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Workers’ Compensation Reform: Undoing the Damage of Schwarzenegger’s Rules

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EXECUTIVE SUMMARY

Over ten years ago, California’s employers began to report a substantial rise in the cost of workers’ compensation premiums. Insurers, citing a variety of cost drivers, simply responded with additional increases. The volume of complaints eventually attracted legislative attention and in 2002 and 2003, former Governor Gray Davis signed two sweeping reform packages that forced new rules for medical treatment of injured workers.

Despite these measures, insurance companies clung to artificially high rates while employer cries for cost containment crescendoed—creating the backdrop for Arnold Schwarzenegger, then candidate for Governor, to call for further reforms. Schwarzenegger campaigned vigorously on the workers’ compensation issue and, once elected, actively supported signature-gathering efforts to place a draconian, employer-funded initiative on the ballot. Employers raised over $5 million to back the measure, further pressuring the Legislature to act again in 2004.

In 2004, Governor Schwarzenegger introduced a harsh “reform” measure (SB 899 Poochigian) that was modified and improved in negotiations with then President Pro Tem John Burton. Organized labor took a neutral stance on SB 899, which ultimately passed both houses of the Legislature with overwhelming bipartisan support. Schwarzenegger had publicly stated that his goal was not to cut benefits for injured workers, but rather to create more objectivity, more uniformity, more consistency, less friction, and less litigation in the system. For example, permanent disability (PD) benefits based on empirical wage loss were expected to ease litigation over PD ratings. Employer-chosen doctors were supposed to decrease the disputes over appropriate medical care, and incentives to return injured workers to work were meant to create more harmonious transitions back to work. This is the brokered deal that the Legislature overwhelmingly passed in 2004 and on which labor stood neutral.

Yet, despite the Governor’s stated intentions, the regulations implementing SB 899 slashed indemnity benefits for injured workers, delayed and denied medical treatment, and complicated injured workers’ ability to successfully return to work. The deal was broken and injured workers are suffering. Schwarzenegger reneged on his promise to protect the injured, employers enjoyed significantly reduced workers’ compensation costs, and insurers, until very recently, collected historic profits. In short, injured workers were forced to foot the bill for this windfall.


KEY FACTS

  • The frequency of workers’ compensation claims has dropped almost continuously over the last 15 years, with a 14% drop since 2006. Workers’ compensation changes that have made it harder for injured workers to access benefits have pushed claims frequency even lower.
  • Deregulation of the insurance market caused the crisis in workers’ compensation. The Legislature repealed the minimum rate law in 1993, triggering predatory pricing and the insolvency of 32 insurance companies. This deregulation also encouraged insurers to adopt undercutting pricing structures that, beginning in 2000, spiked costs for employers.
  • Permanently disabled workers face 40% cuts in permanent disability (PD) benefits. Total PD compensation has been slashed by 2/3rds.
  • Temporary disabled workers face strict time limits on their benefits. Many are being forced to rely on group health insurance and state disability insurance (SDI) – a benefit they pay for themselves.
  • Medical treatment is being delayed and denied by insurance companies applying utilization review and strict interpretations of medical treatment guidelines. These reviews of employer chosen doctors are creating more friction and costs for the system while delaying care for workers.
  • A cottage industry of profiteering doctors, pharmacies, bill reviewers and debt collectors have exploited loopholes in the system and driven up costs – with no benefit to injured workers.
  • Incentives to return injured workers back to work are inadequate and ineffective. The law desperately needs stronger measures to encourage employers to keep injured workers on the job.
     

BACKGROUND ON WORKERS’ COMPENSATION

California’s workers’ compensation system provides benefits for injured workers and shields employers from most tort liability. Workers’ compensation is a “no-fault” system in which injured workers must show that their injury is work-related, but they do not have to prove that their employer’s negligence caused the injury. Benefits available to injured workers include medical care, partial wage replacement for work time missed due to injury, PD benefits, supplemental job displacement benefits, and death benefits. 

In exchange for these benefits, workers have relinquished their rights to sue an employer for injuries that occur on the job. Employers that fund the workers’ compensation system, either by purchasing insurance on the market or self-insuring, are shielded from most tort liability for workplace injuries. 

In 2009, about 533,600 workers’ compensation claims were filed in California. Most claims (about 70 percent) were for medical care only, with no cash indemnity payments. Around 20 percent of claims are for temporary disabilities. Permanent partial disability claims account for about 11 percent of total claims—10 percent are minor disabilities and 1 percent are major disabilities. Death benefits and permanent total disability benefits each account for less than one percent of total workers’ compensation claims.

