Friday, December 28, 2007

TTD RATE INCREASE FOR 2008

Division of Workers’ Compensation reminds workers’ compensation community of changes slated to take effect in 2008

New mileage rate, new temporary disability rate and new TD timeframe all apply Jan. 1

The Division of Workers’ Compensation (DWC) is reminding injured workers, employers, claims administrators, attorneys and others of three changes to workers’ compensation law that take effect Jan. 1, 2008.

The medical mileage rate for medical and medical-legal travel expenses will increase to 50.5 cents per mile. This rate must be paid for travel on or after Jan. 1, 2008, regardless of the date of injury.

Labor Code section 4600, in conjunction with Government Code section 19820 and the Department of Personnel Administration regulations, establishes the rate payable for mileage reimbursement for medical and medical-legal expenses and ties it to the Internal Revenue Service (IRS) published mileage reimbursement rate.

The mileage rate for 2007 was 48.5 cents per mile. The rate was 44.5 cents per mile between July 1, 2006 and Dec. 31, 2006, and prior to that increase, the rate had been 34 cents per mile since 2001.

In addition to the mileage rate increase, the temporary total disability (TTD) rate for 2008 increases to $916.33 per week on Jan. 1, 2008, and the period during which injured workers are eligible for TTD benefits has been expanded from two years to five.

This increase to the maximum TTD rate marks the second year in a row that the TTD rate will be affected by a change in the state average weekly wage (SAWW).

Beginning in 2006, Labor Code section 4453(a)(10) required the rate for TTD be increased by an amount equal to the percentage increase in the SAWW as compared to the prior year.

The California SAWW for the 12 months ending March 31, 2007 was $914.60. For the period ending March 31, 2006, this figure was $880, amounting to an increase of 3.932 percent. Applying this percent increase to the prior year’s maximum benefit of $881.66 brings the 2008 maximum benefit to $916.33. Applying the increase to the minimum benefit brings it from $132.25 to $137.45.

Under Labor Code section 4659(c), workers with dates of injury on or after Jan. 1, 2003 who are receiving life pensions (LP) or permanent total disability (PTD) benefits are also entitled to have their weekly LP or PTD rate adjusted based on changes in the SAWW. Claims administrators should be aware that many LP and PTD awards are reduced (by uniform reduction) in order to produce a lump sum for paying attorney’s fees. To adjust for the SAWW in cases where there’s been a prior commutation of attorney’s fees, the new rate should be based on the previous year’s rate before deduction for attorney’s fees, multiplied by the percentage change in the SAWW.

In addition to the increase in the TTD benefit rate brought about by changes in the SAWW, a bill signed this year by Gov. Schwarzenegger increased the window of time during which temporarily disabled employees are eligible to receive TTD benefits.

Reforms passed in 2004 made changes to the Labor Code that limited TTD payments to 104 weeks within a two-year period for a single injury occurring on or after April 19, 2004, except under certain limited conditions. The two years of eligibility were counted from the date of the first payment of temporary disability. Beginning Jan. 1, 2008, employees injured on or after that date will be eligible to receive the 104 weeks of disability payments within a five-year period. The five-year period is counted from the date of injury.

Significant Permanent Disability Decision!

A Workers’ Compensation Appeals Board en banc decision announced Friday overturns a 30-year-old precedent that provided an injured worker who sustains two separate injuries to the same part of the body, which become permanent and stationary at the same time, is entitled to receive a combined award of permanent disability.

The WCAB, in a 4-1 ruling, said passage of Senate Bill 899 undermines the reasoning that led the Supreme Court to establish the so-called “Wilkinson rule” in 1977. The split decision came in Diane Benson v. Permanente Medical Group (Athens Administrators), Nos. OAK 0297895 and OAK 0326228, 12/13/2007.

“We hold that the rule in Wilkinson is not consistent with the new requirement that apportionment be based on causation and, therefore, Wilkinson is no longer generally applicable,” the WCAB said in its opinion. “Rather, we now must determine and apportion to the cause of disability for each industrial injury. Therefore, all potential causes of disability – whether from a current industrial injury, a prior or subsequent industrial injury, or a prior or subsequent non-industrial injury or condition – must be taken into consideration.”

Benson, a file clerk for Permanente, felt a pain in her neck on June 3, 2003, while pulling out a plastic bin to file a medical chart. The condition grew worse and she was placed on temporary total disability on July 15, 2003.

