employees, but who must be
located within the United States, to aid injured workers in
obtaining appointments or referrals within the MPN.
38)Allows the AD to generically approve an MPN, as opposed to
requiring a separate approval for each employer.
39)Provides that the approval of an MPN by the AD is conclusive
in a matter before the WCAB that the MPN is valid, subject to
proof that there was a specific failure as to a specific
injured worker.
40)Requires periodic administrative audits of MPNs by the AD.
41)Authorizes discretionary administrative audits of MPNs by the
AD.
42)Limits the reasons that can be used to avoid obtaining
treatment within an MPN, and establishes an expedited process
to resolve any disputes about whether the injured worker is
required to be treated within the MPN.
43)Requires a physician who knows or should know that the
patient is suffering from an occupational injury to notify the
employer within 5 days that the injured worker is being
treated outside the MPN, and prohibits payment by an employer
or insurer for any treatment provided to the injured worker
when the notice requirements have not been complied with.
44)Provides that where interpreter services are needed, the
injured worker shall make a request to the employer or
insurer, and the employer or insurer shall pay for the
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interpreter services.
45)Requires that interpreters be certified, and authorizes the
AD to establish, operate or contract for an interpreter
certification program.
46)Prohibits an interpreter certification entity from having a
financial interest in training or employing interpreters.
47)Modifies the Supplemental Job Displacement Benefit (SJDB)
rules to:
a) Change the point in time the benefit is triggered;
b) Prohibit "cashing out" the retraining voucher in
settlements;
c) Establish which schools are qualified to be paid by the
retraining voucher;
d) Limit the time period during which the voucher is valid
to 2 years; and
e) Specify that an injury that occurs during retraining
does not constitute a compensable injury.
48)Prohibits the filing of a lien against an award for matters
that are subject to IMR and IBR dispute resolution.
49)Establishes a $150 filing fee in order to file a lien,
recoverable if the lien claimant prevails.
50)Establishes a $100 activation fee for legacy liens (unless
the lien was previously subject to a since-sunsetted $100
filing fee), recoverable if the lien claimant prevails.
51)Adopts firm time limits within which liens must be filed.
52)Adopts a fee schedule for ambulatory surgery centers (ASCs).
53)Requires the DIR to study the feasibility of establishing a
facility fee for services performed in ASCs.
54)Requires the AD to adopt a medical fee schedule methodology
based on medicare's RBRVS system, with specified modifications
for California's workers' compensation system, including
geographic adjustments.
55)Clarifies the rules that govern the fee schedule applicable
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to vocational expert compensation, and provides that written
testimony, in lieu of live testimony, is proper.
56)Provides that if the MediCal fee schedule for prescription
medications is reduced in order to meet specified MediCal
budget needs, that reduction shall not be included in the
workers' compensation official medical fee schedule, which is
otherwise linked to the MediCal schedule.
57)Prohibits payment for home care services where the services
were already being provided prior to injury (i.e., no pay for
cooking for the injured worker if a spouse was already doing
that function prior to injury); authorizes the AD to adopt a
home care services utilization and fee schedule, and limits
the re-opening of old cases where home care services are
alleged to have been provided but were not authorized or
ordered by a physician before the services were rendered.
58)Authorizes the AD to adopt a fee schedule for copying
services, and establishes substantive rules to govern these
services.
59)Eliminates the "double-payment" pass-through for implantable
surgical hardware, subject to the AD adopting a regulation to
allow an additional reimbursement where the basic hospital fee
schedule does not adequately cover the cost of the hardware.
60)Contains language to prevent chaptering problems with SB
1105.
EXISTING LAW :
1)Provides, based on the state constitution, that the
Legislature has plenary authority to establish a system of
providing workers' compensation benefits to workers who suffer
injuries that arise out of or in the course of employment.
2)Grants the Legislature broad discretion is establishing the
means by which disputes in the workers' compensation system
may be resolved.
