Table of Contents

Introduction

Recommendations

Consider Benefit Increases

Continue Review of Benefit Structure

Engage in Further Study of Uncompensated Wage Loss

Develop Empirically-Based Permanent Disability Rating Tool

Enhance Return to Work Efforts

Reduce System Complexity

Identify and Correct Discrepancies and Inconsistencies

Consider Paying All Benefits at a Single Weekly Rate

Consider Simplifying Permanent Disability Benefit Calculations

Improve Quality of Physician Reports

Review Official Medical Fee Schedule

Review ‘Baseball’ arbitration

Clarify Labor Code Section 5814 – Unreasonable delays

Review Vocational Rehabilitation

Consider Carve Outs Carefully

Change Mechanism for Commission Funding

Streamline Operations

Review the DWC Organizational Restructure

Implement Electronic Filing of Documents

Consider Concept of the “Paperless Office

Manage DWC Lien Workload

Reconsider Delegation of Hearing Notice Issuance

Eliminate ‘Local’ Forms and Procedures

Enhance Information/Feedback Systems

Workers’ Compensation Information

Improve Benefit Notice Program

Revise DWC Audit Program

DWC Information Systems

Ensure Effective Health and Safety Programs

Review California Loss Control Program

Review Targeted Inspection Programs

Promote Health and Safety of Young Workers

Ensure Compliance with Requirements

Illegally Uninsured Employers

Illegally Uninsured Employers in the Trucking Industry

Continue Anti-Fraud Efforts

 


Executive Summary and Recommendations

 

 

 

Introduction

 

Text Box:     The administration of the workers’ compensation program “…shall accomplish substantial justice in all cases expeditiously, inexpensively, and without incumbrance of any character...” 

Constitution of the State of California 
Article 14 
(Labor Relations), Section 4
The legislative reforms of the 1990’s made significant modifications and additions to the health, safety and workers’ compensation systems in California.  Since its inception in 1994, the Commission on Health and Safety and Workers’ Compensation, established by the reforms, has been engaged in ongoing evaluations of these critical programs. 

 

CHSWC’s efforts have been immeasurably assisted by its community of employees and employers and their representatives, labor organizations, injured worker groups, insurers, attorneys, medical and rehabilitation providers, administrators, educators, government agencies and members of the public.

 

Information gathered through CHSWC meetings and projects indicate that the reforms have generally improved the system.  Workers’ compensation premiums and the number of claims have decreased; medical-legal costs have fallen sharply; and abusive claims practices have been reduced. 

 

However, serious problems linger.  Many stakeholders agree that the system remains excessively complex and delivers modest benefits at high costs.  CHSWC and the community recognize that these difficulties adversely affect employers, employees and all parties involved with the system.

 

With extensive cooperation and participation from throughout the community, CHSWC has conducted or contracted with independent researchers for projects and studies of specific aspects of this wide-ranging system.  These projects initially focus on identifying, describing and quantifying specific problems.  Project findings are published and made available to the community and to the public.

 

CHSWC believes that further improvements can and need to be made to achieve optimum system performance to serve all of the employees, employers and taxpayers in California. 

 

The following pages contain the Commission’s recommendations for legislative or administrative changes and/or for further study.  In some instances, where recommended changes have widespread support and do not require legislative action, the Commission and the community have continued their work together to develop and implement corrective actions.  In addition, some project findings have formed the basis for community members to take action in the legislative arena.

 

CHSWC looks forward to continuing its work with the community in striving to fulfill these goals.

 

Recommendations

 

Consider Benefit Increases

 

The Commission wishes to ensure that workers sustaining industrial injuries and illnesses and their dependents, if the injury is fatal, receive adequate workers’ compensation benefits in a timely manner.  The Commission recognizes that the levels of workers’ compensation benefits over the years may not have kept pace with the economic consequences incurred by industrially injured workers.

 

CHSWC recommends that the stakeholders and the workers’ compensation community work together to address this issue.

