The California Division of Workers’ Compensation has scheduled a December 6, 2022 public meeting to hear ideas on improving California’s workers’ comp system. The in-person meeting, open to the public, will be held Tuesday December 6 at 10 am in the auditorium at the Elihu Harris State Office Building in Oakland.
It’s been a long time since the DWC had this type of forum. The last held were 2011 forums when former DWC Administrative Director Rosa Moran and former Department of Industrial Relations head Christine Baker went on a “listening tour” around the state. Those were held the year before major comp reforms were enacted in 2012.
If you care enough about California workers’ comp to be reading this blog, you probably have ideas about improving the system.
Most of the major stakeholders are entrenched in their view of the system and have broad ideas on what should be improved.
Many labor advocates and the applicant bar feel that it is time for an increase in permanent disability rates, which have not been adjusted since 2014. Some have a litany of other concerns which I’ll list here:
• Problems with the QME process, including the availability of QMEs in a reasonable timeframe, the lack of QMEs in many specialties, the quality of QME reports, the shrinking of the QME pool, timeliness of supplemental reports, the difficulty getting multiple QMEs where an injury involves different body systems etc etc
• Continued problems with MPNs containing ghost names of doctors unwilling or unavailable to treat comp cases or too few choices in many specialties and the attendant delay and frustration, which sometimes causes access to care problems
• What they perceive as significant delays and friction caused by unnecessary utilization review of diagnostic tests and treatment
• Belief that the 90 day time to accept or deny a claim is too long
• The belief that it is time for more worker-friendly changes, since the 2012 reforms led to significantly higher system savings than anticipated, far outstripping the benefit increases included in that package
• Concern over unnecessary friction driven by things within the control of the carriers such as high defense costs and expensive QME subpoenaed medical records reviews; they note that the ratio of allocated loss expenses to overall losses is 20.3% in 2021, twice the national median.
• Concern that broker commissions and “acquisition expenses” are too large an expense item in the system ($1.8 Billion in 2021, about 14% of system costs and almost half of the cost of incurred indemnity benefits).
• Belief that changes to the law of apportionment has been a driver of increased frictional costs and also increased the use of the SIBTF
Employers and insurers interests are not necessarily always exactly aligned, but they have been politically united for the past two decades.
In 2004 and 2012 reforms and followup regulations they got much of what they wanted: the AMA Guides, medical networks, a schedule of medical “best practices” called MTUS, a pharmacy formulary of approved drugs, QME process reforms to eliminate dueling QMEs, utilization review and an IMR system to resolve appeals from UR, lien reforms, reductions in sleep, psyche and sexual dysfunction ratings, changes to the SJDB voucher benefit, changes to penalties, copy service and interpreter fee schedules, various anti-fraud provisions, etc etc.
Since 2012, the employer/insurer coalition has proved adept at opposing efforts by the applicant bar or other stakeholders to make big legislative changes. For example, an effort to create a statewide MPN went nowhere. The applicant bar may have built stronger relationships in the legislature, particularly with women and Hispanic members, but that has not produced demonstrable results at the Capitol.
Now, despite their multi-decade success in revamping many areas of the system, employers and insurers have a list of concerns, including the following:
• Some buyer’s remorse re increased costs (including the cost of medical record reviews) under the Medical-Legal Fee Schedule revised in 2021 which governs payment to QMEs
• Continued contention that cumulative trauma claims are a driver of workers’ comp costs and friction
• Belief that the 2004 and 2012 reforms should not be diluted, appreciation of the years of declining workers’ comp premium costs (average charged rates now $1.76 per $100 of payroll down from $6.56 in 2003), and contention that any increased workers’ comp premium costs will negatively affect self-insureds, California business and the California economy
• The effect of lawyer advertising, sign-up services and referral networks in driving workers’ comp litigation
• UR and IMR costs driven by a relatively small percentage of treating doctors who appear to be “frequent flyers”
• The growth in the SIBTF
• Opposition to expansion of injury presumptions and to decreasing the timeframe to determine industrial causation
• Delays and hiccups in the QME process, concerns about QME report quality, etc.
As you can see, there is relatively little overlap of stakeholder concerns other than those concerning the QME process. Many of the concerns outlined above cross the red lines of other stakeholders.
Currently, making workers’ comp improvements is not exactly like trench warfare. But in the near term, making significant changes to the system might come either from a backroom negotiation (possible) or a very heavy political lift (not as likely).
But, as always, the devil is in the details.
The DWC is asking for your ideas. Perhaps they can streamline some of the system by tweaking regulations based on your input. Can your suggestions help ease problems in the system?
Stakeholders who have specific ideas on improving the system can attend in person on December 6.