Benson’s treating physician concluded that Benson had suffered two separate injuries. One was a cumulative injury to her neck and the other was the specific injury suffered on June 3, 2003. He assigned 50% of her disability to the cumulative trauma and 50% to the specific injury.

At trial, the workers’ compensation judge assigned a combined award of 62% permanent disability, following Wilkinson.

The WCAB, however, said the provision of SB 899 that requires apportionment for causation also changed the way awards for separate injuries should be calculated. Specifically, the 2004 reform bill repealed former Labor Code Section 4750 and enacted Sections 4663 and 4664.

In addition to requiring apportionment for causation, those code sections require that the apportionment of permanent disability must be determined based on the approximate percentage of the permanent disability that was caused by the direct result of injury and what approximate percentage of the permanent disability was caused by other factors. Employers are liable only for the percentage of permanent disability caused by the injury arising out of and occurring in the course of employment.

“Apportionment based upon causation is generally not consistent with combined awards of permanent disability, where such awards are based solely upon the fact that the injuries became permanent and stationary at the same time,” the WCAB said in its ruling. “In enacting SB 899, the Legislature mandated that each potential cause of disability be considered for each claim of injury.”

Commissioner Ronnie G. Caplane dissented. She said it is presumed when the Legislature enacts a statute that it has in mind existing law and long-established principles.

“The Legislature easily could have stated an intent to invalidate Wilkinson’s long-established principles, but it did not do so,” Caplane wrote in her dissenting opinion.

Moreover, Caplane said nothing in the plain language of Section 4663 prohibits a combined disability award for two injuries that become permanent and stationary at the

same time. Lastly, Caplane said a requirement that workers’ compensation laws be liberally construed in favor of injured workers requires the court to allow the combined award.

Commissioners Janice Jamison Murray and William O'Brien, whose terms ended last month, did not participate in the decision, although they remain on the board until Gov. Arnold Schwarzenegger appoints their replacements.

Defense attorney Richard "Jake" Jacobsmeyer said the WCAB relied heavily on the recent Brodie decision in reaching its conclusion. He said there will likely be resistance from medical doctors, who consider apportionment to be speculative and also expects the decision to be "heavily appealed" by applicants' attorneys.

Sue Borg, president of the California Applicants' Attorneys Association, agreed, noting that injured workers will receive smaller awards if the decision stands.

"This is bad news for injured workers -- terrible news," she said. "And I really think that they got it wrong, and the dissent has it right."

Borg said she's "certain that the issue will go back up to the Court of Appeal and probably to the Supreme Court," and when it does, she said, she expects CAA will be involved in the case.

Monday, October 22, 2007

Summary of Evidence

Appellate Court Orders W.C.A.B. to Provide Summary of Evidence



The Court of Appeals has considered the consequence of the W.C.A.B.’s issuing a decision after Reconsideration without a Summary of Evidence from the Trial Judge and ruled that the Summary of Evidence is a required document and must be completed before the decision on Reconsideration can be properly reviewed. A Summary of Evidence is required pursuant to Labor Code § 5313 and ADR 10566. In this case an arbitrator was used and the same rules apply according to Labor Code § 5272.



This case involves an undercover witness who provided assistance to several law enforcement agencies in Contra Costa County. It was unrebutted that on several occasions the applicant had made drug buys for some officers pursuant to an investigation. Labor Code § 3366 provides that one who assists a police officer at the officer’s request is deemed an employee of the law enforcement agency and entitled to worker’s compensation benefits. There was a factually dispute, resolved against the applicant, regarding the circumstances leading to his being shot in the throat. The applicant claimed he was shot for assisting another officer in a drug related matter. The potential employer deemed the applicant to be a volunteer witness who simply came forward with information on the basis that the applicant had approached an officer and offered to assist rather than being contacted by the police officer.



The parties proceeded to hearing using an independent arbitrator. However that arbitrator failed to provide a Summary of Evidence (the record does not reflect who the hearing officer was or why there was no Summary provided). The W.C.A.B. on reconsideration upheld the denial of compensability for the arbitrator and deemed the Summary of Evidence unnecessary to decide the case.



