UNDERSTANDING & IMPLEMENTING AB 749 - VI

Sunday, March 30, 2003 | 0

This is the sixth and final part in a series on the new California laws by attorney Richard Jacobsmeyer. The first part (Temporary Disability Benefits) of this 6 part article series was published in the Attorney segment. The second article discussed the changes in permanent disability and life pension benefits. The third article addressed dependency benefits and changes in penalties. Part Four discussed medical-legal changes and medical treatment changes. The fifth part discussed new claim procedures. Part 6 reviews other administrative changes.

V - CHANGES IN WORKER'S COMPENSATION ADMINISTRATION

A. Creation of Court Administrator Position

After much discussion over the last several years, AB 749 has created a new administrative position within the DWC that of Court Administrator that is identified in Labor Code section 110(f) as "administrator of the workers' compensation adjudicatory process at the trial level." This position will be appointed by Governor and confirmed by Senate but shall hold office at the pleasure of the Administrative Director.

The Court Administrator will have several duties that are performed in conjunction with the Administrative Director such as reporting to the IMC if individual physician's reports are adequate for rating purposes.

It appears that the primary duty of the Court Administrator is to oversee court functions of the W.C.A.B. and supervising judges and enforcing uniformity of procedures and forms. Labor Code section 127.5 provides;

"...the court administrator shall further the interests of uniformity and expedition of proceedings before workers' compensation administrative law judges, assure that all workers' compensation administrative law judges are qualified and adhere to deadlines mandated by law or regulations, and manage district office procedural matters at the trial level."

Labor Code section 5500.3 further provides;

"(a) The court administrator shall establish uniform district office procedures, uniform forms, and uniform time of court settings for all district offices of the appeals board. No district office of the appeals board or workers' compensation administration law judge shall require forms or procedures other than as established by the court administrator. The court administrator shall take reasonable steps to ensure enforcement of this section. A workers' compensation administrative law judge who violates this section may be subject to disciplinary proceedings.
(b) The appeals board shall establish uniform court procedures and uniform forms for all other proceedings of the appeals board. No district office of the appeals board or workers' compensation administrative law judge shall require forms or procedures other than as established by the appeals board."

The Court Administrator is also directed in Labor Code section 5502(b) to create the priority calendar for Injury AOE-COE and Employment issues in that section.

No Court Administrator has been appointed as yet, and given our current governor's reluctance to fill appointed positions in general (we are still short 2 W.C.A.B. commissioners with no indication that the governor is the slightest bit concerned as to the impact that the unappointed positions have on the system or the delays in completing reviews on Petitions for Reconsideration which affects the rate that benefits are provided to injured workers.). With the current severe limitations in the budget resources, it may be necessary to wait for some economic turnaround before we see this position filled along with the subordinate positions required to fulfill the designated duties.

B. Changes in Qualifications and Responsibilities for Judges:

The qualifications for Workers' Compensation Judges have been modified. In addition to being attorneys licensed to practice law and meeting the requirements prescribed by the State Personnel Board; attorneys appointed as judges after 1/1/03 must have practiced law at least 5 years and have experience in workers' compensation law. The level of experience in workers' compensation law is not specified by law.

All judges have been subject to the Code of Judicial Ethics adopted by the Supreme Court. However, Labor Code section 123.6 has been amended to provide that the Administrative Director, in consultation with the Court Administrator and the Commission on Judicial Performance shall adopt regulations to enforce the provision for use of the Code of Judicial Ethics. Any existing regulations are to remain in effect until the new regulations issue. The Court Administrator is given the authority to enforce whatever rules are adopted by the Administrative Director. (Labor Code section 123.6(a) .)

The Court Administrator is substituted in place of the Administrative Director to give prior approval to a worker￯﾿ﾢ￯ﾾﾀ￯ﾾﾙs compensation referee (presumably referring to judges) to accept any honoraria (payment) or travel expense for participating in any meeting, convention etc. which is substantially paid for by attorneys appearing before the W.C.A.B.

C. AD Commissioned to Study of Medical Treatment in W.C. System

Labor Code section 127.6 has been passed requiring the Administrative Director to conduct a study into various aspects of the medical treatment provided to injured workers.

The administrative director will, in consultation with the Commission on Health and Safety and Workers' Compensation, the Industrial Medical Council, other state agencies, and researchers and research institutions with expertise in health care delivery and occupational health care service, conduct a study of medical treatment provided to workers who have sustained industrial injuries and illnesses. The study will focus on, but not be limited to, all of the following:

(1) Factors contributing to the rising costs and utilization of medical treatment and case management in the workers' compensation system.
(2) An evaluation of case management procedures that contribute to or achieve early and sustained return to work within the employee's temporary and permanent work restrictions.
(3) Performance measures for medical services that reflect patient outcomes.
(4) Physician utilization, quality of care, and outcome measurement data.
(5) Patient satisfaction.

The administrative director will begin the study on or before July 1, 2003, and will report and make recommendations to the Legislature based on the results of the study on or before July 1, 2004. In implementing this section, the administrative director will ensure the confidentiality and protection of patient-specific data.

