Rene Thomas Folse, JD, Ph.D. is the host for this edition which reports on the following news stories: TD Not Required for Medical Appointments After RTW, Saturday is Not a “Working Day” for UR Time Limits, WCAB Panel Circumvents CA Fitzpatrick Rating Standards, Purdue Pharma $12B Settlement Offer Moves Ahead, Man Accused of Premium Fraud Now Faces $30M Tax Evasion, ABC Employment Test Passed by Legislature, New Law Provides California Benefits to Out-of-State Film Workers, SB 731 Limits to Apportionment Remains in Committee, Panel Discusses New Safety Regulations, Insurance Commissioner Under More Ethical Scrutiny.
The Workers’ Compensation Insurance Rating Bureau of California has released its quarterly update on California statewide insurer experience valued as of June 30, 2019.
Highlights of the report include:
— California written premium through the second calendar quarter of 2019 is 7 percent below the same period for 2018, suggesting that the 2019 premium decrease will also be significant. This is the third consecutive year of premium decreases.
— The average charged rate for the first six months of 2019 is 10 percent below that for 2018 and 32 percent below the peak in 2014. The WCIRB recently proposed a further 5% decrease in advisory pure premium rates for January 1, 2020.
— The WCIRB projects the ultimate accident year loss ratio for 2018 to be four points above that for accident year 2017, driven by higher claim severities for 2018 and lower premium rates.
— The 90 percent combined loss and expense ratio projected for accident year 2018 represents the sixth consecutive year of combined ratios below 100 percent. Combined ratios below 100 percent are one indicator of a healthy workers’ compensation system.
— The ratio for the percent of open indemnity claims closed in the next year increased in each of the last six years and in 2019 is the highest ratio since 1999.
— Cumulative trauma (CT) claim rates continue to increase in accident year 2017, and the ratio of CT claims to all indemnity claims has increased by more than 80 percent since accident year 2005.
— The projected total loss and allocated loss adjustment expense claim severity for accident year 2018 is 5 percent higher than that for accident year 2017, following several years of modest declines in claim severities.
— Medical service costs per claim decreased 17% from 2012 to 2015, primarily driven by a 23% decrease in the number of transactions per claim. Overall medical cost levels have been relatively flat since 2015.
— Pharmaceutical costs per claim decreased 80% from 2012 to 2018. These reductions have been driven by SB 863’s independent medical review and independent bill review, reduced utilization of opioids, changes to Medi-Cal reimbursement rates and the new drug formulary.
— The number of liens filed in the first two quarters of 2019 are more than 60% below pre-SB 1160 and AB 1244 levels.
The full report is available in the Research section of the WCIRB website and linked below:
The Division of Workers’ Compensation just launched an updated free online education course for physicians treating patients in the California workers’ compensation system.
“Caring for California’s Injured Workers: Using California’s Medical Treatment Utilization Schedule (MTUS) 2019” is one of a series of education modules developed for medical doctors, chiropractors and nurses. The course is also available to anyone else wishing to learn about the MTUS, and a completion certificate is available.
The MTUS is the primary source of guidance for treating physicians and physician reviewers for the evaluation and treatment of injured workers. It incorporates evidence-based treatment guidelines of the American College of Occupational and Environmental Medicine (ACOEM), which are published by the ReedGroup.
“All medical providers who treat injured California workers should understand and follow the MTUS. The online course is a convenient tool for providers to learn how to use the treatment guidelines and formulary that are designed to improve medical outcomes for injured workers,” said DWC Executive Medical Director Dr. Raymond Meister.
Medical doctors, chiropractors and nurses who take the course will receive up to one and a half hours of free CME credit. Qualified medical evaluators (QMEs) may report up to one and one half hours of credit for QME reappointment. The course is also available to anyone else wishing to learn about the MTUS, and a completion certificate is available.
The education module covers:
— What the MTUS is, how to use it, and how you may be able to obtain free online access to the MTUS-ACOEM treatment guidelines
— How to navigate the MTUS-ACOEM treatment guidelines and apply recommendations for patient care
— The MTUS Drug Formulary
— When to consider recommendations outside of the MTUS guidelines for the care of your patient
— The role of utilization review (UR) and independent medical review (IMR) physicians
Access to the physician education module can be found on the DWC website.
San Diego City Attorney Mara Elliott has filed a lawsuit against grocery delivery company Instacart, alleging the tech giant has misclassified its employees as independent contractors.
