As 2012 come to a close, it’s time to look back with perspective on the most significant events and trends in California’s workers’ compensation system in 2012.

Here, in no particular order, is workerscompzone’s list:

In the Spring of 2012, Department of Industrial Relations director Christine Baker and then-DWC Administrative Director Rosa Moran toured the state, holding a series of public forums on the problems in California workers’ comp. Baker and Moran took comments from a wide variety of workers’ comp system stakeholders, including lots of injured workers.
Themes emerged, including problems of MPN access, QME process delays, backlogged liens, treatment delays and denials, and stakeholder abuses.
Many of the themes that emerged in the road tour are items that will be addressed in the changes wrought by SB 863. Clearly, while the DIR roadshow was taking place key stakeholders held negotiations on a major comprehensive reform package, with the blessing and assistance of DIR personnel. A key goal was to reduce “frictional costs”, particularly costs generated by various providers who were seen as abusing the system.

2. SB 863
In 2009, efforts by several prominent self-insured employers and CHSWC members to deliver a comprehensive comp reform bill failed. But in 2012, those efforts were successful. In August 2012 a legislative proposal surfaced, and a month of furious back room and public lobbying began.
As the month proceeded, amendments to SB 863 were made again and again, as applicant attorneys, doctors, and some unions sought changes to make the reforms more palatable. Proponents of the legislation touted projections that the bill would increase benefits to injured workers at around $700 million while cutting various frictional costs and achieving savings of over a billion dollars in a rough 2-1 ratio.
At several points it appeared that SB 863 might stall in the legislature. But passage was ultimately achieved as Governor Brown became personally involved in lobbying for the package and as some changes in the bill were
made in the last several days to satisfy a group of unions and some key legislators, particularly in the California Senate, who had concerns about the bill.
Among the key provisions of SB 863 are these provisions, some of which take effect at different times depending on the date of injury and many of which require administrative regulatory frameworks:
-an increase in permanent disability monies (by raising PD maximums and minimums) for post-2012 injuries
-changing the law regarding supplemental job displacement vouchers
-elimination of rating add ons for sleep disorder, sexual dysfunction and also eliminating compensable consequence psyche claims in non-catastrophic injury claims
-a $120 million annual fund is to be established for the AD to compensate workers “whose permanent disability benefits are disproportionately low in comparison to their earnings loss”.
-eliminating the 15% bump up/down for post 1/1/13 injuries
-new language changing the definition of permanent disability by dropping the “FEC factor” , removing the reference to “diminished future earning capacity” and mandating a new 1.4 numeric rating multiplier instead
-modifications to utilization review process rules and to QME process rules
-new procedures are established to resolve treatment denial disputes Independent Medical Review) and billing disputes (Independent Bill Review)
-reform of lien procedure rules, including requiring a lien filing or lien activation fee
-provisions designed to address problems with MPNs and to make it harder for workers to seek treatment outside a valid Medical Provider Network (MPN)
-requirement of new fee schedules that will be instituted to regulate interpreters, copy services, doctors, vocational experts, home healthcare, ambulatory surgery centers and implantable medical devices
-new language outlining prohibited referrals
-changes in self-insurance regulations

If 2012 was one of the most important legislative years in California workers’ compensation history, 2012 was also one of the slowest years for workers’ comp in the courts.
In February 2012, Governor Brown appointed attorney Marguerite Sweeney of Redding to fill a vacancy on the statewide WCAB. But even after Sweeney’s appointment, two vacancies remained on a seven-person board at year’s end. 2012 saw the WCAB issuing only one en banc decision, Torres v. ABC Sandblasting, an opinion addressing the standard of proof required for a lien claimant to prevail where a lien claimant proceeds to trial after the case in chief has been resolved.
With huge systemic changes under SB 863 coming, it is safe to say that that 2013 and beyond will be busy years at the WCAB.
In the California Courts of Appeal, 2012 was a relatively quiet year for workers’ comp. Among the cases worth noting are the following:
-Dutra v. Mercy Medical Center Mt. Shasta (examining the relationship between 132A and a “Moorpark” civil tort action)
-Meeks Building Center v. WCAB (Najjar) (payment of TD to attend a QME evaluation did not trigger the start of a 104-week TTD limit under Labor Code 4565(c)(1)
-SCIF v. WCAB (Garcia) (fall from a 24 foot ladder while picking avocados was not “sudden and extraordinary” so as to permit a psyche claim for a worker who had worked less than 6 months on the job)
-County of San Bernardino v. WCAB (McCoy) (good-faith personnel action defense applied to claimed migraine headaches injury form on the job stress claim)
-City of Sebastopol v. WCAB (Braga) (Labor Code 4658(d) 15% increase not applicable where employee does not miss time from work)
With so few notable workers’ comp cases coming down from the appellate courts in 2012, many practitioners shifted attention to WCAB panel decisions covered by sources such as the LexisNexis California WCAB Noteworthy Panel Decisions Reporter.

