BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: April 24, 2013 2013-2014 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: SB 626
Author: Beall
As Introduced/Amended: April 18, 2013
SUBJECT
Workers' Compensation.
KEY ISSUE
Should the Legislature reverse several key provisions of the
2012 workers' compensation reform, including the Independent
Medical Review process?
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 creates a Commission on Health and Safety and
Workers' Compensation (CHSWC), comprised of 8 voting members:
four from organized labor and four from the employer community.
(Labor Code §75)
Existing law provides that medical, surgical, chiropractic,
acupuncture, and hospital treatment, including nursing,
medicines, medical and surgical supplies, crutches, and
apparatuses, including orthotic and prosthetic devices and
services, that is reasonably required to cure or relieve the
injured worker from the effects of his or her injury shall be
provided by the employer.
(Labor Code §4600)
Existing law , with certain exceptions, provides that an employee
injured on or after January 1, 2004 is entitled to no more than
24 chiropractic, 24 occupational therapy, and 24 physical
therapy visits per industrial injury. (Labor Code §4604.5)
Exceptions to the 24 Visit Caps include:
1) When an employer authorizes in writing additional visits
to a health care practitioner for physical medicine
services; and
2) Postsurgical physical medicine and postsurgical
rehabilitation services provided in compliance with a
postsurgical treatment schedule established by the
Administrative Director.
Existing law provides that a chiropractor may not be a primary
treating physician after the employee has received the maximum
number of chiropractic visits allowed under existing law.
(Labor Code §4600)
Existing law requires that all employers create a utilization
review process, which is a process that prospectively,
retrospectively, or concurrently review and approve, modify,
delay, or deny, based in whole or in part on medical necessity
to cure and relieve, treatment recommendations by physicians,
prior to, retrospectively, or concurrent with the provision of
medical treatment services. (Labor Code §4610)
Existing law provides that, in the event over a dispute over a
utilization review decision on or after July 1, 2014, all
disputes must be submitted for Independent Medical Review (IMR).
The independent reviewer's information must be kept
confidential.
(Labor Code §§4610.5 and 4610.6)
Hearing Date: April 24, 2013 SB 626
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Senate Committee on Labor and Industrial Relations
Existing law requires that, in the absence of fraud, error, or
illegal conduct, the IMR decision is final and binding. (Labor
Code §4610.6)
Existing law prohibits permanent disability impairment ratings
for sleep dysfunction, sexual dysfunction, or psychological
disorders arising from a compensable injury. An increase in
impairment ratings for psychological disorders is allowable if
the following is applicable:
1) The injured worker is a victim of a violent act or
direct exposure to a significant violent act;
2) The injured worker suffers a catastrophic injury,
including, but not limited to, loss of
a limb, paralysis, severe burn, or severe head injury.
Existing law explicitly preserves the ability of an injured
employee to obtain treatment for sleep dysfunction, or sexual
dysfunction, or psychiatric disorder, if any, that are a
consequence of an industrial injury.
(Labor Code §4660.1)
This bill would expand the Commission on Health and Safety and
Workers' Compensation (CHSWC) to 10 members, adding another
employer representative and an injured worker representative.
This bill would lift the 24 visit cap on chiropractic,
occupational therapy, and physical therapy visits and delete the
prohibition of a chiropractor serving as a primary treating
physician.
This bill would allow a physician to continue to serve as the
primary treating physician, even if additional treatment is
denied, as long as the physician continues to comply with
reporting requirements set by the Administrative Director.
This bill would require that all review of appropriate treatment
in utilization review, Independent Medical Review (IMR), and
medical provider network be conducted by medical professionals
who hold the same California license as the requesting
physician.
Hearing Date: April 24, 2013 SB 626
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Senate Committee on Labor and Industrial Relations
This bill would remove the confidentiality requirement of
independent reviewers in the Independent Medical Review process.
This bill would allow for review of Independent Medical Review
decisions by the Workers' Compensation Appeals Board (WCAB) or
the any higher court.
This bill would allow increases to permanent disability
impairment ratings due to psychological disorders arising from a
compensable injury.
COMMENTS
1. SB 626 and the 2012 Workers' Compensation Reform: Policy
Impacts
SB 863 (DeLeon), Statutes of 2012, Chapter 363 represents a
significant and data-driven reform to the workers'
compensation system. The goal of the reform was to provide a
more objective and equitable process for injured workers, as
well as speeding up the process by which medical treatment is
provided. SB 626 impacts several specific provisions of these
reforms, which are discussed below.
Independent Medical Review:
One of the key objections to the pre-SB 863 reforms was that
disputes on medical treatment were decided by workers'
compensation judge, leading to an extremely slow, inefficient
process that did not provide quality results. The
adjudicatory process led to long delays in obtaining
treatment, which resulted in poorer outcomes, reduced return
to work rates, and excessive costs in the system.
