Changes of Law for the Year 2004
by
Law Offices of Edward J. Singer
A Professional Law Corporation
The following a a Summary of the New Laws Recently Enacted by the State of California
that was generated by the Commission on Health and Safety and Workers' Compensation
(Note: I will highlight certain sections of importance for injured workers and place some commentary within it)
Funding
User Funding: Labor Code sec.62.5
Restores 100% user funding for the Workers’ compensation program with exception of LC 3702.5. (Administration of Self-Insured’s Programs). In addition, funding is provided for the Return to work program under section 139.48.
Supplemental Job Displacement Benefit. Labor Code sec. 139.5.
Repeals the duplicate section for supplemental job displacement benefit. Re-enacts former Labor Code sec. 139.5 vocational rehabilitation benefit for injuries before January 1, 2004, and sunsets the law five years later.
(For people who have injuries before 1/1/04, they are still entitled to participate and receive a full vocational rehabilitation plan in accordance with the $16,000.00, cap. For individuals entitled to vocational rehabilitation after 1/1/04, they are entitled to receive only a voucher from the State and nothing further. This voucher does not provide for any disability payments to be made when participating. Individuals with pre-1/1/04 claims must participate in vocational rehabilitation before 1/1/09, when the statute sunsets.)
Integrated Benefits in Carve-Out. Labor Code sec. 3201.5, and 3201.7.
Provides that employer and union may negotiate any aspect of benefit delivery if employees are eligible for group health and non-occupational disability benefits. Labor Code sec. 3201.5 (Construction), 3201.7 (Non-construction)
Liberal Construction. Labor Code sec. 3202.5.
Provides that the burden of proof by preponderance of evidence applies equally to all parties and lien claimants.
(Injured workers' are no longer entitled to the benefit of the doubt under this new system. Despite allegedly being a " no fault system", the injured workers now have the burden of proving there case by a preponderance of evidence. In sum, if there was a tie, the insurance company and/or employer would prevail.)
Return to work site reimbursements for worksite modification. Labor Code §139.48.
Provides for reimbursement to private employers with 50 or fewer full-time employees for worksite modifications to accommodate the employee’s return to work.
Program will reimburse up to $1,250 of expenses to accommodate a temporarily disabled worker or $2,500 to accommodate permanently disabled worker.
The program will be funded from Labor Code sec. 5814.6 (penalties for business practice of unreasonable delay or refusal of compensation) and from transfers by the AD from the WC Administration Revolving Fund.
Also see PD Section: Labor Code Section 4658
Repeal of Treating Physician’s Presumption. Labor Code sec. 4062.9.
Repeals completely the presumption of correctness of the treating physician. Section 46 of the bill makes the repeal apply to all cases, regardless of the date of injury.
Medical Treatment Defined and Pre-designation of Physician. Labor Code sec. 4600.
Defines the treatment “reasonably require to cure or relieve” as the treatment that is in accordance with the utilization schedule or treatment guidelines adopted by the AD pursuant to Labor Code sec. 5307.27 or the ACOEM guidelines.
Unless the employer uses a medical treatment network, the basic rule remains that employer has medical control for first 30 days (or longer in an HCO), and then employee gets the right to select treating doctor.
An exception to the basic rule is that employee may be treated by a predesignated physician from the date of the injury if all of the requirements for predesignation are met. It is only available if
o The employer provides group health coverage, and
o The physician is the employee’s primary care MD or DO who has previously directed the employee’s treatment and who agrees to be predesignated.
If the employer establishes a medical treatment network, employees who did not predesignate must receive care only through the network.
(Treatment is limited to the ACOEM Guidelines which are essentially an HMO type of system. Rather than have your own doctor make decisions for you, a set of guidelines will tell your doctor what they can or cannot do. Essentially our State has told the workers that injured workers should get the same terrible treatment that is available within their HMO plans when they are injured at work. Note: PRE-DESIGNATE!!!!!!!!! Designate your doctor before you get injured!!!!! Also, treatment under this section will be limited if there is a medical treatment network. Absent a maze like procedure to self-procure treatment, you will be placed within a network. Time will only tell whether employers and insurers are committed to provide quality doctors in their networks. It is anticipated that these networks will begin on 1/1/05)
Medical Billing. Labor Code sec. 4603.2.
Provides that all payments for medical treatment shall be at the fee schedule amount except under written contracts. The time limit to make payment runs from date of properly itemized billing.
