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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

CALIFORNIA 2012 SENATE INSURANCE COMMITTEE HEARING ON WORKERS COMPENSATION “REFORM” SB 863 AUGUST 28, 2012 !

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ANGIE WEI - CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR

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“The labor movement has been before this committee raging about delays and !denials In medical treatments"

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Dr. Bob Larsen - UCSF Clinical Professor School Of Medicine ! “SB 863 Is "Crafted To Exclude Injured Workers With Mental Disorders, Most Of ! Them Anyway"

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"Directs Costs Elsewhere To State Disability and Social Security"

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Jésse Ceniceros - President Voters Injured At Work VIAW

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“We are becoming a drive through medicine for the injured worker"

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

TRANSCRIPTION OF THE CALIFORNIA 2012 SENATE INSURANCE COMMITTEE HEARING ON WORKERS COMP “REFORM”; SB 863; AUGUST 28, 2012; TRANSCRIBED TO THE BEST OF THE TRANSCRIBERS ABILITY; ANY ERRORS OR OMISSIONS ARE UNINTENDED

SEAN MCNALLY, VICE PRESIDENT OF CORPORATE AND GOVERNMENT AFFAIRS FOR GRIMMWAY FARMS IN BAKERSFIELD, CALIFORNIA: http://www.youtube.com/watch?v=KpsIuUXsZGI Injured Workers In California Rolled Under The Bus Again ======== "The labor movement has been before this committee raging about delays and denials In medical treatments" ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR

SB 863 Is "Crafted To Exclude Injured Workers With Mental Disorders, Most Of Them Anyway" "Directs Costs Elsewhere To State Disability and Social Security" Dr. Bob Larson UCSF Clinical Professor School Of Medicine

[What] would work better for us and we happen to be the two stakeholders that don't profit from the system and we have come up with a number of the system that that we think make the system better for the state and we’re the two out championing; the two that do not profit from it are the two stakeholders out championing this reform and the folks in ... that seem to be fighting us the hardest are the stakeholders in the system that profit from it.

"We are becoming a drive through medicine for the injured worker" Jésse Ceniceros President Voters Injured At Work VIAW

At this juncture; I think it’s safe to say that both sides have a fair level of discomfort with the bargain we’ve struck and I think that it reflects that we’ve both given up things that were difficult to do; but, we’ve really reached out and worked hard to find some common ground and to find areas that we think are sensible areas for reform.

DESCRIPTION: On August 28, 2012, a California Assembly Insurance Committee hearing was held on SB 863 the "reform" of Workers Compensation This bill SB 863 would create major healthcare problems for injured workers including excluding mental illness, insomnia and sexual problems form workers comp coverage. http://www.leginfo.ca.gov/pub/11-12/bill/sen/ sb_0851-0900/sb_863_bill_2012083...

Our... our primary goals were to simplify the system; to simplify the system for the employees that find themselves in the system, through no fault of their own... and to simplify it for employers, small businesses and... all businesses in general. But we did have in mind to simplify as much as possible for the small business.

It would also allow the outsourcing to anonymous doctors from other states who do not even have a California medical licenses to make medical determinations in cases without even examining the patient. For more information: http://www.workplacebullying.org/2012/09/03/sb863/

Primarily we were looking for predictable outcomes. We were looking for places we could take litigation and unability and delay out of the system; and in order... and if we could do that we felt that we could then put more money into the system... into the benefit level because we would have a better sense of what the outcomes would be.

http://www.californiaprogressreport.com/site/sb-863-whyare-worker-advocates-... www.viaw.org

We were trying to change the system so that it didn’t have dramatically different results for those people that were represented and those people that were unrepresented by attorneys.

http://www.workplacebullying.org www.iwnn.org Production of California Coalition For Workers Memorial Day www.workersmemorialday.org 2

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

We also were trying to speed up the process for moving the system to conclusion, and a lot of the delay, and a tremendous amount of the expense in the last several years has been in arguments over medical treatment, authorization for medical treatment, medical treatment disputes, dueling doctors who get... who... who then end up in front of judges, who then are trying to make decisions.. medical decisions; and we felt that it made a lot more sense to have medical professionals making medical decisions and that's one of the reasons that... or the primary reason that we implemented the IMR process; to speed that up. As an employer, in a rough economy especially, we need a system that gets peop... gets decisions made about medical treatment done quickly, so that we get peop... that medical treatment provided so that we get people back to work.

Thank you very much Mr. Chair and members. Angie Wei on behalf of the California Labor Federation.

The longer people are off the work... off work the harder it is for us to engage them in a return to work dialogue, to get them... and to get them back to work.

Eight (8) years have passed since injured workers were royally screwed in SB899. I don't think a single person in this room are listening to this committee here today would disagree with that.

When attorneys get involved it gets very very difficult for HR departments... personal departments... to try to have conversations with injured workers when they don't know whether or not they're going to have a surgery or not going to have a surgery, it can drag on for months, sometimes more than a year.

Eight (8) years the labor movement has been before this legislature and before this committee; raging about delays and denials and medical treatment. About injured workers living on benefits that were deeply deeply slashed. Finally, we have a plan to do something about it,

This process that we've designed and implemented here should... is designed to resolve in forty days, thirty or forty days, so that we can get those kinds of disputes resolved and the sooner those are resolved the sooner the entire claim should resolve.

Finally, we can get out from under this yoke and do something to return money back into the pockets of injured workers. We have an opportunity for once, since I've worked around this building, to actually beat back a crisis, because when crisis comes, too often in this legislature, we are bargaining from our knees.

So those are my primary comments. I’m going to turn it over here to Angie.

We don't want to go there again.

HENRY T. PEREA, COMMITTEE CHAIR:

We have an opportunity with the rating bureau now saying potentially an eighteen (18) percent increase, a meeting in September to review any legislative action. We have an opportunity to bend that cost curve back; leaving more money on the table for workers, for their own retirement security, for their health care benefits, for their raises. We have an opportunity today to try and save money for employers; as well as increasing benefits for injured workers. How could it get... how could we say no to that? Save costs and improve benefits, take the lead of the system?

Great thank you

How can we say no to that?

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

Our part of the panel is going to talk specifically about two issues; medical treatment and then permanent disability. We’re going to get a little bit into the weeds if the committee will allow us on permanent disability and then we’ll come back and close for the committee.

can help an injured worker find the right doctor, get an appointment with that doctor and get to medical treatment quickly. We’ve maintained the right to predesignate our personal treating physician that was accomplished several years ago; in a narrowed fashion. I would say it’s slightly broader. You were only allowed to pre-designate under the current law if you had employer sponsored health coverage. Now it’s IF you have health coverage at all.

CRISTIE BOUMA, CALIFORNIA PROFESSIONAL FIREFIGHTERS (CPF)

So, all those new folks in California that will be brought under some version of health care will benefit from the ability to predesignate their personal treating physician. Here’s the big one. Under current law, as Mr. McNally described. judges find themselves making medical treatment decisions. Mr Chair members Christie Bouma representing the California Professional Firefighters. Thanks for inviting us to speak to you this morning on this very difficult issue.

