2022: The Top 10 California Workers’ Comp Developments

By:  Julius Young, Partner, Boxer Gerson, Oakland

At the end of 2022, it’s time to assess the significant things that happened in California workers’ comp this year. What follows is an attempt to separate the signal from the noise. I’ve added links to explanatory material.

1. Governor Newsom made two appointments to the California Workers’ Compensation Appeals Board 

In August 2022, Newsom appointed Joe Capurro, a veteran applicant attorney from San Jose. Capurro has long been a leading attorney in the field. And in December 2022, Newsom appointed Natalie Palugyai to the board. Pulugyai had served Newsom as the Secretary of Labor and Workforce Development since 2021, but left that slot for unexplained reasons. In any event, it appears that Newsom found a post for her at the WCAB. In making the appointment, Newsom broke with recent tradition by appointing a non-lawyer to the board. Although non-lawyers did serve on the WCAB at times before 2000, Governors Schwarzenegger and Brown appointed only workers’ comp lawyers to the WCAB.

Also to be noted was former CHSWC member (and CalFed official) Angie Wei’s departure from the Newsom administration. Joining Newsom was former CHSWC member (and firefighter’s lobbyist) Christy Bouma.

2. COVID workers’ comp claims spiked in early 2022 but numbers greatly declined thereafter

The pattern of COVID workers’ comp claims has been dictated by the different waves of COVID variants. The winter 2021/2022 Omicron surge created the highest numbers of COVID comp claims of the entire pandemic. In January 2022 55,206 claims were reported according to a COVID database maintained by the California Workers’ Compensation Institute (CWCI). For January 2022 COVID claims were 55.5% of all comp claims that month. By March 2022 that dropped to 1,331 claims but then spiked again in June and July 2022 to around 9,000 per month and then slacked of til November 2022 when 2.447 COVID claims were reported. For November 2022, COVID claims were 6.4% of all claims reported.

For the whole pandemic since March 2020, 302,628 COVID claims had been reported, with 1,556 deaths reported.

Looking at the claims filed in the pandemic to date by industry, 27% were filed by health care workers, 24.9% by government employees (which include first responders), and 10.3% by workers in retail.

The impact of long-COVID on the California system remains unclear. But a 2022 WCIRB research report on that topic noted that depending on whether the initial COVID was mild, severe or critical, from 11% to 40% of workers who sustained COVID developed long-COVID. 

https://www.wcirb.com/sites/default/files/documents/wcirb-longcovid-impactreport-ar-2.pdf

A 2022 study by the National Council on Compensation Insurance, based on multi-state data revealed that the costs of long-COVID could be substantial. NCCI estimated that the percentage of COVID workers’ comp claims with long COVID was 24%.

3. Important workers’ comp regulations were adopted in 2022:

New regulations included the following:

• A long-negotiated revision to the copy service fee schedule was adopted in July 2022:

https://www.dir.ca.gov/dwc/DWCPropRegs/2021/Copy-Service-Price-Schedule/Index.htm

• Amendments to the WCAB Rules of Practice and Procedure went into effect as of January 1, 2022:

https://www.dir.ca.gov/wcab/WCABProposedRegulations/2021/WCAB-Rulemaking/Index.htm

• Regulations providing for electronic service of QME reports were adopted effective April 2022:

https://www.dir.ca.gov/dwc/DWCPropRegs/2020/QME-Regulations/QME_Regs.htm

•QME Telehealth regs were adopted in July 2022:

https://www.dir.ca.gov/dwc/DWCPropRegs/2021/QME-Regulations/Index.htm

•And a forum on possible regs changes to EAMS (the Electronic Adjudication Management System used by the WCAB) was held in 2022:

https://www.dir.ca.gov/dwc/ForumDocs/2022/EAMS/Index.htm

•Also noteworthy are pending changes in the Cal/OSHA COVID standards that were pending OAL review at the time of this post:

https://www.dir.ca.gov/dosh/coronavirus/ETS.html

4. 2022 saw uncertainty over the fate of Prop 22 and whether more gig workers may be covered under the umbrella of workers’ compensation

In December 2022 the California Court of Appeal heard oral argument in the Castellanos case, an appeal from a ruling of an Alameda Superior Court judge which found Prop 22 unconstitutional. Whatever the result, the losing party will certainly seek review by the California Supreme Court.

