Author: WorkCompAcademy

As directed by the Joint Legislative Audit Committee, the office of the California State Auditor conducted an audit of the Division of Occupational Safety and Health (Cal/OSHA) and its efforts to enforce health and safety standards that protect California’s nearly 20 million workers.

It reviewed 60 case files that Cal/OSHA handled from fiscal years 2019–20 through 2023–24 and reported that it found deficiencies in Cal/OSHA’s enforcement processes and staffing levels that may undermine some of California’s workplace protections.

In a letter sent to the Governor and Legislative Leaders by Grant Parks, the California State Auditor said that in general “Cal/OSHA did not demonstrate that it had sufficient reasons for closing some workplace complaints and accidents without conducting an on-site inspection.” In nine of the 30 uninspected complaints it reviewed it questioned Cal/OSHA’s rationale for deciding not to inspect “because the case files lacked evidence to support that Cal/OSHA had complied with its own policies. Some accident cases also lacked support for Cal/OSHA’s decision not to inspect.”

Parks wrote that his office also “observed some critical weaknesses among the on-site inspections that Cal/OSHA did conduct. It reported that Cal/OSHA did not consistently document effective reviews of employers’ injury and illness prevention programs,” causing the Auditor to question whether it may have overlooked potential violations in some instances.

“When Cal/OSHA identified hazards and cited employers for violations, it did not always document that those employers had abated the hazards. Furthermore, the fines that Cal/OSHA assessed employers were sometimes less than the violations may have warranted, and Cal/OSHA often did not document a clear rationale for further reducing fines in post-citation negotiations with employers.”

“Cal/OSHA’s process deficiencies and staffing shortages are root causes for many of the concerns we identified. Cal/OSHA has left key policy documents unrevised for years, conducted internal audits inconsistently, and relied on paper-based case files. Cal/OSHA had a 32 percent vacancy rate in fiscal year 2023–24 and even higher vacancy rates in many of its district offices, significantly limiting its ability to protect workers.”

Katrina S. Hagen, Director Department of Industrial Relations, responded to the report. “Prior to the audit commencing, many positive changes were in progress. The recommendations in the audit align with these ongoing efforts.”

“Understaffing contributed to several of the findings identified in the audit. In recent years, DIR has been working to address structural and process issues, as well as recruitment and retention issues, that have contributed to staffing shortages at Cal/OSHA.”

“One challenge with recruiting Associate Safety Engineers is the lack of candidates with safety knowledge, skills, abilities and experience – especially in the geographic locations Cal/OSHA needs them in. To address this gap, we broadened our search to include entry-level positions, offer on-the-job training, and created partnerships with educational institutions to help develop the skills needed for the job. “

“Findings related to the enforcement branch’s onsite inspections were largely based on deficiencies in case files. Cal/OSHA is working to immediately address these deficiencies through training.”

“Furthermore, Cal/OSHA is prioritizing the modernization and automation of its data management system, which we anticipate will reduce documentation failures and other deficiencies identified in the audit. Cal/OSHA is the largest state-run OSHA program in the country, yet the division lags behind other states in terms of technology and automation. Currently, Cal/OSHA uses the Federal Occupational Safety and Health Information System (OIS), which does not meet our state-mandated needs, and we still rely heavily on paper case files to capture many California requirements not captured in OIS. The limitations of this system were especially felt during the pandemic when Cal/OSHA received a record number of complaints and had challenges accessing information on our enforcement activities.”

Gilead Sciences, Inc. is an American biopharmaceutical company headquartered in Foster City, California, that focuses on researching and developing antiviral drugs used in the treatment of HIV/AIDS, hepatitis B, hepatitis C, influenza, and COVID-19, including ledipasvir/sofosbuvir and sofosbuvir. Gilead is a member of the Nasdaq-100 and the S&P 100.

California joined a coalition of 48 other attorneys general in securing $202 million from Gilead Sciences, Inc. (Gilead), for running an illegal kickback scheme to promote its HIV medications. Gilead allegedly violated federal law by illegally providing incentives – including awards, meals, and travel expenses – to healthcare providers to prescribe Gilead’s medications, resulting in millions of dollars of false claims submitted to government health care programs, including Medi-Cal.

The settlement in principle, reached in coordination with the U.S. Department of Justice and approved by the U.S. District Court for the Southern District of New York, provides $49 million for Medicaid programs nationwide, including $4,118,184 for California, with the remainder going to Medicare, Tricare, and the AIDS Drug Assistance Program (ADAP).