We all have doctors... our own doctors that we trust, and give us medical advice and give us medical treatment recommendations so this system will allow those doctors to assert and advocate for authorization of those treatment recommendations; through this IMR process.

I’d... would sorta like to echo the comments of my management partner and negotiator here; We are substantially uncomfortable. Every party, as I’m sure you are or will be, made to be uncomfortable over the discussions of this proposal. But Angie has appropriately addressed the fact that acting now is a benefit to all parties versus waiting.

The current law; remember, a doctor makes a treatment recommendation, the insurer can have a chance to do a form of claims review, sometimes called a first level utilization review. If that treatment gets denied it goes to an outside utilization review company that still gets denied, then you get into situation whether sorta dual tracks if you’re represented or unrepresented you’re trying to find a qualified medical evaluator, a qualified medical evaluator, and you have to wait for the division to appoint a panel, then you have to get in front of that QME or AME. This is time... this is time where our members are not on the job. They’re sitting at home waiting to get permission to get medical treatment so they can get back to work.

The comments I want to make to you specifically about the medical treatment issues and how this bill proposes to change or address how those are handled in the system. And I want to remind you that we are from SB 899 baseline. We’re not working from any particular interests groups dream of what this system should be. It’s where we start and how have we moved the ball to improve medical treatment for workers. So, I’ll remind you that SB899; employers had 100% control of medical treatment. That’s the baseline.

And in... ultimately they end up in front of a judge. This system sends them, within thirty (30) days, to an IMR review process once they’ve been denied, internally by the insurance company.

What we have done to try to at least inject some fairness for injured workers, who find medical treatment that’s controlled by employers NPN’s; that those NPN’s are robust and that they truly have doctors in their networks that will treat injured workers. That there’s not... you know, many many opportunities to just delay and try to get out and spend so much time litigation that you’re not spending any time in front of a doctor.

And what we feel very gratified by is that those doctors that are reviewing those medical treatment recommendations are not bound by one simple narrow treatment guideline that was established several years ago. They are bound by not only that, but peer reviewed medical evidence, a doctor’s expert opinion; your own doctors view that this is the most efficacious treatment for what you are suffering from. That’s a high standard for approval that I

Medical access assistance; employers have agreed to make sure that these employer controlled networks have assistants who

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

think will... you’ll see a lot more cooperation in the system. A lot more... a lot more elimination of the fighting over it when you know that these are the standards that are going to be measured against when there trying to determine whether you... you need this medical treatment.

some detail here, but it maintains other add-ons that are in the AMA guides; pain, headaches, gait and others. So, there will be opportunity to pursue other add-ons. The psychiatric add-on has been expanded now in the current language to include, not just being... you can get the psych add-on if you’re a victim of, or a witness to, a violent act. It’s now been expanded to also include catastrophic injuries. You can get the psychological add-on if you’re the victim of a catastrophic injury.

Finally, I just... I... judges will play a role in this system as it relates to the permanent disability determinations and what the injury is, and I think I’ll probably defer on the panel for the rest of this... these remarks, but what we’re working under a repressive system and this is a dramatic improvement to get my members medical treatment.

So what we did here, is we saw data that showed that two (2) percent of permanent disability claims were able to get these three (3) add-ons.

I testify in front of this committee many times saying... when we’re criticized for asking for more time on temporary disability it’s not because they hate their jobs, my members love their jobs, they want to be back in the firehouse. They want to be back serving their communities. Don’t ask them to wait for a very litigious process before they can get the treatment they need.

And we thought, you know what? As an injured worker you’re sitting at home and you’re not working... everybody suffers; from a little bit of psychological depression, a little bit of sexual dysfunction and a little bit of sleep disorder. Everybody does because it stinks being home as an injured worker.

HENRY T. PEREA, COMMITTEE CHAIR:

Two (2) percent of the cases get these add-ons; they create more friction in the system, why don’t we book that savings, grab that money, socialize it across all injured workers and help pay for a benefit increase. Acknowledging that everybody suffers from these kinds of ailments when they’re an injured worker. That’s on the add-ons.

Great, thank you ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: Mr. Chair and members, I’m going to return to talk a little bit about permanent disability very quickly. Again, using the standard of having to compare of what’s in this proposal versus what’s in current law.

On the future earnings capacity issue; you’ve heard probably a lot of discussion and you’ll hear more; The current PD Schedule allows for future earnings capacity adjustment somewhere between a 1.1 and a 1.4. There is a lot of friction in litigation that says are you at 1.1 or a 1.3? And another piece that I’ll get to in a second.

Current law under SB899 absolutely cut at least 50% of the dollars out of the permanent disability system. SB899 actually took weeks of benefits away from people and it was a take-away.

Rather than have the system absorb that friction and that litigiousness; saying are you a 1.1 or a 1.3? This proposal maxes everybody's earnings capacity out at a 1.4. That means that everybody gets a forty 40 percent increase of their whole person impairment out of the AMA guides. Everybody gets a boost from that in and of itself.

This proposal would infuse at least Seven Hundred and Forty Eight Million ($748,000,000) new dollars back into the permanent disability system where we show; by category, by demographic category, by severity of injury, by wages, by age... that everybody wins under this proposed schedule. Everybody gets a raise.

What some of our good friends of the applicant attorneys who... we are grateful for their work in the system. They are some of the most vigorous advocates for injured workers and their cases and we appreciate that.

I want to talk for a second about the permanent... the add-ons that have been a lot of discussion here. Just to walk through the thinking and the path that labor and management took together on this.

What they’ve been able to do is take people above even the 1.4 FEC factor and get people more money when they can show future earning capacity.

Current law adds for... to a compensable physical injury; addons for sleep, psych and sexual dysfunction. This proposal eliminates these three add-ons and I’ll go into

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

Here’s the thinking that we had here. If you look at the rating bureau numbers from today, yesterday, whenever... what you’ll see...

Why? Because to do those cases you have to bring in vocational experts, economists on the applicants side. Then the defense side brings in their experts. All the while, the injured worker's staying at home, case is not resolved, creates a lot of friction, litigation, delay in the system.

Sorry... UNIDENTIFIED MALE: HENRY T. PEREA, COMMITTEE CHAIR?:

Let's put that money... let's give everybody a boost.

Whatever.

Let me close on two final points:

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

Number one, workers comp is a no fault system. It is the giant trade-off. Injured workers; we gave up our rights to sue the employer. The employer has to guarantee us adequate medical treatment and timely access to benefits. It's enshrined in our constitution.

... from this... UNIDENTIFIED MALE: HENRY T. PEREA, COMMITTEE CHAIR?: Whatever.

It is supposed to be a no fault system. [LAUGHTER]

Insurance companies have to be able to price predictably. And when the system becomes unpredictable that's when we start to see the roller coaster costs of workers comp insurance that's going to come back and be the albatross across our neck.

