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| | Mad Dash On SB 863 May Not Be Such A Quick Fix
By Jorge Alexandria - August 30, 2012
The best way to get anything done in Sacramento these days is to create a crisis and scare people to death. The theory being that if you scare key players in the equation, namely employers, the pressure will build to reform what appears to be broken. These days what ills businesses and the crisis that looms is a pure premium rate increase in their workers’ compensation policies come January 1, 2013 of $2.68 per $100 of payroll; which represents a 12.6% increase from a year ago.
Everyone seems to agree that the major cost drivers draining the system are rising medical cost and out of control litigation (as every injured worker now requires an attorney just to navigate the complex web of the 2004 Schwarzenegger reforms). To alleviate this, lawmakers last Friday introduced an amended 170 page bill, SB 863 (De León), to protect employers-- injured workers and medical providers not so much.
Passage appears likely this year if not by the end of this week, as the legislative session ends this weekend, and the bill has garnered the support of Governor Brown, the majority of those in the legislature, the Department of Industrial Relations, and influential employers such as the Walt Disney Company and Safeway, Inc.
John Riggs, in brown suit, white hair, and full grin, is pictured here in April of 2012 at a Film Premiere of The Employers' Fraud Task Force at the Disney Auditorium in Anaheim, California. John, the workers' compensation manager of Disney Worldwide Services, is a political supporter of SB 863. Photo by Lonce LaMon. All rights reserved.
Here is, in part, what the bill would do (in terms of cost cutting measures) if it becomes law:
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The creation of fees ($100) for filing medical liens. Question: Is it worth paying a $100 filing fee for a $90 interpreter’s lien?
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The elimination of consideration of future earning capacity in the disability formula for injuries starting in 2013.
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The elimination of sleep disorder, sexual dysfunction, and psychological issues as additions to primary injuries, when determining disability awards.
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The illusory increase of aggregate permanent disability benefits of $720 million per year, phased in over two years. Opponents argue that it will reduce benefits for most injured workers in greater amounts than SB 899 did in 2004 and that it will allow employers to delay payments of permanent disability benefits and creates roadblocks that will discourage injured workers from returning to work.
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The creation of an Independent Medical Review system, or IMR, modeled after the IMR process of the state Department of Managed Health Care for resolving health insurance disputes. Opponents argue that this will further delay injured workers’ treatment, deny workers due process of law and will be very costly for employers.
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Mandates the establishment of a new Medicare Fee Schedule for workers’ compensation treatment.
The intent of SB 863 is a noble one but reform is too important to just pass this bill with little debate on the legislative floor just because something needs to be done – and be done now- to prevent a premium rate increase in 2013. Rushing this bill through without proper debate will have unintended consequences that will linger for years. Also, since the reforms of 2004 were voter approved, just passing new legislative reform legislation undoing those past voter reforms may not cut it. In order to reform the reforms of 2004 the voters at large will need to undo or amend those provisions. If SB 863 passes in its current incantation it may be tied up in the courts for many years.
Jorge Alexandría is a U.S. Army veteran who received his B.A. in Political Science from Cal State Los Angeles, and graduated from Cal Poly Pomona with a Master’s in Public Administration. He holds both a California Workers Compensation Claims Professional (WCCP) designation and the State of California’s Self-Insured Administrator’s License. With more than 20 years industry experience, including various leadership positions, he is a leading expert in the field of risk management. He currently practices federal workers’ compensation of maritime interest. He can be reached at Riskletter@mail.com. The views and knowledge expressed in this article are Jorge Alexandría’s alone.
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