Following passage of SB 863, DWC Administrative Director Rosa Moran resigned. Moran’s departure generated widespread speculation, but was never explained by any public statements. Moran, who had moved into the AD slot from a position as a workers’ comp judge, returned to the bench as a WCJ in Oakland.

Still pending in late December 2012 were inpatient hospital fee schedule regs and regs dealing with fee schedules for hospital outpatient departments and ambulatory surgical centers.
And just before Christmas 2012 the DWC had submitted to the Office of Administrative Law various proposed “emergency regulations” required by SB 863 dealing with the following:
-Independent Medical Review and Independent Bill Review
-Supplemental Job Displacement Vouchers
-Self-insurance plans
-Lien filing fees
-Interpreter certification
-QME regulations
With it expected that the OAL will approve those emergency regulations, the DWC will shift to a 2013 permanent rulemaking process on those topics and fee rules for home health care services, vocational experts and physicians.

Pro football injuries continued to be a topic that received attention in the press.
An August 2012 U.S. Court of Appeals 9th Circuit case, Matthews v. National Football League Management Council rejected a challenge by a Tennessee Titans ex-player who claimed that an arbitration decision prohibiting him from pursuing California workers’ comp was a violation of the full faith and credit clause of the U.S Constitution and a federal labor violation.
In December an arbitrator ruled against a number a players, finding them bound by choice of forum clauses in player contracts. Thereafter, the players filed an action in the U.S. Federal District Court in Northern California, seeking to overturn the arbitrator’s decision.
Meanwhile, concerns contine to mount about the long term effects of concussions in the sport.

Among the prominent studies regarding California’s workers’ comp system that were unveiled in 2012 were these:
-a January 2012 study presented to CHSWC by UC Berkeley’s Frank Neuhauser that documented a 58% reduction in permanent disability payments to injured workers after adoption of the 2005 rating schedule based on the AMA Guides, even with the Almaraz-Guzman and Ogilvie cases factored in
-an October 2012 analysis by AON Risk Management contended that the cost savings measures under SB 863 would not be liekly to offset the benefit increases and that the overall costs of the system will increase. AON concluded that “We expect the permanent disability rates to increase higher than the WCIRB estimate, due to optimistic assumptions on the add-ons and greater utilization due to higher benefits”. AON also questioned estimates regarding savings to be generated from the SB 863 provisions on liens, IMR and MPNs
-a WCIRB analysis (quoted in a piece by Greg Jones of of liens filed pre-2004 reforms found that liens were filed in 44% of Northern California Claims and 64% of Southern California claims, with 44% of the liens being for medical treatment, 13% for durable medical equipment or pharmacy and 12% for diagnostic studies.
-a March 2012 California Workers’ Compensation Institute study of data from the California Office of Self Insurance Plans (OSIP) noted that average paid and incurred losses on comp claims filed by workers employed by cities, counties and other public self-insureds had risen sharply and that Medical losses have been the biggest cost driver for California public self-insureds in the last five years….:
-a June 2012 CWCI study claimed that excessive surgical hardware reimbursement costs “added nearly $67.5 million in medical costs to the California workers’ comp system in 2010”.
-a study by David I. Levine of the Haas School of Business at UC Berkeley published in Science found that OSHA workplace inspections resulted in substantial declines in injury rates and injury costs and that OSHA inspections did not adversely affect employer competitiveness or destroy jobs.
-another CWCI study analyzed head and spine injuries, finding that a high percentage result in lost time,, permanent disability and attorney involvement
-a study of California claims done by the Massachussetts based Workers’ Compensation research Institute (WCRI) evaluated California claims data from 2005 to 2010, noting some links between the data and the impact of the recession in California
-a study presented to CHSWC in December 2012 by Dr. Teryl Nuckols of UCLA and RAND outlined concerns about opioid prescribing practices and identified various possible opioid guidelines that are used in other jurisdictions
-a July 2012 study by the California Workers’ Compensation Institute noted that “After surging to a record level two years ago, highly addictive Schedule II opioid painkillers such as fentanyl, oxycodone, and morphine are now becoming less prevalent in California workers’ compensation, with new CWCI data showing they fell from 5.8% of all prescriptions dispensed to injured workers in the 2nd quarter of 2010 to 3.4% of the prescriptions in the 4th quarter of 2011.”
-and yet another CWCI study, showing that medical treatment costs had climbed 79% per claim from 2005 to 2010

