Section V

Agency and Program Operations



Introduction

The Commission is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation.

The Commission has the following observations about the performance of state agencies regarding the operation of the specific programs for which they are responsible and in the fulfillment of tasks mandated by the reform legislation.

In its evaluation of agency operations, the Commission is more concerned with the approach and status of efforts to meet those requirements than with the completion of those tasks by the mandated deadlines.


Division of Workers' Compensation

General Observation

The Commission has been somewhat hampered in its evaluation of DWC's operations due to the lack of availability of consistent workload data and performance measures.

The Commission supports DWC's long-range efforts to design and implement an information system for the future and it also urges DWC to modify the current system to provide basic data needed for ongoing program administration.

Claims Adjudication

Timeliness of Actions

It has been difficult to determine the time required for a case to be resolved in the Division of Workers' Compensation.

Statistics in DWC's July 1, 1996 report to the Legislature, Governor and the Commission indicate that as of March 31, 1996, the average time from request to conference is 88 days, while the average time from request to trial is 208 days.

For the period October through December 1996, DWC reports that the average time from request to conference is 94 days, while the average time from request to trial is 214 days.

The following chart shows the numbers and percentages of conferences held within and beyond 30 days and of trials held within and beyond 75 days.





Liens

Lien Backlogs

One of the most persistent administrative problems facing the DWC in recent years has been the development of a backlog of lien claims at some DWC district offices. CHSWC reported on this lien situation in its 1995-96 Annual Report and the recent visits to the Los Angeles, Santa Ana and Van Nuys offices have confirmed that the problem continues.

Commission staff found that in many instances, liens for payments made over 10 years ago were being filed on workers' compensation cases. In other instances, liens on the same case are not being heard at the same time, leading to costly notification and scheduling, churning of cases and delays in resolution.

It is reported that in newer cases, many of the lien claimants are not receiving proper notice of upcoming hearings, primarily due to the delegation by DWC of the responsibility for issuing the hearing notice to the parties.

In addition, the Employment Development Department (EDD) files approximately 60,000 liens with the DWC each year. It has been reported, but not confirmed, that there are approximately $300 million in unrecovered liens filed by EDD against workers' compensation cases.

CHSWC staff visited the Los Angeles office and determined there was a backlog of over 6,000 Declarations of Readiness on WCAB lien cases which had yet to be scheduled for hearing. We understand that a special DWC task force was formed to deal with that backlog.

When CHSWC members and staff participated in a walk-through of the Los Angeles office on June 18, 1997, we noted that the lien backlog had been cleaned up. The WCAB lien cases with Declarations of Readiness had been set on calendar in Los Angeles and other DWC district offices. In the meantime, DWC staff said that other liens had been filed, resulting in a new backlog of about 3,000 new WCAB lien cases.

CHSWC Lien Resolution Roundtable

CHSWC has established a "Lien Resolution Roundtable" comprised of interested members from the workers' compensation community. The Roundtable is discussing staff a proposal developed by CHSWC staff with legislative and administrative recommendations to address lien issues.

Information System

The reform legislation directs the Division of Workers' Compensation to develop a workers' compensation information system (WCIS) compatible with the International Association of Industrial Accident Boards and Commissions Electronic Data Interchange (EDI) system. The legislation requires the system to help the Department of Industrial Relations to manage the workers' compensation system more effectively, to help evaluate the efficiency of the benefit delivery system, to help measure how adequately injured workers are indemnified and to provide statistical data for research.

To develop and implement the part of WCIS involving data collection from claims administrators, medical bills, and non-EDI surveys, DWC estimates its annual start-up and ongoing annual costs of approximately $1 million, exclusive of EDI transmission charges which will be borne by data providers. The WCIS budget includes a startup staffing level of 15.5 positions for EDI and non-EDI surveys, and 17.5 positions thereafter; equipment; travel; facilities; supplies; communication; consulting, and other operating expenses to carry out the program. A separate cost estimate is currently being developed (in conjunction with KPMG/Peat Marwick) for the integration of internal DWC data systems which will address agency performance measures.

In August 1997, the DWC administrative director reported a "WCIS funding setback" and stated that it now appears that this project will not go forward until a least July 1998, assuming that the funding is approved.


