Workers' Compensation

The Top 10 Developments in California Workers Comp 1st Half of 2020

By Julius Young, Partner, Boxer & Gerson, Oakland, California

With 2020 half gone, it’s time for my annual mid-year look at the most significant events in California workers’ comp to date. In a year unlike any other because of changes wrought by the COVID-19 pandemic, many of the top developments must be seen through that lens. But there were others as well.

Here are my picks for the Top 10 Developments in California workers’ comp for the 1st half of 2020:

1. COVID changed operational models for almost all comp system stakeholders. In response to the pandemic, WCAB district offices began holding conferences and hearings by phone. Many medical treatment services were switched to telehealth, as video and phone visits became the norm. Defense attorneys and applicant attorneys agreed to handle most depositions on the Zoom platform. Many QME evals were canceled or rescheduled, though later on some began to happen via video. In most instances claims offices, judges, attorneys and their staff worked remotely. The sudden uptick in unemployment seemed likely to affect the economics of the industry.

In June 2020, the UC Berkeley Labor Center prepared an analysis of the impact of the COVID crisis on workers:

http://laborcenter.berkeley.edu/wp-content/uploads/2020/06/COVID-research-synthesis.pdf

2. There was an ongoing issue of how the comp system would handle claims that a diagnosis of COVID arose out of and in the course of employment. A raft of bills were introduced in the California legislature to create a presumption of industrially related COVID. But Governor Newsom was not to be left out of the conversation, and on May 6, 2020, Newsom issued Executive Order N-62-20 which declared a presumption of compensability for COVID for workers who contracted a verified COVID diagnosis while working outside the home during the shelter-in-place order. My post on Newsom’s order can be found here:

By mid-year, several bills that would create a conclusive presumption of compensability, AB 196 (Gonzalez) and AB 664 (Cooper), seemed stalled. However, SB 1159 (Hill), a bill to create a rebuttable presumption of COVID compensability, did receive a favorable California Senate vote on June 26 and proceeds to the California Assembly, though in its current form does not extend a presumption for work performed after July 5, 2020.

3. As telecommuting became more prevalent, the WCIRB moved to adapt by proposing an update to its classification codes.

This included a proposal to create a classification for Clerical Telecommuter Employees:

https://www.wcirb.com/sites/default/files/documents/jan_1_2021_regulatory_filing-complete.pdf

A July 29, 2020 hearing on this has been scheduled by the California Department of Insurance.

4. AB5 remained a hot political issue. In early 2020, a number of bills were introduced in the legislature to exempt various occupations from AB5. Other bills were introduced to repeal or eliminate the reach of AB5, which enshrined the “ABC test” of employment (used in the 2018 California Supreme Court Dynamex case) into California law. But legislative AB5 repeal is not happening and the fate of some of the exemption bills is not clear. By mid-year, it appeared unlikely that there would be any grand compromise between the gig-platform companies and labor and their allies. This sets up a major political battle between gig-economy companies and labor, likely to be one of the most expensive ballot campaigns California has ever seen. The November election will include the “Protect App-Based Drivers and Services Act,” sponsored by Uber, Lyft, Door Dash and others, which would essentially nullify AB5.

Meanwhile, a decision by the California PUC and a lawsuit by California AG Becerra were factors in the AB5 saga. My post on that can be found here:

5. Some notable new regulations were promulgated. Emergency QME regs setting forth rules for telehealth evaluations went into effect May 14, 2020. Those regs can be found here:

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

And updates to the WCAB Rules of Practice and Procedure went into effect as of January 1, 2020:

https://www.dir.ca.gov/wcab/WCABProposedRegulations/Rulemaking-August-2019/Rulemaking-August-2019.htm

6. A revision of the QME fee schedule remained a thorny issue, but may be headed to a resolution that will not please some QMEs. QME fee schedule revision has been a contentious issue for the DWC for several years. Forums and stakeholder meetings on the issue were held during 2018 and 2019 and a 2019 report from the California State Auditor was critical of DWC administration of the QME system. In early January 2020, a Joint Legislative Audit Committee conducted an oversight hearing on the 2019 findings of the State Auditor. And in January 2020, the DWC convened two additional stakeholder meetings to discuss possible formulas for a revised QME fee schedule. But a bill designed to address the issue, AB 1832, did not progress.

However, on June 25, 2020 the DWC announced draft regulations and set up a forum for comment on them. In the announcement, the DWC stated the following:

“The draft regulations include:

  • A 25% increase in the multiplier for setting fees for evaluations.
  • Standardization of the fee that can be charged for a missed appointment.
  • Flat fees for comprehensive, follow-up, and supplemental medical-legal evaluations.
  • Rates for review of medical records based upon the amount of pages reviewed.
  • Elimination of complexity factors from the Medical-Legal Fee Schedule.
  • An increase in the hourly fee for medical-legal testimony.

The implementation of a predominantly fixed fee for all procedure billing codes is anticipated to reduce frictional costs. Moving to a flat-fee-based schedule and removing complexity factors is contemplated to reduce the incidence of disputes over billing.”