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:: We're all kinda. UNIDENTIFIED MALE: HENRY T. PEREA, COMMITTEE CHAIR?:

There is no perfect deal that comes out of this building. This is not a perfect deal. If our side were to write a bill it would look different than this bill; but, we've joined forces with the employers to say let's try to codify what this great trade-off is between labor and management; what we've given up; and each of us gave up things, each of of got things in this deal. It's not perfect. I would argue that nothing here is, but I would ask that this committee ask ourselves....

Just a... just a ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: Well, we're all working around the clock these days... UNIDENTIFIED MALE: HENRY T. PEREA, COMMITTEE CHAIR?:

And I have my friend from the applicant...

Just a number around here

I started out this journey earlier this year testifying at the... in the informational sharing in this committee saying we will not defend the indefensible. And I am here to say that the status quo is simply indefensible. We've an opportunity to make significant improvements from the status quo we'd ask for this committees and the legislation consideration.

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: ...and the days have flowed together HENRY T. PEREA, COMMITTEE CHAIR:

We’ve got something like two minutes here.

HENRY T. PEREA, COMMITTEE CHAIR:

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

Great, Thank you.

Yes sir.

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

What you'll see in the rating bureau numbers is that for benefit increase on the; what they call the Ogilvey cases, it’s a hundred thirty million dollars ($130,000,000) in benefits over the next two (2) years. But it costs eighty million dollars ($80,000,000) to administer that benefit. Eighty million dollars ($80,000,000) of adjustment expenses.

I'd also like to introduce you the this last witness in this panel HENRY T. PEREA, COMMITTEE CHAIR:

But... and you're... you’re going to get a minute...

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

ARTHUR LEVI, APPLICANT ATTORNEY:

Curt Hagman, Committee Vice Chair; California State Assemblymember:

Just a quick one. Oh, ok. Ms. Wei? You're talking about the one point on (1.1) to one point four (1.4) involved in litigation going on with that and you cap it at one point four (l.4). You also said that a lot of successful attorneys failed to show future wage earners take it to court.

HENRY T. PEREA, COMMITTEE CHAIR:

So... ARTHUR LEVI, APPLICANT ATTORNEY:

Is there something that's going to prevent that part of it from happening still?

My name is Arthur Levi, I'm an applicants attorney... and what the new proposal is.

ARTHUR LEVI, APPLICANT ATTORNEY:

I had a case a few years ago; significantly injured person, with a left arm injury. She could not get to life pension under the present proposal for the sixty (60), sixty point one (60.1) she gets there. Which means it's substantial benefits and plus the increase in permanent disability.

Let me answer ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: Do you wanna answer? I can answer.

So I... I think this is gonna be good for us.

ARTHUR LEVI, APPLICANT ATTORNEY:

HENRY T. PEREA, COMMITTEE CHAIR:

Ok... go ahead. Ok.

Great, Thank you very...

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

ARTHUR LEVI, APPLICANT ATTORNEY:

No, please.

And also one more thing. What we're hearing here is we and not us.

ARTHUR LEVI, APPLICANT ATTORNEY:

HENRY T. PEREA, COMMITTEE CHAIR:

Under Labor Code...

Great, Thank you very much

HENRY T. PEREA, COMMITTEE CHAIR:

What I'd like to do is turn this... bring this back to the committee for any questions.

Can you speak into the mic please? ARTHUR LEVI, APPLICANT ATTORNEY:

Mr Hagman.

Under Labor Code section 4662 there is nothing to prevent that because that allows the judge to made a determination based on the fact. We're talking about significantly injured persons that basically have a total permanent future earning capacity of one hundred (100) percent loss. There's nothing in this statue that prevents that if you read the statue. 7

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

work and is incapable of working in the workplace and now has to survive. And I... and I’m concerned about that simply because every worker gave up their right to sue to come into this process and now, if this... if a worker could sue they would get that occasional sleepless night that... you know, two or three less times with their wife intimately. They might get compensated for that in a lawsuit under the old system before worker comp and then they could go into lost wages.

Just to be clear, that's for a total permanent disability, total disability, not partial disability. So there's a difference there and what is being argued and what may be the case is that this track of litigation will slow down... for partial. CURT HAGMAN, COMMITTEE VICE CHAIR; CALIFORNIA STATE ASSEMBLYMEMBER:

For partial? Thank you.

They can’t do that now because now you’re... you’re stuck with the AMA guideline. So... so now having said that the question is; why should we... why should we hurt... the... why should the injured worker who can’t go back to work have to bear, what I think a large part of the cost and savings in this bill so that everybody else gets a little something more?

HENRY T. PEREA, COMMITTEE CHAIR:

Mr. Caldron CHARLES M. CALDERON; CALIFORNIA STATE ASSEMBLYMEMBER:

Why is the injured worker who can’t go back to work being sacrificed for everybody else? And who... who here speaks for the injured worker? [CLAPPING IN ROOM]

HENRY T. PEREA, COMMITTEE CHAIR: [BANGING GAVEL]

Please no clapping. Please folks, no clapping. Thank you.

Yes, I... This is all eerily similar to... you know 899 when it was passed and worker’s got a bum deal. And now we’re in that same mode, and what I’m... this is prefatory to my question.

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: What... if...

What I’m concerned about is... yeah, I think workers in the system that can go back to work are gonna get a good deal. Small businesses get a better deal. Insurance companies get a deal. The lawyers will make out fine under this. But what about the injured worker that can’t go back to work? The injured worker, that now will have to be evaluated under the AMA guidelines which; in the last analysis, is sorta a standard from healthy to dead.

HENRY T. PEREA, COMMITTEE CHAIR:

Please, if you want to respond ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: Mr Chair, if we could have first the technical response and then anothe... Ok. I... I can respond first...

[SNICKER FROM SOMEONE]

So, If you’re.. if you’re dead you’re a one hundred (100) percent disabled...

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: [Inaudible]

[LAUGHTER FROM SOMEONE]

ARTHUR LEVI, APPLICANT ATTORNEY: ...under the AMA guidelines. So..

I can respond and Senator I support everything you say; that there was a trade-off. Therefore, if you really want to fix it, we get rid of the AMA guides, we go back to the old schedule. But, they don’t want to do that.

[CHUCKLES FROM SOMEONE]

.. Now without Ogilvey and the opportunity to be able to go in and get lost wages; the worker that goes back to work; pays dues, is better off than the injured worker that cannot find

The trade-off could be, in my vision of the whole reform because of the affordable healthcare act, everybody is going to

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

CHARLES M. CALDERON; CALIFORNIA STATE ASSEMBLYMEMBER:

have health insurance. That’s one benefit of workers comp.

I know... but this is real serious stuff Mr. Chairman. And... and to give this just an hour when members are seeing the language...

The other benefit of workers comp is temporary disability. When an injured worker has expired his one hundred and four (104) weeks of temporary disability or cannot return to work, he can tap into state disability.

I’m not criticizing...

