What Happened to California Workers' Compensation in 2004?
    
Arnold Schwarzenegger was elected governor of California claiming that there was
crisis in Workers' Compensation. No one had the patience to see if the reforms
passed under Gray Davis in 2003 would save any money. The Governor then provided
the legislature with a bill he claimed would "fix" the system. That bill was
passed by a Democratically controlled legislature who feared a ballot initiative
that was said to be even worse. A deal was made on the terms dictated by the
governor. The bill passed and the initiative was withdrawn. The bill was
supposed to solve the "crisis" and bring down the cost of workers' compensation
insurance to employers. Unfortunately, it was so poorly written that it will
take years to interpret in the courts and, at the governor's insistence, it did
not contain any requirement that insurance companies reduce their premiums.
Patience will still be required to see if the rates go down significantly.
I will attempt to summarize the new law, but please remember that there are many
parts of the new law that will be argued in the courts for many years before we
know how they should be applied to any particular case. These are the major
changes.
Medical care within 24 hours up to $10,000.00
Medical Provider Networks
Changes in Apportionment
New way of measuring permanent disability
Treatment Guidelines and Utilization Review
No free choice of evaluating doctor
No more vocational rehabilitation.
Special rules for back surgery
Different payments for same level of permanent disability.
No treating doctors presumption /Pre-designated doctors changes
Changes in penalty provisions
Two year cap on TTD
Application to already existing cases/ Multiple dates for different changes
Medical care within 24 hours up to $10,000.00 (LC 5702c)
First, the good news. Within "one working day" after you file a claim form with
your employer, they are supposed to "authorize the provision of all
treatment"(consistent with guidelines, below), until they admit or deny your
injury. If they deny that you were injured at work, then they don't have to pay
for any medical care, unless a judge decides that you really were injured at
work. If the employer is not sure whether you were injured at work, they can
"delay" deciding for up to 90 days, but now they are responsible for all
reasonable medical care, up to a $10,000.00 limit, while they are delaying their
decision. If they admit you were injured at work, they have to pay for all
reasonable care (within the guidelines), but will be able to send you to their
doctor. You might think they would just deny everything they are not sure about.
This could happen, but if you prove later that this denial was unreasonable, you
might be able to win a 25% penalty on all delayed medical care and benefits.
Hopefully, this new law will pressure the employers and insurance carriers to
make a prompt determination of whether they admit that your injury is work
related. This is the only part of the new law that will probably be beneficial
to injured workers. Everything after this is bad news.
Medical Provider Networks (LC 4616)
This may turn out to be one of the biggest changes, but we don't know for sure,
because it does not take affect until January 1, 2005. Basically, the insurance
companies can set up something like HMO's. Some of them will use Kaiser. Some
will use other groups, like a Blue Shield PPO or their own network of
hand-picked defense doctors. In the past, the employer could only control
medical care for most employees for the first thirty days. Now, you will be
stuck with their doctors for all of your treatment. You will only be able to
change doctor's within the employer's network. If the employer or insurance
company do not set up a Medical Provider Network, then you can still change
doctors after 30 days.
Changes in Apportionment (LC 4663 & 4664)
Apportionment is what we call the process of portioning out disability to
different causes. After your injury has reached maximum medical improvement the
doctor has always had to decide what part of the disability came from the injury
and what part came from either a "pre-existing disability or impairment" or from
"the natural progression" of a pre-existing disease process. The idea has been
that the employer should not have to pay for disability that you already had or
would already have by now even without your work injury. Now the law says only
that "apportionment of disability shall be to causation." They have deleted the
two specific code sections that explain what the employer (insurance) does not
have to pay for. They take out two fairly clear descriptions of "previous
injury" and "natural progression." and substitute only "causation." It will be a
while before the courts sort out just what this means. We would like to prove
that it means pretty much the same thing, but the insurance companies want the
doctor to be able to say (for example) that your disability is "caused" by your
age, your body type, an inherited propensity, your lack of conditioning, your
race, and only a little bit by that fall at work.
To make matters worse, the doctor's report has to include a description of
disability under the new method or it is not admissible into evidence, even
though no one really knows what the new method really means. It talks of "other
factors" and "prior condition[s]", without describing what kind of "factors" or
"conditions" should be considered.