It will be fascinating to see if this study documents some of the commonly quoted observations by many in this system. This includes the rather grotesque over-utilization of physical medicine modalities in fashion that would not be tolerated in any other medical system[1], the increased frequency of surgery in the face of little or no clinical indications for surgery, the willingness of WCJ's to allow virtual experimentation on injured workers with unproven medical procedures and, of course, the widely held belief that surgery provided on an industrial basis routinely has a much poorer outcome that the same surgery on a nonindustrial basis, including the frequency of multiple spinal surgeries compared to nonindustrial patient populations.

As with many of the mandates for the Administrative Director, this one will be heavily dependant on how much funding is available to staff the Administrative Director's office.

D. Dir. of Industrial Relations Is to Establish a Return to Work Program

The Administrative Director is to create a Return to Work program for insured employers providing continued employment for injured workers. The program in general provides for the following incentives:

1. This program provides for reimbursement to employers for RTW efforts for injuries occurring after 1/1/2004:
a. 50% of Salary for up to 90 days (until released to U & C or P & S)
b. Reimbursement of workplace modification
c. $1250 cap on reimbursement for temporarily disabled worker and $2500 for QIW
d. Reimbursement of portions of Premium for up to 1 year or 2 years for smaller employers
e. Program only becomes effective after Legislature funds RTW Fund.

Due to the current budget constraints, it is not only unlikely that the Administrative Director will not have rules in place for the implementation date of 1/1/04, but the legislature is not likely to fund the program thereby dooming it to the scrapheap. Perhaps the most valid question to ask about this program is whether it will ever be implemented before the entire process is eliminated when Labor Code section 139.48sunsets on 1/1/09. Labor Code section 139.49 also directs the Administrative Director to contract with an independent research organization and to report on various aspects of the Return to Work program. The study is to be completed by 1/1/08 and shall contain at least 2 years of data.

The Administrative Director is also mandated by Labor Code section 139.47 to create materials to educate employers on return to work issues and provide training to employers, employees and health care providers regarding Return to Work issues and benefits.

E. Carve out Programs Expanded to Include Aerospace and Timber Industries

The provisions of Labor Code section 3201.7 are expanded as of 1/1/03 to include contracts between employer and employee groups in the Aerospace and Timber industries. The language of this section is virtually identical to Labor Code section 3201.5 creating the carve out provisions for the Building trades. The one difference is the requirement in that the employees' bargaining unit must be:

"an affiliate of a national or international labor organization that has one or more affiliate local unions that negotiated an agreement or agreements pursuant to Section 3201.5 prior to January 1, 2003." [Labor Code 3201.7 (c)(4)][2]

G. Benefit Payments

Provision for direct deposit of compensation checks under Labor Code section 4651(a), have been liberalized to provide for:

1. Direct Deposit of benefit checks is authorized if employee has authorized direct deposit, or
2. Employee has authorized direct deposit of payroll checks and has not requested in writing that checks not be electronically deposited.

This provision is likely to affect self-insured self-administered employers first but will probably become the standard in the industry over time.

Additionally Labor Code section 4651(b) provides that a delay caused by application of federal or state laws or regulations is not a delay in violation of Labor Code 4651(a) (requirement that all check be immediately negotiable in the state).

The Administrative Director is to conduct yet another study to assist in developing better access to funds for injured workers in light of State and Federal laws. The Commission on Health and Safety and Workers' Compensation (CHWC) along with the Employment Development Department are to assist in this study and it is to be followed with a report to the Governor.

H. Fraud Issues

Since these bills are essentially products of the applicant side of the legislative equation with benefit increases and little to benefit employers/carriers, the main issues concerning fraud that have been changed are those affecting employer fraud. It should also be pointed out that prior legislative efforts have already been directed at employee and particularly medical and medical-legal fraud.

In general all the penalties for employer fraud have been doubled both as to the size of fines and the length of time for incarceration. Some of this legislation is certainly intended to benefit insurers by discouraging failure to insure and under reporting of payroll used for calculating premiums. The changes are contained in Labor Code section 3820 and 3722 and Insurance Code section 1871 - 1871.4.

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FOOTNOTES

1 The author has been involved in no less than one dozen case over the last 2 years with visits for multiple physical medicine modalities in excess of 100 visits with little or no documented benefit (other than the obvious benefit to the medical provider￯﾿ﾢ￯ﾾﾀ￯ﾾﾙs financial bottom line). Claims administrators are frequently reluctant to aggressively challenge such abusive patterns of treatment due to combination of the PTP presumption, the inability to compel unwilling injured workers to attend QME appointments mandated by Labor Code 4062 and the perception that challenging the medical treatment may result in penalties under Labor Code 5814.

2 This section was added by AB 486 and was not in the original enactment in AB 749. At the WCAB website Labor Code 3201.7 is listed twice, one version being the AB 749 version without this language and also the version as enacted by AB 486. Rules of statutory construction dictate that the most recently enacted version supersedes earlier versions so that AB 486's language is the operative provision.



This is the last of a six part series authored by attorney Jake Jacobsmeyer, of the firm Adelson, Testan & Brundo. He can be reached by e-mail at RichardJacobsmeyer@atblaw.net, or by phone at (925) 609-1990.