Executive Summary: Findings and Recommendations

This section of this third annual report of the California Commission on Health and Safety and Workers' Compensation contains findings and recommendations.

The Commission, created by the workers' compensation reform legislation of 1993, is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation.

Appointed by the Governor and Legislature to represent labor and employers, the Commission members form a body which strives to bring the health and safety and workers' compensation communities together for objective identification and analyses of systemic problems or difficulties.

Since its inception in 1994, the Commission has contracted with independent research organizations in the academic and private sectors to work with state agency personnel and interested members of the workers' compensation community. This cooperative public-private partnership continues to work together to identify, describe, measure and propose solutions to problems and difficulties in the current health and safety and workers' compensation systems.

The Commission has been focusing on evaluating the operation of the workers' compensation system in California and assessing the impact of the 1993 workers' compensation reform legislation on the affected systems and upon the workers' compensation community. With this report, the Commission evaluates the system as it is today, how the reform is impacting its operation and what further actions need to be taken.

Criteria for findings and recommendations are based upon the California Constitutional directive that the administration of workers' compensation "shall accomplish substantial justice in all cases expeditiously, inexpensively and without encumbrance of any character". Toward that end, the Commission directs its attention to optimizing the delivery of proper benefits to injured workers at the lowest possible cost to employers. Observations and recommendations are directed toward that goal, which the Commission believes is shared by everyone participating in and affected by the system.

The following findings and recommendations are derived from the Commission's various studies and other activities described in this report.

Commission on Health and Safety and Workers Compensation

CHSWC and the Community

CHSWC Finding A:

The Commission believes a good working relationship with the health, safety and workers' compensation community is essential to understanding, analyzing, and developing proposed solutions to systemic problems and difficulties affecting the entire community and the public.

CHSWC Response A:

The Commission has actively sought the input from the community by establishing advisory committees for its studies and projects, by holding public fact-finding hearings, and by conducting community roundtable discussions. The community has been very responsive to the Commission and other DIR entities when invited to participate in evaluation and advisory activities.

CHSWC Recommendation A:

The Commission commends the community for its involvement and recommends the continuation of this good working relationship. The Commission will continue to involve the community as an integral part of its activities.

Impact of the Reform

System Complexity

CHSWC Finding B:

Three years after the implementation of the 1993 workers' compensation reform legislation, the community believes that the system is still too complex and needs simplification and further modification in certain areas.

CHSWC Response B:

The Commission has engaged in several projects and studies of various areas of the health and safety and workers' compensation system. These studies included areas impacted by the reform legislation, and areas where problems have been brought to the attention of the Commission by the community and the public.

CHSWC Recommendation B:

The Commission recommends continuing evaluation and monitoring of the California workers' compensation system by itself, by other government agencies and by the community. Based on its own projects and studies of the system, the Commission also makes recommendations in specific areas, as discussed below.


CHSWC Finding C:

The 1993 reform legislation made significant changes to the medical-legal process in workers' compensation.

CHSWC Response C:

The Commission contracted with the University of California to conduct a study to assess the impact of the medical-legal reform. The study, based upon data from the WCIRB, found that recent reforms to the medical-legal process in the California workers' compensation system have had a dramatic impact on the costs and frequency of medical-legal examinations.

CHSWC Recommendation C:

The Commission recommends that the assessment of the medical-legal reform impact continue and has extended its Medical-Legal study for a third year.

Workers' Compensation Issues

Systemic Difficulties

CHSWC Finding D:

Several studies conducted by various organizations have indicated that systemic difficulties mitigate against the prompt delivery of proper workers' compensation benefits. Concerns have been raised regarding delays, costs, and equity.

CHSWC Response D:

The Commission conducted and contracted for several studies of the system and verified that such difficulties do hamper the optimum operation of the system.

CHSWC Recommendation D:

The Commission recommends a continuation of joint efforts with DIR and the community to assist in the evaluation of recommendations and to participate in the development of plans to carry them out.

Permanent Disability

CHSWC Finding E:

The Commission realizes that the rating of permanent disability is one of the most difficult tasks of the workers' compensation system. The method by which California rates and compensates injured workers for total and partial permanent disability has enormous impact on the adequacy of their benefits, their ability to return to gainful employment, the smooth operation of DWC's adjudication system and the cost of the workers' compensation system to employers.

