It’s time for the blog’s year end feature, the Top 10 developments in California workers’ comp in 2010.

2010 was not a year that saw blockbuster changes in California workers’ comp. Yet, there were many significant developments worth noting. What follows are workerscompzone’s picks, in no particular order:

1. RATE INCREASES REJECTED BY POIZNER; RATES REMAIN STABLE
Insurer rate increase in 2010 remained modest, despite the industry’s attempt to have Insurance Commissioner Poizner provide political cover for huge rate increases.
In 2009, Insurance Commissioner Poizner had twice rejected calls for double digit increases by the insurance-company led WCIRB (Workers’ Compensation Insurance Rating Bureau). In 2010, Poizner rejected a WCIRB call for a 27.7% increase, recommending no increase. Meanwhile, carriers such as SCIF raised rates at a much lower level: 5.2% in SCIF’s case.
According to WCIRB stats, the average premium rate paid by employers per $100 of payroll was $2.36 in 2009 and $2.47 in 2010, down from $6.44 in 2003. The rate in 1995 was $2.59 and in 1997 was $2.47.
Thus, premium rates per $100 of payroll remain about what they were in the late 1990s.
Figures from the CDI and CHSWC show that average rates filed by insurers fell from 2004 as follows: -3.6% (1/1/04), -7.3% (7/1/04), -3.8% (1/1/05), -14.6% (7/1/05), -14.7% (1/1/06), -10.7% (7/1/06), -7.0% (1/1/07), -11% (7/1/07), -.05% (1/1/08), -2.6% (7/1/08), +5.8% (1/1/09), and +8.5% (7/1/09), with some further increases in 2010.
But the perception of California as a relatively high cost state persists.A 2010 study by the Oregon Department of Consumer and Business Services claimed that the median premium per $100 among the various states is $2.04, with the Oregon study claiming that under its analytical criteria, California is now the 5th highest cost state. Nevada continued periodic campaigns to attract California business.
In late 2010, Poizner called for changes in the pure premium advisory ratemaking process. Henceforth, the WCIRB has been asked to provide information on actual comp rates of carriers and additional data on the profitability of the insurance industry. It is widely expected that incoming Insurance Commissioner Dave Jones will carefully scrutinize industry data.

2. SCHWARZENEGGER ADMINISTRATION REFUSES TO COMPLY WITH STATUTORY MANDATE TO REVISE 2005 PD SCHEDULE
Despite the statutory mandate that the California’s permanent disability rating schedule be updated every 5 years, the Schwarzenegger administration refused to follow through on amendment of the schedule.
There was no legal challenge mounted to the failure to amend the schedule.
Citing continuing severe problems in the California economy, the DWC indicated that the time was not right to amend the schedule in the midst of a recession with high unemployment.
In the Spring of 2008 the DWC had unveiled a proposed PDRS revision that was estimated to increase ratings by around 12% and benefits by around 16%. That revision was never adopted, despite earlier vows by DWC officials that they intended to meet the 1/1/2010 revision deadline.
Several studies, including the DWC’s own data, had shown that permanent disability awards to injured workers were significantly reduced under the SB 899 adoption of the AMA Guides and use of the 2005 PDRS.
In adopting the 2005 PDRS, then AD Andrea Hoch (appointed by Schawarzenegger in 2010 to the 3rd District Court of Appeal) had declined to do “crosswalk study” as recommended by RAND to link ratings with actual DFEC. The Almaraz-Guzman cases and the Ogilvie case are an outgrowth of and reaction to the restrictive approach to
compensating permanent disability..

3. STATE’S BUDGET PROBLEMS IMPACT WCAB DESPITE USER FUNDING
Despite “user funding” through employer assessments, the Schwarzenegger administration refused to exempt the DWC and WCAB district offices from furloughs during much of the year.
Challenges to the furloughs were rejected by the California Supreme Court in 2010. System stakeholders were unhappy in 2010 as reduced service galled insurers and workers alike. Employers complained because there had been a sharp rise in employer assessments in 2010.
Later in the year the Adminsitration reached a deal with a number of state worker unions to end furloughs in exchange for pay concessions.
Employer assessments for 2011 were slated to rise at a much reduced level.
However, hanging over the whole system as 2010 ended was a great deal of uncertainty as to how the state’s huge budget deficit would be resolved and whether any budget solution could have collateral impact on workers and the system.

