Top ten things to watch in California comp.

Tuesday, January 15, 2008 | 2

--By Julius Young

2008 promises to be an active year in California workers' comp.

Here is my subjective list (in no particular order) of the top things to watch for in 2008. I'll include links to prior posts I've done on some of these issues

1. APPOINTMENT OF NEW WCAB MEMBERS

The statewide Workers Compensation Appeals Board currently has vacancies since the terms of Janice Jamison Murray and William O'Brien recently expired. Unless reappointed, Commissioners Frank Brass and James Cuneo's terms will expire soon. And Commissioner Alfonso Moresi has yet to be confirmed by the legislature. The Governor has a chance to further shape the WCAB by appointing members who will interpret the law for years to come. There is widespread disappointment among applicant attorneys, many judges and even some defense attorneys with the quality-and results-of the WCAB's work over the past few years. Nevertheless, Schawarzenegger's administration does have to be credited with appointing highly qualified industry veterans to the WCAB slots so far.

2. WCAB ACTION ON BOUGHNER

The WCAB has had the Boughner case under study for some time and will be rendering a decision this year. Boughner is the case in which a San Francisco workers' compensation judge ruled that the permanent disability rating schedule adopted in 2005 (the 2005 PDRS) is invalid.

You can find a pdf version of the case by clicking here: http://www.workerscompzone.com/boughner.pdf

If the WCAB upholds Judge Duncan's decision that the 2005 PDRS is invalid, there will be immense pressure on the Division of Workers' Compensation to revise the rating schedule ... which brings us to #3 ...

3. REVISION OF THE 2005 RATING SCHEDULE

Carrie Nevans, DWC Administrative Director, has indicated that a revised schedule is in the works and will likely be unveiled sometime in early 2008. In meetings with stakeholders and in public statements she has indicated that the revision will add some money for permanent disabilities-perhaps in the $150 million range systemwide. Part of this is likely to be achieved by rebalancing ratings to increase ratings for certain body parts such as the spine. The schedule is likely to be prospective (meaning that the benefits of any increase only affect cases after the date the new schedule goes into affect). If the WCAB upholds the Boughner decision finding the 2005 PDRS invalid, perhaps the 2008 revision of the schedule could be made retroactive.
For a link to my post "Nevans Predicts Adjustments in PD Schedule", click here:
http://www.workerscompzone.com/index.ph ... 217-073806

4. EAMS WILL DEBUT

The California workers' compensation board is going paperless. It's called EAMS, and it will be making its debut in the summer of 2008 with some sneak previews beforehand.

Managed by WCAB Court Administrator Keven Star, WCAB consultant Glenn Shor, WCAB judge Neil Robinson in conjunction with Deloitte Consulting others, EAMS is a massive undertaking to bring the WCAB up to snuff with modern technology. Using at least 4 major database programs (Curam, FileNet, Cognos and CyberSource), EAMS promises to increase WCAB efficiency.

Also being designed are courtrooms which will be EAMS friendly. Medical reports and exhibits will be uploaded electronically. Lawyers and judges will have 24/7 access to files. Unrepresented applicants will be able to upload documents at special kiosks.
All of this takes money. From what I've heard things seem to be on track, but in such a big project you can usually expect the unexpected.

5. ACTION ON THE OFFICIAL MEDICAL FEE SCHEDULE

The current medical fee schedule regs were adopted in 2007 and can be seen here http://www.dir.ca.gov/dwc/DWCProp
Regs/O ... alRegs.pdf

In 2007 the DWC contracted with the Lewin Group to do a study in preparation for the 20008 update to the OFMS (Offical Medical Fee Schedule).

For years California has compensated physicians by using CVRS, the California Relative Value Scale. This year the DWC will probably switch over to the RBVRS system. A little fuzzy on your acronymns? RBVRS stands for Resource Based Relative Value Scale. It's a federal system from the Centers for Medicare and Medicaid Services, and it's used by many other states for computing compensation for workers' comp physicians.

Many doctors-including the California Society of Industrial Medicine and Surgery-have been concerned about the switch over. In some states that adopted RBVRS the payments to specialists decreased, causing an exodus of doctors from the system. That's not what the California comp system needs now, since there's already been a lot of doctors leaving the system.

So the action on OFMS this year is likely to have great significance. One big issue is whether the revised OFMS will or won't be revenue neutral. You can expect some developments on this by Spring.

6. ALBERTSON'S VS. WEXFORD AND THE EXCESS COVERAGE MARKET

In a Los Angeles lawsuit the parent company of Albertson's has challenged the way Wexford Underwiters (handling CNA and TIG excess insurance coverage) was interpreting excess coverage policy language.

Basically, excess coverage is a type of insurance coverage which kicks in when losses on a claim or claims reach a certain dollar level.

Wexford took the position that claims should not be lumped together in computing when excess coverage was triggered. Rather, Wexford's position was that each individual injury had to be dealt with as a separate occurrence for purposes of determining when Alberton's self insurance retention ended and insurer excess coverage began.

