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Kamin: Lawmakers to Watch Newsom's Vetoes Closely

By John P. Kamin

Friday, August 23, 2019 | 611 | 0 | min read

As the California Legislature moves toward the end of Gov. Gavin Newsom’s first session, lawyers, lawmakers and lobbyists are gearing up to see whether the new governor’s pen will follow the veto-friendly ways of his predecessor, Jerry Brown.

John P. Kamin

John P. Kamin

Newsom, who previously served as the lieutenant governor under Brown, will have until Oct. 13 to sign or veto any bills passed by the Legislature. The last day for the Legislature to approve bills and send them to the governor’s desk is Sept. 13.

Despite his national reputation as a relatively liberal politician, Brown consistently vetoed some of the more liberal labor-backed workers’ compensation bills that were opposed by employers and insurance carriers. When Newsom became governor, many wondered if he would continue to veto bills in a similar manner that Brown did.

One of the headliners of the 2019 legislative session has been a bill that would change the standard for determining whether a worker is an independent contractor or employee. In 2018, the California Supreme Court adopted the “ABC test” in Dynamex v. Superior Court, which created a simpler standard that will make it easier for gig economy workers to be deemed employees. Assembly Bill 5 seeks to codify the ABC test across all labor disputes.

Currently, the ABC test is limited to wage order disputes. If adopted, the ABC test would replace the multifactor test set forth by the 1989 state Supreme Court decision in S.G. Borello & Sons Inc. v. Dept. of Ind. Relations.

The Assembly has already approved the bill, and now it is making its way through the Senate. Most recently, the Senate’s Appropriations Committee referred the bill to the suspense file during an Aug. 12 hearing.

In short, that means that the Senate Appropriations Committee suspects that this bill will have a major fiscal impact, and the members will take a precautionary vote on it. If the bill survives the vote, it can be sent to the Senate floor for a vote.

In order for the bill to reach the governor’s desk, the Senate will have to also approve it, and then the Senate and Assembly will both have to agree on the same version of the bill.

Newsom mentioned multiple times during his gubernatorial campaign that he would like to help gig economy workers get better overall benefits. However, one cannot assume that he will sign the bill as is, in light of the fact that it appears to potentially create millions in additional premiums to cover the state’s gig economy workers, which includes drivers for Uber, Lyft, Postmates and a plethora of other application-driven services.

Some of the other bills that could reach Gov. Newsom’s desk this fall include: AB 1832, which would give qualified medical evaluators (QMEs) providing med-legal evaluations a pay increase of 50%. The potential pay hike would arrive by increasing a med-legal billing “conversion factor” from $12.50 to $18.75. It also proposes that physicians be entitled to a reasonable missed appointment fee.

However, a recent article by WorkCompCentral included quotes from stakeholders who suggested the bill’s primary purpose is to simply “light a fire” under the Division of Workers’ Compensation (DWC) to expedite administrative rulemaking.

Usually the DWC changes the fee schedule via the rulemaking process, but medical providers apparently felt that the division was acting too slowly, as it had last edited the med-legal fee schedule in 2006. Currently, the bill is still in the Assembly and has not made it to the Senate yet.

Senate Bill 537 is a multi-faceted bill aimed at addressing payment issues to medical providers and physicians. The state Senate has approved the bill and it is currently lingering in the Assembly.

SB 537 would require every medical provider network (MPN) to post a roster on its website of all network physicians, including physical therapists. The bill was crafted in response to allegations that networks were allegedly hiding such lists.

Besides the lists, the bill would also call for the DWC to create two reports: one, a report comparing potential payment alternatives to the Official Medical Fee Schedule (OMFS), and two, a report documenting utilization review modifications and denials for physicians who have treated more than 10 injured workers a year. Both reports would be due by Jan. 1, 2023.

Lastly, the bill would force MPNs that contract at rates of 15% lower than the OMFS to publish an itemized list of services that are subject to the discounts, in an attempt to avoid confusion about what services are discounted. The version of the bill that the Senate approved prevents networks from contracting with providers for rates lower than the Medicare fee schedule. I anticipate that this provision could require more negotiations from lawmakers, and therefore change again before being sent to the governor’s desk.

Senate Bill 542 would create a rebuttable presumption that post-traumatic stress disorder (PTSD) and other psyche injuries are compensable, as defined by workers’ compensation law. The state Senate has approved the bill, and it is currently in the state Assembly.

The bill’s language explains that law enforcement and firefighters are exposed to higher rates of mental trauma, thanks to having to respond to “fires, stabbings, gun battles and shootings, including active shooter incidents, domestic violence, terrorist acts, riots, automobile accidents, airplane crashes, earthquakes and other gruesome scenes.” The bill would give peace officers and firefighters up to five years to plead psyche benefits.

Assembly Bill 1107 is a bit complicated. The bill has gone through one major revision already, and is more aimed at creating a discussion in fixing inefficiencies in the utilization review (UR) process. In general, the various versions of this bill have tried to deter defendants from using UR so frequently.

I am skeptical that this bill will actually pass in its current form because its primary goal is aimed at “creating a discussion,” according to some of the legislative summaries.

Here’s the context for the latest form of the bill:

Existing law states calls for penalties and interest when medical treatment is “unreasonably” delayed or denied. However, existing law states that an independent medical review decision that overturns a utilization review denial is not conclusive evidence of an unreasonable delay or denial. So under existing law, just because IMR disagrees with a UR denial, does not automatically mean that the defendant unreasonably denied care. Assembly Bill 1107 would change all that by deleting the provision stating that an IMR decision is not conclusive evidence of a unreasonable delay or denial. In other words, AB 1107 would likely create more LC 5814 penalties by deleting that provision. The bill has passed the Assembly and has been referred to the state Senate. It is currently at the Senate Committee on Labor, Public Employment and Retirement.

Senate Bill 731 is the latest to exclude personal characteristics from apportionment to nonindustrial factors. It would bar apportionment to “race, religious creed, color, national origin, age, gender, marital status, sex, sexual identity, sexual orientation or genetic characteristics.” The Senate approved this bill and it’s currently in the Assembly.

Brown routinely vetoed bills like this with the explanation that existing law calls for employers not to be liable for any nonindustrial characteristics.

I can think of at least one problem with this bill as currently phrased: Every now and then we see psyche claims where the injured worker has a bad prior marriage that ended in divorce or separation. Sometimes the facts are ugly and include a history of domestic violence, verbal/online/physical harassment, severe drug or alcohol abuse, etc.

Sometimes there’s a drawn-out custody fight that is clearly draining on both spouses. These situations are often painful for all involved.

Under the language of SB 731, it would appear to suggest that the bill would bar nonindustrial apportionment to a change in marital status, which is clearly nonindustrial. That simply doesn’t make much sense. An employer should not be liable for any PD that resulted from a nasty divorce or abusive relationship.

The vast majority of the time I’ve seen this set of facts, these relationships predated the workers’ compensation claim by a number of years. The bottom line is that employers should be able to still get nonindustrial apportionment to marital status if the change resulted in permanent disability.

John P. Kamin is a workers’ compensation defense attorney at Bradford & Barthel’s Tarzana location. He is WorkCompCentral's former legal editor. This entry from Bradford & Barthel's blog appears with permission.

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