This section of this third annual report of the California Commission
on Health and Safety and Workers' Compensation contains findings
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 following findings and recommendations are derived from the
Commission's various studies and other activities described in
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
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
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
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.
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
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
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.
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.
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
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
CHSWC Response J:
The Commission has requested periodic presentations on the Health
Care Organization certification program from the Division of Workers'
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.
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
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
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
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
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
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
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
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
Section III Workers' Compensation Issues
Section IV Health and Safety Issues
Section V Program and Agency Operations
Section VI Commission's Future Activities