3)Includes both medical services and indemnification payments
for permanently disabled workers among the various benefits
that are available to injured employees.
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4)Provides for "employer control" of medical treatment if the
employer establishes an MPN that meets detailed criteria,
including a requirement that 25% of the doctors in the MPN are
not occupational medicine specialists.
5)Provides that an employer is entitled to require an injured
employee to be treated for a workplace injury within its MPN,
provided that the MPN is approved by the AD, and various
notice requirements have been met.
6)Allows, via case law, injured employees to be treated outside
the MPN due to minor failures in pre-employment notice
requirements, workplace notice posting requirements, as well
as substantive deficiencies in the MPN.
7)Allows an entity that arranges for networks of medical
providers to require a physician to participate in a workers'
compensation network as a condition of participation in other
networks arranged by that entity.
8)Provides that most services provided to parties in the
workers' compensation system are subject to a fee schedule,
but does not have a formal fee schedule for interpreter,
copying, transportation or ambulatory surgery center services.
9)Provides that disputes about medical treatment are resolved
based on pre-litigation utilization review by employers,
expert medical opinion obtained through the QME/AME process,
and litigation before a workers' compensation judge.
10)Requires billing disputes (that is, conflicts over whether
billing codes were properly complied with, fee schedules
properly applied, and related matters that do not involve a
challenge to the actual services provided) be resolved by a
workers' compensation judge in connection with the
case-in-chief, often causing delays in settling cases, and
creating a huge backlog of low-priority workload for workers'
compensation judges.
11)Allows a report from a self-procured physician to be admitted
into evidence on any disputed issue, even if the employee has
improperly declined to seek treatment within the MPN.
12)Establishes selected, but not comprehensive, financial
conflict of interest rules for participants in the workers'
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compensation system.
13)Allows basic PD ratings to be increased due to individualized
evidence that the injured worker has suffered "compensable
consequences" of the primary injury due to sleep and sexual
disorders that flow from the primary injury.
14)Allows an injured worker to present evidence to rebut a PD
rating derived from the basic PD rating formula, and to
present evidence of a diminished future earning capacity.
15)Establishes a Supplemental Job Displacement Benefit, but
contains functional impediments in most cases that prevent
delivery of these benefits in a manner helpful to an injured
worker who needs retraining.
16)Contains a soft statute of limitation on the filing of liens
for disputed medical or other services, and requires that
liens be adjudicated by workers' compensation judges.
17)Requires the AD to adopt and periodically update an Official
Medical Fee Schedule, but does not mandate or prohibit that
this schedule be based on medicare's RBRVS system.
18)Provides that medications provided to injured workers shall
be paid for at the rate determined by the MediCal fee
schedule.
19)Allows generally for home care services to be paid for where
an injured worker needs these services as a result of the
injury, but does not provide any specific rules governing the
scope of or payment for these services.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose . This bill reflects a negotiated compromise between
employers and employees to adopt a substantial increase in
permanent disability benefits ($740 million), to ameliorate
unexpected reductions that flowed from the 2004 reforms,
balanced by substantial changes in the benefit delivery system
to eliminate waste, inefficiency, and other loopholes that
result in unnecessary employer costs that go to recipients
other than injured workers.
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2)Workers' Compensation - the Great Compromise . Fundamentally,
workers' compensation is an agreement between employers and
employees to each give up a right in exchange for the
stability and certainty of the workers' compensation system.
Employees give up the right to sue in tort for injuries, and
employers give up the right to contest fault. Employees give
up the right to tort damages in favor of more limited, but
more certain and more easily obtained benefits. Employers
agree to pay benefits in all cases where the injury is work
related. The hallmark of this arrangement is that relatively
certain defined benefits are to be delivered to injured
workers on a no fault basis in a relatively timely manner.
