WCDefenseCA

Governor Jerry Brown is facing an overflowing “in-box” of love-notes from the Legislature, each one hoping to bear his autograph and move from the overcrowded and often populated “bills” population group to the powerful elite of good (and bad, just horribly, unspeakably bad) ideas that have become law.

The Honorable Brown can make repetitive signing motions without fear, of course, as California’s Workers’ Compensation system will no doubt provide him with yet another retirement fund upon his leaving office if he should sustain a cumulative trauma to his wrists, sleep disorder, etc., as a result of his work.

But one bill in particular has employers and unions alike hoping for passage.  That is, of course, Assembly Bill 378, which will strive to rein in the compound drugs industry sucking the last few drops of life’s blood out of California’s battered employers.

The problem of compound drugs was mentioned briefly in this post. California has a medical schedule which puts a cap on the amount doctors and medical equipment providers can charge for treatment, procedures, drugs, and equipment.

But this doesn’t apply to so-called compound drugs, which a doctor can both prescribe and make himself.  Combining aspirin with some placebo, a doctor could make a pill that is nowhere to be found on the fee schedule.

In theory, the self-insured employer or insurer could analyze the pills and apply the fee schedule to its component parts, but this brings with it the cost of bill review and litigation, leaving the defense grasping a Pyrrhic Victory.

AB 378 will strive to change this by preventing self-dealing in pharmacy goods, which means no more prescriptions for drugs produced by the doctor or the doctor’s relatives.  The bill also ties the cost of these compound drugs to the “lowest priced product of equivalent therapeutic effect.”

The bill appears to have support from both Labor and Employer groups, and hopefully will bear the governor’s signature before too long.  Naturally, the physicians and pharmaceutical interests will have some objections to AB 378 becoming law and to its application by the courts.

In other words, there are some fun times ahead.

Although your humble author is an admitted cynic, as a compensable consequence of  California Workers’ Compensation Defense practice, he is always happy to report a victory for employers (read: California’s survival).

Assembly Bill 375, introduced by Assemblywoman Nancy Skinner (D – 14th District), was voted down in the senate last Friday (September 9, 2011).

AB 375 would have created yet another presumption, this time for hospital workers.  If enacted, infection of certain bloodborne diseases would have been presumed compensable, even if the injury arises 180 days after the last day of work.

Admittedly, this is a limited victory.  It lightens no load for employers while merely checking one of the many encroachments against the employer survival rate.  However, a victory is a victory and even a cynic can be happy about that.

Roberto Ceniceros, of Business Insurance has an interesting article on an issue that quickly became one of the more frustrating parts of California Workers’ Compensation practice.  The conflicts between employees and insurance companies, or the employee’s self-insured employers, can be heated and difficult, but that’s the nature of the game.  The frustration comes in when the parties have agreed and want to settle, but Medicare tells them they can’t.

This was the subject of an earlier post, but the efforts to change this system are the subject of Mr. Cenicero’s article.  H.R. 1063 sponsored by (former) Congressman Tim Murphy, the bill is now referred to the House Subcommittee on Health, and would limit the amount of time CMS could respond to a request for Medicare Set-Aside approval.

Presently CMS will not respond to a request for approval of a settlement amount $25,000 or less if the applicant is a current Medicare beneficiary or will enroll in Medicare within the next 30 months and the settlement amount is over $250,000.  The CMS explanation may be read here.

As the saying goes, if wishes were fishes, we’d all be full (except, of course, those of us who do not eat fish).  That being said, both sides of the ongoing struggle of California Workers’ Compensation can wish for H.R. 1063 to eventually see the President’s signature.  For those who need a brush-up on how this process works:

The refreshing winds of September are filling the air, and as they sweep in, they bring with them that rosy scent of fresh legislation: as always, fiery, thick, and perfectly half-baked.  Two pieces of would-be/will-be law have come under the popular spotlight recently.  The first is that of Assembly Bill 889 put forward by Assemblyman Tom Ammiano (D – San Francisco).

The bill would require rest-breaks, over-time pay, and (you guessed it) workers’ compensation insurance for domestic workers such as care persons, nannies, babysitters and cleaners.

While exempting babysitters under the age of 18, I expect this bill, if made law, to send presently free-lance domestic workers into the arms of organized companies.  No matter how much I want to see a perfectly good classic movie ruined by a modern-recreation in a theater, I have no intention of hiring a human resources staff to help me comply with this law while hiring a babysitter for the evening.  I imagine the typical parent in California will likely feel the same way.

So free-lancing, self-employment for babysitters and other domestic workers might decrease, insurance profits may go up, and Sacramento will press harder on small employers with its left hand while continuing to squeeze larger businesses with its right.

The second piece of legislation is Senate Bill 684, which makes it more difficult for insurance companies to have and to enforce arbitration clauses in their workers’ compensation insurance contracts, by requiring a separate disclosure of the existence of the arbitration clauses, the venue and choice of law of the arbitration, and the fact that they are negotiable.

Authored by State Senator Ellen M. Corbett (D – San Leandro), the legislation was greeted with enthusiasm by Insurance Commissioner Dave Jones in a Department of Insurance Press Release.

Many insurance companies are regional or national, and so would normally be subject to the contract laws of several states (wherever their policy holders entered into the contract).  Arbitration clauses allow all disputes to be resolved in one state, and the insurance company’s legal department needs to know only one state’s laws.

Now, insurers will have to either face increased costs in negotiating, quoting, and preparing insurance contracts, or retain different legal departments for every state in which they offer their services.  But while the costs of operation go up, workers’ compensation insurance rates are set by law and cannot be increased.

