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WCAB Reverses Firefighter’s “Ogilvie” Based Award

Ronald Gerton incurred cumulative industrial injury to his low back while working as a firefighter for the City of Pleasanton. The parties’ AME Dr. Post used the range of motion method to rate applicant’s back impairment under the AMA Guides to the Evaluation of Permanent Impairment, Fifth Edition (AMA Guides) in accordance with the 2005 PDRS, and the physician opined that applicant has a 21% whole person impairment using that rating. With regard to apportionment, Dr. Post noted that applicant obtained a prior award of 3% permanent disability for a January 11, 2004 specific injury to the back, which was rated using subjective factors under the earlier 1997 PDRS.

However, the WCJ rejected this rating, and explained that the Diminished Future Earning Capacity (DFEC) adjustment factor contained in the 2005 Permanent Disability Rating Schedule (2005 PDRS) was rebutted at trial by the testimony and reporting of applicant’s vocational expert Eugene Van de Bittner, Ph.D., who opined that applicant’s work preclusions resulted in a 65% DFEC, and the WCJ used that 65% figure to find applicant’s 62% permanent disability after applying apportionment pursuant to the opinion of the parties’ Agreed Medical Examiner (AME) Michael Post, M.D.

Defendant petitioned for reconsideration contending that Dr. Van de Bittner’s reporting was not substantial evidence in support of the WCJ’s finding of 62% permanent disability. The WCAB granted reconsideration, rescinded the aware and remanded the case of Ronald Gerton v City of Pleasanton for further proceedings.

One of the problems with the award was that the vocational expert excluded the Applicant’s actual post-injury earnings in his calculations of diminished future earning capacity. Starting in 6/10, applicant performed some work as a type of construction supervisor for his older brother and younger brothers. His first assignment was to live at a multimillion dollar home in Carmel, California during a remodel project conducted by his older brother. Mr. Gerton supervised the work of construction workers at this home. He worked for about 6 weeks at the rate of about 40 hours per week. Since then he has assisted his younger brothers in apartment remodeling projects. Apartments are gutted and remodeled when tenants vacate the premises. In exchange for his services, his brothers will perform construction work at his home in Livermore and at his cabin. Since his retirement, he has continued to work 20 to 40 hours per week as a jobsite supervisor for his brother’s construction company. He works as much as he wants to work. He is paid $45 per hour for his time

The WCJ found that those earnings were artificially high because the work was being done for a close relative, applicant’s brother. Dr. Van de Bittner found that this work lies outside what applicant could expect to compete for in the open labor market and said it was essentially sheltered employment. “The charity of Applicant’s family should not be used to create a false impression of Applicant’s true capacity for earnings.”

The WCAB disagreed. It concluded “We find no evidence in the record that supports the WCJ’s conclusion that applicant was performing “sheltered work” or that his post-injury earnings are “charity” provided by his family as stated in the Report. Instead, the expected duties of a construction supervisor, the continuing availability of that work to applicant and the $45 per hour pay he receives for it indicates otherwise, as does applicant’s expressed interest in performing that same kind of work as a volunteer overseeing the remodeling of homes. Upon return to the trial level the record should be further developed on the issue of applicant’s post-injury earnings and whether his actual earning history should be utilized to evaluate his DFEC and permanent disability.”

Pricing Survey Shows Workers’ Comp Increasing

Commercial insurance prices in aggregate increased by almost 7% during the fourth quarter of 2012, according to Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies underwritten during the fourth quarter of 2012 to those charged for the same coverage during the same quarter in 2011.

Pricing data reported by carriers for the fourth quarter of 2012 indicated a pause in the upward industry price acceleration observed since the start of 2011. Price-change indications in total and by line of business were generally consistent with price increases in the third quarter of 2012, but with some upward movement in specialty lines.

The largest price increases were in workers compensation and employment practices liability. Increases for most lines fell in the mid- to upper-single digits. No line of business had an overall price increase of less than 3%.

Price increases were observed across all account sizes for standard commercial lines, with larger increases observed in mid-market and large accounts than in small accounts. Specialty lines prices continue to increase, but still lag the results observed in standard lines.