The Court of Appeals disagreed with the W.C.A.B.’s determination that the Summary was not necessary, holding that the Summary is required to complete the record and that without the information, the decision must be reversed and remanded back to the W.C.A.B. for creation of a Summary of Evidence (which includes the Summary of Testimony) by the arbitrator and the W.C.A.B. is to then review the record again and issue its decision. In doing so the Court rejected the proposal by applicant that the failure to provide the summary of evidence should be deemed fatal to the defendant’s case and the Appellate Court be required to assume the facts as set out in the Petitioner’s brief to be true. The Court held that this standard applies in consideration of pleadings, but not evidence. The Appellate court also rejected several suggestions by defendants that the record was adequately addressed by other information provided by the arbitrator and the W.C.A.B.’s review on Reconsideration.



While not making a determination that the W.C.A.B. should reverse the arbitrator’s decision the Appellate Court did make some comments on the W.C.A.B.’s reasoning in its decision and criticized some of the analysis. Specifically the Appellate Court noted the arbitrator and the W.C.A.B. seemed to be fixated on the applicant’s motivation in offering to assist the police officer in the even that got him injured. The court noted that there is no requirement in the statute for the applicant’s motivation to be considered in the factual pattern. The issue was whether the applicant actually assisted the officer, not why he might have done so. The Appeals Court also rejected the idea that the Police officer must initiate the contact for compensability to attach. The Court deemed that the acceptance of an offer of assistance compelled compensability also.



This case has very limited application other than the principle that the Statement of Evidence is a required document. In the vast majority of hearings, the WCJ provides such a Summary and there is no issue. However where a summary is not prepared, for it is fairly common for the W.C.A.B. on reconsideration to grant the appeal and order a summary to be prepared by the Trial judge. The Board may not have felt that it had similar authority over an arbitrator. Clearly in the mind of the Court of Appeals the W.C.A.B. not only has the authority to require the Summary of Evidence, but the obligation as well.





The case can be located by the following link: Sharareh v. WCAB

Thursday, October 18, 2007

Governer Signs New Work Comp Legislation

California -- Gov. Signs Bills on TD and 24-Visit Cap; Vetoes Others: Top [10/15/07]

Gov. Arnold Schwarzenegger over the weekend signed bills that extend the two-year cap on temporary disability benefits, lift the hard 24-visit cap on chiropractic treatment and physical therapy and make other mid-course corrections to a workers' compensation system that was sharply redirected by reforms in 2003 and 2004.



Schwarzenegger vetoed measures that would have required hospitals to use power devices to lift patients, increased penalties for misclassifying employees and allowed audiologists to become qualified medical evaluators (QMEs).



The governor's signature on AB 338 by Assemblyman Joe Coto, D-San Jose, puts into law a hard-fought compromise between business and labor. The bill, while still limiting collection of temporary disability benefits to 104 weeks in total, allows injured workers within five years after injury to return to work and cease benefits but take time off later and resume benefits.



Employers and labor also compromised on AB 1073 by Pedro Nava, D-Santa Barbara. As originally introduced, the bill would have lifted the 24-visit cap on chiropractic and physical therapy treatment for patients recovering from surgery.



Schwarzenegger signed an amended version that lifts the cap for post-surgical patients, but gives the Division of Workers' Compensation authority to impose limits through its medical treatment guidelines.



The governor also signed:



* SB 869 by Senator Mark Ridley-Thomas, D-Los Angeles. The bill requires the labor commissioner to establish a data-matching program to identify uninsured employers and target those employers for enforcement.



* AB 812 by Ed Hernandez, D-West Covina. The measure, sought by the insurance industry, allows carriers to increase rates of employers who refuse to turn over records necessary for thorough payroll audits.



* AB 1269 by Ed Hernandez, D-West Covina. The bill directs the Division of Workers' Compensation to increase in-patient fee schedule amounts for Diagnosis Related Groups (DRGs) 504 to 511, regarding hospital treatment of burn victims, after consulting with the Commission on Health and Safety and Workers' Compensation.



Schwarzenegger vetoed:



* SB 557 by Senator Pat Wiggins, D-Santa Rosa, which would have allowed audiologists to become QMEs.



In his veto message, Schwarzenegger said although Wiggins' bill would allow audiologists to issue AME reports, a final diagnosis would still have to be made by a physician.



"This could result in unnecessary delays for injured workers and increased costs to the system by delaying prompt resolution of claims. In addition, the proponents of this measure have not demonstrated an unmet need for evaluating hearing loss in the workers' comp system," the governor said.



* SB 171 by Senate President Don Perata, D-Oakland. The measure would have required hospitals to impose "musculoskeletal injury prevention plans" that must include a "zero lift/safe patient handling policy" that substitutes manual lifting and transferring of patients with powered patient transfer devices, lifting devices, or lift teams.



