California applicant attorneys have a proposal for a workers’ comp bill in 2008. No, it’s not another run at increasing PD benefits, which is likely to happen regardless. It’s also not a proposal to cap insurer profits. It isn’t even making utilization review a felony, although many on the payer side joke that applicant attorneys would really like to see that happen. The California Applicants’ Attorneys Association (CAAA) has taken up the cause of fighting workers’ comp fraud. Bully for them.
Their rumored legislation addresses three legitimate areas of abuse. The first follows on the heels of Attorney General Jerry Brown’s action against schemes that take advantage of a law that says officers and directors of corporations aren’t “employees” for workers’ comp purposes. Some “consultants” have taken that language and basically encouraged employers to incorporate, give each employee a minute fraction of stock, declare them all officers and directors, and eliminate their workers’ comp coverage. This clearly stretches the bounds of what was intended with this exemption. Setting aside the moral issue of not providing workers’ comp, it will be up to the courts to determine whether this is in fact unlawful. Clarification of this statutory exemption is certainly in order and it appears that pretty much everyone will agree on this area.
The other two issues deal with utilization review and bill review. Some are concerned that the incentives to do utilization review in some instances are not appropriate and unnecessarily delay delivery of medical care. Murky financial arrangements between third-party administrators and medical networks were the subject of a hearing last year before the Fraud Assessment Commission.
The CAAA proposal likely stems from that hearing. As to bill review, there have been long-standing concerns about compensation based on a percentage of the amount saved from that billed by medical providers. To the extent that claims administrators have financial incentives to send all requests for authorization to utilization review, and to the extent that employers and insurers pay for bill review based on the difference between the amount billed (even in excess of fee schedule) and the amount paid, then adjustments are necessary.
These three issues should be closely examined on their own merits. It would be a welcome change if CAAA and other stakeholders could work together to improve the system rather than be at odds over even the most minute details. Indeed, if this proposal represents a strategic shift on CAAA’s part, then we should all encourage such behavior.
History, of course, suggests that applicant attorneys are masters of codifying opportunities under the guise of reform. Much of SB 899 was undoing the mischief created in SB 228, especially as it relates to medical care. For that reason alone, many people will look very closely at whatever emerges in the printed bill. The language will be subjected to microscopic scrutiny. After all that and many months later, a bill nevertheless may emerge that has a reasonable chance at signature. In a year when expectations for meaningful workers’ comp legislation are so low, this would be a remarkable event.