The California Space Authority
As of Introduced Version of the Bill, November 18, 2003
ABX4- 1 (Maldonado)
RE: Workers’ Compensation
A comprehensive workers’ compensation package that enhances benefits for the
most severely injured while bringing under control the cost drivers that have
burdened businesses with increasingly high premiums.
? Establishes a workers’ compensation system to compensation an
employee for injured sustained in the course of employment.
? Provides the Division of Workers’ Compensation is under the control of the
Administrative Director and, as per AB 227 and SB 228 passed earlier this
year, charges it to perform various functions and duties in connection with
the provisions of medical services under the workers’ compensation
? Establishes the Industrial Medicine Fund and requires that specific fees be
deposited into it.
? Authorizes collective bargaining agreements within construction and
construction maintenance fields to establish a dispute resolution process
in lieu of a hearing before the Workers’ Compensation Appeals Board.
? Defines acupuncturists and chiropractic practitioners as physicians for the
purposes of the workers’ compensation program.
? Authorizes a process by which an individual employer may self-insure.
? Allows medical evaluations performed as a result of a dispute over the
compensability of an injury to consider issues beyond the mere injury.
? Creates a presumption in certain circumstances surrounding disputes
between employers and employees regarding the compensability of an
injury that the treating physician on an employee, who has been
predesignated by the employee, is correct.
? Requires an employer to provide to an employee who is injured on the job
medical treatment that is reasonably required to cure or relieve from the
effects of the injury.
? Authorizes an employee to be treated by a physician or at a facility of his
own choice within a reasonable distance.
? Establishes certification requirements for health care organizations that
offer health coverage for workers’ compensation.
? Requires an employer to allow an employee to change his physician and
establishes various obligations of an employee and employer once a
physician is selected.
? Requires the adoption of a medical treatment utilization schedule by
December 1, 2004.
? Imposes disclosure and related requirements on contracting agents who
sell, lease, assign, transfer, or convey a list of contracting providers and
their contracting preferred reimbursement rates to other payors or
? Limits the amount of fees payable to medical providers under contracts
with the employee’s health benefit program.
? Provides for certain methods of determining workers’ compensation
benefits payable to a worker or his dependents for purposes of temporary
disability, permanent total disability, permanent partial disability and in
cases of death.
? Provides that if an injury causes permanent partial disability and the
injured employee does not return to work for the employer within 60 days
of the termination of the temporary disability indemnity payments, the
injured employee shall receive a supplemental job displacement benefit. ? Authorizes the administrative director to update a schedule, from time to
time, for the determination of the percentage of permanent disabilities in
accordance with specified provisions.
? Provides that when determining the percentages of permanent disability,
account shall be taken of various factors, including the nature of the
physical injury or disfigurement and with consideration being given to the
diminished ability of the injured employee to compete in an open labor
? Prescribes which party must bear the burden of proof in various aspects of
workers’ compensation proceedings.
? Provides that when payment has been unreasonably delayed or refused,
the full amount of the award shall be increased by 10% and existing law
requires the appeals board to determine the question of delay and
reasonableness and to award reasonable attorney’s fees incurred in
enforcing the payment of compensation awarded.
THIS BILL WOULD
? Make technical numbering changes to various provisions relative to
procedures followed by physicians when evaluating the existence and
extent of permanent impairment and limitations.
? Eliminate the Industrial Medicine Fund and require that specified fees be
deposited, instead, into the Workers’ Compensation Administration
? Expand the option of using dispute resolution in lieu of a hearing before
the Workers’ Compensation Appeals Board beyond merely the
construction and construction maintenance fields.
? Provide that an injury sustained by a person while incarcerated or
imprisoned in a county jail or the state prison is not compensable. ? Prohibit an acupuncturist or chiropractic practitioner from having the
authority to determine disability for specified purposes.
? Establish procedures that would apply to private self-insurance groups
upon certification by the Insurance Commissioner.
