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More Workers' Comp Reform?

Saturday, October 25, 2003 | 830 | 0 | min read

Insurance Commissioner Garamendi and a number of prominent legislators are indicating that workers' compensation will be a high priority item on the agenda when the Legislature re-convenes in early January 2004. Governor-elect Schwarznegger has also advised that he considers workers' compensation to be a high priority issue when he takes office next month. The most immediate issues will rightfully be medical treatment utilization and consistency for PD ratings but the "job displacement voucher" system created in AB 227 needs modification as well if it is to make sense to employers and be useful to injured workers who need retraining.

As mentioned in last month's article, the language used in the new L.C. sections 139.5, 4658.5 & 4658.6 does not lend itself to smooth operation of the job displacement benefit and, if interpreted literally, would make the benefit essentially useless for almost all injured workers. The following are a number of areas that need to be addressed before the DWC begins the rule-making process to implement AB 227 requirements:

1. AB 227 requires notice to be sent to the injured employee within 10 days after the last payment of TTD. As we well know, the last payment of TTD and knowledge of P&S status or a release to return to work are frequently not the same thing - notice from the treating physician regarding P&S often follows the actual date by weeks or months.

The notice requirement should be tied to knowledge that the employee is P&S and/or released to return to work.

2. AB 227 requires the offer of medically appropriate work to be made within 30 days of the last payment of TTD. As above, knowledge regarding the employee's ability to return to work is often separated by weeks or months is not realistic or equitable to tie the employer/insurer to a standard over which it has no control.

The requirement to advise the employee regarding the availability of work should be 30 days from knowledge that the treating physician has released the employee to return to work. The current standard is that the offer must be made within 30 days of the notice; it would certainly ease the transition to maintain the same standard in the new regulations.

3. AB 227 ties eligibility for the voucher to the employer's inability to offer work that accommodates the employee's work restrictions. Since there are no longer requirements to make a "QIW" determination, there may be more than 400,000 employees annually potentially eligible for vouchers. Was it the Legislature's intent that vouchers should be available to employees who voluntarily terminated for reasons other than injury?

Statute language should recognize exceptions for voucher eligibility where the employee voluntarily terminated his/her employment for reasons unrelated to the industrial injury (e.g., accepted other employment). There is a precedent in L.C. section 4644(f) where employers are not potentially liability for VR services for one year when the employee terminates employment other than "for cause."

4. AB 227 appears to indicate that vouchers will be available to injured workers once there is an award. However, awards typically occur 1-2 years after the P&S date (or last payment of TTD). At that point, a voucher would be essentially worthless to most injured employees who need re-training. By that time, they will have received much of their PD in the form of advances that will be credited against their award. Applicant attorneys typically receive 15% of the award so there will be little left for most employees to use to pay for their living costs during the training program (there is no more VRMA). If vouchers are to be of any value to injured employees who need them, they must be available within a reasonable period after the P&S date.

Statute language should allow injured employees to request their voucher immediately upon (1) notification by the employer that modified or alternative work is unavailable, or (2) the employer has not provided a return to work date within 60 days of knowledge of P&S or release to return to work, whichever is later.

5. AB 227 does not indicate how PD is to be determined for the purpose of placing a value on the voucher. Unless the Legislature truly meant for the voucher to be made available only after an award, there has to be a means to decide whether the employee is entitled to a $6000 voucher based on the defense medical or an $8000 voucher based on the treating physician's report.

Statute language should allow for use of the treating physician's medical report as the basis for setting the value of the voucher with credit allowed to the defendant if the final determination of PD would have required a voucher of lesser value.

6. It is unclear in AB 227 if the employee needs to pay for his/her tuition and then request reimbursement or if the training facility can bill the employer/insurer directly after the employee has presented the voucher. Many employees would not have the resources to pay $6000-7000 for tuition and then wait for reimbursement from the employer or insurer.

New L.C. sections 139.5(b) & 4658.5(b) need to be consistent and specify that the voucher can be used for payment of tuition and accredited facilities (which would leave billing for tuition between the training facility and the employer/insurer).

This list is by no means exhaustive. As we have the time to more thoroughly digest the implications of these legislative changes, we will undoubtedly find additional areas where clarification is needed.

The next article will review some of the areas where DWC guidance will be necessary via regulations.

Contributed by vocational rehabilitation expert Allan Leno, Leno & Associates, (818) 370-8859, allanleno@leno-assoc.com.

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