 

For further information – Please see discussions and reports on these CHSWC projects

' Permanent Disability Study

 

 

 

Continue Review of Benefit Structure

 

The method by which California rates and compensates injured workers for permanent disability has enormous impact on the adequacy of their benefits, their ability to return to gainful employment, and the prompt delivery of benefits at the lowest cost to employers.

 

The Commission realizes that the rating of permanent disability is one of the most difficult tasks of the workers’ compensation system.  In concert with the community, CHSWC has engaged in several studies and hosted public forums to discuss and develop strategies to improve this complex program. 

 

The Commission contracted with RAND to study the workers’ compensation permanent disability system in California.  The CHSWC study by RAND found that there was a significant uncompensated wage loss for permanently disabled workers of insured employers, particularly for workers with permanent disability ratings of 25% and under.

 

The CHSWC Permanent Disability Policy Advisory Committee – composed of CHSWC members representing employers and labor and interested members of the workers’ compensation community – was formed to make recommendations on further action and future direction of the Commission’s efforts.  The PD Policy Advisory Committee adopted the following goals: 

§         Efficiently decrease uncompensated wage loss for disabled workers in California.

§         Increase the number of injured workers promptly returning to sustained work.

§         Reduce transaction and friction costs, including “costs” to injured workers.

 

The Commission makes the following recommendations in pursuit of those goals. 

 

 

 

 

Engage in Further Study of Uncompensated Wage Loss

 

The CHSWC study of Permanent Disability by RAND showed that permanently disabled workers of insured employers sustained significant uncompensated wage loss.  These findings were unexpected and have raised concerns throughout the entire community. 

 

The Commission recommends further study of permanent disability, and has contracted with RAND for additional analyses to incorporate data on self-insured employers, and to determine the reasons for uncompensated wage loss sustained by permanently disabled workers.

 

For further information – Please see discussions and reports on these CHSWC projects

' Permanent Disability Study

 

 

 

Develop Empirically-Based Permanent Disability Rating Tool

 

The CHSWC PD study by RAND found that the current Permanent Disability Rating Schedule (PDRS) does not render benefits to injured workers commensurate with the level of wage loss sustained as a result of the industrial injury or illness.

 

The Commission recommends that cooperative work by the community continue to improve the permanent disability system.  CHSWC has contracted with RAND to develop an empirically based tool for rating and compensating industrially injured workers who sustain permanent disability. 

 

For further information – Please see discussions and reports on these CHSWC projects

' Permanent Disability Study

 

 

 

Enhance Return to Work Efforts

 

The Industrial Medical Council believes that an injured worker should return to work as soon as it is medically feasible.  If the injured worker is unable to immediately engage in his/her usual occupation, the injured worker should be returned to modified or alternative work, provided that such work can be practically accommodated by the employer.  The treating or evaluating physician should recommend appropriate and specific work restrictions. 

 

CHSWC concurs with the IMC’s position and recommends implementation of this concept at all levels throughout the system.

 

The Commission recommends and has engaged in further study to measure and assess return to work programs and to determine “best practices”.  The Commission further recommends that specific policies and strategies be developed from those findings.

 

For further information – Please see discussions and reports on these CHSWC projects

' Literature Review of the impact of modified work

' Summary of Methods to Predict/Evaluate Return-to-Work

 

Reduce System Complexity

 

Identify and Correct Discrepancies and Inconsistencies

 

The workers’ compensation system operates pursuant to provisions in the law, regulations, and policies and procedures.  This assemblage of various instructions is inconsistent and confusing in various areas. 

 

CHSWC recommends that a task force be formed to review and correct discrepancies among the law, regulations, policy and procedures and other instructions.  CHSWC urges that unnecessary regulations, policy and procedures, and instructions be identified and eliminated.

 

The workers’ compensation community encourages the WCAB to take on a more active role in judicial oversight -- for example, by means of en banc decisions -- in an effort to achieve uniformity in the application of the law.  CHSWC concurs and supports this recommendation.

