Workers’ comp reform

In 2004, California’s new governor, flush with the power of a decisive victory over a field of hundreds in the state’s first successful recall election, used his political muscle to reform the state’s workers’ compensation program, the rates for which were putting an ever-increasing financial drain on businesses across an ailing state.

Two years later, the State Compensation Insurance Fund reports an average rate decrease of 16 percent on new and renewed workers’ comp policies. That drop marks the fifth consecutive decrease and a total reduction of 38 percent since the beginning of 2004.

And during his recent State of the State speech, Gov. Arnold Schwarzenegger declared that the state’s workers’ comp program was fixed.

The state’s insurance fund, established by the Legislature in 1914, was originally designed to back up private insurance providers operating in the state. But over time the number of private companies offering workers comp insurance in California dropped so dramatically that the SCIF ended up issuing 60 percent of the coverage. That lack of a competitive market allowed workers’ comp insurance rates for employers to triple between 1999 and 2003.

“State Fund’s fifth consecutive rate decrease underscores the significant positive effect of reform legislation passed by the Legislature and signed by Gov. Schwarzenegger,” recently crowed James C. Tudor, acting State Fund President.

“Clearly, the reform measures have halted the escalation of workers’ compensation insurance costs in California.”

Indeed, the reform has had an effect. Company’s rates are falling dramatically, but it may be at the cost to the injured workers. Treatment options have been taken out of the doctors’ hands and given to the insurance providers.

Before the reform went into effect, the Attorney General’s Office interpreted the initiative that led to the legislation passed in April 2004 as repealing the “requirement that workers’ compensation laws be interpreted to favor providing benefits to workers.”

The law, “[p]ermits injured employee treatment only by employer-approved physician. Limits right to obtain second medical opinion. Requires employee to prove employment activities predominantly caused injury. Limits employer liability for permanent disabilities to percentage caused by job-related injury. Requires compensation or medical treatment to be based on objective medical findings. Provides independent review of all medical treatment disputes. Limits rights to sue for disability discrimination.”

In other words, reform was aimed at benefiting employers rather than empl0yees. No wonder its supporters included the California Chamber of Commerce, Insurance Brokers & Agents of the West, the American Insurance Association, the California Building Industry Association and the California Logging Industry Association.

Critics of the reform wondered why the employees and not the insurance companies, with their increasing rates, were the target of change. One of those critics was local attorney Steve Foster, whose clients include injured workers fighting what they see as a heartless system. Foster says his predictions that the reform would further hurt injured workers have proven true.

“I can tell you that I am receiving phone calls from my clients on a daily basis indicating that they cannot find a doctor to treat them for their workers’ compensation injury,” Foster said.

Under the reform, the employer sets up a medical provider network [MPN], in essence an HMO for workers’ compensation claims—a specific list of doctors the injured worker may see.

When the reform went into place in November 2004, Andrea Hoch, director of the state Division of Workers Compensation, predicted, “MPNs will ease access to treatment for workers. Delays brought on by insurer objections to proposed treatments will be reduced because insurers will be more confident MPN doctors are following appropriate treatment guidelines.”

Foster says the system is not working, at least in any way to the benefit of the employee.

“The problem I’m seeing is that most employers, meaning their insurance companies, are not providing the entire list or if they do, my clients are calling these doctors who tell them, ‘Yeah we are on the list but we don’t take workers’ compensation injuries.'”

Foster said many doctors are pulling out of the system and those who still do treat workers’ comp cases are swamped. His clients are now driving as far as Sacramento to find doctors who will treat them.

Doctors are getting out of the workers’ comp treatment for a couple of reasons, Foster said. For one, the reforms automatically create delays in treatment because the insurance companies have the right to send whatever treatment a doctor requests to a consulting physician who doesn’t have to be licensed to practice in California.

“They’ll use doctors in Texas or Florida, doctors who never see the patient. All they see is the report from the treating doctor. That pretty much means an automatic two-week delay in treatment.”

Under the reform doctors must refer to and comply with the guidelines for treatment as expressed in the American College Occupational and Environmental Medicine Guidlines, or ACOEM.

The book is set up to deal with injuries within the first 90 days, Foster said, meaning it does not address long-term recuperation and care.

“It’s a cookbook. It is the state legislators telling doctors this is how you treat injured workers.”

Foster shared with the News & Review a document containing a comment written by a doctor treating one of the attorney’s clients.

“The intended purpose of the ACOEM Guidelines has been completely perverted.” the doctor writes. “It is a manual intended for general practitioners and clinic physicians to manage care during the first 90 days of treatment. It was never intended to tell specialists how to treat complicated issues.”

One of Foster’s clients is Paradise resident Larry Brown, a former iron worker who six years ago began experiencing neck and back problems. He’s had two surgeries on his neck to remove three discs. He was initially approved to receive 12 massages to help alleviate the pain, but after just three, the insurance company cancelled the treatments. That came just after the reforms were adopted.

Any activity, he says, causes pain and he spends much of his day on his back. He is currently collecting Social Security. He can’t find a doctor between Redding and Marysville who will treat him.

“Because of workers’ comp reform, they are very limited on what treatments they can provide,” Brown said. “There is a doctor in Sacramento, but I can’t see traveling two hours for a half-hour appointment just so the doctor can say he can’t treat me.

“I’m not one of those people trying to screw the system; the system is screwing me.”

He’s been to court once and was awarded $68,000 which is being doled out over the next seven years in $170-per-week increments.

“When I was getting the treatment and the massages, my life was much better. I’m never going to be 100 percent, but I could get through each day without being medicated.”