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CA Workers' Compensation Reform - 2002

California has passed Workers' Compensation reform legislation that will significantly alter operation of the program and its benefits. Due to its phase-in period, this information does not conveniently fit into the format of the Workers' Compensation Summary - California topic, so it is discussed as a separate topic here.

NOTE: The 2002 reforms of the Workers' Compensation program were followed by additional reform legislation in both 2003 and 2004, some of which alters provisions of the 2002 changes discussed in this topic. See the topic CA Workers' Compensation Reform - 2003 for a comprehensive summary of the 2003 reforms. The 2004 reforms are summarized in the CA Workers' Compensation Reform - 2004 topic.

Assembly Bill 749 (Calderon) was passed by the State Legislature on February 4, 2002, and signed into law by Governor Gray Davis on February 15, 2002. It provides the first increase in workers' compensation benefits for injured workers since July 1, 1996. It also contains a number of measures to reduce costs for employers and to improve the efficiency of the California workers' compensation system. Companion legislation, Assembly Bill 486 (Calderon) was passed by the Legislature on August 31, 2002 and signed by the Governor on September 27, 2002. It contains primarily technical changes and corrections for the original legislation.

Benefit Increases

The following chart shows the benefit increases that will be phased in over the next four years and beyond. The new benefits will apply to injuries that occur on or after January 1 of the year indicated.

* increased thereafter by the percentage increase in the State Average Weekly Wage [LC 4453 (a) (10)]

New Activities and Programs

AB 749 contains a number of new mandates for DWC. Implementation of most of these new activities will require the adoption of new and/or revised rules and regulations. Rulemaking to implement some of these subjects, such as audits and vocational rehabilitation, has already begun. Information about these and other regulatory proposals, as they are announced, will be posted on the following page at the DIR web site:
http://www.dir.ca.gov/DIRRulemaking.html

Return to Work - Consultation Programs

This is a new program that is now contained in Section 139.47 of the State Labor Code. It requires the development and distribution of educational materials and training programs to help employers and employee organizations as well as health care providers address accommodations of injured workers and to prevent re-injuries.

Return to Work - Reimbursements from the Return to Work Fund

This new program, found in Section 139.48 of the State Labor Code, provides that employers may apply for reimbursements for wage subsidies, workplace modification costs, and workers' compensation premium reimbursements. The program will require an appropriation to take effect.

Vocational Rehabilitation

Sections 4646b and 4646c of the State Labor Code were revised to provide that employers and injured workers who are represented by an attorney may settle any prospective rights to vocational rehabilitation services. This provision applies to injuries that occur on or after January 1, 2003. All settlements would have to be submitted to the DWC Rehabilitation Unit for approval.

Medical Issues

For injuries that occur on or after January 1, 2003, various provisions of AB 749:

·          Repeal the presumption that the treating physician's report is correct. The presumption still applies if the physician was pre-designated by the employee prior to the injury.

·          Provide for an additional medical/legal evaluation report if an injured worker becomes represented after receiving a panel QME report.

·          Require that DWC, in consultation with the Industrial Medical Council, the Commission on Health and Safety and Workers' Compensation, as well as other state agencies and health care researchers, begin a study on various topics related to medical quality and treatment by July 1, 2003 and report their findings by July 1, 2004.

·          Provide for a pharmaceutical fee schedule and an outpatient surgery facility fee schedule as well as specify the criteria and process for adopting them.

·          Streamline and simplify the Health Care Organization program to encourage its use as a way to reduce costs for employers and assure quality of care and medical case management for injured workers.

·          Provide greater protections for the confidentiality of medical information pertaining to employees who have filed a workers' compensation claim.

Changes to the DWC Audit Program

Major audit changes include:

·          Requires each adjusting location to be audited every five years.

·          Sets new priorities for audits. A more comprehensive audit will be performed if the audit subject fails to meet certain performance standards.

·          Provides that audit penalties be deposited in the Workers' Compensation Administrative Revolving Fund.

·          Requires that DWC publish a list ranking all insurers, self-insured employers and TPAs audited during the period according to their performance

·          Mandates that the Uninsured Employers Fund be audited at least every five years and be included in the Audit Unit's annual report.

Enforcement of Illegally Uninsured Employers

Requires that the Labor Commissioner establish and maintain a program for targeting employers in industries with the highest incident of unlawfully uninsured employers, based on data from Uninsured Employers Fund, Employment Development Department, and State Insurance Commissioner. Specifies that a report be submitted to the Legislature by March 1 annually concerning the effectiveness of this program.

Court Administrator

A new trial court system manager, to be appointed by Governor and confirmed by the State Senate, will administer the workers' compensation adjudicatory process at the trial court level and supervise Workers' Compensation Administrative Law Judges (WCALJs). Specific responsibilities of this position, which will serve at pleasure of the DWC Administrative Director, include: promoting uniformity and expedition of judicial proceedings; reviewing and recommending revisions to regulations governing judicial ethics; and adopting uniform rules of practice and procedure governing trial level proceedings of the WCAB. Violation of these uniform procedures could subject a WCALJ to disciplinary action.

Carve Outs

The alternative dispute resolution program, known as "carve outs", will be expanded to the timber and aerospace industries. The State Insurance Commissioner may not disapprove any discounted premium rates established by insurers for carve out participants through January 1, 2007. A study on the long-term experience of these programs will be performed.

Loss Control

While requirements for all workers' compensation carriers to provide loss control services remain, the programs will work through an ombudsperson and will no longer require DIR certification. The certification funding will used to increase health and safety education programs instead.

Fraud Notices to Employers, Claims Administrators, Attorneys and Physicians

Anti-fraud resources may be used against illegally uninsured employers. The Bureau of State Audits will be required to evaluate the effectiveness of the Fraud Assessment Commission, the Bureau of Fraudulent Claims, the Department of Insurance, and DIR, as well as local law enforcement in investigating and prosecuting workers' compensation fraud and willful failure to secure workers' compensation insurance.

Resources

Text of AB 749 as passed:
http://info.sen.ca.gov/pub/01-02/bill/asm/ab_0701-0750/ab_749_bill_20020219_chaptered.html

Text of AB 749 as passed (PDF format, requires Adobe Acrobat Reader):
http://info.sen.ca.gov/pub/01-02/bill/asm/ab_0701-0750/ab_749_bill_20020219_chaptered.pdf

Text of AB 486 as passed:
http://info.sen.ca.gov/pub/01-02/bill/asm/ab_0451-0500/ab_486_bill_20020926_chaptered.html

Text of AB 486 as passed (PDF format, requires Adobe Acrobat Reader):
http://info.sen.ca.gov/pub/01-02/bill/asm/ab_0451-0500/ab_486_bill_20020926_chaptered.pdf

Overview of AB 749, a presentation made at DWC's 2002 Educational Conference (Power Point, zip. 1.3M):
http://www.dir.ca.gov/dwc/educonf9/DWCEducConfAB749.zip

Additional Information

Links to a number of additional Workers' Compensation related agencies mentioned above can be found at:
http://www.dir.ca.gov/workers'_comp.html

Updated information about recently enacted workers' compensation reforms is available online from the Division of Workers' Compensation at:
http://www.dir.ca.gov/dwc/wcreformindex.html

See also:

Workers' Compensation Summary - California

CA Workers' Compensation Reform - 2003

CA Workers' Compensation Reform - 2004

Source

http://www.dir.ca.gov/dwc/AB749.htm

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