Disability Evaluation

The Permanent Disability Rating Schedule

California employs a permanent disability rating schedule (PDRS) which prescribes the monetary amount an injured worker is to be compensated for specified percentages of permanent impairment incurred due to industrial injury or occupational disease.

The 1993 reform legislation directs the administrative director of the DWC to revise the PDRS and provides that CHSWC must approve changes to the standard disability ratings before they are adopted.

This requirement was not met. The DWC administrative director did not submit a final proposal for a revised permanent disability rating schedule to the Commission.

In December 1996, the DWC administrative director adopted a revision to the Permanent Disability Rating Schedule (PDRS) effective April 1, 1997. The DWC administrative director contends that the revision did not require the review and approval of the Commission under the provisions of Labor Code Section 4660(d).

However, several members of the workers' compensation community had other interpretations of Labor Code Section 4660(d) such that the December 1996 PDRS revision was subject to CHSWC review and approval.

The Commission has entered into negotiations with the Department of Industrial Relations and the Division of Workers' Compensation for a Memorandum of Understanding (MOU) specifying the process by which future revisions to the PDRS will be proposed, reviewed, and approved.

California Labor Code Section 4660(d)

California Labor Code Section 4660(d) specifies:

"On or before January 1, 1995, the administrative director shall review and revise the schedule for the determination of the percentage of permanent disabilities. The revision shall include, but not be limited to, an updating of the standard disability ratings and occupations to reflect the current labor market. However, no change in standard disability ratings shall be adopted without the approval of the Commission of Health and Safety and Workers' Compensation. A proposed revision shall be submitted to the commission on or before July 1, 1994."


Judicial Ethics Regulations

In response to legislation enacted in 1993 (AB 1252, Mountjoy), the DWC administrative director developed regulations requiring workers' compensation referees to comply with the Code of Judicial Conduct adopted by the Conference of California Judges, effective December 1, 1995.

The regulations were developed by the Josephson Institute of Ethics after interviews with and surveys of participants in the workers' compensation system. They cover such subjects as the duty to report misconduct, integrity of court records and ex parte communications, socializing with practitioners, financial interest in educational programs, diligence, honesty and decorum.

The new regulations specify that written approval of the Administrative Director must be obtained before anything of value is transferred from practitioners, attorneys, interest groups, or others to a Workers' Compensation Judge. The Judges now have a duty to report misconduct that they see in the courtroom or around whether it be by another Judge, a witness, an attorney or others. The regulations also specifically prohibit Judges from putting on educational programs for the workers' compensation community for profit.

A significant aspect of the regulations is the creation of an ethics advisory committee appointed by the DWC administrative director. The committee includes three members of the public, one of whom represents organized labor, one of whom represents insurers, and one of whom represents self-insured employers; two attorneys who formerly practiced before the Workers' Compensation Appeals Board, one of whom usually represented insurers or employers and one of whom usually represented applicants (injured workers); a presiding referee and a referee or retired referee; and two members of the public outside the workers' compensation community. The committee, which meets approximately four times a year to review complaints, is currently chaired by a Superior Court judge.

A total of 26 complaints about the ethical conduct of workers' compensation referees were received by the Workers' Compensation Ethics Advisory Committee (EAC) during 1996. Of the 23 complaints reviewed during 1996, the committee determined that there was an insufficient showing of misconduct to warrant further investigation in 17. It recommended investigation by the DWC administrative director in the other six cases, three of which remain under active investigation as of the 1996 report publication.

The DWC administrative director received over 100 requests for written approval to receive teaching fees, meals, honoraria, and other gifts, as well as to participate in various educational events. Advance written approval to receive any such item that exceeds five dollars in value is required under new DWC ethics regulations.


Audit Unit

1996 Activities

The Division of Workers' Compensation's Audit Unit issued 9,030 penalty assessments totaling $1,164,120 to workers' compensation claims administrators during 1996, according to DWC's 1996 Annual Report to the Legislature on its audit activities.

Unpaid compensation due to injured workers that was found in the 55 audits conducted during the year added up to $473,961. The largest amount, $261,733, was for unpaid permanent disability benefits.

