BILL ANALYSIS Ó
SB 863
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 863 (De León)
As Amended August 30, 2012
Majority vote
SENATE VOTE :Vote not relevant
INSURANCE 10-0
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|Ayes:|Perea, Hagman, Bradford, | | |
| |Carter, Feuer, Beth | | |
| |Gaines, Miller, Mitchell, | | |
| |Olsen, Skinner | | |
| | | | |
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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 (IMR) system,
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 Administrative Director (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.
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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.
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.
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15)Provides for the 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)Allows an employee who has health insurance from any source
to pre-designate his or her own physician as the primary
treating physician in the event of a subsequent workplace
injury.
18)Repeals several outdated annual reporting requirements.
19)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.
20)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.
21)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).
22)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.
23)Streamlines the Agreed Medical Evaluator (AME) and QME
process to eliminate unnecessary delays and friction in the
system.
24)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,
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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.
25)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.
26)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
loss of future earnings, and to ensure that no class of
injured workers receive a lower award than under the present
system.
27)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.
28)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.
29)Limits psychological add-ons when calculating a PD rating to
cases involving catastrophic injury or that involved a violent
workplace incident.
30)Provides that all permanent disability awards are increased
by a multiplier of 1.4.
31) Establishes a return to work program administered by the
Director of the DIR, funded with $120 million annually from
the workers' compensation revolving fund, for the purpose of
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making supplemental payments to workers whose PD benefits are
disproportionately low in comparison to their earnings loss.
32)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).
33)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 American Medical Association (AMA)
Guides rating is correct is rebuttable by evidence presented
by the injured worker.
34)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.
35)Provides that a chiropractor who has reached the 24-visit cap
cannot serve as the injured worker's primary treating
physician.
36)Eliminates the requirement that a Medical Provider Network
(MPN) have non-occupational medicine specialists constitute at
least 25% of the physicians in the network.
37)Requires an MPN to obtain a written acknowledgement from a
physician that the physician agrees to be in the MPN.
38)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.
39)Allows the AD to generically approve an MPN, as opposed to
requiring a separate approval for each employer.
40)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.
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41)Requires periodic administrative audits of MPNs by the AD.
42)Authorizes discretionary administrative audits of MPNs by the
AD.
43)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.
44)Requires a physician who knows or should know that the
patient is suffering from an occupational injury to notify the
employer within five 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.
45)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
interpreter services.
46)Requires that interpreters be certified, and authorizes the
AD to establish, operate or contract for an interpreter
certification program.
47)Prohibits an interpreter certification entity from having a
financial interest in training or employing interpreters.
48)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
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does not constitute a compensable injury.
49)Prohibits the filing of a lien against an award for matters
that are subject to IMR and IBR dispute resolution.
50)Establishes a $150 filing fee in order to file a lien,
recoverable if the lien claimant prevails.
51)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.
52)Adopts firm time limits within which liens must be filed.
53)Adopts a fee schedule for ambulatory surgery centers (ASCs).
54)Requires the DIR to study the feasibility of establishing a
facility fee for services performed in ASCs.
55)Requires the AD to adopt a medical fee schedule methodology
based on Medicare's resource based relative value system
(RBRVS) system, with specified modifications for California's
workers' compensation system, including geographic
adjustments.
56)Clarifies the rules that govern the fee schedule applicable
to vocational expert compensation, and provides that written
testimony, in lieu of live testimony, is proper.
57)Provides that if the Medi-Cal fee schedule for prescription
medications is reduced in order to meet specified Medi-Cal
budget needs, that reduction shall not be included in the
workers' compensation official medical fee schedule, which is
otherwise linked to the Medi-Cal schedule.
58)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.
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59)Authorizes the AD to adopt a fee schedule for copying
services, and establishes substantive rules to govern these
services.
60)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.
61)Contains language to prevent chaptering problems with SB 1105
(Lieu).
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.
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'
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compensation network as a condition of participation in other
networks arranged by that entity.
8)Limits the right to predesignate a person's own physician as
the primary treating physician in the event of a workplace
injury to employee's who have employer provided health
insurance.
9)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.
10)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.
11)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.
12)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.
13)Establishes selected, but not comprehensive, financial
conflict of interest rules for participants in the workers'
compensation system.
14)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.
15)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.
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16)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.
17)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.
18)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.
19)Provides that medications provided to injured workers shall
be paid for at the rate determined by the MediCal fee
schedule.
20)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 : Unknown
COMMENTS :
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.
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
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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 have 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.
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), Chapter 34,
Statutes of 2004 - 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 this bill.
First, SB 899 (Poochigian) substantially changed the permanent
disability rating system. Employers and insurers had long
complained 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
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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 this bill.
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.
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
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proposed by this bill involve strengthening the rules to ensure
that the MPNs are sound, and strengthening the rules requiring
treatment of injured workers by MPN physicians.
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, this
bill requires out-of-network physicians treating an injured
worker to notify the employer within five 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.
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
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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.
Independent Medical Review . This bill 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 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. This bill 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
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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.
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
two-year phase-in), some have objected to the way that 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
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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.
Return to Work Program . The bill establishes a new return to
work program within the DIR designed to direct additional
benefits, without excess frictional costs, to those injured
workers whose PD ratings are disproportionately low in
comparison to their earnings loss. This approach was adopted in
lieu of the "bump up" provisions that were in prior versions of
the bill.
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 thousands of backlogged liens,
possibly in excess of a million, and many of these are related
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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, provide much
faster dispute resolution, and result in better decisions by
billing experts as opposed to judges, who have no special
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training in the arcane world of billing codes and procedures.
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 León), 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 this bill
does not provide the "revenue neutrality" provision that
rendered SB 923 controversial.
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.
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
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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.
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.
Analysis Prepared by : Mark Rakich / INS. / (916) 319-2086
FN: 0005897