Workers Comp Zone

CCWC at Disneyland

photoI’ve been attending the 2014 California Coalition on Workers’ Compensation annual conference at Disneyland, which wrapped up yesterday.

On Wednesday the conference kicked off with a blogger’s panel featuring myself, insurance consultant and blogger Peter Rousmaniere, publisher David DePaolo, and publisher Bob Wilson.  Mark Walls of Safety National Insurance moderated a lively discussion that got into some “out of the box” discussions about the direction of workers’ comp; in a coming post I’ll reprise some of the thoughts from the panel and offer some further insights.

CCWC is a major player on the California workers’ comp scene. Many of California’s big employers are members. I’m talking companies like Safeway, Walt Disney and UPS. CCWC is one of several prominent employer advocates in Sacramento along with the Cal Chamber and groups like WCAN (Workers Compensation Action Network).

Members of CCWC were pivotal in drafting and pushing through the 2012 SB 863 California comp reforms. Key board members clearly have the ear of Brown Administration policymakers. And the Sacramento lobbyists used by CCWC, Paul Yoder and Jason Schmelzer, are a talented bunch.

In short, the conference attracts many of the key employer and insurer players in California workers’ comp.

Here are some of the more interesting things I heard and some of my random impressions from the conference:

Governor Brown and his key policy people remain committed to make SB 863 work in cutting workers’ comp costs. David Lanier, Secretary of the California Labor and Workplace Agency made it clear the the Governor is personally interested in and invested in seeing the reforms succeed. Lanier may have raised some eyebrows when he indicated that they could not “control” what a “random judge” might do, but that the administration would work to insure that there is balance on the WCAB. Lanier specifically referenced Brown’s appointment of Kathy Zalewski to the board. Given that there are several open slots remaining even after the recent reappointment of Frank Brass to the WCAB, it looks as though employers will likely have a strong role in vetting future candidates for the WCAB. Although Lanier acknowledged that tweaks might be needed to SB 863, he indicated that it was too soon.

Independent Medical Review has generated controversy, and employers are not happy with the results so far. In a number of sessions employer or insurer representatives complained about the performance of the DWC and Maximus in administering IMR. Several questioners put the Maximus representative, Tom Naughton, on the defensive regarding the problems Maximus apparently had in scaling up their system to meet IMR demand. Naughton did not appear to be a happy camper. Some employers complained that they had to wait up to 9 months for a decision. One referenced a situation where a worker was detoxed only to be told 9 months later that opioids should be allowed.

IMR requests had started trending down somewhat but are now coming in around 20,000 a month. On a yearly basis it appears there will be over well over 100,000 IMR requests. Although Maximus recently announced a reduction in its fees, projected system savings from the IMR component are are very much in doubt.

Meanwhile, in answers to questioning Naughton denied that Maximum was sending work off-shore (i.e. abroad), but essentially confirmed rumors that Maximus was outsourcing IMR reviews to subcontractors. Naughton claimed that reviewers for those subcontractors were vetted for conflict of interest problems, but provided no data or details on the amount of outsourcing or the names of vendors with whom Maximus is subcontracting.

Director of the Department of Industrial Relations Christine Baker spoke and indicated that part of the problem was that about 45% of the IMR applications had technical problems and were not eligible for review. Baker pledged that the DWC and Maximus would get current on backlogged IMR within the next several months and begin meeting the statutory 45 day time-frame. Maximus will not be fined for past delays but may be if delays persist.

A panel discussion featuring lobbyists for various stakeholders ended up focusing extensively on the IMR issue.

California Professional Firefighters lobbyist and CHSWC member Christy Bouma indicated that she is hearing lots of negative feedback from firefighter members about the IMR process.

CAAA legislative consultant Diane Worley was pressed on why applicant attorneys filed so many IMRs requests and noted that they were obligated to protect the interests of their clients.

Jeremy Merz of the Cal Chamber indicated that more data is needed before IMR can be evaluated, but that the structure of IMR is still good.

Diane Przepiorski, Executive Director of the California Orthopaedic Association, said that the jury is still out on IMR. She noted that in some instances treatment denials by IMR may reflect not doing the paperwork properly but she does not see it as the role of the specialist to generate a report giving a history of everything that has happened in the case. Przepiorski noted that SB 863 was short on incentivizing better outcomes and that the focus should be on incentivizing doctors to achieve better outcomes.