The suit comes three days after new legislation, called Assembly Bill 5, cleared the California Legislature, spurring panic among gig economy giants such as Uber and Lyft. The bill is now on its way to the desk of Gov. Gavin Newsom, who has previously pledged his support. Should the bill be signed into law, it would prevent many companies from classifying their workers as independent contractors rather than employees.
According to the report in the San Diego Tribune, Elliott’s lawsuit is asking for Instacart’s workers to receive compensation retroactively, including payment for things like minimum wage, overtime pay, meal breaks and expense reimbursement. The suit also alleges Instacart evaded paying workers compensation and unemployment insurance, along with state and federal payroll taxes.
Instacart did not respond to a request for comment by publication time.
San Francisco-based Instacart is a grocery delivery service that operates nationally and has a presence in San Diego. Its app allows customers to place grocery orders online, which are then purchased and delivered by a “shopper” who drives the order directly to their home.
The suit alleges that Instacart shoppers do not qualify as independent contractors under a 2018 California Supreme Court decision (Dynamex Operations West, Inc. v. Superior Court). It’s the Dynamex case that spurred AB 5 to move its way through the state legislature this year, sponsored by San Diego Democrat Lorena Gonzalez.
Procopio law partner Tyler Paetkau, who practices employment law, said AB 5 would change the game entirely for companies hiring contract workers. Employers used to have a lot of wiggle room to classify workers as independent contractors. This new bill now tightens the definition of an independent contractor. The most notable difference is that employers cannot use contractors unless the person’s work is “outside the normal business activities” of the hiring company.
Elliott’s suit alleges Instacart does not meet the criteria outlined in Dynamex, which AB 5 mirrors.
“Shoppers perform work that is directly within the course of Instacart’s business model, including ‘groceries delivered in as little as one hour,’” stated a City Attorney’s Office news release. “Shoppers are essential to providing the core service the company offers.”
Proponents of AB 5 say the legislation will improve labor conditions for gig economy workers, forcing companies to offer benefits and protections that a normal employee would be granted – such as minimum wage, paid sick days and health insurance benefits. Opponents say the bill invokes outdated views of “employment,” hampering the millions of Californians who want flexible work.
Lawsuits seeking retroactive restitution could be a major challenge for companies throughout the state, Paetkau said, especially small businesses that have adopted the gig economy model popularized by Uber and Lyft.
“A lot of these companies are startups,” Paetkau said. “They have some funding but limited resources. The worst thing that can happen to them is a lawsuit or claim. Especially involving multiple workers. This could wipe them out.”
Lawyers for cities and counties suing drug companies over the opioid epidemic on Monday objected to a bid by pharmaceutical distributors and pharmacies to disqualify the federal judge overseeing the cases, saying it had no basis and came too late.
The plaintiffs’ lawyers moved swiftly to fight the request companies including AmerisourceBergen Corp (ABC.N), Cardinal Health Inc (CAH.N) and McKesson Corp (MCK.N) had made on Saturday for U.S. District Judge Dan Polster in Cleveland, Ohio, to step aside from the litigation.
In Monday’s brief, lawyers for the plaintiffs said the defendants had waived their ability to seek Polster’s recusal, noting they were relying on statements he made more than a year ago to belatedly seek his disqualification.
“If these Defendants really thought recusal was necessary, they were required to raise the issue sooner – much sooner,” the plaintiffs’ lawyers wrote.
The companies had argued in Saturday’s motion that Polster, who has long pushed for a settlement that could “do something meaningful to abate this crisis,” had made a series of public statements since 2018 that could cause a reasonable person to question his impartiality.
They said those statements, made in court hearings and media interviews, raised the prospect that he had improperly prejudged their liability ahead of the first trial on Oct. 21 involving two Ohio counties seeking $8 billion.
In Monday’s brief, the plaintiffs’ lawyers said the companies did not take action when Polster made those comments and actively participated in court-overseen settlement talks without objection.
Polster “has at no time expressed improper or biased views about the liability of any defendant, much less views based on extra-judicial sources,” the lawyers wrote.
The companies who joined Saturday’s motion also include CVS Health Corp (CVS.N) and Walmart Inc (WMT.N). The defendants did not respond to requests for comment.
OxyContin maker Purdue Pharma, one of the lead defendants, filed for bankruptcy protection on Monday after reaching a tentative deal to resolve claims in the federal litigation and by 24 U.S. states.
The Orange County Register reports that county officials say they will stand behind their sheriff’s deputies who are injured while trying to help others, even when they’re off duty and out of state. County supervisors voted Sept. 10, to extend workers compensation benefits to sworn employees who were hurt during the 2017 mass shooting at the Route 91 Harvest Festival in Las Vegas, and to county law enforcement caught up in future domestic terrorism events who use their training to protect civilians or assist local first responders.