Historical loss cost information reported by participating carriers points to an improvement of almost 4% in loss ratios in accident-year 2012 relative to 2011, as earned price increases more than offset reported claim cost inflation. The report notes that CLIPS results are intended to exclude catastrophes. This indication is a reversal from the estimated 3% deterioration between 2010 and 2011. This improvement comes from both earned price increases and reduced estimates of claim cost inflation. Carrier estimates of claim cost inflation come in at 1% for 2012.

Total Disability Award Reversed by Court of Appeal

Michael Borman sustained continuous trauma injury to his ears (hearing loss), bilateral upper extremities, neck and head during the year prior to his last day at work for Acme Steel as a steelworker. AME Dr. David Schindler apportioned hearing loss based on both non-industrial, degenerative causes and prior injury, opining that Borman’s 100 percent “binaural neurosensory hearing loss” was 60 percent due to “occupational factors, specifically noise induced hearing loss. Approximately 40 percent of Mr. Borman’s hearing loss is the result of non-occupational factors, particularly cochlear degeneration.”

Borman told Dr. Schindler he filed a workers’ compensation claim following a December 1994 explosion at the factory that threw him 10 to 15 feet and knocked him out momentarily. He was rated at 22 percent disability due to hearing loss from the 1994 injury, and his hearing has gradually gotten worse since then. Borman was examined by Dr. David Manace in October 1994. Dr. Manace documented that the explosion experienced by Borman occurred in 1993, found Borman had “a 37.5 percent monaural loss in the right ear and a 37.5 percent monaural hearing loss in the left ear for a 37.5 percent binaural hearing loss at that time,” and concluded Borman had a bilateral high-frequency hearing loss consistent with accumulated noise exposure. Dr. Manace recommended Borman should be fitted with hearing aids.

Dr. Schindler reiterated his conclusion in a subsequent report that Borman had “a 100 percent hearing loss . . . apportioned . . . as 60 percent due to noise-induced hearing loss and 40 percent due to other factors. The noise-induced hearing loss . . . includes the explosion component that was found by Dr. Menace,” adding, “I did not apportion Dr. Menace’s portion of the hearing loss.”

In July 2012, the Workers’ Compensation Administrative Law Judge (WCALJ) issued a “Findings and Award” and “Opinion on Decision” following proceedings held in April 2012 at which Borman was the only witness. The WCALJ found Borman’s injury ratable under the post-2004 Permanent Disability Ratings Schedule. The WCALJ also found Borman a straight-forward and credible witness, noting that during testimony he “clearly had difficulty understanding questions and had to face his questioners directly in order to ‘lip read’ as well as listen. His cochlear implants have improved his hearing but his hearing . . . is quite limited[,] . . . particular[ly] . . . in crowded or noisy environments, and [he] cannot function effectively on the phone.” The WCALJ found Borman effectively rebutted any Diminished Future Earnings Capacity (DFEC) and showed 100 percent loss of earning capacity entitling him to permanent and total disability. The WCALJ based the latter finding on expert vocational testimony proffered by Borman showing there was no job in the open labor market that could accommodate Borman’s “difficulty with oral communications, limitations with use of the upper extremities, limited mobility, need for daily narcotic medication, rests and serious headaches.’ Additionally, the WCALJ found that “Labor Code section 4664 is not pertinent as prior to the instant cumulative trauma injury there was no earnings loss due to the prior award of permanent disability for hearing loss,” reasoning that “Borman continued to work [after] the prior award for prior hearing loss, [and his] hearing loss progressed to the point where he required implants, which . . . have severe limitations.”

The WCAB summarily denied Acme’s petition for reconsideration. The Court of Appeal reversed in the unpublished case of Acme Steel v WCAB (Borman), finding that the WCALJ erred “by failing to address the issue of apportionment.” The clear intent of the Legislature in enacting Senate Bill No. 899 was to charge employers only with that percentage of permanent disability directly caused by the current industrial injury. “Here, the WCAB ignored substantial medical evidence presented by Dr. Schindler, as summarized above, showing that Borman’s 100 percent loss of hearing could not be attributed solely to the current cumulative trauma. ” The matter was “remanded to the WCAB with directions to order the WCALJ to make an award consistent with this opinion.”