 

 

 

Consider Paying All Benefits at a Single Weekly Rate

 

The industrially injured worker receives payment at different weekly rates for the various types of workers’ compensation benefits: Temporary Disability (TTD), Permanent Disability (PD), and the Vocational Rehabilitation Maintenance Allowance (VRMA).  Both the TD and the PD weekly rate can change several times over the life of the claim.

 

The CHSWC study of the DWC Audit Unit determined that these different and changing weekly rates are confusing to administrators and workers and contribute to errors and delays in benefit payments.

 

The Commission recommends that further study be given to the proposal that an injured worker receive payment for all types of workers’ compensation indemnity benefits at a single weekly rate.  Under this proposal all workers’ compensation benefits would be paid at the TTD rate regardless of the type of benefit.  This would not change the total amount of benefits, only the rate at which they are paid out.

 

For further information – Please see discussions and reports on these CHSWC projects

' Study of DWC Audit Function

 

 

 

Consider Simplifying Permanent Disability Benefit Calculations 

 

The calculation of workers’ compensation Permanent Disability benefits is complex for the claims administrator and confusing for the injured worker.  In part this is because the weekly payment amount factors in a changing multiplier of weeks of payment as the seriousness of the disability increases, and a changing maximum rate as the seriousness of the disability increases.

 

Consider simplifying the calculation of the amount of PPD due by eliminating the stepped maximums in the weekly rate.  However, it is important to note that this may result in substantial changes in the level of compensation paid by employers or the distribution of compensation among different groups of workers.

 

This issue will continue to be discussed as part of the continuation of the Commission’s study of permanent disability.

 

For further information – Please see discussions and reports on these CHSWC projects

' Permanent Disability Study

' Study of DWC Audit Function

 

 

 

Improve Quality of Physician Reports

 

Many disability evaluators in the Division of Workers’ Compensation indicate that their largest problem is the inadequate information on medical reports from which to derive permanent disability ratings.  The Commission is engaged in a study of medical reports produced by physicians – both treating and non-treating.  Preliminary findings from that study indicate that legal decisions are being based on reports with inadequate data (those from treating physicians) without any apparent cost savings.

 

The Commission recommends that the Industrial Medical Council continue its efforts to train treating physicians to produce ratable medical reports.  The Commission notes that the IMC has furthered this process by developing medical reporting forms for the final treating physician and QME evaluators, and recommends that the IMC continue to monitor their usage and effectiveness.

 

The Commission notes that the DWC has developed a primary-treating physicians’ medical reporting form to be used to rate permanent disabilities, the “Primary Treating Physician’s Permanent and Stationary Report” (DWC PR-3).  CHSWC recommends that its usage and effectiveness be monitored.

 

The Commission recommends that the DWC, the IMC and the community review the statutory presumption given to the findings of the primary treating physician; this could involve recommendations to change the special authority, giving ‘great weight’ to the PTP report, rather than the presumption. 

 

For further information – Please see discussions and reports on these CHSWC projects

' Medical/Legal Study

' Physician Report Study

 

 

 

Review Official Medical Fee Schedule

 

The Official Medical Fee Schedule (OMFS) has been the subject of controversy and debate within the community for many years.  Members of the community have indicated that the OMFS is cumbersome, overly complex, and difficult to update and administer.

 

The Commission supports the current efforts to explore alternatives for improving the fee schedule.  The Commission notes that the Industrial Medical Council has contracted with the UCLA Center for Health Policy Research for a study of the resource based relative value scales (RBRVS) used by the Federal government and several states and the possible options of adopting an RBRVS-based schedule in California.

 

When a revised OMFS is adopted, the Commission recommends that DWC, with the assistance of the IMC, continue with its statewide educational training efforts to inform all parties on the appropriate use of the OFMS. 

 

The Commission will follow the IMC studies and the adoption of a revised schedule by the DWC Administrative Director and provide whatever assistance appears warranted from time to time.