One of the ironies of 2012 was that the impetus for reforms came from large self-insured employers such as Disney, Safeway and Grimmway Farms, not from the insurance industry. Yet, it’s the rates insurers charge that often grab the business press headlines.
California workers’ comp premiums are set by the marketplace, not by fiat of the California Insurance Commissioner. Still, Insurance Commissioner Jones is charged by law with setting a benchmark rate known as the “pure premium rate”.
In an August recommendation to Insurance Commissioner Jones, California’s Workers Compensation Insurance Rating Bureau (WCIRB) advised a 12.6% increase (to $2.68 per $100 of payroll) in the pure premium rate be set for 2013. By comparison, the average filed rate was said to be $2.38 per $100 of payroll.
In November 2012 Jones issued his order, recommending that insurers set the benchmark comp rate at $2.56 per $100 of payroll. This represents a 2.8% change from the average pure premium rate of $2.49 as of November 9, 2012.
While less than the $2.61 per $100 of payroll that had been recommended by the WCIRB Actuarial Committee, the recommendation is significantly more than the $2.38 per $100 of payroll figure which was eventually recommended by the WCIRB Governing Committee. The Governing Committee’s vote for a lower pure premium rate had been widely seen as a political move and Jones used his rate decision to criticize the process used by the WCIRB in making its rate recommendation.
A last look at December 2012 rate filings shows that carriers were filing for increases of around 9% on average.
In an October 2012 workers comp market update, AON said:
“What does the future look like for rates? Very uncertain. Not only do disagreements on cost estimates exist, but certain reform measures need to be implemented by numerous parties and their impacts quantified”.

Yes, we’ve already covered SB 863 in other portions of this post. Still, it would be remiss to not give the Governor his due with a separate entry.
As noted above, Brown drug the faltering SB 863 bill across the legislative finish line, making clear to all parties that he wanted a comp bill this year.
That’s not to say that Brown is passionate about the underlying workers’ comp issues and details. In fact, almost all sources say he isn’t.
But Brown found himself with bigger fish to fry. Brown’s moves can be understood in the context of wanting to avoid further perceived deterioration in the state’s economy and as a measure to avoid sniping by a business community that he needed to stay neutral in his successful campaign for a tax hike.
Whether SB 863 does or doesn’t hold down costs or does or doesn’t benefit injured workers will be answered over time. Meanwhile, Brown has reaped a considerable political harvest.

We have SB 863 as the year ends, but what does that portend? Will workers see $700 million in increases and employers see double that in savings? As the year ended there were many known unknowns such as the following:
-will there be a challenge to the constitutionality of the IMR provisions, the lien filing fee or the limit on chiropractors serving as PTPs after 23 or 24 sessions?
-with rather expensive fees to be paid to Maximus (purveyor of IMR determinations) by the employer for each IMR, how will the new IMR system affect medical costs and medical treatment access?
-what will be the effect of a fee of $335 per bill review to be paid by the provider challenging the amount of a bill paid?
-can the DIR limit the $120 fund to workers injured after 1/1/13 or will the fund be available to those injured before as well?
-will some stakeholders find loopholes in order to continue out-of-network treatment on a lien?
-in failing to address rising cost containment costs such as utilization review costs, did SB 863 miss one of the real sources of increased costs in the system?
-the Almaraz-Guzman cases appear here to be here to stay, but is the Ogilvie approach to rating truly dead ?
-with preparations proceeding for the Affordable Care Act, how will
Obamacare affect California’s workers’ comp system?

