Workers-Compensation

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Workers Compensation in CA; System, Cost and Reform proposal :

Workers Compensation in CA; System, Cost and Reform proposal Kulwinder Kaur Employment law

Agenda:

Agenda Meaning of Workers Compensation Description of workers Compensation in CA History and Processes System and Costs Reform proposal Major Issues

What is California workers compensation:

What is California workers compensation California Workers Compensation is a no-fault system for injuries connected with employment, whether they are specific injuries or a disease or disabling condition. An employer is required to pay for Workers Compensation Insurance to cover all its employees. Employee are not required to be represented by an attorney to make a claim but remember that employer and its Insurance Company will be represented, at least, by an experienced claims adjuster and probably, also, by a competent attorney. In case of a dispute, an employee too should be properly represented or employee will be at a serious disadvantage.

THE CALIFORNIA WORKERS’ COMPENSATION (WC) SYSTEM:

THE CALIFORNIA WORKERS’ COMPENSATION (WC) SYSTEM Established to provide the exclusive remedy for industrially injured employees, irrespective of fault. Established to provide industrially injured employees with medical treatment and a variety of other benefits. Established to provide an arena to resolve disputes.

The History and Origin of Workers' Compensation Law :

The History and Origin of Workers' Compensation Law Back in the year 1884, Germany established a set of laws that made the employer the insurer of accidents in the workplace - regardless of fault. This was the first time in history that there was a modern "workers' compensation" system. England followed suit in the year 1897. Finally, in 1908, the United States under the leadership of President Theodore Roosevelt, enacted the Federal Employers' Liability Act and encouraged the States to make their own workers' compensation laws. The California legislature enacted the "Workmen's Compensation Insurance and Safety Act of 1917." This was later codified in 1937 and is now the foundation and basis for California's workers' compensation laws. Since that time, numerous changes and revisions have come to California's laws of workers' compensation. SB 863 is the most recent sweeping reform at the time of this writing (Jan 1, 2015). The California Labor Code, division 4, defines the law for the California Workers' Compensation system.   The law is supposed to be "liberally construed by the courts with the purpose of extending their benefits for the protection of persons injured in the course of their employment." LC 3202. The purpose of California's workers' compensation law is rehabilitation, not to provide damages as under negligence ("personal injury") law. The features of workers' compensation law will be explored more fully in other blog posts, but for now this should be a good introduction to the history of the law as we see it in the United States, and specifically in the State of California.

Workers’ Compensation and The Three Parts:

Workers’ Compensation and The Three Parts Workers’ Compensation is a social insurance program that provides: Medical care Cash benefits Rehabilitation services Three coverages are provided: workers’ compensation insurance, employers liability insurance, other-states insurance

Objectives and Eligibility Requirements of Workers’ Compensation:

Objectives and Eligibility Requirements of Workers’ Compensation Provide broad coverage Substantial protection Provide sufficient medical care/rehab Reduction of job related accidents Reduce litigation Two principal eligibility requirements must be met

Workers’ Compensation Benefits:

Workers’ Compensation Benefits Unlimited medical care Disability-income benefits Death benefits Rehabilitation services

Workers’ Compensation Mess in California:

Workers’ Compensation Mess in California Rates were falling due to set rates without state approval Insurers competed for business Carriers selling insurance at a loss to gain market share Firms became insolvent

Workers’ Compensation Mess in California (Cont.):

Workers’ Compensation Mess in California (Cont.) Businesses pay highest premiums, but injured workers get the lowest benefits. Costs paid by employers are the highest in the country. Average employer pays 5.2% of payroll.

Problems & Issues:

Problems & Issues 30% of claimants who miss work hire a lawyer Doctors & patients have little incentive to restrain costs Employers often hire dueling doctors California gives lots of discretion Unnecessarily complex, difficult to administer, some cases outdated Difficulty finding workers comp. Insurance California receive lowest disability benefits California has highest litigation and medical cost Last year, job based insurance premiums increased by an average of 10% Nearly 1 million claims filed each year

Problems & Issues (Cont.):

Problems & Issues (Cont.) Standards of disability awards Stricter guidelines for permanent- partial disabilities Physician choice California exceeds national norm Workers file more claims than elsewhere Medical cost in California far above average Lack of fee schedule Delays in updating existing fee schedules No fault system Rising medical inflations Indemnity Underwriting performance

Workers Compensation Fraud:

Workers Compensation Fraud What is workers’ compensation fraud? The two most common types of workers’ compensation fraud : Premium Benefit fraud Health care provider or attorney assists the worker in fraudulent schemes, or participates in double billing. In 2002-03 there were 660 fraud cases representing more than $54 million dollars in chargeable fraud Humboldt man was charged with 6 Felony counts for defrauding workers’ comp. $7.1 billion in 1993 to $29 billion in 2003 Fraud estimated to be between $1 to $3 billion

Workers Compensation Fraud (Cont.):

Workers Compensation Fraud (Cont.) Fraud committed by companies Falsely declaring number of workers Falsely declaring number of hours California passed AB227 Before legislation 50,000 Now 150,000 Investigation department

Current Claims and Costs in California:

Current Claims and Costs in California Reserves more than doubled from $9.5 billion in 1995 to $25 billion in 2002. Medical Expenditures skyrocketed from $2.6 - $5.3 billion. Claims have been declining, but savings have been offset by rising medical costs.

The Rise In Cost:

The Rise In Cost Substantial increases in medical costs per claim Average medical cost per claim in 2002 was $31,000. California employers pay more in Workers’ Compensation premiums than any other state. 40 states premiums average less then $4.00 per $100 of payroll California averages $6.50 per $100 of payroll

Current Claims & Cost (cont.):

Current Claims & Cost (cont.) California has difficult political environment for business. Between 1997 and 2000, indemnity claims increased 230%. 62% of claim dollars go to medical bills and not weekly benefits. Excessive use of prescription pain medication. Hospital Cost totaled $1.1 Billion in 2002. Chiropractor visits per claim up 70% Pharmaceutical service has grown 243% $86.4 million in 1997 to $296.6 million in 2002

CA Distribution of Workers Compensation :

CA Distribution of Workers Compensation

California Legislation:

California Legislation AB 749 was passed on February 4, 2002 Bill provides first increase in workers’ compensation benefits for injured workers since July 1, 1996. Mandates return to work programs Also provides pharmaceutical and outpatient surgery fee schedule New requirements for enforcement of illegally uninsured employers.

Reform Plan:

Reform Plan Propose to cut workers compensation rates in half. Which would result in $5 Billion in savings. Democrats have stated that the reform package would reduce workers’ compensation cost by 14.9%. Plan will also increase the burden of proof for claims of “cumulative injuries” that builds over time.

Proposed Solutions To Workers Compensation:

Proposed Solutions To Workers Compensation To regulate the amount of chiropractic and physical therapy visits per claim. Strict guide lines of medical treatments. Make fees for outpatient surgery centers tied to Medicare rates and pharmaceutical prices tied to Medi-Cal rates.

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