SB 899 - A Detailed Review, Part 6: Clean-Up Legislation

Saturday, July 3, 2004 | 0

This is the sixth and final article in a series of articles extracted and edited from a new booklet attorney Michael Sullivan has prepared on the substantial changes to California workers' compensation laws instituted by SB 899. The earlier articles are available for reading by clicking on the links to the right.

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13. Clean-Up Legislation

A variety of provisions in this new set of statutes seem to have been put into place at least in part to "clean up" some of the enactments of the 2003 legislation.

A. Vocational Rehabilitation.

Labor Code section 139.5 had been completely repealed. This had been confusing to some, since the voucher system was not put into place except for injuries on or after January 1, 2004. Accordingly, it was wondered how the Vocational Rehabilitation Bureau was going to continue to exist, and how there would be a legal basis for their decisions for injuries preceding that date.

Accordingly, Labor Code section 139.5 has been re-added to the Labor Code. It has one extra provision; the statute will remain in effect only until January 1, 2009. It will then "sunset" unless the legislature takes further action.

Note that the repeal of section 139.5 in its present form is not a repeal of the voucher system. That system was enacted in 2003 in its entirety in two separate Labor Codes. Labor Code section 4658.5, which independently provides for the existence of the entire voucher system.

B. Fraud.

Labor Code section 3823 is part of the 2003 legislation. A variety of persons were charged with the duty of reporting fraud when they became aware of the same. This caused a fear of liability, as any "apparent fraudulent claim" had to be reported. We now have Labor Code section 3823(c), which indicates that those persons reporting this apparent fraud are not subject to civil liability, as long as they act in good faith without malice, and reasonably believe that the action taken was warranted by the known facts. This is of only limited comfort.

C. Utilization Review.

There are a variety of items here which are obviously intended to reinforce and better define utilization review, which was of course a major part of the 2003 legislation. One of these areas, the definition of utilization review as "reasonable" in accordance with Labor Code section 4600, has already been described in the text of this review. We have also seen the requirement that the applicant object if displeased with a decision to delay, refuse or modify a request for medical treatment.

In addition, we have new language added to Labor Code section 4604.5. This refers to the presumption in favor of utilization review guidelines. The question of the strength of that presumption had been raised by some following the 2003 legislation. However, new language is added here that "The presumption created is one affecting the burden of proof." This is no doubt intended to rectify any question in that area. Also, overcoming the presumption requires scientific medical evidence.

This provision takes effect right away as noted herein. Finally, it should be noted that throughout the entirety of this Bill the authors have taken care to reinforce the seriousness of utilization review wherever appropriate.

D. Collective Bargaining Agreements.

The 2003 law established a collective bargaining agreement between a private employer or groups of employers engaged in certain industries with their unions to create a dispute resolution process and terms for workers' compensation in general. Labor Code section 3201.5 is now amended to allow the parties to negotiate any aspect of the delivery medical benefits, and the delivery of disability compensation to the employees who are eligible for group health benefits and non-occupational disability benefits. This is a possibly serious opportunity for these sorts of organizations.

E. Return to Work Fund and Funding.

This statute restores user funding and allows it to be allocated to the Return to Work program. Employer assessments and as surcharges are to account for the total funding of this program. This is done pursuant to Labor Code section 62.5 and 139.48.

Other changes are made too in accordance with Labor Code section 139.48. It is specifically stated that the entire program is to be implemented only to the extent funds are available. One is given to wonder if the funds will ever be available. Also, the employer will not be able to apply for reimbursement of wages, which was one of the original items intended to attract the dense to the program. Other benefits remain available.

It looks like the legislature may be pinning its hopes on the thirty percent swings available under the new permanent disability rules. Those rules apply to those employers with fifty or more employees. The Return to Work Program is now limited, under this new Bill, to those employers with less than fifty employees.

F. Limitations on Chiropractic and Physical Therapy Visits.

The 2003 legislation specified that an employee would be limited to no more that 24 chiropractic and 24 physical therapy visits per industrial injury. This new legislation similarly provides that an employee is entitled to no more that 24 occupational therapy visits per industrial injury. That language does not seem to solve a many of the potential problems with the original statute. This is a modification 4604.5(d).

There is a modification here to Labor Code section 4604.5(f); it is clarified that if the defense authorizes the applicant to get more than 24 visits, there is no waiver of the entire section. That was a concern that has now been "cleaned up".

G. Safety Program Changes.

As part of the 2003 legislation, each insurer was required to establish and review an injury prevention program with its insureds. The program was to be reviewed within four months of writing a new policy. This standard has been replaced; the insurer now has to only review the programs of insureds with experience modifiers of 2.0 or greater to determine whether the insured has implemented the program within six months of writing the initial policy. This gives the insurers a little more room to breathe.

Article by attorney Michael Sullivan. Mr. Sullivan can be reached by e-mail at mike@mikeslaw.com, or by phone at (310) 337-4480.

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