These are but a few of the questions as we end 2012.

Stay tuned.

Julius Young

In the next few weeks I’ll focus on the Top 10 Developments in California Workers’ Comp in 2012 as well as featuring my annual quiz on the likely issues for 2013.

And I’ll be taking an in-depth look at the recently unveiled post-SB 863 “emergency” regulations which are currently under consideration with the Office of Administrative Law.

But since the media and the public are currently consumed with discussion of guns, what about guns and workers’ comp?

Practitioners of workers’ comp see some gun violence cases.

I’ve represented tellers who were held up at gunpoint, liquor store clerks who were pistol-whipped, cops and CHP offices injured in gun incidents in the line of duty, as well as a few workers who were injured by gunfire as they just happened to be in the wrong place at the wrong time.

I’ve had clients who committed suicide with a gun.

I’ve represented muskrat hunters and trappers who had guns as part of their gig.

I recall a client who abducted someone with a gun and then hurled the abducted to death from a bridge above a river. It’s amazing what you sometimes learn about your client as the “discovery process” proceeds.

In another incident, shortly after my client made credible threats to bring an automatic rifle into the local WCAB, airport-type scanner security was adopted.

During last year’s Occupy Oakland protests, one of my partners’ clients was heading to BART from a deposition at our office when an individual was shot in the head and killed in an apparent dispute between two occupiers.

One cannot represent injured workers over a long career without being exposed to some horrific incidents.

Gun violence is a very small part of the workers’ comp pie. But it’s worth consideration.

A serious national debate about this is long overdue.

Like many readers, I live and work in an urban area awash with weapons.

Several blocks away there may be Nobel prize winers and entrepreneurs creating the latest startups. But there are also guys with Uzis and Sig Sauers.

And those street corner guys may not be the ones we fear the most. We are most afraid of the unstable angry ones who surface in schools, theaters, and our public spaces.

Readers who have interesting perspectives and stories about guns and gun violence in the workplace are invited to send them to the blog.

Julius Young

California’s Commission on Health and Safety and Workers’ Compensation met on December 14 in Oakland.

New CHSWC appointee Martin Brady was elected CHSWC chair for 2013.
Brady has served as Executive Director of Schools Insurance Authority since 1988, so to say he knows his way around the California comp system is an understatement. Brady succeeds outgoing chair Angie Wei of the California Labor Federation.

What’s up at CHSWC? That’s always worth noting, as CHSWC has been ground zero for reform ideas in California’s workers’ comp system.

Christine Baker, Director of the Department of Industrial Relations (and former CHSWC Executive Officer), gave the first presentation. She stated that SB 863 had helped “avert a crisis” in California workers’ comp and asserted that the bill is a “balanced tradeoff” between increasing benefits and controlling costs.

Baker also noted that the Brown administration will monitor the law as the law and regulations take effect and that they “stand ready to make adjustments” if need be.

Of particular interest was Baker’s comments of Labor Code 139.48, the new $120 million return to work fund that was added to the bill during the final negotiations over SB 863 after Teamsters, Machinists, Los Angeles Firefighters and a few other unions insisted on further changes in the bill.

Baker indicated that she is working with RAND on ideas about how the fund should be allocated and administered. She indicated that the goal is to target payments to workers who don’t return to work and whose actual percentage of wage loss is more severe than expected losses for workers with similar injuries.

She noted that RAND had been contracted to do an analysis of this and that the study is due mid 2013, with proposed regs coming sometime thereafter and then time for public comment. Baker observed that there was ample time to develop this since the DIR is taking the position that the fund under 139.48 applies only to post 1/1/13 injuries and that it would be a while before earnings losses will be determined for those injuries.

Baker also noted that the fund will probably require workers to document both pre and post injury earnings data. However, Baker did not reveal any other significant details about how the fund might be administered or exactly what periods of post earnings losses would be required.

The focus then shifted to opioids.

Concern about opioids has been growing nationally and the issue is clearly on the CHSWC radar. The concern is threefold: opioid deaths and non-fatal overdoses, opioid costs, and opioid diversion.