Therefore, I have an employee... it costs me fift.. she makes sixty five thousand (65,000) dollars a year; it costs me fifteen dollars ($15) a week for SDI. If that was increased to forty five dollars ($45) so she would have have a hundred and fifty six (156) weeks, which is a hundred and four (104) that comp gives her plus fifty two (52) that the state gives her, she’s mandated... she has medical insurance, everybody has to have medical insurance, we take those two (2) benefits out of workers comp, the only benefit we have is permanent disability. I think there’d be a great savings to the employers because the employers presently are paying for... most of the employers.... like he has medical benefits to his employees, Safeway does; they’re paying twice for the same thing, which is medical benefits and they’re also paying indemnity... an indemnity for temporary disability, and they’re also paying in to state disability.

HENRY T. PEREA, COMMITTEE CHAIR:

Sure you know, we have session in thirty (30) minutes. CHARLES M. CALDERON; CALIFORNIA STATE ASSEMBLYMEMBER: Well, I totally understand that so where do we go from there? We give an hour or and hour and ten minutes to something that’s incredibly complicated and far ranging in it’s implications... HENRY T. PEREA, COMMITTEE CHAIR:

Sure

CHARLES M. CALDERON; CALIFORNIA STATE ASSEMBLYMEMBER:

So, if you really want to do a reform look at the big picture and bring it into the twenty first century and don’t think a nineteenth century concept...

..and then we’re suppose to vote on it. That’s... that’s... that’s the problem I have with this process as it’s... ...you know, transpired.

HENRY T. PEREA, COMMITTEE CHAIR:

HENRY T. PEREA, COMMITTEE CHAIR:

Thirty minutes...

Sure

ARTHUR LEVI, APPLICANT ATTORNEY:

CHARLES M. CALDERON; CALIFORNIA STATE ASSEMBLYMEMBER:

...that came from Europe, that we adapted a hundred (100) years ago. Or we...

...you know, transpired. HENRY T. PEREA, COMMITTEE CHAIR:

HENRY T. PEREA, COMMITTEE CHAIR:

Sure. Well, we all... we all get a yes or no vote and if we want to give this more time, certainly can do that, but, at... today we’re under constraints for thirty (30) minutes and we still have two (2) more panels that need to present, I don’t want to cheat anybody out of their time here today. So...

Ok sir we’re going to have to stop you there. Angie, I’m going to give you thirty (30) seconds and Miss Olsen has a question. ARTHUR LEVI, APPLICANT ATTORNEY: ... well...

Miss Olsen.

HENRY T. PEREA, COMMITTEE CHAIR:

We’ve gotta wrap this up continued on next page

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CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

KRISTIN OLSEN:

MIKE FEUER, CALIFORNIA STATE ASSEMBLYMEMBER:

Thank you Mr. Chair.

Yeah. So, I’ve been wrestling with this and... Was it... was airing on the side of supporting the changes because of the broader systemic benefits of this?

I was puzzled by the comments earlier about litigation and so I was wondering if the panel could clarify for me which sections of the bill, or which pieces of the bill helps streamline that or help reduce the opportunities for litigation?

I did though receive this morning something that continues to give me pause; and that’s I got a letter from the firefighters in my city who are strongly opposed to the measure. I just got it, like a minute ago, I’ve been in two (2) other committees this morning already.

Cuz I believe it was stated that it does but then it was stated that there are still opportunities. The same opportunities so I’m just puzzled as to whether there are or aren’t.

And the firefighters in LA say that the bill would curtail their due process for us to get medical treatment and would make it difficult for injured firefighters to attain appropriate disability ratings.

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: If I may. It is hard to say specifically what will happen in the litigation going forward. It seems as if after SB899 new case law and new pathways for litigation were created so I cannot tell you definitively what’s going to happen.

I’d like to know what the answer to that is please. CRISTIE BOUMA, CALIFORNIA PROFESSIONAL FIREFIGHTERS (CPF)

What I can tell you is that on this issue of diminished future earning capacity; if you look at labor code section 4660, and then the new section 4660.1 there is the deletion of the words diminished future earnings capacity. And some would argue that that would limit the opportunity to come in... voc... vocational experts an economist experts to argue for wage loss. Two things there; one is, as Mr. Levi stated prior, there’s also language in the new 4660.1 that says nothing stops an injured worker from pursuing a permanent total disability case under 4660.2 of the labor code, which is called the Labouf standard.

Seems that might be a good one for me to grab

So for the... partly Mr. Caldron’s question was, “What happens to the injured worker who cannot get back to work and is completely disabled?”. They still maintain their right to argue total disability under Labouf; under labor code section 4660.2 of the labor code.

MIKE FEUER, CALIFORNIA STATE ASSEMBLYMEMBER: Yeah... it kinda... yeah CRISTIE BOUMA, CALIFORNIA PROFESSIONAL FIREFIGHTERS (CPF)

HENRY T. PEREA, COMMITTEE CHAIR:

UM... ha ha So, to the medical treatment issue; because of course we’ve had a lot of internal dialogue about this as well.

Great, thank you. Any other comments or questions from... for this panel?

We think that the IMR process is more robust. It has, as we spoke with you about more opportunity for medical treatment

Mr. Feuer. 10

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

authorizations to be approved, so you know you...

MIKE FEUER, CALIFORNIA STATE ASSEMBLYMEMBER: Sorta the crux of the debate about this bill I think... and I appreciate the private conversations we’ve had, but I benefit from some public ulliminations on this.

they’re measuring against the current system in an utilization review, it’s very limited. They’re... they’re restricted by the ACOEM guidelines so they’re experiences were going to get denied in AMR...err in IMR. But the fact of the matter is we’ve completely changed the dynamic of what gives the IMR Doc permission to approve, and it’s so much broader based on his... your doctors expert opinion or if the treatments efficacious etcetera.

HENRY T. PEREA, COMMITTEE CHAIR:

Sure. And we really do need to... this will be our last question and we need to wrap this up here so we can move on to the next panel. ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR:

But, we also had a lot of dialogue about what if the UR denial was because there wasn’t enough information, which happens a lot. A URL denial the insurer says “yeah, well you didn’t give me this report or this piece of information so denied”.

Categorically we can show that everybody by category gets a benefit increase. There are some specific examples that have come up in which people could argue that an earnings loss going forward happens. We believe that there are other things in the system that help to mitigate that including the occupational adjustment factor and other things. Litigation could continue in to the nooks and crannies of this proposal to bring some of that to bear.

So this bill explicitly allows the injured worker and/or their representative to make sure that every piece of information that is necessary to support that authorization request gets introduced into evidence in that process. MIKE FEUER, CALIFORNIA STATE ASSEMBLYMEMBER:

It is a deal. It’s not a perfect deal. We’ve traded frankly guaranteed benefits to at lea... a hundred thousand (100,000) injured workers a year for what is hypothetically at risk going forward in to an expensive system that could come back and whipsaw against us in two (2) years.

