Workers' Compensation Daily News for Jul 28, 2014
Tylenol No Better Than Placebo For Low Back Pain
Thu, 24 Jul 2014 11:41:09 - Pacific Time
About two-thirds of adults have lower back pain at some point in their lives, and most are told to take acetaminophen, sold under brand names like Tylenol, Anacin and Panadol. Medical guidelines around the world recommend acetaminophen as a first-line treatment. But there has never been much research to support the recommendation, and now a large, rigorous a double-blind, randomized controlled trial published in the Lancet has found that acetaminophen (also known as paracetamol) works no better than a placebo.
The Lancet is a weekly peer-reviewed general medical journal. It is one of the world's oldest and best known general medical journals, and has been described as one of the most prestigious medical journals in the world. The Lancet was founded in 1823 by Thomas Wakley, an English surgeon The Lancet's impact factor was ranked second among general medical journals after The New England Journal of Medicine
"Our result illustrates the problems in relying on that indirect evidence when setting guidelines," said Christopher M. Williams, a researcher at the George Institute for Global Health in Sydney and lead author of the new study, published Wednesday in The Lancet.
Dr. Williams and his colleagues randomly assigned 1,643 people with acute low back pain to one of three groups. The first was given two boxes: one “regular” box containing 500-milligram acetaminophen tablets, and a second "as-needed" box also containing acetaminophen. The second group received a regular box of acetaminophen and an as-needed box containing a placebo. The third group received two boxes of placebos. All participants were told to take six tablets every day from the regular box, and up to two tablets a day from the as-needed box for pain relief.
The three-month study found no differences among the groups in recovery time, pain, disability, function, symptom changes, sleep or quality of life. About three-quarters of the patients were satisfied with their treatment whether they received medicine, placebos or both.
Dr. Bart W. Koes, who wrote an editorial accompanying the paper, said that even though the study was large and methodologically sound, it was not necessarily the last word on the subject. "The fact that it’s no more effective than placebo does not mean that it doesn’t work for a given patient," wrote Dr. Koes, a professor of general practice at Erasmus University Medical Center in Rotterdam, Netherlands.
Dr. Williams said that acetaminophen had been shown to be effective for headache, toothache and pain after surgery, but the mechanism of back pain is different and poorly understood. Doctors should not initially recommend acetaminophen to patients with acute low back pain, he said.
But, he added, “If patients already taking it feel they are getting a benefit, then it wouldn’t be wise to tell them to stop.” Read More...
FDA Generic Drug Rules Waste $5.4 Billion a Year
Thu, 24 Jul 2014 11:41:03 - Pacific Time
Reuters reports that U.S. FDA rules that ensure prescription medicines are not misused have been manipulated by brand-name drug companies to fight off generic competitors, costing consumers billions of dollars, according to a report recently released.
Called "risk evaluation and mitigation strategies" (REMS), these U.S. Food and Drug Administration rules are meant to secure the safe distribution of dangerous medicines. However, the report from the Generic Pharmaceutical Association said REMS have been used to prevent generic drugmakers from getting branded medicine to test their own versions, which is required to win FDA approval. This has delayed the arrival of 40 potential generic drugs, costing consumers some $5.4 billion a year, according to the report by Matrix Global Advisors and released by the generic drug trade group.
Senator Richard Blumenthal, a Democrat from Connecticut, said the issue was worrisome. "This study raises serious concerns about whether safety protocols are being inappropriately used to inhibit access to cheaper alternatives," he said in an emailed statement. "The potential savings that this study suggests must be considered as we in Congress continue to work to slow health care spending."
The U.S. Federal Trade Commission, which works with the Justice Department to enforce antitrust law, has also voiced concern. In a 2013 amicus brief filed in a case brought by Actelion Ltd against companies that wanted access to its Tracleer and Zavesca drugs, the FTC said it had investigated allegations of abuse, but had not filed any complaints. Tracleer is a treatment for hypertension and Zavesca treats Gaucher disease, a rare metabolic disorder.