DWC Posts RAND Working Papers on Proposed RVRVS Fee Schedule

The Division of Workers’ Compensation (DWC) today posted three documents to provide the public with tools which assess proposed rulemaking on the Official Medical Fee Schedule.

The first document is a revised RAND working paper, providing a quality assurance review of the impact for a transition to a resource-based relative value scale (RBRVS) based physician fee schedule. The revised working paper includes updated impact tables, revised estimated transition conversion factors, and an explanation of the changes made.

The other documents include a detailed impact file intended for public use as well as a supporting document with a description of the data elements included. The impact file is a comprehensive data table which allows members of the public to focus on specific components of the proposed changes.

“I am pleased to provide this impact file so that stakeholders can better assess areas that are of specific interest to them. I believe providing this data file improves the opportunity for meaningful public participation in the rulemaking process,” said Christine Baker, Director of the Department of Industrial Relations (DIR). DWC is a division of DIR.

The revised RAND working paper and the public use data file can be found on the proposed regulations page.

DWC 2012 Claim Audits Finds 4690 Violations and $1.2 Million in Penalties

The Division of Workers’ Compensation has posted the 2013 DWC Audit Unit annual report on its website . The Audit Unit annual report provides information on how claims administrators audited by the DWC in 2012 performed and includes a ranking report. Labor Code sections 129 and 129.5 provide the framework for oversight and enforcement of the regulations of the Administrative Director for the prompt and accurate provision of workers’ compensation benefits. The performance of any insurer, self-insurer or third-party administrator is rated for action in specific areas of benefit provision. Of foremost importance is the payment of all indemnity owed to the injured worker for an industrial injury. The timeliness of all initial and subsequent indemnity payments and compliance with the regulations of the Administrative Director for provision of notice for a qualified or agreed medical evaluation are also measurable factors for performance.

In 2012, the DWC Audit Unit completed a total of 64 profile audit reviews (PAR audits). Of the PAR audits, 61 were routinely selected and three were target audits, which were conducted based upon failure of a prior audit. The total number of PAR audit subjects included 15 insurance companies, 14 self-administered / self-insured employers, 30 third party administrators (TPA), and five insurance company / third-party administrator combined claims adjusting locations.

At all audits, claim files were selected for review on a random basis, with the number of indemnity and denied cases being selected based on the numbers of claims reported in each of those populations for the audit subject in the three calendar years prior to audit commencement. In addition, if any complaints were received regarding possible violations of the Labor Code or regulations of the Administrative Director, each respective claim file related to a complaint may have been part of the audit.

Fifty-nine audit subjects (92.2%) met or exceeded the PAR 2012 performance standard thereby having all penalty citations waived. Five audit subjects (7.8%) failed to meet or exceed the PAR standard and the audit expanded into the full compliance audit of indemnity claims (FCA stage 1). Four of these audit subjects (6.3%) then met or exceeded the FCA-1 2012 standard. For these four audits, the Audit Unit issued notices of compensation due and assessed administrative penalties for late and unpaid indemnity. One of the 64 audit subjects (1.6%) that failed the PAR audit also failed to meet or exceed the FCA performance standard thereby demonstrating poor performance and this claims administrator will be subject to a return target audit within two years. The complete list of the performance ratings for the 64 audit subjects can be reviewed in order, from the best to worst performer. In 2012, two claims administrators disputed one or more penalties cited in the course of their respective audits. The disputes will be reviewed by the Workers’ Compensation Appeals Board.

As a result of PAR/FCA audits conducted during the calendar year 2012, the Audit Unit found and cited 4,690 violations against claims administrators with administrative penalties totaling $1,273,489. Not all administrative penalties are subject to collection. Under the Labor Code, no penalties are assessed on those “cited” violations unless the audit subject fails the audit at a specific level.

