Good Example Of Reforming Workers Compensation Thesis

AN EXPLORATORY ANALYSIS OF SENATE BILL 863

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ABSTRACT
California’s (CA) legislature has passed a series of Workers Compensation (WC) reforms during the past 15 years; the most recent, Senate Bill (SB) 863 passed on August 21, 2012. SB 863 was introduced and presented to the California public as a reform bill that would ensure better coverage and easier medical access for workers injured on the job. SB 899 passed during the early 2000s was shown to be better for California’s workers, than SB863. The most vulnerable workers, those with permanent disabilities, receive the worst impacts from SB 863. SB 863 added more bureaucracy not less to the WC system; including the creation of the IMRO to resolve medical disputes. The IMRO has been placed between the UR and the WC judges. The CA WC system should make fees and schedules transparent. Return-to-work options should be favorable to both the disabled worker and the employer.
(Key words: Workers compensation, California WC, permanently disabled workers, return-to-work, SB 863, SB 899)

LIST OF FIGURES

Figure 2- 2 California workers from 1996 to 2009 26
Figure 2- 3 Projected earnings losses versus AMA impairment rating 54
Figure 2- 4 Framework for WC Performance-Measurement 62
Figure 3- 1 Methodology...70
Figure 4- 1 Comparison of outcomes between SB 899 and SB 863..79
Figure 4- 3 Millions of California workers from 1983 to 2011 80
Figure 4- 4Workers Compensation graphed as $100/payroll 81
Figure 4- 5 Workers Compensation per payments to insurers (fee rates) 81

