“State Fund is committed to ensuring policyholders receive the benefits of reform legislation… .” (News release, State Compensation Insurance Fund, June 1, 2005)
Although State Fund says it is living up to its “…commitment to pass on the savings from the 2004 California workers’ comp reform legislation,” that is not the same as saying that State Fund is a careful steward of the reforms, whether from 2004 or 2003. In fact, SCIF is anything but.
Policyholders are seeing lower premiums, to be sure, and though SCIF touts its safe workplace credit for small employers in its effort to bring rate reductions to all sizes of California employers, those reductions range across all carriers.
But in the halls of justice, SCIF continues to be at the forefront of litigation to erode, eviscerate or eliminate the reforms in virtually all aspects. It appears to the watchful observer almost as if SCIF is in cahoots with its many union friends and, through them, with applicants’ attorneys. The consequences of these cases will be profound and if history is a guide, the “commitment to pass on savings” will ring somewhat hollow as the courts obliterate those savings.
Next month, the Court of Appeal will hear oral arguments in the case of Sandhagen v. Cox & Cox Construction, where nothing less than the future of utilization review may well be at stake. The insurer is SCIF. Of the several issues raised in this case, one is whether all aspects of utilization review are mandatory. DWC thinks they are. WCAB disagrees. If the Court of Appeal upholds the WCAB decision, it not only will undermine the governor’s workers’ comp reform and send a cloud over current utilization review regulations, it will fuel speculation about whether the utilization review process is even desirable, given harsh penalties proposed in DWC’s UR penalty regulations and various conflicting requirements in utilization review regulations already adopted by DWC.
SCIF is also at the center of the latest challenge to California’s new apportionment statutes. In Nabors v. WCAB, the Court of Appeal already has ruled that WCAB incorrectly applied the apportionment laws, following the lead of another recent apportionment case, E & J Gallo v. WCAB. But what troubles many legal observers is SCIF’s determination to have this issue decided by the Supreme Court. The facts in Nabors, like the Gallo decision, could present sufficiently unique situations (the employee was working for the same employer at the time of both injuries) that neither decision would significantly erode the overall apportionment reforms. On the other hand, should the Supreme Court accept review, it will give itself a virtually blank slate to issue a far-reaching opinion on apportionment. Under these facts, in other words, in a case chosen by SCIF unwisely, that could prove problematic.
SCIF was also on the receiving end in Hamilton v. SCIF, an unpublished panel decision that agreed with a workers’ compensation judge that, because ACOEM guidelines applied only to the acute phase of an injury, scientific evidence was not necessary to rebut ACOEM provisions when the worker’s condition was no longer acute. In Navarro v. SCIF, a workers’ compensation judge awarded permanent disability where there was no AMA-rated impairment. That case, which was not reconsidered, involved a successful rebuttal to the presumed prima facie rating established in the permanent disability rating schedule, a so-called “zero” that some claim forms the basis for much of the savings in disability costs since the new schedule became effective on January 1, 2005. More such cases are in the pipeline.
This is not simply the case of a big insurer being a big target for litigation. Bad facts in the world of workers’ compensation begin with bad practices. No amount of rate reductions can overcome the destruction of reforms resulting from such practices. If SCIF is committed to passing along savings, then the first order of business is to make sure those savings can be sustained.
Although SCIF’s messaging may sound promising, the reality of its actions in the courts clearly has proven quite different, and it is not the courts that pick the cases to take up.
When the SCIF Governing Board, with two holdovers from the Davis administration, and three appointed by Governor Arnold Schwarzenegger, including Chairperson Jeanne Cain, from the California Chamber of Commerce, meet to interview and select a new president, the first question it needs to ask present management is how it put the governor in this position. For the others, one question might be how to keep SCIF from continuing to make California Applicants’ Attorneys Association members’ lives easier and the employer’s lot harder. Their answers likely will be illuminating.