Treatment Guidelines. Labor Code sec. 4604.5.
Provides that guidelines can be rebutted only by scientific medical evidence. States that guidelines are to be evidence-based, nationally recognized and peer reviewed.
For injuries occurring on or after January 1, 2004, imposes limit of 24 visits on occupational therapy, along with 24 chiropractic and 24 physical therapy visits, unless the employer authorizes additional visits.
(Note: Treatment is limited!!! This is a set number for treatment visits for the life of your case. This means your entire lifetime. Use your visits wisely!!!!. Further, these treatment guidelines will be give significant weight. Scientific Medical Evidence will rebut them. It would appear that what is in the injured workers' best interest is not a concern.)
Medical Networks. Labor Code sec. 4616.
• Beginning January 1, 2005, employers may establish networks composed of both primarily occupational and primarily nonoccupational treating doctors, with goal of at least 25% primarily nonoccupational.
• Network shall include sufficient number of physicians to provide timely treatment.
• Employer or insurer has exclusive right to decide which providers are in network.
• Physician compensation shall not be structured to achieve goal of reducing, delaying or denying treatment.
• Treatment shall be in accordance with the guidelines per ACOEM (American College of Occupational and Environmental Medicine) or Section 5307.27.
• Only a licensed physician in the appropriate scope of practice may modify, delay or deny a request for authorization for treatment. (This governs any internal utilization review process the network may adopt.)
• AD shall approve plan if it meets requirements of section. Default approval if AD can’t act in 60 days.
• AD shall adopt implementation regulations in consultation with the Department of Managed Health Care (DMHC).
• Section 4616.1 requires that economic profiling of providers must be disclosed.
• Section 4616.2 requires that continuity of care be provided for up to 12 months after provider leaves the network, depending on defined circumstances.
Patient Rights in Networks. Labor Code sec. 4616.3.
Provides that after the first visit the injured worker has the right to choose a doctor within the medical network.
Authorizes the injured worker to obtain a second and third medical opinions in appropriate specialty within the network if he/she disputes diagnosis or treatment prescribed by the treating physician.
Authorizes out-of-network specialist treatment if approved by the employer or the insurer.
(This section indicated the maze that an injured worker has to get to in order to obtain a free choice doctor. It is clearly meant to prevent outside treatment and drive independent doctors out of the workers' compensation system.)
IMR to Resolve Dispute with Network Labor Code secs. 4616.4 and 4616.6
• AD to contract with individual physicians or review organizations to conduct Independent Medical Review to be performed by a doctor, with current certification of appropriate specialty board, and no disciplinary history. The statute contains conflicting provisions about whether the doctor must be California-licensed or may be licensed in any state.
• Employee may request this IMR if treatment is still in dispute after 3rd opinion in network.
• Employer sends specified records to IMR doctor.
• IMR doctor performs exam, reviews documents, issues report using the appropriate guidelines for medical necessity, based on ACOEM and Section 5307.27. Report due in 30 days or less if the reviewer says it is urgent.
• AD shall adopt the report of the reviewer and issue a decision to the parties.
• If IMR finds the disputed care is consistent with guidelines, the employee may seek the disputed services from any physician, not limited to network (§4616.4(i))
• No additional exams or reports shall be ordered or admitted by the WCAB on issues of medical treatment under networks. (§4616.6)
• Note: The bill does not specify who will pay for the cost of the Independent Medical Review.
(At the end of the maze of getting opinions, you must have an Independent Medical Review in order to opt out. Good luck!!!!)
Organizations Deemed Approved as Networks. Labor Code sec. 4616.7.
• These organizations are deemed to meet all or specified parts of the eligibility requirements to be networks:
o Health Care Organization licensed under Labor Code Section 4600.5
o Health Care Service Plan licensed pursuant to the Knox-Keene Act.
o Group disability policy for medical expenses under Insurance Code Section 106(b).
o Taft-Harley health and welfare fund
• These organizations will be approved if they have a reasonable numbers of occupational and non-occupational physicians, as determined by the AD.
Early Medical Treatment Labor Code sec. 5402
Requires that the employer provide medical treatment to a worker after a workers’ compensation claim form is filed and until the claim is accepted or rejected.
Establishes a $10,000 limit on liability before a claim has been accepted or rejected.