Unpaid compensation due was found in one out of eight of the indemnity and complaint files audited, averaging $819 per case. Statistics in the report also show that over one fifth of all temporary disability cases and over 30 percent of permanent disability cases had late first payments.

Comparing 1995 and 1996 statistics for late-paid and unpaid indemnity in undisputed cases, DWC noted that the number of indemnity and complaint files audited dropped somewhat, from 6,045 in 1995 to 4,577 in 1996. However the number of penalties assessed for late and unpaid indemnity remained substantially the same, 2,732 in 1995 and 2,739 in 1996, and the amount of penalties rose to $365,645 in 1996 compared to $312,470 in 1995.

Failure to notify injured workers regarding payment or delay of payment of indemnity benefits was found in one out of five files where such a notice was required. The notice was sent late in another 22 percent of the cases.

Other statistics in the report show that, in over 45 percent of vocational rehabilitation cases involving post-1994 injuries, there was either a failure to issue a notice of vocational rehabilitation rights after 90 days of total temporary disability, or the notice was sent late. In nearly one half of all vocational rehabilitation cases, the injured worker was not provided a timely notice of potential eligibility for vocational rehabilitation after medical eligibility was established.

DWC Task Forces on Simplification: Audit

DWC reports that the Audit Simplification subcommittee sought to develop means of better focusing limited staff resources on poorly performing claims administrators. The committee discussed various recommendations for reducing the initial sample size for an audit, and the standards by which expanded audits would follow unsatisfactory audit results.

The committee also discussed recommendations to reduce the frequency of audit, or the mitigation of penalties among subjects with good results. The subcommittee currently expects to propose regulations to implement their recommendations later in 1997, to be effective in January 1998.


Rehabilitation Unit

Rehabilitation Unit Workload

Plan Approvals

Rehabilitation plan approvals are showing a sharp decline after peaking in 1993. This is likely the result of the decline in all reported injuries after 1991.

Also, vocational rehabilitation plans on claims that have dates of injury after January 1, 1994 and are represented by an attorney do not require approval by the DWC Rehabilitation Unit.


Plan Disapprovals





Rehabilitation plan disapprovals have shown a sharp decline since 1991. The San Francisco region seems to be running counter to this trend.

Plan disapprovals are likely to represent greater workloads than approvals. Approvals can be the result of no action taken by the DWC Rehabilitation Unit within 30 days. Disapprovals require active review of the plan documents and notification of the parties.

Decisions and Orders





Decisions and Orders (D&O) following conferences are an important indicator of workloads in the Rehabilitation Unit. Since these represent a conference held and a decision issued, a D&O will represent two work intensive activities undertaken by the consultants.

The sharp rise in D&Os could indicate that, despite the decline in nearly all other measures of workload (e.g., openings, closures, approvals and disapprovals), the Rehabilitation Unit may not be experiencing an overall decline in manpower requirements.

Plan Outcomes





The percent of workers successfully returning to work at rehabilitation plan completion has been declining since 1991 from over 57% to 46%. The portion of plans terminated prior to completion has declined. Unfortunately, the percentage of workers not working at plan completion has increased from 28% of those receiving services in 1991 to 46% of those receiving services in 1996.

Rehabilitation Unit Guidelines

The Division of Workers' Compensation reports that it has adopted a revised set of administrative guidelines for the DWC Rehabilitation Unit. The guidelines, covering 48 subjects, provide policy and procedure direction for the day-to-day activities of the division's rehabilitation consultants. The new policy document is intended to ensure that state vocational rehabilitation laws and regulations are interpreted and implemented consistently across the state.

These revisions come in reaction to major changes to State Labor Code and Title 8 California Code of Regulations sections that pertain to the provision of vocational rehabilitation services in workers' compensation cases in recent years, particularly as a result of the 1993 reforms.

Included in the revised guidelines are eight new subjects, including return to modified/alternate work, waiver of qualified rehabilitation representative, uninsured employer fund cases, vocational rehabilitation maintenance allowance, interpreters' fees, dispute resolution, fee disputes, and considerations for audit referral.