From January 2011 to November 2017, Gilead allegedly violated federal anti-kickback laws by providing gifts to healthcare providers who attended and spoke at promotional speaker programs for Gilead’s HIV drugs: Stribild, Genvoya, Complera, Odefsey, Descovy, and Biktarvy. Gilead paid high-volume prescribers tens to hundreds of thousands of dollars to present as “HIV Speakers.” The company also covered travel expenses for speakers, including those traveling long distances and to attractive destinations, such as Hawaii, Miami, and New Orleans, and hosted dinners at high-end restaurants.

Gilead’s internal compliance mechanisms failed to halt these violations. The company’s internal policies and procedures failed to prevent its sales representatives from improperly offering incentives to induce prescriptions.

The Division of Medi-Cal Fraud and Elder Abuse receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $69,244,976 for Federal fiscal year (FY) 2025. The remaining 25 percent is funded by the State of California. FY 2025 is from October 1, 2024 through September 30, 2025.

Gilead Sciences has had at least one prior problem with resolving claims for illegal kickbacks. Back in 2020 Gilead agreed to pay $97 million to resolve claims that it violated the False Claims Act by illegally using a foundation, Caring Voice Coalition (CVC), as a conduit to pay the Medicare co-pays for its own drug, Letairis.

In that prior case the government alleged that Gilead used CVC, which claimed 501(c)(3) status for tax purposes, as a conduit to pay the co-pay obligations of thousands of Medicare patients taking Letairis, which is approved to treat pulmonary arterial hypertension (PAH). According to the government’s allegations, Gilead used CVC to cover the patients’ co-pays in order to induce those patients’ purchases of Letairis. Gilead knew that the prices it set for Letairis otherwise could have posed a barrier to those purchases.

California’s private self-insured employers reported 7,026 fewer workers’ compensation claims in 2024 than in 2023 (-7.4%), pushing private self-insured claim frequency to a 4-year low, but for the second year in a row the average paid and incurred losses on these claims increased, driving total paid and incurred losses higher according to a California Workers’ Compensation Institute (CWCI) review of initial data from the state Office of Self-Insurance Plans (OSIP).

The annual summary of private self-insured data posted on OSIP’s website last week, offers an initial snapshot of California private, self-insured claims experience for cases reported in 2024, noting the number of covered employees, medical-only and indemnity claim counts, and total paid and incurred losses on those claims through the end of the year. The 2024 summary shows the experience of private self-insured employers who covered 2.25 million California employees last year (down from 2.34 million in the 2023 first report) and who reported 87,360 claims in 2023, down from 94,386 claims in the 2023 initial report.

According to the latest summary, private self-insured employers reported 45,170 medical-only claims in 2024 (down 7.1% from 48,404 in 2023, the first full year following pandemic), though that was still 3.2% above the 43,779 med-only claims noted in 2020, when med-only claim volume plummeted during the brief, pandemic-driven recession. At the same time, the number of private self-insured indemnity claims, which spiked during the pandemic due to the flood of COVID-19 lost-time claims then fell 13.0% as COVID claim volume dropped in 2023, fell for the second year in a row, declining by 8.2% to 42,190 claims in 2024.

The 2024 claim count translates to an overall frequency rate of 3.88 claims (2.01 med-only and 1.87 indemnity) per 100 private self-insured employees, down from an overall rate of 4.03 in 2023 (2.07 med-only and 1.96 indemnity), marking the second consecutive year-over-year decline in private self-insured claim frequency, and pushing the overall rate to the lowest level since 2020.    

Despite decreasing claim volume and claim frequency, private self-insured’s first report total paid and incurred losses both increased for the second year in a row last year. Paid losses on the 2024 private self-insured claims through the end of the year totaled $353.6 million, up 3.9% from the first report total for 2023, as total paid medical increased by $10.2 million (6.1%) to $177.6 million, and total paid indemnity (primarily temporary disability payments) increased by $3.2 million (1.9%) to $176.0 million. First report total incurred losses (paid benefits plus reserves for future payments) on 2024 private self-insured claims rose to $934.3 million, up $30.6 million, or 3.5% from the 2023 total, as first report incurred medical increased by $39.8 million (7.9%) to $542.3 million and total incurred indemnity increased by $30.6 million (8.5%) to $392.0 million.