CHSWC Response E:

The Commission contracted with the RAND corporation to conduct a study that would look at California's permanent disability benefit levels, the rating methods, and the cost of providing those benefits in comparison to similar systems in other states. The report, to be published in September 1997, will include recommendations for improving the California system.

A CHSWC public forum entitled "Summit on California Workers' Compensation Permanent Disability" has been scheduled in November 1997. This Summit is designed to bring representatives from the community together to discuss and comment on the RAND study report.

CHSWC Recommendation E:

The Commission urges all interested persons and organizations to participate in the CHSWC public forum on the RAND report on permanent disability. Based on the study report and the comments received at the PD Summit, the Commission plans to issue a report containing "CHSWC Findings and Recommendations for California's Workers' Compensation Permanent Disability System."

The Commission recommends a joint effort with DIR and the community to assist in the development of action plans to implement the RAND study recommendations.

Anti-Fraud Activities

CHSWC Finding F:

Interest and some concern has been expressed by the community about workers' compensation anti-fraud activities, which are funded by an assessment -- currently $25 million per year -- on California employers.

CHSWC Response F:

The Commission held a public fact-finding hearing in February 1997 to discuss California's workers' compensation anti-fraud activities and to determine if legislative or administrative changes may be needed to improve workers' compensation fraud detection and prosecution. The Commission then published a report containing findings and recommendations resulting from its fact-finding hearing.

CHSWC Recommendation F:

The Commission recommends:

A complete listing of findings and recommendations from the CHSWC report on its workers' compensation anti-fraud hearing is contained in the annual report.

Illegally Uninsured Employers

CHSWC Finding G:

It was brought to the attention of the Commission that some California employers, particularly in certain industries such as construction and home cleaning services, fail to secure workers' compensation coverage. Employers that are not covered for workers' compensation impose a burden on injured workers, on employers who comply with the workers' compensation insurance requirements, and on the state's taxpayers.

CHSWC Response G:

To address these problems, the Commission convened an Advisory Committee consisting of representatives from the community. Based on the findings from the meetings of the Advisory Committee, the Commission has published an Issue Paper discussing various methods for dealing with uninsured employers, including increased notification of the requirement to secure workers' compensation coverage, the identification of non-complying employers, and increased enforcement.

The Commission, the Department of Industrial Relations, the Employment Development Department, and the Workers' Compensation Insurance Rating Bureau are all working together on implementation of three pilot projects to identify employers who are out of compliance with the workersÌ compensation coverage requirement. A full discussion of the pilot projects is contained in the Commission's "Issue Paper: Project to Identify, Track and Bring into Compliance Employers Illegally Uninsured for Workers' Compensation" published in April 1997.

CHSWC Recommendation G:

The Commission recommends that the community continue efforts to inform employers of their responsibility to secure workers' compensation coverage. The Commission also recommends that, upon the successful completion of the pilot projects, those efforts be expanded to the entire employer community.

The Commission is also recommending specific legislative language regarding:

  • A complete listing of legislative recommendations from the CHSWC Issue Paper is contained in the annual report.

    Information Provided to Injured Workers

    CHSWC Finding H:

    The Commission realized that, if the injured worker is to be served well by the system, he or she must be aware of his or her rights and responsibilities under the changing workers' compensation system. The Commission engaged in a study of information services to injured workers and determined that injured workers were receiving inadequate and inconsistent information.

    CHSWC Response H:

    The Commission then initiated a project to develop prototype informational materials - - a video and various fact sheets -- that will be made available to all in the workers' compensation community. The Division of Workers' Compensation and several interested members of the workers' compensation community are working with the Commission in this endeavor.

    CHSWC Recommendation H:

    The Commission recommends, when the prototype informational materials have been finalized, that the DWC and the community utilize them to full advantage.

    Physician Reports

    CHSWC Finding I:

    Incomplete physician reports have been cited as a major factor leading consistency in permanent disability ratings. Many of DWC's disability evaluators state that their largest problem with the current system is the poor quality of medial reports that have been submitted for rating. Despite the incomplete nature of these reports, it is reported that the Disability Evaluation Unit (DEU) is rating the reports, sending them out and having them returned for rerating. This churning results in delays and additional costs to all parties in the system.