So, let me just... I don’t... I know time is very short and I really appreciate the Chairs efforts to manage the hearing. I want to say just two (2) things. First, I’m still not... I’m still puzzled by... you know, I was the Vice Chair of Public Safety and the Council in LA; worked with you know, firefighters police for years trying to assure that they have some basic protections in place and I’m puzzled by the internal disagreement regarding this issue. Maybe there’s not enough time in this hearing to further that, but it does trouble me I have to say.

The system the way it is now, with that lack of predictability and that frictional cost, is unsustainable. It’s not going to stay this way. It’s gonna come back and you... this legislature or the legislature after you will impose significant reforms like SB899 which we were very clear we knew was going to take away benefits, didn’t put any money back in the pockets. We knew there that was bad for workers. And if we don’t do something today that’s gonna come back to us and we’re going to get our meager benefits slashed again.

The other thing is, I guess as the proponents of the bill know, I do get the broader systemic benefits of the legislation and it’s design to implement. I understand before I arrived here Mr. Caldron may have been delving a little bit in to something that has continued to trouble me and I wanted a little more public discussion about it.

HENRY T. PEREA, COMMITTEE CHAIR:

Great

And that is; I’ll put it in very simple terms, the possibility that for the good of the broader system individuals who are injured in some instances may be sacrificing, for the broader good. And I’d like a public discussion of that issue a little bit.

ANGIE WEI, CALIFORNIA LABOR FEDERATION LEGISLATIVE DIRECTOR: The system itself is unsustainable HENRY T. PEREA, COMMITTEE CHAIR:

HENRY T. PEREA, COMMITTEE CHAIR:

Thank you very much and that will end this panels presentation. The next panels; panel four (4); the applicants attorneys and industrial physicians.

Great, would anybody like to respond in sixty (60) seconds or less?

11

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

If you can please come on up we have Brad Chalk, president of the California Applicants Attorneys Association. Jason Machew, and injured worker.

somebody said all categories are covered. That’s true, all categories are covered except for those that aren’t. [laughter in room]

Babak Jamasbi, Dr., sorry if I mispronounced your name CSIMS president and Robert Larsen, M.D. CSIMS past President

Right? Everybody get’s an increase except for those people that don’t get an increase. And who doesn’t get an increase? The injured worker that can’t go back to their job.

So Mr. Chalk, we’ll begin with you.

My... Assemblyman Caldron asked the right question. Who’s protecting the injured worker that can’t go back to their job? And isn’t he being sacrificed for the greater good? And is that the public policy of the state of California, that we’re gonna throw those less disabl... I’m sorry, those more disabled under the bus in exchange for benefits for somebody that actually goes back to work?

And we do have... I apologize we do have less than thirty (30) minute here and one (1) more panel. So, do the best you can. BRAD CHALK, PRESIDENT OF CALIFORNIA APPLICANT ATTORNEY ASSOCIATION:

So, If I can just run through a quickly example. Under their proposal we have the AMA guides; let’s say they have an eight (8) percent injury under the AMA guides, and I don’t need to get into the details of all of that, but let’s just say for the sake of argument they have a back injury and they get an eight (8) percent under the guides. They’re telling you now that there’s a 1.4 modifier applied to that. So that’s a forty (40) percent increase, so that goes to twelve (12) and twelve (12) is going to be worth a certain amount of money. And that twelve (12) is going to be worth more money under this new system than what we have currently.

Thank you very much. Thank you very much to the Chair and the Vice Chairs and members. We greatly appreciate the opportunity to have this conversation.

And then the next ... and so that’s great if that person goes back to work. What if they can’t go back to work? They get a fifteen (15) percent bump-up. Ok? Well, we currently have a fifteen (15) percent bump-up so they’re not giving us anything there. But, they’re telling you that it’s a fifteen (15) percent bump-up.

Yes, this conversation started every since 899 was passed. It was... we had an informational hearing as was indicated earlier, but the devils in the details and we didn’t get this bill until August 24th (2012) and now we learn today that it’s been amended again last night and we still don’t have that.

So let’s just say for the sake of argument that the twelve (12) percent is worth ten thousand dollars ($10,000). The fifteen (15) percent bump-up gives you another fifteen hundred dollars ($1,500). That’s great. They couldn’t go back to their job but they get an extra fifteen hundred dollars ($1,500). And that’s the trade-off for somebody who can’t go back to work?

And so, to say that... that the parties have an understanding as to what’s in this is. When the WCIRB (Workers Compensation Insurance Rating Bureau) report changes from four hundred million (400,000,000) last night to a positive one hundred million (100,000,000) today, that show’s you that we don’t know what we’re doing here.

So, then they say, “well we can still argue permanent and total disability.”

We don’t have the data and the numbers can’t be relied upon. I will say that the people that brought you 899 are attempting to bring you 863. And, we represent injured workers, we’re in the trenches every day and on some level we... we... we’re owed some credibility here. We told you 899 was flawed. We’re telling you 863 is flawed.

Art Levi sat here and said we still have 4662 accordance with the fact. What is a judge gonna do with that? A judge is gonna take that and analyze it against 4661... I’m sorry, 4660... the new 4660.1

So, I’ll just highlight some points. Not everybody gets an increase. Right? There charts show everybody gets an increase. I counted at least three (3) times today than

And what is... as it describes permanent disability. And what does that say? It’s based on the AMA guides. It’s not based on 12

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

diminished earnings capacity. It’s not based on diminished ability to compete in the labor market. And so what is the judge to do? To measure total disability against the AMA guides.

The employers wanted the AMA guides, we didn’t ask for them. It’s either all or nothing within the AMA guides. So, if there’s a medical impairment, a verifiable medical impairment by the insurance companies doctors in the AMA guides we should be allowed to have access to that.

And as Assemblyman Caldron said, “At a hundred (100) percent you’re dead”.

I guess the big elephant in the room; if this was an increase, why would we oppose it? Right? Everybody’s saying “Well gee whiz, why are the applicants attorneys opposed? It’s a seven hundred million dollar ($700,000,000) increase.”

So our argument is that you can’t reach that number because they’ve taken away the measuring stick. They’ve taken away the definition of permanent disability. They’ve eviscerated fifty (50) years of Supreme Court decisions of disability.

Because we know it... it’s an illusion. The seven hundred million dollars ($700,000,000) is really not available. We’re not gonna be able to approve higher levels of disability. The AMA guides are measuring your ability to exist as a human being. They’re not measuring your ability to work. And the numbers on the chart reflect these higher percentages of thirty (30), forty (40), fifty (50), sixty (60) percent and upwards are not obtainable under the AMA guides. The only way they are obtainable is through diminished future earnings capacity arguments to show my clients lost earnings.

This has not been vetted. We have a hundred and seventy nine (179) pages that were handed out and is indicated we got more amendments last night. We don’t even know what those are. We do believe that these problems can be solved and we’re happy to come to the table and have that conversation. We believe that we are the experts in the system and that we can actually provide assistance in drafting legislation that will help solve these problems.