 

 

Review ‘Baseball’ arbitration

 

Labor Code §4065 provides that where either the employer or the employee have obtained evaluations of the employee's permanent impairment and limitations from a qualified medical evaluator under Section 4061 and either party contests the comprehensive medical evaluation of the other party, the workers' compensation judge or the appeals board shall be limited to choosing between either party's proposed permanent disability rating.  The employee's permanent disability award shall be adjusted based on the disability rating selected by the appeals board.

 

However, with the use of such "baseball arbitration”, the result is often perceived as unfair.  Experienced triers of fact in the workers' compensation field believe that more often than not an applicant's true disability lies somewhere between the description of PD obtained by the applicant and that procured by the defendant.  Under §4065, however, a WCJ may be ‘forced’ to award too much or too little. 

 

The Commission recommends further study on this issue.  At its May 1999 meeting, the Commission voted to incorporate this issue into the ongoing study of permanent disability.  The Commission also recommends obtaining statistical data on the usage of baseball arbitration.

 

 

 

Clarify Labor Code Section 5814 – Unreasonable delays

 

Labor Code Section 5814 provides that "when payment of compensation has been unreasonably delayed or refused, either prior to or subsequent to the issuance of an award, the full amount of the order, decision or award shall be increased by 10 percent."  Section 5814 has been the subject of considerable litigation since its enactment in 1945, and its interpretation continues to be problematic.

 

With a ‘call for information’, the Commission requested input from the workers’ compensation community and the public on the Labor Code Section 5814 penalty provisions.  The community responded with great interest.

In light of the Supreme Court decision in Stuart and stakeholders’ concerns, CHSWC recommends that Labor Code Section 5814 be reviewed to provide a more fitting penalty assessment, which is appropriate to the length and type of delay.  The Commission has offered to serve as a clearinghouse for recommendations regarding Labor Code Section 5814.  At its May 1999 meeting, the Commission decided to collect WCAB statistical data for further analysis of this issue.

 

For further information – Please see discussions and reports on these CHSWC projects

' Section 5814 Issue Paper

 

 

 

Review Vocational Rehabilitation

 

The 1993 workers’ compensation reform legislation made major changes affecting the level and delivery of the vocational rehabilitation benefit.  The Commission contracted for a study to help evaluate the impact of the workers’ compensation reform legislation on the vocational rehabilitation system.  The study is assessing whether the reforms reduced the cost of the rehabilitation benefit for employers and determining how those changes have affected outcomes for injured workers.  Preliminary findings indicate that VR may not now be considered to be a completely successful program.

 

The Commission recommends that a Vocational Rehabilitation Roundtable, composed of interested members of the workers’ compensation community and the public, be established to review the Vocational Rehabilitation benefit.

 

For further information – Please see discussions and reports on these CHSWC projects

' Vocational Rehabilitation Study

 

 

 

Consider Carve Outs Carefully

 

A provision of the workers’ compensation reform legislation allows construction contractors and unions to collectively bargain over alternative workers’ compensation programs, also known as Carve Outs.  CHSWC engaged in a study that is identifying the various methods of alternative dispute resolution that are being employed in California carve-outs, and beginning the process of assessing their efficiency, effectiveness and compliance with legal requirements.

 

The Commission recommends that caution be exercised when considering the expansion of carve-out programs to other industries.  Carve-out programs potentially offer labor and management opportunities to negotiate better arrangements for both.  However, implementation of structures that take advantage of the opportunities offered by carve-outs have proved to be initially difficult and inconsistent in the construction industry.  In addition, large cost savings have failed to materialize thus far. 

 

The carve-out program should not be viewed as a panacea, but as an opportunity to attempt innovations that could lead to improvements in the statutory system. 