LIST OF TABLES

Appendix A- 1 California Workers v. Year 110
Appendix A- 2 Characteristics of 500 Injured Workers 111
Appendix A- 3 Characteristics of 500 Injured Workers (cont.) 112
Appendix A- 4 Characteristics of 500 Injured Workers (cont..) 113
Appendix A- 5 Overview of WC case events with Coding and Descriptions 114
Appendix A- 6 Number of California workers per year 115
Appendix A- 7The Insurance Rate from 1983 to 2014 116
ACRONYMS AND ABBREVIATIONS
AB Assembly Bill
APHA American Public Health Association
BRG Berkeley Research Group
BRS Bickmore Risk Services
CA California
CCHSWC California Commission on Health and Safety and Workers' Compensation
CLF California Labor Federation
DIR Department of Industrial Relations
DIV Division of Workers’ Compensation
DWC Division of Workers’ Compensation
ER emergency room
IMR Independent Medical Review
IMRO Independent Medical Review Organization
JPA Joint Public Authority
ER Emergency Room
FEHA Fair Employment and Housing Act
MMI Maximum Medical Improvement
MPN Medical Provider Networks
OSHA Occupational Safety and Housing Administration
par. Paragraph
PD Permanent Disabilities
PPD Permanent Partial Disability
SB Senate Bill
SB 899 Senate Bill 899 on workers’ compensation passed by the California legislature in 2004
SB 683 Senate Bill 683 for the reform of the earlier workers’ compensation bill (SB 899) took effect January 1, 2013.
TTD Total Temporary Disability
UCLA University of California, Los Angeles
UR Utilization Review
U.S. United States
WC Workers Compensation
WCIS Workers’ Compensation Information System
WCIRB Workers’ Compensation Insurance Rating Bureau of California
Chapter I
INTRODUCTION
A series of legislative measures have been applied over the years in order to reform California’s WC (WC) system. The most recent is Senate Bill (SB) 863. SB 863 was introduced and presented to the public as a reform bill that would ensure better coverage and easier medical access for workers who are injured on the job. A higher degree of equity between injured workers was an expected outcome of instituting SB 863. SB 863 was passed on August 21, 2012, signed into law by the governor on September 18, 2012 and took effect January 1, 2013. This research reviewed the most recent academic research and other appropriate sources to determine whether or not the reform has positively impacted injured workers.
In 2006 a plan to abolish WC and replace it with a national disability insurance system, under the auspices of The Public Health Model, was proposed (LaDou, 2011, p. 103). Medical professionals, health care workers and safety workers would be part of the public health system under the plan; no part of the system would be private (LaDou, 2010; LaDou, 2011, p. 103). An article about a plan, the Public Health Model, appeared in Environmental Health (LaDou, 2010: LaDou, 2011). A follow-up to the review appeared in the Comments and Controversy section of New Solutions outlining an effective strategy based on LaDou’s recommendations for a new WC agenda (Lax, 2010, p. 303). Lax (2010, p. 303) emphasized the need to take action using LaDou’s recommendation for a strategy.
The purpose of SB 863 was to reform problems in California’s WC that developed from an earlier WC reform bill, SB 899. SB 899 was signed into law in 2004. WC is a complex issue with real life impacts on workers and their families. The outcomes for Senate Bill (SB) 863 were expected to improve outcomes from SB 869. The impact of SB 869 and SB 863on injured workers have been compared and contrasted, in order to learn whether or not SB 896 has resulted in improved coverage. The aim of the research has been to analyze the complexity of the issue in order to clearly understand SB 863’s impact on the people who depend on it the most, namely, injured workers. The analysis of the bills and the issues surrounding the bills allowed a better understanding of WC reform legislation in California. Therefore observations about the efficacy of California WC reform bills could be made. Recommendations could be developed for a future strategy for WC because the benefit s and disadvantages of past bills were assessed with the historical knowledge. An effective strategy has been designed for implementing WC that would be better for California and better for California workers.
If the processes for injured workers were compared between SB 899 and SB 863, insights into strategies would become clear. A new strategy, taking the best from the two reform bills, but throwing out the worse, could be developed with reference to the effective strategy proposed by LaDou (2010) and the actions proposed by Lax (2010).
Worker’s Compensation
WC is a tool for providing medical bill payment, cash (indemnity) benefits and occupational rehabilitation. The dependents of workers are covered upon the death of their primary care giver (father, mother or other designated person) when the death was caused by an injury or illness due to a workplace accident or situation. Seabury (et al., 2011, p. 45) explained how the system is based on an assumption of no-fault: regardless of fault, the employer must take on the responsibility of compensation for the worker or for the dependents of the worker in terms of costs of health care (medicine, hospital, etc.) and lost wages. In the case of a worker’s death, the employer is responsible for making monetary compensation to the workers’ dependents.
Every employer in California must meet the requirement of obtaining WC insurance whether one worker or more is employed. The employer can self-insure. Or the employer has the choice of purchasing insurance from the State Compensation Insurance Fund or from a private insurance agency (Seabury et al., 2011). If the employer decides to self-insure, the process requires proof s/he has enough financial resources to do so. After that has been proved, then certification from the Department of Industrial Relations (DIR) is required. For small businesses another option for self-insurance can be chosen, that is to form a group with other small businesses and apply for certification as a group or define the group as a Joint Public Authority (JPA).
Historical Background
California Worker’s Compensation faced a crisis during the years 1999 to 2003 because the “aggregate premiums in California rose by more than 200 %” (Pourat et al., 2007. p. 618). The cause was recognized as the minimum rate regulatory system change to an open-rating system. In 2000, California had the highest total claims and premium rates in the U.S., but benefits paid to injured workers were close to the lowest (BRS, p. 3). “Employers were faced with even greater premium costs, lack of insurance markets willing to underwrite risks, and ultimately the unprecedented financial failure of 28 insurance companies insuring employers for WC in California” (BRS, p. 3). These problems motivated WC reform bills in 2002 and 2003. In 2004, SB 899 was passed because a coalition built of various stakeholders who were concerned with the possible catastrophic impact to California’s economy pushed for reform.
New reforms were initiated after April 19, 2004 based on SB 899. SB 899 created a cap at 104 weeks for TTD benefits, with a few exceptions for severe injuries or diseases (Seabury et al., 2011, p. 45). Severe injuries were categorized as on the order of severe burns or amputations. For severe injuries, the cap set by SB 899 was 239 weeks of TTD benefits after which no more benefits were paid. Workers who had not recovered by the time MMI was reached could apply for PPD benefits but the resumption of benefits was not guaranteed. The doctor judged whether or not permanent disability has been caused by a work-related disease or injury; the doctor rated the severity of the injury and filled out a medical report. On the report, the disability was rated by a number system from 1 to 1000, indicating the severity of the health problem or injury. SB 899 directly linked the amount of PPD benefits to the disability rating. At the maximum, an injured worker could receive 60 percent of their weekly wages for a benefit, but the amount was assessed each week and could be capped.
A worker injured on January 1, 2004, would have been eligible for up to $200 per week if his or her disability rating was under 70 percent, but he or she would have been eligible for up to $250 per week if his or her disability rating were 70 or more. (Seabury et al., p. 46)
The weeks an injured worker could receive linked to the disability rating. If the disability rating was above 70, then the injured worker could receive a small weekly life pension payment.
The purpose of SB 863 was to reform problems that developed from the earlier bill, SB 899 passed in 2004. In SB 863, California benefits for work-related injury or illness is two thirds of gross wages (the pretax value of the wages) (Seabury et al., 2011, p. 45).
Other states do not use a rating formula like California’s system. The Division of WC (DWC) administrative director adopted a rating system for determining every individual injury’s ‘percentage of disability’. Other states use a less detailed calculation based on a common benefit schedule organized according to the type of injury. Details that made California’s system unique in the U.S. were the adjustment factors for occupation, age, work-capacity and a category of “subjective” factors (Seabury et al., 2011, p. 46). The California rating system has been blamed for being too subjective and not objective enough leading to disputes and lawsuits (Revelle et al., 2005).
Research conducted on the impact of SB 899 reforms demonstrated that an easily identifiable difference in the amount of income replacement occurred (Seabury et al., 2011, p. 110). Unfortunately, from the perspective of injured workers the indemnity benefits showed a dramatic decrease and the highest felt impact of this occurrence was felt by permanently disabled workers. Seabury (et al., 2011, p. 110) reported that the causes included the changed disability rating schedule and the repeal of the vocational rehabilitation system. The fraction of workers who were eligible for permanent disabilities (PD) benefits was decreased. Decreased indemnity benefits directly related to decreased average replacement rate (of lost income) (Seabury et al., 2011, p. 111). The disability ratings were observed to increase about 8 to 10 percent between 2007 and 2009 (Seabury et al., 2011, p. 111). This observed increase helped even out the immediate 60 percent drop of PD awards after the bill was initiated; the drop evened out to about 40 percent in 2004. These types of problems helped motivate the reform movement that resulted in SB 863.
The decade from 2000 to 2010 was evaluated by a research study to determine information about post-injury employment outcomes. Several years after injury, workers’ personal finances were shown to be negatively impacted (Peterson et al., 1998; Reville & Schoeni, 2001). SB 899 was shown to have a negative impact for vocational training because it replaced California’s “extensive vocational rehabilitation system” with a voucher program (Seabury et al., 2011, p. 41).
The effects of reform bills on California WC were evaluated in a study for DIR and DWC. The first recommendation resulting from the study was to reassess how effective the regulatory system had made necessary changes. The purposes of the reassessment are to encourage stable costs and ensure fair competition. The hope is that cutthroat competition will be avoided. The main concern of insurance companies was future legislative movement on WC that would require ineffective predictions of costs. If predictions are not reliable the insurance companies end up having to increase their costs retroactively.
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) was put in charge of a plan to monitor changes caused by reforms. Other recommendations were meant to keep the insurance rate competitive; for example, creating a “strong state fund alongside a competitive market” was recommended (Miller et al., p. 9). In 2006, the medical provider network market had been undergoing a consolidation into fewer and fewer companies and the trend is still continuing. Cost control measures that affected WC were found to include medical services. A diverse range of medical provider categories were available. Another recommendation was to follow procedures and measures in other states that could be successfully applied to Californian WC.
California benefits for work-related injury or illness is two thirds of gross wages (the pretax value of the wages) (Seabury et al., 2013a, p. 45). Recent research, after the institution of SB 863, has focused on SB 863’s impact on injured workers (Seabury, Neuhauser & Nuckels 2013a; Seabury & Scherer, 2013b) as well as, injured worker’s perceptions of medical care and their satisfaction level (Pourat et al. 2007). In fact, research from the RAND Center has identified the disproportionate earnings losses that permanently disabled workers have experienced due to SB 863 (Seabury & Sherer, 2013b). The degree and quality of access available to injured workers after SB 863 reforms were instituted has been evaluated by the Berkeley Research Group (Miller, Hisrsh & Kellogg et al., 2013). The findings reported in a number of studies published in peer-review academic journals do not demonstrate that the assurances from Angie Wei, the legislative director for the California Labor Federation have come true. Wei (2013) declared that the reforms implemented due to SB 863 would reduce costs and help injured workers.
An organizer for the California Labor Federation remarked at the time SB 899 was passed, that it was “a draconian bill that gutted the workers compensation system and created more pain and suffering for injured workers” (Wei, 2013, Labor’s Edge section, par. 2). The anger at the omissions and the seeming punishments to injured workers that resulted from the passing of SB 899 led to a movement for creating a reform bill. The organized push for a reform bill resulted in the California Senate Bill 863 (SB 863).SB 863 was passed on August 21, 2012, signed into law by the governor on September 18, 2012 and took effect January 1, 2013.
Kirk Kancella is a doctor who practices in San Diego (‘Docs,’ 2013). Kancella sued the State of California on behalf of medical providers who offer care to WC applicants on a lien basis. This is only one example of court cases arising due to SB 863. Part of the problem may be that not all the reforms were immediately effective (‘Docs’, 2013), but there are complexities in the law suits that argue against some of the basic reforms embedded in the bill.
Massachusetts WC medical care was impacted by health care reform in the emergency room (ER) sector. The number of uninsured patients was reduced. Heaton (2012, p. 28) reported that “The share of ER patients who wer3e uninsured fell from about 15 percent pre-reform to about 9 percent after reform.” For hospital inpatients the reduction of uninsured was about 50 percent (Heaton, p. 28). But Heaton (p. 27) warned that this general trend may not necessarily result in a statistically important reduction in WC patients therefore more research remains to be done.
A recent study (Miller et al., 2013) on California Workers used data from worker surveys taken in 2011 and 2012, and submissions of medical claims from 2007 to 2011 to the WC Information System (WCIS) in order to evaluate the availability of medical care for injured workers. The study objectives were to evaluate whether or not access was available to meet the needs of injured workers to health care and the health products needed for recovery. Eighty four percent of the injured workers were found to be ‘satisfied’ or ‘very satisfied’ with their provider (Miller et al., p. 30).
Language was not found to be a large barrier to communications with a medical provider; only three percent noted problems with a provider due to language differences (Miller et al., p. 30). Therefore, language does not have an impact on the degree of satisfaction for employees claiming WC. Language would not be an important variable to take under consideration in future research projects. Although the American mass media has raised concerns about a language problem for Latino workers, at least in terms of WC reforms, communication of changes between a health care provider and an injured or disabled worker would not be expected to be a problem based on the survey (Miller et al., 2013).
The percentage of workers reporting problems when they contacted medical provider networks (MPN) totaled 11 percent. No appointments were available for a small percentage and five percent reported difficulties not related to trying to finalize an appointment. The majority of participants, 89 percent, contacted healthcare providers in the MPN without any problems. Seventy nine percent of the participants reported their satisfaction with the quality of care whereas13 percent fell into the range of “very good” to “good” satisfaction’, and eight percent gave a rating of ‘poor’ (Miller et al., 2013, p. 36). Participants who gave a ‘fair’ or ‘poor’ included the reasons of denial of care or claims; no improvement, treated with disrespect and not receiving the appropriate attention (Miller et al., 2013, p. 36). Although 71 percent of the participants returned to work and received earnings the same or similar to what they received before the injury, 14 percent earned less are returning to work and nine percent reported earning more (Miller et al., 2013, p. 40).
The Fairness in Employment and Housing Act (FEHA) requires employees to actively communicate in transparent and genuine ways with workers’ who have been injured and need to reintegrate back into the job (Sum, Kalmin, & Valentine, 2010, p. 9). Many of the impacts of WC reform are from how a new law integrates with other laws such as the disability rights laws. An injured person could have incurred a temporary or permanent disability which must be dealt with under California regulations; this can be expensive and compliance can be difficult from a small business owner’s perspective.
The relationship and quality of communication between employer and employee is important in situations when WC may or may not be an issue depending on the perspectives of each participant. In that kind of instance a reform may further confuse an issue or make the issue easier to resolve. Legal reforms intend to make the process easier to navigate, but often that is not the case. Disabilities and job-protected leave for employees with serious health conditions can make an employee’s life easier or more difficult and the same applies to employers. Sometimes, the perspective has the most importance for interpretation of a reform. Each stakeholder may have a different solution in mind, because the goals are not usually the same.
The California Injury and Illness Prevention program also has impacts when changes are made in WC laws (Mendeloff et al., 2012). The issues between health, occupational safety, and WC have become complicated and often difficult to interpret. Legal reforms have required adjustments to the WC Information System as well as to the Occupational Safety and Health Administration Data Initiative Data (Mendeloff et al., 2012, p. 77). Fair insurance rates have been shown to be dependent stable competition.
Agencies and data providers for the California Industrial Relations department and for other WC reform stakeholders have clearly defined roles. The purpose is to prevent an overlap of complexities in the system. System overlaps cause claims to become increasingly difficult to interpret. Better communication and task division results are a purpose of defining roles carefully. Three examples of agencies with impacts on WC processes impacted by reform laws are described below. The three examples have different missions and different ways to measure variables. WC issues must be very careful when comparing variables between one agency and department to another.
1. The WCIS is in charge of first-report-of-injury forms insurers (submitted by the employers to third party administrators). Injuries were reported to WCIS with electronic communication starting in 2000 and the numbers received increased rapidly until 2001 (Mendeloff et al., 2012, p. 72). The WCIS estimated approximately 25 percent of first reports of injury are not submitted (Mendeloff et al., 2012, p. 72).
2. The Occupational Safety and Housing Administration (OSHA) is in charge of collecting, maintaining the categories of injuries and the types of illnesses in the manufacturing sector for businesses with 40 or more employees. OSHA is a federal department that compiles a national database by collecting data from each state.
3. The WCIRB is responsible for medical reports and indemnity claims from firms. The employers who are not self-insured are required to submit claims to this bureau. The amount of under-reporting has not been researched because, even though reporting to WCIRGB is mandatory, gaps exist in the available data (Mendeloff et al., 2012, p. 72). No fees or other penalties are assigned for non-compliance. Therefore under- reporting occurs but the amount and the impact on research results cannot be estimated because data is not available.
Medical post-reforms were considered after 2003 and 2004 to determine if new reforms could improve the medical decision making and decrease medical expenditures. Winn, Timbie and Sorbero (2011, p. 97) have recommended improvements in administrative efficiency and program oversight. The researchers pointed out that the fastest increasing factor of WC medical expenditures was the “medical cost-containment expenses” Winn (et al., 2011, p.97). The WCIRB set forth new requirements for reporting medical cost-containment expenses meaning that the two categories of medical care payments and medical cost-containment expenses. The recommendations were targeted at the next reform bill which was passed in the form of SB 863.
Definitions
Some of the terminology used in the research is specifically related to workers compensation issues. The following definitions were based on those provided by the California Commission on Health and Safety and WC and the RAND Center for Health and Safety in the Workplace.
Adequacy is used as a measurement of the effectiveness of WC by evaluating the whether or not the benefits paid to an injured worker to compensate for wages lost because of the injury (Seabury et al., 2011, p. 1).
Affordability is used as a measurement of the effectiveness of WC by evaluating employers’ ability to meet the monetary needs to cover “WC benefits, including the delivery costs” (Seabury et al., 2011, p. 1).