Generic Pharmaceutical Association members include Impax Laboratories Inc, Perrigo Co Plc, Ranbaxy Laboratories Ltd, Sandoz Inc; Teva Americas, a unit of Teva Pharmaceutical Industries Ltd and Apotex Corp, among others. Read More...
WCAB Panel Says Suspended QME Reports Are Admissible
Wed, 23 Jul 2014 11:29:52 - Pacific Time
Gary McKinney was involved in an auto accident while driving a delivery truck for UPS, which resulted in the death of a motorcyclist. McKinney was terminated following an investigation involving a union representative, a company employee, and an arbitrator. As a result of the investigation, it was determined that applicant's conduct was reckless, resulting in a serious accident.
Nonetheless, McKinney pursued his workers' compensation benefits for both orthopedic and psychiatric alleged injury. For his orthopedic condition, applicant was evaluated by an orthopedic QME Dr. Senador on multiple occasions, resulting in six reports issued by Dr. Senador between July 14, 2010 through March 26, 2012. Dr. Senador's opinion that applicant did not sustain injury arising out of and in the course of employment to his back, neck, and sleep was consistent throughout his opinions. For the psychiatric injury, applicant was evaluated by Panel Qualified Medical Examiner (PQME) Dr. Charles Furst, Ph.D. Dr. Furst stated that 50% of applicant's psychological disorder was caused by the emotional trauma of learning that a motorcyclist involved in the accident was killed, as well as the emotional trauma of being criminally charged with manslaughter in this death. The remaining 40% of the causation of applicant's psychological disorder was due to applicant being terminated from his job due to his conduct involved in the auto accident, which Dr. Furst noted may be the result of a nondiscriminatory, good faith personnel action.
The WCJ found that applicant, while employed as a driver/dockworker for United Parcel Service on August 8, 2008, sustained injury arising out of and in the course of employment to his psyche, but did not sustain injury arising out of and in the course of employment to his back. neck and sleep. In finding that applicant's psychiatric injury was caused by his employment, the WCJ rejected the portion of the opinion of Dr. Charles Furst which found that 40% of applicant's psychiatric injury was caused by applicant's termination following the injury, which Dr. Furst deemed to be the result of a lawful, nondiscriminatory, good faith personnel action pursuant to Labor Code section 3208.3(h). In support of the determination that applicant did not sustain injury to his back, neck and sleep, the WCJ relied upon the opinion of the orthopedic QME Dr. Jose Senador.
Both parties filed a petition for reconsideration. Defendant objected to the finding of psychiatric injury, and applicant objected to the take nothing in the physical injury case.
The WCAB panel rescinded the WCJ's Findings and Award and Order, and issued its own decision to find that applicant did not sustain an injury arising out of and in the course of employment to his psyche. In doing so, it found that Dr. Furst adequately discussed the issue of causation of applicant's psychiatric disorder, and that his opinion was based upon substantial medical evidence when reviewing his opinion as a whole. It did not disturb the portion of the WCJ's decision which found that applicant did not sustain an industrial injury to his back, neck, and sleep. Thus, applicant took nothing in the case of Kinney v. United Parcel Service.
The novel issue in was in an argument raised by the applicant for the first time on reconsideration, He argued that since Dr. Senador's QME license was suspended during this case, his reports were inadmissible. The WCAB rejected this argument and held that the reports of Dr. Senador were indeed admissible.
The WCAB panel noted that there is no authority, and certainly none cited by applicant, in the Labor Code or in the regulations which indicates that reports of a QME are inadmissible during a suspension or probation of the QME's license by the Medical Unit. Labor Code section 139.2(m) specifies that a report of a QME is inadmissible if the QME has been suspended or placed on probation by the "relevant licensing board," which is the California Medical Board. Applicant did not allege that Dr. Senador was suspended or placed on probation by the relevant licensing board. Furthermore, an online search of the records of the California Medical Board reveals that its only disciplinary action involving Dr. Senador at any time was a public reprimand on February 4, 2010, and that his license has not been suspended or revoked. Read More...