In this system, the relevant parties to the agreement are
employees and employers. Every other stakeholder - providers
of medical services and products, lawyers, insurers, and
various providers of a range of related services - are service
providers contributing goods and services necessary to carry
out the agreement between employees and employers. However,
they are not direct parties to the agreement.
Over the years, the principles of relatively certain defined
benefits and relatively timely delivery have been seriously
eroded. Inconsistency in parties' ability to ascertain
exactly what benefits an injured worker is entitled to has
forced the system to develop a complex, cumbersome, and slow
litigation-based dispute resolution system. At a fundamental
level, the proposal contained in this bill is an effort by the
direct parties to the workers' compensation agreement
(employees and employers) to return to the principles of
relatively certain defined benefits, and relatively timely
delivery of those benefits.
3)The 2004 Reforms . In 2004, with recently-elected Governor
Schwarzenegger poised to file signatures to place a workers'
compensation reform initiative on the ballot, the Legislature
passed and the Governor signed SB 899 (Poochigian) - Statutes
2004, Chapter 34 - in lieu of the initiative. These reforms
enacted a broad range of changes to the workers' compensation
system, but two issue areas are of primary importance to the
reform proposal contained in SB 863.
First, SB 899 substantially changed the permanent disability
rating system. Employers and insurers had long complained
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that the rating system was far too subjective, which resulted
in widely varying results for similar cases. The result of
this variation was a tremendous amount of litigation because
both sides could see the potential of changing the result in a
great number of cases. SB 899 adopted several changes to the
law designed to resolve this problem. The bill required
objective medical findings, the use of the American Medical
Association Guides to the Evaluation of Permanent Impairment,
5th Edition (AMA Guides), and use of a numerical formula to
address the impact on the injured worker's future earning
capacity (FEC). These changes were intended to reduce
litigation and increase consistency of results. They were
also intended to eliminate some cases altogether - so-called
"zeroes" who under the old system obtained a rating based on
subjective but not medically verifiable pain. Under the new
rules, this class of injured worker receives a "zero" percent
PD rating.
These reforms did not have as much impact on litigation as
predicted, largely due to a clearly unexpected result - PD
awards for injured workers who still obtained a rating fell by
approximately 50% or more on average. This result was largely
due to the way the Schwarzenegger Administration's regulations
implemented SB 899. The call for reform had never included an
argument that widespread benefit reductions be included. As
these reductions became evident, lawyers sought aggressive
means to develop ways to increase the low ratings, and they
succeeded in certain respects, discussed in more detail below.
Contemporaneously, political pressure began to build for a PD
benefit increase, which is a key component of SB 863.
Second, SB 899 authorized the establishment of medical provider
networks (MPNs) that, if properly established by the employer
and approved by the AD, were intended to grant "employer
control" over medical treatment. Prior to SB 899, the injured
worker had the choice of treating physician starting 30 days
after the injury. This right was criticized because of
employer concerns that injured workers were being directed to
physicians who were not using evidence-based treatments, and
instead were engaging in treatment patterns designed to
increase the legal case for higher disability ratings. The
MPN was intended to provide quality evidence-based treatment
for injured workers but with a network of physicians developed
by the employer, which would presumably decline to contract
with outlier physicians.
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Two primary problems have developed with MPNs. Injured workers
have far too frequently found it difficult or impossible to
find physicians on the MPN list to treat them. A related
problem is that because of these difficulties, many injured
workers are being directed to the same outside physicians that
employers sought to avoid by creation of the MPNs. In
addition, physicians have complained that they are leveraged
to be in networks they do not want to be in, and get listed in
networks that they had no notice of. A major part of the
reforms proposed by SB 863 involve strengthening the rules to
ensure that the MPNs are sound, and strengthening the rules
requiring treatment of injured workers by MPN physicians.