(Note: Under this provision, treatment must be provided to an Injured Worker after they have reported an injury and the claim has not been denied. What is important is that an injured worker should immediately fill out a claim form and provide it to their employer. If the employer refuses, the employee should get a claim form, fill it out and provide a copy to the employer. It is this author's opinion that the claim form is now everything when it comes to receiving treatment and pursuing the claim for benefits.)
AME/QME
QME System and Report Writing Labor Code sec. 139.2
Provides for assignment of a three-member QME panel upon request of employee or employer per Labor Code Section 4062.1.
Provides for Administrative Director to give notice of panel issued pursuant to Labor Code section 4062.1 or 4062.2.
Provides that the PD report writing criteria be consistent with Labor Code section 4660 (American Medical Association Guides).
Provides that the medical treatment criteria refer to section 5307.27
AME/QME and Medical Dispute Resolution.
• The dispute resolution process through an AME or a single QME applies to all disputes including compensability of claim (§4060), permanent disability evaluation (§4061), and all other disputes (§4062).
• There is an exception for medical treatment issues that are subject to utilization review under Section 4610, but if the employee objects to the outcome of utilization review the employee may still request an exam through the AME or single QME process (§4062(a)).
• Existing law is retained regarding 2nd opinion upon employer’s objection to spinal surgery. (§4062(b)).
• Unrepresented employee gets a QME exam by requesting a panel to be assigned, then selecting one from the panel. (§4062.1)
• Represented employee gets an AME if parties agree, but if they do not agree on AME, then either side requests a panel, each side strikes one name, and the remaining physician is the QME who will conduct the exam. (§4062.2) The new procedure for represented cases applies to dates of injury on or after January 1, 2005. (§4062.2(a)) (NOTE: The bill leaves a gap in the represented QME process until January 1, 2005.)
• Existing provisions of law regarding communication with AME or QME and the duty of the QME to render a report are recast in Sections 4062.3 and 4062.5.
Timing of Payments. Labor Code sec. 4650.
Requires PD advances to commence upon cessation of TD payments, including termination when statutory TD limit is reached.
TD Limit to Two Years. Labor Code sec. 4656.
• TD benefits are limited to 2 years from date of commencement of payment in most cases.
• TD may extend to 240 weeks aggregate within first 5 years after date of injury for the following injuries: (§4656(c)(2))
o Acute and chronic hepatitis B.
o Acute and chronic hepatitis C.
o Amputations.
o Severe burns.
o Human immunodeficiency virus (HIV).
o High-velocity eye injuries.
o Chemical burns to the eyes.
o Pulmonary fibrosis.
o Chronic lung disease.
PD Indemnity Chart, including Tiered PD Benefit Labor Code sec. 4658
• Return-to-Work adjustment:
o Tiered PD benefit system provides for 15% decrease or increase in the weekly rate of the payments of the PD award depending on whether or not the employer offers return to work.
o If terminated before PD is all paid, the remaining weeks of the PD benefit from the time of termination are increased 15% above the base rate.
o The 15% adjustment does not apply to employers with less than 50 employees.
o The increase or decrease does not apply to employers with less than 50 employees.
• PD indemnity:
o Weeks of indemnity for each percentage point of rating are reduced for each percentage point under 15%.
o Weeks of indemnity for each percentage point of rating are increased for each percentage point of 70% or more.
• Amendments apply to injuries occurring on or after the date of the revised schedule (§4658(d)(1)), which is due by January 1, 2005, per Section 4660.
• In another paragraph, the section provides that it does not apply to claims arising before April 30, 2004 if
o There has already been a medical-legal report, or
o The treating physician has found permanent disability, or
o The employer has been required to issue a notice under Section 4061 upon the cessation of TD payments. (§4658(d)(4))
Definition of Modified and Alternate Work Labor Code sec 4658.1
Definitions of Modified and Alternate work require at least 85% of time-of-injury earnings and location at a reasonable commute distance from residence.
PD Rating Schedule: Labor Code sec. 4660
Revises the process for determining the percentage of permanent disability.
Replaces ratable factor of “diminished ability to compete” with “diminished future earning capacity.”
Defines “nature of the physical injury or disfigurement” to incorporate the AMA Guides for both descriptions and percentage impairments.
Provides that schedule shall adjust from impairment to diminished earning capacity by a formula based on empirical data of average long term loss of earnings from each type of injury for similarly situated employees, including age and occupation.
The new PD schedule is to be adopted by January 1, 2005 (Section 4660(e)) and is also applicable to injuries before January 1, 2005 if there has been no comprehensive report, no treater’s P&S report, and no obligation for employer to issue Labor Code Section 4061 notice (i.e., TD has not ended).