 

For further information – Please see discussions and reports on these CHSWC projects

' Carve-Out Study

 

Change Mechanism for Commission Funding

 

In order to avoid the appearance of a conflict of interest, funding for CHSWC should not be totally dependent on the amount of the audit penalties collected by the DWC Audit Unit.  Currently, audit collections are deposited into the Workplace Health and Safety Revolving Fund and the Commission’s budget is appropriated out of that fund.  If audit collections are not sufficient to meet the needs of the Commission, there is currently no recourse.

 

The Commission proposes that audit collections be deposited into the state’s Workers' Compensation Administration Revolving Fund (see Labor Code Section 62.5) or into the State General Fund.  An adequate amount for the Commission’s budget could then be appropriated from the state’s Workers' Compensation Administration Revolving Fund or from the State General Fund.  If allocated from the state’s Workers' Compensation Administration Revolving Fund, the Commission’s budget would be included in the 80/20 funding ratio for workers’ compensation programs.

 

For further information – Please see discussions and reports on these CHSWC projects

' Study of DWC Audit Function

 

 

 

Streamline Operations

 

Several studies, including KPMG, RAND, WCRI, and the CHSWC DWC Profile, have determined a need for improving the operations of the DWC district offices throughout the state.  Inconsistency and lack of uniform procedures are often cited.  RAND suggests that the system is poorly utilized and burdened by unnecessary paperwork and litigation issues.

 

The Commission recommends that DWC continue and enhance its efforts to streamline processes, establish and maintain uniform procedures, and review and evaluate its current organizational structure.  CHSWC also recommends that DWC continue to invest in infrastructure, training and technology improvements.

 

 

 

Review the DWC Organizational Restructure 

 

The Division of Workers’ Compensation is in the process of implementing a revised organizational structure employing three regional centers with regional managers to provide information and assistance, designating that all district office staff report to the presiding judge, and establishing a Policy, Program Evaluation and Training Unit.

 

The Commission recommends that the implementation and operation of the new DWC organizational structure be followed and evaluated. 

 

 

 

Implement Electronic Filing of Documents

 

The state’s health, safety and workers’ compensation systems in California necessarily require the transmission of a lot of information among various entities in the public and private sectors.  The evolution of technology now enables the electronic transmission of such data, with savings in time and resources and with increased speed and accuracy.

 

CHSWC supports efforts by the DWC and the WCAB to implement procedures and methods for the electronic filing of documents among all parties.  The capability for electronic filing would assist in the prompt delivery of proper benefits in a cost-beneficial manner.

 

 

 Consider Concept of the “Paperless Office”

 

In December 1998, the State Compensation Insurance Fund conducted a walk-through of the operations of their Sacramento office for CHSWC members and staff, who were very impressed with SCIF’s ‘state of the art paperless claim file system’.

 

The Commission believes that this approach may be helpful to the Division of Workers’ Compensation in the management of their many case files and recommends that the Division of Workers’ Compensation evaluate utilizing the concept of the ‘paperless’ office for its district office operations. 

 

CHSWC recommends that the DWC continue its efforts to develop and implement the electronic storage of paper files.  This could result in significant savings in State Records Center charges and DWC storage space.

 

The Commission recommends that the Workers’ Compensation Appeals Board review the applicable statutes and regulations and recommend changes to eliminate unnecessary retention of paper documents while retaining full legal protections for all case parties.

 

 

 

Manage DWC Lien Workload

 

One of the most persistent administrative problems facing the DWC in recent years has been the development of a continuous backlog of lien claims at some DWC district offices. 

 

CHSWC acknowledges the past efforts and accomplishments of the DWC in directing resources to and reducing the backlogs of lien claims.  CHSWC recommends that DWC continue monitoring and addressing this problem.

 

CHSWC recommends the continuation of its “Lien Resolution Roundtable”, comprised of interested members from the workers’ compensation community.  The Roundtable is discussing a proposal developed by CHSWC staff with legislative and administrative recommendations to address lien issues.  CHSWC recommends continuing evaluation of this ongoing problem.  The Commission and DWC will begin statistical analysis of liens.