4)MPN Reforms . One of the primary concerns expressed by
employers is that the expected control of medical care and
delivery of evidence-based medicine to injured workers through
MPNs authorized by SB 899 has not materialized. Employers
point out that the workers' compensation courts have allowed a
range of erosions to what was expected after SB 899 was
enacted. Specifically, they point to cases where employees,
after being in treatment within an MPN, simply go to outside
physicians, expect those physicians to be paid by the
employer, and justify this through technical notice errors
that have nothing to do with the delivery of health care
services. In response, SB 863 requires out-of-network
physicians treating an injured worker to notify the employer
within 5 days, establishes an expedited hearing process to
determine if treatment outside the MPN is legitimate, and
prohibits payment to physicians violating these rules. The
bill is designed to eliminate existing practices whereby weeks
or months of out of network treatment is being provided, often
without any notice to the employer, and liens are being filed
in staggering number (see below) by providers seeking payment
for treatments that were not pre-authorized.
In addition, the bill tightens regulatory oversight to ensure
that MPNs are viable entities, and provides rights to
physicians who may not want to be included in the MPN,
including a repeal of the rule at least 25% of each MPN's
providers must be non-occupational medicine specialists. The
concern has been that these are the providers least likely to
be willing to take workers' compensation cases, and account
for a high percentage of providers on the lists given to
injured workers who will not schedule appointments.
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These reforms are designed to improve the quality of the MPNs,
and in that regard improve the quality of evidence-based
medicine as the basis of treating injured workers, and based
on these improvements, enhance the ability of employers to
provide treatment for injured workers within the MPN.
The bill expressly eliminates some of the reasons that attorneys
for injured workers have used to justify getting treated
outside of MPNs. For example, the law requires a
pre-employment notice to an employee that the employer uses an
MPN, and there are requirements for on-site posting of MPN
notices in workplaces. Deficiencies in meeting these
requirements have been used to get out of MPNs, even by
injured workers who, at the time of injury received all
necessary information about accessing the MPN, and who in fact
had been treated by MPN providers for some time. The bill
eliminates these technical violations as a basis to obtain
treatment outside of the MPN, establishes a presumption that
an approved MPN is valid, but continues to allow an injured
worker to prove that the MPN is failing to make appropriate
treatment available, thereby justifying outside treatment.
The bill also addresses one of the incentives to seek treatment
outside of an MPN. Case law at the WCAB level had held that a
medical report obtained outside an MPN that should have been
used for treating the worker was inadmissible in WCAB
proceedings. The Court of Appeal revered this rule in the
Valdez case. Employers have argued that allowing this sort of
evidentiary use would incentivize wrongful efforts to seek
treatment outside of the MPN. The bill stops short of
overruling the Court of Appeal, but adds two rules: first, the
bill provides that a report from an outside physician shall
not be the sole basis of an award of compensation, and second,
a QME or treating physician shall consider the outside report
in any report they make, and indicate agreement of
disagreement, and the reasons therefore.
5)Independent Medical Review . SB 863 proposes to change the way
medical disputes are resolved. Currently, when there is a
disagreement about medical treatment issues, each side
attempts to obtain medical opinions favorable to its position,
and then counsel for each side tries to convince a workers'
compensation judge based on this evidence what the proper
treatment is. This system of "dueling doctors" with
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lawyers/judges making medical decisions has resulted in an
extremely slow, inefficient process that many argue does not
provide quality results. Long delays in obtaining treatment
result in poorer outcomes, reduced return to work potential,
and excessive costs in the system, none of which are good for
injured workers. SB 863 would instead adopt an independent
medical review system patterned after the long-standing and
widely applauded IMR process used to resolve medical disputes
in the health insurance system. Thus, a conflict-free medical
expert would be evaluating medical issues and making sound
medical decisions, based on a hierarchy of evidence-based
medicine standards drawn from the health insurance IMR
process, with workers' compensation-specific modifications.
The bill contains findings that this system would result in
faster and better medical dispute resolution than existing
law.
The IMR system is designed to ensure that medical expertise is
used to resolve medical disagreements. Thus, the decision
from the IMR is final and binding on the parties.
