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Young: Top 10 Workers' Comp Topics, First Half 2017 (Part 1)

By Julius Young

Wednesday, July 12, 2017 | 955 | 0 | 0 min read

Months race by, so now it is time to take stock of California workers’ comp after the 2017 half-way mark. What stands out?

Julius Young

Julius Young

Below, in no particular order, is part one of of my top 10 picks for the most significant topics in California workers’ comp during the first half of 2017. Most of these were discussed in my blog as the year went along. The second five picks will be discussed here Thursday.

1. Adoption of formulary delayed

Proposed formulary regulations were unveiled, with a 45-day comment period ending with a public hearing on May 1. AB 1124, passed in 2015, amended Labor Code section 5307.27 to require the administrative director to adopt and incorporate an evidence-based drug formulary into the Medical Treatment Utilization Standard MTUS by July 1.

Many stakeholders expressed concern over the July 1 deadline, urging the Division of Workers' Compensation to take more time to “get it right.” As of early 2017 the DWC has not issued revised regs with a 15-day comment period.

The DWC moved forward on regs required to implement the two anti-fraud measures enacted in 2016. Emergency provider suspension regs were adopted as required by AB 1244, as were Workers' Compensation Appeals Board lien claims filing rules, required by SB 1160.

Workers’ Compensation Information System regs were also adopted.

Still undone are home health care provider fee schedule regs and an interpreter fee schedule.

It should be noted that the DWC is not required to go through the Administrative Procedures Act for treatment guideline updates and Official Medical Fee Schedule updates.

2. Apportionment to genetic causation rose in prominence

A case decided by the California Court of Appeal's 3rd District, City of Jackson v. WCAB (Christopher Rice) 11 Cal. App. 5th 109, addressed whether the courts would uphold a qualified medical evaluator's determination that a portion of a claimant's disability should be apportioned due to genetic causation.

The Court of Appeal determined that this was allowable. However, the court refused to consider arguments that this was prohibited by the California anti-discrimination statues (Government Code 11135(a) and 12940(a)), since that issue was not raised previously. Likewise, City of Jackson v. WCAB did not consider potential issues as to whether genetic apportionment was a violation of the federal Genetic Information Nondiscrimination Act of 2008.

Attorneys for Rice are hoping that the California Supreme Court will grant their petition for review. Meanwhile, it is unclear whether we will see a flurry of litigation over genetics issues in the workers’ comp system. Applicants' attorneys argue that apportionment to genetics may be “risk factor” apportionment or apportionment of injury causation rather than apportionment of disability causation required under LC 4663.

If genetics becomes a big issue in cases, we will likely see extensive discovery disputes about what can be provided to the QME.

3. 2017 not looking like major legislative year for comp

This year is not likely to be one in which stakeholders come together with any major reforms.

As in any year, a number of comp-related bills died or stalled by midyear. The bills that remained in play by midyear won’t necessarily make it to the finish line or get the governor’s signature. But prominent bills that are still under consideration include the following:

  • AB 1422: This bill would fix a loophole in the anti-fraud measures signed into law in 2016. Lien stays would remain in effect from the date of a criminal conviction until the completion of process to suspend a physician from participation in the comp system.
  • AB 44: This bill addresses medical treatment procedures for terrorism victims such as victims of the San Bernardino terror incident. There has been a tug of war this year at the Capitol over what the bill should include. Employer advocates succeeded in amending the bill so that it would require advocacy services to workers injured in terror attacks. As of early July the author was pushing for a reputable presumption that requested care for such victims meets state MTUS guidelines.
  • AB 553: A measure to amend LC 139.48 to require the Department of Industrial Relations to spend all of the $120 Million Return to Work Fund each year.
  • AB 570: This is the latest installment of a multi-year effort by women’s advocates and the California Applicants' Attorneys Association to address perceived gender inequity in workers’ comp. For several years in a row, Gov. Jerry Brown has vetoed gender-related legislation sponsored by the author. This year’s version is somewhat different and would prohibit the use of pregnancy, childbirth or other medical conditions related to pregnancy or childbirth in the calculation of permanent disability benefits for injuries occurring on or after Jan. 1, 2018.
  • AB 1697: This would require the DWC to establish an anti-fraud division. Although the bill does not appear to be currently set for hearings, it is notable that the new state budget includes a number of positions for the DWC to support anti-fraud efforts.
  • SB 617: Requires a study of alternatives to fee-for-service payment models. It would also authorize the DWC to issue “outreach reports” to high-volume workers’ compensation treating physicians, showing them utilization review and independent medical review performance dates relative to their peers, as well as alerting them to training resources.

4. Administration of Return to Work Fund remained controversial

In response to an inquiry by Sen. Tony Mendoza, the Committee on Health and Safety and Workers' Compensation and the DIR produced a March report on utilization of the RTW Fund, which is intended to compensate workers with disproportionately high wage losses. Specifically, Mendoza had asked them to address whether there was a gap between the number of workers given a supplemental job displacement benefits voucher and the number of workers who applied for the RTW Fund.

In early 2013, only half of the voucher recipients applied for the RTW Fund. By late 2015, about 14% of SJDB voucher recipients did not apply. That seemed a promising trend.

In March, the DWC adopted regs extending the time to file for the RTW Fund. This was in response to a request by CAAA.

A pending bill, AB 553, would require that the DIR pay out $120 Million each year. In 2015 the DIR paid less than $20 million and in 2016 slightly more than $63 million. As currently structured, the DIR pays $5,000 to workers who have received a SJDB and who make a timely RTW Fund application. Depending whether the number of RTW Fund applicants grows, AB 553 might require payment of amounts higher than $5,000 per worker.

5. Anti-Fraud efforts a major theme in system

Concern over outrageous examples of provider fraud led to two major anti-fraud bills in 2016, SB 1160 and AB 1244.

During the first half of 2017, the provisions of both bills began to take effect. Liens of many providers were stayed, and suspension notices went out to a number of providers who had been convicted or pleaded to fraud. The DWC began to post on its website the names of doctors who had been suspended from participation in the comp system.

Meanwhile, indictments continued to roll in during early 2017. A June 2017 Orange County indictment involved doctors, cappers and attorneys who allegedly ran a scheme to cross-refer workers to medical testing, interpreting and records retrieval. This scheme was said to particularly target Hispanic workers.

Some providers filed a challenge to the constitutionality of the SB 1160 lien stay procedures, but it would appear they are facing an uphill battle.

Meanwhile, AB 1222 winds its way through the Legislature, addressing a perceived loophole that might otherwise allow lien pursuits by doctors whose suspension is not yet final.

Additional provider fraud-fighting measures were outlined in a report by Rand, issued in June. Key recommendations included increased use of sophisticated data mining, implementation of a deny-but-control medical treatment option (up to $10,000 in treatment), and possible adoption of Medicare/Medicaid provider fraud suspension standards. Rand’s paper used a very broad definition of fraud, including systemic abuse.

And the new California state budget contains money for 73 new DWC staffers, many of whom will be working on anti-fraud measures.

Also noteworthy is that a joint legislative audit will be done, looking at what is being done by different governmental entities to fight fraud, what other states are doing, and what groups are committing the fraud.

Check back tomorrow for issues 6 through 10.

Julius Young is a claimants' attorney for the Boxer & Gerson law firm in Oakland. This column was reprinted with his permission from his blog, www.workerscompzone.com.

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