The frequency of workers’ compensation claims filed has dropped almost continuously over the past 15 years. Safer worksites, better worker safety programs, and improved worker protections cannot fully explain this dramatic drop in claims frequency. It is no coincidence that some of the sharpest drops have occurred in the years when legislative “reforms” have made it more difficult for injured workers to access medical treatment and survive on pittance benefits. As our system becomes more tattered and difficult to navigate, workers suffering injuries and illnesses are turning elsewhere.


DEREGULATION OF INSURANCE MARKET CAUSED THE CRISIS

Total premium costs have fluctuated wildly over the past decade. The 1993 repeal of the minimum rate law—the floor for workers’ comp rates—deregulated the workers’ compensation system, allowing insurers to price products too low to cover losses. Twelve insurers withdrew from the market between 1993 and 1997 while other companies relied on investment returns to make up for underwriting losses. When the investment bubble burst, many companies faced insolvency, and from 2000 through 2006, 32 companies went under.

 

Beginning in 2000, insurers overcorrected their own underpricing with massive rate hikes. What employers experienced as an astronomical workers’ compensation rate increase reflected the market response to deregulation, rising medical costs, and a crashing investment market. The workers’ comp crisis was caused by insurers making up for their prior losses and augmenting reserves left inadequate by below market pricing in the mid-1990s. These reforms have resulted in California employer costs decreasing from a high in 2003 of $6.47 per $100 of payroll to $2.39 in 2010.

 

SB 899 NOT MEETING GOALS OF MORE PREDICTABILITY AND LESS FRICTION

Deep cuts to indemnity benefits and medical treatment for injured workers—rather than careful reform or increased efficiency—have produced the employer savings and insurer profits. SB 899 was passed to decrease frictional costs and increase consistency but has accomplished neither. Instead, more litigation and challenge have resulted. 

Low PD benefits have pushed applicants’ attorneys to find creative ways to augment benefits.  Judges who think benefits are too low find judicial ways to adjust them upwards. The point of the new schedule, to achieve consistency and predictability, has been lost.

In addition, recent California court decisions have further complicated the goal of consistent and predictable PD awards. One, Almarez/Guzman, allowed injured workers’ attorneys greater freedom to argue for increased awards within the bounds of American Medical Association (AMA) guidelines, and the other, Ogilvie, allowed rebuttal of the Permanent Disability Rating Schedule (PDRS). Both decisions are thought to have increased PD awards, but in an unpredictable manner far more favorable to injured workers represented by an attorney.

Treatment guidelines and employer-controlled medical networks were supposed to deliver timely and appropriate medical care. Utilization review—insurers challenging doctors’ decisions—has instead built up the workload on treatment decisions at the Workers’ Compensation Appeals Board and more medical decisions are being referred to judges through the litigation process.

The explosion of fraudulent and excessive medical liens presents another serious issue. Medical treatment liens, essentially legal claims by medical providers or third parties for payment for treatment provided, are filed in such staggering numbers that the Workers’ Compensation Appeals Board (WCAB) system cannot address them. The Commission on Health and Safety in Workers’ Compensation (CHSWC) estimates that 470,000 liens were filed in 2011, with each lien generating around $1,000 in adjustment costs. Liens, and the ease with which profiteering third parties can file them, are just one example of crippling inefficiencies in the workers’ compensation system.


INDEMNITY BENEFITS

Injured workers unable to return to their usual jobs may qualify for indemnity benefits. Workers who will never recover completely or will always be limited in the work they can do may be eligible for permanent disability (PD) benefits, and temporary disability (TD) benefits may be available for workers recovering from their injuries. The 2004 Schwarzenegger reforms slashed both.

Permanent Disability: SB 899 reduced PD benefits in four ways, and it delegated the revision of the PD rating schedule to the Administrative Director (AD) of the Division of Workers’ Compensation (DWC). The AD’s schedule reduces benefits even more. SB 899 reduced PD benefits in four ways:

