Brown Vetoes Bills Backed by Labor, Signs Compound Drug Measure

California Gov. Jerry Brown on Friday vetoed four workers’ compensation bills backed by labor, stating in two of his veto messages that he wants to see broad workers’ compensation reform instead of “piecemeal changes” that will increase employer costs.But the governor did find some workers’ comp legislation he could support: Brown signed Assembly Bill 378 , introduced by Assembly Insurance Committee Chairman Jose Solorio, which will bring compound drugs under the state’s pharmacy fee schedule.Brown also signed Senate Bill 684 , which will require insurers to provide written disclosure to California employers if the carrier includes in the employer’s policy a provision that requires disputes to be arbitrated or resolved in courts outside of California.Brown’s signature on the compound drugs bill and his vetoes of AB 211, AB 584, AB 947 and AB 1155 brought an immediate accolade from the Association of California Insurance Companies.

“Gov. Brown said yes to an important bill that will curb abuses in the workers’ compensation system and he said no to several bills that would have increased costs or made California’s system more litigious,” stated ACIC Mark Sektnan in a press release. “We commend him for his leadership and his common sense approach. Given the state of California’s economy, Gov. Brown made the right decisions for employers who pay for the system and employees that want jobs and safe working environments.”

AB 211 bill_number=ab_211&sess=CUR&house=B&author=cedillo , introduced by Assemblyman Gil Cedillo and sponsored by Voters Injured at Work, would have made $6,000 supplemental job displacement vouchers available to injured workers when the treating physician determines the injury is permanent and stationary and there will be some degree of permanent disability. The veto message is here., injured workers do not receive job displacement vouchers until they receive a permanent disability rating. Supporters of AB 211 said injured workers often get the retraining benefits too late to do any good.

Brown said in his veto message that he recognizes the bill is an effort to improve benefits to workers. “I am however, reluctant to enact piecemeal changes to the workers’ compensation system in the absence of more comprehensive reform that addresses both the cost and benefits under the system.”

Brown made a similar statement in vetoeing AB 947  by Solorio, D-Anaheim, which would have allowed up to 240 weeks of temporary disability benefits for injured workers who are still recovering from surgery when the current 104-week cap is exhausted. His veto message is here .”It is vital that injured workers receive adequate compensation to provide for their needs when they are unable to work due to work-related injuries,” Brown said. “Workers’ compensation reforms, however, need to be addressed on a broad and balanced scale — ensuring workers receive adequate and timely benefits and treatment, while also ensuring that the costs of the system are sustainable.”

Opponents of AB 947 said it was nothing more than an end-run around the 104-week cap on TD benefits created in 2004. Jerry Azevedo, a spokesman for the Workers’ Compensation Action Network, said if there are specific treatments or injuries that require additional recovery time, they should be identified individually and added to other conditions that are exempted from the 104-week cap.

Brown also vetoed AB 1155  by Luis Alejo, D-Salinas. The bill would have stated that apportionment can’t be based on characteristics such as race, gender or nationality. The veto message is here. in support of the bill, attorneys said women with broken bones have had awards reduced because they were predisposed for osteoporosis. African Americans have had awards reduced because of a genetic disposition to hypertension, they said.

Jason Schmelzer, a lobbyist for the California Coalition on Workers’ Compensation, said previously that the bill created a new opportunity for applicants’ attorneys to argue whether apportionment is appropriate. No amendment would eliminate that problem from the bill, he said.

Brown apparently was persuaded by the argument, saying in his veto message that the bill would lead to increased litigation.

“At best, that additional litigation would add to employers’ costs for workers’ compensation,” he wrote. “At worst, this bill could disturb the appropriate interpretation of existing law that is already taking shape in the courts.”

Brown vetoed AB 584  by Paul Fong, D-Cupertino, as well. The bill would have limited utilization review to physicians licensed in California. Supporters of the bill said physicians licensed in the state have more training and are better equipped to determine whether a specific treatment is appropriate for an injured worker. The veto message is here .Dr. Stuart Bussey, president of the Union of American Physicians and Dentists, said while testifying in support of the bill before the Senate Committee on Labor and Industrial Relations in June that the state is lucky it has not been sued over using out-of-state doctors for UR. He said the Medical Practices Act prohibits physicians who aren’t licensed in California from making decisions about treatment recommendations made by physicians who are licensed in California.

Opponents of the bill said there is a difference between practicing medicine and conducting utilization review. Theo Pahos, a lobbyist for the Association of California Insurance Companies, testified against the bill, telling the Senate Labor Committee that reviewing a request for treatment is just balancing an individual opinion with the weight of the general occupational medical community.

Brown said in his veto message that limiting utilization review to California-licensed physicians would be an abrupt change and incompatible with how utilization review is conducted by health care service plans.

“I am not convinced that establishing a separate standard for workers’ compensation utilization review makes sense,” Brown wrote.

With the exception of SB 684, Brown’s actions on the six workers’ comp measures brought a near clean sweep for the insurance industry, which had opposed any tinkering with the California workers’ compensation system, absent substantial reforms to shave costs that have been creeping up again after major savings created by legislative reforms in 2003 and 2004.

Insurers lobbied heavily for AB 378, which will establish a maximum 20% mark-up over documented acquisition costs for pharmacy goods dispensed by physicians.

“Studies by the California Workers’ Compensation Institute in 2010, and a report to the Commission on Health and Safety and Workers’ Compensation by the Rand Institute have pointed out the costly abuses involving physician-dispensed compound drugs,” the ACIC said. “Compound medications are often paired with topical and transdermal creams that have not been approved by the U.S. Food and Drug Administration. Since compound medications are a combination of other medications, these medications present unique billing issues and many insurers have seen instances where the bill for a compound drug is several times more expensive than the comparable FDA-approved, commercially available oral dosage. Some of these compound prescriptions are not vetted and could pose safety risks to injured workers.”