New Law Sets Priority Conference in Uninsured Employer Cases
Wed, 23 Jul 2014 11:29:44 - Pacific Time
AB 1746 which was signed into law by Governor Brown this week, requires the Administrative Director of the Division of Workers Compensation (DWC) to include injured workers who are or were employed by an illegally uninsured employer on the priority conference calendar when the issues in dispute are employment or injury arising out of employment or in the course of employment. The bill amends Section 5502 of the Labor Code to add the language shown in bold below.
"The administrative director shall establish a priority conference calendar for cases in which the employee is represented by an attorney or is or was employed by an illegally uninsured employer and the issues in dispute are employment or injury arising out of employment or in the course of employment. The conference shall be conducted by a workers’ compensation administrative law judge within 30 days after the declaration of readiness to proceed. If the dispute cannot be resolved at the conference, a trial shall be set as expeditiously as possible, unless good cause is shown why discovery is not complete, in which case status conferences shall be held at regular intervals. The case shall be set for trial when discovery is complete, or when the workers’ compensation administrative law judge determines that the parties have had sufficient time in which to complete reasonable discovery. A determination as to the rights of the parties shall be made and filed within 30 days after the trial."
The law passed the state Assembly in May and the Senate on July 3 with no opposition by any legislator. Prior to the vote, the supporters of the bill were AFSCME, AFL-CIO, Association of California Healthcare Districts, California Chamber of Commerce, California Coalition on Workers' Compensation, California Labor Federation, AFL-CIO, California Professional Firefighters, Pacific Compensation Insurance Company, Rural County Representatives of California, Salud Para La Gente, The California Applicant Attorneys Association, Watsonville Law Center and Worksafe. There was no opposition voiced by any industry stakeholder group.
The argument in support of the law stated "that this bill is a necessary reform that will help some of the most vulnerable injured workers and assist California in its fight against the underground economy. Specifically, proponents argue that injured workers who work for illegally uninsured employers do not have the same access to medical care, as insurers are required by law to provide medical benefits in a timely manner with a significant pool of medical providers. As injured workers who work or worked for an illegally uninsured employer have none of these protections, this bill ensures that they receive an expedited hearing so that they can quickly receive the medical care they need. Additionally, proponents note that this bill allows for the rapid identification of illegally uninsured employers, giving California another important tool in the fight against the underground economy." Read More...
Federal Court Says Obamacare Subsidies Illegal
Tue, 22 Jul 2014 09:11:39 - Pacific Time
In a potentially crippling blow to Obamacare, a federal appeals court panel declared this morning that government subsidies worth billions of dollars that helped 4.7 million people buy insurance on HealthCare.gov are illegal. The 2-1 ruling in Halbig v US Secretary of HHS said such subsidies can be granted only to people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia - not on the federally run exchange HealthCare.gov. The ruling relied on a close reading of the Affordable Care Act.
"Section 36B plainly makes subsidies available in the Exchanges established by states," wrote Senior Circuit Judge Raymond Randolph in his majority opinion, where he was joined by Judge Thomas Griffith. "We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up their own Exchanges, our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly."
In his dissent, Judge Harry Edwards, who called the case a "not-so-veiled attempt to gut" Obamacare, wrote that the judgment of the majority "portends disastrous consequences."
Indeed, the 72-page decision threatens to unleash a cascade of effects that could seriously compromise Obamacare's goals of compelling people to get health insurance, and helping them afford it. However, the ruling does, and will not ultimately affect the taxpayer-fund subsidies the federal government issued to 2 million or so people through the 15 exchanges run by individual states, including California, and the District of Columbia, The Obama administration is certain to ask the full U.S. Court of Appeals for the District of Columbia Circuit to reverse the panel's decision, which for now does not have the rule of law.
