Annual Report
Trends in California Workplace Health and Safety
California's work injury and illness rates have declined
significantly in 1993 and 1994 as a result of a drop in less serious
cases.
The following chart shows that the work injury and illness rate in the private sector dropped from 8.4 cases per 100 employees in 1993 to 8.1 cases in 1994. In the public sector where work injury rates are traditionally higher, the rates have also declined significantly.
While the drop in the public sector rates
have been driven in part by declines in the incidence of lost-time
injuries per 100 employees, the lost-time incidence rate in the
private sector has remained constant.
Reform Requirements
To enhance the health and safety of California workers, the workers'
compensation reform legislation
Loss Control Services
The reform legislation requires workers' compensation insurers
to provide certified occupational safety and health loss control
services to help high-hazard employers reduce their incidence
of industrial accidents and illnesses.
Insurers must provide (or contract with others to provide) loss
control consultation services to all employers identified as high-hazard.
These services must include evaluation of the employer's operations,
identification of factors most related to the losses experienced
by the employers, formulation of recommended loss control measures,
a written report documenting the consultation and ongoing evaluation
of the employer to determine the effectiveness of the consultation.
Insurers may not charge the employer any fee in addition to the
insurance premium for these services.
Loss control services are those services offered by insurers to
employers in order to prevent, reduce, or eliminate the potential
for workers' compensation losses. Loss control management consists
of the identification of the employer's risk exposure, measurement
and analysis of exposures, the selection of appropriate loss control
action and the implementation of loss control measures. Loss control
services include workplace hazard surveys, training programs,
consultations, accident analyses and industrial hygiene services.
Loss Control Certification
The Loss Control Certification Unit in the Division of Occupational
Safety and Health (DOSH) certifies the loss control capabilities
of insurers.
To qualify for certification, the insurer must develop an annual
loss control plan and must demonstrate that it can deliver effective
loss control services.
Plans must detail the insurer's program for delivering loss control
consultation services to insureds selected as targeted employers.
Each plan must include a budget for these services, the method
used to target employers, one-year and three-year loss reduction
goals for targeted employers, the identity of targeted employers
and a description of loss control services provided these employers
in the previous year.
The LCCU certifies carriers, not contractors, and holds the insurance
carriers responsible for loss control services. The Loss Control
Certification package requires the insurers to list the loss control
personnel and their qualifications.
In 1994 DOSH gave a short-term provisional certification to insurers
that submitted an initial loss control plan. In 1995 the division
revised its requirements for plans and has begun to certify insurers
for one-year periods.
The LCCU sends out the recertification package 90 days before
the expiration of the current certification. The LCCU has a procedure
of issuing warning letters to the insurance carriers who have
not submitted application packages 30 days before the certification
expires.
Revenue from the certifications goes to support the LCCU.
Selection of Employers for Loss Control Services
The current LCCU regulation (Insurance Code Section 11721) allows
an insurer to choose its own methodology for selecting employers
"with the greatest workers' compensation losses and
the most significant and preventable health and safety hazards".
This position still has the support of the insurance industry,
but other targeting methods are being studied.
As a result, the LCCU reports that it has seen an array of"methodologies"
from the insurers. Some use the experience modification rating
or the loss ratio. Others use governing classifications, "Hazard
Index", SIC Codes, frequency rates or a larger than normal
number of claims in general or a specific type of claim (e.g.,
back injuries). The LCCU will publish a study of the various methodologies
in early 1997.
Assessment of Loss Control Services
The Commission is concerned that the elimination of the minimum
rate law could have a deleterious impact on the provision of loss
control services and therefore on workplace safety -- insurance
companies could cut back or eliminate loss control services as
a way of saving money to make up for reductions in the workers'
compensation premium.
The Commission explored the feasibility of studying Loss Control
Services before and after the implementation of the workers' compensation
reform legislation. However, the Commission, in conjunction with
the workers' compensation community, determined that the study,
as proposed by the California State University at Fresno, cannot
be completed as originally specified due to the unavailability
of timely and appropriate data.