 

 

Reconsider Delegation of Hearing Notice Issuance

 

It has been reported that in newer WCAB 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.  This has resulted in costly rescheduling, unused court time, churning of cases and delays in resolution.

 

The Commission recommends that the Division of Workers’ Compensation review the cost-benefit and the impact on the timeliness of case resolution by the delegation of hearing notice issuance to the requesting party.

 

CHSWC recommends that DWC continue its efforts to identify reasons for improper notice and to train the DWC staff to update the address records as needed.

 

The Commission also recommends that the DWC pay particular attention to updating its online system database of addresses of the various parties.  Some lien claimants, such as small medical groups in the Los Angeles basin area, change addresses frequently.

 

 

Eliminate ‘Local’ Forms and Procedures

 

CHSWC has received allegations that some WCAB district offices and workers' compensation administrative law judges are using forms and procedures that have not been established by the Appeals Board.  Such actions would be in violation of Labor Code Section 5500.3, which provides that the Appeals Board establish uniform court procedures and forms and prohibits local offices and workers’ compensation judges from requiring other forms or procedures.

 

CHSWC recommends that efforts be made to identify and eliminate the use of unauthorized forms and procedures.  At the May 1999 meeting, CHSWC voted to initiate a ‘call for information’ to the community regarding local forms and procedures.

 

The Commission recommends that a task force be established to review the ‘call for information’ findings and each office’s individual procedures.  The purpose would be to develop proposed revisions to existing forms and procedures for use statewide.

 

The Commission recommends that the Workers’ Compensation Appeals Board update and adopt standardized forms and establish appropriate procedures in regulation, pursuant to the task force recommendations.

 

 

 

Enhance Information/Feedback Systems

 

The Commission and the community recognize that timely and reliable information at all stages is vital to the optimum functioning of the workers’ compensation system.  Employers and employees need information before a work injury occurs, when an injury occurs, during the course of the claims process and, if applicable, the claims adjudication process.  Timely and accurate feedback on how the system is working is needed by administrators.

 

 

Workers’ Compensation Information

 

CHSWC realizes that, if the injured worker is to be served by the system, he or she must be aware of his or her rights and obligations under the workers’ compensation program.  CHSWC studies have indicated that some injured workers receive inconsistent and inaccurate information. 

 

To address this need, the Commission engaged in a project that developed prototype informational materials – fact sheets and a video - for use by the community and available to the public at no charge.  At the urging of the community, the project was augmented to produce further fact sheets.

 

CHSWC recommends that the Division of Workers’ Compensation and other community members use, promote and facilitate the distribution of the prototype workers’ compensation informational materials.

 

CHSWC also recommends that members of the community continue to work together to develop, update, and distribute useful information for workers about the California workers’ compensation system.

 

For further information – Please see discussions and reports on these CHSWC projects

' Injured Worker Experience Study

' Prototype Informational Material Project and Augmentation

 

 

Improve Benefit Notice Program

 

When an employee files a claim for worker’s compensation, the employer or insurer is responsible for communicating the status of the claim to the employee by means of a series of benefit notices.  The benefit notice program is intended to be a key communication tool between the claims administrator and the injured worker, keeping the worker informed about important changes in the status of his or her workers’ compensation claim. 

 

The workers’ compensation community has long criticized the benefit notice system as confusing and ineffective.  Through its various studies and analyses, the Commission has confirmed that:

 

·         The Benefit Notice system is complex, cumbersome, and not currently designed to provide meaningful information to injured workers regarding benefit levels or to collect appropriate data to monitor prompt delivery of proper benefits.

 

·         Current benefit notices are not readily comprehensible and result in confusion to injured workers and all parties.

 

CHSWC recommends that cooperative community efforts be undertaken to identify benefit notice problems that contribute to problems with claims and make needed improvements to the benefit notice system.  Benefit notices should transmit clear and concise information to injured workers.

 

Consideration should be given to an automated, simplified benefit notice system with initial key indicators to be submitted electronically to the State of California.