Another seven subjects were significantly changed, including those dealing with the independent vocational evaluator, vocational rehabilitation maintenance allowance vocational rehabilitation and/or temporary disability during on-the-job training, maintenance benefits due to public safety employees, self-employment/capital investment, maintenance and transfer of case files, proceedings before the WCAB, and public access to Rehabilitation Unit records.


DWC District Office Operations

Concern has been expressed regarding the operations of the DWC district offices throughout the state.

The community has cited the closing of some DWC offices, sometimes without sufficient notice to DWC staff, the workers' compensation community, or to the public.

Complaints have also been received regarding the level of service provided to injured workers, employers, their representatives, and the public at certain DWC district offices. Specifically mentioned were the following:


CHSWC Profile of DWC District Office Operations

The Commission decided to implement a project entitled "CHSWC Profile of DWC District Office Operations. " As part of the Commission's responsibility to oversee state operations which administer the workers' compensation program, this project is designed to provide insights and knowledge in areas which have been identified as problematic.

Methodology

Commission staff requested that DWC suggest the offices that should be observed. Commission staff selected the San Francisco, Oakland, Van Nuys, Los Angeles, Santa Ana and Anaheim offices for walk-throughs.

When possible, CHSWC staff were given an overview by the DWC Regional Manager, and were guided through district office operations by the Presiding WC Judge and other staff in specific areas such as mail handling, filing, and calendaring.

CHSWC requested that its members have the opportunity for a "walk-through" of the Los Angeles DWC district office to view its clerical and calendaring operations. DWC staff graciously conducted the walkthrough for CHSWC members and staff on June 18, 1997. CHSWC staff appreciate the spirit of cooperation and willingness to share information demonstrated by the DWC staff.

The Commission will continue to monitor the operations of the DWC district offices.

Preliminary Recommendations

In June 1997, the Commission forwarded findings and recommendations to the DWC administrative director and requested his comments and a description of actions that he has taken or plans to take to address these issues. Included were the following preliminary recommendations based on CHSWC observations of selected DWC district office operations and discussions with some DWC staff associated with those offices.



Industrial Medical Council

The Industrial Medical Council is the medical unit within the Department of Industrial Relations. It acts in coordination with other state agencies and the Administrative Director of the Division of Workers' Compensation to set medical policy and establish guidelines on treatment and evaluation for injured workers in California. The Council also regulates standards for physicians, such as the Qualified Medical Evaluation program, and advises the Administrative Director with the respect to issues impacting the Workers' Compensation systems. The IMC's goal is quality care for the injured worker at reasonable cost.

Medical Treatment and Evaluation Guidelines

Discussions of the medical treatment guidelines and evaluation guidelines developed by the Industrial Medical Council are under the "Medical Issues" subsection of the "Workers' Compensation Issues" section of this report.

Fee Schedules

The IMC is required by the Labor Code to recommend to the Administrative Director reasonable levels of fees for physicians who treat and evaluate industrial injury in the California workers compensation system. A discussion of those efforts is contained under the "Medical Issues" subsection of the "Workers' Compensation Issues" section of this report.

OMFS Study

The IMC reports that one of its subcommittees, the Fee Schedule and Utilization committee, met to review the data generated by a treatment reimbursement benchmarking study initiated by the IMC in early 1996. Conversion factors in the California OMFS have not changed since 1985 for all categories, except Medicine which was last increased in 1987. The data showed in general that for the top 100 cost drivers identified by the contractor (Medicode) in workers' compensation, reimbursement under the California OMFS is approximately 34% higher, overall, than average Medicare allowable reimbursement (population-weighted) in California but is lower than the 25th percentile of Medicode's California group health reimbursement for all types of service except Physical Medicine and Lab/pathology.

The IMC committee also explored proposals on converting the California Official Medical Fee Schedule to an RBRVS-based schedule. Ultimately, the committee determined that more time was needed to study the impact of such a conversion in the California fee schedule.

QME Report Quality Project

The IMC is charged with continuously reviewing the quality and timeliness of QME (Qualified Medical Evaluator) and AME (Agreed Medical Evaluator) forensic reports. In early 1996, after consultation with the Disability Evaluation Unit (DEU) of the Division of Workers Compensation (DWC), the Workers Compensation Appeals Board, and Information and Assistance Unit of DWC, the IMC devised a three tier system for analyzing the quality of medical/legal reports.

