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New WC Reform Analysis
on Oct 12 in Latest News

REFORM BILL, SB 863

Here we go again…

By J. Barry Collins

INTRODUCTION

SB 863 makes vast changes to the California Workers’ Compensation system. This outline is meant to serve as an easy reference summary of the major changes. This is not a comprehensive in-depth review, but, hopefully will be an aid to your practice and to your understanding of the upcoming changes.

The bill that was passed by the Legislature on 8-31-12 was a compromise and trade-off of higher PD rates for applicants in exchange for reduced friction costs for employers and insurance carriers. In case you don’t know, we are considered part of the “friction”.

This bill attempts to eliminate a lot of the litigation in the system. Most of those changes are regarding medical treatment disputes and liens.

Eventually, everyone will find the loopholes, as they always do, and we’ll do this all again in about seven years.

PERMANENT DISABILITY

Beginning for DOIs on or after 1-1-13, the PD rates will go up. They will further increase on 1-1-14.

The new Minimum rate will be $160 (was $130).

If PD is between 1% and 55%, the Maximum PD rate is $230 per week. (this is the same as the current rate).

For 56% to 69%, the maximum PD rate is increased to $270. (currently, you have to be at 70% to get this rate).

For 70% to 99%, the new max rate is $290. (an increase from $270)

For DOIs on or after 1-1-14, ALL PD is paid up to max of $290 per week, regardless of %.

The actual number of weeks for a given percentage will not change.

Comment: This benefit will be automatic. No need for extensive rulemaking. Not true with most of the cost savings measures. This will definitely increase settlements and awards.

Other Changes/Issues regarding PD:

PD schedule still rebuttable.

Guzman still alive, LC4660.1 (h).

Possibly Ogilvie as well. LC 5703 (j) added which allows Vocational Expert Reports to be admissible.

No testimony of Vocational experts at trial “without good cause”.

Continuances granted if Vocational reports not served sufficiently in advance of close of discovery to permit rebuttal.

PDA’s CHANGE

There is also a new section re PDAs, section 4650(b)(2) that says if the IW:

-is earning at least 85% of his prior earnings at the same employer when he reaches P&S/ MMI or,

- is earning at least 100% of his prior earnings with another employer when he reaches P&S/MMI,

Then, NO PD has to be paid until an Award is issued. This would obviate the need to start PDAs based on anticipated PD.

Upon an award, PD is paid retro from TTD end or P&S date, whichever is earlier.

Comment: This will help us settle cases as no large deductions from settlement proceeds.

FEC MODIFIER

They have tossed the 8 different FEC (Future Earnings Capacity) modifiers and replaced them with a standard 1.4 multiplier. The old ones ranged from 1.1 to 1.4 depending on the body part.

Comment: Despite the excitement in the industry that getting rid of the FEC completely was coming, this will actually increase PD somewhat for most injuries as ALL will be at the top of the old scale. It will however also avoid some litigation costs (friction) in cases where the A/A was disputing the proper FEC loss. The VR experts who were unemployed but then became Ogilvie experts regarding FEC may be back in the EDD line. We’ll have to wait and see.

15% BUMPS GONE

Rather than using a 15% bump up or down for employers with 50 or more employees, when no mod, alt or regular work offer was timely made, like the current system, they have gotten rid of both the bump up and the bump down. LC 4658 (e)

Applies to DOIs on/after 1-1-13.

Bumps still apply for DOIs between 1-1-05 and 1-1-13.

SLEEP, PSYCH, AND SEX (oh my!)

They have gotten rid of PD add-ons for Sleep disorders, psyche and sexual dysfunction which are arising out of a compensable physical injury, which is a major change.

Certain Exceptions, as always, such as “catastrophic” injuries and for victims or witnesses of violent acts.

Catastrophic not clearly defined. Includes but not limited to loss of limb, paralysis, severe burn, or severe head injury.

Potential litigation and Expert testimony re “Catastrophic”.

Downside: (due to a late amendment), that the employer must still provide treatment for sleep disorder, sexual dysfunction and psyche that are compensable consequences to a physical injury.

Appears that can still have “cumulative injury” to these body parts (stress case).

Comment: This is a major and great change for the defense. These additional problems were the subject of much dispute. There were numerous additional treatment bills, depositions, additional PQME panels and a multitude of other cost drivers associated with these claimed conditions. I, for one, am happy to not have to review another sleep study report in my lifetime or ask an ED question in a deposition.

Although treatment is still allowed and compensable, I don’t believe it will be utilized except in extreme cases. There is no money in it for the AA’s, so they won’t plead it.

It is still unclear what constitutes a “catastrophic” injury. Also, since no PD can be awarded for these conditions, we will argue that a doctor can’t consider them under ADLs to move impairment up within a given range or to give a 3% pain add on.