Commission staff continue to develop a framework for a possible
study in the future, including benchmark measurements of the overall
workers' compensation system. A background summary and literature
review of workers' compensation insurance loss control services
has been completed.
The Commission has continued monitoring the provision of loss
control services by requesting that Division of Occupational Safety
and Health management appear at Commission meetings and provide
status reports. DOSH has complied graciously with such requests.
Before the March 1996 meeting, the Commission requested that DOSH
address certain questions regarding the loss control program.
The questions and the responses from the DOSH representatives
are as follows:
| Q 1: | Has the DOSH Loss Control Unit seen a change in the types or amounts of loss control services provided since open rating? |
| A 1: | DOSH 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. |
| Q 2: | Are carriers shifting the loss control workload from in-house to contracted-out and, if so, how is this affecting the quality of service? |
| A 2: | A year ago, it was rare to see an insurer's loss control department outsourcing their account services (except for small companies). Now, DOSH hears about employers of all sizes outsourcing their account services. The effect that outsourcing has on the quality of loss control services provided to the insured is unknown. |
| Q 3: | Are there model loss control service plans that seem to have a better effect on injury prevention and on controlling losses? |
| A 3: | Not that DOSH is aware. DOSH has seen many types of loss control service plans but has not determined that certain types are better than others. |
| Q 4: | Please provide information regarding the amount of money or percentage of budgets that are being dedicated to loss control services both before and after the open rating. If this is not possible, please provide us with your baseline information. |
| A 4: | Insurance Code Section 11721 requires the insurer's "annual health and safety loss control plan" to "include a budget..." Since there is no uniformity in insurers' plans when it comes to their "budgets", the Loss Control Certification Unit cannot provide generalizable data about budgets pre- and post-open rating. Furthermore, ¤11721 provides that "any information provided to the director under this section shall remain confidential except for aggregate statistical data." |
The LCCU recently reported that the impact from the elimination
of the minimum rate law on the workers' compensation industry
has had a dramatic effect on the Loss Control departments of most
insurers. The LCCU is aware of several carriers who have laid
off the great majority of their internal loss control staff as
a cost-cutting measure, opting to provide service through contractors
and/or consultants. While this is permissible under current regulations,
LCCU expresses serious concerns as to the ability of the contractor/consultant
industry to handle this workload shift without a serious loss
in the quality of service. The ability of these consultants to
operate in this environment without conflicts of interest is another
concern.
High-Hazard or Targeted Inspection and Consultation Program
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 than average workers' compensation
costs.
In early 1995 DOSH began notifying employers that they have been
identified as high hazard places of employment. About 400 high
hazard employers received the notification because of a high score
on a frequency-based formula based on their experience modification
(for insured employers) or a severity-based formula for self-insured
employers. DOSH offered consultation services to the employers
to help them address the occupational safety and health issues
that cause them to be high hazard.
Administration of the High Hazard Program
DOSH has established two offices -- one in the North and one in
the South -- that are exclusively devoted to the High Hazard Employer
Program (HHEP).
The HHEP was designed to reduce preventable occupational injuries
and illness and workers' compensation losses through consultative
assistance, compliance review, and educational outreach.
Employers are selected for the HHEP by various methods using experience
modification, types of injuries that have occurred, claims frequency,
on-site screening, and high hazard industry. Due to the fact that
the experience modification method was criticized for being inaccurate,
DOSH has explored other ways of identifying employers in a high-hazard
industry. Using a combination of factors, DOSH has been able to
best determine where to concentrate its efforts and focus its
resources available for such inspections.
DOSH reports that there have been problems with the HHEP assessment
in the past but that the provision of services has gone well.
A discussion of the HHEP assessment is contained in the
"Agency
and Program Operations -- DOSH" section of this report.
Ergonomics
Proposed ergonomic standards
A provision of the 1993 reform legislation required the Occupational
Safety and Health Standards Board to adopt workplace ergonomics
standards by January 1, 1995, in order to minimize repetitive
motion injuries.