  • It reduced the number of weeks of benefits for most ratings. Permanent disability benefits are payable for a number of weeks that depends on the percentage of permanent disability. SB 899 reduced the number of weeks for all but the most severe injuries. The change in weeks reduces PD benefits paid to injured workers by approximately 11%.
  • It bumped the weekly PD benefit payment up or down by 15% depending on whether the employer offers the injured worker a job. The weekly amount of the PD benefit is $230 for most full time workers. This weekly rate is reduced by 15% if the employee can return to work for the employer or increased by 15% if the employer cannot return to work for the employer. The net effect is about a 3% reduction in the average benefit paid to a permanently injured worker.
  • It permitted apportionment by causation of disability. PD benefits are now apportioned to causation, that is, the cause of the injury. Doctors are now allowed to attribute percentages of disabilities to injuries suffered off the job. For example, a worker who suffers a serious toe injury and later has to have his leg amputated due to infection, could lose a substantial percentage of disability because he had diabetes which contributed to the spread of the infection. Apportionment determinations have cut PD benefits by an average of 6%. 
  • It required ratings to be based on the AMA Guides, which exclude many disabilities that used to be covered. PD ratings are now tied to the American Medical Association Guides to the Evaluation of Permanent Impairment. Almost a quarter of all injured workers who would have had a PD rating under the previous California system will no longer receive any PD rating under the AMA Guides. As a consequence, 25% of injured workers who would have had PD awards under the pre-2005 schedule will receive no PD benefits at all.   

The deepest cuts in PD did not come from the language of SB 899. The deepest cuts are a result of a Permanent Disability Rating Schedule (PDRS) adopted through regulations in 2007. The goal of the Legislature in enacting the new PDRS (Labor Code Section 4660) was to tie benefits to wage loss, or the percentage of wages a worker would lose as a result of the injury. The RAND study on wage loss would provide the empirical data needed to calculate loss of wages.  The law can be no clearer on this matter. 

Yet, Schwarzenegger’s Administrative Director adopted regulations that did not properly consider the empirical data and, instead, made her own policy determinations on what the PDRS should look like. The result of the Schwarzenegger Administration’s PDRS has been an additional 40% cut in PD benefits.

With about twenty-five percent of what used to be PD claims now dropping out completely due to the AMA Guidelines, an additional drop in benefits due to the change in weeks, a 6% cut from apportionment, and another 40% cut in benefits due to the rating schedule, the total dollar amount spent on PD has dropped by 2/3, or about $3.5 billion dollars a year.

Recommendations:

  • Adjust the Permanent Disability Rating Schedule. The new schedule became effective January 1, 2005. By the first report for Policy Year 2008, approximately 244,000 PD claims had been filed and it could be determined that workers faced benefit cuts of approximately 40%. An adjustment to the schedule, based on wage loss, must be completed as quickly as possible.
  • Adopt new future earnings capacity (FEC) factors. The Schwarzenegger regulations created FEC numbers in the rating schedule to translate AMA impairments into disability percentages that are supposed to reflect wage loss. Yet, these numbers did not rely on RAND’s wage loss data.  The FECs should be recalculated to more closely tie PD benefits to wages. These recalculations can be done without legislation and, instead, by modifying the regulation. 
  • Increase the weekly benefit amount. The weekly PD benefit rate no longer reflects earnings. A worker earning $8 an hour would receive the same weekly benefit as a worker earning $18 an hour.  The weekly benefit amount calculation should mirror temporary disability (TD) benefits that do reflect wage loss. 
     

Temporary Disability: TD benefits are intended to replace part of a worker’s lost earnings while recovering from a job-related injury. TD benefits are 2/3 of pre-injury earnings and indexed to changes in the statewide average weekly wage.   For 2012, the minimum TD benefit is $151.57 and the maximum is $1010.50 per week. TD benefits end when the employee goes back to work or reaches maximum medical improvement, whichever is first.  Benefits may be payable for interrupted periods when a worker tries to go back to work for a while and must go off again, all before reaching maximum medical improvement and subject to statutory maximums and minimums.

Until 1979, TD was limited to an aggregate of 240 weeks within five years of date of injury.  Beginning in 1979, there was no limit on the duration of temporary total disability benefits available as long as the worker remained continuously disabled. 

The Schwarzenegger reforms limited TD benefits to 104 weeks of benefits, with some exceptions, within two years of the first payment of TD benefits. This time limit proved so punitive that in 2007 Schwarzenegger signed AB 338, which extended this time limit from two years to five.

What happens when workers hit the 104 week limit? They may rely on State Disability Insurance, benefits they paid for themselves. Their recovery and return to work will be compromised and, potentially, unachievable. 

Recommendations:

  • Adjust the TD benefits limit. The TD limit should be extended beyond 104 weeks and more exceptions are needed for some workers. Delay in accepting a claim or in receiving needed medical care should not count against the TD time limit. 