Schwarzenegger said he had vetoed similar measures in the past that do not give hospitals the flexibility they need to protect worker safety.



* SB 622 by Senator Alex Padilla, D-Pacoima. The bill would have imposed penalties of up to $25,000 on businesses that misclassify employees as independent contractors and exposed employers to civil suits by misclassified employees.



Schwarzenegger adopted language by the California Chamber of Commerce, saying the bill was a "job killer" in his veto message.



"In creating new and redundant exposure to litigation and sanctions, this bill may cause businesses to avoid use of the independent contractor model even where it may be appropriately utilized," the governor said. "This will ultimately contribute to a negative perception of California as an inhospitable business climate."



* SB 906 by George Runner, R-Lancaster. The bill clarifies processing and submission of pharmacy claims and other medical service claims in the workers' compensation system.



"I am concerned that some provisions of this bill may inadvertently undermine existing law," Schwarzengger said in his veto message. "For instance, this bill appears to force health plans that cover medical services later determined to be workers' compensation injuries to accept a loss on their outstanding health plan liens against workers' compensation insurers. In addition, by providing that the changes it makes are declaratory of existing law, this bill would unfairly impact existing liens in the system."

Sunday, October 14, 2007

TTD Rate Changes Effective 1/1/2008

California's maximum temporary total disability (TTD) rate will increase to $916.33 on Jan. 1, the Division of Workers' Compensation announced this week.

The minimum rate of $132.25 will increase to $137.45.

The DWC said the increases mark the second consecutive year that the TTD rate will be affected by a change in the state average weekly wage.

Beginning in 2006, Labor Code section 4453(a)(10) requires the rate for TTD be increased by an amount equal to the percentage increase in the average weekly wage as compared to the prior year. The average weekly wage is defined as the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending Mar. 31 in the year preceding the injury.

The California average weekly wage for the 12 months ending March 31, 2007 was $914.60. For the period ending March 31, 2006, the figure was $880.00, amounting to a percentage increase of 3.932%.

Applying this increase to the prior year's maximum benefit of $881.66 brings the 2008 maximum benefit to $916.33, the DWC said.

Source: Calif. DWC

Monday, August 20, 2007

UR PENALTIES

Penalties Pursuant to UR Enforcement Regulations



· $50,000: Failure to establish a UR plan

· $50,000: Failure to have medical director

· $25,000: Decision outside of scope of practice

· $25,000: Non-physician delays, denies, modifies treatment request

· $15,000: Untimely response to expedited request

· $10,000: Failure to discuss concurrent treatment with the treating physician

· $10,000: Failure to file plan or letter

· $ 5,000: Failure to include elements in plan

· $ 5,000: Failure to file modified plan after material modification within 30 days

· $ 5, 000: Denying treatment because the condition is not in the Medical Treatment Utilization Schedule

· $ 2,000: Failure to respond, non-expedited, concurrent

· $ 1,000: Failure to respond, non-expedited, prospective review

· $ 1,000: No documentation of amended request

· $500: Failure to respond to retrospective request

· $100: Failure to disclose UR criteria or guideline to public

DWC POSTS UR FAQS FOR CLAIMS ADMIN

Division of Workers' Compensation posts utilization review FAQs for claims administrators on its Web site

The Division of Workers' Compensation (DWC) has posted answers to frequently asked questions (FAQs) about utilization review on its Web site to help claims administrators and others better understand utilization review (UR) rules and processes.

"Our goal is to help everyone understand UR so that injured workers receive the correct treatment at the right time," said DWC acting Administrative Director Carrie Nevans. "We intend to continuously update the page as new questions come in or related case law is decided."



The FAQs are posted on the DWC's UR Web page at http://www.dir.ca.gov/dwc/UR_Main.htm and can also be accessed from the DWC “what's new” page at http://www.dir.ca.gov/dwc/whatsnew.htm.



These FAQs are directed to claims administrators but others may also benefit from reading them. The division has a fact sheet on UR specifically for injured workers posted on its fact sheets and guides page at http://www.dir.ca.gov/dwc/iwguides.html.

Last month the DWC issued an advisory to support the establishment of "UR best practices," which allow claims administrators to approve appropriate levels of care for injured workers at the lowest possible levels within the claims organization, without having to send those requests through a third party process.

UR penalty regulations became final June 7, 2007 and UR rules have been in place since September of 2005. Both sets of regulations can be found at http://www.dir.ca.gov/dwc/DWCrulemaking.html.