A study by the IMC found about 10% of reports contain no errors. In approximately 52% of the reports, the evaluator failed to state the time spent face-to-face with the injured worker. In 17% of the reports, the evaluator omitted one or more of the required declarations at the end of the report. At the Tier II level of review, in approximately 20% of the cases, the discussion of work restrictions was inadequate. Copies of the results of the full study are available upon request from the IMC.

Investigations and QME Discipline

The Investigations Unit of the IMC investigates complaints about physicians in the workers' compensation system. Investigations which reveal misconduct by QMEs are referred to the IMC Discipline Committee. Investigations which find misconduct by non-QME physicians are referred to a licensing agency, the Department of Insurance, a prosecutor or other state or federal agency, as appropriate.

A qualitative transition was made by the IMC Investigations Unit during 1996 - 1997. With the skill and experience of a Senior Special Investigator, the Investigations Unit began in-field investigations, which led to more case referrals to prosecutors as well as closer working relationships with a variety of anti-fraud investigative bodies.

The Investigations Unit staff also currently includes a supervising attorney, an Associate Medical Director, who assists with field investigations and with medical issues, and a Workers' Compensation Assistant who manages the complaint tracking system.

During this time, the Investigations Unit enhanced and refined the complaint tracking system by expanding to 39 complaint type codes. Between July 1996 and June 1997:

By recommendation of the IMC Discipline Committee and vote of the full IMC, the following disciplinary actions were taken during the 1996-97 fiscal year:

A complaint hotline with an '800' number was established (1-800-999-1041). Tips from the hotline have led to investigation of more complex cases involving alleged unlawful referral and kickback schemes, double billing and other fraudulent activity.

The Investigations Unit staff met with the executive directors and chiefs of enforcement of various medical licensing boards, including the Medical Board, the Osteopathic Medical Board, the Board of Chiropractic Examiners and the Psychology Board, to coordinate better interagency communication and investigative assistance. In June 1997, the IMC Investigations Unit presented a half day training session for the statewide complaint intake personnel of the Medical Board.

One impediment in the IMC's investigation work has been the lack of "peace officer" status for the IMC investigator. The IMC is the only medical licensing board whose investigators are not "peace officers" under Penal Code § 830.3. The IMC is hopeful that the legislative change needed to make the IMC investigator a peace officer will be made during 1997 - 1998.

Educational Activities

The IMC reports that it firmly believes that physician education will help improve the quality of care for injured workers in California. During the past year, the IMC reviewed and revised the Physician's Guide to Medical Practice in the California Workers' Compensation System. The revised version will be distributed by the Fall of 1997.

In addition to approving course providers of continuing medical education courses for QMEs, the IMC began auditing courses. The audit program will be expanded during late 1997.

The IMC also began planning a one day educational seminar directed primarily to treating physicians in the California workers' compensation system. The seminar will be given in November 1997, in conjunction with release of the CHSWC study on the permanent disability system in California.

QME Appointments, Reappointments and Panels

The 1996/1997 fiscal year marked the 'second generation' era for the majority of Qualified Medical Examiners (QMEs). In this period, the IMC approved 3,321 QMEs for re-appointment.

A total of 465 QME applicants sat for the QME competency exams, with 343 passing.
A total of 321 new QMEs were appointed.

The IMC also issues 'panel' letters to unrepresented injured workers. From 1996 - 1997, the IMC processed approximately 39,500 panel requests.


Division of Occupational Safety and Health

High-Hazard Employer Program

The 1993 reform legislation directed the Division of Occupational Safety and Health (DOSH) to create a program targeting especially hazardous employers for consultation and inspections. The program - High Hazard Employer Program (HHEP) - was designed to reduce preventable occupational injuries and illnesses and workers' compensation losses.

The statute requires HHEP to:



Assessment for High-Hazard Program

The HHEP program is paid for by employers who experience higher than average workers' compensation losses. The statute permits the Director of the Department of Industrial Relations to levy an assessment on all employers with an experience modification (ex-mod) or its equivalent for a self-insured employer of 125 percent or more.