While it may be a year or more until we know the ultimate fate of Prop 22, the outcome of Castellanos may determine whether gig workers seek workers’ comp benefits as employees. A 2022 WCAB panel decision, Murguia v.Lyft, points to some of the issues that may arise if gig workers now try to file cases under the California workers’ comp system:

Meanwhile, various industries and professional groups have pursued unsuccessful challenges to AB-5. A lawsuit by the American Society of Journalists and Authors, Inc. and the National Press Photographers Association v. Rob Bonta, challenged AB-5 and Labor Code 2778 on free speech grounds and equal protection grounds but was not successful at the 9th Circuit. A petition for cert at the U.S. Supreme Court was denied in June 2022. The 9th Circuit rejected a similar challenge in Mobilize the Message v. Bonta, this time filed by plaintiffs in the political signature gathering business.

And the California trucking industry failed in its attempt to avoid application AB-5 and the “ABC” employment test from the California Supreme Court Dynamex case. On June 30, the U.S. Supreme Court denied review of a 9th Circuit holding that AB-5 was not preempted by federal law covering motor carriers. My post titled “AB-5, California Truckers and the Ports” can be found here:

However, a coalition of truck owner-operators was allowed to intervene and is currently challenging application of AB-5 to trucking as an infringement on interstate commerce. The loser at the 9th Circuit level will undoubtedly seek to request U.S. Supreme Court review.

Another angle to the ongoing saga of the definition of employees vs. independent contractors is the rule making effort by the U.S. Department of Labor announced in October 2022, though in the context of the Fair Labor Standards Act (FLSA):

https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking

And yet another uncertainty surrounding AB-5 are various civil lawsuits filed against some of the gig-workers companies alleging misclassification violations. For example, Instacart settled a lawsuit filed by the City of San Diego after losing its argument that its shoppers are required to arbitrate rather than sue.

5. 2022 was a year of modest legislative accomplishment

First responders were the biggest winners in the 2022 legislative season. Police and firefighters achieved a significant victory with SB 1127 (Atkins), which shortens the time to investigate claims eligible for presumptions, creates increased penalties for unreasonable denial of a presumption claim, expands the potential period of temporary disability for some first responders with cancer, and authorizes DWC data collection on claim acceptance and denial.

Bills signed by the governor include the following:

• AB 1751 (Daly) which extends the COVID presumption statute until 1/1/24 and expands the categories of first responders eligible for the presumption

• AB 151 which extends 1 year of salary continuation in lieu of TD to Department of Forestry firefighters and up to 3 years in the event of severe burns

• AB 551 (Rodriguez) which extends COVID disability retirement presumptions until 1/1/24

• AB 1643 (Rivas)which creates a task force to study the effect of high heat on workers and the economy

• SB 1002 (Portantino)which provides that licensed clinical social workers can be added to MPNs to behavioral and mental health treatment if referred by a physician

• SB 1242 which requires brokers to take anti-fraud training in order to renew certifications

• SB 1064 (Newman) and SB 216 (Dodd) which mandate certain contractors have workers’ comp coverage. As of 1/1/26 all contractors will have to have coverage unless they have a very narrowly defined organizational structure

Other legislative winners were fast food workers (who will benefit from a fast food council to negotiate wages, working conditions etc under AB 257 unless a 2023 initiative overturns the law) and California farmworkers, whose rights to unionize were strengthened under AB 2183. Also, cannabis users who under AB 2188 have increased protection for their off-the-job cannabis use, with limited exceptions.

Despite rumors that some stakeholders were discussing a package that might include a PD benefit increase and some system changes, no reform package materialized.

Governor Newsom gave a strong indication that he may not be in favor of large scale expansion of injury presumptions. Newsom vetoed AB 334 (to create a skin cancer presumption for State Fish and Game and parks and Recreation officers). He also vetoed SB 213, which would have extended a post traumatic stress presumption to additional first responders.

Legislative proposals to create a single payer insurance system in California went nowhere. Likewise, an effort to create a rebuttable injury presumption for hospital workers failed to gain passage. Here is a post titled “What Failed”  which examines some of the bills that failed to advance in 2022:

6. Workers’ comp costs were at historic lows for many employers

In July 2022, Insurance Commissioner Ricardo Lara decided that the advisory workers’ comp benchmark rate should stay at $1.45 per $100 of payroll. That’s the same rate he had approved in his 2021 finding.

Despite the proposal for a $1.42 rate by two public members of the WCIRB Governing Committee, the full WCIRB Governing Committee voted to recommend a rate of $1.55 per $100 of payroll. Lara rejected that, essentially splitting the baby in a decision and order that can be found here:

https://www.boxerlaw.com/wp-content/uploads/2022/07/September-1-2022-Proposed-Decision-and-Order-State-of-California-DOI.pdf

Lara rejected the idea of a COVID surcharge.