This new method of taking away from your permanent disability is arguably to be
applied to cases that started before the law was even passed. So, reports that
were written before the law passed but are offered into evidence after that,
must comply with this new, poorly written standard, or we have to get
supplemental reports from the doctors.
New way of measuring permanent disability (LC 4660)
The method for measuring permanent disability has been completely changed. It is
now based on the American Medical Association Guides to measuring permanent
"impairment." So, the basis of the determination is no longer how your injury
affects your ability to "work" but how it affects your ability to perform
"activities of daily living." Your activity of daily living is not 100%
"impaired" until you are dead. Overall, the system measures disability by a much
more conservative standard. That means, in short, that you will get much less
money for the same disability. There are two parts to the system. First the
doctor describes the disability for each body part or system as a percentage of
"whole person impairment," using the AMA method. This means that the doctors
have to learn a whole new, very complicated system. Once they have assigned a
percentage of "whole person impairment" then that percentage is modified by a
number that depends on what part of the body is injured, and then by your age
and occupation as we had done in the past.
The administrative director has proposed a new manual for the modification of
the AMA percentages. The AMA percentages are very low. The modifiers do not
bring them up to anything like what they would have been under the old system.
We had hoped that the director would use those modifiers to make the new system
at least similar to the old system, but she did not, despite the fact that the
law requires the schedule to "promote consistency, uniformity, and objectivity."
The new law was supposed to save money by making the measurement of disability
more "objective." Everything is supposedly based on things a doctor can see and
measure. If you say you have pain, that is not something that can be measured or
seen, so it no longer has value, even if your doctor believes you. But the new
manual goes beyond that. Even disabilities that can be objectively observed,
just are not worth as much money. So they not only took out all the "subjective"
or unverifiable disabilities, but they also de-valued the supposedly verifiable
disabilities that were left. Then they take away more disability based on the
new "apportionment" standards.
Treatment Guidelines and Utilization Review (LC 4604.5, 4610)
Your doctor can no longer prescribe whatever he feels is the correct treatment
for you. The insurance will have the right to refuse to authorize any treatment
that does not fit into "treatment guidelines." There is a book of treatment
guidelines that has been adopted by the legislature as the rules of how
different injuries should be treated. This book is "presumed correct." However,
the Administrative Director is supposed to write new treatment guidelines based
on this book. Those have not been written yet. The book, known as ACOEM, because
it was published by the American College of Occupational and Environmental
Medicine, takes a very conservative approach to treatment. It discourages the
use of physical therapy for much of anything but teaching you exercises to do at
home. A separate law has limited the number of physical therapy treatments,
chiropractor treatments or occupational therapy treatments to 24 each. Your
doctor has to request, from the insurance, authorization for every kind of
treatment. Under the reforms passed in 2003, the insurance had to have set up a
"utilization review" system, which decides if the treatment your doctor
recommends is approved. If it is not, the doctor will not be paid. Now that
review must measure the treatment by the very restrictive "guidelines."
No free choice of evaluating doctor (LC4062.2)
After January 1, 2005, if you disagree with your insurance company treating
doctor you have to request a list from the state and pick a doctor from that
list of three names. If you have an attorney, the attorney can try to agree with
the insurance company on a doctor to resolve the dispute. If they agree you go
to that doctor. If they don't agree, you get the list from the state and each
side gets to strike one name off the list, then you go to the one that is left.
Your attorney no longer has any ability to help you pick either a doctor to
provide treatment, or a doctor to provide a report to the judge as evidence to
prove your side of the story, such as whether you need more treatment, or how
much disability you have.
Many states use the AMA guides to measure disability, but in most of them you
get to have your own expert, to look at things in the best light for you. In
California, now, the best you will get will be a doctor that your attorney
thinks is fair but only if the insurance agrees that he/she is fair. The
alternative is a crap shoot.