Disability refers to a mental or physical impairment that may or may not be related to work but limits employees important daily life activities; a “physical or mental impairment . . . that limits a major life activity” (IRLE, 2010. p. 29). A disability can fall under the categories of permanent or temporary. On the other hand, the term can refer to having a simple disability (IRLE, 2010). A doctor determines if an injury or illness has resulted in a permanent disability (Seabury et al., 2013b, p. 18).
Disability management, according to the U.S. General Accounting Office the key factors are (a) immediate action when an accident that causes or may potentially cause a worker disability, (b) set return-to-work goals and manage assistance in reference to those goals, and (c) design the system of so medical and indemnity benefits give workers with disabilities an incentive to return-to-work (Seabury et al., 2011, p. 42).
Disproportionately low as used in SB 863 was not well defined so Seabury and Scherer (2013, p. iv) suggested the following payment scenario for PD benefits “payments can be targeted to workers whose actual measured earnings after the disability award are below what would be expected based on the severity of their disability.”
Earnings loss can be considered the amount of the difference between the potential earnings if the injury had not taken place and the real, post-injury earnings.
Essential functions are the tasks and requirement that fulfill the purpose of a job position. A function is considered essential if its removal would make the job change in essential ways. Another way to determine if a function is essential is if only a few employees are able to perform the function. Finally when only an expert or person specially trained can do the job task it is considered an essential function.
The Independent Medical Review (IMR) was brought into existence by SB863. The purpose of the IMR is to make medical disputes easier to resolve and to shorten the time for making a decision. The review became effective as of January 1, 2013 so job-related injuries that happened after January 1, 2013 are reviewed with this strategy. Other injuries and/or disabilities were covered as of July 1, 2013
Independent Medical Review Organization (IMRO) is an independent group that administers the IMR. The members of the IMRO) are chosen by the CA DWC.
“Potential earnings”is a hypothetical estimate of what the future earnings of an injured worker would have been if they had not been injured (Seabury & Scherer, 2013, p. 4).
Reasonable accommodation and Reasonable adjustment are the changes in a work environment made so that an employee can continue working. The degree of changes should be proportional to the degree of injury or disability of the worker.
Return-to-work in its most simple definition means when an injured worker returns to the job they held before they were injured. The situation is often more complex because a worker may not be able to do the same tasks, so will be given a different job position. A worker may return and be paid the same as pre-injury or the pay may be decreased.
Social insurance for out-of-work employees in general covers unemployment, PD, illness, and retirement (unemployment due to old age).
Temporary injuries or illnesses that are work-related are classified as causing a worker to be unable to perform the expected routine work, miss work for more than three days or to be hospitalized overnight (Seabury et al., 2013b, p. 17).
Undue hardship applies to situations of accommodating an employee that would result in a burden on the employer in terms of resources and/or costs. Another possibility may mean such a large disruption to the flow of work at a place of employment that the changes cannot be reasonably made. Two laws have addressed this issue FEHA and Labor Code section 132a for initiating an action against an employee.
Utilization review (UR) is a medical treatment request from a physician. The UR is turned into the DWC with a Request for Authorization (RFA). This step is taken before submitting claims to the IMR with the hopes that differences can be resolved at the point of the UR. The RFA contains the request for a specific treatment and description of any dispute or disputes. UR referrals can be deferred by claim administrators and injured workers for all but one situation with the passage of SB863. The UR does not cover whether or not a chosen medical treatment is needed. Instead other disputed issues are covered by the UR such as the location where the injury took place and the part of the body injured (DWC, 2013).
Purpose of the Study
The purpose of the study is to identify the underlying problems of constantly passing a series of state WC bills to improve the system. Reforming WC has been done by changing steps in the process of making claims as evidenced by SB 899 and SB 863. The processes of SB 899 and SB 863 were evaluated side by side. Assessing the positive and negative aspects of the bills improved the understanding of how the CA WC system works and whether or not the system is effective in aiding injured workers.
The evaluation discussion was further strengthened with knowledge from European workers compensation systems and systems in other states. A realistic, pragmatic WC design could be built from the ground up after a careful assessment of the history of WC in the U.S. The evaluation of the two reform bills with respect to each other and the proposal for an effective WC system would be useful to workers, the DIR, the DWC, the state legislators, the medical community, the insurance business and other stakeholders.
Hypothesis: If the processes for injured workers were assessed based on the historical outcomes, a better strategy could be designed.
Research Questions
1. What positive effects did SB 899 have on injured workers?
2. What positive effects does SB 863 have on injured workers?
3. What would an effective, fair WC process look like, if the opportunity arose to build a new system from the ground up?
Aim
The aim of the research is to simplify the complexities of SB 899 and SB 863 by evaluating the systems in order to design a new system from the ground up, avoiding the pitfalls of earlier reforms.
Objectives
1. To identify the benefit of SB 899 and SB 863 by drawing parallel flow charts of the processes the bills demanded for WC.
2. To recognize the disadvantages of SB 899 and SB 863 by drawing parallel flow charts of the processes the bills demanded for WC.
3. To categorize the processes the reform bills of SB 899 and SB 863 as effective of ineffective for injured workers.
4. To develop a plan for a WC system that would be effective in offering fair compensation to injured workers.
5. What positive effects did SB 899 have on injured workers?
6. What positive effects does SB 863 have on injured workers?
7. What would an effective, fair WC process look like, if the opportunity arose to build a new system from the ground up?
Thesis Structure
Chapter I introduces the statement of the problem: an analysis of California’s worker compensation law (Senate Bill 863). A historical background was given on other reforms instituted in California for WC. The purpose of the research has been described. The research questions are listed along with the aim and objectives of the research.
Chapter II contains a literature review composed of peer reviewed articles from academic and professional journals. References with insights into the WC process created for injured workers by SB 899. Research results from the RAND Center for Health and Safety and Berkeley’s Institute for Research and Labor have been included with detailed descriptions of the results of their studies on the influence of SB 863 on injured workers. Articles comparing and contrasting how SB 899 and SB 863 have worked are referenced. Recommendations made in the literature for a more effective system have been discussed.
Chapter III has explained the method of data collection. A chart of the steps taken for the methodology during the research has been provided. A qualitative method was chosen because quantitative measurement tools are not available for this type of descriptive and evaluative policy study. Flowcharts for an injured worker from making a claim to receiving benefits are the foundation of a study to build a new reform system from the ground up. The present situation was assessed by considering the experience of workers who make claims and the amount of the benefits paid to disabled and permanently disabled workers. The California government websites, such as the Department of Industrial Resources (DIR) and the Division of Workers Compensation (DWC), give a very positive, upbeat perspective on the impacts of SB 863. Other sources offer a very different perspective. Therefore, the references include a range of sources such as DIR, DWC, California Labor Federation (CLF), Berkeley Research Group (BRG), and the RAND Center for Health. Articles from the peer-reviewed academic journal, the Journal of Occupational and Environmental Medicine have been cited.
Chapter IV the results of the research in the form of flow charts for the two systems instituted due to SB 899 and SB 863 were described and compared. Tables and charts for categories of advantages and disadvantages have been included. A flow chart of the proposed WC resulting from the research has been included.
Chapter V has presented a discussion of the results. Conclusions derived from the results are included. A description of the proposed system and the reasoning behind each of the steps in the proposed process has been explained. Recommendations for future study have been suggested. Limitations of the research have been shared.
Chapter II
LITERATURE REVIEW
The organized push for a reform bill resulted in the California Senate Bill 863. SB 863 was passed on August 21, 2012, signed into law by the governor on September 18, 2012 and all the changes made in the bill took effect by January 1, 2013. A question remains though if SB 863 is a reform bill or not. Does the bill benefit the people who need it the most, the injured workers of California? If not, then what group of stakeholders is receiving the most benefit?
A comprehensive literature review has been carried out in order to better understand the dynamics of WC (WC). Another goal has been to better understand the impacts on injured California workers who may have temporary or permanent disabilities from an on-the-job injury. The details of SB 863 were found on websites for the Department of Industrial Relations (DIR) and the Department of WC (DWC). The bias on the California state websites was in favor of the legislations, so in order to offer other opinions research from the RAND Center for Health and Safety in the Workplace, RAND Civil Justice and blogs such as the Courthouse News. Several perspectives have been included in order to understand the opinions of the various stakeholders.
The literature review included a historical background on how the United States (U.S.) borrowed ideas from systems that existed in Europe to initiate an American WC system. A short discussion of the federal WC program is included to show the difference between the federal and the state level WC systems. California’s reforms for WC are reviewed starting in 2001 with the Assembly Bill (AB) 222 and continue to the recently passed SB 863. Some of the measures of SB 863 took effect in 2013 so that doctors’ small practices have already discovered that the new reform form for gaining reimbursement is more expensive than they can afford; a litigation case has been described. Details of the SB 863 have been covered.
Overall the one feature that seemed to be linked to dissatisfaction with the new reforms, is the Utilization Review. The new method for review and the organization of the decision making process has been described. The difference between the former UR procedure and the new process are discussed. The changes to the voucher system have been noted along with other details necessary to understand SB 863. A major change with SB 863 was the setting up of the Independent Medical Review (IMR) for medical review. Another major change was the institution of An Independent Bill Review (IBR) to resolve bill payment disputes so that the WC judicial system has been designated for only difficult to resolve disputes.
Historical Background
California has the largest work force in the U.S. and between the years 1996 to 2007 WC in the state demonstrated an increase of more that 2.5 million workers (Gerlach, 2012, p. 2). (See table A-1) California workers amounted to 11.8 percent of the total national workers covered by WC in the U.S. during 2009. In 2001, the number workers reached a peak of 14.73 workers, followed by a dip in 2002 and 2003. (See fig. 1) In 2007 a higher peak was reached of approximately 15.40 million workers, with a dip to about 14.38 million workers in 2009. (See fig 1) EDD data recorded another year of decreasing workers covered by WC during 2010, followed by an increase in 2011to levels approximating the same number in 2009 (Gerlach, 2012, p. 2).
Figure 2- 2 California workers from 1996 to 2009
(National Society of Social Insurance as cited by Gerlach, 2012, p. 2)
The paid medical showed an increasing trend since 2006 when medical benefits equaled about $3.7 billion, until 2010 when medical benefits equaled approximately $4.25 billion (Gerlach, 2012, p. 7). In 2003, the medical benefits paid out about $5.0 billion that was the peak of increase due to the passing of new legislation between 32003 and 2004 (Gerlach, 2012, p. 7). The peak of 2003 has not been matched to this date, although the 2010 payout for medical benefits is approximately 15 percent higher than in 2006, the payout in 2010 was more than 13 percent lower than the 2003 peak (Gerlach, 2012, p. 7).
During the years from 2003 to 2008 the WC insurance rates dropped by 66 percent (Gerlach, 2012, p. 1). The reported amount in July 2003 for the average WC insurance rate equaled approximately $6.29 per $100 payroll (Gerlach, 2012, p. 4). The rate has been decreasing since that to the lowest amount of $2.16 per $100 payroll in January 2008 (Gerlach, 2012, p. 4). The range from January 2009 to January 2011 showed a miniscule increase from $2.29 to $2.37 per $100 payroll (Gerlach, 2012, p. 4).
The Utilization Review (UR), bill review and the medical network costs are the main drivers of medical costs (Gerlach, 2012, p.1). For example, the QME panels have increase in 2010 to about 96.9 thousand after some of the SB 863 reforms were instituted (Gerlach, 2012, p. 11). (Some of the reforms were instituted earlier than others.) Problems were identified with a bottleneck with QME assignments because 40 percent of all medical evaluations take place in 3.9 percent of the location available in the state (Gerlach, 2012, p. 11). The CHSWC reported in 2010 that the number of permanent disability ratings were “substantially and significantly lower” the GMEs handling the high volume than at any of the other locations (Gerlach, 2012, p. 11).
The CHSWC Liens Report (2011 cited by Gerlack, 2012, p. 13) estimated that litigation costs of about $117 million “could be saved by reducing the number of liens by one third.” The number of liens in 2010 reached more than 350,000, and the amount that was expected to be filed was over 470,000 (Gerlack, 2012, p. 13). Eighty percent of the dollars in dispute were for medical treatments bills (62%); “one out of three of the disputes were over bills received by the adjuster after they had been paid” (Gerlack, 2012, p. 13). Seventeen percent of the liens were due to disputes over the medical fee schedule (Gerlack, 2012, p. 13). The three top categories of liens issued over treatment authorization disagreement were 37 percent, unauthorized providers; 29% the authorized treatment; and 20 percent under the category of other.
The Berkeley Research Group (2013, p. 2) conducted a workers survey reported that the main injuries treated were “sprains, strains or other muscle joints.” The survey included workers who had been injured in the 4th quarter of 2011 or the1rst quarter of 2012. The four most used codes for types of treatment were for electric stimulation therapy, therapeutic exercise, and office visits; these all fall under the diagnosis code ICD-9 which is the category for orthopedic treatments (BRC, 2013, p. 3). BRC (2013: 4) conducted surveys on worker satisfaction on medical care satisfaction in 2006, 2008, and 2012; the majority of workers (amounting to about 85 percent) responded they were satisfied with their care in each of the three survey years.
The WCIRB 2012 report on WC losses and expenses for permanent disability claims showed that about 24 percent were for slip and fall injuries and about 21 percent were for back injuries. The average medical cost per permanent disability claim was approximately $39, 860 for slip and fall injuries $31,254 for back injuries, $22,936 for carpel tunnel and other repetitive motion injuries and $15,600 for psychiatric and mental stress injuries (WCIRB CA, 2012, p. 28).
The purpose of the SB 862 reform law was to create “(a) greater efficiencies and accountability in the system, (b) save major employers money that can be used to hire new workers and help our economic recovery, and (c) protect workers who have been injured on the job” stated Assembly Speaker John A. Perez (Neuhauser et al., gov.ca.gov, 2012). Governor Brown stated that the reforms would (a) save hundreds of millions of dollars for California’s employers while (b) preventing an imminent crisis of skyrocketing rates that would hurt both injured workers and businesses” (Neuhauser et al., gov.ca.gov, 2012).
One of the outcomes of SB 863 expected to provide was a 30 percent increase in permanent disability benefits coupled with more efficient, speedier awards payments (Neuhauser et al., gov.ca.gov, 2012). The benefit delivery system was reformed in the bill with the goal of establishing a more objective and more reliable system. The average WC rate per $100 of payroll was expected to increase for $2.39 due to SB863 (Neuhauser et al., gov.ca.gov, 2012).
The rates of WC rates were expected to be reduced because of the new dispute resolution program. SB 863 was designed to establish better retraining for workers and increase permanent disability benefits. An annual savings of $40 million in insurance costs was stated to be an expected outcome (Neuhauser et al., gov.ca.gov, 2012). Business expected to receive almost $1 billion due to the reduction in worker’s compensation costs and losses addressed by the reform bill (Neuhauser et al., gov.ca.gov, 2012).
California WC reform AB 2222
Public policy on WC in California has been revised several times in the past 15 years, starting in the early 2000s. The assembly passed the Assembly Bill (AB) 2222 in 2001 that established disabled workers protections under California’s Fair Employment and Housing Act (FEHA) (Seabury et al., 2011, p. 15). The desired outcome was to reduce discrimination against disabled workers in the job market. Another purpose was to enhance employers’ responsibility to provide needed changes to work stations. The reason was to support disabled workers’ timely return-to-work by ensuring changes on the job so they could continue accomplish tasks even with disabilities. The policy was expected to ensure a shorter amount of time to pass between the injury and the injured worker’s return-to-work. A study by the RAND Center for Health and Safety in the Workplace determined that “AB 2222 led to a large increase in the number of discrimination claims starting in 2002” (Seabury et al., 2011, p. 15).
Reforms to implement better medical decision-making and to decrease medical expenditures were recommended after the passing of the above reform legislation. Results of research led to the call for increased medical care administrative efficiency and the establishment of program oversight (Winn, Timbie & Sorbero, 2011, p.97). The researchers pointed out that the main reason higher rates of costs for WC was the uncontrolled increases in medical costs (Winn, Timbie & Sorbero, 2011, p.97). It wasn’t until the reforms being considered to improve SB 899 that expense containment under the categories of (a) medical care payments and (b) medical cost-containment expenses was addressed.
California WC Reform Bills SB 228 and SB 899
Permanent Partial Disability (PPD) benefits California Senate Bill (SB) 228 was passed in 2003 and made big changes including the initiation of the Utilization Review (UR) based on specific medical treatment guidelines and delivery systems for health care (Seabury et al., 2011, p. xiii). In 2004 the Senate passed SB 899 in order to make WC affordable for employers but at the same time make sure that the benefits for injured workers were adequate. Instead the benefits for PPD were significantly reduced. In fact PPD benefits fell by 50 percent or more (Seabury et al., 2011, p. 15).
Return-to-work changes
The SB 899 was passed to offer a new design for pay-outs of the permanent disabilities (PD) benefits. SB 899 changed the one tier system for PD payment levels so that 2-tiers were established in the hopes the payment amounts would be fairer. Fifteen percent higher payments were established for employers, if the employer makes no return-to-work offer. On the other hand if a return-to-work offer is made to the injured worker, then the employer will pay 15 percent less in benefit payments if the worker does return-to-work (DIR, 2014). Research on the amount of injured worker amount of benefits received under SB 899 showed that benefits decreased dramatically. The highest negative impact for decreased benefits was felt by the permanently disabled workers (Seabury et al., p. 110).
The two changes that most decreased advantages for injured workers were the new disability rating schedule and the repeal of the vocational rehabilitation system was (Seabury et al., p. 110). The number of injured workers eligible for permanent disabilities (PD) benefits was decreased leading directly to decreased average replacement rate (of lost income) (Seabury et al., p. 111). The disability ratings were observed to increase about eight to ten percent between 2007 and 2009, helping to even out the immediate 60 percent drop of PD awards after the bill was initiated (Seabury et al., p. 111). The decrease in amount of benefits fell to about 40 percent by 2004.
The reasons for the problems were stated as ranging from “the incentives embedded in the WC system” to a number of public policies that influenced the return of work (Seabury et al., 2011, p. 15). SB 899 was regarded by an organizer for the California Labor Federation as “a draconian bill that gutted the WC system and created more pain and suffering for injured workers” (Wei, 2013). The anger at the omissions and parts of the bill, such as the decreases in benefits and the voucher system for vocational training, were interpreted as punishments to injured workers. Seabury (et al., 2011) concluded that in the two years after SB 899 passed; return-to-work increased, but decreased benefits resulted, particularly to PD workers. These types of problems helped motivate the reform movement that resulted in SB 863.
