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A Field Guide to Reform

  • State: California
  • - Popular with: Legal
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It's likely that we'll see a comprehensive California workers' comp reform bill emerging in the next few weeks.

That proposal has been closely guarded by the small group involved in those negotiations.

So before a proposal actually sees the light of day, perhaps this is a good moment to explore the criteria for how a comprehensive comp reform package should be evaluated.

Here are some of the important criteria:

A is for Adequacy.......by now many key employer and insurer stakeholders have admitted that permanent disability indemnity benefits are too low.
Will proposed reform bring a meaningful increase in benefits? This is more complicated than it looks, because if reform affects the criteria for determining permanent disability, a benefit "increase" could be illusory.

C is for current claimants. If the Division of Workers' Compensation and labor interests agree to reform proposals, will they abandon the interests of those claimants who are currently in the system? This could certainly happen if benefit increases are prospective (say for injuries after 1/1/13) but if limitations are placed on rebutting the PD schedule for those injured before 1/1/13. Thousands of workers could be abandoned, i.e. screwed.

D is for data driven........will proposed reforms be based on solid data or rather on political considerations? Various studies have analyzed possible targets for system cost savings, but some of those studies are now dated.

If reform proponents or the DWC/CHSWC have updated data, it has not been unveiled.

D is also for details. Among cost saving reforms that have been discussed are benefit notice simplification, copy service cost regulation, Resource-Based Relative Value Scale (RBRVS) doctor compensation reforms, opioid controls, qualified medical evaluator process changes, medical provider network reforms, utilization review reforms, and more. Yet, some of these items are so detail-driven that it may be hard to do in a statutory change. Will a reform bill merely direct the DWC to draft detailed regulations dealing with some of these items? If so, are savings predictable?

E is for extinct. Vocational retraining benefits are now extinct. Supplemental retraining vouchers are underutilized. Will reform address these problems?

G is for greed. To what extent will reform proposals deal with the greed of some vultures who feed off the comp system?

H is for hardball politics. What are the politics of a proposed deal, and how will various Capitol interests respond? At a time when the governor is focusing on a tax initiative and labor unions focusing on defeating an initiative that threatens their political power, where does a reform proposal fit?

L is for LeBoeuf. For years, some workers with severe injuries have been able to show 100% disability under the LeBoeuf case and/or Labor Code 4662. These concepts have survived the 2004 reforms. Would the DWC , labor and progressive Democrats ever sign on to a package which made it impossible for a worker who has lost all earning capacity to be found 100% disabled?

M is for medical access. Any workers' comp reforms would be undertaken in the shadow of Obamacare, the Federal Affordability Care Act. Recently there have been news articles noting a growing lack of physicians in some areas of California such as the Inland Empire. The DWC listening tour highlighted treatment access problems that plague some workers. Reforms could attract physicians to treat injured workers or reforms could drive doctors from the system.

P is for practicality. Past reforms have almost always brought unintended consequences. In part this can be traced to the fact that several rounds of comp reforms were jammed through the legislative process without time for widespread input by those who actually handle these claims.

R is for ratios. For some time it's been clear that employers are asking for reforms which will achieve greater than 1:1 savings. In essence, employers
will support a benefit increase as long as the savings exceed the costs of the benefit increase. The goal is to relieve some of the pressure of rising workers' comp premiums. If there is to be a reform package, what is the ratio of benefit increases to savings? And how can we reliably gauge these calculations?

S is for a sigh of relief. What groups benefit and what groups are untouched? Insurers are unlikely to face strengthened rate scrutiny. Insurance brokers are unlikely to face scrutiny over whether broker fees should be regulated as a system cost. How will self insured public entities fare?

T is for transparency. Once a reform package is unveiled, will the DWC and CHSWC open their vaults to share data and studies which may be a basis for assumptions in the reform package?

U is for untested ideas. Will the reform proposals include untested ideas as a solution to the system's ills? For example, certain stakeholders have mentioned the desire to use "Independent Medical Review" doctors rather than judges to resolve treatment disputes. Untested ideas in a comprehensive reform package could take the reforms away from a data-driven basis.

V is for vision. What is the vision of the reform? Is the goal a system which is more mechanistic? Key stakeholders have been very concerned about "frictional costs". But will reform go so far as to make it hard for individuals to address the impact of a serious injury on their wage earning capacity?

Z is for "zeros". These are the workers who are assigned no impairment under the AMA Guides. Yet, some of these workers are assigned medical work restrictions which knock them out of returning to their jobs. Will reforms allow such workers a path to achieve justice?

These are but a few of the possible flash points of concern about any reform package.

I have no doubt that good people with good intentions have been working on possible reforms. In many cases they are disturbed by questionable practices by some doctors and lawyers. Any reform would be undertaken at a time when California's economy is fragile.

So it's understandable that key stakeholders want to agree on a package and then move it as quickly as possible so that the deal does not unravel.

But the role of worker advocates, the workers' comp press and the legislature is to look carefully at the impact of comprehensive reform.

<i>Julius Young is an applicants' attorney for the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his Workers' Comp Zone blog.</i>



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