Elimination of vocational rehabilitation
For all injuries after January 1, 2004, if you are unable to return to your
usual and customary occupation or to the job you were performing when you were
injured, you will no longer be eligible for vocational rehabilitation. When you
are found to have reached maximum medical improvement you will stop receiving
TTD and will get PD ( which is deducted from your settlement), if you have any
permanent disability under the new schedule. There is no longer the intermediary
step of receiving VRMA(which was not deducted from your settlement) while you
learn some new trade. The employer is no longer required to retrain you. Now all
you get is a "voucher" which can only be used at a school. You don't get any
money to live on while you attend school, except your PD benefits (which come
out of any settlement). The amount of the voucher depends on the amount of your
permanent disability. If your disability is under 15%, the voucher is $4,000.00
the amount goes up in stages to $10,000.00 for disability over 50%.
Special rules for back surgery (LC 4062b)
If your doctor recommends spinal surgery, and the insurance company objects, you
have to either go to an agreed doctor (only if you have an attorney) or to
request the state to assign a doctor to decide whether you need spinal surgery.
The examination is supposed to be set up on an expedited basis. The report of
the doctor is supposed to be sent out within 45 days of his receipt of the
treating doctors report. Some doctors have established an expedited schedule for
seeing and evaluating patients for surgery, but many have not. If you don't have
an attorney, or if your attorney cannot agree with the insurance on a doctor,
the only option is for a doctor to be "randomly selected" by the administrative
director.
Different payments for same level of permanent disability (LC4658d)
Once your Permanent Disability has been evaluated, there are now several
different amounts that you might receive for the same percentage of disability,
depending on whether your employer has more or less than 50 employees and on
whether or not your employer offers you a job after you are able to return to
work. If your employer has more than 50 employees and if he does not offer you a
job to return to within 60 days of becoming permanent and stationary, then each
payment of PD after that will be increased by 15%. The job offered has to last
for 12 months. However, if he does offer a job (regular work, modified work or
alternative work) then your payment is reduced by 15%. Modified and alternate
work are required to pay at least 85% of your wages at the time of injury. This
section does not appear to be limited to employers of over 50 employees. If your
work is terminated by the employer while you are still receiving PD payments,
then the 15% is added back into your payments. You don't get this increase if
you quit or if your employer has fewer than 50 employees. For example, a worker
with 20% disability, injured in 2005, would receive payments for 90.25 weeks of
either $220/wk or $253/wk or $187/wk, depending on whether his employer had over
50 employees and whether he was offered a job or not. The total amounts would
vary if the job did not last the whole 90.25 weeks.
Changes in penalty provisions (LC5814)
In the past, the penalty for "unreasonable delay" in providing benefits was 10%
of the entire "class of benefit." This meant that if one payment of temporary
disability was "unreasonably delayed" by the insurance, then the judge could
award a penalty of 10% of all temporary disability in the past and the future.
The idea was that the penalty could be substantial in order to encourage the
insurance to not "unreasonably delay" benefits. There is a separate increase of
10% of only the delayed benefit, on any delayed benefit. Meaning that a check
that was 1 or 2 days late, might not be "unreasonably delayed," entitling you to
a 10% increase on all of that class of benefit, but you would still be entitled
to the automatic increase for the delayed payment only.
Now the law is that the judge can award only "up to 25%" of the delayed benefit
or up to $10,000.00, whichever is less. Even worse, if the insurance figures out
that they "unreasonably delayed" payment of some benefit, they then have another
90 days to continue to unreasonably delay, so long as they pay the 10% automatic
increase on that benefit. Any time that the insurance pays the automatic 10%
increase on a late payment, they get to deduct that from the 25%, so the
increase for "unreasonable delay" is really only 15% of the delayed payment.
There is almost no incentive for the carrier to pay you on time any longer.
There will be no big penalties no matter how long they delay.
Changes in the pre-designated doctor and treating doctor's presumption( LC4062.9
& 4600d)
Last year we encouraged everyone to designate a doctor, so that they could hold
on to the treating doctor's presumption. Now, there is no longer any treating
doctor's presumption, for any injury, regardless of when it happened. You can
now only designate a doctor to be your treater, if he/she agrees, and if he/she
is already your primary care physician in an HMO, provided by your employer. So
all those earlier pre-designations no longer are effective. Unless you meet
these very strict requirements, you will have to go to the doctor the employer
sends you to in the Medical Provider Network. Then, you will only be able to
change doctors within that network.