CHSWC has been looking at the issue and in this session heard a presentation on how opioid guidelines might be adopted. The topic was outlined in a powerpoint by Dr. Teryl Nuckols.

Nuckols is co-author with Allison L. Diamant, MD, Ioana Popescu, MD, Laura Anderson and Roger Chou, MD of a study “Identifying Risky Opioid
Prescribing Practices” that has now been posted on the CHSWC website (see bottom of this post).

CHSWC has also posted an August 30, 2012 memo that summarizes the evaluation of guidelines for the use of opioids to treat chronic pain.

In her presentation, Nuckols, who is an Associate Professor of Internal Medicine at the University of California, Los Angeles (UCLA) and a Health Services Researcher at the RAND Corporation, concluded that the most rigorously developed guidelines available on the use of opioids to treat chronic pain are the guidelines of the American Pain Society and the American Academy of Pain Medicine (AP-AAPM) and the Canadian guidelines for safe and effective use of opioids for chronic non-cancer pain, developed by the National Opioid Use Guideline Group.

What is on the minds of the CHSWC members? Here’s a rough summary (not verbatim quotes) of some of the issues that were raised:

Member Sean McNally of Grimmway Farms asked about the possibility of restricting which physicians could prescribe opioids to make sure that those medications are distributed appropriately.

Nuckols noted that providers could be selected and profiled but acknowledged some concerns about making sure patients were not not penalized in access issues.

Doug Bloch of the Teamsters Union asked why opioids are prescribed more frequently in workers’ comp than in group health settings. Nuckols noted that this is complicated and may be in part due to when the treatment occurs, or as a result of some variations in geographic regions, where physicians trained, etc as well as due to some secondary gain issues

Martin Brady noted concern about opioids appearing in schools if they are diverted.

CHSWC member Faith Cuthbertson raised questions about the effects of urinary drug testing.

Doug Bloch queried how California tracks drug diversions and overprescribing.

Angie Wei asked whether opioid use results where there is a failure to address and treat the underlying cause, with Nuckols noting that there are lots of chronic pain conditions where there is no easily identifiable cause.

Among those who testified in response was Mike Nolan of the California Workers’ Compensation Institute, who noted the work that CWCI’s Alex Swedlow has done on the issue. Nolan, who mentioned the issue of creating a drug formulary, challenged the notion that opioids are used more frequently in workers’ comp because they are “sicker patients”, noting that there are several studies which challenge that notion.

Representatives from the California Medical Association and the California Chiropractic Association testified. The CMA’s message is that any reform should be carefully done so that patients are not denied access to care.

The chiropractors argue that opioid use has expanded because the system now has a bias in favor of pharma. More workers now rely on meds to control their pain and limitations on chiropractic and physical therapy has resulted in more workers with medication related gastrointestinal problems, ulcers, and kidney and liver failure.

Another presentation to the commission was from Frank Neuhauser of UC Berkeley. Neuhauser, a frequent consultant for CHSWC, summarized a draft experience modification study done in conjunction with Rand Corporation’s Center for Health and Safety in the Workplace. The study, co-authored by Seth Seabury of RAND and John Mendeloff, is titled “The Impact of Experience Rating on Small Employers: Would Lowering the Threshold for Experience Rating Improve Safety?”

The X-mod study has been posted online for public comment: … _draft.pdf

The opioid study can be found here: … s_2012.pdf

The memo on evaluation of opioid prescribing guidelines can be found here: … n_2012.pdf

Stay tuned.

Julius Young

We’re in an in-between phase in California workers’ comp.

Draft emergency regulations were posted by the DWC several weeks ago.
This included regs on the following subjects:
-Independent Medical Review
-Certification of interpreters
-Supplemental Job Displacement Vouchers
-Chiropractors as Primary Treating Physicians
-Independent Bill Review

The DWC online forums elicited a large number of detailed comments on the proposed draft regs. Other comments may have been forwarded to the DWC by letter.

So within a few days its likely that we will see some changes made in the proposed emergency regs.

And then off they will go to the Office of Administrative Law.

Whatever emerges will be with us til regular rulemaking hearings are held on these topics in 2013.

Meanwhile, a controversy of sorts has emerged over the large proposed increase in employer assessments for 2013.