    CHSWC Response I:

    The Commission has engaged in a study of physician reports used in the permanent disability rating process. The goal of the study is to determine the nature and magnitude of the problem, ascertain who is producing incomplete reports and why, develop quantitative analyses, and provide recommendations for improving the quality of reports and calculate the cost/benefit of possible modifications.

    CHSWC Recommendation I:

    The Commission plans to issue findings and recommendations in its upcoming report on the Incomplete Physician Report study.

    Health Care Organization Program

    CHSWC Finding J:

    The Health Care Organization certification program has been criticized throughout the community for being too complex and posing a barrier to participation in the workers' compensation managed care program.

    The Commission notes that Senate Bill 1063 has been proposed which would eliminate the role of the Department of Corporations in the authorization of health care provider organizations. The Division of Workers' Compensation would be the only authorizing body.

    CHSWC Response J:

    The Commission has requested periodic presentations on the Health Care Organization certification program from the Division of Workers' Compensation.

    CHSWC Recommendation J:

    The Commission recommends ongoing monitoring and evaluation of the Health Care Organization certification program.

    24 Hour Care Pilot

    CHSWC Finding K:

    Pursuant to provisions in Labor Code Section 4612, several employers have been participating in the "24 Hour Care" pilot program. The pilot authorizes an employer to contract with a licensed health care service plan to be the exclusive provider of medical, surgical, and hospital treatment for occupational and nonoccupational injures and illness incurred by its employees. Recently, legislation -- SB 410 -- was proposed, but did not pass, to extend the duration of this pilot from 36 to 60 months.

    CHSWC Response K:

    The Commission has requested periodic presentations on the 24-Hour Care program from the Division of Workers' Compensation.

    CHSWC Recommendation K:

    The Commission recommends that DWC and the community review the results of 24 Hour Care pilot programs to evaluate their outcomes and to determine if there were features of the program which could be considered for future use.

    Vocational Rehabilitation

    CHSWC Finding L:

    The workers' compensation reform legislation made major changes affecting the level and delivery of the vocational rehabilitation benefit, including a "cap" of $16,000 on the total benefit.

    CHSWC Response L:

    In 1995, the Commission contracted with the UC Berkeley Survey Research Center to conduct a two-year study of the workers' compensation vocational rehabilitation program, with the objective of determining the impact of the reform.

    CHSWC Recommendation L:

    The Commission recommends ongoing monitoring of the effects of the reform on vocational rehabilitation. The Commission has extended its Vocational Rehabilitation Study for another year, to July 1998.

    Workers' Compensation and State Disability Insurance

    CHSWC Finding M:

    The Commission was made aware of possible cost shifting between the workers' compensation system and the State Disability Insurance (SDI) system.

    The State Disability Insurance system provides a safety net for injured workers by paying benefits on an interim basis when their eligibility for workers' compensation benefits is in dispute, or when payment in the compensation system is delayed. SDI then attempts to recover those payments from the insurer or the worker, often through a lien filed with the Workers' Compensation Appeals Board (WCAB).

    CHSWC Response M:

    The Commission has engaged in a study which will result in an Issue Paper analyzing these resource shifts and proposing cost-effective changes to either or both systems.

    CHSWC Recommendation M:

    The Commission recommends ongoing monitoring of possible cost shifting of resources between SDI and workers' compensation. Specific recommendations are expected to be published in the upcoming Issue Paper.


    CHSWC Finding N:

    The reform legislation enabled authorized parties to agree, through the collective bargaining process, to alternative methods for resolving workers' compensation disputes. The workers' compensation community has expressed great interest in these "carve-out" agreements how they are working.

    CHSWC Response N:

    The Commission has engaged in a study of such carve-out programs in California. This independent, outside study will take an important first step for the long term evaluation of the effectiveness of alternative workers' compensation programs. The identification and establishment of baseline measurements will be developed. The first phase of this study is to describe the carve-out programs that have been established and to determine the acceptability of these programs through interviews with unions and employers, program administrators, workers who have incurred claims, employers who are covered by the programs and service delivery providers engaged by the programs. This first phase is scheduled to be completed in December 1997.

    CHSWC Recommendation N:

    The Commission expects to issued findings and recommendations in the report of this study. The Commission is appreciative of the community's interest in this project and urges that it continue to participate.