RETURN TO WORK SLUSH FUND

Last minute amendment.

Vague $120 million dollar program (WC Admin Revolving Fund)

LC 139.48 for supplemental payments to workers are “disproportionately low compared to their earnings loss”.

whose

SJDB/VOUCHERS

Changes for DOIs 1-1-04 thru 1-1-13:

Must use within 2 years of issue or five years of DOI, whichever LATER, if issued on/after 1-
1-13.

ER not liable for injuries incurred while using voucher

Changes for DOIS on/after 1-1-13:

LC 4658.7, All are for up to 6K. No more range.

Expanded use. Includes 1K for computer and $500 for expenses without itemized deduction or accounting. Huge potential for abuse.

Must use within 2 yrs of issue or 5 yrs of DOI, whichever LATER

DEATH

Burial expenses increased to 10K for DOIs on/after 1-1-13

MEDICAL TREATMENT

IMR RE UR DECISIONS

The biggest changes to the system involve the way medical treatment disputes are handled. Currently, if there are UR disputes over treatment recommendations, those are handled by UR appeal and then through the LC 4061/2 process using AMEs and QMEs. They also are often the subject of many Expedited Hearings at the WCAB. The new bill really takes the decision making process away from judges and AME/QMEs and gives the power to the Independent Medical Reviewers (IMRs).

The IMR system was created in the prior reform as part of the MPN process. If someone disputed the findings of an MPN treatment issue, they had the right to second and third opinion doctors and then IMR review. This process was never used. The applicant would usually go straight to a DOR for Expedited Hearing or just change treating doctors within the MPN.

Now, the IMR reviews are going to be mandatory for nearly all medical treatment disputes, not just MPN treatment disputes.

Also, the ruling of the all powerful IMR will not be subject to judicial review. This will cut back on attorney and court involvement and will also affect AME/QME doctors’ children’s college funds and country club memberships.

IMR changes apply to all DOIs on/after 1-1-13, and all UR decisions communicated to the requesting Dr. after 7-1-13, regardless of DOI.

This will create mass confusion for a while.

IMR PROCESS

-No Judges to decide Tx disputes (re: medical necessity)

-NO AMEs/QMEs re Tx disputes. (can still use for PD, AOE/COE etc).

-EE must submit IMR request no later than 30 days after service of UR decision.

-Tolled if ER doesn’t give notice of IMR rights with decision.

Regulations need to be created.

EE can send documents to IMR dr. and have his Tx dr. advocate for him.

Decisions limited to medical necessity, (not AOE/COE etc).

30 days for decision or 3 days if serious or imminent health threat.

Then 30 days for Appeal to WCAB.

Presumed correct. Set aside only for:

-AD acting in excess of powers

-Material conflict of interest (how do you know?)

-Bias: Race, National origin etc.

-Plainly erroneous express or implied finding of fact on a matter of ordinary knowledge.

Even if you WIN on appeal, just goes to different IMR reviewer.

Admin penalties up to 5K per DAY if fail to authorize within 5 working days.

Companies to do this need to be contracted by the State.

The reviewing doctor is allowed a little wider discretion on which to base his opinion here however. He is not limited to the ACOEM guidelines regarding treatment necessity. He may also use peer reviewed journals, expert opinion, nationally recognized professional standards, generally accepted standards of medical practice, and whether treatments might benefit the patient for certain conditions where other methods are not clinically efficacious.

Comment: This will be a major change in our practice. We’ll wait to see what role we have in the TX dispute process. It will definitely cause less Expedited Hearings and less AME/ QME dances prior to P&S/MMI.

There will be serious due process/constitutional objections to this IMR process. It does not allow for actual examinations of the patient by the reviewing IMR doctor. The decision is made by record review. There are also very limited occasions when the IMR decision is reviewable and the standard is high (fraud, bias etc) and even then, it just goes to another IMR reviewer.

MPN CHANGES

The main MPN change in the bill merely clarifies what case law has been evolving to regarding the MPN notice requirements. The Knight case was interpreted by judges to be very rigid and strict regarding the notice requirements. If the defendant failed to provide proper notice, the applicant could treat outside the MPN. Case law since then has interpreted it as not being that rigid.

The new bill clarifies that there must be an actual “denial of medical care” as a result of any notice failure to justify going outside the MPN. (LC 4616.3 b)

Knight said neglect or refusal to provide reasonable medical care.

Notice failure alone not enough to TX outside MPN.

If litigate MPN issue and LOSE, per LC 4603.2 (a) (2), IW can continue to TX with that provider. No more just transfer of care into MPN.