In 1994, the Division of Occupational Safety and Health, with
input from several advisory committees over the years, drafted
proposed ergonomic standards which went to public hearing and
received 6,154 comments. DOSH revised the proposed standards and
submitted them to the Occupational Safety and Health Standards
Board.
On November 17, 1994, the OSH Standards Board unanimously rejected
adoption of the proposed standard which would have required all
workplaces in California to take actions to prevent cumulative
trauma disorder (CTD), an ailment associated with repetitive motions.
The Board Chairman indicated that there was virtually no agreement
among the affected groups on a means to effectively regulate the
prevention of cumulative trauma disorder. It was also felt that
the proposed standard was overly broad and would have imposed
a costly regulatory burden on a vast number of employers where
the occurrences of cumulative trauma disorders have not been identified.
In January 1995, the Commission passed a resolution requesting
that the Cal-OSHA Standards "adopt an ergonomics standard
as expeditiously as possible".
The California Labor Federation, AFL-CIO, sued to compel the board
to adopt the proposed ergonomic standard. On May 26, 1995, a Sacramento
superior court ruled that the OSH Standards Board must adopt an
ergonomics standard within 18 months -- six months to develop
a proposal and twelve months to get it through the rule-making
process.
On January 18 and 23, 1996, the OSH Standards Board held public
hearings in Northern and Southern California to consider revisions
to Title 8, General Industry Safety Orders, Section 5110 of the
California Code of Regulations. The Standards Board received over
900 comments from 203 commentors.
The proposed regulation has been modified as a result of these
comments and the Standards Board has issued a notice requesting
written comments on the proposed modified regulation by August
5, 1996.
The proposed modified regulation and the 33 comments received
will be discussed at the September 19, 1996 meeting of the Cal
OSHA Standards Board.
Ergonomics at the national level
The Commission notes that on a national level, Fed-OSHA may be
able to start to work again on its ergonomic standard.
The July 22, 1996 issue of the Cal-OSHA Reporter indicated
that during a debate on July 11, 1996, the House of Representatives
on the fiscal 1997 spending bill for the departments of labor,
health and education eliminated the repetitive stress rider that
hobbled OSHA's 1996 appropriation. That rider forbade the Federal
Government from issuing any standard or guideline for ergonomic
protection.
Young Worker Health and Safety
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.
Task Force on Young Worker Health and Safety
The Commission is initiating a 12-month project to enhance the
health and safety of young workers.
As suggested by the Labor Occupational Health Program at UC Berkeley,
the Commission will convene a statewide Task Force to coordinate
strategies to protect young people from work-related injury and
illness.
The Task Force will consist of groups and individuals dealing
with California youth employment and education issues, as well
as others who can play a role in educating and protecting young
workers. Task force participation is expected to include the Federal
Department of Labor, the California Departments of Education and
Employment Development, other Department of Industrial Relations
entities such as Labor Standards Enforcement, Cal/OSHA, and Apprenticeship
Standards, university researchers, physicians, labor unions, employer
groups, loss control organizations, parent/teacher and student
groups, and the California Association of Work Experience Educators.
The Task Force will meet quarterly to accomplish three major tasks:
Safety and Health Education Video for Young Workers
The Commission has contracted with the UCLA Labor Occupational
Health Program (LOSH) to develop a 10 to 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. This project has received the support of the
Los Angeles Unified School District. Students and teachers will
be involved in all aspects of the video project.
LOSH is one of three model projects funded by the National Institute
for Occupational Safety and Health -- NIOSH -- to develop and
implement health and safety curricula in US high schools. During
a LOSH project at Jefferson High School in Los Angeles, participants
identified the need for a video to be used in the classroom. LOSH
has previously produced eight videos on workplace health and safety
that have been distributed nationally.
The video will be accompanied by a discussion guide and will be distributed at no cost to all 49 high schools in the Los Angeles Unified School District. LOSH plans to disseminate the video to all other school districts in state at minimal cost.
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