SB 863 addressed this with the creation of Independent Medical
Review (IMR), patterned after the long-standing IMR process
used to resolve medical disputes in the health insurance
system. With IMR, an independent medical expert would be
evaluating medical issues and making the final ruling on
Hearing Date: April 24, 2013 SB 626
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Senate Committee on Labor and Industrial Relations
medical decisions, based on a hierarchy of evidence-based
medicine standards drawn from the health insurance IMR
process, with workers' compensation-specific modifications.
While not fully implemented , the IMR process promises to speed
up medical treatment and increase objectivity in the provision
of medical services.
SB 626 impacts the IMR process in two principle ways. The
first is that it removes the confidentiality currently
afforded to independent reviewers. While the full impact of
this is unknown, one fear is that it would reduce the
independence of the reviewer . Currently, the Department of
Managed Health Care does not post the identity of independent
reviewers on their website, and the Committee is unaware of
any issues with that confidentiality.
Additionally, SB 626 makes IMR decisions appealable to the
WCAB or a higher court. The end result of this is that IMR
ceases to be the final word on medical decisions, but rather a
temporary stop before final litigation. This makes judges the
final decider on medical decisions, encourages litigation, and
removes the objectivity and speed that the IMR process brings
to the workers' compensation system.
Medical Quality Control and Chiropractors:
In the workers' compensation system, chiropractors are
included in the definition of "physicians". This, however, is
not the case in the group health or Medicare setting. This is
because chiropractors are not medical doctors.
While the workers' compensation system allows chiropractors to
provide medical treatment, there are caps of 24 visits for
chiropractic treatment. This is because, while for some
chiropractic treatment can provide relief, for others it will
not and therefore a medical doctor needs to step in and review
treatment. Therefore, removing the 24 visit cap on
chiropractors will lead to worse medical outcomes for injured
workers and increase costs .
Psychological Disorders and Impairment Ratings:
Hearing Date: April 24, 2013 SB 626
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Senate Committee on Labor and Industrial Relations
As a part of the SB 863 benefit increase, the systemic value
of the use of the impairment ratings "add-ons" of sleep
dysfunction, sexual dysfunction, and psychological disorder
were socialized across all ratings. The logic of this
decision is that all permanently disabled workers will
experience one or both of these impacts, but the pre-SB 863
system only awarded such benefits in the event of a successful
legal argument.
However, SB 863 had no impact on the ability of an injured
worker to get treatment for any of the above conditions. SB
626 would allow for an impairment rating add-on for
psychological disorders, but would have no impact on the
provision of treatment.
3. SB 626 and the 2012 Workers' Compensation Reform: Fiscal
Impacts
As noted above, SB 626 would undermine the cost savings
provided in the IMR process, bring back the costs associated
with increased impairment ratings for psychological disorder,
as well as increase medical utilization costs. Using WCIRB
data, we can estimate that the IMR provisions of SB 626 would
cost $230 million (excluding utilization and loss adjusted
expenses) and the increase impairment rating would be
approximately $52 million (excluding utilization and loss
adjusted expenses), however, we cannot estimate the additional
medical utilization costs.
Therefore, we can conservatively estimate the fiscal impact of
SB 626 at $300 million.
4. Proponent Arguments :
Proponents argue that the 2012 workers' compensation reform
made several changes to the workers' compensation system that
were inequitable and hurt workers. Proponents believe that SB
626 will return equity to the system. Specifically,
proponents argue that the psychological add-on will only cost
$50 million and will ensure appropriate psychological
treatment. Proponents also argue that SB 626 will increase
the number of California physicians in the workers'
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Senate Committee on Labor and Industrial Relations
compensation system, increasing jobs in the state. Finally,
proponents argue that SB 626 strikes an unconstitutional
denial of appeal from the IMR process.
5. Opponent Arguments :
Opponents note that the 2012 workers' compensation reform was
a collaborative process that led to roughly $1 billion in
employer cost savings and significant benefit increases for
injured workers. Opponents argue that SB 626 eliminates many
of the reforms that made this reform possible. Specifically,
opponents argue that SB 626 would undermine IMR, leading to
slower medical care, higher costs, and worse return-to-work
rates. Additionally, opponents note that the psychological
add-on that existed prior to the 2012 reform was a source of
significant litigation costs with few benefits accruing to the
worker. Opponents argue that a return to that litigation,
particularly when the 2012 reform had no impact on the
provision of psychological treatment, would only need to
increased attorney awards, rather than increased injured
worker benefits.
6. Prior Legislation :
SB 863 (DeLeon), Statutes of 2012, Chapter 363, was discussed
above.