According to the story on CNBC, White House spokesman Josh Earnest said the ruling "for now - does not have any practical impact" on premium subsidies issued to HealthCare.gov enrollees now. " "We are confident" that the ruling will be overturned, Earnest said. "We are confident in the legal position we have . . . the Department of Justice will litigate these claims through the federal court system." Earnest said "it was obvious" that Congress intended subsidies, or tax credits, to be issued to Obamacare enrollees regardless of what kind of exchange they used to buy insurance.
Tuesday's ruling endorsed a controversial interpretation of the Affordable Care Act that argues that the HealthCare.gov subsidies are illegal because ACA does not explicitly empower a federal exchange to offer subsidized coverage, as it does in the case of state-created exchanges. HealthCare.gov serves residents of the 36 states that did not create their own health insurance marketplace. About 4.7 million people, or 86 percent of all HealthCare.gov enrollees, qualified for a subsidy to offset the cost of their coverage this year because they had low or moderate incomes. If upheld, the ruling could lead many, if not most of those subsidized customers to abandon their health plans sold on HealthCare.gov because they no longer would find them affordable without the often-lucrative tax credits. And if that coverage then is not affordable for them as defined by the Obamacare law, those people will no longer be bound by the law's mandate to have health insurance by this year or pay a fine next year.
The ruling also threatens, in the same 36 states, to gut the Obamacare rule starting next year that all employers with 50 or more full-time workers offer affordable insurance to them or face fines. That's because the rule only kicks in if one of such an employers' workers buy subsidized covered on HealthCare.gov. The decision by the three-judge panel is the most serious challenge to the underpinnings of the Affordable Care Act since a challenge to that law's constitutionality was heard by the Supreme Court. The high court in 2012 upheld most of the ACA, including the mandate that most people must get insurance or pay a fine. Read More...
California Supreme Court Allows Wage Damages in Illegal Alien FEHA Claims
Tue, 22 Jul 2014 09:11:31 - Pacific Time
Sierra Chemical Co. manufactures, packages, and distributes chemicals for treating water, including water in swimming pools. As the weather gets warmer in spring and summer, consumer demand for its products increases, while in fall and winter demand decreases, which in turn results in seasonal layoffs of many production line employees. Those laid-off workers generally are recalled to work when consumer demand rises.
In April 2003, Vicente Salas applied for a job with Sierra, providing a Social Security number and a resident alien card. He completed and signed, under penalty of perjury, federal Immigration and Naturalization form I-9, in which he listed the same Social Security number he had given to Sierra, and he attached to the form a copy of a Social Security card with that number. He also signed an employee's Internal Revenue Service withholding form W-4, which had the same Social Security number he had given. In May 2003, Salas began working on Sierra's production line.
In March 2006, Salas injured his back while stacking crates on Sierra's production line. On August 16, 2006, he again injured his back while stacking crates and was taken to the hospital. Thereafter, he filed a workers' compensation claim for his workplace back injury. He still came to work, performing modified duties, until December 15, 2006, when he was laid off during seasonal reduction of workers. In either late January or early February of 2007, Salas started working for another company. On May 1, Sierra sent Salas a letter stating that it was recalling laid-off employees and informing him to call or come to the office to make arrangements to return to work. The letter also told him to bring "a copy of your doctor's release stating that you have been released to return to full duty." Salas did not reported for work as he had not yet been released by his physician. But the employer indicated he would hold the job open until he was able to get a release.
In August 2007, Salas sued Sierra. The first cause of action alleged Sierra failed to provide reasonable accommodations for his disability, in violation of California's FEHA. The second cause of action alleged a violation of the public policy expressed in the FEHA, by retaliating against him for filing a workers' compensation claim and for being disabled.
Salas advised the court that he would testify at trial and assert his privilege against self-incrimination under the Fifth Amendment to the United States Constitution if asked about his immigration status. This information led the employer to investigate the authenticity of the employment documents that were given to Sierra which were discovered to be fraudulent. The employer moved for summary judgment based upon this information which was granted after appeal to the Court of Appeal. The Court of Appeal reasoned that the doctrine of after-acquired evidence barred Salas' causes of action because he had misrepresented his eligibility under federal law to work in the United States. It also held that his claims were subject to the doctrine of unclean hands because he had falsely used another person's Social Security number in seeking employment with defendant, he was disqualified under federal law from working in the United States, and his conduct exposed the employer to penalties under federal law.