MEDICAL TREATMENT

Employers are now allowed to direct injured workers exclusively to medical provider networks (MPNs): an employer-selected pool of physicians directed to treat workplace injuries. The only way for injured workers to see their own doctors is to pre-designate their physicians prior to injury. All other workers are now subject to treatment to a doctor selected by an employer or insurance company.

Providers are required to follow medical treatment guidelines established by the American College of Occupational and Environmental Medicine (ACOEM). ACOEM guidelines are meant to be used for chronic, not acute, injuries and illnesses. The guidelines generally don’t account for pain suffered and, as a result, must be augmented by other evidence-based medical treatment guidelines such as pain and other specialty treatment guidelines.

Insurance companies are allowed to review doctors’ decisions by sending them through utilization review (UR). During early implementation of UR, one major insurer was sending every doctor decision through the UR process. 

Sending cases to utilization review has, in some cases, become one way for insurance companies to delay and deny needed medical treatment. Out-of-state doctors, paid for by the insurance companies, work out of their specialty area, and review the decisions of California doctors. UR has simply become a new tool with which insurers hang on to their premium dollars a little longer. But what may be good for the insurers is definitely harmful to injured workers.

If a worker without legal representation disputes the results of a UR, he or she must petition for a medical-legal evaluation from a Qualified Medical Evaluator (QME). An often arduous QME process involves delays in selecting evaluators and difficulties obtaining examinations or even the proper evaluation reports. Problems also persist with inadequate reports. The end result is wasted money resolving disputes and delayed benefits for workers.

Over 1,000 employer-controlled MPNs have been approved by the Administration’s Division of Workers’ Compensation (DWC) since January 1, 2005. The law requires MPNs to maintain certain standards, including the number of primary care and specialty doctors that must be available, the access injured workers have to doctors, and the process for second opinions within the MPN. The DWC is not required to review the MPNs for any of these quality standards once they are approved. 

Injured workers have complained that doctors listed in the MPN whom they have contacted do not accept workers’ compensation cases. Doctors have reported that they have been included in MPNs without their knowledge. Others report that they are forced to take discounted rates of pay for workers’ compensation cases or face getting kicked out of a group health network.

The proliferation of medical and third party liens also presents a major problem. However, given that the key issue remains a lack of disincentives for medical providers and third parties to file medical treatment liens, potential reforms are relatively simple. A more explicit fee schedule could help clarify certain ambiguous areas within the AMA guidelines responsible for frequent legal disputes, and the Commission on Health & Safety in Workers’ Compensation has identified 29 other possible reforms—all of which are worth considering.

Taken together, these outcomes from Schwarzenegger’s reforms have created unnecessary delays and denials of medical treatment. As the workers’ compensation medical treatment system deteriorates, injured workers who have group health insurance will increasingly be more likely to rely on their employer-based health coverage to treat their injuries. Costs will shift from workers’ compensation to group health insurance and, as a result, injured workers will have to pay co-pays and deductibles out of their own pockets. 

Recommendations:

  • More stringent review of MPNs. The DWC must conduct regular audits of MPNs to guarantee that they maintain the required access to medical care.
  • Educate employers and employees about the right to pre-designate. The DWC should issue more information and clarification about a worker’s right to see her/his own doctor. Stronger enforcement and penalties on employers who curtail this key right should be levied.
  • Augment ACOEM treatment guidelines. No one treatment guideline is comprehensive enough to treat all injured workers. Other evidence-based medical guidelines must be incorporated to supplement the ACOEM guidelines.
  • Limit the use of utilization review on MPN-approved doctors. Employers should not wield both the right to select physicians and the ability to delay treatment by constantly second guessing those same physicians. Under some circumstances, MPN doctor decisions should not be subject to utilization review.
  • Improve the QME process. Reduce delays by allowing either party to request a QME panel and ensure the evaluation reports contain all of the necessary reports.
  • Address the proliferation of medical treatment liens. Medical treatment liens have slowed the WCAB system to a crawl and effectively clogged our system. The frequency of these filings must be reduced through rulemaking and/or legislation.
  • Continually monitor and evaluate access to and quality of medical care. The medical treatment system has been fundamentally altered to the employers’ control. Such a significant change should be accompanied by a significant investment in its evaluation. The cost shift from workers’ compensation to group health care should be documented. 

RETURN TO WORK

Labor believes the best outcome for injured workers is for them to return to work when ready and able. SB 899 created incentives for employers to take injured workers back on the job.  Employers who return an injured worker back to work would pay a 15% lower Permanent Disability (PD) benefit; employers who don’t return an injured worker back to work would pay a 15% higher PD benefit. A funding source was created to help small employers pay for the workplace modifications needed for an injured worker to return to the job.