Nonetheless, in the exercise of the Legislature's plenary
authority to establish a workers' compensation system that
includes a review of decisions, there is a process to appeal
the IMR result, but this review process does not allow the
second-guessing of medical expertise. Rather, the appeal is
limited to circumstances where there was fraud, conflict of
interest, discrimination based on protected classes, or clear
mistakes of facts that do not involve medical expertise.
According to the California Applicants' Attorneys Association
(CAAA) the IMR process prohibits WCAB or judicial review of
medical necessity for treatment of work injuries, and is in
direct conflict with the California Supreme Court's
Determination in State Compensation Insurance Fund v. Workers'
Compensation Appeals Board (Sandhagen) , which provided that an
injured worker was entitled to an expeditious, complete and
final judicial review of all treatment disputes. It should be
noted that Sandhagen was not decided in the context of an IMR
process, and may not be on point with respect to reviewing an
IMR decision.
6)PD Reforms . PD reforms are probably the most controversial
element of the proposal. Despite increasing annual PD
payments to injured workers by an estimated $740 million
(after a 2-year phase-in), some have objected to the way that
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this increase is structured, as well as changes in how
approximately $1 billion in existing PD expenditures are
redirected. There are numerous ways that a PD system can be
structured. At one end of the spectrum, there can be
relatively broad guidelines, and every injured worker could be
entitled to prove to the workers' compensation courts his or
her individual circumstances. This approach, of course, would
have little predictability, and would have tremendous
frictional costs and delays in delivering benefits. At the
other end of the spectrum, there can be a total formulaic
approach where there is no opportunity to bring in
individualized proof. Employers have argued that the current
system operates too close to the former, and this bill moves
in the direction of the latter, while retaining key rights for
limited individual proof of unique circumstances. Employees
have agreed to these changes in exchange for increased
benefits for all classes of employee, and increased certainty
and speed in the delivery of the benefits.
The bill specifically limits some of the "add-ons" that can be
established by individualized proof - sleep disorders, sex
disorders, and to a limited extent, psychological disorders -
because these add-ons have greatly expanded in recent years,
largely as a result of the inappropriately low PD ratings that
followed from the 2004 reforms. Since benefit levels are
being substantially increased by the bill, many believe that
these add-ons, which generate substantial litigation expense,
are no longer needed.
Not everyone agrees with this conclusion. For example, the CAAA
argues that the bill alters the existing statutory description
of permanent disability and may undermine or reverse fifty
years of California Supreme Court case law allowing injured
workers to recover compensation for their lost ability to earn
a living, citing the Court of Appeal decision in Ogilvie v.
Workers' Compensation Appeals Board and the 2007 Supreme Court
Decision in Brodie v. Workers' Compensation Appeals Board.
7)Lien Reforms . The current lien system in workers'
compensation is out of control. There is no effective statute
of limitations, because case law has developed tolling rules
that result in most billing matters remaining alive
indefinitely. In addition, the method of resolution requires
formal litigation in an already overcrowded workers'
compensation court system. There are presently hundreds of
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thousands of backlogged liens, possibly in excess of a
million, and many of these are related to long-since closed
cases.
One of the concerns most often expressed by employers is that
liens get filed by providers for months of treatment when the
employer had no idea that there was any treatment being
provided. The bill seeks to avoid these situations by
mandatory notice by providers to the employer, an expedited
hearing process to determine if the provider has a right to be
treating the injured worker, and a prohibition against paying
bills submitted in violation of these rules.
But lien abuse is not limited to treatment the employer has no
notice of. For example, it has become common for third
parties to purchase old receivables from providers, who often
billed at (higher) usual and customary rates but were properly
paid according to established fee schedules. These third
parties then file liens in an effort to leverage settlements.