By the end of June 2020, there were extensive forum comments, many critical of the proposal. Here is my post, “The QME Fee Schedule Needs Work”:

7. The Insurance Commissioner took some action to reduce premiums and exclude COVID claims from experience rating, but the effect of COVID on future workers’ comp costs and rates remained uncertain at mid-year

Insurance Commissioner Lara ordered that certain COVID claims be excluded from experience rate calculations:

https://wcc-public-news-storage-4081.s3-us-west-2.amazonaws.com/2020/06-June/20200615_Lara_WCIRB_Reg_Proposal_Order.pdf

On June 17, California’s Insurance Commissioner ordered new regulations to mandate that insurance companies recompute workers’ comp premium charges for policyholders to reflect pandemic-related reduced risk of loss as announced in an April 13 order:

http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/Bulletin_2020-3_re_covid-19_premium_reductions-2.pdf

and as announced in a May 2020 order:

http://www.insurance.ca.gov/0250-insurers/0300-insurers/0200-bulletins/bulletin-notices-commiss-opinion/upload/Bulletin-2020-4-Premium-Refunds-Credits-and-Reductions-in-Response-to-COVID-19-Pandemic.pdf

The WCIRB did not make a mid-year rate filing, and announced that it would not file its 2021 pure premium rate filing until August 2020. With chaos in the California economy, sky high unemployment, and many now working from home, the effect of COVID on workers’ comp rates and costs is unclear at mid-year.

8. Aside from bills pertaining to COVID presumptions and proposed tweaks to AB5, 2020 shaped up as a modest legislative year. Bills to expand presumptions for PTSD and skin cancer for certain law enforcement personnel had failed to advance by mid-year. SB 893, a bill to grant certain industrial presumptions to hospital employees who provide direct patient care, failed a key legislative committee vote. CAAA’s vision of  bills “to reduce delays in care ” and “eliminate bias in apportionment” did not  materialize.

9. While 2020 has not shaped up to be a gangbuster year for workers comp in the courts, there were some decisions that should be noted:

Dennis v. State of California Department of Corrections (WCAB en banc) (invalidating AD Rule  10133.54 and finding that the WCAB, rather than the DIR Administrative Director, has jurisdiction over SJDB voucher disputes);

Brome v. California Highway Patrol (a filed workers’ comp psyche claim tolled the one year statute of limitations under FEHA, Government Code 12940);

•County of Santa Clara v. WCAB (Barbara Justice) (Hikida  case doctrine did not apply on facts of the case and apportionment not prohibited where evidenced established underlying degenerative condition was partial cause of the disability). My post on the case, “Limiting Hikida,” can be found here:

Kennedy V. MUFG Union Bank (unpublished decision out of the 4th DCA) (voluntary resignation as part of a workers’ comp settlement negated claims made in wrongful termination and discrimination lawsuit that worker was in fact terminated);

Todd v. Subsequent Injuries Benefits Trust Fund (WCAB en banc) (Prior and subsequent permanent disabilities shall be added to the extent they do not overlap in order to determine the “combined permanent disability” specified in Labor Code section 4751; and SIBTF is liable, under section 4751, for the total amount of the “combined permanent disability,” less the amount due to applicant from the subsequent injury and less credits allowable under Labor Code section 4753.

10. As always, there were a raft of studies looking at aspects of how the California system is performing:

As this post was being finished, the WCIRB published its 2020 State of the System, perhaps the best source for an overview of trends in the California workers’ comp system:

https://www.wcirb.com/sites/default/files/documents/2020_state_of_the_system_report-ar.pdf

Studies and reports often affect policy decisions, so stakeholders ignore them at their peril. Here are a few notable reports from the first half of 2020:

•”Impact of Economic Downturn on California Workers’ Compensation Claim Frequency” (WCIRB June 2020)

https://www.wcirb.com/sites/default/files/documents/rb-impact_of_economic_downturn-audienceready_0.pdf

• “Evaluation of Cost Impact of Governor Newsom’s Executive Order on Rebuttable Presumption for California COVID-19 Workers; Compensation Claims” (WCIRB May 2020)

• “2019 California Workers’ Compensation Losses and Expenses” (WCIRB June 29, 2020)

https://www.wcirb.com/sites/default/files/documents/2019_ca_wc_losses_and_expenses_report-complete.pdf

• “Independent Medical Review Decisions January 2014 through March 2020” (CWCI May 2020)

• “Integrating COVID-19 Presumptions Into the California Workers’ Compensation System” (CWCI May 2020)

https://www.cwci.org/document.php?file=4522.pdf

•”Technological Change in Health Care Delivery” (UC Berkeley Center for Labor Research June 2020)

http://laborcenter.berkeley.edu/wp-content/uploads/2020/07/Technological-Change-in-Health-Care-Delivery.pdf

•”CHSWC 2019 Annual Report

https://www.dir.ca.gov/chswc/Reports/2019/CHSWC_AnnualReport2019.pdf

Stay tuned. As California struggles to cope with the health and financial impact of COVID, it promises to be a challenging year for the workers’ comp system.

Julius Young

https://www.boxerlaw.com/attorney/julius-o-young/


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