I have a client of mine here today; Jason Mishue, who had a terrible accident to his hand. Under the new proposed system he’s probably looking at fourteen (14) percent under the AMA guides. If I was able to prove diminished earning capacity argument I could show that he probably has upwards of a fifty (50) percent lost earnings capacity. That fifty (50) percent translates into fifty (50) percent disability. I can’t make that argument under the new proposal. I’m limited to the 1.4 modifier and a fifteen (15) percent increase.

For some reason we’ve been left out of the conversation. The WCIRB last nights report said they don’t have enough data or information to make a decision. IMR; the Independent Medical Review, What’s wrong with a Knox Keen act? If it works for Knox Keen, why are we changing it? They’re changing the rules regarding the information relied upon the doctors, who ultimately decide the decisions.

HENRY T. PEREA, COMMITTEE CHAIR:

Ok. Great thank you and if we want to allow for questions from the committee we have about seven (7) minutes here.

I’m pretty sure that the California Constitution requires judicial review. This IMR decision would be unconstitutional as drafted, as it precludes appellate review of the decisions.

BRAD CHALK, PRESIDENT OF CALIFORNIA APPLICANT ATTORNEY ASSOCIATION:

You want to talk about litigation? You know... 899 we just finished eight (8) years of litigation on 899 and we finally have our hands wrapped around it.

Thank you HENRY T. PEREA, COMMITTEE CHAIR:

You’re going to change in with 863? The litigation is going to be tremendous.

Sure. Who’s next?

So, I’m personally offended at the term add-ons. Right? They’re talking about add-ons; sleep, psych, headaches, pain, and gastrointestinal. Those are not add-ons for my client who has a failed back surgery. Those are medical impairments rated under the AMA guides and they’re actual disabilities. And I’m personally offended that somebody would call that and add-on.

BRAD CHALK, PRESIDENT OF CALIFORNIA APPLICANT ATTORNEY ASSOCIATION:

Did you want Doctor? HENRY T. PEREA, COMMITTEE CHAIR:

Sure.

13

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

BABAK JAMASBI, PRESIDENT OF THE CALIFORNIA SOCIETY OF INDUSTRIAL MEDICINE AND SURGERY:

treat him. So, he’s stuck and I’m stuck. He can’t get the treatment. So I think that if you restrict treatment over time people will figure out that this workers comp thing is just not worth it. They’re going to sell their cases on pennies on the dollar and leave the system. So now if somebody’s making twelve dollars ($12.00) and hour, they’re hurt, they can’t work, what’s going to happen to them? They’re going to apply for state disability and their medical care, which is covered under MediCal, Medicare and the county health system is already covered so they leave the system; they start using taxpayer based healthcare resources and they apply for disability. So now, the burden has been shifted to the taxpayer.

Good morning. My name is Babak Jamasbi, I’m president of California Society of Industrial Medicine and Surgery and I want to thank the committee for allowing me to speak.

Now, on the IMR side; currently the QME’s are in California, so there’s California employers that have staff and the funds are staying in California. The IMR is going to be out of state. So now you’re shipping jobs out of the state.

Our society is opposed this bill because we don’t really believe the bill will accomplish what it’s intended to accomplish.

Now, let’s say there was some extra profits for the insurance companies. There’s no guarantee that those funds are gonna go back to the employers. So, the way we see it is that it’s more restriction in providing medical care to the injured worker and it’s shifting the cost to the California taxpayers and it’s shipping jobs out of the state. So, there are better ways of solving this and our society is more than happy to sit down and come up with a better solution than this.

Currently, if you look at treatment, it takes in the order of three (3) to four (4) months, or maybe longer to get something authorized that you and I, under our commercial insurance or something as Medicare can readily have access to within twenty four (24) hours. What this bill does it adds another layer of utilization review. So that’s just gonna cause further delay. Under the current system if utilization review denies the treatment then the patient is allowed to go get an examination by a real California physician whose a QME and the finial decision will be made by an interview and physical examination.

HENRY T. PEREA, COMMITTEE CHAIR:

Great, thank you very much. Next witness. ROBERT (BOB) LARSEN, MD; CLINICAL PROFESSOR AT THE UNIVERSITY OF CALIFORNIA; SAN FRANCISCO SCHOOL OF MEDICINE:

Under the proposed legislation this will go to an IMR, a doctor out of state that nobody knows; we’re not allowed to know his name or her name, and the final decision will be made. So, I don’t understand how adding an extra layer of utilization review and an IMR is going to allow more treatment for the injured worker. I think it’s going to just further restrict it. Now, let’s say I have a patient and I want to treat him and let’s say something very simple; let’s say it’s an injection or physical therapy, and let’s say that he could have that treatment within twenty (24) hours with a private insurance and it’s taken him six (6) months to get authorization through workers comp.

Good morning. I’m Doctor Bob Larsen, I’m a clinical professor at University of California, San Francisco School of Medicine.

Now, it’s illegal for him to use his commercial insurance and it’s illegal for me to bill his commercial insurance to give him that treatment. It’s illegal for me to take cash from him to

According to the World Health Organization the number one (1) cause of disability in the world is cardiovascular illness. Number two (2) is major depression.

14

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

JASON MASHEW, INJURED WORKER:

Other common, serious and potentially disabling psychiatric conditions in the working population include; post traumatic stress, generalized anxiety, chemical dependancy. The veterans administration recognizes mental disorders as legitimate and deserving of treatment and disability benefits equal to other medical conditions. So too does Social Security. Without input from clinicians, public health professionals or epidemiologists SB863 has been crafted to exclude injured workers with mental disorders. Most of them anyway. Depression, loss of confidence, insomnia, profound fear and impotence will not be compensated while a limp, lifting limitations, nerve damage and chronic pain will in the same person.

Thank you. I’m thirty six (36) years old, I live in Windsor, near Santa Rosa. I worked for fifteen (15) years in construction and spent the last five (5) as an equipment operator and a member of Operator Engineers Local three (3).

A bank teller who’s robbed, a police officer who accidentally shoots a child and a firefighter who carries out one (1) too many dead bodies will be covered. Those same employees who develop mental disorders, based upon a reaction to an admitted physical injury and less catastrophic, whatever that means, will not.

I’ve spent ten (10) years learning to operate construction machinery and equipment before becoming an operator engineer. I’ve taken classes and obtained certification for fifteen (15) different pieces of equipment. I love my job and I intend to spend the rest of my working life doing it.

This bill will not eliminate psychiatric illness or disability. It will direct the costs elsewhere; to state disability, to Social Security. Litigation will increase in disputes over what injuries are covered and what are not.

I earn seventy thousand (70,000) per year. On July 1st, 2010 I was working on campus of University California at Santa Cruz. We’re drilling holes for sewer lines, steel beams to be placed in those holes. I was in the hole when a co-worker accidentally turned on the drill. I was pinned inside the hole. I lost the index finger on my left hand and all feeling in that hand except for my little pinky. I’ve suffered severe nerve... nerves in my left arm injuries and I will never again be able to work as an operating engineer.