 

The Commission has contracted with the Labor Occupational Health Program to assess the needs and explore methods for improving benefit notices to injured workers.  The project team will review and make recommendations on streamlining the Benefit Notice process, clarifying requirements, and ensuring that notices accurately and effectively communicate with injured workers in a format and language that is comprehendible.

 

For further information – Please see discussions and reports on these CHSWC projects

' Benefit Notice Study

 

 

Revise DWC Audit Program

 

The audit function of the Division of Workers’ Compensation (DWC) was established by the 1989 Workers’ Compensation reform legislation to monitor the performance of insurers and administrators to ensure that industrially injured workers receive proper benefits in a timely manner.  At the joint request of the Senate Industrial Relations Committee and the Assembly Insurance Committee, the Commission undertook an evaluation of the DWC Audit Unit with respect to its effectiveness, its staffing level and whether or not audit penalties are adequate or appropriate. 

 

The study determined that although much time and effort was being expended by the DWC Audit Unit in performing audits of workers’ compensation insurers, a redirection of these activities would produce more effective outcomes.  The research team found that the current audit procedure, as established by statute, did not include all insurers within a reasonable period of time, did not focus on the worst performers, and concentrated penalties on relatively inconsequential violations.

 

The Commission recommends revisions to the workers’ compensation audit function to:

·         Reward good performers by eliminating administrative penalties and resource requirements,

·         Increase incentives to improve benefit delivery by raising administrative penalties substantially on poor performers,

·         Focus administrative penalties on important violations,

·         Provide balance to the audit process:

·         Bad business practices by claims administrators mean that injured workers are not receiving proper indemnity payments and appropriate medical services in a timely manner.

·         Excessive audit penalties and regulation mean employers are paying higher costs to deliver the same benefits.

For further information – Please see discussions and reports on these CHSWC projects

' Study of the DWC Audit Function

 

DWC Information Systems

 

Labor Code Section 138.6 directs the Division of Workers' Compensation to develop a cost-effective workers' compensation information system (WCIS) compatible with the IAIABC’s Electronic Data Interchange (EDI) system:

§         to help the Department of Industrial Relations manage the workers' compensation system more effectively,

§         to help evaluate the efficiency and effectiveness of the benefit delivery system,

§         to help measure how adequately injured workers are indemnified, and

§         to provide statistical data for research.

 

CHSWC recommends that DWC continue its efforts to develop this information system, contingent upon appropriate and effective security and confidentiality measures.

 

CHSWC notes that the language of Labor Code Section 138.6 may be inadvertently restrictive in that the WCIS system must be ‘compatible’ with the IAIABC’s system.  Since the IAIABC’s system design is not yet finalized, CHSWC recommends that some flexibility be allowed in the language of Labor Code Section 138.6.

 

CHSWC encourages the Division of Labor Statistics and Research to revise its regulations to enable data from Form 5020 (Employer’s Report of Injury) and Form 5021 (Doctor’s Report of Injury) to become part of the DWC Information System.  This would eliminate duplicate filings with the State of California and eliminate duplicate data entry.

 

CHSWC also urges DWC to improve its current computer systems to provide basic data needed for ongoing program administration.

 

 

 

Ensure Effective Health and Safety Programs

 

Review California Loss Control Program

 

The Loss Control Certification Unit (LCCU) was established by the 1993 workers’ compensation reform legislation to ensure that the insurance industry was appropriately engaged in assisting employers to protect workers’ safety and health and to enable businesses to benefit from cost savings and productivity gains resulting from improved workplace safety.

 

Insurers report that they have had to divert a reported 50% of their loss control resources to address expensive administrative requirements – including targeting employers -- rather than address substantive loss control challenges.  Additionally, the regulations have imposed a structure that discourages the flexibility required to help employers who actually want assistance.

 

Commission recommends that the California loss control program be reviewed with respect to its efficiency and effectiveness.