Provides that apportionment “shall be based on causation.”
Provides that reports addressing PD must address causation and must determine percentage of PD caused by injury and by other factors, or refer to another doctor to evaluate apportionment.
Specifies that injured employee must disclose previous disabilities or impairments upon request.
Specifies that employer is liable for the percentage of PD directly caused by the injury.
Provides that any prior awarded disability is conclusively presumed to continue.
Accumulation of all PD awards not to exceed 100% for any one region of the body.
All apportionment provisions are now in Labor Code Secs 4663 and 4664.
Specifies that the filing fee is assessed on liens filed on behalf of providers as well as liens filed by providers.
The list of admissible evidence to the appeals board will also include the medical treatment utilization schedule in effect pursuant to Section 5307.27 or the guidelines in effect pursuant to Section 4604.5.
Provides that the right of employees to prosecute for civil penalties for Labor Code violations that could be prosecuted by the state does not extend to civil penalties under workers’ compensation under Division 4, Audit Penalties, under Labor Code Section 129.5, or discrimination under Labor Code Section 132a.
Provides that penalties for unreasonable delay or denial of compensation may be applied at the discretion of the WCAB, up to 25% of the amount of payment delayed or denied, or up to $10,000, whichever is less.
Provides that the employer can avoid the 25% penalty by paying a self-imposed 10% penalty of the delayed payment along with the delayed payment within 90 days of discovery, if delay is discovered by the employer before the employee makes a claim for penalty.
Provides that potential penalties are deemed resolved by Compromise and Release or Stipulations and Award or by trial of the underlying benefit unless expressly reserved.
Provides that any Labor Code section 4650(d) no-fault penalty is credited against the 25% penalty.
Provides that no unreasonable delay in the provision of medical treatment shall be found when the treatment has been authorized by the employer in a timely manner and the only dispute concerns payment of a billing submitted by a physician or medical provider as provided in Section 4603.2.
Provides a two-year statute of limitations from the date the payment of compensation was due on recovering penalties awarded under Labor Code Section 5814.
These provisions shall become operative June 1, 2004 and shall apply to all injuries, without regard to whether the injury occurs before, on, or after June 1, 2004.
Provides that any employer who knowingly violates Labor Code Section 5814 for a general business practice of unreasonable delays or refusals is liable for a civil penalty of up to $400,000.
Penalty amounts are to be deposited into RTW Fund pursuant to Labor Code Section 130.48.
This section shall become operative June 1, 2004.
Provides that the requirement for insurers to review their insureds’ industrial injury prevention plan (IIPP) only applies to those insured employers with Ex-Mod of 2.0 or greater.
Provides that the review be conducted within six months of the commencement of the initial insurance policy term.
Provides that the reviewer need not be “independent.”
Grants civil immunity to the people who are required to report fraud when such person acts in good faith, without malice, and reasonably believes that the action taken was warranted by the known facts, obtained by reasonable efforts.
Provides that the DWC AD contract for a study of effects on workers’ compensation insurance rates as a result of the 2003-2004 reforms.
The study is to be completed by January 1, 2006.
The below stated information is from the State of California
Website concerning the changes in the law. Some of the important changes
are with Vocational Rehabilitation: the program in which Applicant's
received training or self employment along with a maintenance allowance is
eliminated and a voucher program for schooling is implemented. for injuries on
or after 1/1/04; Spinal Surgery: a second opinion procedure is being
implemented;
Chiropractic Treatment and Physical
Therapy: for
injuries occurring on and after 1/1/04, chiropractic and physical therapy
treatment are limited to 24 visits for the life of the claim. The caps shall
not apply when an insurance carrier authorizes, in writing, additional visits.
A State's discussion of these changes, among others, are listed below.
SB
228 (Chapter 639) ADMINISTRATIVE REORGANIZATION
1. ELIMINATION OF THE INDUSTRIAL MEDICAL COUNCIL (IMC) AND TRANSFER OF
FUNCTIONS TO DIVISION OF WORKERS’ COMPENSATION: In order to accomplish
these changes, two sections [L.C. sec. 139 and 139.1] are repealed and a number
of other sections are amended to strike the IMC or to change references from the
IMC to the Administrative Director (AD) or DWC. These include G.C. sec. 12813
and L.C. secs. 29, 110, 122, 124 127.6, 139.2, 139.31, 139.4, 139.45, 4061,
4062, 4062.5, 4062.9, 4068, 4628, and 5307.3. Note that some of these sections
are also amended to accomplish other reform purposes. Uncodified provisions
transfer assets of the IMC and the Industrial Medicine Fund to the WCARF. All
IMC regulations, other than the treatment guidelines, which are repealed,
continue in effect as AD regulations. All Qualified Medical Examiner (QME)
appointments, terms, and disciplinary proceedings are unaffected by the
elimination of the IMC.