The message we tell our employees should not be, “you’ll receive proper benefits if you break your back but not your mind”. Let me just finish by saying the mix of disorders, injuries and disabilities change over time. In the 1940s hernias were prevalent. With keyboarding we saw carpal tunnel syndrome come forth. In today’s world and going forward in the future depression is with us and it’s not going away.

I’ve lost my ability to earn the living I’ve trained for and can no longer do many of the things that made life enjoyable. I used to kayak, I used to play guitar, I worked on classic cars and machinery. I can’t do any of these things anymore.

The savings in this bill are illusory. We can do better for California. Thank you very much, I appreciate your consideration.

Under the current permanent disability system I would receive approximately seventy one thousand four hundred and forty nine dollars ($71,449.00). If SB683 passes, an injured worker like myself would receive just fifteen thousand four hundred and twenty four [dollars] $15,424.00 in disability compensation to compensate for all the earnings and activities I’ve lost.

HENRY T. PEREA, COMMITTEE CHAIR:

Great, thank you very much and last on our list of testimony here is we have Jason Mashew.

Taking away my disability compensation based on the earnings I’ve lost is an outrage. SB863 compounds my injury by drastically reducing my disability compensation. Thank you. 15

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

HENRY T. PEREA, COMMITTEE CHAIR: STEVEN BRADFORD:

HENRY T. PEREA, COMMITTEE CHAIR:

Great, thank you very much I apprec...

Great, thank you. Any other comments or questions from the committee?

[CLAPPING IN ROOM] [INAUDIBLE COMMENT IN ROOM]

Please no clapping folks. No clapping

Sure. Well, we still have one more panel. Do you want to wait?

We’re running out of time here so colleagues; were there any questions or comments you’d like to make for this panel?

[INAUDIBLE COMMENT IN ROOM]

Mr. Bradford

Ok, great. Thank you very much, we appreciate it.

STEVEN BRADFORD:

UNKNOWN SPEAKER:

Thank you for your time. HENRY T. PEREA, COMMITTEE CHAIR:

Thank you. And our last panel is other physicians perspective. We have Dr. Lee Snook, California Medical Association; Dr. Nick Peters, Vice President of Medical Operations and Don Schenskie, Western Occupational Environmental Medical Association. And if you... there will be a chance for public comment after that, and if you start seeing member leave in about eight (8) minutes it’s because they have to go back to session.

Well, I... I.. There was a question and it dealt more with the Doctor of how psychological injuries are addressed and I just... not sure if he can answer that or someone else can answer that, but that was one (1) of the questions I was concerned with.

So Dr. Snook we’ll begin with you. LEE SNOOK, MD; MEMBER of the CALIFORNIA MEDICAL ASSOCIATION BOARD OF TRUSTEES, CHAIR of the MEDICAL ASSOCIATION COMMITTEE on WORKERS COMPENSATION and QUALIFIED MEDICAL EVALUATOR (QME):

BRAD CHALK, PRESIDENT OF CALIFORNIA APPLICANT ATTORNEY ASSOCIATION:

Under the... under the proposal 863 provides medical treatment for psychological injuries but no disability for psychological injuries and they’ve carved out some exceptions that is yet unknown what it means, but it for catastrophic injuries or if you were involved or saw a violent act and so, obviously the goal is to reduce permanent disability for psychological injuries except for extreme situations. ROBERT (BOB) LARSEN, MD; CLINICAL PROFESSOR AT THE UNIVERSITY OF CALIFORNIA; SAN FRANCISCO SCHOOL OF MEDICINE:

And let... I would just like to say Mr. Bradford that earlier it’s been commented on that injured workers cannot return to the workforce, they’re sacrificed.

Morning Chairman and members of the committee. Thank you so much for allowing me the opportunity to address you.

The people that I see, who have significant physical injuries, whether you call it catastrophic or not and can’t get back to work; not uncommonly are miserable. And, these folks will definitely be sacrificed there’s no increased benefits for them.

My name is Lee Snook, I’m a member of the CMA board of trustees. My local practice; I treat injured workers. Many of them suffer from debilitating pain. I’m also a Qualified Medical Evaluator and have been doing this for twenty five (25) years. 16

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

I serve as the Chair of the California Medical Association Committee on Workers Compensation and in that capacity I’ve spent a lot of time on workers compensation issues, and in general SB863 particularly since we had it available to us.

Medical provider networks as we know them today are a far cry from what was envisioned eight (8) years ago. Currently group health physician networks are often sold to insurance companies in order to set themselves up for a greater federal funding; often times with the physician not knowing. As a result CMA has requested; one (1) thorough disclosure to physicians that networks may be sold, two (2) the ability of the physician who opt out of a network with a ninety (90) days written notice and three (3) establishment of a reimbursement floor for work comp physicians contracting with insurers to provide some stability and predictability on rates for innetwork physicians.

Everyday I see what’s wrong with the workers compensation system and why we need to reform what’s wrong. This includes a long overdue facts of permanent disability, but we cannot fix one (1) problem and create a whole new one. We need to do this right. It is in that spirit that the CMA has the support of an amended position; SB863 be known as currently drafted and our letter is being circulated to committee members now for review.

The disclosure request was partly incorporated, others were not.

Ever since the passage of SB899 in 2004, there have been a host of problems that have arisen within the California workers compensation system; which is a result of undo litigation and a gradual progression of... of amendments to try to correct the problems that occurred by passage of SB899.

Independent medical review and independent bill review; although CMA has been long supportive of alternative and impartial means of addressing the rate and access issues in works comp; the process is outlawed in SB863 are fundamentally problematic. On this issue in particular the CMA asked that; one (1) the outside companies that states contract with to execute these funds functioned be headquarter here in California, and that’s we believe more accountable. Two (2); require these companies to have an instate medical director which has now been included in the bill and three (3); retain the right of the physicians and their patients to go to court if no resolution is found to the IMR or the IBR.

CMA has continuously worked toward a broad resolution on these issues along with legislators and staff. From the outset we saw this years discussion of major workers compensation reform as an opportunity to address many of these problems together in a mutually agreeable fashion that didn’t threaten injured workers access to the medical care they need. After going through the bill in detail; CMA developed a list of major issues in SB863 that would need to be addressed through amendments in order for us to be able to move to a support position. These requested changes are detailed in her letter, but I’d like to walk through some of them today so that everyone is clear on what the concerns of the physician community have with the bill as it is currently drafted.

Liens; CMA acknowledges that there are significant problems with lien filings in California that require real solutions. CMA is requested that one (1) the lien filing fee be charged in two (2) equal parts, one (1) to the physician and one (1) to the carrier. With the looser paying in the end to incentivise both to reach a fair resolution for services provided to the injured worker; and two (2) that the lien activation fee be abolished entirely.

CMA’s requested amendments on roughly five (5) major issues in the bill; fee schedule, RBRBS, medical provider networks, independent medical review and bill review, liens and ambulatory surgery center or ASC fees.

ASC’s; Physicians preform procedures in ASC settings and it’s typically more efficient and cost effective to do so, as recently noted in yesterdays Wall Street Journal. However, draconian and reimbursement would drive these same procedure of higher costs and less efficient hospitals with a rate of payments remain the same as it does with the ASC’s as is does today.