The WCIRB was directed to monitor the different impacts the reforms caused. Creating a “strong state fund alongside a competitive market” was recommended in order to keep insurance rates competitive (Miller et al., 2013, p. 9). Monopolies of the medical provider network started forming in 2006; this trend has continued. Medical services were impacted by cost control measures, which in turn had an influence on the services to workers. A diverse range of medical provider categories were available which included chiropractors and acupuncturists (Miller et al., 2013). A recommendation to compare the procedures and measures used in other states was made, with the purpose to use any that could improve the WC system in California.
Stable competition has been found to be the most important feature that equitable insurance rates are based (Mendeloff et al., p. 77). Legal reforms are expected to require adjustments to the WC Information System (WCIS) but other agencies are also affected such as the Occupational Safety and Health Administration Data (OSHA) Initiative Data (Mendeloff et al., p. 77). The data and information linkage between WCIS and OSHA has resulted in a complex and hard to interpret. Because of the reforms, the issues between health, occupational safety, and WC have become complicated. For example the WCIS is responsible for first-report-of-injury forms insurers (submitted by the employers to third party administrators). Electronic submissions of injuries have been allowed starting in 2001. A problem that may confound research data is the estimate that about 25 percent of first reports of injury are not submitted (Mendeloff et al., p. 72).
On the other hand, OSHA is a federal agency that has the responsibility of collecting and maintaining the data of injuries and categories that are experienced in factories with 40 or more employees. The California WCIRB has responsibilities that overlap the duties of OSHA and WCIS. Self-insured and non-self-insured companies must submit medical reports and indemnity claims to the WCIRB. No penalties, such as fees are applied for non-compliance. Under-reporting leads to gaps in the available data leading to difficulties in some research projects (Mendeloff et al., p. 72). The amount of under-reporting is not known.
The Massachusetts’ system for worker’s compensation has been the focus of several research studies. Reforms in Massachusetts’ emergency room (ER) systems were influenced by reforms in the WC medical care. About 6 percent more of the ER patients were observed to be insured after the reform (Heaton, 2012, p. 28). The reduction in uninsured hospital inpatients was 50 percent (Heaton, 2012 p. 28). The researcher, Heaton (2012, p. 27) cautioned that a decreased trend in uninsured workers’ receiving benefits may not link directly to the general public; therefore Heaton recommended more research to compare the trends.
The national WC policies have also been compared to state reforms. Employees are required by the Fairness in Employment and Housing Act (FEHA) to communicate openly and sincerely with injured workers in order to integrate them back into the job (Sum, Kalmin, & Valentine, p. 9). The reason the act requires transparent and genuine interactions between employers and injured workers is so that arrangements can be made that will be advantageous to both parties.
Overview of Public Policy Changes Taking Place with SB 863
Labor unions and employers negotiated a compromise which resulted in Senate Bill 863, according to the DIR website (2014). Two major options needed to be ironed out by the legislation passed in September, 2012. Firstly, the amount of permanent disability benefits for workers injured on the job and who experience long term negative effects needed reform. Secondly, the challenges employees faced when attempting to collect WC made reform necessary to make the system more efficient. The problems included the costs and the length of time taken to deliver benefits. Resolving disputes were also costly and lengthy.
Changes addressed in the SB 863
According to the California’s Department of Industrial Relation significant changes which resulted in California’s WC law SB 863 included the following (DWC, 2013).
1. The permanent disability payments were increased.
2. The rating method used to decide permanent disability benefits was simplified.
3. An Independent Medical Review (IMR) was organized in order to resolve medical treatment disputes. The IMR will resolve disputes that could not be resolved by the UR. The IMR will take all disputes that are about the type of treatment needed to take care of an injured. The purpose of the IMR was expected to give injured workers an easy, efficient way to dispute decisions made by the claims administrator.
4. An Independent Bill Review (IBR) was organized to resolve bill payment disputes.
5. The voucher system for supplemental job displacement was simplified.
6. The new law addressed the costs of liens by requiring payment of filing fees and activation fees.
7. The medical provider networks were improved.
8. The Medical Fee Schedule was updated.
9. Fee schedules were created for in-home health care, vocational experts, interpreters, and copy services.
9. Workers who were impacted by disproportionate wage loss would receive higher payments.
More detailed look at changes initiated by SB 863
Independent bill review (IBR)
The IBR changed the bill review from resolution by the judicial system to “the medical billing and payment experts” (DWC, 2013). This portion of the law was added to offer a way for billing disputes to be resolved outside the judicial and civil service systems. When a medical provider has disagreed with the amount of payment received based on a decision of a claims administrator, can request a second review. If the provider is still dissatisfied the dispute can move to the IBR. An appeal of the IBR’s solution is handled by a WC judge (DWC, 2013). This new procedure became effective January 1, 2013. The payment for IBR is the responsibility of physician and is submitted with the application for a review.
Long term disabilities, the IMRO and the IMR
If an employee has experienced an injury that results in a long-term disability the disability benefits for the employ will be raised to compensate for “the lasting effects of a workplace injury” (DWC, 2013) The SB 863 was expected to reduce the time and the costs necessary in order (a) to receive benefits and (b) the resolution of disputes. A new group of physicians appointed by DWC has been organized under the new law, the Independent Medical Review Organization (IMRO). The IMRO is the administrator of the Independent Medical Review Organization IMR. The IMR is charged with the task of resolving issues between the claims administrator and a worker. The supervision of the program is the responsibility of the DWC Medical Unit. The IMR physician does not carry out physical exams. When a request for IMR is accepted, the IMRO will assign the records and the other information that can be used and must be submitted for the review (DWC, 2013).
The IMR was created in the hope that claim disputes could be resolved in approximately 40 days instead of approximately one year which was commonly experienced. The claims administrator might make accept, reject, delay or modify a claim. If the claim is not accepted the injured worker has the right to a review of the claim by an “independent, qualified physician” assigned to the case by the IMRO (DWC, 2013) The guidelines for choosing the appropriate physician for each care are rigorous and standardized. In the past the review of medical claims was done by “state-certified medical evaluations and judicial decisions” (DWC, 2013).
Utilization Review (UR)
SB863 still requires the utilization review (UR) to be the step to take before submitting disputes to the IMR. The only exception is the whether or not the injury requires a specific medical treatment. If the dispute is not by the end of the UR process, then the claim passes to IMR. For instance, the UR is specifically for disputes if the injury took place at work or somewhere else. Another example of a claims dispute taken to the UR is the part of the body where the worker’s injury occurred. Once a UR claim is resolved that claim stands for one year; therefore duplicate claims are rejected during that year and no change will be made unless the facts about the incident and/or injury change (DWC, 2013).
Change to Qualified medical examiners (QMEs)
SB863 has tried to change the predestination process to be more in favor of workers choosing the physician they want to use by dropping the need for meeting a list of qualifications. The part of the former law that was changed was requiring the employer to offer a group health insurance policy and the worker to have another medical insurance for non-work related health issues (DWC, 2013). Qualified medical examiners (QMEs) cannot comment on disputes after January 1, 2013 for any and all injuries. Everything pertaining to injuries will be processed through the IMR. Workers are allowed to choose ten offices they want to designate for undergoing “qualified medical evaluations” (DWC, 2013).
Medical provider networks (MPN)
IMRs also have an impact on the medical provider networks (MPN).SB863 has structured the MPN IMR process so that disagreements between workers and doctors can be resolved over the treatment needed. MPN providers are no longer required to take worker compensation patients. Instead each MPN provider must list on their office’s website a list of all MPN providers who do accept worker compensation patients. An appeal of the IMR’s solution is handled by a WC judge.
Changes were made to the MPN approval processes which are intended to strengthen the MPN. MPNs need to apply for approval every four years. Preapproval applications need to be submitted “at least six months before the expiration of the four year approval period” DWC, 2013). After January 1, 2014 a physician must provide a “separate written agreement” to be in the MPN to enter or renew becoming a part of the MPN.
Permanent disability (PD)
Permanent disability (PD) benefits were increased by 30 percent in step-wise fashion over the past year (2013). The minimum benefit was set at $160 per week and the maximum changes based on a rating system. The range for maximum PD benefits is from $230 to $290 per week in 2013. After January 1, 2014 the maximum rate is set at $290 per week for all PD levels. SB863 eliminated “sleep disorder, sexual dysfunction and psychological add-ons” workers compensation claims (DWC, 2013). The reimbursement for future earnings losses were ended as of January 1, 2013.
Supplemental Job Displacement Vouchers (SJDB)
Supplemental Job Displacement Vouchers (SJDB) system was changed and now is at the set rate of $6,000 without using the PD rating schedule as a reference. Before SB863 the PD rating schedule was used to determine payments ranging from $4,000 to $10,000. The vouchers expire under SBE63 two years from January 1, 2013 or “five years from the date of injury, whichever comes later” (DWC, 2013). Any voucher that was issued before January 1, 2013 does not expire because it is covered by the previous WC law. SB863 does not allow cash payment for vouchers. Training costs, fees and required tools are covered by the vouchers now. The voucher system covers “up to 10 percent or $600 to “a licensed placement agency or vocational counselor” (DWC, 2013).
Liens
Filing a lien after January 1, 2013 for “medical treatment, medical-legal expense, or claims of costs” require a $150 fee payment. A $100 activation fee is required for liens placed before January 1, 2013 to be reactivated. Exemptions are available from the fee payments for “health care service plans, group disability insurers, self-insured employee welfare benefit funds, Taft-Hartley health and welfare funds and publicly funded programs providing non-industrial medical care” (DWC, 2013). Cash and check payments are not accepted for liens now; liens can only be paid electronically. Liens filed after July 1, 2013 the time from the date of service provided to filing of the lien has been shortened to 18 months as opposed to three years.
Return-to-work
A return-to-work program was initiated with a funding budget of $120,000 per year. The money was designated for supplemental payments “to injured workers whose permanent disability benefits are disproportionately low in comparison to their earnings” (Seabury & Scherer, 2013, p. 2). The term ‘disproportionately low’ was not defined in the bill so the amount must be decided by the Director of the Department of Industrial Relations (DIR) when creating and implementing the new program. The eligibility and the amount of the benefit payments are to be determined by the DIR and by the Commission on Health and Safety WC (CHSWC).
Influence of European WC on U.S. policies
German system
Worker’s compensation was part of the public policy in all the countries in Europe by the end of the 1900s. German WC’s policies started under Chancellor Otto Von Bismarck (1873 to 1890). German WC policy was designed with centralized administration and employees paid into the WC fund LaDou (2011, p. 103). The main features of the system were broad coverage, compulsory involvement, and “provided for nonprofit mutual employer’s funds” (LaDou, 2011, p. 103).
British system
Britain developed a different system that made WC “elective, administration was left to the courts, and insurance was carried (out) through private firms” (LaDou, 2011, p. 103). Unlike the German system, Britain’s system was not linked well with other social insurance systems. Germany’s WC system was coordinated with insurance for health treatments, rehabilitation, and accident prevention (LaDou, 2011, p. 103). On the other hand, from the time the British system was created, problems in the judicial system in order to be solved with litigation (LaDou, 2011, p. 103).
Differences between U.S. and Europe
The countries in Europe spend 26 percent of their GDP on social benefits or more, whereas the U.S. spends only 11 percent GDP on social benefits (La Dou, 2011, p. 104). Labor organizations are strong in Europe, but in the U.S. the power of labor unions are diminishing. Europe has been organized into the European Union (E.U.), all the workers in E.U. member countries “are covered against the risk of wage loss due to temporary sickness through government agencies” (La Dou, 2011, p. 104). On the other hand, about 50 percent of U.S. workers have short term disability insurance (La Dou, 2011, p. 104). Except for the Netherlands, European countries separate disability S.S. and occupational injuries compensation; the injured worker has coverage for one year. When necessary a worker can be switched to the long term disability insurance.
The Netherlands
The Netherlands partially disabled unemployed workers and workers that are totally disabled are paid the same benefits (La Dou, 2011, p. 104). Therefore the working age population of disabled workers in the Netherlands is high at approximately nine percent. The other European countries have a rate of about six percent so comprehensive reforms have been initiated. In order to lessen the amount of unemployed disabled workers, employers are expected to take initiative and adapt the workplace for them (La Dou, 2011, p. 105).
American national WC system
WC in the U.S. developed on the state and the national level. The American national level adopted the German style with the Federal Employees’ Compensation Act (FECA). LaDou (2011, p. 104) listed several of the positive aspects of the FECA.
1. Benefits are provided in a timely manner.
2. Disabled workers may be moved to other federal programs but the system is non-adversarial.
3. FECA has no competition.
4, Europe would recognize the program.
American state level WC
In comparison to the European and FECA plans, at the state level, each of the American states has a unique system for WC. The U.S. states’ systems were established for the same reasons as the British system, with the purpose of preventing poverty without a goal to prevent disabilities. At the time the state level WCs were established the medical profession was against setting up “a compulsory social health insurance” (LaDou, 2011, p. 104). The battle resulted in diverse, uneven coverage for workers with workers having to continually fight for adequate coverage. In fact, La Dou shared information that brings to light the worst deficiencies in American states’ coverage
Occupational injuries and illnesses, if accurately reported, would be among the five leading causes of morbidity and mortality in the United States. . . . Only about one in twenty severely disabled occupational disease victims receive WC benefits. For occupational cancers, it is fewer than one in a hundred. (La Dou, 2011, p. 104)
California WC Claims
In 2004 research on the perceptions of doctors to the degree of access to quality care was available to patients using the California WC program. The purpose of the research was to provide data at a point in time of physicians’ perception in order to inform and, perhaps aid WC reform decisions by DWC. Four issues were measured (a) intention to opt out of WC participation, (b) challenges to quality care delivery, (c) payment rates, and (d) provider types that were influenced by the 2004 WC reforms. Surveys were carried out of WC physicians and then the data was analyzed using “bivariate and logistic regression models” (Pourat, Kominski, Roby, et. al., 2007a, p. 619).
The researchers reported the perception of decreased health care since the 2004 reforms. The results were based on physicians sharing their intent to stop taking WC patients or to decrease the number of WC patients they will take at their office. The participants were surveyed in 2006. For those who planned to change the volume of WC patients for their office the results are listed below (Pourat et al., 2007a, p. 621).
- 12.4 % were planning to stop taking any more WC patients.
- 18.5 % were planning to decrease the number of WC patients they accepted.
- 39.0% planned to maintain the number of WC patients at the same level.
- 16.7 % planned to increase the number of WC patients.
The biggest barrier to quality care was perceived to be the UR (utilization review). In fact 47.4 percent of the participants in the survey agreed that “Authorization/UR issues as a barrier to providing quality health care” (Pourat et al., 2007a, p. 621).
Chiropractors and acupuncturist in general shared the opinion that WC patients did not have enough access to quality care. The results for physician participants in general are listed below.
- 65.4 % perceived a decline in access to quality care since 2004.
- 56.2 % perceived a decline in quality health care since 2004.
- 54.8% perceived access to quality health care is “inadequate” (Pourat et al., 2007a, p. 621).
Return-to-Work
Kominiski, Pourat, Roby and Camreon (2008) from the UCLA Center for Health Policy the factors that influenced the return-to-work of injured workers in California’s WC system. The researchers also surveyed the same workers’ self-reported degree of recovery were studied. Nine hundred sixty five California workers who were injured during the period from April 1, 1995 to June 30, 2005were surveyed (Kominiski et al., 2008, p. 297). The main factors studied were evaluating how the primary treating physician’s (PTP) occupational medicine orientation influenced the workers’ return-to-work and perceived recovery (Kominiski et al., 2008. p. 296). The influence of the PTPs’ interpersonal behavior was also examined. The injured workers' access to good health care, the suitability of the care after return-to-work and the extent of recovery were measured. And the characteristics of the workers and their injuries were assessed (Kominiski et al., 2008, p. 296).
In general, the results showed that the majority of the workers were satisfied with their PTP’s occupational orientation because 82.9 percent felt their doctor’s understood the demands of the workers’ jobs. This matched the researchers’ hypothesis that a good relationship between physicians and the injured patient have a positive impact on workers’ recovery and earlier return-to-work times (Kominiski et al., 2008., p. 301). Another important factor has been to reach the doctor as soon as possible after the injury but, on the other hand, the researchers pointed out the importance of learning why 12.2 percent of California’s injured workers waited over three days before going to the doctor’s office. Two studies on California WC claims showed that when people chose their own PTP they were as likely to have negative outcomes for return-to-work and degree of recovery compared to having a physician assigned (Pourat et al., 2007; Kominiski et al., 2008; WCRI, 2005).
Satisfaction with care and quality of care
Pourat, Kominski, Roby (et al., 2007b) carried out another study the same year as to the satisfaction of care and perceived quality of care by California’s of injured workers using WC after the 2004 reforms. The purpose of the research was to gain insights into the impact of care on injured workers’ and to evaluate their assessments concerning quality care after the 2004 WC reforms had been instituted. The study used a sample of workers injured between April 1, 2005 and June 30, 2005 (Pouratb et al., 2007b, p. 621). The researchers used a logistic regression to evaluate the data. The injured workers were asked about the following issues.
1. Satisfaction with medical care
2. Perceptions of quality of care
3. The impact of provider –occupational medicine “orientation” (Pourat, et al., 2007b, p.1250)
4. The interpersonal behavior of the medical provider
5. The degree of access to quality care
6. The impact of “timeliness of care” on injured worker satisfaction and quality (Pourat, et al., 2007b, p.1250)
7. Identifying features of “provider behavior” and access to high quality care that could be improved (Pourat, et al., 2007b, p.1250)
Seventy four percent of the participants were fluent in English so inability to communicate due to language problems did not seem to be a factor in workers’ perceptions. Ninety percent of the participants resided in an urban area of northern California. The results about the satisfaction of injured workers survey in 2006 concerning their main provider, their overall medical care, and their access to quality care are listed below. (See table 1)