SUPPORT
Dolores Huerta Foundation, Inc. (Sponsor)
California Chapter of the International Association of
Rehabilitation Professionals
California Chiropractic Association
California Neurology Association
California Psychological Association
California Society of Industrial Medicine and Surgery
California Society of Physical Medicine and Rehabilitation
California Workers' Compensation Services Association
The Weinmann Report
Voters Injured at Work
1-individual
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Senate Committee on Labor and Industrial Relations
OPPOSITION
101 Manufacturing
Acclamation Insurance Management Services
Actief Case Management
Allied Managed Care
ALPHA Fund
American Fence Association
American Insurance Association
Associated Builders and Contractors
Associated General Contractors
Association of California Healthcare Districts
Association of California Insurance Companies
Brand Source Pacific Rim Region
Brea Chamber of Commerce
Building Owners and Managers Association of California
California Apartments Association
California Association for Micro-Enterprise Opportunity
California Association of Competitive Telecommunications
Companies
California Association of Joint Powers Authorities
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Chapter of the American Fence Association
California Clubs of Distinction
California Coalition on Workers' Compensation
California Construction and Industrial Materials Association
California Employers Association
California Farm Bureau Federation
California Fence Contractors' Association
California Fish and Seafood Industry
California Grocers Association
California Independent Grocers Association
California Labor Federation, AFL-CIO
California Landscape Contractors Association
California League of Food Processors
Hearing Date: April 24, 2013 SB 626
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Senate Committee on Labor and Industrial Relations
California Manufacturers and Technology Association
California Metals Association Coalition
California Professional Association of Specialty Contractors
California Professional Firefighters
California Restaurant Association
California Retailers Association
California School Employees Association
California Special Districts Association
California State Association of Counties
Camarillo Chamber of Commerce
Chambers of Commerce Alliance of Ventura & Santa Barbara
Counties
Claremont Chamber of Commerce
Coalition of Small and Disabled Veteran Businesses
Committee on Jobs-San Francisco
County of Los Angeles
County of San Bernardino
Dowdle & Sons Mechanical
El Dorado Hills Chamber of Commerce
Engineering Contractors Association
Flasher Barricade Association
Fullerton Chamber of Commerce
Garden Grove Chamber of Commerce
GMGS Risk Management & Insurance Services
Golden Gate Restaurant Association
Golden Oak Cooperative Corporation
Greater Bakersfield Chamber of Commerce
Greater Conejo Valley Chamber of Commerce
Greater Riverside Chambers of Commerce
Grimmway Farms
Independent Cities Risk Management Authority
Independent Insurance Agents & Brokers of California
Inland Valley Business Alliance-Rancho Cucamonga
International Paper
Irwindale Chamber of Commerce
League of California Cities
Lodi Chamber of Commerce
Long Beach Chamber of Commerce
Los Angeles Chamber of Commerce
Los Angeles County Board of Supervisors
Main Street Chamber-Rancho Cucamonga
Main Street Chamber-Upland
Hearing Date: April 24, 2013 SB 626
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Senate Committee on Labor and Industrial Relations
Marin Builders Association
Marriott International
Metro Risk Management
Monterey County Business Council
National Federation of Independent Business
North Bay Schools Insurance Authority
Northern California Independent Booksellers Association
Oakland Metropolitan Chamber of commerce
Orange Chamber of Commerce
Oxnard Chamber of Commerce
Pacific Contractors Association
Palm Desert Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California
Plumbing-Heating-Cooling Contractors Association of San
Francisco
Porterville Chamber of Commerce
PPG Aerospace
Property Casualty Insurers Association of America
Redondo Beach Chamber of Commerce
Regional Council of Rural Counties
Rural County Representatives of California
Safeway
San Fernando Valley Chamber of Commerce
San Francisco Builders Exchange
San Francisco Chamber of Commerce
San Francisco Council of District Merchants Association
San Francisco Locally Owned Merchants Alliance
San Francisco Small Business Network
San Jose Silicon Valley Chamber of Commerce
Santa Clara Chamber of Commerce
Schools Insurance Authority
Schools Insurance Group
Sedgwick Claims Management Services
Simi Valley Chamber of Commerce
Small Business California
Small Business Majority
Small Manufacturers Association of California
South Bay Association of Chambers of Commerce
Southwest California Legislative Council
Stuart Baron & Associates
Tiger Lines LLC
Torrance Chamber of Commerce
Hearing Date: April 24, 2013 SB 626
Consultant: Gideon L. Baum Page 10
Senate Committee on Labor and Industrial Relations
United Parcel Service
Urban Counties Caucus
Valley Industry & Commerce Association
Visalia Chamber of Commerce
Western Electrical Contractors Association Western Growers
Association
Hearing Date: April 24, 2013 SB 626
Consultant: Gideon L. Baum Page 11
Senate Committee on Labor and Industrial Relations