RBRVS; four (4) of the items the CMA requested were included in the bill, we’re thankful for that. However, bridging AMA impairment ratings... as been adequately testified to by prior speakers, but the purpose of determining an injured workers level of disability is inappropriate.

This means that the state could potentially score very little savings from this move.

The AMA guides impairment definition has been one of the stable mechanisms by which we can gauge impairment from the physicians standpoint.

CMA requested that the bill be amended to state that ASC’s be paid a hundred (100) percent of the MediCare hospital rate up from the eighty (80) percent that originally included in the draft in order to maintain their competitiveness and

We need to maintain the integrity of the AMA guides and should not abridge them. 17

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

not over-burden the hospitals with these procedures while also securing good savings.

We support many of the provisions which will remove many of the inefficiencies in the workman compensation system. I’m going to focus my comments on the RBRVS portion of the bill.

Well in conclusion; as you can see CMA has re-doubled its efforts over the past few weeks into trying to work with legislators and key stakeholders to craft language for SB863 that is appropriate for patients and providers. We continue to be ready and willing to work out a solution to these issues.

There’s a growing problem in California finding good quality physicians to care for injured workers and the primary treating physician level. We attempt to recruit the physicians in our practice and we find many chose to practice in other states or specialties that find stronger reimbursement.

We need a fixed and permanent disability. We also need to make sure that we, the physicians of California, can still treat the injured worker.

We also have an aging workforce of the occupational physicians in the country and we have a great need to bring in a younger workforce of physicians.

Thank you again for the opportunity to address the committee with this bill. HENRY T. PEREA, COMMITTEE CHAIR:

The RBRVS are needed to keep and attract new occupational physicians who are trained specifically to treat these work injuries. It would allow for a more competitive reimbursement making the practice more attractive.

Thank you. Next witness. NICK PETERS, MD; VICE PRESIDENT OF MEDICAL OPERATIONS FOR CENCENTRA:

With the current system we have to rely on large volumes to cover the margins. Large clinics have their place but Concentra prefers the smaller clinics for more personalized care. So this has been a difficult course in California. There’s significant advantages to having a primary treating physician that’s an occupational physician over a primary care physician in treating the general public. Occupational physicians, has been well documented, have better outcomes, lower costs to payers and employers and more importantly the injured worker gets better faster. Specifically sixty (60) percent lower total costs, seventy (70) percent fewer cases end up in litigation and sixty (60) percent fewer days the worker is off work. So the goal is to help everybody, but get the injured worker healthy.

Mr.Chair and members. My name is Nick Peters. I am a physician and the Vice President of medical operation for Concentra.

Personally I began my career in the emergency department and transitioned to occupational medicine. I was great at treating acute injuries, but treating occupational injuries was something new to me that I had to learn in the processes. The intricacies of physical therapy working with doctor specialists and appropriate referrals, return to work procedures. It’s like taking a great taxi driver in a large metropolitan area and telling him, “you’re going to drive a big rig truck and eighteen (18) wheeler across country.” He’s not trained for it but will do a marginal job and at times he may fail. It’s good to have a doctor who knows his area and knows it well.

Concentra is the largest provider of occupational medicine in the United States and in California we have nineteen (19) clinics throughout the state treating injured workers, Mr Chair, we have a clinic in your district at Southeast Avenue. Assembly Member Skinner, we have a clinic in your district on Hilltop Road and Assembly member Torres, we have a clinic in your district on South Milican [?] Avenue. [LAUGHING IN ROOM]

My biggest concern is, with many people here, all of us is the quality of care to the patients and with Concentra, we believe that SB863 gives us an important opportunity to make some positive improvements in the workman compensation in California.

Primary care physicians as a group don’t understand all the intricacies that dealing with the needs, they know how to treat the injury but not the other complicated issues around the occupational medicine.

18

CA 2012 Senate Insurance Committee Hearing On Workers Comp “Reform” SB 863; August 28, 2012

The RBRVS would give an opportunity for increased reimbursement, which would allow a greater percentage of primary care treating physicians into the system.

We are the regional society for occupational medicine physicians and a lot of our members work as primary treating physicians in the system. I’ll try to be brief.

There’s also a question with the specialists that there’s a fear that if the system will drive out the specialists. Concentra we also use specialists in our centers. We have working relations with them and so what would hurt the specialists would also hurt us.

Ten (10) years ago the Lewin Group quantified the gross under evaluation of primary care services within the system. That disparity exists today and represents real loss value, not just in... because OC [occupational] Med physicians are in short supply, but because a lot of the value that primary care can add simply can’t be delivered.

Existing law requires that medical provider networks to have sufficient physicians to treat injured workers so that would protect it. Diversion of workman compensation would be mandated to study access and make adjustments to the fee schedules needed to ensure access.

The... Just one example, maybe... quickly. A worker gets injured, works in the warehouse; may be capable of doing light desk work. That arrangement obviously keeps the worker engaged with their job connected to their workplace society, that they may recover more quickly, a lot of down stream and frustration and hostility and litigation could potentially be avoided.

SB863 provides four (4) years of transition to avoid shocking the system; so there will be adjustments but the system will be graded over time with the protections mentioned above and will avoid the tex... the mistakes that have occurred in Texas.

Physician to facilitate that arrangement talks to the patient, talks to the employer, goes back to the patient, goes back to the employer, back and forth again. Sometimes it’s a little tense but it can work if the physician can take the time and has the latitude to go ahead and make that series of phone calls.

I myself, have practiced in Texas and my personal experience the system’s working now, but the transition was too hard and too fast and was too difficult. So we, in this bill have addressed that, learning from their mistake.

Now there’s nothing in the current fee schedule that encourages a physician to do that. The fact is we... incentivise virtually nothing on the case management side, no open case management, no disability management.

The important to remember that over twenty five (25) states have adopted the RBRVS system and none have abandoned it, none have abandoned it once it was implemented. So this is our chance to help the injured workers of California, provide a better quality physician and provide better care.

Now granted, SB863 doesn’t redress all of that, but it does provide for a basis level of support for primary care services and a.. which we think that’s a step in the right direction. Thank you.

HENRY T. PEREA, COMMITTEE CHAIR:

Great, thank you. Last witness.

HENRY T. PEREA, COMMITTEE CHAIR:

DON SCHINSKE; WESTERN OCCUPATIONAL ENVIRONMENTAL MEDICAL ASSOCIATION (WOEMA):

Great, thank you very much. Any questions or comments for this panel? I see none, thank you very much. Now we will move on to the public comment section. I’d just like to remind the... get their position on the record. So if you could help us with that, you’re gonna want to say more but do your best to try to keep it at that. Thank... We’re not taking a vote today. This is only informational. This is... Please sir.

Don Chinskee on behalf of the western Occupational Environmental Medical Association.

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AUGUST 28, 2012 CALIFORNIA SENATE INSURANCE COMMITTEE ON WORKERS COMP "REFORM" - SB 863