Off-duty officers from several Southern California communities were attending the Las Vegas concert when a gunman fired on the crowd. Some were shot or received other injuries while leading people to safety, helping secure the area and providing others aid.
Orange County rejected workers comp claims filed by four of its deputies who were hurt, because California law at the time specifically referred to peace-keeping activities “anywhere in this state,” but did not mention actions outside the state’s boundaries.
A bill from Assemblyman Tom Daly, D-Anaheim, that passed in 2018 clarified the law so that California peace officers injured off duty while responding to out-of-state crimes and life-threatening emergencies can collect public injury benefits. Now, Orange County has enshrined in its own policies that officers in good standing hurt in the Las Vegas shooting or such future incidents are eligible for workers compensation.
The new policy’s cost to county taxpayers is unknown because it will depend on how many claims are filed and what benefits are awarded.
Deputy Mark Seamans, hit by gunfire, was among the Orange County deputies whose claims were initially rejected. As Seamans told a reporter shortly after the incident, he never stopped to worry about his own safety while pulling people out of harm’s way. “The switch turned on, and it became everything we train for,” he said at the time.
The county’s new policy doesn’t guarantee off-duty deputies’ claims will be paid, only that they’ll be considered even if the incident takes place in another state. The policy would not apply to claims of psychological injury or events outside the U.S. On Wednesday, a county spokeswoman said two claims by officers who were shot in Las Vegas are due to be approved.
Since Daly’s bill passed last year, San Bernardino County accepted a claim from one deputy injured at the Route 91 festival, county spokeswoman Felisa Cardona said. California Peace Officers Association spokesman Shaun Rundle said he wasn’t aware of other agencies making policy changes as Orange County did.
The Division of Workers’ Compensation (DWC) announces that the 2020 minimum and maximum temporary total disability (TTD) rates will increase on January 1, 2020. The minimum TTD rate will increase from $187.71 to $194.91 and the maximum TTD rate will increase from $1,251.38 to $1,299.43 per week.
Labor Code section 4453(a) (10) requires the rate for TTD be increased by an amount equal to percentage increase in the State Average Weekly Wage (SAWW) as compared to the prior year. The SAWW is defined as the average weekly wage paid to employees covered by unemployment insurance as reported by the U.S. Department of Labor for California for the 12 months ending March 31 in the year preceding the injury. In the 12 months ending March 31, 2019, the SAWW increased from $1,290 to $1,325 – an increase of 3.84013 percent.
Under Labor Code section 4659(c), workers with a date of injury on or after January 1, 2003 who are receiving life pension (LP) or permanent total disability (PTD) benefits are also entitled to have their weekly LP or PTD rate adjusted based on the SAWW.
SAWW figures may be verified using the U.S. Department of Labor’s Unemployment Insurance Data Base. #
Puni Pa’u suffered an admitted injury while working for the Department of Forestry. His PTP requested authorization for radio frequency ablation, a type of medical treatment, for an accepted injury to his back. The RFA was was received by EK Health on March 12, 2018, a Monday. EK Health denied the request for treatment on March 19, 2018, also a Monday.
Applicant made a second request for the same treatment; this request was received on April 16, 2018, a Monday, and denied on April 23, 2018, also a Monday.
Applicant filed a Declaration of Readiness to Proceed, alleging that both UR denials were late, and therefore that the WCAB had jurisdiction to award him the medical care he sought.
The core of the parties’ dispute was over whether defendant had complied with the requirement to render a decision within “five working days,” as mandated by Labor Code section 4610. The WCJ found in pertinent part that defendant timely denied applicant’s requests for treatment via Utilization Review (UR). The WCJ concluded that the UR denials were timely because Saturdays and Sundays are not working days under the meaning of the Labor Code section 4610.
Applicant contends on reconsideration that the UR denials were untimely because Saturday is a working day for purposes of Labor Code section 4610, and therefore that the Workers’ Compensation Appeals Board (WCAB) has jurisdiction over the dispute and that the WCJ should have awarded applicant the requested treatment.
The WCAB affirmed the conclusion of the WCJ in the Significant Panel Decision of Puni Pa’u v Department of Forestry.
“Although Saturday is a business day under Civil Code section 9, it is not a working day under Labor Code section 4610, because Labor Code section 4610 does not incorporate the definition of business day found in Civil Code section 9. Applying the principles of statutory interpretation, we determine that the phrase “working day” found in Labor Code section 4610 does not include Saturdays based upon its standard modern usage, as reflected in dictionary definitions, statutory and regulatory enactments, and judicial decisions. Moreover, even if Saturday were a working day, the UR decisions in this case would still be timely based upon Code of Civil Procedure section 12a, which extends the deadline for performance of acts that fall due on a Saturday.”