Even though there were 7,026 fewer private self-insured claims in 2024 than in 2023 (including 3,792 fewer indemnity claims) the growth in private self-insureds’ total paid and incurred losses in 2024 can be traced to the growth in average paid and incurred losses at the first report, as average paid losses per claim rose 12.3% to $4,047 while average incurred losses rose 16.8% to $10,695.

OSIP’s summary of private self-insured’s calendar year 2024 data, follows the December 2024 release of public self-insured claims data for fiscal year 2023/2024. OSIP private and public self-insured claim summaries from the past 20 years are posted at https://www.dir.ca.gov/SIP/StatewideTotals.html. CWCI members and subscribers may log on to the Communications section of the CWCI website www.cwci.org to view a summary Bulletin with more details, analyses, and graphics.

According to a study published this year in the Journal of Inflammation Research – Mechanisms and Factors Influencing Resorption of Herniated Part of Lumbar Disc Herniation: Comprehensive Review – Lumbar disc herniation (LDH) is a common condition causing low back pain, radiating leg pain, and neurological symptoms.

Clinically, the phenomenon of spontaneous shrinkage or disappearance of a herniated disc without surgical intervention is called resorption. Spontaneous resorption of herniated disc material without surgical intervention is a well-documented phenomenon, occurring in approximately 70% of cases, offering a basis for conservative treatment.

Here are some of the mechanisms that play a role in resorption:

– – Inflammation and Macrophage Infiltration: The herniated nucleus pulposus (NP) is recognized as a foreign antigen, triggering an autoimmune response. Macrophages, particularly M1-type (pro-inflammatory) and M2-type (anti-inflammatory), infiltrate the herniated tissue. M1 macrophages produce pro-inflammatory cytokines (e.g., TNF-α, IL-1β, IL-6), which stimulate matrix metalloproteinases (MMPs) like MMP-3 and MMP-7. These enzymes degrade collagen and proteoglycans, facilitating resorption. M2 macrophages support tissue repair and resolution of inflammation in later stages.
– – Neovascularization: New blood vessel formation around the herniated disc enhances macrophage access and nutrient supply, aiding resorption. Cytokines such as vascular endothelial growth factor (VEGF) and fibroblast growth factor 2 (bFGF) drive angiogenesis.
– – Apoptosis and Autophagy: Programmed cell death (apoptosis) and autophagy (cellular self-degradation) in the herniated tissue contribute to its breakdown. The Fas-FasL pathway mediates apoptosis, reducing disc volume.
– – Dehydration and Retraction: Dehydration of the NP reduces disc volume, while mechanical retraction of the herniated material back into the annulus fibrosus may occur, particularly in cases with intact fibrous rings.
– – Matrix Degradation: MMPs, activated by inflammatory mediators, break down the extracellular matrix of the herniated disc, accelerating resorption.

And there are several factors that influence resorption:

– – Herniation Type and Size: Extruded and sequestered discs are more likely to resorb (87.77% and 66.91% incidence, respectively) compared to protruded (37.53%) or bulging discs (13.33%). Larger herniations, particularly those exceeding 50% of the spinal canal diameter (“giant” herniations), show higher resorption rates due to greater exposure to epidural vessels
– – Posterior Longitudinal Ligament (PLL) Integrity: Rupture of the PLL allows the NP to contact epidural vessels, promoting resorption. Intact PLL may hinder this process.
– – Composition of Herniated Tissue: Discs with a higher proportion of NP (high water content) are more prone to resorption than those with cartilaginous endplate material or Modic changes, which resist vascularization and macrophage infiltration.
– – Rim Enhancement on MRI: Greater rim enhancement on gadolinium-enhanced MRI indicates increased neovascularization and inflammation, predicting higher resorption likelihood.
– – Sagittal Parameters and Posture: Studies suggest that lumbar spine alignment, such as greater L4 posterior vertebral height and sacral slope, correlates with faster resorption, possibly due to biomechanical influences.
– – Disease Duration and Age: Shorter disease duration and younger age are associated with higher resorption rates, likely due to more robust immune responses and tissue plasticity.
– – Inflammatory Mediators: The balance of pro-inflammatory (e.g., TNF-α) and anti-inflammatory mediators influences resorption speed. High levels of MMPs and chemokines enhance matrix degradation.

Spontaneous resorption of LDH is a complex process driven by inflammation, macrophage activity, neovascularization, apoptosis, autophagy, and dehydration. Predictive factors such as herniation size, type, PLL rupture, and MRI rim enhancement guide clinical decision-making. Conservative treatments show promise in promoting resorption, reducing the need for surgery. Further research is needed to refine predictive models and optimize non-surgical strategies.