Because PD benefits are now so low, the 30% swing in PD benefits doesn’t amount to much of an incentive. A Commission on Health and Safety in Workers’ Compensation (CHSWC) analysis has revealed that more cases are being paid at the bumped up rate than the bumped down rate—confirming that expected savings have not materialized and suggesting that even fewer PD recipients now successfully return to work. Workers who have been on the job longer have likely accrued higher wages, more vacation days, and better benefits. It may be cheaper for the employer to replace older workers with younger, healthier, and lower-paid new workers.

Injured workers who have been cleared by their doctors to return to their jobs are facing increased barriers. In some situations, after being cleared to go back to work by their treating doctors, workers are required by their employers to submit to a final examination by a company doctor. This can delay the return to work by months. 

These dynamics have increased friction and conflict between employees and employers.  More injured workers will have to rely on lawyers to file anti-discrimination lawsuits, and union members will have to grieve and arbitrate decisions that keep them off the job. 

Recommendations:

  • Penalize employers who refuse to take injured workers back to work. Financial incentives for return to work have failed and stronger financial disincentives now need to be explored. Once an injured worker has been cleared to return to work, an employer should be required to take them back or pay them their full wages.
  • Allow a doctor’s release back to work to stand. Once a doctor has released a worker back to work, that decision should be implemented. There should be no insurer or employer interference with this decision.
  • Create a penalty against employers who refuse to take an injured worker back to work. The state’s declared policy is that injured workers should not be discriminated against. This policy should be enforced against employers who choose not to take an injured worker back to work.

INSURANCE MARKET REFORMS

Over the past two decades, the California workers’ compensation insurance market has grown so volatile that observers have likened it to the Wild Wild West. Deregulation in 1993 caused rates to plummet below the cost of paying benefits, and skyrocketing prices in 2000 reflected the needed adjustments post deregulation.

Most recent reforms have required everyone in the system—medical providers, lawyers, injured workers, and employers—to face some type of regulation. Only the insurance companies have gotten away with no new oversight.

The state’s Insurance Commissioner is required to issue advisory premium rates based on the office’s own actuarial studies. The insurance companies’ actuarial arm, the Workers’ Compensation Insurance Rating Bureau (WCIRB), provides its own advisory rate and, ultimately, insurance companies are allowed to charge whatever prices they choose.

As the chart below indicates, the WCIRB’s advisory rate nearly always differs from that of the Commissioner. They will, on behalf of the industry, almost always call for bigger rate increases and slower savings.

 

The Insurance Commissioner’s advisory rates for workers’ compensation insurance costs are just that – advisory – and have no legal bearing on what the insurance companies actually charge.  The result of such an arrangement has usually been historic profit margins for insurers. 

Following the 2004 reforms, insurers watched their profit margins skyrocket as benefit levels plummeted. For example, in 2005, medical and indemnity benefits totaled a mere 31% of premium. In the most recent year for which figures are available, from 2009 – 2010, insurer profitability increased 13%.
 
The workers’ compensation insurance market works only if all covered employers participate in the system. When insurance costs fluctuate so dramatically, employers’ coverage will as well.  Even though state law requires all employers to have workers compensation insurance coverage, many employers remain uninsured.

Recommendations:

  • Regulate insurance rates. Workers’ compensation is the only property casualty insurance line that does not require prior approval for rate increases from the Insurance Commissioner. The advisory rate issued by the Commissioner should have more bearing on what insurers are allowed to charge.
  • Limit the loss ratio. For every dollar collected in health care premium, at least 85 cents must be spent on medical care. The same loss ratio should be applied to workers’ comp insurers.

CONCLUSION

California’s workers’ compensation system has undergone sweeping changes over the past decade, and few of these changes have helped workers. Employers have enjoyed drastically reduced comp costs while insurers have reaped the benefits of massive deregulation. California employer costs have decreased from a 2003 high of $6.47 per $100 of payroll to $2.39 in 2010—a 63% reduction.

Permanently injured workers have meanwhile watched their benefit amounts across the system cut by two-thirds. Many temporarily disabled workers face deep limits on their benefits, medical treatment is delayed or denied, and injured workers ready to return to work are stymied at every turn. 

Cost savings were supposed to come from less friction and less litigation in the system, but instead, savings followed immediately through brutal cuts to benefits. Costs have since spiked as new frictional and legal costs spiral out of control—robbing injured workers of dollars badly needed for benefits and treatment. Clearly, the original goals of reform have been lost. 

