BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1643


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          Date of Hearing:  May 18, 2016


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                               Lorena Gonzalez, Chair


          AB  
          1643 (Gonzalez) - As Amended March 16, 2016


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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No


          SUMMARY:


          This bill prohibits the use of certain gender-related  
          characteristics in the calculation of permanent disability (PD)  
          benefits for injuries occurring on or after January 1, 2017.   
          Specifically, this bill:  


          1)Prohibits granting the disabling effects of breast cancer a  
            lower impairment rating than granted to the disabling effects  
            of prostate cancer. 


          2)Prohibits apportionment based on pregnancy, osteoporosis,  
            menopause, or carpal tunnel syndrome, when apportioning  







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            permanent disability with respect to a physical injury.


          3)Prohibits apportionment based on prior psychiatric disability  
            or impairment caused by pregnancy, osteoporosis, menopause, or  
            carpal tunnel syndrome, when apportioning permanent disability  
            with respect to a psychiatric injury.


          FISCAL EFFECT:


          1)On balance, it appears this bill has the potential to increase  
            administrative costs in the workers' compensation system.   
            Specifically, the Department of Industrial Relations (DIR)  
            expects the language prohibiting apportionment to certain  
            preexisting conditions to result in an increase in judicial  
            workload and commensurate costs to the Workers' Compensation  
            Appeals Board (WCAB).  DIR estimates, based on a number of  
            assumptions, including 33,000 additional judicial hearings (an  
            average of three per each of 11,000 cases), increased cost  
            pressure to WCAB in the range of $6 million. (Workers  
            Compensation Administration Revolving Fund). DIR indicates out  
            of 90,000 permanent disability cases, 11,000 cases are women  
            and include apportionment.  


            However, staff notes it is difficult or impossible to project  
            such costs with certainty, and indeed there are countervailing  
            factors at play as well.  For instance, the number of women  
            who receive an apportionment determination could be reduced  
            somewhat, as the bill prohibits apportionment to certain  
            factors, such as carpal tunnel syndrome and osteoporosis.   
            Conversely, the bill is likely to result in increased  
            litigation as attorneys seek to demonstrate apportionment  
            determinations are related to one of the factors no longer  
            allowable, such as a condition attributable to pregnancy or  
            menopause.  Some cases among males may also be subject to  
            similar impacts, although they would be far fewer, as all of  
            the conditions listed are more common in, or exclusively  







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            among, females.  Thus, though there does appear to be  
            potential for significant net cost increase, the magnitude is  
            unknown. 


          2)Unknown, likely significant increased workers' compensation  
            costs to the state as an employer for higher permanent partial  
            disability compensation as a result of fewer allowable  
            apportionments and increased compensation for job-related  
            breast cancers (various funds).  Breast cancer PD awards  
            largely affect public-sector employees, like police and  
            firefighters, due to presumptions of compensability, whereas  
            in other employment sectors it is difficult to prove breast  
            cancer is job-related.  These costs would also impact local  
            governments whose workers have similar presumptions. 


          COMMENTS:


          1)Purpose. According to the author, this bill is needed to  
            eliminate bias in the workers' compensation system, by barring  
            consideration of certain conditions more likely to affect  
            women when considering permanent disability awards.  The  
            California Applicants' Attorney Association (CAAA), the  
            sponsor of this bill, indicates these are narrowly crafted  
            changes that will ensure women receive the permanent  
            disability they deserve after being injured on the job.


          2)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.  Workers' compensation  
            benefits include medical treatment and indemnity benefits,  
            including temporary and permanent disability benefits.  Gender  
            bias in workers' compensation was the subject of an  
            informational hearing by the Assembly Select Committee on  
            Women in the Workplace on February 23, 2016, where this bill  
            and related issues were discussed. Speakers noted the lack of  







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            adequate compensation for a woman with breast cancer who has a  
            mastectomy, as compared to other compensation for other  
            conditions.