The Legislative Analyst’s Office (LAO) has provided fiscal and policy advice to the Legislature for 75 years. It is known for its fiscal and programmatic expertise and nonpartisan analyses of the state budget. The office serves as the “eyes and ears” for the Legislature to ensure that the executive branch is implementing legislative policy in a cost efficient and effective manner.

The LAO just published a new analysis of the Subsequent Injury Benefit Trust Fund (SIBTF), which was created as a narrow supplement to California’s workers’ compensation system. The state first enacted SIBTF to offset employers’ workers’ compensation costs for veterans and other workers whose serious pre-existing disabilities made a new work injury more disabling and, therefore, more expensive. The program had the effect of providing additional lifetime benefits to a small number of workers facing steep barriers to employment.

Over time, however, SIBTF has grown dramatically in both size and scope. Today, it operates alongside the standard workers’ compensation system but with broader eligibility, less rigorous standards, and more generous benefits.

SIBTF claims are paid out of the state fund, but the fund itself is supported by a tax that employers pay on their workers’ compensation insurance premiums. (This tax is sometimes referred to as an assessment.) All employers pay the same tax rate, levied as a flat percentage of the employers’ insurance premium total. Insurers collect the tax as part of the premium payments and remit the collections to the state. Employers that self-insure for workers’ compensation remit a commensurate payment to the state. The statewide SIBTF employer tax totaled $848 million in 2024-25.

In recent years, the SIBTF program has evolved from a narrowly focused benefit to support a small number of severely injured workers into a much larger and broader disability benefits program. Many more workers file claims with SIBTF today than a decade ago. These claims typically pay more generous benefits than standard workers’ compensation and many include compensation for common chronic illnesses, as opposed to severe pre-existing disabilities. The result is a benefit program that now rivals standard workers’ compensation in size and that may no longer align with the program’s original legislative intent.

Between 2005 and 2015, the state received about 1,000 SIBTF claims annually and was able to process roughly half of those claims each year. The number of injured worker submitting SIBTF claims has increased in recent years. The state now receives around 3,000 SIBTF claims per year, of which it has been able to process 500 to 1,000 claims annually. Submitted claims are held as “case inventory” until state staff can process and initiate benefit payments. The state’s case inventory of unprocessed SIBTF claims now sits at roughly 25,000 claims.

Insured employers pay roughly $1.4 billion in permanent disability payments. Self-insured employers – private and public – likely add another $500 million to $1 billion. Together, total annual permanent disability payouts under the standard workers’ compensation system likely total about $2 billion. SIBTF, once a relatively small program, now pays more permanent disability payments ($2 billion to $3 billion) than the state’s core workers’ compensation program.

SIBTF claim payments and associated medical and legal payments have increased rapidly in recent years, resulting in annual increases in the employer paid taxes that replenish the SIBTF. The 2024-25 tax is expected to generate $850 million, nearly double the amount necessary to replenish the fund in the prior year. However, the current employer tax does not fully capture employers’ financial exposure to SIBTF claims because most claims each year go unprocessed. In recent years, the state has processed between 500 and 800 claims annually, or roughly one fifth of all incoming claims.

This means current employer tax rates only reflect a small portion of claims submitted, masking the full fiscal effect to come. Should the state progress through the backlog of SIBTF claims at a faster rate, employers’ annual taxes will grow commensurately.

Looking broadly at incoming claims each year, employers likely face lifetime SIBTF costs totaling $2 billion to $3 billion for each cohort of claims that injured workers submit each year. If the number of claims remains steady at around 3,000 per year and the state processes all incoming claims, the annual employer tax would climb to $2 billion to $3 billion before stabilizing near that level.

At the conclusion of the report, the LAO suggests “the Legislature look to refocus SIBTF to more closely align with its original purpose. To do so, the Legislature would need to reassess several dimensions of the program. Key options include: (1) establishing stricter criteria for pre-existing conditions, (2) returning the eligibility threshold to only cover moderate and severe work injuries, (3) requiring that pre-existing conditions were previously documented, (4) requiring claims to be reviewed by an agreed-upon physician, (5) limiting SIBTF to pre-existing disabilities that actually worsen the work injury, and (6) revisiting how multiple conditions are added together. We also recommend the Legislature consider fast-tracking backlogged claims from workers with the most severe pre-existing conditions.”