Insured employers will see assessments increase by 44% and self-insureds will see assessments increase by 35%.

Prominent employer stakeholder leaders were quoted in Workcompcentral as loathe to criticize the assessment increases, but as concerned and desirous of more information from the DWC on the details.

Assessments fund the Division of Workers Compensation. the Division of Occupational Safety and Health, the Subsequent Injuries Fund, and to some extent Labor Standards enforcement.

Clearly, SB 863 is going to raise the costs of administering California’s comp system. To the extent that those costs are passed along to employers then the SB 863 savings are lower that anticipated.

But without more facts and figures from the DWC, and without the ability to actually see the Brown Administration 2013 budget yet, it’s hard to analyze this topic.

However, fellow blogger David DePaolo (and publisher of has done several posts on the issue of the assessment hikes. DePaolo’s take on the assessments is notable and here are links to his analysis:

“State Closed. Take Your Business Elsewhere”: … iness.html

“Employers Just Need Stability”: … ility.html

“In Jerry We Trust”: … trust.html

Stay tuned.

Julius Young

In my recent post “Under Submission” I noted the choices that Insurance Commissioner Dave Jones faced as he considered setting the advisory “pure premium” workers’ comp rate for 2013.

Jones has now issued his order, recommending that insurers set the benchmark comp rate at $2.56 per $100 of payroll. This represents a 2.8%
change from the average pure premium rate of $2.49 as of November 9, 2012.

While less than the $2.61 per $100 of payroll that had been recommended by the WCIRB Actuarial Committee, the recommendation is significantly more than the $2.38 per $100 of payroll figure which was recommended by the WCIRB Governing Committee. The Governing Committee’s vote for a lower pure premium rate had been widely seen as a political move although if that is so it’s hard to see what was gained in such a move.

And in any event, actual rates charged will be set by insurers who need not follow the recommendations of the WCIRB or Jones. Workers comp pricing is affected by X-mod formulas, credits and discounts and a number of other factors.

Jones claims that “math does matter” and notes that Department of Insurance actuaries found that the Governing Committee decision to reject the Actuarial Committee decision was not sound and based on a unsupported speculation about SB 863 savings. Jones noted that speculation has led to a wave of insurance bankruptcies in the 1990s.
Jones expressed concerns that insurers set rates high enough to pay claims, saying that :”Today, companies are paying out 116% more in claims than they are collecting in premiums.”

Premiums collected are just a part of the story, however, since insurers do invest the premiums and earn returns on that money.

Jones chided the WCIRB Governing Committee, noting that in the future he expected them “to provide a sufficient and reasonable basis for its recommendation with proper actuarial support”.

But the overall message that Jones’ rate recommendation sends is that a rise in comp costs is likely to be tamped down by the SB 863 reforms.

Jones noted that there is much to be done to implement SB 863. No surprise there.

What does Jones think is on the horizon? That’s of some interest. As California’s Insurance Commissioner, Jones does not have a direct role in formulating workers comp laws or regulations. But Jones is a capable and popular guy in Sacramento and is seen as having a bright political future which could include a run for governor a couple of election cycles from now.

For the future, Jones says that:
“There are additional reforms to be explored that were not part of SB 863 to achieve additional savings. These include addressing through legislation and regulations ongoing problems with the overuse of powerful and addicting pain medications and reviewing reasons for increasing cumulative trauma claims and post-termination claims. We also need to standardize as many processes and procedures as possible. I encourage all stakeholders to refrain from thinking their work is done with regard to workers’ comp reforms and encourage the Legislature and the Governor to use this upcoming legislative session to advance more reforms to reduce systemic costs and to make sure that resources are going where they should be going-to assist injured workers-as opposed to transactional and frictional costs”.

Those comments by Jones seem to indicate that we’ll see another push for significant reforms, probably centered on opioid usage and cumulative trauma claims.

An upcoming meeting of CHSWC on December 14, 2012 will feature a study on opioid use in California’s comp system done by Teryl Nuckols-Scott of UCLA: … er2012.pdf

Historically, reforms to California’s system have come in waves that were 8 to 10 years apart. Those wave sets may be coming more often in the future.

A link to the decision by Jones can be found here: … chmark.pdf

Stay tuned.

Julius Young