The pendulum has swung too far. California’s unions commit to restoring fairness for injured workers through legislative and regulatory changes that restore benefits, provide timely and appropriate medical care, and strengthen oversight on insurance companies. 

Schwarzenegger’s brutal reforms have proven that workers’ compensation woes can’t be fixed by simply slashing benefits and denying medical care. As the Legislature and Governor work to restore California’s broken workers’ compensation system, a few key points must drive the discussion. First, laws passed by the Legislature can’t be ignored during the regulatory process. Second, unreasonably delayed medical care is effectively denied medical care, and finally, adequate benefits to injured workers must be restored and must be the centerpiece of reform.

As worker advocates, we’re confident that these and other goals remain within reach, and look forward to working with the Governor, the Legislature, regulators, and stakeholders to achieve the necessary improvements throughout our workers’ compensation system.


KEY RECOMMENDATIONS

Permanent Disability

  • Adjust the Permanent Disability Rating Schedule. The new schedule became effective January 1, 2005. By the first report for Policy Year 2008, approximately 244,000 PD claims had been filed and it could be determined that workers faced benefit cuts of approximately 40%. An adjustment to the schedule, based on wage loss, must be completed as quickly as possible. 
  • Adopt new future earnings capacity (FEC) factors.  The Schwarzenegger regulations created FEC numbers in the rating schedule to translate AMA impairments into disability percentages that are supposed to reflect wage loss. Yet, these numbers did not rely on RAND’s wage loss data. The FECs should be recalculated to more closely tie PD benefits to wages. These recalculations can be done without legislation and, instead, by modifying the regulation. 
  • Increase the weekly benefit amount. The weekly PD benefit rate no longer reflects earnings. A worker earning $8 an hour would receive the same weekly benefit as a worker earning $18 an hour. The weekly benefit amount calculation should mirror temporary disability (TD) benefits that do reflect wage loss. 

Temporary Disability

  • Adjust the TD benefits limit. The TD limit should be extended beyond 104 weeks and more exceptions are needed for some workers. Delay in accepting a claim or in receiving needed medical care should not count against the TD time limit. 

Medical Treatment

  • More stringent review of MPNs. The DWC must conduct regular audits of MPNs to guarantee that they still offer the required access to medical care.
  • Educate employers and employees about the right to pre-designate. The DWC should issue more information and clarification about a worker’s right to see her/his own doctor. Stronger enforcement and penalties on employers who curtail this key right should be levied.
  • Augment ACOEM treatment guidelines. No one treatment guideline is comprehensive enough to treat all injured workers. Other evidence-based medical guidelines must be incorporated to supplement the ACOEM guidelines.
  • Limit the use of utilization review on MPN-approved doctors. Employers should not wield both the right to select physicians and the ability to delay treatment by constantly second guessing those same physicians. MPN doctor decisions should not be subject to utilization review.
  • Improve the QME process. Reduce delays by allowing either party to request a QME panel and ensure the evaluation reports contain all of the necessary reports.
  • Address the proliferation of medical treatment liens. Medical treatment liens have slowed the WCAB system to a crawl and effectively clogged our court system. The frequency of these filings must be reduced through rulemaking and/or legislation.
  • Continually monitor and evaluate access to and quality of medical care. The medical treatment system has been fundamentally altered to the employers’ control. Such a significant change should be accompanied by a significant investment in its evaluation. The cost shift from workers’ compensation to group health care should be documented. 

Return to Work

  • Penalize employers who refuse to take injured workers back to work. Financial incentives for return to work have failed and stronger financial disincentives now need to be explored. Once an injured worker has been cleared to return to work, an employer should be required to take them back or pay them their full wages.
  • Allow a doctor’s release back to work to stand. Once a doctor has released a worker back to work, that decision should be implemented. There should be no insurer or employer interference with this decision.
  • Create a penalty against employers who refuse to take an injured worker back to work. The state’s declared policy is that injured workers should not be discriminated against. This policy should be enforced against employers who choose not to take an injured worker back to work. 

Insurance Market Reforms

  • Regulate insurance rates. Workers’ compensation is the only property casualty insurance line that does not require prior approval for rate increases from the Insurance Commissioner. The advisory rate issued by the Commissioner should have more bearing on what insurers are allowed to charge.
  • Limit the loss ratio.  For every dollar collected in health care premium, at least 85 cents must be spent on medical care. The same loss ratio should be applied to workers’ comp insurers.