The majority of workers were satisfied with the care they received from their main provider demonstrated by the 82.3 percent of participants who were satisfied or very satisfied (in agreement with earlier research results). The majority of workers were also satisfied with their overall medical care; 46.5 percent were satisfied and 32.1 percent were very satisfied. The total is 79 percent. The percentage of workers reporter satisfaction with their access to quality care was even larger; 50.7 percent agreed and 31.5 percent agree giving a total of 82.2 percent. (Pourat et al., 2007b, p.1253) The research results showed that “occupational medicine orientation, interpersonal behaviors, choice of provider, timeliness of care, and ease of access to specialists were associated with higher levels of satisfaction” (Pourat et al., 2007b, p. 1249).
Return-to-work and recovery
Another research study by the same researchers (Pourat et al., 2008, p. 296) determined the aspect impacting an injured workers return-to-work and their degree of recovery after the 2004 WC reforms. The participant sample included 965 workers who were injured between April 1, 2005 and June 30, 2005. The results were evaluated using the survey data and logistical regression (Pourat et al., 2008, p. 297). Worker characteristics and the injury characteristics of a worker were used as controls. The features that were evaluated are listed below.
1. Influence of the primary treating physician’s (PTP) occupational medicine orientation
2. The influence of the PTP’s interpersonal behavior
3. The impact of access to care on return-to-work
4. The impact of timeliness of care on return-to-work
5. The influence of degree of recovery
The study results showed that some “interpersonal behavior of PTPs significantly increased the likelihood of return-to-work and some degree of recovery” (Pourat et al., 2008, p. 296). On the other if an injured worker was referred to specialized care “reduced the likelihood of returning to work or experiencing some degree of recovery” (Pourat et al., 2008, p. 297). The researchers concluded that there is an opportunity to improve an injured workers return-to-work and amount of recovery. The two main features that could be targeted for improvement were the behaviors of the PTP and how specialized care was managed (Pourat et al., 2008, p. 304).
Earning losses
The AMA conducted a study of the “impairment ratings and earning loses due to disability” in order to understand what differences exist, if any (Seabury, Neuhauser, & Nuckols, 2013, p. 286). The researchers used a sample of 21,662 California injured worker claimants (Seabury, Neuhauser, & Nuckols, 2013, p. 286). The study results demonstrated that “impairment ratings were strongly associated with earnings losses” (Seabury et al., 2013, p. 288). In fact the percent earnings loss plotted against the AMA impairment rating were found to have a linear relationship. (See fig. 1) Figure 1 shows predicted percent earnings’ losses of cases with the solid circles along the solid line in the middle. The 95% confidence intervals are represented by the dashed lines on either side of the middle line. The researchers concluded that impairment ratings can predict accurately the severity of a disability. On the other hand improvement could be made by understanding how the relationship between earnings losses and impairment ratings are influenced by other factors such as the patient’s personal traits and the type and/or degree of injury (Seabury et al., 2013, p. 288).
Figure 2- 3 Projected earnings losses versus AMA impairment rating
(Seabury et al., 2013, p. 289)
Disproportionate earnings losses
Seabury and Scherer (2013, p. iv) studied the effect on PD workers with “disproportional earnings losses for supplemental payments.” The researchers estimated that possibly 20,000 California workers could be eligible for this type of benefit payments under the reforms designated in SB 863. A goal of SB 863 was to keep medical treatment costs to a minimum and at the same time restoring benefits for PPD that had been lowered. Unfortunately SB 863 did not define amounts or give a definition for ‘disproportional earnings loss.’ Therefore the amount depends on the decision of the DIR and is “subject to review at the trial level of the appeals board” (Seabury & Scherer, 2013, p. 3).
Employer benefits compared to workers’ benefits
Julius Young (2012) publisher of the WorkersCompZone.com blog wrote that although some improvements were made from earlier laws by SB 863 the problem remained that employers gained the most from the bill. For example, the savings for employers had been estimated at $1.4 billion and the increased benefit payments to workers would be $740 million resulting in employees benefitting twice as much as employees. Young (2012) noted that although the Utilization Review (UR) had been determined by research studies to drive costs up in the WC system, SB 863 does not have any measures to control the problem. Ken Garofalo (2012) of Law Justia registered doubt that although the bill uses the word ‘independent’ to mean ‘unbiased’ that has not been the reality. For example in the case of UR, an independent committee within an insurance company does not mean the committee will maintain an objective, unbiased perspective.
The California Labor Federation Executive Secretary-Treasurer Art Pulaski declared
Finally, there’s a solution to the growing worker’s compensation crisis – a bill that provides a system-wide benefit increase of $860 million for injured workers, while reducing delays and friction that waste time and money. After months of negotiations between labor and management, and a statewide listening tour host by the DIR, a comprehensive reform deal was struck that benefits both workers and employers.” (CLF, 2013)
For Pulaski the improvements offered by SB 863 over SB 899 were substantial and would make available more money to workers due to streamlining the system. Secretary-Treasurer Pulaski said that the misinformation against the bill was spread by the entities the profit from the old bill, SB 899. Pulaski characterized SB 863 as “a lifeline for the system and for the workers it benefits” (CLF, 2013).
On the other hand, a theme that ran through the information available at worker oriented blogs was anger; especially with Art Pulaski and his assistant Angie Wey. The majority of comments agreed that some of the provisions of SB 863 were improvements over the old reform bills. On the other hand Pulaski and Wei were identified as “pro-corporate” and “insurance companies as their primary concerns rather than the workers (indybay.org, 2013). The overall feeling was that where payments were increased was done at the loss of those least able to pay, the permanently disabled as suggested in the research by Seabury (et al., 2011).
Workers advocates not satisfied
In another article Young (2012) listed some of the reasons workers’ advocates were not happy with SB 863 and some of those he listed agree with research published in peer review journal articles. Young (2012) included in his list the following problems for workers.
1. The loss of rights for face-to-face medical exam when appealing denial of medical claims.
2. WC judges would not hear cases about medical disputes concerning denials of treatment unless the case was over a particularly extreme situation.
3. The new IMR system was created as the first step in the UR but the system is very large and no cost comparison was offered to compare with the face-to-face QME reviewers used previous to SB 863.
4. UR has been identified as a cost driver (increasing costs) but no containment of UR costs measures are in the bill.
5. Benefit increases are directed towards workers with less severe disabilities.
6. The Diminished Future Earnings Capacity was eliminated so severely injured workers are expected to have a difficult time receiving fair benefits.
7. Proving a disability has become more difficult for workers.
8. Transparency was not available, for example the DIR did not share any reports or reasoning on the issue of constitutionality of the IMR creation in SB 863.
Young (2012) backs up his claims citing the WCIRB report which questions the amounts of benefit increases that proponents were suggesting.
Available medical care
A survey was used to determine the availability and quality of the health care available to California’s injured workers on WC. The data was taken from surveys taken in 2011 and 2012 and from WC Information System (WCIS) claims (Miller et al., 2013). A portion of the research evaluated the degree of access for injured workers to health services and products necessary for recovery (Miller et al., 2013). The results were positive as 84 percent of the injured workers were found to be ‘satisfied’ or ‘very satisfied’ with their provider (Miller et al., p. 30). Language was not a large barrier to communications between medical providers and injured workers; only three percent reported differences in native language as a problem (Miller et al., 30).
Eighty nine percent of the participants in the survey reported easy access to MPN healthcare providers (Miller et al., p. 40). Thirteen percent of the participants reported ‘very good’ to ‘good satisfaction’ out of the 79 percent reporting satisfaction with the quality of the care they received. On the other hand, eight percent responded with a ‘poor’ rating (Miller et al., p. 36). The reasons respondents ticked ‘fair’ and ‘poor’ for quality of care ranged from denial of care or claims or no improvement, disrespectful treatment or not receiving the appropriate attention (Miller et al., p. 36). Fourteen percent of the injured workers who participated recorded they earned less when they returned to work, whereas nine percent earned more. Seventy one percent reported that they pay remained the same or was similar to as pre-injury wages (Miller et al., p. 40).
Doctors’ dissatisfaction
Dr. Stephen M. Pfeiffer (2012) expressed concerns that the bill would negatively impact mental health benefits for those injured on the job. Physical health providers (medical doctors, chiropractors and acupuncturists) seemed to be the angriest because of the burden of payments they are expected to make before they can receive reimbursement. The Courthouse News Service (2013) noted that doctors have called the new WC law unconstitutional. Court cases have already arisen due to SB 863. Part of the problem may be that not all the reforms were immediately effective (“Doc,” 2013) but there are complexities in the law suits that argue against some of the basic reforms embedded in the bill. Kirk Kancella is a doctor who practices in San Diego. On “behalf of medical providers who offer care to WC applicants on a lien basis” Kancella sued the State of California (Docs 2013). The UR was seen as central to the problem.
Most vulnerable workers
The President of Voters Injured at Work, low-income workers’ advocates and attorneys were not convinced that the bill worked in favor of the workers least likely to take on anymore financial burdens (Lifsher, 2012). Lifsher (2012) a journalist for the LA Times reported that the “mammoth bill (170 pages) was negotiated behind closed doors over months by the California Labor Federation and large, self-insured employers, including Safeway, Inc. and Walt Disney Company.” Proponents of the bill expected it to provide approximately $170 million/year from an estimated $1 billion in savings from reforms forcing efficiency “in the $16 billion system” (Lifsher, 2012). Governor Jerry Brown had commissioned a report from the WC Insurance Rating Bureau (which is financed by the insurance industry); the report suggested the savings would only amount to $400 million which “is $300 million less than the cost of the hike in benefits” (Lifsher, 2012).
WC Measurement System
A study conducted in order to address the success and/or failures due to the SB 863 focused on the effect of the reforms and offered recommendations to improve the quality and efficiency of care under the worker’s compensation system. The key provisions of the reform related to medical treatment including the use of alternative care practitioners, the requirement that injured workers use the MPNs and setting new standards for the UR processes were the focus of the study. The results of the study were the recommendations to “improve the incentives for providing medically appropriate care efficiently, increase accountability for performance, facilitate DWC monitoring and oversight, and reduce administrative burden” (Wynn, Timbie, & Sorbero, 2011, p. xix). The researchers developed a framework for WC performance-measurement for the process with three domains: the provision of care, the system cost, and the system performance. (See fig. 2-4) Domain 1 is the provision for care after when the injured employee enters the system. A performance measurement system is critical to enhance efforts to “avoid both the overuse and underuse of services, as well as providing care that is safe, equitable, and patient-centered” (Wynn, Timbie, & Sorbero, 2011, p. 70).
Figure 2- 4 Framework for WC Performance-Measurement
(Wynn, Timbie, & Sorbero, 2011, p. 70)
Purpose of the Study and Rationale
The main focus of the research is whether or not SB 863 is a reform bill that benefits workers. An assumption has been made that the purpose of the reform was to better serve injured workers so it is important to determine whether or not this is the case. In order to isolate data the measurement tool has been identified as the satisfactory closure of worker’s compensation cases.
Seabury (et al., 2010, p. 1) have pointed out that the two most common ways to measure effectiveness of a worker’s compensation system are to use affordability and adequacy. The number of cases that have ended with satisfactory worker’s compensation before the law was passed will be compared to cases that have ended with satisfactory worker’s compensation after the law. The California Industrial Relations department and LexisNexis have the data need on worker’s compensation cases. The two sources only focus on the legal cases brought by workers for injury compensation so the focus will remain on the law and the differences before SB 863 was passed.
A qualitative assessment of the will be made of the attitudes of the stakeholders in order to answer the question ‘How do the attitudes between labor unions, injured workers, the state of California and the medical community compare on the usefulness the bill has shown.’ The published data available from labor union sources, workers, the medical community and the state of California will be compiled. The purpose will be to sort the data and then determine a range of satisfaction for the data from ‘not satisfied’ to ‘very satisfied.’ The intention is to determine how each of stakeholder groups views SB 683 and to compare the four groups in terms of degree of satisfaction.
The aim of the research is to study and describe the issue in order to clearly understand SB 863’s impact on the people who depend on it the most, injured workers. An objective of the research is to understand the context of workers compensation to different groups of stakeholders, to California, to the rest of the U.S.A., and to Europe. This is one way the success or failure of the most recent reform bill can be gauged. The positive and negative features of the SB 863 and WC in California can be assessed. Recommendations for improvements can be made based on the findings of this research. The following research questions have been designed to help reach those goals, they are listed below.
Research Questions
1. What positive effects did SB 899 have on injured workers?
2. What positive effects does SB 863 have on injured workers?
3. What would an effective, fair WC process look like, if the opportunity arose to build a new system from the ground up?
Summary
Chapter II used a literature review in order to offer historical into how the WC systems in the American states are based upon the British designed WC system which had a purpose of ending or decreasing poverty rather than targeting WC issues. The British system from the beginning had disputes being resolved by litigation and the same problem can be recognized in the California system. Although ironically the California WC judges who are experts on the subject will not be used under SB683 except in extreme cases. The most complaint most often raised was the integration of a new entity to oversee medical treatment claims, the IMR. And the problem with the newly reformed system was most often the Utilization Review. The problems with the UR were also linked to or the basis for other problems such as transparency and financial implications. The main complaint raised over the UR was the fact that it had been identified as a cost driver but the reform bill did not address the increased costs caused by the UR system or set up a monitoring system to contain costs.
On the other hand the earlier reforms passed under Governor Schwarzenegger’s time in office was the reason for the popularity of a new reforms for WC. For example, research demonstrated that many doctors offering WC services to injured patients were considering dropping out of the system. The upbeat description of SB863 by the California Department of WC was in contrast to the anger by doctors who must pay for the reviews in order to be reimbursed; a special hardship for private practitioners. Research on how the new reforms effected disabled and permanently disabled was discussed. The purpose of the study was explained and the research questions were listed. The operational definitions for some of the terminology with unclear meanings were included.
Chapter III
METHODOLOGY
A qualitative descriptive methodology was used for this research. The aim of the research was to organize the complexities of SB 899 and SB 863for a better understanding of the differences and similarities of the two bills, and for their impacts on the stakeholders, especially injured workers. The changes in the WC system due to reform bills were assessed. An overall look at the reforms and the impacts on the stakeholders was needed in order to design a new system from the ground up, avoiding the pitfalls of earlier reforms and the patchwork quality of a stream of reform bills from the state legislature. The research chose references that would inform the subject by “establishing background facts, sequences of events, and provide examples of political phenomenon” (Minkoff, 2012, p. 6).
A descriptive research methodology observes the facts but does not theorize about why people behave the way they do. The purpose of the research was also not to pinpoint a cause for any of the behaviors, like is done in experimental causal studies. Instead the available research and data on California’s WC system was found, described and evaluated. One of the objectives of the study was to develop a better WC system. The events before and after SB 863 pertaining to WC reform were the focus of the research.
The study is not a longitudinal study because SB 863 was signed into legislation very recently. Some of the reforms went into effect at the beginning of 2013 so only a little over a year after the event has passed. On the other hand, this research is a cross section of events primarily focused on the period before and after the time that reforms were signed into law with SB 863, although relevant historical information has been included. Several WC reform bills have been passed in California. Therefore, it was necessary to compare the recent legislation to SB 899 and earlier forms because of the importance of making a comparison. The comparison was needed to evaluate the influence of the reforms on the major stakeholders, mainly the workers of California and the subcategory, injured workers. The main group of interest (within the subcategory) was identified as workers with permanent disabilities; the impact of the recent reforms was the greatest on this group.
Qualitative versus Quantitative Methodology
Quantitative analysis requires a large database of similar data that allows for mathematical descriptions and statistical analysis, but that was not available for this research. The evaluation of the gathered data used for results was small data sets but the sources used were reliable sources, such as peer reviewed academic journal articles and data from the appropriate California Department of Industrial Relations (DIR) agencies, such as the Division of WC (DWC). Therefore a reason qualitative descriptive methodology was used for this research was because of the variety of the data units and the highly diverse sources. The use of quantitative methodology was not a realistic choice.
The data that was compared in the results section was only compared if the values were presented in the same units. Many of the values reported were in terms of percentages which required careful reporting of the pool of data the value had been taken. For example, ‘workers satisfaction’ was measured by the use of surveys of workers injured at work. The category breakdown of the data varied from gender, ethnicity, and age to whether or not the worker was able to speak and understand the English language. The year of compilation of the data and the date the data was published in a journal article, a white paper, or from California DIR, DWC or other agency or source was reported with the results.
Bias
Qualitative research has the disadvantage that a subjective bias can easily enter the evaluation of the data. Daniele Fanelli (2010, p. e10068) has presented a hypothesis called a Hierarchy of the Sciences. The field of physical science is at the top of the hierarchy based on the use of an objective perspective and use of the scientific method. The physical sciences can easily design experiments using qualitative methods. On the other hand, the social sciences rely on the capabilities of the researchers to use cognitive or intuition in order to make observations. This research included small diverse sets of mathematical data that was compared based on value amounts; the method of considering the data logically and with common sense was applied. The research was aware of the possibility of bias interfering into the study and that statistical analysis could not be used to interpret the amount of bias. Therefore, the awareness of bias was considered the best tool to use in order to avoid bias. Fanelli (2010, p. e10068) determined that “when (social science research) adopt(s) a scientific approach to discovery, they differ from the natural sciences by a matter of degree.” In other words, when social science research has been carried out responsibly, the results are reliable, in fact, similar to the degree of reliability of the results in the physical science.
Selection of Subjects
Five categories have been chosen for analysis because they are the groups expected to be the most impacted (either negatively or positively) by the SB 863 reform bill. The five categories represented the groups: workers, labor unions, government, medical community, and the insurance industry. A particular focus of the research ‘injured workers’ is a subgroup of workers. The focus on SB 863 was narrowed to an assessment by considering the experience of workers who make claims and the amount of the benefits paid to disabled and permanently disabled workers.
Steps of the Methodology
A chart of the steps taken for the methodology during the research has been provided. (See fig. 1) A preliminary literature review was necessary in order to develop the thesis outline.
Figure 3- 2 Methodology for WC SB 863
The preliminary literature review was essential, in order to find out what kind of data was available so a research project could be designed. The California WC Losses and Expenses Board (WCIRB) have made a lot of data available to the public and for use in research that analyzes workers’ reform in the U.S.A. The insurance and attorney associations had commissioned research on how the reform in SB 863 impacts their sectors, that research had been published and the data used was available in the form of tables and charts.
The purpose of this study was to conduct a comprehensive literature review on the research data available, systematically analyze the data and studies of credible sources and drawing conclusions from the findings.
The stakeholders invested in the CA WC system includes a large range of individuals and groups with different needs and goals. The individuals most impacted are workers injured at work, but the injury they suffer, the intensity of the injury, the ability to return to work or to become permanently disabled are only a few of the ways workers are impacted. In other words the data available reflects the complex nature of the subject. Other stakeholders include the doctors who provided the treatment and require payment from the WC insurance. Reforms enhance or prevent various health care providers include orthopedic surgeons, acupuncturists and chiropractors. Other stakeholders are the employers, the insurance company sector and lawyers when claims are made by the doctors or injured workers; but the five groups and one subgroup were the main components of this research.
History of WC
A history of workers compensation was compiled with a focus on the outcomes from SB 899. And then in the results section SB 899 and SB 863 similarities and differences were compared. A history of WC was shared as an introduction to a comparison between California’s WC program, the programs in other states, the U.S. national program, and programs in Europe. The global look at WCs program was necessary so recommendations could be made for California for those features that could remedy some of the problems by using a well-planned system.
Sources of Data
Data was needed to evaluate who benefits the most and the least from the SB 863 reform bill. Data was available from the WCIRB. Research using the data from the WCIRB and the DIR was also available in several recent research papers from the RAND Center for Health and Safety in the Workplace and from research articles published in the Journal of Occupation and Environmental Medicine. The Berkeley Research Group, LLC and the Bickmore Risk Services had been commissioned by the California DIR DWR to evaluate the access to medical treatment for injured workers (BRG) and the impacts of reform on insurance rates (BRS). The UCLA Center for Health Policy Research also had relevant data in recently published peer reviewed journals and reports.
Anecdotal information was included from the LexisNexis site for injured workers who have initiated court cases. A report written for the California Applicants’ Attorneys Association was helpful in comparing the average WC insurance rate over time. The longest range of consecutive years data reported was from 1993 to 2011 and was found in the report to the attorneys’ association.
WC System Design
Finally for information, data, and guidance on reforming workers compensation with innovative ideas, two of the most helpful articles were from 2010. One article was written by Joseph LaDou and problems in the coverage, care and compensation that may be inherent in the worker’s compensation system. A follow-up to LaDou’s discussion was written by Michael B. Lax on the need for an agenda and a strategy inspired by LaDou’s article. Simple flowcharts for injured workers from making a claim to receiving benefits were created in order to evaluate the influences on injured workers, both the advantages and the disadvantages.
Recommendations for a better WC were listed. The data and information gathered during the research was used to recommend a system that would work very well for injured workers. When the conclusion was written recommendations were made and the limitations of the study were discussed. Future research topics were suggested.
Summary
A qualitative method was chosen to evaluate the data collected for the research because of the diverse range of measurements (in different units) used for the data gathered. References included a range of sources such as DIR, DWC, California Labor Federation (CLF), Berkeley Research Group (BRG), and the RAND Center for Health. Articles from the peer-reviewed academic journal, the Journal of Occupational and Environmental Medicine have been cited. The main source of the data used in this study as well as the research projects reported in the literature was from the California WC Losses and Expenses Board (WCIRB). The information and data gathered was used to assess the advantages and disadvantages of SB 899 and SB 863. SB 863, the most recent reform bill was the main focus. The results were used to suggest a WC system designed from the ground-up instead of with a series of ‘patchwork’ reform bills.
ChapterIV
RESULTS
Several workers compensation reform bills have been passed in California in the last fifteen years. The aim of this research was to review, evaluate, and simplify the complexities of the California workers compensation reform bills SB 899 and SB 863. Data was gathered from a variety of sources and organized in order to develop a better understanding of the differences and similarities between the processes instituted. Relevant data was collected for the specific purpose of reviewing the systems in order to design a new system from the ground up; one that would avoiding the pitfalls of earlier reforms. Major changes in the processes initiated after an injury were instituted in CA SB 863. The main bills that instituted reforms are listed in Table 4-1.