Lara’s decision is advisory only, and what individual employers pay depends on various credits, discounts, classification codes, X-mods etc. Self-insurers are a different story as well.

But data on average charged insurance rates confirm that workers’ comp costs to California employers are at historic lows. WCIRB stats reveal that in 2022 average charged rates are about $1.74 per $100 of payroll. 20 years ago they were $5.07 per $200 of payroll.

7. A handful of appellate court cases were notable

In recent years the appellate courts have granted few writs appealing decisions of the California Workers’ Compensation Appeals Board. So 2022 was something of a yawner for appellate court decisions in the California workers’ comp field. Nevertheless, the following cases involving workers comp or work rights deserve mention:

• Hector Castellanos v. State of California (California Court of Appeal 1st District) (December 2022 oral argument was held in the case, which is an appeal from an Alameda County Superior Court filing that found Prop 22 unconstitutional as a limitation on the legislature’s plenary power over workers’ compensation in California and a violation of the single-subject rule)

• Kuciemba v. Victory Woodworks (9th Circuit, U.S. Court of Appeals) (in April 2022 the 9th Circuit requested that the California Supreme Court address whether the derivative injury doctrine bars a spouse from a civil action alleging the employer negligently exposed the spouse’s husband to COVID with death as a result and whether the employer has a duty of care to the spouse; as of late 2022 the parties were filing briefs with the California Supreme Court)

• Rigoberto Manuel v. Superior Court (Brightview Landscape Services) (California Court of Appeal 6th District) (Court of Appeal issued writ of mandate and ordered Superior Court trial judge to vacate an order that would have allowed discovery of certain immigration status information)

• Lawson v. PPG Architectural Finishes Inc. (California Supreme Court) (ruling that whistleblower retaliation claims are to be governed by Labor Code 1102.5 and not by a U.S. Supreme Court burden-shifting standard)

• Scheer v. Regents of UC (California Court of Appeal 2nd District) (2022) Following Lawson, holding that in whistleblower retaliation a showing of pretextual reasons was not required. Lawson and Scheer may make it easier for some whistleblower retaliation claims to get to a jury. The California Supreme Court denied a petition for review.

• Kaur v. Foster Poultry Farms (California Court of Appeal 5th District) (rejection of a Labor Code 132a claim did not bar pursuit of a claim for discrimination under FEHA)

• People ex. rep Ellinger v. Magill (California Court of Appeal 4th District) (injured worker could not bring a qui tam action against workers’ comp insurer and its agents for alleged violation of Insurance Code 1871.7, the Insurance Frauds Protection Act)

• Trigueros v. WCAB (California Court of Appeal 5th District) (deals with effect of service by mail regulations on timing of QME panel requests)

• The Travelers Indemnity Co. v. Lara (Adir International) (California Court of Appeal 2nd District) (California Insurance Commissioner had jurisdiction over side agreements between an insurer and employer which allowed him to declare them unenforceable)

•.Earley v. WCAB (California Court of Appeal 2nd District) (in May 2022 the Court ordered the WCAB to explain and justify the “grant for study” practice that has in some cases caused significant delays for the litigants in resolving cases)

• Zenith Insurance Co v. WCAB (Alex) (California Court of Appeal 3rd District) (Writ denied where defendant employer Greyhound challenged a WCAB finding that its security guard was entitled to workers’ comp benefits after an injury sustained chasing an unruly patron from the premises despite company policy prohibiting a chase or restraint)

At the WCAB panel level, however there was plenty of activity. Issues of note that were addressed in WCAB panels included the QME process (such as striking QMEs, telehealth evals, and replacement panels), apportionment, psyche injury causation and good faith personnel actions, the neutral risk doctrine, the going and coming rule, cumulative trauma date of injury, the application of LC 4662(a)(2), use of diminished future earning capacity testimony in post1/1/13 cases, application of the Kite doctrine, cancer latency periods, dependency of a homeless adult child, home health care issues, SIBTF issues,  application of the Hikida and Justice cases, injury while on employer’s assignment to a nonprofit, vocational versus medical apportionment, the overlap doctrine, reservation of jurisdiction in CTE cases, utilization review of previously approved treatment, whether IDL payments shall be included in a S&W award, etc.

8. Changes wrought by the pandemic continued to affect California workers’ comp

Remote hearings over the LifeSize platform. Telephonic conferences. Zoom depositions. Fully remote work options for some and hybrid work for others. Some QME evaluations in a telehealth format.