The California Supreme Court reversed in the case of Salas v Sierra Chemical Company. It concluded that (1) Senate Bill No. 1818, which extends state law employee protections and remedies to all workers "regardless of immigration status," is not preempted by federal immigration law except to the extent it authorizes an award of lost pay damages for any period after the employer's discovery of an employee's ineligibility to work in the United States; and (2) contrary to the Court of Appeal's holdings, the doctrines of after-acquired evidence and unclean hands are not complete defenses to a worker's claims under California's FEHA, although they do affect the availability of remedies.
The California Legislature enacted Senate Bill No. 1818 in 2002 in response to the United States Supreme Court's decision earlier the same year in Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137 (Hoffman). It said that the NLRB could not "award backpay to an illegal alien for years of work not performed, for wages that could not lawfully have been earned, and for a job obtained in the first instance by a criminal fraud." (Id. at p. 149.) "[A]warding backpay to illegal aliens," the high court held, "runs counter to policies underlying" the Immigration Reform and Control Act of 1986.
However, Hoffman, did not decide any issue regarding federal preemption of state law but instead addressed federal immigration law's impact on a federal agency’s authority. A distinction is made between pre-discovery and post-discovery. remedies. Federal law preempts state Senate Bill No. 1818 to the extent that it makes a California FEHA lost pay award available to an unauthorized alien worker for the post-discovery period. In allowing lost wages for the pre-discovery period, state labor laws does not directly conflict with the federal Immigration Reform and Control Act of 1986, because compliance with both federal and state laws is not impossible. Federal law does not prohibit an employer from paying, or an employee from receiving, wages earned during employment wrongfully obtained by false documents, so long as the employer remains unaware of the employee's unauthorized status. Read More...
Berkshire Hathaway Assumes Billions of Dollars of Liberty Mutual Risk
Mon, 21 Jul 2014 08:37:11 - Pacific Time
On July 17, 2014, Liberty Mutual Insurance reached a definitive agreement with National Indemnity Company, a subsidiary of Berkshire Hathaway Inc., on a combined aggregate adverse development cover for substantially all of Liberty Mutual Insurance’s U.S. workers compensation, asbestos and environmental liabilities, attaching at approximately $12.5 billion of combined aggregate reserves with an aggregate limit of $6.5 billion.
At the closing of this transaction, but effective as of January 1, 2014, Liberty Mutual Insurance ceded approximately $3.3 billion of existing liabilities under a retroactive reinsurance agreement. NICO will provide approximately $3.2 billion of additional aggregate adverse development cover. Liberty Mutual Insurance paid NICO total consideration of approximately $3.0 billion.
The agreement covers Liberty Mutual Insurance’s potentially volatile U.S. asbestos and environmental liabilities arising under policies of insurance and reinsurance with effective dates before January 1, 2005, as well as Commercial Insurance’s workers compensation liabilities as respects injuries or accidents occurring before January 1, 2014. NICO will assume responsibility for claims handling related to Liberty Mutual Insurance’s asbestos and environmental claims. Liberty Mutual Insurance will continue to handle all workers compensation claims.
"We believe that this agreement further strengthens our financial position as it eliminates a substantial source of uncertainty in these liabilities and allows us to focus on execution in our core businesses," said David H. Long, Liberty Mutual Insurance Chairman and Chief Executive Officer. Workers’ compensation has challenged U.S. insurers amid climbing medical costs and low interest rates that make it hard for carriers to generate investment income from the premiums they hold. The industry has posted underwriting losses in the segment every year since 2007, according to data from the National Council on Compensation Insurance Inc
This transaction will be accounted for as retroactive reinsurance in Liberty Mutual Insurance’s GAAP consolidated financial statements and results in a pre-tax loss of approximately $130 million as of the effective date, which will be included in third quarter results. Standard and Poor’s raised Liberty Mutual’s credit rating one grade to BBB, two levels above junk, after the announcement. The deal "largely mitigates" the insurer’s risk of having to add to reserves and reduces earnings volatility, the ratings company said in a statement.