The program is of limited duration as the statutory provision for the Targeted Inspection and Consultation Fund "sunsets" on January 1, 1999, unless a later enacted statute deletes or extends the date.

DOSH reports that in their January 1, 1997 report to the legislature less than 10 percent of the employers identified by the ex-mod as "high hazard" are in an industry that has higher than average rates of workplace injuries and illnesses. DOSH also states that many of the employers identified in the program - employers that have been assessed due to their ex-mod - have few Title 8 correctable hazards after an on-site inspection.

On-Site Selection

DOSH reports in its January 1, 1997 report to the legislature that it is applying "on-site" selection of High Hazard Employers in the High Hazard Industries. First, high hazard industries are identified after review of injury and illness data. Then employer members of the high hazard industry are determined using SIC codes, or other sources. Employers or "establishments" are then selected as "high hazard" but only after an on-site review of the injury, illness and loss data and other required programs. The on-site selection of high hazard employers is a method used to focus resources on the employers who need it the most.

The HHEP is applying an "on-site" methodology to a subset of 34,000 employers with 520,000 employees in the following high hazard industries based on data from Division of Labor Statistics and Research:


SIC Code

Industry
Number of Employers
Number of Employees
421Trucking & Courier Services except air
8,700
148,600
2086Bottled & canned soft drinks
600
9,000
373Ship & boat building
1,700
10.300
176Roofing, siding & sheet metal work
8,000
20,700
2421Sawmills & planing mills, general
40
11,500
449Water transportation services
1,000
12,100
495Sanitary services
400
23,000
2033Canned fruits & vegetables
10
21,500
205Bakery products
800
21,900
202Dairy products
900
14,100
243Millwork, plywood & structural members
4.400
17,800
805Nursing & personal care services
4,400
119,400
2015Poultry slaughtering & processing
20
9,700
251Household Furniture
1,000
24,300
371Motor Vehicles & Equipment
1,100
32,200
2034Dehydrated Fruit & Vegetables
170
9,800
2984Wines, brandy & brandy spirits
1,200
14,200

DOSH reports that in 1994, 1995 and 1996 calendar years, it completed 1,449 on-site consultation inspections.

Report to Legislature

No later than January 1, 1998, DOSH is to prepare its final report to the legislature describing its Targeted Inspection and Consultation Programs.


Loss Control Certification Unit

The Loss Control Certification Unit (LCCU) in the Division of Occupational Safety and Health (DOSH) certifies the loss control capabilities of insurers. The loss control certification program was created in January, 1994, and began its fourth Annual Plan review year in April 1997.

Program Implementation

LCCU reports that the great majority of the industry has cooperated. The few insurers who have not cooperated are ones that are deficient or are reluctant to do the paperwork. For example, some east coast insurers reported that their computer systems do not generate the types of information required by the LCCU.

The LCCU recently reported that the impact from the elimination of the minimum rate law on the workers' compensation industry continues to have a dramatic effect on the Loss Control departments of most insurers. LCCU reports that while most insurers' loss control departments seem to be trying to meet their legal obligations, severe economic pressures are being brought to bear on insurers to reduce operating costs and loss control departments are being eliminated (at some companies) or scaled back (at other companies) or are having their travel and training budgets restricted.

Although understanding of these marketing pressures, the LCCU reports that it has taken the position of holding a carrier 100% responsible with an expectation of 100% control over services provided to policyholders.

LCCU Working Group

Since inception the Loss Control Certification Unit staff have worked closely with workers' compensation insurance carriers in order to optimize the effectiveness and success of the program.

The Loss Control Work Group has worked with the unit staff to help develop the Certification and Evaluation processes. Created in 1994, the Work Group was formed to serve in an advisory capacity to the Unit, and consists of representatives from workers' compensation carriers, employer and employee advocates, and a variety of other legislative interests.

Loss Control Certification

The Loss Control Certification Unit is currently certifying the Loss Control Consultation Service Plans for 101 insurer groups consisting of 273 carriers writing workers' compensation insurance in California.