Albertson's position is that under the Wilkinson case, multiple injury awards may be combined.

As of early 2008 this lawsuit is still pending. Funny thing, though. In December 2008 the WCAB decided the Benson case, throwing out the decades-old Wilkinson doctrine.

If the Benson decision survives appellate court scrutiny there may be less need for excess coverage, since permanent disability awards will be lower. But that's hard to quantify, and to the extent that medical treatment is a cost driver in serious injury cases, there will always be a market for excess insurance. But back to Benson ...

7. BENSON, SANDHAGEN, SMITH, VAIRA AND MORE

The California courts will be deciding some important workers comp issues this year. Two cases are already awaiting California Supreme Court argument.

<i>Smith v. WCAB</i> and <i>Amar v. WCAB</i> are cases dealing with whether an insurer is liable for paying attorney fees for a worker's attorney who fights an informal denial of treatment where there is a future medial award. State Compensation Insurance Fund vs. WCAB (Sandhagen) deals with utilization review procedures including issues regarding use of untimely utilization review reports in the litigation process.

Dianne Benson vs. The Permanente Medical Group is a recent en banc decision from the WCAB.

The Benson decision is being appealed. The result in Benson is 2007 Christmas present of huge magnitude to insurers who are already reaping record profits. The issue-whether successive or concurrent injuries to the same body part which stabilize at the same time must be rated separately-is so important that it is likely to work its way through the courts in other cases.

It's likely there will be a lot of appellate court activity on the issue of risk based apportionment. Is it legal to deduct for age based or age related "causes" of disability?

Vaira itself was remanded to the WCAB but any day now there will be a decsion from the 3rd District Court of Appeal in <i>Fitzgerald vs. WCAB</i> (see link here to "Vaira and Fitzgerald": http://www.workerscompzone.com/index.ph ... 223-122254

8. MARKET CONDUCT UTILIZATION REVIEW ABUSE PROBES

A continuing chorus of complaints in California workers' comp comes from workers and doctors over problems with utilization reviews. Treatment is denied where the carrier failed to give the utilization reviewer adequate information. Treatments costing less that the UR review are often sent to UR anyway. Some carriers allow the claims examiner liitle latitude in authorizing treatment, thus forcing UR of most every requested treatment. And the UR reviewer may fail to make itself available to discuss the treatment at a time convenient to a busy doctor's schedule. There are but a few of the common complaints.

In 2007 the DWC unveiled utilization review enforcement regulations. You can see those here:
http://www.dir.ca.gov/dwc/DWCPropRegs/U ... sFinal.pdf

In 2008 Insurance Commissioner Poizner will probably unveil the results of a market conduct study of UR practices of six insurers. Meanwhile the DWC will be doing its own audits under the 2007 regulations, some on a targeted basis and some as part of routine five year claims performance audits. There could be penalties imposed of up to $50,000 under the DWC regs.

9. POIZNER AUDIT OF THE WCIRB AND EXPERIENCE RATING SYSTEM

In an earlier post I dubbed the California Workers Compensation Insurance Rating Bureau as the gang that can't shoot straight .
Insurance Commissioner Poizner-the likely Republican choice to succeed Schwarzenegger-has announced plans to audit the WCIRB after the WCIRB completes its own internal review. Also on tap is a look at the experience rating system that's so unpopular among many California employers, many of whom continue to pay high rates not because of insurance rates per se but rather because of their x-mod factor.

10. SACRAMENTO

There will always be workers' comp activity in Sacramento. Cynical folks note that comp is a "juice" issue. The comp system generates billions, and stakeholders with cash are willing to spend the cash to promote (or defend) their interests.

But this year the Sacramento scene is murky at the moment. Unless term limits reform passes-which seems unlikely-Nunez and Perata will be goners. Would Perata be replaced as the State Senate's big honcho by Alex Padilla, Darrell Steinberg, or a compromise candidate? And on the Assembly side, who might emerge? Joe Coto? Charles Calderon?

It's not clear at this juncture who will emerge as the champion of worker interests in the capitol leadership.

All of this maneuvering will be taking place in the midst of what's likely to be a nasty fight over what sort of budget cuts or revenue increases will occur to balance a budget that's over $14 billion out of whack during difficult economic times.

As a result, workers' comp activity at the capitol in 08 is likely to be modest. One area that may be a priority for some employers is a bill streamlining employer obligations in the return to work/voucher/reasonable accomodation process.

There's other stuff to watch of course. The report of the fraud working group. CHWSC studies that are ongoing. Attrition in the number of attorneys representing disabled workers. Increasing numbers of unions looking at carve outs. Healthcare reform at the state and national level.

Experiments with 24 hour care. The unveiling of the AMA Guides 6th edition (California currently mandates use of the 5th edition). Court decisions clarifying use of labor market testimony to rebut the rating schedule per the Costa case. These are some of the runner-up items to watch.

<i>Oakland attorney Julius Young writes a regular blog on California workers' compensation law, which can be found at: http://www.workerscompzone.com/</i>