Many of the adaptations of the pandemic have turned out to be more efficient. And congenial to the workers’ compensation workforce and injured workers.

As pre-pandemic office leases come up for renewal, we may see some system stakeholders downsizing their real estate footprint.

9. As always, in 2022 there were plenty of new system studies to ponder

Studies do often influence policymakers.

2022 was a year in which CHSWC commissioners questioned the quality and validity of some of the studies that had been commissioned, and requested more input on the front end of the studies. Later in the year CAAA issued a blog post raising a question about the impartiality of WCIRB studies.

But for now almost all of the system studies come from sources supported by employer and insurance stakeholders. What were those studies in 2022?

Chock full of charts and graphs, the 2022 WCIRB State of the System report can be found here:

https://event.on24.com/wcc/r/3906810/5208334296481E7891951A85CEB89AE6

The CHSWC 2022 Draft annual report is here:

https://www.dir.ca.gov/chswc/Reports/2022/CHSWC_AnnualReport2022.pdf

The WCIRB’s 2022 Geo Study on regional differences in California workers’ comp can be accessed here:

https://www.wcirb.com/sites/default/files/files/WCIRB-Geo_Study-2022-AR.pdf

And in mid-December 2022 the WCIRB released a report on medical characteristics of cumulative trauma claims:

https://www.wcirb.com/sites/default/files/documents/wcirb-ct_study-2022-ar.pdf

A mid-2022 WCIRB report on 2021 expenses and losses in the California system is available here:

https://www.wcirb.com/sites/default/files/documents/2021_ca_wc_losses_and_expenses_report.pdf

In November 2022 the WCIRB released a report on the drivers of claim duration in California, claiming that four “duration drivers” lead to longer claims in California than in other states (a higher share of PD claims, a higher share of cases involving medical-legal reports, a higher share of cumulative claims, and regional claims differences across California):

https://www.wcirb.com/sites/default/files/documents/wcirb-claimdurationstudy-2022.pdf

RAND did a COVID study, “COVID-19 in the California Workers’ Compensation System. A Study of COVID-19 Claims and Presumptions Under Senate Bill 1159”: https://www.dir.ca.gov/chswc/Reports/2022/RAND_RRA1430-1.pdf

A shorter research brief of that study can be seen here:

https://www.dir.ca.gov/chswc/Meetings/2022/ResearchBrief_CovidClaims_SB1159.pdf

The California Workers’ Compensation Institute prepared several studies, one on IMR Decisions 2015 to 2021  https://www.cwci.org/document.php?file=5219.pdf and another on medical access under the California system https://www.cwci.org/press_release.html?id=889.

In July 2022 CWCI released a study on the early impact of the new Medical-Legal Fee Schedule: https://www.cwci.org/press_release.html?id=905. My blog on that can be found here: https://www.boxerlaw.com/workerscompzone/cwci-say-new-doc-fee-schedule-is-costly/

CWCI’s report on IMR decisions between 2015 and December 2021 can be found here:

https://www.cwci.org/document.php?file=5219.pdf

And CWCI produced a position paper on proposals to shorten the compensation determination timeline for California claims:

https://www.cwci.org/document.php?file=5345.pdf

Although CWCI did not release the full report, they issued a press release touting data they developed on medical access in California workers’ compensation:

https://www.cwci.org/press_release.html?id=889

And in December 2022 the CWCI issued a bulletin to subscribers which asserts that data from the Office of Self-Insurance Plans documents a 35% increase in claim volume at public self-insurers over the past year, with sharp increases in losses incurred and paid. Some of this may be due to the COVID presumptions applicable to first responders and frontline workers.

10. Workers comp remained an issue out of the headlines

2022 was the 50th anniversary of the report from the Nixon-era National Commission on State Workmen’s Compensation Laws. While California’s system met many of the basic recommended benchmarks from that study, many stakeholders continue to feel the California system is too cumbersome and costly for the benefits it delivers to workers.

But at least it does not have the widespread problems that the pandemic-era EDD has had:

https://www.latimes.com/california/story/2021-01-15/unemployment-benefit-fraud-california-billions-edd…

California’s workers’ comp system received hardly any 2022 coverage in California’s mainstream media. There is no indication that the issue interests or concerns Governor Newsom. Water, housing, homelessness, the economy, and a boom and bust state budget cycle are the current currency of the realm. For now, disgruntled employers and injured worker advocates who want workers’ comp system change will need to negotiate for it in that context.

Julius Young