(June 14, 2012) Two California Chamber of Commerce-opposed bills that unnecessarily increase workers' compensation costs, incentivize litigation and drive up attorneys’ fees passed the Senate Labor and Industrial Relations Committee yesterday.
- AB 1145 (Cedillo; D-Los Angeles) increases frictional costs in the workers’ compensation system by creating a two-tiered system for the supplemental job displacement voucher.
- AB 1687 (Fong; D-Mountain View) unnecessarily increases costs and incentivizes litigation by permitting the Workers’ Compensation Appeals Board (WCAB) to award attorneys’ fees to an applicant who challenges a utilization review decision regarding a future medical treatment award.
AB 1145: Creates Inequities
AB 1145 seeks to accelerate injured workers’ access to a uniform Supplemental Job Displacement Voucher (SJDV). The CalChamber supports the underlying concept of accelerating injured workers’ access to the uniform SJDV benefit. As amended on January 4, 2012, however, AB 1145 creates inequities while unnecessarily adding layers of administrative complexities and expenses to California’s workers’ compensation law. Additionally, this legislation represents the piecemeal workers’ compensation reform disfavored and vetoed by Governor Edmund G. Brown Jr. in 2011.
The bill creates a two-tiered benefit system that is based on the date of injury and eligibility for the SJDV benefit. This system creates inequities as it deprives workers injured before January 1, 2013, who are not yet eligible for the SJDV benefit under current law, of access to the accelerated and improved SJDV benefit. These workers would be forced to wait for their retraining voucher and would have to delay their return to the workforce, while similarly situated workers injured after this date would be able to take advantage of the improved benefit. As California has one of the lowest return-to-work rates in the country, it is essential for AB 1145 to help all injured workers re-enter the workforce, not just those injured after January 1, 2013.
Not only is this system inequitable to injured workers, it leaves businesses with additional administrative hurdles. AB 1145 forces businesses to navigate a two-tiered system containing separate job-offer dates, separate notification dates, and differing voucher benefit amounts based on an arbitrary date of injury and whether an injured worker is already SJDV eligible. One misstep in this administrative maze could trigger additional litigation, escalate costs and prolong the period before injured workers receive their SJDV benefit. Businesses would be forced to expend more time and resources to ensure compliance with this complicated legislation.
The CalChamber and other employer groups provided simple amendments to AB 211 — a carbon copy of AB 1145 — that would create one efficient and cost-effective system. However, these amendments that would accelerate injured workers’ access to the uniform SJDV benefit without creating administrative complexities, escalating costs and increasing the prospect of litigation, have not been incorporated into AB 1145.
California needs to seek balanced cost-saving measures in the workers’ compensation system, not implement new laws that increase the administrative complexity and add more costs. Stakeholders are now beginning to examine ways to balance an increase in benefits with a reduction in frictional costs.
Issues with the SJDV benefit should be addressed through a global workers’ compensation reform process, not through piecemeal legislation that increases administrative inefficiencies and costs.
AB 1687: Incentivizes Litigation
AB 1687 seeks to award attorneys’ fees to injured workers receiving medical treatment under a future medical award who succeed in overturning a utilization review decision of the WCAB. This bill would unnecessarily incentivize more litigation in an area of workers’ compensation that is already heavily regulated and contains appropriate penalties.
The Labor Code requires all California employers to establish and maintain a utilization review program. These programs ensure all injured workers receive appropriate, evidence-based care and are extensively governed by the Division of Workers’ Compensation (DWC). Indeed, each and every utilization review program must meet restrictive guidelines laid out by both the Labor Code and the DWC, and must be approved with the DWC’s administrative director. Employers face a myriad of penalties if their utilization review program does not comply with these guidelines.
The Labor Code also provides for penalties and attorneys’ fees where an employer unreasonably delays or refuses medical care. Given the existing rigid framework and stiff penalties relating to utilization review, the attorneys’ fees penalties in AB 1687 are unnecessary and increase system costs. AB 1687 incentivizes litigation and drives up frictional costs where medical denials are made appropriately using the nationally recognized and peer-reviewed guidelines of the American College of Occupational and Environmental Medicine.
AB 1687 also purports to grant injured workers adequate representation by imposing attorneys’ fees in cases where workers prevail in a utilization review decision over a future medical award. However, the DWC already provides representation in the form of the Information and Assistance Unit. This unit is staffed by insurance and assistance officers whose sole job is to help injured workers navigate the system—including issues involving access to future medical treatment. These officers are available at all 24 WCAB venues throughout the state and can assist injured workers without driving up litigation costs.
As stakeholders throughout the state are examining ways to balance an increase in benefits with a reduction in frictional costs, a common refrain is that the system is overburdened with litigation. California needs to seek balanced cost-saving measures in the workers’ compensation system, not implement new laws that unnecessarily incentivize litigation and add more costs.
AB 1145 passed the Senate Labor and Industrial Relations Committee yesterday 5-1.
Ayes: DeSaulnier (D-Concord), Leno (D-San Francisco), Lieu (D-Torrance), Padilla (D-Pacoima), Yee (D-San Francisco).
Noes: Wyland (R-Escondido).
Absent, Abstaining, Not Voting: Runner (R- Antelope Valley).
AB 1687 passed the Senate Labor and Industrial Relations Committee yesterday 6-0.
Ayes: DeSaulnier (D-Concord), Leno (D-San Francisco), Lieu (D-Torrance), Padilla (D-Pacoima), Wyland (R-Escondido), Yee (D-San Francisco).
Absent, Abstaining, Not Voting: Runner (R- Antelope Valley).
Staff Contact: Jeremy Merz