Study Says Post-Operative Checkups by Telephone is Safe and Saves Time and Money

In a preliminary study of patients who had simple surgeries, most did well and seemed satisfied with post-operative checkups by telephone instead of seeing their surgeon in a clinic visit. According to the article in Reuters Health, the phone follow-up saved doctors and patients the time and effort involved in clinic visits without compromising patient care, according to the study of California patients. “These clinic visits are usually five minutes or less, very brief, the doctor asks ‘how are you, do you feel well, are you going to the bathroom okay, that kind of thing,” said senior author Dr. Sherry Wren of the Stanford University School of Medicine. Those questions can easily be asked over the phone, and only patients with unusual symptoms need to come see a doctor in person, she told Reuters Health. The study included patients who had hernia repairs and gallbladder removals, both routine surgeries with very low post-op complication rates. But so-called telehealth follow-up would not be appropriate for all surgeries Wren said; for cancer patients, for example, follow-up doctors’ visits include discussions of continuing care and treatment plans.

For the new study, Wren and her colleagues identified patients of the Palo Alto Veterans Administration Health Care System who were scheduled for one of two surgeries. In total, 115 patients had hernia repairs and 26 had gallbladders removed. All were scheduled for a follow-up clinic visit three weeks after their surgeries. But two weeks post-surgery the patients were called by a physician assistant. The assistant asked scripted questions about the patient’s pain and activity levels, swelling, the look and feel of the incision, appetite and bowel movements. If patient responses indicated normal recovery, the patient’s scheduled follow-up clinic visit was canceled with the patient’s consent. If recovery seemed abnormal, the patient was encouraged to keep the clinic appointment. Any patients who wanted in-person follow-up were also allowed to keep their appointment. Calls went through to 110 of the patients; 63 hernia patients and 19 gallbladder patients agreed to have surgical follow up by phone only and canceled their clinic appointments.

None of the gallbladder patients and three hernia patients had surgical complications up to 10 months after surgery, which is comparable to complication rates in the general population, according to the results published in the journal JAMA Surgery. The authors did not compare the outcomes of the telehealth group to a group going to traditional clinic visits.

Of the patients who said they wanted to visit the clinic, even after the phone checkup, most wanted to pick up a return-to-work form and thought they had to do so in person, whereas it can actually be mailed or faxed, Wren said. Most patients said they were very satisfied with the telehealth checkups and seemed grateful that they didn’t have to drive to the clinic, Wren said, Of the patients who accepted the telehealth follow-up, the average round-trip travel distance from their homes to the hospital was 141 miles, and the average driving time Wren’s team calculated would have been about two and a half hours. Though research supports the safety and efficacy of telehealth, it is only used in some pockets of healthcare, Wren said. Some physicians balk at leaving behind the “gold standard” of in-person visits, she said.

The current study indicates that even the relatively low-tech telephone call can be a reliable telehealth option, and it may be more appealing to people, she said. “Nothing about this was surprising, especially in this patient population and with what we would consider relatively routine procedures, especially if they travel great distances, we know people would like an alternative,” said Dr. Glenn Ault of the department of surgery at the University of Southern California in Los Angeles. Using telemedicine to make sure only surgical patients who need to be seen end up going to a clinic could help cut down on crowds and wait times, said Ault, who wrote a commentary to accompany the research. He already uses telemedicine in his practice in L.A. health system, and has also had patients send pictures of their wounds before coming in to the office. The next step will be to study telehealth options for other procedures, he said. “Healthcare as we view it will undergo some significant transformation in the years ahead, the status quo cannot continue,” he said. “We are going to have to look for different ways to safely and efficiently provide care,” and telehealth could play an important role, he said.

IRS To Review State Funds Tax Exempt Status

The nation’s 20 state-run workers compensation funds showed strong growth for the second straight year, according to a new A.M. Best report. The article in Property Casualty 360 says that state funds accounted for 44 percent of total net premiums written in 2012. Net premiums written increased 7.1 percent in 2011 and 13.5 percent in 2012, reaching $6.9 billion last year–the highest level since 2008. The report says the increases are an outgrowth of a hardening market as the economy returns to a growth mode. Rate increases accounted for some of the increase in NPW, but overall premium growth was only slightly higher than the 6.8 percent and 13.1 percent respective increases in the A.M. Best workers’ comp composite for 2012 and 2011. Premium income rose for state funds in both years despite a precipitous decline in the California state fund.