Wednesday, July 18, 2007

First PD Payment Doesn't Trigger Notice Duty

California -- Calif. 1st: First PD Payment Doesn't Trigger Notice Duty: Top [07/16/07]
The California appellate court in San Francisco issued another ruling Friday that the last -- not the first -- permanent disability payment triggers an employer's duty to provide a Section 4061 notice.


The decision essentially mandates the more meager benefits awarded under the 2005 Permanent Disability Rating Schedule for workers who were receiving temporary disability when Senate Bill 899 was signed into law on April 19, 2004.


In Minatta Transportation v. Workers' Compensation Appeals Board, A117143, 07/13/2007, the 1st District Court of Appeals, Division 4 decided that the language in Labor Code Section 4660 leaves no room for interpretation after being amended by Senate Bill 899.


"But the WCAB's interpretation of section 4061 is simply untenable in light of the section's direction to provide the notice with the last payment of temporary disability," the court wrote. The decision was not published.


Section 4061 reads that the 2005 Permanent Disability Rating Schedule applies retrospectively if before Jan. 1, 2005 "there has been either no comprehensive medical-legal report or no report by a treating physician indicating the existence of permanent disability, or when the employer is not required to provide the notice required by Section 4061 to the injured worker."


The Section 4061 notice informs the worker of the employer's planned dispute of permanent disability.


Paul Lanning sustained an industrial injury on Oct. 5, 2004, while working for Minatta Transportation. He received temporary disability benefits until July 2005, when his condition became permanent and stationary.


Minatta mailed the required Section 4061 notice to Lanning after the last temporary disability payment was made in July 2005.


The workers' compensation judge initially used the new disability rating schedule. Lanning petitioned for reconsideration, and the WCJ recalculated the award using the disability rating schedule in effect when Lanning's injury occurred in 2004. The WCAB upheld the judge's revised decision.


"Because there was no medical report indicating permanent disability before Jan. 1, 2005, and because Minatta was not required to mail a section 4061 notice before that date, the AMA rating schedule applies to Lanning's case," the appellate court wrote.


Both the 1st District's Division 4 and Division 3 have issued similar opinions in other cases in the past two months.


The appellate court annulled the award of permanent disability indemnity and remanded the case for recalculation using the 2005 permanent disability schedule.

Wednesday, June 27, 2007

DWC MEDICAL UNIT CLARIFICATION ON UR

It is important to keep in mind that all requests for authorization and all approvals as well as denials, delays and modifications are part of the UR process described in LC 4610 and the UR regs. An employer must have a UR plan with an appropriately credentialed and empowered medical director. Empowered to assure all decisions made in the UR process conform to the UR plan standards which must conform to LC 4610 and the UR regulations. The employer can contract out the UR responsibility thru h/h insurer, through a TPA or directly to a URO. If the employer just gets WC insurance or a TPA which, as part of the contract with the employer provides UR services (whether directly or through a subcontractor URO), that can satisfy the LC 4610 and the regs. However, it's the employer's responsibility to make sure that the contract documents cover the employer's duties under LC 4610 and the UR regs. It's the employer's responsibilities that the process is working.
As long as the Medical Director of the UR plan devises a way to ensure that the employer's claims adjusters (whether in house for a self insured employer or external through a TPA or WC insurer) are applying the standards of the UR plan (the plan the employer relies on to satisfy h/h LC 4610 and 8 CCR 9792.6 et seq responsibilities), the claims adjusters can approve medical treatment authorization requests. In so doing, they will be held to the same standards (timeliness, contents of communications) we would hold the URO to in complying with LC 4610 and 8 CCR 9792.6 for approvals.

Thursday, June 14, 2007

SCHOOL'S OUT FOR SUMMER - From The Law Offices of Mullen & Filippi

Thursday, June 14, 2007
School’s out for Summer! Are you ready for Vacation?

It’s time to pack up the kids (and dog) and head out for that well-deserved vacation. Or, just suit up, and hit the pool. But, before we go, let’s see what this semester’s report card bears.

