Category: Daily News

Health insurance giant Anthem Blue Cross is spurning California’s new insurance market for small businesses, a potential setback in the state’s rollout of the federal healthcare law. Anthem, a unit of WellPoint Inc., is California’s largest insurer for small employers. The Los Angeles Times reports that the company’s surprising move raised concerns about the state’s ability to offer competitive rates and attract businesses to its new Covered California exchange that opens Jan. 1. Friday’s disclosure made Anthem the first big insurer in California to publicly pass on the small-business pool. Some other big names, such as UnitedHealth Group Inc. and Aetna Inc., have already opted out of California’s larger exchange for individual consumers. Anthem’s decision in California underscored that the small-business exchanges are the most susceptible to a lack of interest among insurers.

The state’s largest for-profit health insurer isn’t abandoning the small employer market, which is limited to firms with 50 or fewer workers. It said it would keep selling coverage to small companies outside the exchange, and it also remains one of 13 health insurers that will offer policies to individuals in Covered California.

Anthem led California with 31% of the small-employer market in 2011, according to the most recent Citigroup data. Kaiser Permanente was a close second with a 28% share, followed by Blue Shield of California with 18% of small firms. Both Kaiser and Blue Shield are expected to participate in the small-group exchange. Nonetheless, Anthem’s move caught many observers off guard. “That’s really surprising and not a good thing for the exchange,” said Micah Weinberg, a senior policy advisor at the Bay Area Council, an employer-backed San Francisco group. “Anthem is a very major player in the small-group market and you want a broad range of insurers, particularly the most compelling brand names.”

Covered California sought to downplay any potential fallout on rates and employer choice, likening Anthem’s departure to one airline pulling out of a highly competitive market. “We don’t think it will have a huge impact,” said exchange spokesman Dana Howard. “There are other companies that are just as big. This will be a competitive market.” Employers will learn more early next month when Covered California announces the health insurers and their proposed rates for the small-business exchange. In the first few years, the state estimates up to 200,000 small-business workers and family members may get coverage through the state’s market.

One concern for health insurers selling in exchanges is that too many customers with big medical bills pick a certain company and it absorbs a higher share of the medical costs among that population. “The reality is that risk is not spread equally in an exchange,” said Bruce Jugan, an insurance agent in Montebello and president of Benefitscafe.com, which sells health insurance to individuals and businesses. “If SHOP can offer comparable plans with lower rates then they will get a lot of business, even without Anthem Blue Cross participating,” Jugan added.

Anthem has come under fire from regulators recently over rate hikes for small businesses. Last month, California Insurance Commissioner Dave Jones asked the exchange to bar Anthem from its small-group market because of what he viewed as unreasonable premium increases. “I think Anthem withdrew because they felt they would be excluded or at a minimum they didn’t want to face additional debate” over their rate hikes, Jones said Friday. Covered California had said it would consider the commissioner’s request alongside other factors. Anthem said the recommendation by Jones had no bearing on its decision to drop out.

On July 9, 2013, the Workers’ Compensation Appeals Board announced its intent to modify the text of proposed amendments to its Rules of Practice and Procedure that had been the subject of a public hearing on April 16. The announcement stated that written comments regarding the proposed modifications would have to be received by the WCAB by 5 p.m. on July 25.

Following this announcement, some members of the workers’ compensation community requested the WCAB to extend the time for submitting written comments. The WCAB agreed that a limited extension of time was reasonable. Therefore, the WCAB extended the time for submitting written comments by an additional 15 days to Friday, August 9 by 5 p.m. The WCAB will consider only comments it has received by that time.

As previously announced, the proposed modifications to the initially proposed Rules and related documents are posted on the WCAB’s website. The originally proposed new and amended Rules and related documents may also be found at this site.

Additionally, to facilitate further public comments, the WCAB is presently in the process of adding to its website all public comments it has received regarding the proposed Rules amendments. The documents to be posted will include the written comments the WCAB received on or before April 16, a transcript of the April 16, public hearing, and the written comments the WCAB has received in conjunction with the July 9 announcement. The posting of these written comments will be periodically updated until the August 9 closure of the written comment period.

The address for submission of comments by e-mail is WCABRules@dir.ca.gov. The address for submission of comments by mail is: Neil P. Sullivan, Assistant Secretary and Deputy Commissioner, Workers’ Compensation Appeals Board, P.O. Box 429459, San Francisco, CA 94142-9459. The address for submission of comments by delivery service or personal delivery is: Neil P. Sullivan, Assistant Secretary and Deputy Commissioner, Workers’ Compensation Appeals Board, 455 Golden Gate Avenue, Ninth Floor, San Francisco, CA 94102.

The WCAB will consider all written comments regarding the proposed Rules modifications it receives by Friday, August 9 at 5 p.m. It encourages all interested members of the workers’ compensation community to participate in this important process.

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.”

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.”

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.