Two year cap on TTD (LC4656)
For injuries occurring after April 19, 2004, there is now a cap of "104
compensable weeks within a period of two years from the date of commencement of
temporary disability payment." There is an exception for a few serious named
diseases, severe burns and amputations. They are allowed 240 weeks within a 5
year period, as are all workers injured before the effective date of the new
law.
Application to already existing cases/Different start dates for different
changes (Section 47)
In the past, when the rules changed, they would change "for all injuries
occurring on or after January 1, [of the next year]." Because the governor
insisted that there was an "emergency" in workers' compensation, many or most of
the new changes in the law are supposed to apply to all cases "regardless of
date of injury." This causes even more confusion. Unclear writing of the law,
allows different interpretations, so we won't know for sure which provisions
apply when, until we have some more court opinions. It does appear that the new
rating manual might apply to some old cases. The "changes" in apportionment
(whatever they are) will affect many cases which already existed when the law
was passed. The medical provider networks may apply to all injuries, even those
that were settled decades ago, with medical treatment open. The California
Applicant's Attorneys Association filed a lawsuit late in 2004, to prevent the
insurance companies from making people who already had doctors who were treating
them for old injuries from being forced to go to a Medical Provider Network, but
the court said, the law doesn't even take effect until after 1/1/05, so it is
too early to sue and they dismissed the lawsuit. We have to file again after
someone (or everyone) has been told they have to change doctors. The law seems
to say that it covers all injuries unless a specific section says it applies to
injuries after a certain date. Even the section that says that is confusing. It
says that it applies "prospectively" (meaning only in the future) "for all dates
of injury." Does that mean all dates of injury or all dates of injury after the
effective date? The courts will eventually answer this question. The law clearly
and specifically says that the repeal of the treating doctors presumption
applies to all cases, regardless of date of injury.
The new rating manual will not be officially adopted until after January 1,
2005. Of course, it could not be applied to any determination of disability
before that time, but for injuries which occur before that there is some dispute
about whether it can be used if the permanent disability is not evaluated until
after January 1, 2005, or whether it will only apply to injuries which occur
after that date. As mentioned above, the Medical Provider Networks can be
certified after January 1, 2005, and there is a dispute about whether injured
workers who already have a doctor can be sent to the new networks after that
date. The law seems to say that they can, but there will be legal action to
determine if that is constitutional. The apportionment section, seems to apply
to all cases now.
The changes in the way we resolve medical disputes are especially confusing,
since the old law was repealed as of April 19, 2005, but the new law doesn't
take effect until January 1. 2005. We are assuming that until that date we will
use the old system. The WCAB has referred to "ghost statutes" as a way of
solving the problem, statutes that have been repealed but linger in the law to
fill the gap until the new law takes effect.
Summary
The law is very confused now. There is only one change that might be good for
injured workers. That is the $10,000.00 liability for medical care from the time
the injury is reported until it is denied or admitted.. Everything else that was
in this bill, will make it worse for injured workers. The next few years will
probably see a lot of attorneys going out of the workers' compensation business.
We are only paid a small percentage of the small amount the worker receives for
permanent disability. That amount will be eliminated in many cases and reduced
in almost all cases. As a result of the fact that injured workers have been
short-changed by the legislature, the attorneys will find it much harder to
survive. While that upsets me, I am more upset by the fact that the injured
workers will find it harder to survive.
You must let your state legislator know that this is not right. They passed a
bill that they knew nothing about because they were told it would get those
(employer) voters off their back who were complaining about the high cost of
workers compensation insurance. There are more workers than there are employers.
Workers vote too, even if they can't afford big political contributions. Find
out how a candidate feels about workers compensation before you vote for any
candidate. Do not believe that Arnold has your interest at heart. He has taken
as much or more money from Insurance companies and big businesses as Gray Davis
ever did. Arnold is not your friend, he is a rich movie star, business man, who
is helping the people who give him a lot of money. Are you giving him a lot of
money?
Changes in California
Workers' Comp in 2003
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