Don't Let Purpose of Workers' Comp be Subverted (Again)

Tuesday, December 14, 2010 | 0

By Martin Brady
California Coalition on Workers' Compensation

Attorneys who represent injured workers are wasting no time in calling on Gov.-elect Brown to undo changes made several years ago to California’s workers’ compensation system. As they have for seven years, these attorneys continue to attack the bipartisan reforms passed  in 2004 primarily by trying to rewrite the history of California’s crisis and the results of reform. 

What they won’t recount is the battery of abuses that made California’s system ineffectual at helping injured workers heal and get back to work and unaffordable for employers including school districts and local governments. Costs for medical treatment had skyrocketed because physicians could prescribe treatments carte blanche regardless of their efficacy. Permanent disability claims here were three times the national average because attorneys knew how to manipulate the system so even workers who went back to work with no ill-effects received permanent benefits.

California’s system was the nation’s most expensive, yet we had no evidence that injured workers fared better here than other states. In fact, the data showed their outcomes were worse. The only thing this system was good at was fostering dispute and litigation. The only interests that were served were those who profited at the expense of the employers and workers the system was supposed to serve.

Now, attorneys are pushing the governor-elect to “restore doctor choice” and “end discrimination” in workers’ compensation. But the fact is employees can already elect to be treated by their personal physician for workplace injuries. If they are treated by physicians in their employers’ Medical Provider Network (MPN), they can replace their treating physician at any time. Allegations of so-called “discrimination” in permanent disability ratings are based on isolated instances where doctors have incorrectly interpreted apportionment law, but were corrected by the courts. 

Attorneys are attempting to manufacture an epidemic of discrimination simply to undermine the concept of apportionment.     

The reality of both of these attacks is that applicant attorneys preferred the old system where they could “doctor shop” for their clients in hopes of maximizing their disability rating and had the power to drive up permanent disability awards by including inappropriate factors such as non-work related and pre-existing disability.

As employers grapple with the still-sour economy, such efforts to inappropriately drive up costs for small business, school districts and other public agencies should be rejected.
   
As for the attorneys’ call to Gov.-elect Brown to unwind the reforms, here are the facts:

The legislative reforms have produced measurable improvements. Injured workers are returning to work sooner and in greater numbers. There is broad agreement that an injured worker’s ability to return to work is best possible outcome for minimizing wage loss from a workplace injury. This outcome is at direct odds with the economic interest of applicants’ attorneys, who are only compensated when there is a permanent disability award. 

The cash benefits injured workers receive while temporarily off the job have increased substantially. The maximum rate for these benefits has doubled since 2002. Two broad-based surveys of injured workers show high levels of satisfaction with access to quality medical treatment in the workers’ compensation system. These results show a consistent level of satisfaction after the adoption of evidence-based treatment standards and treatment delivered through MPNs. 

The reforms were successful in stemming the rate at which costs for medical treatment and disability benefits were escalating. Still, claims costs have risen by 50 percent since 2005 and are today well above their pre-reform levels due primarily to medical costs including more doctor visits, more treatments, pharmaceuticals and other costs. After dropping to 13th on the list of most expensive states in 2008, California has risen back to 5th according to a report published by the State of Oregon.

An attorney-driven effort to create loopholes in the new objective system for permanent disability ratings has dropped another costly bombshell on the system. Since 2009, these cases have been driving benefit and legal costs up by a projected $800 million according to the Workers’ Compensation Insurance Rating Bureau. The cases have left open the question of whether California’s system will continue to be objective in accordance with the legislature’s intent.

Today we find a system that is much-improved, but not perfect. What is clear is that California’s fragile economy and double-digit unemployment cannot withstand another workers’ compensation crisis. Given massive budget deficits at the state and local levels, publicly-funded organizations that provide education, public safety and other critical services are at greatest risk of all.

As a candidate, Gov.-elect Brown clearly put protecting and growing jobs as a top priority. Doing so requires, in part, a stable and cost-effective workers’ compensation system that serves the interests of employers and injured workers above those who merely treated the system as an income source.

<i>Martin Brady is executive director of Schools Insurance Authority and chairman of the California Coalition on Workers’ Compensation.</i>