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Young: Top 10 Workers' Comp Topics, First Half 2017 (Part 2)

By Julius Young

Thursday, July 13, 2017 | 1089 | 0 | 0 min read

Welcome back. On Wednesday, I discussed the first five of what I think are California's top 10 workers' compensation stories for the first half of 2017. Today we cover the final five topics.

Julius Young

Julius Young

6. 2017 noteworthy year in courts so far

Court of Appeals decisions that are worth singling out include the following:

  • City of Jackson v. WCAB (Christopher Rice).
  • Ramirez v. WCAB.
  • Southern Insurance Co. v. WCAB (Berrios-Segovia).
  • County of Riverside v. WCAB (Sylves).

From the Workers' Compensation Appeals board, there was one en banc decision, Maxham v Dept. of Corrections.

Although the WCAB did not formally designate any decisions as “significant panel decisions,” there were, as usual, many notable panel decisions though space does not permit listing them here.

An attempt to sue the Department of Industrial Relations, WCAB and various Gov. Jerry Brown administration officials on a gender bias theory failed. A Los Angeles County Superior Court judge dismissed the complaint without leave to amend.

King v. CompPartners is still pending at the California Supreme Court.

7. Repeal and replace Obamacare? Single-payer, anyone?

Obamacare has its problems, and in some states the health exchanges are not working well, as insurers have exited and premiums have risen. Covered California, however, seems to be functioning. And it is undeniable that many Californians have gained coverage through it and the federal subsidies.

There is widespread suspicion and anecdotal evidence that treatment costs have been shifted away from the workers’ comp system onto group health and Covered California. But there is still a lack of comprehensive documentation that this is so.

However, most applicant attorneys will tell you that clients often must seek treatment outside the comp system for denied compensable consequence conditions and management of co-morbid illnesses. So changes to the overall health market have great implications for the comp system.

As the first half of 2017 ended, comp system stakeholders were carefully watching the Washington health care debate. The Congressional Budget Office analyses of the House-passed “Ryancare” and of the proposed Senate version (the “Better Care Reconciliation Act of 2017”) indicate that millions would lose coverage under these proposals. From a political standpoint, prospects for a passing vote on these proposals seems to be in doubt.

The projected impact on California’s Medi-Cal program and workers in various industries has been analyzed by the UC Berkeley Labor Center.

Meanwhile, the California Nurses Association and a group of progressive Democratic legislators were able to push a proposed (but unfunded) single-payer health system through the California Senate.

SB 562, known as the “Healthy California Act,” includes a provision to “develop a proposal for coverage of health care services currently covered under the workers’ compensation system, including whether and how to continue funding for those services under that system and whether and how to incorporate an element of experience rating.”

SB 562 went to the California Assembly, where Assembly Speaker Anthony Rendon refused to move forward on the bill this year. A nasty political food fight among Democrats ensued. Interestingly, State Sen. Ricardo Lara, a candidate for California Insurance Commissioner in 2018, was one of the named sponsors of SB 562.

8. Comp costs continued to trend lower

In May, Insurance Commissioner Dave Jones approved an advisory pure premium rate of $2.02 per $100 of payroll, effective July 1, following the Workers' Compensation Insurance Ratings Bureau's recommendation.

This rate is non-binding on insurers but reflects a 7.8% reduction from the $2.19 per $100 of payroll rate set by Jones in his October 2016 order. Mark Priven of Bickmore had recommended an even lower figure, $1.98 per $100 of payroll.

By comparison, advisory pure premium rates spiked to $4.37 in 2003, in part fueling some of the Gov. Arnold Schwarzenegger-era changes.

Average charged rates have been higher, however, though the trend of those has fallen. Average charged rates were $3.04 in the first half of 2015, $2.86 later in 2015, $2.67 in the first half of 2016, and somewhere between $2.58 and $2.42 in the first half of 2017.

According to a WCIRB presentation at the May 3 Department of Insurance rate hearing, the factors leading to declining rates paid by some employers are due to “medical losses developing downward,” “claim settlement accelerating,” “claim frequency decreasing,” “wage inflation increasing” and “improving ALAE trends."

Loss containment expenses have skyrocketed in recent years, though the WCIRB noted that this may be slowing somewhat. Still, it is very noteworthy that of the $2.02 pure premium rate per $100 of payroll, the WCIRB and DOI figures indicate that 51 cents are for allocated and unallocated loss adjustment expenses and medical cost containment.

Looking at it another way, allocated loss adjustment expense/major contributing cause/unallocated loss adjustment expense had reached a factor of 37.2% in late 2016, and per the latest WCIRB/DOI figures are at 34.2%. Loss adjustment expense is not that far from equaling the expense of indemnity. That’s not a good thing in a benefit delivery system.

Also worth highlighting is the slide presented by the WCIRB on page 18 of its powerpoint at the July 1 DOI rate hearing. Titled “SB 863 Updated Total System Cost Impact Estimates,” it indicates that the WCIRB initial prospective estimate of savings was $200 million for all SB 863 components.

The chart would indicate that the 2012 SB 863 negotiations came out in favor of the employer/carrier coalition.

How these results affect the general business climate of the state, and how it has affected individual workers caught up in the system, is an ongoing debate.

9. Simmering dispute between DWC and QME doctors

This choice is an important but relatively under-the-radar item. In 2016 the Division of Workers' Compensation Medical Unit delayed or chose not to renew the qualified medical evaluator certification status of dozens of QMEs, sending shock waves through the QME community.

Some QMEs have lawyered up.

Not all of the situations are the same, but one of the issues in some cases appears to be how QMEs can bill under the ML104 code for complex exams. At the heart of this dispute is the DWC Medical Unit interpretation that report preparation can not be billed as a factor under ML104.

This interpretation is in conflict with training materials promulgated by the DWC about 10 years ago.

Reportedly the DWC is considering promulgating amended QME regulations that would presumably address this dispute. The California Society of Industrial Medicine, representing many doctors, charges that the DWC is engaged in an “underground regulation.”

10. As always, studies and reports

Looking back at the California system from a historical perspective, today’s reports and studies often become fuel for tomorrow’s reforms.

In the first half of 2017 we had the following significant studies/reports:

From Rand, “Provider Fraud in California Workers’ Compensation.”

From the California Workers' Compensation Institute on the IMR process.

From CWCI, a series of reports on claims in different regions of the state.

From WCIRB, an April report on insurer experience in California.

From the Kaiser Family Foundation, various studies on federal health care reform efforts.

That’s my list. Readers who think I’ve overlooked some significant trend or development are invited to contact me with their choices. As always, I’ll be doing an end-of-year list.

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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