Move to the head of the class (aka: use the new disability rating schedule) Since the Brodie-Welcher decisions by the California Supreme Court on May 3rd allowing employers to subtract percentages when calculating apportionment and resulting in significant PD award savings, final exams for the term have resulted in another “A+” grade for the Defense:

The Court of Appeals (1st District) has decided in favor of “our school” (employers) on application of the new 2005 PD rating system to pre-2005 injuries. In Costco v. Chavez, applicant’s injury occurred in 2004, and the QME reported in late 2004 that applicant was not P&S. But the report did not mention whether permanent disability was expected or not. Temporary disability continued into 2005, when applicant was found P&S by the AME. Both the trial Judge and the WCAB ruled that the old 1997 Permanent Disability Rating Schedule (PDRS) applied, based on finding that a comprehensive medical/legal report issued prior to 1/1/05 need not show permanent disability in order to anchor the claim within the old rating schedule.

On appeal Applicant, Applicants’ Attorneys Association (CAAA) and the San Francisco office of Mullen & Filippi on behalf of Defendant, argued before the Court of Appeals. The Court ruled in favor of Defendant, stating that because no pre-2005 medical/legal report indicated the existence of permanent disability, Applicant’s PD must be rated under the 2005 schedule. The Court also found that the commencement of TTD payments (rather than termination) was insufficient to trigger the requirements of PD notification found in Labor Code Section 4061, again resulting in application of the 2005 rating schedule.

This decision supports use of the new 2005 PD rating schedule for pre-2005 injuries where there is no pre-1/1/05 report showing permanent disability, and TTD has not yet been terminated. The complete Costco appellate decision may be read through this link.

Although school may be out for now, other challenges to the use of the new schedule for old injuries are sure to come. We will fight those battles… next semester.

If you think gas prices are high… On your way out of town, the price of gas at the pump is not the only thing you’ll notice has gone up. The Department of Labor has posted the State’s Average Weekly Wage (SAWW) for the period ending 3/31/07 of $914.16, an increase of 3.93% over last year. This brings the minimum and maximum TD rates up to $137.45 and $916.31 beginning 1/1/08. This will apply to TD rate limits on new claims, as well as claims over two years old (due to the bump-up statute), provided the two year cap has not been reached for injuries on or after 4/19/04. So, mark you 2008 calendar for these coming increases in TD rates.

The increase in SAWW also increase payments on life pension awards for injuries on or after 1/1/03.

Don’t be Delinquent. Effective May 26, 2007, new administrative penalties went into effect. Here’s how it works:

The DWC shall monthly submit report cards (actually, copies of decisions, findings and awards of Labor Code Section 5814 violations) to the Audit Unit. Reporting of multiple such violations by a claims administrator at a single adjusting location may prompt an investigation, consisting of an audit of claims and/or utilization review files. The AD may then issue a Notice of Assessment for delay of benefits. These assessments range from $1,000 up to $15,000, depending on the benefit delayed.

Repeat violations earn a return trip to the “Principal’s Office” for:

One Swat: $30,000 fine for unreasonable delay or failure to comply with existing compensation order;

Two Swats: $100,000 fine where AD finds a general business practice of compensation delay.
Fines are doubled and tripled for reoccurrence within five years, up to $400,000 for a single Order.

That’s pretty steep tuition. Fortunately, penalties may be mitigated by a showing of such factors as: the consequences of the violation, good faith of claims administrator, first offense defense, and size and duration of claims adjusting operation. Also, an Appeal may be filed, followed by a hearing and Determination and Order, which itself is can be appealed to the WCAB.

Utilization Regulations Adopted

Claims examiners beware!

Finally, just before school let out, the “Principal” (Administrative Director) adopted regulations governing Utilization Review (UR). The Section 9792 Regulations take effect immediately (no rest for the weary). The Regulations provide for periodic investigation of claims administrators every five years, UR review organizations every three years, and “target investigations” in the interim where prompted by complaints about UR to the Administrative Director (AD). Upon receipt of a “Notice of Utilization Review Investigation” the claims administrator is required to transmit all requested records to the AD within fourteen days (similar response is required by a UR review organization when they receive a Notice). A further “Notice of Investigation Commencement” may issue fourteen calendar days prior to the on-site investigation. (Special Target Investigations require response and production of documents within ten business days).

Numerous fines “shall be assessed” for a variety of compliance violations (Regulation 9792.12), ranging up to $50,000.00 for failure to establish a UR plan, and up to $400,000.00 for repeated failure to meet UR compliance performance standards. For claims administrators, specific penalties apply for failure to timely approve, modify, or deny requests for authorization, or for tardy notification of need for additional material.