4. GUZMAN DECISION SURVIVES APPELLATE CHALLENGE
Insurer challenges to the board’s Almaraz-Guzman II decision fell short. The Bakersfield-area California Court of Appeals had not granted a writ in Almaraz by year’s end. In Guzman, an employer challenge to the Guzman II en banc decision did not succeed. The San Jose area 6th District Court of Appeals issued a decision upholding the WCAB’s Almaraz-Guzman II analysis.
Various defense commentators attempted to identify solace for employers and insurers in some language in the 6th District’s opinion.
But the decision stands as a major win for disabled workers, allowing evaluators in selected cases to rebut the strict AMA rating by assessing impairment within the four corners of the AMA Guides in an effort to assign an impairment rating that accurately assesses the clinical findings and the impacts on ADLs.
Later in the year the California Supreme Court refused to hear an appeal of the 6th District’s opinion in Guzman.
As the year progressed, a series of board panel decisions provided some guidance to both applicants and defense on what type of A-G II medical analysis would pass muster with the WCAB, and what would not.

5. LEGISLATIVE SESSION ENDS WITH LITTLE CHANGE IN COMP
The 2010 legislative session ended, winding up one of the least productive on workers’ comp in memory.
Unlike the last several years, labor advocates and applicant attorneys did not continue to push a bill to raise permanent disability. After 3 Schwarzenegger vetoes of bills on this subject, the issue was put on the legislative back burner.
Again passed by the Democratic-conrolled legislature and again vetoed were SB 145 (DeSaulnier) (to bar apportionment based on race, religious creed, color, national origin, age, gender, marital status, sexual orientation or genetic predisposition) and AB 933 (requiring that any UR reviews be done by California doctors).

6. DWC CONTINUES EMPHASIS ON REGULATIONS TO GENERATE COST SAVINGS
In 2010 the Schwarzenegger Administration continued its effort to achieve system savings via regulatory reform. This program, announced in late 2009, is known as the 12-point plan to control medical costs. At year’s end, the DWC announced hearings on proposals to adopt Medicare-based fees for ambulatory surgery center fees and to reduce spinal hardware reimbursements, generating eventual claimed savings of $86 million per year.
Those regs (and contentious changes to the physician fee schedule, as well as regs on pharmacy networks, a medication formulary and UR authorization requests), will default to the Brown Administration for finalization. Other 12 point plan efforts either done or nearing completion are MTUS guideline regs (done in 2009), revised MPN regs, and revised regs on medical billing.
The bottom line? Much of the 12-point plan has been initiated, but only about half the items have actually been adopted.
Medical cost escalation continues to be a national problem in workers’ comp systems. NASI, the National Academy of Social Insurance, released a 2010 report documenting the fact that for the first time nationally, the cost of medical treatment for injured workers exceeds cash indemnity benefits paid to workers.
In California we continue to see tension over medical treatment in California, with some doctors threatening to leave the system if fees are cut.
. The anecdotal experience of many judges and attorneys is that many injured workers are not happy with their access to care. But in 2010 the DWC released results of a study of 1,000 injured workers conducted by the University of Washington School of Public Health. A 2007 study out of UCLA had made a similar assessment.
The University of Washington study claimed that although there were barriers to access to care, that overall 4 out of 5 workers were satisfied with their care. However, the study noted a great deal of provider unhappiness and made a number of recommendations: 1) quality improvement at MPNs; 2) better communication by DWC to providers; 30 eliminating UR delays and simplifying UR; 4) reducing administraive paperwork; 5) creating incentives for reasonable accomodation; 6) mitigating language barriers.