As chairman and CEO, Buffett, 83, fueled Berkshire’s growth over the last five decades by investing insurance premiums in stocks and takeovers. The company’s dozens of operating businesses now span the transportation, energy, manufacturing and retail industries.
More than 50% of Patients Make Costly Medication Mistakes After Surgery
Mon, 21 Jul 2014 08:37:04 - Pacific Time
More than half of heart patients in a new study made mistakes taking their medications or misunderstood instructions given to them after being discharged from the hospital. Those with the lowest "health literacy" were among the most likely to make the risky errors, highlighting the importance of healthcare professionals making sure their instructions are clear and of patients being sure they understand what they need to do after they get home, the study authors say. "Some errors have the potential to be harmful to patients," said lead author Dr. Amanda Mixon, a hospitalist with the VA Tennessee Valley Healthcare System in Nashville. "Thousands of patients are discharged home with medications every day. Knowing which patients are at risk of medication errors after patients go home can help inpatient providers counsel patients about their medications before they go home," added Mixon, who is also affiliated with Vanderbilt University.
According to the story in Reuters Health, past research suggests that an individual’s health literacy, the ability to interpret and act on health information, is a strong predictor of whether they will correctly follow instructions for their own care. Overall, 20 to 30 percent of prescriptions are never filled, and 50 percent are not continued as prescribed, according to the U.S. Centers for Disease Control and Prevention.
To assess what factors might influence whether heart patients will follow their care instructions correctly after leaving the hospital, Mixon’s team recruited 471 people hospitalized for heart failure, heart attacks and related conditions, then discharged from the hospital. The participants’ average age was 59 and just under half were women. Every participant took a seven-minute health literacy test to gauge their understanding of health information as well as a short numeracy test to measure basic math skills.
The researchers contacted the patients by telephone two to three days after they left the hospital and compared the medications on the discharge list from their doctors to what the patients said they were taking. When someone said they were taking a medication not on the list, or forgot to mention one that was on the list, it was counted as an error. If a patient didn’t know the purpose, dose or frequency of a medication, it was classified as a misunderstanding. Failure to refill a prescription, discontinuing use of a medication against a healthcare professional’s orders or not being aware of a medication were also counted as errors.
More than half - 242 of the 471 patients - had at least one discrepancy between the medications they reported taking, and the ones on their discharge list. Over a quarter left out one or more medications on their list and more than a third were taking something that was not on the list. And 59 percent of patients had a misunderstanding of the purpose, dose or frequency of their medications.
Participants who scored highest on the math skills test were about 23 percent less likely than those who scored lowest to add or omit medications, the researchers report in Mayo Clinic Proceedings. People with the highest health literacy scores were about 16 percent less likely to make an error compared to those who scored lowest. And women were about 40 percent less likely than men to make a mistake. Single people were almost 70 percent more likely than people who were married to make errors. Older age and worse cognitive function also predicted higher odds of having an error.
"It’s a powerful study in that it helps to define some of the things we assume, but haven't been able to fully understand," said Dr. Benjamin Brooke, a surgeon and professor at the University of Utah School of Medicine in Salt Lake City, who was not involved in the study. "I think this says that we need to do a better job of understanding a patient at the time of discharge, what are their risks of having a post discharge adverse event," he told Reuters Health.
This study should help workers' compensation case managers focus on a strategy that should help better post surgical outcomes. Read More...
