The Latest from SacramentoJune 28, 2011

California Workers’ Compensation:

Welcome

Jerry Azevedo, Workers’ Compensation Action Network APCO Worldwide

Jason Schmelzer, California Coalition on Workers’ Compensation Shaw / Yoder / Antwih, Inc.

Who We Are

Workers’ Compensation Action Network

Broad-based, statewide coalition of employers and insurers dedicated to defending and advancing reform of California's workers' compensation system

• Includes every major employer trade association in California • Insured, private and public self-insured employers• Nonprofit organization

Educate lawmakers, the business community and members of the media on workers’ compensation issues

• Track outcomes of recent legislative reforms• Disseminate original material• Provide media commentary• Conduct annual Legislative Education Day

Mobilize grassroots network to support/oppose legislative proposals

Who We Are

California Coalition on Workers’ Compensation

Statewide association of employers committed to maintaining a workers’ compensation system that provides quality benefits at a reasonable cost to employers

• Founded in 1985 and governed exclusively by CA employers

Advocacy • Intimately involved in the development and passage of 2004 reforms• Serve as the voice of California employers in legislative and regulatory venues• Unrivaled experience and knowledge of workers’ compensation policy in

Sacramento

Education• Annual conference on workers’ compensation trends, strategies, and public

policy• Coordinate annual Legislative Education Day

What We’ll Cover Today

• Who’s Making Decisions in Sacramento

• How and Why Decisions Are Being Made

• Pending Legislation

• What You Can Do

Decision Makers

Governor Jerry Brown

DIR Director Christine Baker

DWC Director???

Labor Secretary Marty

Morgenstern

Senator Darrell Steinberg

Senator Ted Lieu

Gideon BaumSenate Labor &

Industrial Relations

Assembly Speaker John Perez

Assemblymember Jose Solorio

Mark RakichAssembly Insurance

Administration Legislature

Context for Decisions

State % Rate (May 2011)

Michigan 10.3

Mississippi 10.3

Florida 10.6

California 11.7

Nevada 12.1

Five States with Highest Unemployment Rate

State Budget Deficit • Tax extension negotiations have sputtered• All cuts budget and legislator pay

Economy and Jobs• Tax receipts up in early 2011• Employment continues to lag

• CA unemployment at 11.7%• US Average is 9.1%• Nevada only state higher at 12.1%

Redistricting and Open Primary • Final maps from redistricting commission not

yet released• Electoral uncertainty because of modified

districts• Impact of open primary undetermined

Context for Decisions

Year 2000 2002 2004 2006 2008 2010

Rank by Most Expensive 3 1 1 2 13 5

% of National Median 148% 216% 236% 166% 121% 131%

California Workers’ Compensation Costs VS

Other States and the National Median

Context for Decisions

$50,017 $49,190$45,652

$38,687 $38,656

$44,944

$51,612

$58,418

$61,664+23%+60%

California Workers’ Compensation Costs Per Indemnity Claim

Context for Decisions

Costs per Claim VS Rate per $100 of Payroll VS Premium Volume

Context for Decisions

California regulators seize SF’s Majestic Insurance, propose rehab plan

April 22,2011

WCIRB Accident Year Combined Loss & Expense Ratios

168

144

113

79

56 5568

90

111

130

Context for Decisions

Levels of Permanent Disability:

Context for Decisions

Almaraz Declined by 5th District Court of Appeal

Guzman Affirmed by 6th District Court of Appeal,

Declined by Supreme Court

Ogilvie Oral arguments held last week by 1st District

Court of Appeal

“California's non-partisan Legislative Analyst's Office has concluded that these rulings could lead to (1) changes in PD

ratings, (2) increased incentive for litigation, and (3) decreased uniformity in determining PD. Ultimately, these effects would likely lead to increased benefits for

workers and higher costs for businesses and governments.”

Assembly Bill 378

Compounded drugs bring big profits to California doctors, study finds

January 29, 2011

Unusual coalition pushes for restrictions on compounded drugs

December 28, 2010

www.cwci.org/research.html

Assembly Bill 378Compound Drugs, Co-Packs and Medical Foods

Assembly Bill 378

AB 378 removes the profit motive for prescribing compound drugs• Ban on self-referral• Imposition of temporary fee schedule

Recent reports indicate that the increase in utilization of compound drugs may be driven by profit-motive instead of medicine

• Utilization spike following repackaged drugs regulations• Suspect arrangements with compound drug manufacturers• Physician dispensing spike

Hearing in Senate Labor & Industrial Relations Committee July 6, 2011

• Strong opposition by medical community• Partnership with labor, employers, and insurers.

Compound Drugs, Co-Packs and Medical Foods

Senate Bill 863

State Senator Sees Zombie Liens as a Grave Issue

June 6, 2011

LIENS

Senate Bill 863

SB 863 reforms the medical lien process• Time limits on when liens can be filed

o 18 months for medical providerso 5 years for third party payers (insurers)

• Requires documentation for liens to be valid• Implementation 7/1/2012

LIENS have become a major cost driver • Clogging the WCAB • Increasing litigation costs • Increasing medical costs

SB 863 passed Senate Labor and Industrial Relations on 6/2/2011• Currently in the Senate Appropriations Committee• No hearing scheduled

LIENS

Assembly Bill 947

Employers balk at bill to extend temporary disability payments

June 10, 2011

Temporary Disability Benefits

Assembly Bill 947

AB 947 would eliminate the 104 week cap on TD benefits• Creates broad new exception for claims not P&S by 104 weeks• New Exception captures any claim where treatment extends beyond

104 weeks

Temporary Disability is a major cost-driver in WC• The current cap drives RTW• Cap elimination allows for gamesmanship in WC by medical

providers and attorneys seeking to profit off of injured workers

Passed Senate Labor & Industrial Relations on 6/22/2011• Sent to Senate Rules Committee• Will be referred to Senate Appropriations for evaluation of fiscal

impact

Temporary Disability Benefits

Assembly Bill 375

Expanding workers' comp benefit to nurses could cost SF

May 9, 2011

Hospital Worker Presumption

Assembly Bill 375

AB 375 creates a presumption for hospital employees• Neck and Back injuries removed from the bill• MRSA and blood-borne pathogens are presumed to be industrial• Applies to hospital employees who engage in direct patient care

Presumptions increase cost in WC• Overcoming the presumption is almost impossible• Proliferation of presumptions in a problem• Cost increases to counties and University of California, which run

public hospitals

AB 375 passed Senate Labor & Industrial Relations on 6/22/2011• The bill has been referred to the Senate Appropriations Committee,

but no date is set for the hearing

Hospital Worker Presumption

Assembly Bill 1155

AB 1155 would reopen litigation on the validity of apportionment• The bill prohibits apportionment when the prior non-industrial

disability is caused by age, race, gender, or another protected class• Amendments have been offered by the opposition

Apportionment is a fundamental issue of fairness• Employers only liable for disability caused by workplace injury• Will open up new litigation on apportionment

AB 1155 will be heard on 6/29/2011 in Senate Labor & Industrial Relations

• No fiscal committee

Apportionment

What Can I Do?

• Learn About the Issues• Join a membership organization

• Be Heard• Write, call or meet with your legislature• User-friendly online advocacy tool• Visit www.fixworkerscompnow.org and click Take Action!

Get Involved

www.fixworkerscompnow.org

Thank You

Questions?