Summons to Principal’s Office

Following an investigation, the AD may issue an Order to Show Cause Re: Assessment of Administrative Penalty (Reg. 9792.15). The claims administrator or review organization shall have thirty days to file an answer contesting any of the asserted UR violations with the AD. Within sixty days of the Order to Show Cause, the AD shall notice a hearing. Following an evidentiary hearing, the AD shall issue a Determination and Order Assessing Penalty, if any. Appeal may be filed within thirty days.

Well, just when we thought it was safe to go in the water, based on the new Regulations it looks like it might be time for summer school. Ugh! Yes, there are sharks in the water. But, better to be aware than to dive into unknown waters.

We hope this news and update will help you to be prepared, and allow you to enjoy the summer season.

Need Assistance? Are you interested in having M&F attorneys design a customized training or claim review round-table meeting for your office? We'd be happy to provide on-site assistance as required to help you meet the challenges of today's claims administration issues, and to assist you in complying with all regulatory guidelines. Contact us today at education@mulfil.com for further details or to schedule a seminar!
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DISCLAIMER — The purpose of this e-mail is to review the latest developments in workers' compensation law and related issues which may be of particular interest to the workers' compensation community. The information contained herein has been abridged from various sources and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.

Wednesday, June 6, 2007

CASE LAW UPDATE: Significant Decisions

The following are recent California case law decisions that may be of interest to our clients:



Utilization Review

SCIF v. WCAB (Sandhagen) - Utilization review decisions not made within the mandatory time frames are excluded from consideration. The AME/QME process is still available to the claims administrator. The case's ruling that utilization review is optional has been appealed by the applicant to the California Supreme Court, and the Court has agreed to make a ruling on the issue.
Smith & Amar v. WCAB; Attorneys are entitled to be paid attorney fees under Labor Code section 4607 for their efforts in enforcing a future medical award where a defendant has been denied a specific form of treatment but did not petition to terminate the award of medical care. The California Supreme Court recently granted the defendant's petition; therefore, this case is not citable authority.


Medical Provider Network

Bruce Knight v. Liberty Mutual - If an employer or insurer fails to provide the proper medical provider network notice to its employees, treatment can be obtained outside of the MPN.
Norman Pyle v. American Insurance and Fireman's Fund Insurance Company - Failure of an employer or insurer to have MPN providers available to treat employees is equivalent to terminating a future medical award, and attorney fees are owed under Labor Code section 4607.
Babbit v. Ow Jing & Golden Eagle – MPN statute applies to all injury dates. Thus, employers or insurers may transfer older cases into the MPN.


Permanent Disability

Pendergrass v. Duggan Plumbing & SCIF - The old permanent disability rating schedule is not triggered by the commencement of temporary total disability prior to January 1, 2005. Instead, the new schedule will apply. This replaces a previous finding by the same court that the payment of TTD prior to January 1, 2005 actually triggered a rating under the old system, generally producing a higher permanent disability rating.
Baglione v. Hertz Sales & AIG - A comprehensive medical legal report prior to January 1, 2005 does not trigger the old permanent disability rating schedule unless the report describes the existence of permanent disability.
Costco v. WCAB - Upholds the findings in Pendergrass II and Baglione II. The commencement of TTD prior to January 1, 2005 does not trigger the use of the old permanent disability schedule. Further, if the Comprehensive Medical Legal Report on a claim does not comment on the existence of permanent disability, the case cannot be rated under the old permanent disability schedule.
Costa v. SCIF - The new permanent disability rating schedule was validly adopted. Vocational rehabilitation evidence may be used for rebuttal of schedule, and fees may have to be adjusted. The WCAB has now granted the defendant’s petition for reconsideration. Therefore, this case is not citable authority.


Apportionment

The California Supreme Court has determined that the percentage (Welcher) method must be used for calculating apportionment in permanent disability cases. This resolves the issue as to which method should be used to calculate apportionment - the percentage or the dollar method.