2. FIVE-YEAR TERM FOR COURT ADMINISTRATOR L.C. sec. 138.1 gives the
Court Administrator a five-year term.
FUNDING
3. PROVIDER LIEN FILING FEE: New L.C. sec. 4903.05 establishes a $100
filing fee for the initial lien filed by a medical provider, excluding Medi-Cal,
VA, and public hospitals. Provides that the funds are to be collected by the
Court Administrator and used to offset amount of assessments under Section 62.5.
Court Administrator is to adopt regulations to implement this provision.
UTILIZATION
4. UTILIZATION SCHEDULE: New L.C. sec. 77.5. Requires CHSWC to conduct a
survey and evaluation of existing medical treatment utilization standards by
July 1, 2004, and to issue a report of its findings and recommendations by
October 1, 2004, for adoption of a utilization schedule. The report shall be
updated periodically.
5. TREATING PHYSICIAN’S PRESUMPTION OF CORRECTNESS: L.C. sec. 4062.9.
Repeals the treater’s presumption of correctness for all dates of injury, except
in cases where the employee has "pre-designated" his or her personal physician
or chiropractor, pursuant to section 4600. The retroactive repeal applies only
to issues relating to the scope and extent of medical treatment. The repeal
does not apply to petitions to reopen existing awards.
6. UTILIZATION SCHEDULE PRESUMPTION: New L.C. sec. 4604.5. Upon adoption
by the AD of a utilization schedule pursuant to section 5307.27, it shall be
presumptively correct on the issue of extent and scope of medical treatment.
Effective three months after the publication date of the updated American
College of Occupational and Environmental Medicine and Occupational Medical
Practice Guidelines, the ACOEM guidelines will constitute the presumptively
correct standard until adoption of a schedule by the AD. The section specifies
the required characteristics and purposes of the recommended guidelines to be
adopted by the AD. For injuries not covered by the ACOEM guidelines or the
schedule, treatment shall be in accordance with other evidence-based medical
treatment guidelines generally recognized by the medical community.
7. CAP ON CHIROPRACTIC AND PHYSICAL THERAPY TREATMENTS: New L.C. sec.
4604.5(d). For injuries occurring on and after 1/1/04, limits chiropractic and
physical therapy treatment to 24 visits for the life of the claim. The caps
shall not apply when an insurance carrier authorizes, in writing, additional
visits.
8. UTILIZATION REVIEW: New L.C. sec. 4610. Requires all employers to
adopt utilization review systems consistent with the utilization schedule/ACOEM.
In cases involving spinal surgery, denials will go to expedited second-opinion
process established in section 4062 (b). In all other cases, the existing QME/AME
process under section 4062 will continue to apply. This is a complex provision
with many time limits and the provision for assessment of unspecified
administrative penalties by the AD for violations. These penalties are not an
exclusive remedy.
9. AD UTILIZATION SCHEDULE ADOPTION REQUIREMENT: New L.C. sec. 5307.27.
Requires the AD, in consultation with CHSWC, to adopt a medical treatment
utilization schedule by December 1, 2004, based on CHSWC study recommendations
pursuant to section 77.5.
10. SPINAL SURGERY SECOND OPINION: New L.C. sec. 4062 (b). Establishes
procedure for employers to obtain a second opinion on recommendations for spinal
surgery. If the employee is represented by an attorney, the parties shall seek
agreement on a California-licensed board-certified or board-eligible orthopedic
surgeon or neurosurgeon to prepare a second opinion resolving the disputed
surgical recommendation. If no agreement is reached in 10 days or if the
employee is not represented by an attorney, an orthopedic surgeon or
neurosurgeon shall be randomly selected by the AD to prepare a second opinion
resolving the disputed surgical recommendation. If the second opinion concurs
in the treater’s recommendation, the surgery is authorized. If the second
opinion determines that the proposed surgery is not reasonably necessary, then
parties proceed to expedited hearing. The employer is not liable for costs of
surgery or associated TD when the surgery is performed prior to the completion
of the second-opinion procedure. This provision sunsets on January 1, 2007.