Note that CA SB 899 came directly from the Assembly and was passed in the same form in the Senate as had been voted on in the Assembly. (Table 4-1) California has passed many workers compensation reform bills since 1913. After each new system was instituted, attachments to reform the reform bills were passed.
Chapter IV includes tables and charts with data to make plain the advantages and disadvantages of the processes. The systems instituted after SB 899 and SB 863 have been diagramed in parallel flow charts. The data has offered in an organized form to aid in evaluating the systems instituted after the two major health reform bills, CA SB 899 and CA SB 863.were passed in California. The changes were reviewed in terms of their influence on the major stakeholders, in particular injured workers and their physicians. According to the California Department of Industrial Relations, Division of Workers Compensation (CA DIR-DWC) (2014) each contemporary reform bill has promised to simplify the process to the advantage of the worker.
Outcomes of CA SB 899 and CA SB 863 compared
CA SB 899 was passed in 2004; it was designed to meet some of the inconsistencies and problems that arose in the earlier statutes. In 2013, after prolonged negotiation and compromises between the legislators per their group of constituents, SB 863 was passed to enhance the reforms of SB 899 as well as stop the trend of rising workers compensation values (CA DIR-DWC, 2013, p. 68). A comparison of the general outcomes of SB 899 and SB 863 does demonstrate some striking differences. (See table 4-2) For example, the MPNs are strengthened or weakened, depending on the perspective, by changes in the regulations. Every four years, MPNs must be approved. Doctors cannot enter the MPNs without preapproval. And finally, MPNs are under no obligation to accept workers compensation patients.
The first main steps an injured worker must make are the same for both SB899 and SB 863. As soon as a worker realizes the condition that is negatively affecting his/her work abilities is related to the work environment, they must contact the employer and report the work-related injury. The types of injuries range from falling off a ladder and breaking a limb, to asthma from toxic fumes to carpal tunnel syndrome. The range is large because the types of industries covered by workers compensation in California are diverse. Injuries that happen under emergency conditions, like a fall from ladder, require immediate travel to an emergency room. Regardless of the reason for the injury the injured worker must pick up a claim form from their employer, fill it out, and hand it in to the employer. The major differences have been identified in Table 4-2.
Figure 4- 2 Comparison of outcomes between SB 899 and SB 863
After the steps each of the bills requires in common, the changes become obvious. Although, quantitative comparisons become difficult when attempting to compare many items due to the change in the injury and medical treatment ratings systems used. Not only have those challenges made qualitative comparisons necessary, some of the terminology like ‘disproportionately lower’ still needs to be defined by the legislators.
A random survey of 500 workers taken in 2012 by the Berkeley Research Center resulted in data that gives context for Table 4-2. The survey showed that the largest age group of workers was from 31 to 45 (47 percent of the total). (See table A-1) This amount reflects the general situation in California. The shoulder to finger area of the body was the most injured (50 percent of the time) due to muscle or joint injuries. (See table A-1) Out of the 500 workers surveyed 33 percent had needed 10 or more visits to their health practitioner to deal with the injury; that was the largest percentage in the survey category that gave choices from 1 to 10 or more visits. (See table A-2) Most workers (85 percent) made their visit to the physician on the same day of the injury or 1-3 days from the time of the injury. (See table A-3)
Liens are listed on the Internet and are available to the participants who have been assigned a special password. In general, the tables list the type of benefit, such as a death benefit or benefit to dependents. Applications for adjudication are listed as well as requests for awards. All of these types of liens are listed with a column dedicated to whether or not no to the lien is bounded by law to 8 months. (See table A-5)
Review of quantitative data
Another challenge to reporting quantitative data that can easily be compared as outcome measurements between SB 899 and SB 863 are not available because of different measurement scales and different time frames. The following results have been gathered from several research studies, but the main resource for values is the WCIRB. The number of California workers peaked in July 2003 and by January 2011 the number of workers still had not reached peak levels. (See fig. 4-3) The following tables have been used in Chapter V, the discussion chapter to determine the influence of SB 899 and SB 863.
Figure 4- 3 Millions of California workers from 1983 to 2011
(Compiled from values in Table A-1)
Workers compensation reported as $100 per payroll values have the same shape of the above figure but the time frame available for the data is only from 1983 to January 2010. (See fig. 4-4) The peak value for the graph of workers compensation benefits in USD located at January 2003. The amount is approximately $6.20 per $100 payroll.
Figure 4- 4 Workers Compensation graphed as $100/payroll
The value of fee rates for workers compensation that was paid to insurers was available from 1983 to January 2010. The peak value for the fee rates falls between January 2003 and January 2004. (See table 4-5) The amount is approximately $6.20 paid into the system by employers.
Figure 4- 5 Workers Compensation per payments to insurers (fee rates)
(Compiled from values in Table A-2)