7. CHSWC REPORTS IDENTIFY MAJOR PROBLEMS IN QME PROCESS AND LIEN FILINGS
A midyear 2010 study by CHSWC and UC Berkeley researcher Frank Neuhauser revealed many problems in the QME process. A mismatch between supply and demand for specific specialties was noted. A small percentage of QMEs were doing a highly disproportionate share of evaluations.The study noted that some QMEs were dropping out because there were too few evaluations to make it worthwhile.
Later in 2010 the DWC considered further amendments to the QME process to address some of these problems, including the outsized share of evals done by some doctors, particularly those traveling doctors with multiple “offices”.
Many observers believe that these QME difficulties is an issue which will get attention from new regulators in a Brown administration.
Meanwhile, liens problems were a source of attention in 2010. The Los Angeles district office, which claimed that liens consume 35% of its calendar, held several highly publicized “lien” fiestas, trying to reduce the backlog of liens. And in December 2010 the California Commission on Health, Safety and Workers Compensation unveiled a draft report on liens for discussion at the January 5, 2011 CHSWC meeting. Among the recommendations are to reinstate a lien filing fee, establish an administrative system for fee schedule dispute resolution, amendment of the statutes and regs to deter premature lien filings, and tightened requirements on the disclosures and documentation that accompany liens.

8. SCHWARZENEGGER ADMINISTRATION WINDS DOWN AND BROWN ADMINISTRATION AWAITS
Schwarzenegger’s legacy in workers’ comp will be debated for years to come.
But in 2010 the gubernatorial campaign of Insurance Commissioner Poizner never jelled. Poizner, who had significant insight into workers’ comp, may be a political force in the future.
Workers’ comp never surfaced as an issue in the 2010 campaign, and many stakeholders felt that was just as well.
The California Applicants Attorneys Association, which had had some notable dust-ups with the 1980s version of Governor Brown, was an early and enthusiastic supporter of his 2010 bid for a second round in Sacramento.
As 2010 came to a close, some DWC personnel began to exit. There was much anticipation about the incoming Brown Administration. A number of veterans of the workers’ comp scene were floating their names for the slot as DWC Administrative Director.
With the Brown’s first priority being the state budget crisis, it was not clear when comp would be on his radar.

9. RULE 30 MEETS ITS DEMISE
Among the relatively meager case law developments in 2010 was the Mendoza Vs. Huntington Hospital case, wherein the WCAB rejected the controversial Administrative Director Rule 30 which had prohibited a defendant from requesting a panel QME after denying a case. Rule 30(d)(3) provided that after a claim was denied by the defendant, only the employee could request a panel QME.
The WCAB in Mendoza finds Rule 30 inconsistent with provisions of Labor Code 4060(c) and 4062.2. Therefore, a defendant will be able to deny a case without prejudice to its right to later invoke the QME process on AOE/COE grounds.
Later in the year, a writ was denied in Mendoza, and the California Supreme Court declined to review the case.

10. ADJUSTMENTS IN THE WORKS AT SCIF
The State Compensation Insurance Fund (SCIF), continued to adjust to its reduced role in the California marketplace. The quasi-public insurer of last resort, SCIF’s market share is less than half of what it was before the 2004 reforms. The carrier released a report in 2010 noting that it had lost one-quarter of its premium volume over the prior year. In late 2010 SCIF announced plans to move many employees from its San Francisco headquarters in an effort to achieve cost savings.

For a slightly different take on many of these 2010 developments in California workers’ comp, you can see the video discussions between myself and attorney Richard “Jake” Jacobsmeyer on thecompguys.org by clicking here:
http://www.thecompguys.org/

In coming days I’ll be posting a quiz on projections for California workers comp in 2011. Happy holidays to readers.

Julius Young
www.boxerlaw.com
www.thecompguys.org

The car turns down a side road, off a fine highway onto a somewhat-rutted track. Next we pull into a small courtyard. In the small office sits a 6 foot long fish tank. A big white fish, all alone, lounges dreamily. Its yellow eyes seem to reach out in communication. Meanwhile, the TV blares a

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The car turns down a side road, off a fine highway onto a somewhat-rutted track. Next we pull into a small courtyard. In the small office sits a 6 foot long fish tank. A big white fish, all alone, lounges dreamily. Its yellow eyes seem to reach out in communication. Meanwhile, the TV blares a

Read more…