Effective January 1, 2007, the process reverts back to pre-January 1, 2004. [New
L.C. 4062.01].
11. SPINAL SURGERY STUDY BY CHSWC: An uncodified provision requires
CHSWC to conduct a study of the spinal surgery second-opinion process.
12. LC 5703 TREATMENT PROTOCOLS: Makes specified treatment protocols
admissible before WCAB and provides procedures related to admission.
SELF-REFERRAL
13. SELF-REFERRAL PROHIBITION: L.C. sec. 139.3. Adds outpatient surgery
clinics to list of prohibited self-referrals by physicians.
14. SELF-REFERRAL DISCLOSURE: L.C. sec. 139.31. Allows self-referral to
outpatient surgery center where the provider discloses the financial
relationship to the employer and the employer pre-authorizes the treatment at
the center.
ALTERNATIVE DISPUTE RESOLUTION ("CARVE-OUTS")
15. REPEAL OF AB 749 CARVE-OUT: L.C. sec 3201.7. The aerospace and
timber carve-out is repealed.
16. CARVE-OUT EXPANSION: New L.C. sec 3201.7. Establishes a new
carve-out program, in any industry, except construction [already covered in
3201.5]. Only the union may initiate the process by petitioning the AD. The AD
will review and issue a letter allowing a one-year window for negotiations. The
parties may request a one-year extension. Minimum employer premium = $50,000.
Minimum group premium = $500,000. Any agreement must include right of counsel
throughout the alternative dispute resolution process.
FRAUD
17. MEDICAL BILLING FRAUD: New L.C. sec. 3823. Requires the AD to adopt
a medical billing fraud referral protocol in coordination with the Bureau of
Fraudulent Claims of the Department of Insurance, the Medi-Cal Fraud Task Force,
and the Bureau of Medi-Cal Fraud and Elder Abuse of the Department of Justice.
Requires any insurer, employer, TPA, WCJ, attorney, or other person who believes
that a fraudulent medical treatment claim has been made to report the apparent
fraudulent claim.
PHARMACEUTICALS
18. GENERIC DRUG REQUIREMENT: New L.C. sec. 4600.1. Requires greater use
of generic drugs beyond pharmacies to other providers.
19. REPEAL OF EXISTING PHARMACEUTICAL LANGUAGE: L.C. sec. 5307.2.
Repeals existing pharmaceutical schedule language.
PAYMENT REQUIREMENTS
20. PROMPT PAYMENT: L.C. sec. 4603.2. Changes time to pay medical bills
from 60 calendar days to 45 working days from the date of complete billing,
unless the employer is a governmental entity, in which case the time is 60
working days. Increases penalty for late payment from 10% to 15%. Provides for
repayment by the defendant of the lien-filing fee if any contested amount is
determined payable by the WCAB.
21. ELECTRONIC BILLING: New L.C. sec. 4603.4. Requires AD to adopt
regulations on electronic payment by January 1, 2005. All employers must accept
electronic billing by July 1, 2006. If bills are sent electronically and are
within the fee schedule, payment must be made within 15 days of receipt.
MEDICAL FEE SCHEDULES
22. REPEAL OF EXISTING OMFS LANGUAGE: L.C. sec. 5307.1. Existing OMFS
language repealed.
23. NEW FEE SCHEDULE: New L.C. sec. 5307.1. 100% of Medi-Cal for
pharmaceuticals. Inpatient hospital at 120% of Medicare, 120% of the Medicare
hospital outpatient department fee for hospital outpatient departments and
ambulatory surgery centers; these provisions become effective 1/1/04. Until
then the criteria for determining reasonable fees for outpatient facilities
enunciated in the KUNZ en banc decision will apply.
Provides that the existing OMFS for physician services will remain in effect in
2004 and 2005, but fees will be reduced by 5%. As of 1/1/06, the AD will have
the authority to adopt an OMFS for physician services, which need not be based
on Medicare schedule.
24. ACCESS TO CARE STUDY/AD AUTHORIZATION: New L.C. sec. 5307.2. AD to
conduct an annual access study. Authorizes adjustments to medical and facility
fees where AD documents substantial access problems.
25. REPEALS EXISTING OUTPATIENT LANGUAGE: L.C. sec. 5307.21. Repeals
existing outpatient schedule provision.