Uninsured Motorist Carrier May Offset Workers' Compensation Benefits
Fri, 18 Jul 2014 13:56:56 - Pacific Time
Nicholas Ortiz was injured while in the course and scope of his employment when a vehicle driven by Choi Seok Hwan collided with his vehicle. Hwan’s insurance policy had an available per person policy limit of $15,000 and Ortiz settled his liability claim for that amount. Ortiz also received approximately $107,000 in workers’ compensation benefits.
Ortiz then made a claim for underinsured motorist benefits under a State Farm automobile policy. This policy has underinsured motorist limits of $100,000. State Farm denied his claim based on the offset language in the policy’s underinsured motorist coverage section which provided that "Any amount payable under this coverage shall be reduced by any amount paid or payable to or for the insured : a.for bodily injury under the liability coverage; or b.under any workers’ compensation, disability benefits, or similar law."
Ortiz filed a complaint in Superior Court for declaratory relief claiming that, when compared to the statutory requirements, this offset provision is overly broad and therefore is void. The trial court disagreed with Ortiz and concluded that the policy was to be read and enforced as if it did comply with the law and that the $107,000 Ortiz received in workers’ compensation benefits reduced the available underinsured motorist benefits to "$0." Accordingly, the trial court granted State Farm’s motion for summary judgment.
The Court of Appeal agreed with the dismissal and reasoning of the trial court in the unpublished case of Nicholas Ortiz v State Farm Mutual Automobile Insurance Company.
Insurance Code section 11580.2, subdivision (h), provides that any loss payable under the terms of the uninsured motorist endorsement or coverage to or for any person may be reduced by the amount paid under any workers’ compensation law, exclusive of nonoccupational disability benefits. Although this setoff provision specifically applies to uninsured motorist coverage, it permits such a setoff against underinsured motorist coverage as well. (Rudd v. California Casualty Gen. Ins. Co. (1990) 219 Cal.App.3d 948, 953-954.)
State Farm was statutorily authorized to offset these workers’ compensation benefits against the underinsured motorist coverage. By authorizing such a reduction, the Legislature intended to prevent the insured from recovering twice for the same injury. The Legislature’s purpose in enacting section 11580.2 was to shift the cost of an industrial injury sustained by an employee, as the result of the negligence of an uninsured motorist, from the motoring public (who pay the premium for uninsured motorist coverage) to the employer or workers’s compensation carrier. Thus, as applied to appellant, the offset provision in the State Farm policy promotes public policy. Read More...
DWC Publishes Assessment of SB 863 Reforms
Fri, 18 Jul 2014 13:48:51 - Pacific Time
The Department of Industrial Relations and its Division of Workers’ Compensation posted a progress report on the department’s implementation of Senate Bill 863, the 2012 law which makes wide-ranging changes to California’s workers’ compensation system.
The report, "SB 863: Assessment of Workers’ Compensation Reforms," describes improvements made as well as the challenges remaining to fulfill the law’s intent to improve benefits to injured employees while containing costs. SB 863 became law on Jan.1, 2013, but not all provisions were effective immediately, and some aspects are still going through the rulemaking process.
:DIR took a balanced approach to putting SB 863’s reforms into practice," said DIR Director Christine Baker. "The priority was to increase the benefits in 2013, reduce frictional costs and implement the cost savings efficiencies through regulations, a process that started as soon as the law was signed. We have laid the groundwork for the next stage of improvements and expect more gains in the years ahead." Key findings of the report include:
1) Although SB 863 successfully trimmed three percentage points off the rate increase, employers still had to endure an increase of more than 10% in their workers’ compensation costs. Insurance prices had already begun to rise in 2012. After SB 863 was passed, the Department of Insurance adopted a minimum pure premium rate for Jan. 1, 2013, which was up 11.3% from the rate one year earlier. If SB 863 had not been enacted, indications are that the rates would have increased by 14.3%.
2) Permanent disability benefits increases are now in effect. It is too soon to determine the net effects, primarily because it takes up to two years or more for permanent disability to be determined.