? Limits medical evaluations performed as a result of a dispute over the
compensability of an injury to the injury only.
? Repeals the presumption that an employees’ predesignated physician is
correct in matters of a dispute between an employer and employee
relative to compensability of an injury.
? Provide for a definition of medical treatment that is reasonably required to
cure or relieve from the effects of an injury.
? Provide that an employer must agree to a employees’ determination to be
treated by a physician or at a facility of his own choice. ? Revise the certification requirement associated with obtaining health
coverage for workers’ compensation from a health care organization.
? Repeal the provisions that require an employer, upon the request of an
employee, to tender the employee one change of physician, that
authorizes the employer to petition the administrative director for a change
of physician, and that establishes various obligations of an employee and
employer once a physician is selected.
? Limit the number of chiropractic and physical therapy visits by an
employee per industrial injury.
? Repeals the provisions that impose disclosure requirements in contracts
that provide for the payment of preferred reimbursement rates by payors
for health care services rendered by health care providers. ? Establishes the Independent Medical Review System to resolve disputes
involving any disputed health care service. The bill would authorize the
Department of Industrial Relations to contract with one or more
independent medical review organization to conduct reviews for this
purpose. The cost of the independent medical review would be borne by
? Repeals the limitation on fees payable to medical providers under
contracts with an employee’s health benefit program.
? Provide extended benefits in the case of an injury that causes permanent
disability that would become operative upon a declaration from the
Secretary of Labor and Workforce Development that certain conditions
? Revise the exceptions provided in existing law relative to the receipt of
supplemental job displacement benefits for an employee who fails to
return to work after sustaining a permanent partial disability injury. ? Require, rather than allow, the administrative director to prepare, adopt,
and amend the schedule for the determination of percentage of permanent
? Require that the nature of a physical injury or disfigurement be established
by a preponderance of medical evidence based upon objective findings
and would require that consideration be given to the injured employee’s
adaptability to perform a given job. The bill would also require that the
physical injury or disfigurement be the sole factor to be considered under
? Provide that the burden of proof for apportionment regarding permanent
disability shall rest on the defendant and this bill would establish the
standard of proof. This bill would also limit the number of permanent
disability awards and it would prohibit the payment of permanent disability
and death benefits unless the industrial injury is the predominant cause of
the disability or death when compared to all causes of injury in total.
? Repeal the provisions establishing a 10% penalty for unreasonably delay
or refusal to pay an order and instead prescribe procedures that would
require a payment of up to 15% or $500, whichever is greater, for such
Not only are workers’ compensation rates in California the highest in the nation,
but benefits to truly injured workers are markedly inferior considering the high
costs associated with the program. We must bring affordability to the system so
that costs are at or below the average rate and that injured workers receive the
benefits they need. This legislation seeks to reduce the average cost per $100 of
payroll from $5.85 to $2.46, an estimated $11.3 billion reduction in overall costs
to California’s employers.
Costs associated with the workers’ compensation system can be equally divided
into two cost centers: 1) Indemnity payments to compensate workers for lost
wages and disabilities and 2) medical treatment.
1) Indemnity Costs
California’s number of disability claims is almost 3 times the countrywide
rate – in 2002 California had 1,221 claims per 100,000 workers, while the
countrywide average was only 434. The cost of permanent disability per
injured worker in California is also three times the average of that in other
2) Medical Costs
California has developed two duplicative health care systems, each with
their own administrative costs and each with their own set of rules.
Employers who opt to provide health care to their workers are burdened
with the expense of this duplication and employees find the dual systems
confusing. Medical costs have been one of the fastest growing factors in
the workers’ compensation system in recent years. Some injuries treated
in the workers’ compensation system are up to five times more expensive
than the same injury treated in the group health system.
RECOMMENDATION BY CSA STAFF
Pending action in the Assembly Insurance Committee
Eric A. Daniels
Director, State and Local Governmental Relations 916-551-1543