LCCU Evaluations (Audits)

In fiscal year 1996-97 the unit completed twenty three (23) evaluations of carriers to determine their compliance with their own certified service plans and compliance with the regulations. The unit concentrated on evaluating only the annual plan years of 1994 and 1995 so that complete plan years could be evaluated. From these evaluations the division issued seventy-five (75) mandatory corrective actions. These are required actions the carrier must take to bring service into compliance with the regulations. In addition, the division made forty-four (44) non-binding recommendations to assist the carriers in improving the quality of loss control service or to improve their next annual plan submissions.

LCCU reports that most carriers showed improvement in meeting their plans and the regulations during the 1995 plan year. Carriers are becoming more knowledgeable of the regulations and are adjusting their service capabilities to meet their requirements. Since only twenty-five per cent (25%) of the carrier groups have been evaluated thus far, it is too early to draw too many conclusions from these early evaluations. The carriers who have been evaluated have been very responsive both to the process and to the corrective actions and recommendations made. Evaluations have been made of carriers of all market sizes from small niche carriers to large multi-line national companies.

Additional LCCU Information

The Loss Control Certification Unit further reports:


Commission on Health and Safety and Workers' Compensation

Commission mandates

The following is a description of the steps that the Commission on Health and Safety and Workers' Compensation has taken to fulfill its mandates.

The workers' compensation reform legislation established the Commission on Health and Safety and Workers' Compensation. Pursuant to California Labor Code Sections 75 through 78, the Commission is authorized to perform the following duties:

    1. Issue an annual report on the state of the California workers' compensation system, including recommending administrative or legislative modifications which would improve the operation of the system.

    The first annual report was issued in July 1995.

    The second annual report was issued in September 1996
    The third annual report (this document) was issued in September 1997

    2. Review and approve applications for grants to assist in establishing effective occupational injury and illness prevention programs.

    The Commission awarded grants to nine applicants in 1994. A description of the Commission's grant program is contained in Section I - The Commission. In subsequent years, the Commission has elected to contract with independent research organizations for studies in particular areas of interest and concern.

    3. Review for approval a proposal by the Administrative Director of the Division of Workers' Compensation as required by California Labor Code Section 4660 to change the standard disability ratings.

    The Commission did not such a proposal from the DWC administrative director. A discussion of this project is contained in "Agency Operations - Division of Workers' Compensation". The Commission has also held a public fact-finding hearing and subsequently contracted with RAND for a comprehensive study of workers' compensation permanent disability. A description of this activity is contained in Section III - Workers' Compensation Issues.

    4. Consult with the Administrative Director of the Division of Workers' Compensation, as required by Section 139.2(o) of the California Labor Code, on the adoption of regulations prohibiting a Qualified Medical Evaluator (QME) from requesting or accepting any compensation or other thing of value from any source that does or could create a conflict with the QME's duties as a medical evaluator.

    As reported in the Commission's first Annual Report, published in July 1995, the DWC Administrative Director announced that he will not go forward with such regulations without clarification of the legislative intent.

    5. Conduct continuing examinations of the California Workers' Compensation System and of California's activities to prevent industrial injuries and occupational diseases and examine these programs in other states.

    The Commission is fulfilling this mandate in several ways.

    Its ongoing studies of various issues include the determination and analysis of comparable programs in other states.

    The Commission's educational programs and forums, including the upcoming Permanent Disability Summit, brings together the workers' compensation community in California with program managers and public officials from other states to address concerns that California shares.



Commission Funding

The Commission on Health and Safety and Workers' Compensation derives its funding by appropriations from a special fund entitled the "Workplace Health and Safety Revolving Fund".

Monies are deposited into the Workplace Health and Safety Revolving Fund from collections made by the Division of Workers' Compensation from administrative and civil penalties assessed by the Audit Unit pursuant to Labor Code Section 129.5 and from civil penalties assessed against physicians pursuant to Labor Code Section 4628. The amounts collected vary from year to year.

The Department of Finance has informed the Commission that it has been reluctant to establish additional permanent staffing.

A Budget Change Proposal was submitted for fiscal year 1997-98 that would provide the Commission with one additional clerical position, one additional analyst position, and a permanent annual appropriation of an additional $200,000 for contracted studies. The Governor's Budget for 1997-98 included the monies for contracts, but deleted the request for additional positions.

The Commission's budget for fiscal year 1997-98 is $921,000.


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

Acknowledgments