Excluding State Compensation Insurance Fund of California (SCIFCA) premiums, the premium increase of the 19 other competitive state funds rose a 18.3 percent in 2012, compared to 11.7 percent in 2011–an indication state funds may be fulfilling their role as residual market providers to a greater degree as workers’ comp markets harden.

The report notes one emerging concern: the Internal Revenue Service’s Exempt Orga­nizations division is reviewing the tax-exempt status afforded state funds. “While still in a preliminary and exploratory phase, any eventual IRS rulings in this regard could have significant impacts on affected state funds’ markets, business strategies and operations,” the report said.

One factor in premium growth is most of the funds predominately serve residual markets–small businesses, for example–while also competing with the private market. Typically during hardening markets, some businesses find it more difficult to afford or secure coverage in the voluntary market and turn to state funds. The report noted that each fund tends to develop its own, unique characteristics, largely depending on its business profile and growth initiatives.

The report said some state funds maintain a steadfast role in the residual market and often contend with political pressure that can affect surplus and rate levels. Others have undergone transformations toward becoming private, mutual insurers. Some funds have taken to writing business beyond their state borders, the report said.

The term “state funds” is used for the 20 U.S. competitive state compensation funds, the report said. It does not include the monopolistic funds operating in North Dakota, Ohio, Puerto Rico, Washington or Wyoming.

Researchers Question Surgical Treatment for Spine Compression Injury

Getting back surgery to fix fractures caused by compression of the spine may not be any more beneficial than more conservative treatments, according to a new study of Medicare patients. According to the summary in Reuters health, researchers found that people who had so-called spinal augmentation had a similar likelihood of dying or having major complications as those who didn’t have the surgery. “I can’t say there is no effect in patients who swear by their procedure, but in looking at objective measures we can’t say it’s effective,” said Dr. Brendan McCullough, the study’s lead author who did the research while at the University of Washington in Seattle.

During spinal augmentation, doctors fill compression fractures – usually caused by the bone-thinning condition osteoporosis – in people’s vertebrae with a bone cement. Research has found that spinal augmentation relieves the pain of back fractures, but more recent studies suggest the procedure’s perceived benefits may be due to a placebo effect – or mind over matter. Spinal fractures, however, can lead to more problems than just chronic pain. They have, for example, been tied to a doubled risk of death. Therefore, some believe the procedure may help reduce the risk of death in people with fractures.

For the new study, the researchers used medical billing data for people on Medicare, the U.S. health insurance for the elderly and disabled, between 2002 and 2006. They identified 10,541 people who had spinal augmentation to treat their fractured back bones, and 115,851 people who used more conservative approaches, which typically include pain medicine and back braces or girdles. On average, the people included in the study were about 80 years old, mostly female and white.

The researchers found that spinal augmentation patients had fewer complications – such as cardiac arrest, pneumonia and stroke – within the 30 days following the discovery of their fracture, compared to those who used more conservative treatments. But that difference disappeared one year after their fractures were discovered, when about 29 percent of people in both groups had major complications. People who had spinal augmentation, however, did appear to have a consistently lower risk of death over the first 30 days and one year after their fracture was discovered, compared to the conservative treatment group. That advantage, however, went away once the researchers accounted for the fact that people who had spinal augmentation appeared to be healthier overall than the people who picked more conservative treatments. What’s more, people who had the procedure ended up in the hospital more often over the next year, compared to the conservative treatment group. They were also more likely to be admitted to an intensive care unit or sent to a nursing home. The researchers can’t say that the procedures didn’t give some of the patients relief from pain, said McCullough, who is now a neuroradiologist with Radia in Seattle.