Review Targeted Inspection Programs

 

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.

 

CHSWC has begun a study on statutorily required safety efforts, including the federal OSHA mandate for implementation of targeting and intervention directed at the most hazardous employers.

 

 

 

Promote Health and Safety of Young Workers

 

The Commission has engaged in several projects designed to assist in the health and safety of young workers.  It is funding a statewide task force -- known as the California Study Group on Young Worker Health and Safety -- charged with coordinating strategies to protect young people from work related illness and injury.  The study group is composed 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.  The Commission also funded the development of a video to be used in the schools to educate young workers on workplace health and safety and their rights and responsibilities under the workers’ compensation system.

 

The Commission recommends that ongoing efforts and focus need to continue in the area of young worker health and safety.

 

For further information – Please see discussions and reports on these CHSWC projects

' California Study Group on Young Worker Health and Safety

 

 

 

Ensure Compliance with Requirements

 

Illegally Uninsured Employers

 

CHSWC has become aware that some California employers -- particularly in certain industries such as construction, restaurants, and trucking -- fail to secure required workers’ compensation coverage.  Employers that are not covered for workers’ compensation impose a burden on injured workers, on employers that comply with the workers’ compensation insurance requirements, and on the state’s taxpayers. 

 

The Commission engaged in pilot projects designed to test matching-records and notification methods to identify illegally uninsured employers and bring them into compliance.  The purpose is save monies from the state’s Uninsured Employers Fund and General Fund, assist injured workers, and reduce the current competitive disadvantage and the tax burden on responsible employers.

 

The Commission’s pilot project methodologies proved to be efficient and effective in identifying illegally uninsured employers and bringing them into compliance.  The Commission recommends that these and other efforts to secure workers’ compensation coverage for all workers continue.

 

The Commission further recommends that coordinated multijurisidictional efforts be continued to identify and bring into compliance those employers who are in the “underground” economy – employers that are unknown in the system, do not have the required business licenses or permits and do not pay the proper taxes.

 

For further information – Please see discussions and reports on these CHSWC projects

' Illegally Uninsured Employers Study

 

 

 

Illegally Uninsured/Underinsured Employers in the Trucking Industry

 

Section 34633 of the California Vehicle Code (CVC) requires that certain commercial motor carriers report annually to the Department of Motor Vehicles (DMV) with information on their employees and owner-operator drivers including arrangements for workers’ compensation.  The DMV is required to submit the reported information to the identified workers’ compensation insurer or to DIR’s Self-Insurance Plans (SIP).  However, DMV had not been contacting SIP for verification of self-insurance status.

 

Representatives from the Commission and the Illegally Uninsured Employer Project Advisory Committee met with DMV staff in June 1999 to examine the current procedures to fulfill the provisions of CVC Section 34633.  The participants agreed that CVC Section 34633 and PUC Sections 1043, 5230, and 5374.6 are not currently serving any useful purpose.

 

The Commission recommends that DIR, DLSE, CHP and DMV continue efforts to identify illegally uninsured or underinsured employers in the trucking industry and bring them into compliance.

 

 

 

Continue Anti-Fraud Efforts

 

The Commission believes that fraud in the California workers’ compensation system has decreased since the implementation of the reform legislation.  Traditional fraud claims are down and some blatant medical mills have been put out of business.  However, CHSWC and the workers’ compensation community recognize that fraudulent activities continue.

 

CHSWC recommends that anti-fraud efforts be directed at all types of fraud, including employers who willfully fail to secure workers’ compensation coverage, large medical-mill cases and small injured worker cases.

 

The Commission recommends that the community continue to identify and reduce fraudulent activities perpetrated by anyone and everyone in the system, including but not limited to employers, employees, insurers, and providers.

The Commission also recommends an ongoing, independent evaluation of the effectiveness and cost-benefit of these anti-fraud programs.

 

For further information – Please see discussions and reports on these CHSWC projects

' Fact-Finding Hearing on Anti-Fraud Activities