Around each mid-year I look back at what were the top events and trends in California workers’ compensation during the first half. Here in no particular order are my picks for the top 10 developments in California workers’ comp for the first half of 2018:
1. 2018 is shaping up to be an important year in the courts for California workers’ comp
As always, there are interesting WCAB panel cases galore, but in the 1st half of 2018 there were important cases at the appellate court level as well:
• Zuniga v. WCAB (1st DCA case rejecting another challenge to the constitutionality of the IMR system)
• County of San Diego v. WCAB (Pike) (even though there was a timely petition to reopen filed before the 5 year anniversary of the injury, the WCAB had no authority to award temporary disability after the 5 years expired)
• Dynamex Operations West v. Superior Court of Los Angeles (an April 2018 California Supreme Court case that adopts a more broad criteria for finding a worker to be an employee. Although this was in a wage and hour case and the Borello test still may apply in workers’ comp, many believe that the more simple Dynamex standard will eventually be applied to workers’ comp claims. Dynamex may have major implications for “gig economy” companies)
• SCIF v. WCAB (Guzman) (where worker’s soil compactor hit a rock and fell on him, it was not a “sudden and extraordinary” event that would trigger an exception to the 6 month employment rule for psychiatric claims)
•King v. CompPartners (while a ruling on this case has not been issued by the California Supreme Court yet, the court did hold oral argument during the first half of 2018. The issue is whether a UR reviewer has a duty to the worker that can give rise to a tort/negligence action where the UR reviewer allegedly failed to warn the worker about the danger of withdrawing from a medication that the UR reviewer did not certify in a UR decision)
2. Controversy about aspects of the QME system continue to be a big issue
After a spate of QME non-renewals and delayed renewals in 2017, several doctors sued the DWC. Although the case in Los Angeles County Superior Court was resolved, in May 2018 the DWC posted to a public forum proposed changes to QME report billing standards. Those changes, which would include tightened billing rules for complex exams and medical research, created great concern among QMEs. Over 500 pages of forum comments were lodged by QMEs. Many noted that the number of QMEs has been declining for years and that the proposed billing rules were unworkable and punitive to the point that many QMEs might simply drop out of the system. At its June 2018 meeting several CHSWC commissioners suggested the DWC hold off formal rule making until it schedules some face to face meeting with stakeholders on this topic.
A February 2018 CWCI research update analyzed trends in the QME system:
Among the interesting findings, the report noted that payments for supplemental med-legals were up but that the number of ML 104 reports began to level off in 2015. The total number of QME providers decreased by 20% between 2012 and 2017. QME management group market share continued to expand.
3. 2018 does not appear to be a likely year for any major legislative reforms on workers’ comp issues
Nevertheless, at mid-year there were some notable bills to track:
• AB 479 (Gonzalez Fletcher) (addresses rating criteria for breast cancer)
• AB 1749 (Daly) (coverage for injuries to police officers injured out of state while off official duty)
• Several bills that would make changes to the CURES database system (AB 1751, 1752 and 1753) (Low)
•SB 899 (Pan) (precludes apportionment based on race gender or national origin; this is a bill that originally took direct aim at declaring legislative intent to reject genetic apportionment as allowed under the City of Jackson/Christopher Rice case)
•SB 1086 (Atkins) (death claim statute of limitations for safety personnel)
•AB 2496 (Gonzalez Fletcher) (rebuttable presumption janitorial workers are employees)
•AB 2046 (Daly) (requires data sharing between government agencies involved in combatting fraud and allows Fraud Commission to use unused funds from prior assessment)
•SB 880 (Pan) (allows pilot program for payment of TD via prepaid cards where employee gives written consent)
•AB 2334 (Thurmond) (allows for release of certain information about self-insurers)
4. California has rolled out the new workers’ comp prescription drug formulary, but it is too soon to determine the results
The formulary regulations (Title 8 CCR sections 9792.27.1 through 9792.27.23) were adopted as of January 1, 2018. As of January 1 the formulary took effect for all drugs dispensed for all dates of injury. In June 2018 the DWC announced the names doctors and pharmacists who have been selected for the Pharmacy and Therapeutics Committee, tasked with revising and consulting on the safety and effectiveness of drugs on the formulary. The P&T Committee is to begin meetings as of July 2018.
A March 2018 analysis prepared by the California Workers’ Compensation Institute claimed that pharmaceuticals were 46% of the medical services sent to IMR in 2017, and IMR upheld the UR denial 92% of the time.
As of mid 2018 the formulary was so new that it is difficult to reliably gauge its effect on quality of care or costs.
The formulary was not the only new item affecting medical treatment in 2018. Revised MTUS guidelines for many different body systems went into effect December 1, 2017.