In an editorial accompanying the study in JAMA Internal Medicine, Dr. Douglas Bauer writes that the study “convincingly” shows that spinal augmentation is unlikely to reduce deaths after back fractures. “Until better evidence becomes available, the potential benefits of vertebral augmentation remain unproven, and it should not be routinely offered to patients with osteoporotic vertebral fracture to improve pain, improve function, or reduce mortality,” Bauer, a professor at the University of California, San Francisco, added. However, Dr. Kirkham B. Wood, chief of the orthopedic spine service at Boston’s Massachusetts General Hospital, said the new study has limitations. For example, it did not separate the two main forms of spinal augmentation surgery from the other, and an older form of augmentation made up the majority of the included procedures. “It’s not going to change anyone’s practice,” Wood said about the study, adding that the procedure is still important to consider.

IMR Decisions Posted on DWC Website

The Independent Medical Review (IMR) program is part of an important essential overhaul of the California Workers’ Compensation System that was created pursuant to Senate Bill (SB) 863.

The IMR program provides an expedient method to resolve medical necessity treatment disputes for work-related injuries occurring on or after Jan. 1, 2013. On July 1, 2013, IMR became available to resolve medical necessity treatment disputes for all dates of work-related injury as long as the requested treatment was denied, delayed, or modified following utilization review after Jan. 1, 2013.

The DWC has contracted with Maximus Federal Services, an independent medical review organization (IMRO), until December 31, 2014 to conduct IMR on its behalf. Maximus contracts with medical professionals to perform the review. The names of the professionals are confidential in communications outside the organization.

All IMR decisions are posted on the DWC website with redacted information. While each IMR request is assigned a number when it is received, the posted IMR decisions are not numbered sequentially because some requests are withdrawn and others determined to be ineligible. Further, some applications have not been assigned yet because DWC is awaiting additional information requested from the parties.

Thus far and informal review of the information posted by the DWC shows that the Maximus professional reviewer sustained the utilization review physicians’ determinations to deny the requested treatment more times than they overturned the UR decisions thus favoring the employer’s point of view.

An analysis of some of these decisions by the California Society of Industrial Medicine and Surgery said that “some Maximus professional reviewers are better than others. In some cases, the professional reviewers performed a thorough review and provided a clear and cogent rationale for their decision. Unfortunately, in other cases, the professional reviewers cited no authority whatsoever to support their decisions.”

WCIRB Proceeds With STAR Rollout and Online Access

The WCIRB announced that it is on schedule for a July 22 deployment of the second phase of its new STAR operating system. This latest release of STAR builds upon the first phase of the system, which was rolled out in September 2012 and supports the WCIRB’s unit statistical report (USR) collection and experience rating functions. Phase 2 gives the WCIRB new policy data management tools, which will enable electronic policy data reporting for insurers. It also includes the initial release of STAR Online – a new online service for insurers to manage USR data submissions, correspondence and more.

With this deployment, the WCIRB can begin decommissioning its mainframe system and, in conjunction with the online services provided via STAR Online, will be positioned to provide new operational efficiencies for member insurers and new products and services for all WCIRB stakeholders.

Phase 2 of STAR will be deployed over the weekend of July 19-21. In the days preceding the cutover, the WCIRB will resolve as many open policy inquiries as possible. On July 12, the WCIRB will process its last policy submission in its mainframe and, between July 15 and July 22, no new policies will be processed. During this period, the WCIRB will continue to process USRs and publish experience ratings and classification inspection reports. For additional information concerning the rollout of STAR phase 2, refer to WCIRB Bulletin 2013-11.

The initial release of STAR Online provides insurers access to their USRs, experience rating worksheets, an online queue for managing and resolving USR audit errors, and various tools for benchmarking and managing USR submissions. Later in 2013, STAR Online will expand to provide insurers access to their policy data, classification inspection reports and test audit results. It will also provide licensed agents and brokers with access to experience modifications and classification information.

Insurer enrollment for the STAR Online system has begun. For details about the new STAR Online system or to learn how to begin the enrollment process, see the STAR Online Brochure or visit the STAR Online Enrollment page on

When fully deployed, STAR Online will completely replace the services provided by; however, is not impacted by the first release of STAR Online and will continue to operate normally. Until STAR Online is completely deployed later in 2013, insurers may find it necessary to have a STAR Online and a user account.

For STAR Online enrollment information, contact

For general questions regarding the STAR system or the cutover process, please contact the WCIRB Customer Service department at or by calling 888.229.2472.