BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 305 (Gonzalez) - Workers' compensation:  permanent disability  
          apportionment
          
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          |Version: June 30, 2015          |Policy Vote: L. & I.R. 4 - 1    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: July 13, 2015     |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.




          Bill  
          Summary: For injuries occurring after January 1, 2016, AB 305  
          would (1) prohibit apportionment if pregnancy, menopause, or  
          menopause-caused osteoporosis is contemporaneous with the  
          injured worker's claimed injury, (2) prohibit apportionment in  
          cases of psychiatric injury in specified instances, and (3)  
          require that breast cancer not be less than the comparable  
          impairment rating for prostate cancer.


          Fiscal  
          Impact: 
                 The Department of Industrial Relations (DIR) would incur  
               costs (special funds) of $4.25 million in the first year,  
               and $4 million annually thereafter to implement the  
               provisions of the bill. 








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                 As a direct employer, the State would incur increased  
               permanent disability costs due to breast cancer. The  
               magnitude is unknown, but potentially significant.

                 The bill also would result in increased litigation costs  
               to the State as a direct employer. The magnitude is  
               unknown, but potentially significant.



          Background: Current law establishes a workers' compensation system that  
          provides benefits to an employee who suffers from an injury or  
          illness that occurs during the course of employment,  
          irrespective of fault.  This system requires all employers to  
          secure payment of benefits by either (1) securing the consent of  
          DIR to self-insure, or (2) securing insurance against liability  
          from an insurance company authorized by the State.
          Under current law, when doctors are determining the nature and  
          severity of an occupational injury, the American Medical  
          Association (AMA) Guides to the Evaluation of Permanent  
          Impairment (5th Edition) must be used to measure physical  
          impairment and determine an injured worker's whole person  
          impairment (WPI). 


          When physicians prepare a report regarding whether a claimed  
          workplace injury is permanently disabling, the physician must  
          determine both (1) causation, and (2) what percentage of the  
          injury is due to non-occupational issues, including prior  
          workplace injuries. An injured worker's PD award is then  
          adjusted down by this percentage. Only a physician can make the  
          determination whether and to what extent if apportionment is  
          appropriate.


          Additionally, current law creates the Permanent Disability  
          Ratings Schedule (PDRS), which increases the WPI by 40 percent  
          and adjusts for occupation and age to calculate a percentage of  
          permanent disability, also known as a PD rating. AMA Guides rate  
          the removal of female breasts at a WPI of zero percent, while  
          the removal of a prostrate generally rates at 16 to 20 percent  
          WPI. Thus, prostrate removal currently translates into a higher  
          PD rating than female breast removal. 









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          Proposed Law:  
          With respect to injuries occurring on or after January 1, 2016,  
          this bill would do the following:
                 Prohibit apportionment in cases of physical injury based  
               on any of the following conditions if those conditions are  
               contemporaneous with the claimed physical injury: (1)  
               pregnancy; (2) menopause; and (3) osteoporosis casually  
               related to menopause.


                 Prohibit apportionment in cases of psychiatric injury  
               caused by sexual harassment or any of the conditions listed  
               above if the conditions are contemporaneous with the  
               psychiatric injury.


                 Require that WPI ratings for breast cancer and its  
               sequelae shall in no event be less than comparable WPI  
               ratings for prostate cancer and its sequelae.




          Related  
          Legislation: AB 1155 (Alejo) of 2011 addressed apportionment by  
          broadly prohibiting the use of the protected classes defined in  
          the Unruh Civil Rights Act as a basis to apportion permanent  
          disability awards. The bill was vetoed by the Governor. 
          Staff Comments: The Office of the Legislative Counsel has keyed  
          this bill "non-fiscal."  However, the purview of this Committee,  
          pursuant to Joint Rule 10.5, is to review and analyze bills that  
          would, among other things, result in a substantial expenditure  
          of state money. Thus, even though AB 305 was keyed "non-fiscal,"  
          the Committee requested the bill to examine the extent to which  
          it might potentially increase both workload and state costs. AB  
          305 has the potential to create significant fiscal pressure on  
          the state in the following ways: (1) increased litigation,  
          leading to higher Workers Compensation Appeals Board (WCAB)  
          utilization, (2) increased PD costs due to breast cancer for the  
          State of California as a direct employer (particularly for peace  
          officers), and (3) increased litigation costs for the State of  








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          California as an employer.


          Regarding WCAB utilization, it is assumed that there are about  
          90,000 claims annually where PD is owed. If, according to the  
          April 2007, Commission on Health and Safety and Workers'  
          Compensation (CHSWC) report, 10.5 percent of disability  
          evaluations include an apportionment component, then there will  
          be roughly 9,000 claims per year where the conditions listed in  
          the bill would have an impact.  


          The extent to which the effects of menopause, pregnancy,  
          osteoporosis and a psychiatric injury from either those  
          conditions or sexual harassment will actually result in the  
          apportionment of disability is unknown. However, the prevalence  
          of these conditions in women would likely produce more  
          litigation to differentiate and identify the root cause of an  
          apportionable impairment. If the 9,000 claims were to be  
          disputed, but absent the bill they would not have been  
          litigated, AB 305 would create a 13 percent increase in judicial  
          workload of disputed cases. DIR estimates the additional  
          workload would result in increased costs of about $4 million  
          annually.




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