5. Major personnel changes occurred at the Department of Industrial Relations, including the departure of Christine Baker
Most system stakeholders were shocked when Christine Baker, long-time Director of the California DIR announced her sudden retirement. Rumors swirled about the circumstances of her departure. In April Workcompcentral published a story indicating that it had received information that there were some issues involving Baker’s brother and daughter, both of whom had worked for the DIR. Thereafter, Baker received tributes from some of the stakeholders who had worked with her on various legislative and regulatory reforms. Andre Schoorl was appointed the Acting Director of the DIR, reporting to Labor and Workforce Development Agency Secretary David Lanier.
George Parisotto was confirmed as the Administrative Director of the Division of Workers’ Compensation.
In February 2018 there was a controversy that erupted after the WCAB commissioners wrote a letter to the DIR indicating that it appeared some WCAB e-mail accounts had been accessed by DIR personnel, expressing concern about independence of the judiciary. The DIR responded with a February 26 explanation that addressed some of the WCAB’s questions. The exact circumstances of what occurred have not been published, but in any event the WCAB eventually issued a statement that it accepted the DIR explanation.
At the WCAB, long-time Commissioner Frank Brass retired in January 2018. In June 2018 Governor Brown appointed an old school chum, Juan Pedro Gaffney, to the WCAB.
At mid year many of the stakeholders were expressing concern about what the next governor’s election might mean for their constituencies.
6. Workers’ comp insurance rates declined again for many employers
Advisory rates established by the California Insurance Commissioner continued to decline. Seven advisory rate reductions have been made by Commissioner Dave Jones since 2015, and according to the WCIRB, average charged rates declined 22% since 2014.
Still, there were some troubling things about the numbers.
•frictional costs, loss adjustment expense and cost containment expense continued to be extremely high in comparison to other states
•as in 2017, in 2018 it continues to cost $.53 to deliver $1 of benefits
• The ratio of SB 863 savings to the increased benefits to workers turned out to be much more in savings to benefits than has been anticipated
•defense attorney fees and the category of commissions and acquisition expense continued to rise significantly
Here are some comments on the 2018 WCIRB report on 2017 results:
7. Workers’ comp anti-fraud efforts continued to be a major theme in the system
Provider fraud continued to get more of the headlines than employer premium fraud. As of early June 2018 the DWC announced that 263 medical providers had been suspended from participating in the workers’ comp system under the anti-fraud statutes AB 1244 and SB 1160. While some of these were physicians who had surrendered or lost their license for reasons other than fraud, overall the suspensions were at least a start on “cleaning the swamp”.
In March 2018 the DWC posted a progress report on its anti-fraud efforts:
That report noted that 465,000 liens filed by or on behalf of criminally charged providers had been stayed and 229,200 liens (with claimed value of $2.5 billion) had been dismissed for failure of the provider to file lien declarations required by Labor Code 4903.05.
8. A handful of regulations remained on the horizon but had not been instituted
Regulations that went into effect in 2018 included the MTUS-formulary and provider suspension procedures.
Still undone at mid-year were some possible other regs: new interpreter regulations, possible medical-legal expense regulations, evidence-based updates to MTUS, home health care regs, and UR accreditation regs.
9. It appeared that many UR providers missed the deadline for the required URAC certification
July 1 was the deadline for UR providers to be accredited by URAC as required under Labor Code 4610 (g)(4), part of the SB 1160 reforms enacted in 2016. It appears that many UR providers did not meet that deadline. The consequences of that failure and enforcement penalties are not entirely clear. The DWC has not promulgated regulations to address that issue.
10. Studies continued to provide data that may be important in future debates about the direction of the system:
Among the noteworthy studies in the first half of 2018:
• a 2018 study (prepared for CHWSC) on options to improve the Return to Work Supplement Program (the s0-called $120 Million fund), including a possibility of automating fund payments to increase participation in the fund:
• a RAND study (commissioned by CHSWC) titled “Medical Care Provided to California’s Injured Workers”
• a June 2018 study by the DIR titled “Preliminary Findings of Supplemental Job Displacement Benefits (SJDB) Voucher Program Assessment”
•a RAND report titled “Physician Reporting Requirements for Injured Workers in California”. This report was written in 2017 but was not publicized until it was found online on the RAND website by a Workcompcentral reporter.
• a CWCI report on 24 Hour Care and integration of such a system with California workers’ comp
Here is my blog post on that report:
• a WCIRB report dated June 26, 2018 titled “2017 California Workers’ Compensation Losses and Expenses”. My analysis of that report, with links to it, can be seen here:
• and shortly after mid year, the 2018 State of the System report from the WCIRB:
• a powerpoint presentation to CHSWC by RAND in June 2018 “Wage Loss Monitoring in California’s Workers’ Compensation System”:
• a March 2018 CWCI study on opioid trends. The study notes that California workers’ comp opioid spending fell in 2017 to the lowest level in a decade: