The CCWC Panel

Monday, August 1, 2011 | 0

By Julius Young
Boxer & Gerson

The Disneyland conference of California Coalition on Workers' Compensation wrapped up July 25 with a panel analyzing the current state of California's workers' comp system.

Moderated by CCWC lobbyist Jason Schmelzer, panelists included insurance industry exec Mark Webb and Michael Nolan of the California Workers' Compensation Institute. There speaking on behalf of doctors active in the system was Steve Cattolica of the California Society of Industrial Medicine and Surgery. Brad Chalk, president-elect of the California Applicants' Attorneys Association, showed up to speak for the applicants' attorneys. John Riggs of Disney, a major employer, participated, as did Sean McNally of Grimmway Farms. Rounding out the panel was retired workers' comp judge and author David O'Brien, now a defense attorney with the Floyd, Skeren firm.

Although Angie Wei of the California Labor Federation had originally been slated to join the panel, Wei (who like McNally is on the California Health, Safety and Workers' Compensation Commission) was not present.

One session wasn't enough to solve all the comp world's problems.

But I had the sense that if we could get these guys holed up for a weekend and there were a few bottles of good wine and scotch on hand, progress could have been made.

That's not to say that each of the panelists doesn't see one of the others as the ultimate scourge in the system. But at least the tone of discussion bode well for future negotiations.

The discussion jumped around quite a bit. Here are my notes summarizing (not strictly quoting and admittedly selective) a few of the more interesting observations made by some of the panelists:

Mark Webb:
It's worth looking at the Oregon system with adequate benefits and prompt medical care. Oregon focuses on return to work and helping workers get a job rather than punishing employers for not taking employees back.

Mike Nolan:
Following a discussion or the relationship between rates, premiums, and combined ratios, he noted that the threat of carrier insolvency is low, and with poor returns in the bond market and property & casualty lines, "where else can they put their money?"

Brad Chalk:
Noted that permanent disability benefits were greatly reduced. But "frictional costs" of cost containment have skyrocketed.

Sean McNally:
Frictional costs are a problem. There's too much litigation. But yes, some of the prior reforms need to be improved. The system still needs to be uniform and predictable. On medical issues, dispute resolution process systems in private insurance seem to work and may be a model. Interested in looking with Angie Wei and the administration at whether we do some of these things in a less litigious way than in the past.

Steve Cattolica:
Thinks we should be looking at the delta between what self-insureds and insureds pay to settle a claim. Points out the 300% increase in cost-containment costs. Notes that adjustment to the physician fee schedule are not likely to have a large impact on premiums, estimating a 6-cent impact.

John Riggs:
Senate Bill 899 may have swung too far to the right. He's concerned with trends where attorneys and claimants "add in body parts that make the person sicker."

Mike Nolan:
Changing elements in the system may have unintended consequences. The Division of Workers' Compensation and the legislature needs to decide on some policy issues like opioids, compound drugs, and medical foods.

Mark Webb:
Remember that insurance is by its nature risk transfer and risk sharing. Self-insureds may have ways of dealing with their risk via captives and excess carriers

David O'Brien
California has a terrible system and it needs reform. Many states stop paying out PD when a person is 65 or on Social Security. Some states have a "deductible"; they don't pay money out for PD at the lower PD percentages. Why are judges needed to approve settlements in cases where there is a lawyer? Judges spend too much time dealing with liens and approving settlements.

McNally:
Employers and adjusters care about workers.

Chalk:
Applicant attorneys see the problem cases. If the worker's treatment is going well and things are being authorized that worker may not come to an attorney.

Mike Nolan:
PD is a flashpoint, but medical costs are the cost driver. Certain segments of PD need to be enhanced, but there can be unintended consequences. There is room to enhance PD. But how much cost savings are needed? Is a 1:1 offset enough? If premiums are on the verge of rising then a 1:1 offset will not satisfy employers. There's room for political compromise. On the medical side there is stuff that regulators need to deal with, such as compound drugs and medical foods.

Sean McNally:
The medical-legal process needs revamping. Expansion of body part allegations is a problem. Perhaps dispute resolution should be taken away from the attorneys and the WCAB and managed administratively. Almaraz-Guzman was also mentioned.

Mark Webb:
Utilization review is sometimes a problem. Need to look at independent medical review and how it works in group medical. Perhaps it would make sense to pay higher rates to physicians if that would eliminate some of the UR disputes. Medical licensing boards need to do a better job of training and disciplining occ medical doctors. Health care organizations are better at reducing frictional costs.

Mike Nolan:
There's room to increase PD. There needs to be focus on bringing down medical costs.

Sean McNally:
Need to rethink the system as a return to work system, not a disability system. . Not sure why employers are not using HCOs. Medical provider networks need to look more like HCOs.

Brad Chalk:
Rand studies showed PD benefits were inadequate before the reforms. The reforms led to a 50-70% drop in PD. Against this a 16% PD adjustment is too low. Cost containment costs are the growing problem now.

John Riggs:
There needs to be a focus on safety as well. Historically, some carriers have offered safety training and evaluation to policyholders.

David O'Brien:
We should raise the threshold for proving sleep disorder claims.

Brad Chalk:
Chalk fielded a comment from prominent Southern California attorney Lynn Peterson which charged that in Southern California there are a group of out of control applicants' attorneys, some of whom who may be using cappers and having their ads paid for by doctor groups. Peterson suggested that CAAA needs to find a more active way to manage those attorneys. Chalk questioned whether they were CAAA members but indicated some willingness to look into it. Someone (my notes are not clear) noted that peripheral players in the system such as unscrupulous lawyers and doctors do not have enough penalties for bad behavior.

Mike Nolan:
Lets not forget about the effect of co-morbidities in the system, as we see lots of clients with underlying diabetes and other conditions.

With that, the panel ran out of time. Nothing was solved, but a number of the themes are clear, and many of the primary areas of concern were mentioned. But with labor unions not represented, an important voice was not included.

Still, it would be good to see these discussions more often. On a desert island, with some bottles of wine or scotch, who knows what might evolve?

Julius Young is an applicants' attorney with the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his blog, http://www.workerscompzone.com