If litigate MPN and WIN, not liable for that TX or any referrals or any consequences of that treatment. (ex. What if failed fusion?)

OTHER TREATMENT CHANGES:

LC 4605, can still TX at OWN EXPENSE, but that report can’t be SOLE basis of an award.

That report must be reviewed by a QME or “authorized treating physician”.

MPN dispute can be issue for Expedited Hearing LC 5502 b.

New Law also makes it easier for injured workers to find the doctors in the MPN and creates medical assistants to help them in this regard.

PTP must sign written acknowledgement that he is in MPN

One other major change regarding medical treatment is that the alternate dispute system regarding spinal surgeries has been eliminated. This wasn’t used often and was confusing and cumbersome as it required notices to the Administrative Director and the timelines were very tight.

Limit on Chiros: Can’t be PTP once 24 visit cap reached

Comment: There should actually be less litigation regarding MPN enforcement as just failing to properly give notice will not be enough. Interesting that they have allowed it to be subject of Expedited Hearings, probably because the calendars will be emptied of treatment disputes…?

PQME PROCESS CHANGES

No more requirement to offer AME name first.

Still have to object to TX dr determination for LC 4061/2.

New form/request for LC 4060 evals. “Request for Medical Evaluation”.

No more requirement to confer and attempt to agree on one Dr. from Panel.

Both Parties can now strike within 10 days of issuance of Panel.

If other doesn’t timely strike, you can pick one of remaining.

OK to speak with AMEs re appointment dates, report availability etc, Not considered “Ex Parte” (LC4062.3 f) (does not apply to QMEs)

Trying to clean up Ct. of Appeal Alvarez case

Can have Expedited Hearings how over appointment disputes.

Comment: There will be a race to select PQMEs now. No more 3 business days from the date of the other’s strike etc. Unclear if 5 days for mailing applies but I’m sure it will. More things to fill up the Expedited Calendars…

INTERPRETERS

The new bill indicates that a Fee schedule for interpreting services will be created and that the WCAB will keep a list of certified interpreters that may be used. It also gives applicants the right to have an interpreter for a medical evaluation but the defendant gets to pick the interpreter instead of the applicant.

Clarifies Interpreters ALLOWED at medical TX appointments. LC 4600 (g)

Interpreters have to pay fee to be certified.

Comment: This will actually help interpreters get paid more timely and help defendants by eliminating inflated bills and liens from interpreting companies that have clogged the system for years. We will wait to see the schedule fee amounts.

LIEN CLAIMANTS

The new bill is NOT lien claimant friendly.

Lien filing fee, this time $150, all liens filed after 1-1-13.

Lien “activation” fee of $100 for liens that have already been filed. If these are not paid on the old liens, they will all be dismissed on 1-1-14 by operation of law or earlier if the case gets before a judge after a DOR.

All LCs must prove at conference or dismissal with prejudice after 1-1-13.

Filing fee is reimbursable in certain circumstances but only if the lien claimant gets an award that is equal to or more than their timely demand to settle was. Settled liens do not get the fee reimbursed.

Statute of limitations for lien filing has been reduced. LC4903.6

Generally, now 3 years from DOS for Tx. LC 4903.5 (a)

For DOS on/after 7-1-13, 18 months from the date of service.

Comment: Significantly shorter than the current three prong option which extends to as long as 5 years post DOI.

Also a limitation on what constitutes a lien. There will be no liens allowed for disputes (med-legal) over medical treatment that are subject to the IMR process.

No liens may be filed (except to beat SOL) until 60 days after claim accepted or 90 days denial period has run.

LC’s must tell WCAB and parties within 5 days of changing reps or attorneys.

LC’s can’t assign lien unless original LC ceased doing business.

Assignments must be filed with WCAB.

Comment: I like it. Bad year for Lien Claimants.

MISCELLLANEOUS

Pass through spinal surgery costs have been eliminated.

Out-patient Spinal Surgery Center charges will now be limited to 85% of hospital charges. Gone are the days of the “Kunz Study” battles over how much everyone charged and accepted. This will reduce litigation and be a cost saver.

A Copy service fee schedule will be established as well. This is welcome relief for defendants as these liens have become a pain. Not only do these copy services bury us with mail and phone calls, they also ridiculously overbill for copying, mileage, ratings and other

SUMMARY

PD awards will go up but the costs of litigation and abusive medical treatment should go down. The lien claimants will be further punished and a case may actually get to go to court in a timely manner. We’ll see in time if there are loopholes big enough to drive a truck through, as there were in SB899. The history of the Ca. Workers’ Comp practice also shows that, if a law passes and the litigants don’t like it, they will just ignore it. Think “baseball arbitration”. I’m still waiting to see my first one of those.