This year the California Legislature again introduced legislation poised to limit apportionment in several ways with SB 731. The proposed law adds a sentence to LC 4663 (c) “The approximate percentage of the permanent disability caused by other factors shall not include consideration of race, religious creed, color, national origin, age, gender, marital status, sex, sexual identity, sexual orientation, or genetic characteristics.”
The proposed law was likely a response to a few recent decisions that have enhanced the ability of employers to obtain apportionment of permanent disability. However the court successes may be short lived as a new proposed law is rapidly gaining momentum in the California Legislature to limit or water down apportionment law adopted in 2004 by S.B. 899.
In April 2017, the Court of Appeal published its decision in the City of Jackson v WCAB (Rice) which confirmed apportionment to genetic factors. Christopher Rice was a police officer who suffered a spine injury. A PQME found that genetic factors were significant factors in his permanent impairment. The Court of Appeal reversed the WCAB which refused to allow apportionment to genetics.
In December 2018, the Court of Appeal published its decision in City of Petaluma v WCAB and Aaron Lindh. In that case a PQME concluded that 85 percent of his disability was due to a previously asymptomatic, underlying condition. The ALJ, however, rejected apportionment and reconsideration was denied by the WCAB. The Court of Appeal reversed, and granted apportionment finding that the requirement that the asymptomatic preexisting condition will, in and of itself, naturally progress to disable the claimant. was “the law prior to 2004” and is no longer a requirement for apportionment to an underlying condition.
SB 731 has been passed by the California Senate on 5/19/2019, and sent to the State Assembly as of 5/22/2019. On 5/30/2019 the bill was sent to the Insurance Committee, and as of the end of the legislative session this year, has not had a finding by that Committee. Thus SB 731 will not be passed this year.
Similar bills were passed by the legislature and then vetoed by Governors Arnold Schwarzenegger and Jerry Brown for many years. It is likely that SB 731 will be passed by the legislature the next legislative session. It is not clear what response Governor Gavin Newsom will have if it is passed. However, the bill is not yet an urgency bill, so the effective date would be no earlier than January 1, 2021 if passed and signed next year. Employers who have cases in litigation involving apportionment issues would have more than one year to bring those cases to a conclusion.
The state Senate voted in favor of the bill – dubbed Assembly Bill 5 (AB5) – that would ensure gig economy workers in companies like Uber, Lyft, and DoorDash are entitled to minimum wage, workers‘ compensation, and other benefits.
The contentious bill was passed in a 29 to 11 vote as the legislative session was about to end for the year. AB5 had passed the State Assembly on May 29 with a 53-11 vote. It is expected to be signed by California Governor Gavin Newsom, and will go into effect starting January 1, 2020.
The business models of these companies are already under severe strain. Although the extent to which AB5 could impact these platforms is unknown, it’s expected to drive their labor costs up by 30 percent, according to a report by San Francisco Chronicle.
Last month, Uber reported a record second quarter loss of $5.2 billion, its largest ever quarterly loss. The company laid off 435 employees across its engineering and product teams yesterday, on top of the 400 marketing team employees who were handed pink slips in late July in an attempt to cut costs.
Litigation is now likely to follow passage of the new law. Uber said Wednesday that it was confident that its drivers will retain their independent status when the measure goes into effect on Jan. 1. “Several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces,” said Tony West, Uber’s chief legal officer. He added that the company was “no stranger to legal battles.”
California has at least one million workers who work as contractors and are likely to be affected by the measure, including nail salon workers, janitors and construction workers. Unlike contractors, employees are covered by minimum-wage and overtime laws. Businesses must also contribute to unemployment insurance and workers’ compensation funds on their employees’ behalf.
In California, religious groups said they feared that small churches and synagogues would not be able to afford making pastors and rabbis employees. Winemakers and franchise owners said they were worried they could be ensnared by the law, too.
Historically, if workers thought they had been misclassified as a contractor, it was up to them to fight the classification in court. But the bill allows cities to sue companies that don’t comply.
San Francisco’s city attorney, Dennis Herrera, has indicated that he may take action. “Ensuring workers are treated fairly is one of the trademarks of this office,” he said in a statement.
And California may be only the beginning, as lawmakers elsewhere, including New York, move to embrace such policies. Legislators in Oregon and Washington State said they believed that California’s approval gave new momentum to similar bills that they had drafted.