-Opioid prescribing and compound medicines remain a major concern for employers and insurers. A conference seminar was devoted to opioid  and compounded medicines issues. This, of course, is a current focus of DWC policy. Proposed opioid treatment guidelines were circulated for public comment, though there is no formal rule making on the guidelines at the moment.

-There is agreement that some aspects of SB 863 seem to be going well.  Lien reform, ambulatory surgery center fees and spinal hardware fees were noted as success stories by various speakers. There was some disagreement about the transition from a state treating doctor fee schedule to a Medicare based RBRVS system. Przepiorski of the California Orthopaedic Association noted that for some doctors it may generate cuts “too big to swallow” and that it may have “unintended consequences”, for example on the availability of surgeons. She also referenced concerns that physicians are not paid for medical record review and face to face time. Later in the conference, however, actuary Mark Priven of Bickmore questioned whether  the RBRVS schedule would really increase costs vis a vis the old fee schedule.

-Workers’ comp costs are still a major concern. In her presentation, Baker claimed that passage of SB 863 shaved 3% off of what would have been a 14.3% rate increase, noting that even after passage of SB 863 the California Department of Insurance set a “pure premium” advisory comp rate at 11.3% higher than the previous year. Several speakers noted concern about whether the coming Oregon comparative survey of interstate workers comp rates will show that California is now the most expensive state. Clearly, the concern of the speakers is that California not be perceived nationally as a bad place to do business because of high workers’ comp costs. Alex Swedlow of the California Workers’ Compensation Institute showed slides (based on data from the WCIRB) showing that California frequency (the number of claims) is going up at a time it is declining in other states and that the change in frequency is happening because of increased frequency in several Los Angeles area counties.

-Issues on the horizon. In addition to some discussion about SB 863 mandated regulations which are still in the drafting phase, some emerging issues were discussed at CCWC. In this category as potential “on the horizon issues” I would put the following:

-cumulative trauma claims

-establishment of a pharmaceutical “formulary” outlining what medicines the comp system will pay for

-integrating workers comp with group medical/24 hour care (note that Director of the Department of Industrial Relations Baker says this is something she would personally favor)

-whether statutory injury presumptions  for certain public safety employees should be modified

-should the system of penalties be modified in some fashion? Should there be some penalties for bad physician or attorney behavior?

-attempts to change the 104 week TD cap

-focus on what trends are different in Southern California and what to do about it

-what would another Jerry Brown term look like for workers’ comp? If reelected as expected, Brown will be 80 when his next term expires.

-Increasingly workers’ comp will be influenced by big data and technology. At a panel featuring executives from Travelers Insurance, Corvel, Gallagher Bassett, and UPS, there was agreement that “big data” is going to transform workers’ comp in various ways.For example, using computer models to predict which workers are most susceptible to becoming chronic pain patients so that different strategies can be used in those cases.

One speaker talked about using wearable computers to bring physical therapy and other wellness initiatives into the home. Another noted that systems will increasingly deliver real time case management,  pharmacy, medical records , bill review  and payroll stats to adjusters, breaking down silos of information.

However, several of the executives stressed that talking to the claimant is important and that attracting, training and retaining skilled claims examiners needs to be a priority. One commented that tech will give tools guiding decisions but ultimately the goal is to provide good service to employers and the injured worker. The UPS speaker noted that in the future there may be a more holistic approach to absence management and focus on wellness and prevention.

California is noted to be the “mother ship” for innovation and investments here are often precursors to what happens in other states.


Workerscompzone is all for increasing dialogue between employers and injured worker advocates. We have seen time and again in California  workers’ comp that reforms create unintended consequences and that constant tinkering and political intrigue occurs around workers’ comp. That’s why some have referred to it as a political “tar pit” but why at other times legislators have been very happy to delve into it as a juice issue in Sacramento.One need only look to the allegations arising out of the Calderon indictments to see that workers’ comp reforms can produce some ugly consequences politically.

After SB 863, some injured worker advocates are still licking their wounds. And though various speakers argued that treatment denials are statistically in the minority, that is is not the experience of many workers and attorneys.

The CCWC conference is a good place to start for developing  dialogue, because one thing is sure. California works comp is never static. And, of course, Mickey is here:



Stay tuned.

Julius Young