The number of QME panels steadily increased from 2002 to 2010. (See table-4-3) In 2002 the number was 31.6 and by 2010 the number was 96.9. Between 2003 and 20004 was the largest increase from 31.4 to 51.9; 2004 was the year SB 899 was passed.

The amount of medical benefits paid for slip and fall injures was about $39,860 in 2010. (See table 4-5) Back injuries accounted for somewhat less, $31,254. (See table 4-4) Carpal tunnel and injuries from performing repetitive tasks was approximately 22,936 (about the same as other cumulative energies). (See table 4-4) Mental health claims under Medical was about 15,600. (See table 4-4) Including the indemnity costs with the medical, slip & fall injuries cost the most, followed by back injuries, and the other injuries in the same order. The indemnity costs were less than the medical in all categories except for psychiatric and mental stress. (See table 4-4)

Slip & fall injuries and back injuries amounted to 45 percent of the reported losses for those paying out claims. (See table 4-5)

In 2011, twenty nine percent of the liens were over disputes concerning the treatment authorized; 37 percent were over the use of an unauthorized provider. (See table 4-6)

The total medical losses paid in 2011 were about $4.4 billion and about $4.8 billion was paid in 2012. The largest amount that was catagorized in reference to stakeholders instead of for ‘other’ was to physicians; $1.6 billion paid in 2011 and $1.7 billion paid in 2012. The injured workers also faced losses of over a billion dollars $1.1 billion in 2011 and $1.3 billion in 2012. Hospitals paid $877 million in losses for 2011 and $878 billion in 2012. Pharmacies were rated next in terms of total losses, after pharmacies, the containment program, and then the Medicare set-aside account related payments, and lastly, reimbursements to Medicare. (See table 4-7)

The WCIRB reported the figures for the amounts paid to physicians in 2011 and 2012 based on the specialty. General practitioners and family doctors received the largest amount, 22.8 percent for 2011 and 20.9 percent for 2012. (See table 4-8) Next were clinics at 12.9 percent for 2011 and 13.6 percent for 2012. (See table 4-8) The third and fourth highest were orthopedics and physical therapists. (See table 4-8)

The pre-injury earnings (USD) in relationship to disability ratings and post injury earnings (USD and percent) were evaluated by Seabury and Scherer (2013, p. 21). When the pre-injury earnings were assumed to be $45,853 per year, the amount of post-injury earnings consistently decreased as the injury rating changed from 1-4, the best rating, to 95-99, the worst rating. In other words, the worse the injury, the less the injured person earned. (See table-4-9)

WCRIB reported that the largest amounts of medical costs are those made to physicians, 36 percent. (See table 4-10)

Orthopedics was found to generate the highest number of legal medical reports. (See 4-11)

The largest number of medical-legal costs was also experienced by the orthopedic health care category, 54 percent. (See table 4-12) Next was psychiatry at 26 percent. (See table 4-12)

WCRIB reported for 2012 the paid indemnity benefits for injured workers with the temporary disability status were 48 percent of the total. (See table 4-13) Next, the amount for total permanent partial disability amounted to 41 percent of the total. (See table 4-13) Permanent total disability only accounted for 5 percent of the paid indemnity benefits.

SB 899 and SB 863 reviewed as effective (+) or ineffective for injured workers (-)
The change characteristics of the California reform bills SB 899 and SB 863 have been coded in the following terms. (See table 4-14) The stakeholder who was considered at the center of this evaluation was the injured worker. When the characteristic only refers to the physician, the rating is considered in terms of the physician. The symbol (+) indicates that the characteristic changed to a positive effect for the stakeholder. The symbol (-) indicates that the characteristic changed negatively for the stakeholder. The symbol (=) means that the changes were the same as the previous reform bill. The symbol (Unclear) means that the impacts on the stakeholder were mixed, and have been discussed further in Chapter 5.