SB 684 has passed both the Assembly and the Senate and now awaits Governor Brown’s signature.  Perhaps, if the legislation is signed into law, an update will be necessary on the benefits of self-insurance.

The California Workers’ Compensation Institute has released the results of a data collection study showing an increase in the average temporary disability period for injured California workers.

The study can be viewed here.

The results show that temporary disability claims for injuries occurring in 2009 have reached pre-SB-899 levels.  12 months after the injury date, 2009 injuries average $6,050 paid, while 12 months after 2004 injuries the average paid in temporary disability was $6,071.

The report shows that this increase is part of an upward trend.  If you’re on the applicant’s side of the industry, it appears that a trend truly is your friend.

Some of us might think that the trend should level out after 24 months of temporary disability.  But with AB 947, as discussed in this post, pushing ahead, we can soon expect statistics for 240 weeks of temporary disability, rather than a maximum of 104.

An interesting subject for study might be the treatment costs associated with temporary disability periods.  Such a figure would more completely show the true cost to employers and insurers.

SB-899 and the reforms of 2004 were a triumph for the State of California.  By no means did these reforms fix all the problems in California Workers’ Compensation, but at least some efforts were made to make California semi-profitable (read: survivable) for employers.

One of the regular targets for the chipping-away efforts of applicants, their attorneys, and their treating physicians, is Labor Code § 4656.  § 4656 limits applicants to 104 weeks of temporary disability within a 5 year period.

Temporary disability is meant to provide some semblance of income, 2/3rd of the injured workers’ average yearly wages, while the worker is recovering – treatment, improvement, etc.

That means that someone is paying the employee 2/3rd of his or her income and receiving no labor or benefits in return.

Assembly Bill 947, being pushed by Assemblyman Jose Solorio, would increase the cap on temporary disability to 240 weeks.  You can read the amended text here.  That means the self-insured employer or insurance company would be paying the worker three years worth of salary over the course of five years without seeing any productive labor in return.

Today, the Senate Appropriations Committee will have a hearing on the bill.  Having already worked its way through the Assembly your humble author can only hope that this bills finds a sudden and tragic demise somewhere in the Senate.

The Department of Workers Compensation has announced that it is proposing new regulations, mostly having to do with lien claimants.  You can see the notice and read the new regulations here.

The proposed changes include a process for dismissing liens that have been inactive for the last year, similar to the dismissal of cases for lack of prosecution.

The new proposed regulations also limit the filing of liens to new or opening liens, and lifts the requirement to file (but not to serve) the itemized list that make up the basis for the lien.

Also, it appears that defendants will have grounds to argue that an improperly filed lien is not filed and not binding, even if it is served.   The new proposed regulations even seem to allow for sanctions and attorney’s fees for violations of the new procedures.  (The threat of sanctions is a useful tool in curbing the advances of lien claimants.)

I, for one, am eager to see how much of this survives and becomes the law of the land.  It looks like, before too long, defendants might have a new set of maneuvers to ward off the Lien Pirates!  Even for a cynical workers’ compensation defense attorney, hope springs eternal.

UPDATE (6/23/11):  The bill has been signed and is now law.  Will this signal a trend that other states will follow?  Only time will tell.

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It appears that Florida might be riding to the rescue to ease some of the burden on California’s Workers’ Compensation system.  While taking a break from hunting alligators and providing the single most popular way of getting out of serving on a criminal case jury (trust me, just tell the judge or prosecutor that you watch CSI: Miami and you’ll be home in time for the intro sequence), the Florida legislature has presented a bill for Governor Rick Scott’s signature.

This new bill would require all employees of Florida companies injured while working  for the employer (temporarily) in another state to press their claims in Florida and under Florida’s Workers’ Compensation laws.

Why would someone from Florida want to have their Workers’ Compensation claim adjudicated under the laws of another state, such as California?  To put it gently, California is somewhat more generous with employers’/insurers’ coffers, than many of the other states, Florida included.

If Governor Scott signs this bill, claims ranging from boredom-induced psyche injuries for visiting convention attendees all the way to training and game injuries (fantasy league pride-stinging included) for professional football and hockey players will have their claims adjudicated in their home states, where their employers and their employer’s insurance companies can retain counsel with previously negotiated and volume-based reduced hourly rates and keep the costs of adjusting the claim to a minimum based on already-possessed knowledge and expertise.

As a California defense attorney, I hate to see less business walk through my doors, especially business glowing with Florida tans and generous with Disney World tickets.  But at the same time, I would be glad to see a less cluttered and overburdened calendar down at the Board, and I am also happy to see employers treated fairly within their own state.  Do I dare dream that California’s will one day experience the same?

In the event that Governor Scott doesn’t sign this bill, or some angry mob of applicant’s attorneys threatens to boycott Florida Orange Juice, I will still happily help any out-of-state defendants run the gauntlet of California’s Workers’ Compensation system.

Keith Goble of Land Line Mag has an interesting article today on the freezing of a new bill which would have effectively stopped the owner-operator business model of drayage trucking:  Assembly Bill 950.  AB 950 would “deem drayage truck operators as employees of those persons who arrange for or engage their services, with the exception of public agency employers.”

With employment, of course, come various forms of liability, including workers’ compensation liability under Labor Code § 3700.  No doubt this increased liability would translate to higher consumer prices and lower contract amounts for the individual drivers.

By falling under the category of independent contractors, drayage truck owner-operators escape the jurisdiction of the California workers’ compensation system.  The independent contractor exception is one of the last few safe harbors remaining for individuals to retain control over their small businesses.

Fortunately, this bill has been ordered to the “inactive” file.  Hopefully, it will be some time indeed before there is another encroachment from Sacramento onto the interactions between private citizens doing business.