Another example of lien abuse involves a provider filing a
lien for excessive amounts after being paid, again with the
hope of obtaining a settlement. Nuisance-value settlements
are rampant because the workers' compensation courts simply
don't have time for these minor matters when crucial right to
benefits issues are the priority cases. To address this
growing volume of problem liens, the bill proposes to re-enact
a lien filing fee, so that potential filers of frivolous liens
have a disincentive to file. This approach worked well in the
past before it sunset (due to the DWC's inability to track the
fees - a problem DWC says no longer exists.) The lien filing
fee is refundable if the lien-claimant prevails. In addition,
for liens that are pending, and were filed after the prior
filing fee sunset, the bill provides for the payment of an
activation fee. Again, the purpose is to provide a
disincentive to file frivolous liens.
Not surprisingly, there has been concern expressed that filing
fees are a burden on providers who may have legitimate billing
disputes with the employer or insurer. Therefore, in order to
further eliminate a major portion of the unnecessary volume of
liens, the bill would create an "independent bill review"
process where expert bill reviewers would make determinations
in cases where it is merely a billing, and not a substantive
treatment, dispute. This IBR process would relieve
substantial congestion in the workers' compensation courts,
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provide much faster dispute resolution, and result in better
decisions by billing experts as opposed to judges, who have no
special training in the arcane world of billing codes and
procedures.
8)RBRVS . Medicare uses a resource based relative value system
(RBRVS) as the foundation for calculating payment for
physician services. Most states use RBRVS in their workers'
compensation system. In California, this issue has been
debated for years, and subject to substantial consideration
and hearings by the DWC. However, it has not been adopted.
Last year, the Assembly Insurance Committee passed SB 923 (De
Leon), which would have required the DWC to adopt RBRVS, but
the bill was not taken up on the Assembly Floor.
RBRVS is not without controversy within the medical community,
even as it is a well-understood system that is virtually
self-updating as medicare regularly updates it. Specifically,
it is argued by specialists that the RBRVS rules favor primary
care physicians over specialists, and would result in unfair
reimbursement cuts to specialists. On the other hand, primary
care physicians argue that some specialties receive
reimbursement at over 300% of the medicare rate by
California's workers' compensation system. It should be noted
that SB 863 does not provide the "revenue neutrality"
provision that rendered SB 923 controversial.
9)Other Fee Schedules . Market pricing does not work well in
workers' compensation, since the people who receive services
(injured workers) are not the payors. There is not market
pressure for the injured worker to say "no" to over-priced
services. As a result of this dynamic, most services that
employers are mandated to pay for in workers' compensation are
subject to a fee schedule, and in many cases, to utilization
schedules as well (as over-utilization has the same
inflationary impact as over-pricing.) However, not all
services have been subjected to fee schedules, and some
services are covered by fee schedules that allow for overly
generous payments according to research data reported by
CHSWC. As a result, the bill proposes establishing or
updating utilization and/or fee schedules for the following
services: ambulatory surgery center facility fees, interpreter
services, vocational experts, home care services, and copying
services.
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With respect to home care services, the bill seeks to adopt a
fee schedule, identify appropriate utilization, require a
physician to order the services, and cut off a practice of
re-opening old cases where there had never been a physician
order for home care, and pursuing a lien on behalf of a family
member who cared for the injured worker. Since attorneys
pursuing these claims are not representing the injured worker,
the usual attorneys fee rules for workers' compensation cases
do not apply. There have been reports of 50% contingency fees
on claims of months of 24/7 home care services, where there
had never been any notice that the services were needed or
ordered by a physician.
10)SJDB . Return to work after an injury is crucial to an
injured worker's long term financial and emotional health.
California, unfortunately does a poor job of returning its
injured workers to work. In 2004, SB 899 adopted a
supplemental job displacement benefit designed to provide
retraining services for injured workers who could not return
to their existing job. However, this program has never worked
well because the trigger for the benefit occurs far too late
for the benefit to work well. This bill attempts to reform
the SJDB to make its promise of retraining viable.
