CCWC Says 2012 is Employers’ Best Year for Reform

CCWC Says 2012 is Employers’ Best Year for Reform

By Greg Jones, Western Bureau Chief

ANAHEIM, Calif. — Management should take advantage of a favorable political environment and push for reform legislation in 2012, according to the lobbyist for the California Coalition on Workers’ Compensation.

Jason Schmelzer, during his annual mid-session legislative update at the CCWC’s 10th annual Legislative and Educational Forum, said a statute that required an update of the Permanent Disability Rating Schedule in 2010 and data showing rising costs are two reasons why employers should push for reform in 2012.

Schmelzer said many times reform feels like two or three groups are banding together to “nail the other one to the cross.” But right now, labor and management agree that reform should involve cutting costs to finance a benefit increase. Employers should exploit that to avoid the possibility of being run over by labor and the labor-friendly Democrats who control the Legislature and the governor’s office.

“For employers, the politics don’t get any better than they are now,” Schmelzer said. “Very infrequently do labor and management, the two central parties in the workers’ comp bargain, get together and make good decisions based on a kind of mutual respect. That’s where we are right now. I would hate to see that relationship in the form it’s currently in be wasted.”

Employers should capitalize on the friendly relationship with labor to pursue system savings in a trade for permanent disability benefit increases, which are two-years overdue. Senate Bill 899 required an update of the Permanent Disability Rating Schedule by 2010, but the Division of Workers’ Compensation has not complied with that mandate.

The Commission on Health and Safety and Workers’ Compensation (CHSWC) commissioned a study that shows the rating schedule introduced in 2005 cut benefits by an average of 58%. A more precise definition of apportionment was a good change that accounted for some of the reduction, Schmelzer said, but there is also some data that shows some injured workers are “getting a bad deal” and employers have felt for several years that a benefit increase is necessary.

If a benefit increase is imminent, employers should take advantage of the current opportunity to get labor to sign off on some other system changes that will reduce waste and fraud, Schmelzer said.

Finally, because 2012 is an election year — one in which Democrats need to pick up three seats for a supermajority in the Senate and six seats for a supermajority in the Assembly — it’s possible that the Legislature will lose some members who are knowledgeable about workers’ compensation. If Democrats get a supermajority in both chambers, which is two-thirds of the members in each house, they can approve a budget without bargaining with Republicans.

In addition to a potential shift in political balance next year, many of the legislators who have become experts on workers’ comp issues will soon be termed out of office.

Six members of the Assembly Insurance Committee, the committee that reviews work comp bills, will not be returning next year. Jose Solorio, chairman of the Committee, Charles Calderon, Mary Hayashi, Mike Feuer and Wilmer Carter can’t seek re-election because of term limits, and Jeff Miller is running for the state Senate. Sen. Sharon Runner, who serves on the Senate Committee on Labor and Industrial Relations, is not seeking reelection next year.

“It’s hard to keep (lawmakers) up to speed on what’s going on in something as sexy as workers’ compensation,” Schmelzer said.

Having to retrain a new class next year about the workers’ compensation system, all of its problems and the history of reform efforts will be burdensome, Schmelzer said.

Knowledgeable lawmakers and a general agreement between business and labor “are fleeting,” he added.

“For employers, if you’re thinking about why do we want to do this now, why do we want to push to get something done, there’s three really good reasons that may not exist next year,” he said.

Schmelzer said he doesn’t know what bill will be the vehicle for reform language, or even when reform language might be introduced.

Among the bills that have been introduced, Senate Bill 959, by Ted Lieu, D-Torrance, is the only bill Schmelzer described as “good” on Wednesday. The bill would eliminate the pass-through that allows hospitals and surgery centers to bill for the full cost of hardware they use in spinal surgeries plus a handling fee.

Schmelzer said the bill has support in both the Assembly and the Senate and it could be passed to the governor’s desk immediately. However, people working on the bill want to get it right and make sure the language in the measure doesn’t leave loopholes that can be exploited.

Assembly Bill 1687, by Paul Fong, D-Cupertino, is another bill that has strong support. Schmelzer said he expects the measure will be passed in the Legislature and go to the governor’s desk. The bill would authorize attorneys fees for successfully appealing a utilization review denial in cases where an injured worker with a settlement that includes an award of future medical care.

In 2011, Brown vetoed a number of workers’ compensation bills that were opposed by employers, and Schmelzer said he hopes the governor “performs as well as he did last year” and vetoes AB 1687.

“I have no doubt that if this is passed, you will see this for other cases,” Schmelzer said. “Basically, if you overturn UR, you’ll get attorney fees.”

With other bills, such as a measure that would create a presumption of compensability for hospital workers who contract methicillin-resistant Staphylococcus aureus (MRSA) and one that would eliminate the five-year statute of limitations on death benefits for public safety workers, the goal is to kill the bills before they get to the governor.

Lawmakers are currently on summer recess and will not return to Sacramento until Aug. 6. The legislative session ends on Aug. 31.

The California Coalition on Workers’ Compensation forum continues Thursday and Friday and will include speeches by both Christine Baker, director of the Department of Industrial Relations, and Rosa Moran, administrative director of the Division of Workers’ Compensation.