What’s Old Is New Again

By: Mark Webb

On December 6, the Division of Workers’ Compensation (DWC) will be holding a public, in-person forum in Oakland for the express purpose of hearing ideas for improving California’s workers’ compensation system. Specifically, “DWC invites all stakeholders, including insurers, attorneys, employers, injured workers and health care providers, to share their thoughts and suggestions.


All areas of the system can be addressed. Each speaker will have 5 minutes to provide their comments.”


The day before this forum, we will likely know who the Chair of the Assembly Insurance Committee will be. The Legislature is required by the Constitution to convene at noon on the first Monday in December of each even-numbered year and each house “shall immediately organize”. This year, the Organizational Session is December 5. Who will get the chair of this important committee, and possibly other changes in leadership of the Legislature, may have a profound impact on the debate about workers’ comp changes in 2023.


We should also know by December 6th how much employers will be assessed to support the various operations of the Department of Industrial Relations. This includes the rapidly growing Subsequent Injuries Benefits Trust Fund (SIBTF), which in fiscal year 2021/22 tapped employers (public and private) to the tune of $372 million. Look to the issue of the SIBTF and how it affects many aspects of the determination and negotiation of permanent disability (PD) benefits for seriously injured workers to get mentioned in a number of the 5-minute commentaries by stakeholders.


It should be noted in the context of the SIBTF that the expenses of delivering that benefit are paid through the Workers’ Compensation Administration Revolving Fund (WCARF). The assessment for that Fund was $562 million last fiscal year. The WCARF pays for the operations of the DWC, the expenses of the SIBTF, and other employer-funded DIR programs. When added up, employer assessments totaled over $1.3 billion for the fiscal year. The smart money is on those assessments increasing again, likely across the board.


Expect medical providers to continue their complaints over a host of issues, including adequacy of the reimbursements under the Official Medical Fee Schedule, and to renew their decades-long frustration with what are euphemistically called “PPO contracts” and who pays for what and for what amount. Applicant attorneys will join in that chorus if their failed legislative activity in 2022 is any indication and will add to the mix the costs of unjustified delays and denials of everything from compensability determinations to utilization review (UR) and independent medical review (IMR).


Labor will take their shots at benefit adequacy – in other words the need for a PD benefit increase – and make their feelings known about medical provider networks (MPNs) and UR. At some point, someone will make the inevitable comment that if employers “pick” the doctors in an MPN, why do employers also need UR (or vice-versa). Apparently, some in the community think that within the heart of every MPN doctor is someone longing to be cast as Scarecrow in the next iteration of the Wizard of Oz.


The failed ab initio QME process will be railed against again by employers. Post-termination cumulative trauma claims and the continued struggle to effectively deal with fraud in the system are likely also on several lists. Then there is the incredible number of IMRs in the system and the total cost it generates to employers.


What likely will not be discussed in this forum is reminding people of the very unique pressures placed on the system during the COVID-19 pandemic years. This should be causing stakeholders to pause and make sure solutions are being offered to long-term problems and not short-term aberrations.


Whether that will be the case will not be known until well into next year.


Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.