REGISTERED SUPPORT / OPPOSITION :
Support
Acclamation Insurance Management Services
Advanced Ambulatory Surgery Center
Air Conditioning Sheet Metal Association
Allied Managed Care
ALPHA Fund
American Federation of State, County and Municipal Employees
American Subcontractors Association of California
Association of California Healthcare Districts (ACHD)
Association of California School Administrators (ACSA)
AT&T
Boeing
Brand Source Pacific Rim Region
California Association of Competitive Telecommunications
Companies
California Association of Joint Powers Authorities (CAJPA)
California Association of Sheet Metal and Air Conditioning
Contractors Association
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California Carpenters Conference
California Chapter of the American Fence Association
California Chapters of the National Electrical Contractors
Association
California Coalition on Workers' Compensation
California Concrete Contractors Association (CCCA)
California Employers Association
California Faculty Association
California Farm Bureau
California Fence Contractors' Association
California Grocers Association
California Hospital Association (CHA)
California Independent Oil Marketers Association
California Labor Federation
California Landscape and Irrigation Council
California Landscape Association
California Landscape Contractors Association (CLCA)
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California Manufacturers and Technology Association
California Medical Legal Specialists, LLS (CMLS)
California Metals Coalition
California Nurses Association
California Occupational Medicine Physicians
California Physical Therapy Association
California Professional Firefighters
California Retailers Association
California School Employee Association
California Small Business Association
California Special Districts Association (CSDA)
California State Association of Counties (CSAC)
California State Council of Laborers
California State Pipe Trades Council
California Teachers Association
California Trucking Association
California-Nevada Conference of Operating Engineers
CALPASC-California Professional Association of Specialty
Contractors
Change.org
Coalition of Small and Disabled Veteran Businesses
Communication Workers of America
Disney
Engineering Contractors' Association
Federal Express (FedEx)
Flasher Barricade Association
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Globe Iron Foundry, Inc.
Golden State Builders Exchanges (GSBE)
Grimmway Farms
Insurance Brokers and Agents of the West
International Alliance of Theatrical Stage Employees
International Brotherhood of Electrical Workers
International Longshore & Warehouse Union Southern California
District Council (ILWU SCDC)
International Union, United Automobile, Aerospace & Agricultural
Implement Workers of America - UAW
Kaiser Permanente
Laborers' Local 777 & 792
Liberty Mutual
Los Angeles Police Protective league
Marin Builders' Association
Monterey County Business Council
National Federation of Independent Businesses (NFIB)
North Bay Labor Council
Northern California Independent Booksellers Association (NCIBA)
Numerous Individuals
Numerous Physiological Associations
Oakland Metropolitan Chamber of Commerce
Painting & Decorating contractors of California, Inc.
PECG/CAPS
Plumbing Heating and Cooling Contractors Association of
California (PHCC)
Psych Techs
Regional Council of Rural Counties
Safeway
San Francisco Builders Exchange
San Francisco Chamber of Commerce
San Francisco Council of District Merchants Associations
San Francisco Small Business Network
School Insurance Authority
Sheet Metal Workers
Small Business Association
Small Business California
Southern California Contractors Association
State Building & Construction Trades Council of California
Tri-Counties Central Labor Council
U.S. Health Works Medical Group
UAW International Union and Locals 2865, 4123 and 5810
UNITE HERE
United Auto Workers
United Food and Commercial Workers
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UPS-United Parcel Service
Western Carwash Association
Western Electrical Contractors Association (WECA)
Western Growers Association
Western Occupational & Environmental Medical Association
Zenith
Opposition
Advanced Ambulatory Surgery Center
California Hospital Association (CHA)
California Medical Legal Specialists, LLS (CMLS)
International Longshore & Warehouse Union Southern California
District Council (ILWU SCDC)
Numerous Individuals
Numerous Physiological County Associations
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086