          3)Determining PD Awards. Once an individual's condition is  
            permanent and stationary, they can be evaluated for PD  
            benefits.


             a)   Impairment. Impairment refers to how the injury affects  
               one's ability to do normal life activities. Most people  
               receiving PD benefits are not 100% disabled, but instead  
               receive permanent partial disability based on a partial  
               loss of function.  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), which is  
               expressed as a percentage of impairment. A treating  
               physician issues a report that provides a WPI value and an  
               apportionment determination.


             b)   Apportionment. Physician's reports must include an  
               apportionment determination, which is a determination that  
               some percentage of a disability is not work-related.   
               Apportioning a percentage of the injury to a preexisting  
               condition, if applicable, attempts to ensure employers are  
               only responsible to provide permanent disability  
               compensation for a disability that is work-related.   This  
               bill bars apportionment based on the factors listed,  
               including pregnancy, menopause, carpal tunnel, and  
               osteoporosis, regardless of whether the condition is  
               work-related. 


             c)   Disability evaluation.  Disability means how impairment  
               affects one's ability to work. A disability rating is  







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               issued, which is expressed as a percentage. The rating is  
               based on the WPI value, applicable apportionment, and other  
               relevant factors such as age and occupation. After the  
               amount of PD in a claim is determined, there is usually a  
               settlement or award for benefits, which the claims  
               administrator or the injured party's attorney can assist to  
               obtain. 


             d)   Appeals and litigation. There are a number of avenues  
               for appeals if the injured party disagrees with a medical  
               report on impairment or an apportionment determination, or  
               a disability rating.  The process depends on whether he or  
               she is represented by an attorney.  He or she can appeal to  
               a DWC to have the rating reconsidered, and/or present the  
               case to a workers' compensation administrative law judge at  
               the WCAB.  If there is a dispute about impairment and  
               apportionment determinations, an injured worker can request  
               a qualified medical examiner (QME), who is selected from a  
               panel, or an agreed medical examiner (AME) to provide a new  
               report.  


          4)Breast Cancer in AMA Guides. The AMA Guide, 5th Edition rates  
            the removal of female breasts at a WPI of zero percent, while  
            the removal of a prostrate generally rates at 16-20% WPI.  
            Thus, prostrate removal currently translates into a higher PD  
            rating than female breast removal. Physicians have some  
            flexibility to use other parts of the 5th Edition to  
            accurately describe the impairment, if needed.  The more  
            recent AMA Guide, 6th Edition, includes a higher rating for  
            mammary disorders, which range from 0 -15% WPI, where a 15%  
            WPI rating would apply to mastectomy not amenable to cosmetic  
            or reconstructive surgery.  


          5)Support. The California Applicants Attorneys and employment  
            lawyers, advocates for women's issues, public safety, and some  
            labor groups support this bill. Supporters indicate the AMA  
            Guides inappropriately assign little to no value to the loss  







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            of a woman's breasts, and that it is also inappropriate to  
            apportion disability to non-industrial causation if that  
            causation is a factor or condition that is uniquely or  
            predominantly based on gender.


          6)Opposition. Groups representing numerous private employers;  
            cities, counties and other public employers; insurance  
            companies; and the California Coalition for Workers'  
            Compensation are opposed to this bill. Opponents contend this  
            bill will undermine objectivity in workers' compensation  
            permanent disability ratings, and require employers to pay  
            monetary awards to injured workers for disease or disability  
            that did not result from a workplace injury.  They indicate  
            lack of evidence that discrimination is occurring under  
            current law, and argue current law already clearly prohibits  
            apportionment based on age, gender, or other characteristics.


          7)Prior Legislation. AB 305 (Gonzalez) of 2015 was substantially  
            similar to this bill, and was vetoed.  The veto message  
            stated,  


                 "This bill prohibits the use of certain gender-related  
                 characteristics in the calculation of permanent  
                 disability benefits for injuries occurring on or after  
                 January 1, 2016.  The workers compensation system must be  
                 free of gender-bias.  No group should receive less in  
                 benefits because of an immutable characteristic.   
                 However, this bill is based on a misunderstanding of the  
                 American Medical Association's evidence-based standard,  
                 which is the foundation of the permanent disability  
                 ratings, and replaces it with an ill-defined and  
                 unscientific standard."


            As it is similar to AB 305, this bill does not appear to  
            address the veto message. 








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          Analysis Prepared by:Lisa Murawski / APPR. / (916)  
          319-2081