26. IMPLANTABLE MEDICAL DEVICES: New L.C. sec. 5318 Repeals AD
"pass-through" regulations. Provides that instrumentation, implants, and
hardware for specified DRGs will be paid at documented paid costs + 10% (up to
$250), plus taxes, shipping, and handling. Expires when AD adopts new schedule
provisions for these items.
IIPP
27. INSURER REVIEW OF EMPLOYER’S INJURY AND ILLNESS PREVENTION PLAN: New
L.C. sec. 6401.7(l). Requires insurer review of insured’s injury and illness
prevention plan within four months of commencement of the initial policy term.
The reviewer must be an independent licensed professional as specified.
INSURANCE MARKET REPORTING
28. INSURANCE COMMISSIONER REPORT TO THE LEGISLATURE: Uncodified Section
52.5 requires the Insurance Commissioner to report to the Legislature by July 1,
2004, and annually thereafter, on the financial condition of SCIF. The
Commissioner is to review and analyze SCIF’s underwriting practices and rate
structure and report on the potential for reducing rates.
AB 227 (Chapter 635)
CALIFORNIA INSURANCE GUARANTEE ASSOCIATION (CIGA) CHANGES
1. CIGA BOND AUTHORITY THROUGH INFRASTRUCTURE BANK: Gov’t Code sections
63010, Article 8 (commencing with new section 63049.6, and 63071). Provides that
loan monies financed by Calif. Infrastructure and Economic Development Bank are
available to CIGA for payment of cost of claims of insolvent insurers.
2. EXCLUDES 5814 & 5814.5 PENALTIES FOR DELAY FROM THE DEFINITION OF
"COVERED CLAIMS" BY CIGA: Ins. Code sec. 1063.1(c)(8). Provides that CIGA
is not responsible for paying 5814 and 5814.5 claims for unreasonable delay or
claim refusal when penalties were in response to actions taken by insolvent
insurance companies prior to administration by CIGA.
FRAUD
3. INCREASE IN FINE FOR COMMITTING FRAUD IN OBTAINING OR DENYING
COMPENSATION: Ins. Code sec. 1871.4 (b). Increases the fine from $50,000
to $150,000 for making knowingly false or fraudulent statements for the purpose
of obtaining or denying any compensation.
GROUP INSURANCE
4. GROUP INSURANCE FOR MANUFACTURING FACILITIES: New Ins. Code sec.
11656.6 (b)(8). Expands group insurance for manufacturing industry.
INSURANCE COMMISSIONER RESPONSIBILITIES
5. REQUIREMENT OF INSURANCE COMMISSIONER TO CONSIDER PROJECTED SAVINGS IN
SETTING PURE PREMIUM ADVISORY RATES: New Ins. Code sec. 11735.1. Requires
Insurance Commissioner to evaluate projected savings from bills passed in the
2003-04 session and include them in determination of advisory pure premium rates
and that insurers’ filed rates also reflect these savings.
6. REQUIRES INSURANCE COMMISSIONER TO ESTABLISH AND MAINTAIN ONLINE RATE
COMPARISON GUIDE FOR TOP 50 WORKERS’ COMPENSATION INSURANCE CARRIERS: New
Ins. Code section 11742(a), (b) & (c). Expresses legislative finding that
insolvencies have constricted the insurance market but that a central updated
online information source comparing insurance rates would increase consumer
power of employers buying workers’ compensation coverage. Requires creation of
online guide comparing rates and indicating effective dates of each rate.
7. REQUIRES COST SAVINGS DETERMINED BY THE WCIRB BE REFLECTED IN PREMIUM
RATES FOR 2004 AND THAT CERTIFICATIONS BE POSTED ON THE INTERNET: New Ins.
Code sec. 11742 (d). Requires WCIRB to determine cost savings of 2003 reform
legislation and requires each insurer writing coverage to publicly certify that
its filed rates reflect such cost savings.
SCIF STAFFING ISSUES
8. PROVIDES SCIF WITH EXEMPTIONS FROM HIRING FREEZES: New Ins. Code sec.
11873(c). Positions funded by SCIF are exempt from hiring freezes and staff
cutbacks otherwise required by law.
FUNDING
9. USER FUNDING: Labor Code sec. 62.5. Provides for 100% user funding,
specifies Legislative intent concerning priorities for funding including medical
fraud reporting, communication of changes in medical fee schedules, clerical
staffing and retention, and technology upgrades (electronic filing, calendaring,
case management).