- A California registered Qualified Medical Examiner made decisions on rating of injuries and treatment. (+)
- For spinal cases the second opinion of a spinal surgeon was allowed. (+)
- A ban on bias for Permanent Disability compensation was passed by the California Senate Labor and Industrial Relation Committee July 6, 2011. (CAAA, 2011) The ban protects older workers, ethnic minorities, and women. (CAAA, 2011) (+)
- The trend of increasing amounts in benefit payments from insurers to workers was stopped. An average rate of $4.81/$100 of payroll decreased to $2.59/$100 of payroll (a 46 percent decrease). These values are based on the three year time frame from July 1, 2003 to January 1, 2006. The values are adjusted from the values available of payroll per industry. (BRS, 2006, p. 3) (-)
- The cost savings for insurers from 2003 to 2006 were $8.1 billion. (BRS, 2006, p. 4) If the reforms had not been put into place by the legislator the insurers would have paid $15 billion. Savings for permanent disability were 40 percent, for evidence based medical fees 27 percent, for voucher system were 12 percent, for medical fees 13 percent, and for the cap of 24 medical visits the savings was 8 percent.(BRS, 2006, p. 4) (-)
- PPD savings on lost time due to conflicts over claims to bring CA more in-line with other states by developing a PD system based on “the nature of the physical injury or disfigurement, the occupation of the injured employee, and his or her age at the time of such injury, consideration being given to an employee’s diminished future earning capacity.”(DWC, 2004, p.8) (unclear)
- PDRS replaced subjective medical condition assessments with objective AMA schedules. Instituted wage loss data from experimental evaluations as opposed to subjective values. (-)
- Developed consistent PD ratings so workers with the same injuries receive the same compensation. (+)
- Disabilities from work related injuries are evaluated by AMA guidelines with consideration of the personal characteristics of (a) decreased future earning capacity, (b) occupation, and (c) age for necessary adaptations. (DWC, p. 8) (+)
SB 863
- The IMR is administered by MRO selected by the DWC. (-)
- IMR physicians are certified and screened by the IMRO (-)
- IMR determines conflicts over the medical treatments (DWC) (-)
- MPNs are better (DWC) (unclear)
- The amounts for medical fees are updated and published in the Official Medical Fee Schedule (DWC) (+)
- In-home health care and the peripheral services interpreters, copy services, and vocational experts have fee schedules (DWC) (+)
- IBR decides the solutions to arguments about the bill payments (DWC) (-)
- The voucher system for job displacement is simplified (DWC) (-)
- Fee payments are required for lien activations or filing fees (DWC) (-)
- QMEs must apply to the IMRO if they want to be part of the IMR (-)
- QME cannot comment on ‘specific medical treatment disputes. (-)
- Independent qualified physicians are allowed to give treatment with predestination. (unclear)
- Ability of gaining a second opinion from a spinal surgeon was discontinued. (-)
- Increases permanent disability amounts (DWC) (unclear)
- The PD rating has been made more simple (DWC) (unclear)
- Forty days are allowed for resolving injury rating and treatment decisions. (-)
- The Request for Authorization (RFA) is submitted by the treating physician. (=/-)
The effects on the stakeholders will be discussed with reference to the tables, graphs and determinations offered in Chapter IV and the literature review offered in Chapter III. The following questions will be answered. (a) What positive effects did SB 899 have on injured workers? (b) What positive effects does SB 863 have on injured workers? Recommendations for a new workers compensation system design will also be discussed. A new system has been discussed in chapter 5; one that would avoid the pitfalls of the earlier reforms
Research Questions
1. What positive effects did SB 899 have on injured workers?
2. What positive effects did SB 863 have on injured workers?
3. What would an effective, fair workers compensation process look like, if the opportunity arose to build a new system from the ground up?
Summary
Chapter IV reviewed available data on SB 899 and SB 863 in order to determine which of the reform laws work better for injured workers. A table was developed to compare the changes from SB 899 to SB 863. Graphs were offered that demonstrated the relationship between number of workers, fee rates and earning per $100 of payroll. The time frames were different but the graphs all produced a similar shape with the peak in the region of mid-2003. And then, many tables from various sources were placed in the chapter to better understand the influence of injured workers. The data offered included data about several of the major stakeholders with links to the injured workers. The changes from SB899 to SB 863 and the changes instituted by SB 863 were listed and determined as positive (+), (-), or (unclear) for California injured workers. The results have been discussed in Chapter V.
Chapter V
DISCUSSION AND CONCLUSION
California has passed several workers compensation reform bills in recent years, in both the assembly and senate of the state legislature. Each reform bill has addressed perceived problems in the California Workers Compensation (WC) system depending on the factors present that influenced political agenda setting at the time. Therefore, the research presented here created the following hypothesis. If the processes for injured workers were assessed based on the historical outcomes, a better strategy could be designed. In order to test the hypothesis, the goal of the research was to interpret the complexities of SB 899 and SB 863 in a straight forward manner that would offer a simplified version of the bills and their intent. Simplifying the complexities of the bills and evaluating their processes helped identify the measures that were advantageous to the workers and the measures that made their position as an injured worker more difficult. Therefore, attributes of a new system for worker’s compensation system could be recommended, because pitfalls of the earlier reforms could be reformed.
The benefits and disadvantages of SB 899 and SB 863
The WC systems which developed after SB 899 and SB 863 were passed were diagrammed in order to better discern the similarities and the differences between the two systems. The WC process begins when a work-related injury has happened that requires medical care or a trip to the emergency room. The diagram demonstrated that SB 899 made the process easier for injured workers. Here are some of the examples that lead to this conclusion.
- SB 899 allowed doctors to enter a medical provider network (MPN) with a basic approval form and MPNs were required to take workers compensation patients. On the other hand, SB 863 requires preapproval and a four year review of physicians for another approval for entrance into the MPNs. SB 863 does not require any doctors to accept WC patients.
- In each process if the claim is accepted the worker is given treatment based on the American Medical Association (AMA) ratings under SB 899. Under SB 863 the AMA ratings have been refined, and treatment is based on the refined ratings.
- The processes are different for resolving issues surrounding the dismissal of a worker’s claim if the worker wants to pursue a course to disagree with the dismissal and have a claim approved. Under the conditions of SB 899, a dismissed claim was taken under consideration by the Utilization Review (UR). If the UR resolved the differences then the claim left the system, but if one of the two-parties was not satisfied with the decision the issue moved to a Workers Compensation judge. Under the conditions of SB 863, another layer of decision-making was added into a claim dispute. The UR still reviews the cases and then, based on that review the decisions are passed to the Independent Medical Review Organization (IMRO). If the IMRO successfully resolves the medical, dispute the claim is taken out of the system. If the IMRO does not resolve the claim, then the claim is sent to a WC judge.
- The next major difference influences injured workers indirectly, because the direct impact is on the treating physician. Under SB 899 liens were paid by check or cash to the doctors for treatments, but that is no longer the case. Three years were allowed from time of treatment to reply. Under SB 863, the liens are only paid electronically to doctors for cost reimbursement. Doctors are required to pay a $150 fee payment and when appropriate a $100 activation fee is required. After the summer of 2013 liens could be filed within 18 months about treatments.
- Under SB 899 workers had been allowed compensation for psychological reasons, sexual dysfunction and sleep disorders, but under SB 863 these health problems were no longer allowed.
- Any losses considered disproportionate were addressed by making reimbursements for future earnings losses under 899. Under 863 the term ‘disproportionate losses’ has not been defined but it is used to address issues in the return-to-work process. The amounts for reimbursement amounts are to be decided by the Department of the Industry Relations (DIR) and the California Commission on Health and Safety and Workers' Compensation (CHSWC).
Positive effects of SB 899
The positive effects on injured workers under SB 899 were found to be numerous; some of the major advantages are discussed here. Injuries and treatments were rated by a California registered Qualified Medical Examiner. Second opinions were allowed in some instances; a spinal surgeon could be contacted for a second opinion on spinal cases. Older workers, ethnic minorities and women, were protected from being treated by bias. Consistent, permanent disabilities (PD) were developed so injured workers with the same or similar injuries would be given the same compensation. Three personal characteristics were used, and AMA guidelines were used to determine the disabilities from work related injuries. The three personal characteristics were the anticipated decrease in the injured worker’s future earning capacity, the individual’s occupation and their age.
Positive effects of SB 863
Medical fees have been updated and are available so anyone can find them in the Official Medical Fee Schedule from the Division of Workers Compensation (DWC). The fee schedule has been developed for peripheral services that include vocational experts for training, copy services, and interpreters used for workers receiving in-home healthcare. Many of the changes made due to SB 863 may turn out to be advantages or disadvantages depending on how the system is applied.
Rules that may turn out to be advantages or disadvantages since the passing of SB 863 include the following. The MPNs are better according to the DWC (2014). Independent qualified physicians are allowed to give treatment after a pre-designation has been approved. According to the DWC web site, SB 863 increases the disability amount that will be received and PD ratings have simplified.
Developing a WC process benefiting injured workers
Politically, the first step in designing a WC process with the goal of benefiting injured workers must be established as the overarching goal of all the stakeholders, not only the workers, labor unions and physicians. The two decade review of the WC’s reforms in California demonstrates that administration of a WC system is mainly challenged by having to pass through the political process before any changes can be made. Therefore, reforms at any given time can be seen by some of the stakeholders as benefits and others as disadvantages. This situation may sound like ‘business as usual’ in a political system where compromise is essential to making progress. But, current levels of money and lobbyists involved in the state house decision-making process have made compromises less than satisfactory for most players and in this case dangerous.
The beneficiaries of WC reforms need to be the workers. Favoring any other group is dangerous on the individual level (those who have received an injury not receiving necessary care), the family level (the family of an injured worker is likely to be impacted negatively, and the state, because the economy of the state will feel negative repercussions. States that do not respect the importance of workers to the state’s economy create problems that would have been avoided. SB 899 has been shown to be better for the workers of California; therefore, SB 863 has been shown to be worse for workers. SB 863 is not only worse for workers than the early reforms, it is worse for physicians. In other political systems when a bill is developed to reform workers compensation, perhaps it would be safe to assume the workers would benefit from the reforms passed into law. California politics are far more complex, and nothing can be assumed, because a reform may reform the current status of the law in a way that facilitates the success of other stakeholders.
Reasons for putting SB 863 on the legislative agenda
The WC CA SB 863 reform bill can be understood as a law that arrived at the level of legislative decision-making not with the intent of enhancing the WC system for injured workers but for other reasons.
Ambiguity
The reasons for CA SB 863 were to firstly, make the system more efficient and accountable. This reason is ambiguous and who benefits depends on for whom the system is made more efficient and accountable. If the premise for a WC reform is that workers cannot be trusted and they will injury themselves or fake injuries in order gain money without working, then certainly the no reform bill will be written to favor injured workers.
Employer savings
Secondly, save employers money in order to initiate an economic recovery in California. This second reason could be legitimate if the bill included rules and regulation on how the money saved by the employers was to be used to motivate a healthy economy for California workers. No such rules or regulation were included. Instead, more layers of bureaucracy were integrated into the system. The most obvious was found to be at the level of doctors’ admittance into the MPN system and by introducing a new organization, the IMRO, for dealing with medical disputes. (See table 4-2)
Benefit injured workers
Thirdly, the purpose of the bill was to benefit injured workers. Governor Brown’s office stated that SB 863 was necessary for two major reasons. 1) To save California’s employers hundreds of millions of dollars, and 2) prevent catastrophic rise rates that would hurt injured workers and businesses.
Negotiating a reform bill in the legislature for general, sweeping political results between two historical opponents, workers and employers, can be expected to fail for a least one stakeholder. In this case, the stakeholder group receiving the least benefits is injured workers, directly and, also indirectly because of new reforms pertaining to doctors.
Recommendations
The first recommendation is for California to accept the fact that patching together reforms from one bill to another is not going to fix the problems inherent in the California WC system.
The second recommendation is to make sure that workers with permanent disabilities, the most vulnerable, are not hurt worse financially or in any other way. Society, the state and employers need to behave ethically and morally. Firstly, every reasonable effort must be made to ensure safe working conditions. Secondly, when workers are injured in a way that makes them permanently disabled, their needs should be a priority based on their vulnerability. If reasonable accommodations at the workplace can be made, so the disabled worker can return to work, that should be the first choice for action. Accommodations for permanently disable workers cannot always be made or an employer may be unwilling to take the proper steps. If an employer does not take appropriate steps then they should be fined and if they receive any state or federal funding those funds should be reduced. Finally, disability rights laws need to be integrated into the design of the workers compensation system. The workers with permanent disabilities have been shown to suffer the most under SB863. Therefore, a major problem with the new reform has been made obvious, one that needs correction as soon as possible.
The third recommendation is to design the state WC system so that it works well with and within the features of the federal WC plan. Having two systems dealing with workers compensation issues on the state and the federal level could be advantageous to all stakeholders. The federal government deals successfully with many issues facing the injured workers, so a realistic state system would address the needs that the federal system does not.
The fourth recommendation is to simplify the system, not add more bureaucracy. SB 863 added more bureaucracy not less; an example is the creation of the IMRO to resolve medical disputes. The IMRO has been placed between the UR and the WC judges. A better option would simply and make the system operate with easy to understand and transparent fees and schedules. More bureaucracy was formed because prior approval to reentrance of the MPNs every four years is required.
The fifth recommendation is to use the judicial system as a last resort. The judicial system has become integrated into the WC system because doctors rely on the judicial system over disputes motivated by the new fee schedules and treatment ratings. Injured workers need expert health care givers to heal, and return-to work. Punishing doctors for treating injured workers is counterproductive.
Framework
Importantly a framework for WC performance measurement needs to be implemented so a new WC bill or another WC reform bill would at the least be more realistic and workable than SB 863. The framework developed by Wynn, Timbie and Sorebero (2011) specifically addressed the positive and negative features of SB 863. The framework is divided into three major portions Provision of Care, System Cost and System Performance. The first part is the provision of primary care that starts when an employee is injured, and the first activity is immediate medical care if needed. Primary access to health care is a category the Framework addresses in order to remedy the problem of non-reporting of injuries, denying claims for work-related injuries, and developing an equitable way to establish the cause of the injury.
The next activity is submitting the file claim by the worker and the review by whatever system has been set into place. Here the Framework addresses the issues of secondary access for when the UR is the reason care cannot be accessed, the health care provider is not the choice of the injured, and the waiting times are not realistic based on types of injuries and other factors.
Continuing care for temporary disabilities or permanent disabilities are measured, under the Framework as to safety, equal access and the care is assessed positive if it is patient-centered. The dynamics of appropriate and effective continued medical care are measured in terms of underuse and overuse.
The assessment of system costs under the Framework has four major sections all on an equal level. Those are medical care costs, the amount of indemnity benefits, the administrative costs of the insurance and finally, and importantly, the regulatory oversight.
The system performance measurements are critical to the success of using the Framework. Five main performance units can be evaluated in order to rate the system’s performance. Primarily, recitation of health would be the most important and secondly, the ability to continue to work and be restored to the earning capacity held when the injury took place. Thirdly the ability to maintain and continue work coupled with the degree of work capabilities can be measured. Another piece of the system performance assessment is rating the administrative and insurance efficiencies and outcomes. And finally, include all four of the above factors with a fifth, the satisfaction of the stakeholder.
Each unit of the Framework requires careful research and collecting of data. The flow of the framework through the three categories is straightforward, and the main units that can effect a knowledgeable assessment have been included. The most time consuming activities are predicted to be the time spent gathering the data and categorization of the data into a well-designed database. After these steps, the data can be evaluated, and the most important information from the data can be prioritized in order to set an agenda for fulfilling an assessment for each unit under the three categories for the provision of care system cost and system performance.
For example, assuming an injured workers point of view, SB 863 could be realistically simplified in the following way. Personal physicians could be allowed to treat their patients if injured at their workplace. A second opinion could be allowed if the injured worker felt it necessary. The treatments could be based on the American Medical Association (AMA) descriptions. The determination of the treatment would be based upon the expert opinion of the primary doctor, the doctor giving a second opinion, and the injured person. The fee schedules could be designed, so workers with similar injuries are compensated by similar amounts. Safety regulatory agencies could be required to investigate workplace sites more often. Return-to-work policies could be designed to allow employers to redesign workplace stations (for example) so that injured workers could remain in the labor force. The necessary issues surrounding the recommendations were addressed in Chapter II.
Suggestions for Future Study
What strategies have been used in other countries that have made workers the main beneficiaries of WC laws?
Who benefits the most financially from the CA SB 863 law?
What needs of the California worker are not addressed by federal WC?
Concluding remarks
In conclusion, the research undertaken in order to better understand the WC system in California and compare CA SB 899 and SB 863 has demonstrated that SB 899 was a better reform bill for injured workers than the current SB 863. In terms of whom SB 863 benefits the most that would be a good subject for further research. It is very possible the employers could be the most benefited, or perhaps the insurance providers or even California lawyers. There is no doubt that piling reforms upon new reforms every few years is not an efficient process for any WC system. Therefore, the recommendations will hopefully add some new thoughts on how to improve California’s WC system without continuing to build a patched-up system with unnecessary complexities.
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Appendices
Appendix A- 1 California Workers v. Year

(2012 Random Survey of 500 Injured Workers (A) BRG, June 3, 2013, p. 30 and (B) BRG, June 3, 2013, p. 21)
Appendix A- 3Characteristics of 500 Injured Workers, (cont.)

(January 2011, in USD