3) SB 863 strengthened California’s self-insurance marketplace, thanks to the greater oversight authority provided to DIR’s Office of Self Insurance Plans over self-insured employers. The reforms lowered the rate of defaults thereby reducing costs to all remaining self-insurers. To date, no defaults have occurred in self-insured entities since SB 863 regulatory changes went into effect.
4) SB 863 reduced ambulatory surgery center (ASC) facility fees from 120% to 80% of Medicare’s hospital outpatient fee schedule. The average amount paid per ASC episode in the first six months after the change in fee schedules was 26% lower than in the year before the change took effect.
5) SB 863 amended the inpatient fee schedule by repealing the separate reimbursement for spinal hardware. The average amount paid per episode of the spinal surgery involving implantable hardware declined by 56% after the separate reimbursement (duplicate payment) for spinal hardware was repealed.
6) The lien filing fee halved the number of new liens being filed. In the first year the filing fee was in effect, 213,092 liens were filed, down from 469,190 in 2011, a greater than 50% reduction. This represents a cost savings of an estimated $270 million per year in litigation costs to California employers and insurers.
7) Medical costs appear to be down: Preliminary data from WCIRB indicate that the estimated ultimate medical loss per lost-time claim is down 1.3% from calendar year 2012 to 2013. However, because the estimate is based on historical trends and adjusters’ predictions of what their cases will cost over the lifetime of the case, it is a weak performance indicator of the workers’ compensation system after the extensive reforms brought about by SB 863.
8) The Independent Medical Review (IMR) process is heavily used: approximately 185,000 IMR applications have been filed to date. The qualified medical evaluator (QME) process that IMR replaces costs on average $1,653 per QME request, at least three times higher than the administrative cost of an IMR. An IMR costs $420 to process, down from $560 initially, and the cost will go down further starting in 2015.
9) Ten sets of cost-saving regulations have been enacted, and additional regulations are in process.
10) More than 80 percent of IMR determinations uphold the utilization review (UR) finding that the treatment requested is not medically necessary. Pharmaceuticals are the most common IMR request, and narcotics are the most common type of pharmaceutical requested.
"One of the key improvements of the reforms was to improve the delivery of appropriate medical care to injured workers through an independent medical review process that is transparent and consistent and uses evidence-based medicine," said Dr. Rupali Das, DWC Medical Director. It is still too early to gauge the overall effect of SB 863 reforms. Revisions to the lien filing procedures, as well as the conflict of interest statute and the fee schedule changes, are expected to help reduce fraudulent behavior in the workers’ comp system.
The progress report is posted on the DIR website. Read More...
Past Week News Archive
Employers' Fraud Task Force Announces August Event: Thu, 17 Jul 2014 11:58:37 - Pacific Time: Read More...
Three Indicted in $50 Million Orange County Surgical Fraud Scheme: Thu, 17 Jul 2014 11:58:30 - Pacific Time: Read More...
Private Self-Insured Claim Rate Shows Little Change: Wed, 16 Jul 2014 05:54:34 - Pacific Time: Read More...
Progressive Medical and PMSI to Rebrand as Helios: Wed, 16 Jul 2014 05:54:26 - Pacific Time: Read More...
Another Federal Agency - ICE - Botches Workers Compensation Claims: Tue, 15 Jul 2014 12:23:16 - Pacific Time: Read More...
DWC Now Accepting QMEApplications: Tue, 15 Jul 2014 12:23:10 - Pacific Time: Read More...
Surveillance Evidence Convicts Santa Barbara Roofer: Mon, 14 Jul 2014 11:32:40 - Pacific Time: Read More...
DWC Publishes Corrected Spanish Time of Hire Pamphlet: Mon, 14 Jul 2014 11:32:34 - Pacific Time: Read More...
Civil Lawsuits Claim Comp Doctors Used Fake Spine Surgery Hardware: Thu, 10 Jul 2014 09:36:33 - Pacific Time: Read More...
Veterans Administration Botches 60% Of Its Own Work Comp Claims: Thu, 10 Jul 2014 09:36:26 - Pacific Time: Read More...