10. REQUIRES CHSWC STUDY ON REINSTITUTION OF INSURANCE RATE REGULATION:
Uncodified Section 17 manifests the intent of the legislature to ensure fairness
to workers and a predictable workers’ compensation market, and requires CHSWC to
study the feasibility of reinstituting the minimum rate law to regulate the
workers’ compensation market, to be phased in over a five-year period.
VOCATIONAL REHABILITATION
11. REPEAL OF VOCATIONAL REHABILITATION: L.C. sec 139.5. Repeals existing
vocational rehabilitation statute [Article 2.6 (commencing with Section 4635) of
Chapter 2 of Part 2 of Division 4 of the Labor Code] as part of a repeal of the
vocational rehabilitation mandate.
12. SUPPLEMENTAL JOB DISPLACEMENT BENEFIT: New L.C. sec. 4658.5.
Establishes a new supplemental job displacement benefit (SJDB) with savings from
repeal of vocational rehabilitation. Provides that employees who do not return
to work for their employer within 60 days of the end of TD period will receive a
voucher of $4,000 for permanent partial disability of less than 15%; $6,000 for
permanent partial disability between 15% and 25%; $8,000 for permanent partial
disability between 26% and 49%; and $10,000 for permanent partial disability
between 50% and 99%. The voucher must be used at state-approved or accredited
schools for education-related retraining or skill enhancement, or both. The AD
shall issue regulations governing the form of payment and other matters related
to the proper administration of the benefit. Provides that up to 10 percent of
SJDB can be used for counseling. Provides for employer notice to injured worker
of availability of benefit. [NOTE: As the result of clerical error, new L.C.
sec. 139.5 is identical to sec.4658.5.]
13. LIMITATION ON EMPLOYER’S LIABILITY FOR SUPPLEMENTAL JOB DISPLACEMENT:
New L.C. sec. 4658.6. Provides that the employer will not be liable for the
supplemental job displacement benefit if, within 30 days of the end of TD, it
offers modified or alternative work, and the employee rejects or fails to accept
the offer.
SUMMARY OF ADDITIONAL BILLS
1. SB 1007 (Speier) (Chapter 641): SPECIFIED MANUFACUTURING FACILITIES AS
COMMON TRADE OR BUSINESS. Ins. Code sec. 11556.6. Existing law authorizes
an insurer to issue a workers' compensation policy insuring an organization or
association of employers subject to specified conditions, including requirements
that the organization or association file certain documents with the
commissioner or a licensed workers' compensation rating organization relating to
(1) the percentage of its membership engaged in a common trade or business, and
(2) the naming in certain statements of members eligible for insurance. The
definition of "common trade or business" is now expanded to include specified
types of manufacturing facilities (establishments engaged in the mechanical,
physical, or chemical transformation of materials, substances, or components
into new products).
2. AB 149 (Cohn) (Chapter 831): ASBESTOSIS - FIREFIGHTERS. L.C. 5406.5.
The one-year period from the date of death for commencing proceedings for
workers’ compensation benefits in the case of death from asbestosis is extended
to include firefighters who die of asbestosis.
3. AB 1099 (Negrete McLeod) (Chapter 636): WORKERS’ COMPENSATION INSURANCE
FRAUD. Ins. Code secs. 1877.1, 1877.3, 1877.4, 1877.5. Includes the
Employment Development Department as a government agency that is authorized to
request and receive information regarding workers' compensation fraud.
"Licensed rating organizations" (such as the WCIRB) are authorized to release
information regarding workers' compensation fraud, as specified.
4. AB 1262 (Matthews) (Chapter 637): CERTIFICATION OF CLAIMS ADJUSTERS/BILL
REVIEW. New Ins. Code sec. 11761. The Insurance Commissioner is to adopt
regulations setting forth the minimum standards of training, experience, and
skill for claims adjusters. Insurers must certify to the Insurance Commissioner
that personnel employed to adjust WC claims or those employed for that purpose
by a medical bill review company meets the minimum standards.
5. AB 1557 (Vargas) (Chapter 638): APPLICATION OF L.C. sec. 5814 TO
UTILIZATION REVIEW. New L.C. sec. 4610.1 provides that periods of time
reasonably required to conduct utilization review shall not be considered an
unreasonable delay in the payment of compensation for purposes of determining
"penalty" issues under L.C. sec. 5814. However, an unreasonable delay in the
completion of utilization review may result in a penalty.
Last updated October 20, 2003