Please see the illustration below of the two methods:



Assume '06 injury is 50% or $62,387.50 and prior award for '05 is 30% or $28,820

- Welcher - subtracting the percentage

- 50% - 30% = 20% or $17,365

- Nabors/Dykes - subtracting the money

- $62,387.50 - $28,820 = $35,567.50

- Variance of $18,202.50

Utilization Review Enforcement Regulations

New Regulations That All Claims Administrators and Employers Should be Aware of:

The California Administrative Director filed the final version of the utilization review enforcement regulations with the Office of Administrative Law on April 26, 2007 with an effective date of May 26, 2007. The regulations carry high dollar monetary penalties for failure to meet any of the provisions of the utilization review regulations. The following are examples of the penalties in the most recent version of the regulations:



$50,000 for failure to establish a utilization review plan
$5,000 for failure to include all of the plan requirements
$10,000 for failure to file the utilization review plan or a letter in lieu of the plan
$5,000 for failure to file a modified utilization review plan after a material modification
$50,000 for failure to employ or designate a physician as a medical director
$25,000 for issuance of a decision to modify or deny a request for authorization regarding a medical treatment, procedure, service or product where the requested treatment, procedure or service is not within the reviewer’s scope of practice
$25,000 for failure to comply with the requirement that only a licensed physician may modify, delay or deny requests for authorization of medical treatment for reasons of medical necessity
$15,000 for failure to communicate the decision in response to a request for an expedited review
$5,000 for failure to approve the request for authorization solely on the basis that the condition for which treatment was requested is not addressed by ACOEM
$10,000 for failure to discuss reasonable options for a care plan with the requesting physician prior to denying authorization of or discontinuing medical care, in the case of concurrent review

Sunday, May 13, 2007

Permanent Disability Ratings

The game has changed when it comes to rating permanent disability on Workers' Comp claims. This excerpt from Volume - 2 of the Professional Training Series, "Litigation Management" discusses the recent changes to rating PD.

Sunday, May 6, 2007

APPORTIONMENT!

Does anything more really need to be said? Apportionment is the defining issue of the 2004 reforms. This excerpt discusses the legal basis for apportionment and some practical How To's.

For a complete guide to legal procedure, purchase the DVD from the WorkCompTV.com website at: http://www.workcomptv.com/videos.html.

Sunday, April 29, 2007

NEW RELEASE! The Claims Examiner Toolkit


WorkCompTV.Com is proud to announce the release of our latest tool for effective claims management, "The Claims Examiner Toolkit.

The Claims Examiner Toolkit is a single-source, CD-based claims management tool that contains all of the:

-Forms
-Checklists
-Publications
-Tips
-Techniques

For managing a Workers' Compensation claim in the California Workers' Comp environment.

You may purchase the Claims Examiner Toolkit at the WorkCompTV.Com website for $39.99 per CD.

Friday, April 27, 2007

Injury AOE/COE and Medical Disputes

Two of the most common issues on litigated claims have to do with injury AOE/COE and disputes over the provision of medical treatment. This video excerpt gives you valuable advise on how to address these issues with legal counsel. Please go to the WorkCompTV.Com website to publish the complete video series.

Jeff

Sunday, April 22, 2007

Initial Legal Referral

As simple as it seems, the most basic decision on litigated claims is making the initial decision to refer the claim to an attorney. This brief excerpt deals with that issue. To view the whole DVD, you can go to the workcomptv.com website to purchase.

Have A Life

I realize that any bozo with web access can spout off on any topic as long as there is someone to read it. On second thought, you don't need anyone to read it, although it helps. In the coming weeks and months, I plan on spouting off on all things relating to Workers' Comp. Oohh Boy! That's an exciting topic. Why the banana split? Why not!

Excerpts From Volume 2 DVD - Litigation Management

The Man behind the Man

I'm not sure why I feel the need to show my face, but...I feel the need!
This may be the result of some deep seeded need or desire to be the center of attention, but really, I just hope it helps me sell the video.

State of The Industry

As we creep past the 3 year anniversary of the passage of SB899, it is time to reflect on what has been gained, lost and is yet to come.

GAINS: Across the board, employers, especially self-insured employers have seen substantial reductions in the cost of Workers' Compensation. Cost are down anywhere from 10 to 20% across the board. In addition the number and frequency of claims reported are down significantly. There is a general sense in the industry that a corner has been turned and the employer has the upper hand.


LOSSES: Although there are fewer claims, severity seems to have increased over the past 3 years. Applicant attorneys are squeezing every drop of PD and medical treatment out of the claims that do exist. The issues of apportionment and the appropriate PD schedule to use are being hotly contested.

THE FUTURE: Where do we go from here? There are a variety of legislative and court challenges pending that may adversely affect the positive gains that employers have seen recently.

Stay tuned for more info in the coming days.

Jeff

Welcome!


Welcome to the WorkCompTV.Com blog. We are here to provide you with the ultimate in Workers' Compensation training and education. Please go to http://www.workcomptv.com for the latest release of training and educational dvd's.