    Health and Safety IssuesHealthandSafetyIssues

    Young Worker Health and Safety

    CHSWC Finding O:

    The Commission is concerned with and supports efforts to prevent work injuries and illnesses. During the course of its activities, the Commission has become aware of the particular need to focus on the health and safety of young workers.

    CHSWC Response O:

    The Commission has initiated two projects dealing directly with young worker health and safety.

    The California Study Group on Young Worker Health and Safety, comprised of groups and individuals dealing with California youth employment and education issues, coordinates strategies to protect young people from work-related injury and illness.

    The Commission has also contracted with UCLA to develop a 15 minute video and discussion guide for use in the classroom to educate students how to identify health and safety hazards on their jobs and to understand their rights and responsibilities under Cal-OSHA and California's child labor laws.

    CHSWC Recommendation O:

    The Commission has extended the California Study Group for another year and urges a continuation of its good works.

    The Commission recommends that the video and discussion guide be utilized in as many classes as appropriate throughout the state.

    DOSH Targeted Inspection Program

    CHSWC Finding P:

    The reform legislation directed the Division of Occupational Safety and Health to begin a program targeting especially hazardous employers for consultations and inspections, to be funded by assessments upon employers with higher that average workers' compensation costs. However, the assessment methodology has been shown to be problematic and SB 996 was passed requiring that DIR submit a report to the Legislature by January 1, 1998, addressing one or more alternative methods of funding the program.

    CHSWC Response P:

    The Commission plans to hold a public fact-finding hearing on the alternative methods of assessing employers for the high-hazard program, after DIR submits the required report to the Legislature. This will provide an opportunity for the community and the public to comment.

    CHSWC Recommendation P:

    The Commission will issue a report regarding the findings and recommendations derived from the Public Fact-Finding Hearing. The Commission urges the community and the public to participate.

    Program and Agency Operations

    PDRS Revisions

    CHSWC Finding Q:

    The community has expressed great concern with the various interpretations of the roles of CHSWC and DWC in the revisions to the Permanent Disability Rating Schedule. Labor Code Section 4660(d) language has been shown to be ambiguous, particularly the meaning of the phrase "standard disability ratings."

    CHSWC Response Q:

    The Commission has developed proposed legislative language and a new procedure clarifying the roles of and relationships between the Commission and the DWC. This procedure is to be formalized in a Memorandum of Understanding between CHSWC and DWC.

    CHSWC Recommendation Q:

    The Commission recommends:


    CHSWC Finding R:

    The workers' compensation community has expressed concern in the past about the overlapping responsibilities of the Industrial Medical Council and the Division of Workers' Compensation with respect to medical issues in meeting legislative mandates.

    CHSWC Response R:

    The Commission has requested that both the DWC Administrative Director and the IMC Executive Medical Director present periodic reports of their activities at CHSWC meetings. The Commission has noted improved coordination between DWC and IMC.

    CHSWC Recommendation R:

    The Commission recommends that IMC and DWC continue to coordinate, particularly in the formulation of fee schedules and the development of regulations and guidelines regarding workers' compensation medical and medical/legal issues.

    The Commission recognizes and commends the IMC for its efforts to improve the quality of physician reports through extensive training.

    DWC District Office Operations

    CHSWC Finding S:

    Concerns have been raised that several factors mitigate against the smooth operations of the DWC district offices.

    CHSWC Response S:

    The Commission implemented a "DWC Office Profile Project" whereby CHSWC staff, with the cooperation of DWC, reviewed the operations of selected district offices. A draft report was submitted to the Commission members. Subsequently, several Commission members engaged in "walk-through" of a large DWC district office to view its clerical and calendaring operations.

    The Commission then compiled a listing of findings and recommendations from the Profile project. These were sent to the DWC Administrative Director with a request for a written response. The DWC AD was also invited to the July 1997 CHSWC meeting to speak to those issues.

    CHSWC Recommendation S:

    The Commission will continue to request that the DWC Administrative Director respond to the specific findings and recommendations from the CHSWC District Office Profile project (contained in the "Agency Operations" section of this annual report). The Commission will continue to monitor the operations of the DWC district offices.

    Executive Summary: Findings and Recommendations

    Section I The Commission on Health and Safety and Workers' Compensation

    Section II Reform Legislation Impact on the Workers' Compensation Community

    Section III Workers' Compensation Issues

    Section IV Health and Safety Issues

    Section V Program and Agency Operations

    Section VI Commission's Future Activities