Commission on Health and Safety and Workers' Compensation
SB 899 topic summary report - version 4

Table of contents

Funding
Vocational rehabilitation
Integrated benefits in carve-outs
Liberal construction
Return to work incentives
Provision of medical benefits
AME/QME
Payment of benefits
Permanent disability
Apportionment
Penalties
IIPP
Fraud
Study of effects of reform
SB 899 effective date

FUNDING

User Funding: Labor Code sec.62.5

Restores 100% user funding for the Workers' compensation program with exception of LC 3702.5. (Administration of Self-Insured's Programs). In addition, funding is provided for the Return to work program under section 139.48.

VOCATIONAL REHABILITATION

Supplemental Job Displacement Benefit. Labor Code sec. 139.5.

Repeals the duplicate section for supplemental job displacement benefit. Re-enacts former Labor Code sec. 139.5 vocational rehabilitation benefit for injuries before January 1, 2004, and sunsets the law five years later.

INTEGRATED BENEFITS IN CARVE-OUTS

Integrated Benefits in Carve-Out. Labor Code sec. 3201.5, and 3201.7.

Provides that employer and union may negotiate any aspect of benefit delivery if employees are eligible for group health and non-occupational disability benefits. Labor Code sec. 3201.5 (Construction), 3201.7 (Non-construction)

LIBERAL CONSTRUCTION

Liberal Construction. Labor Code sec. 3202.5.

Provides that the burden of proof by preponderance of evidence applies equally to all parties and lien claimants.

RETURN TO WORK INCENTIVES

Return to work site reimbursements for worksite modification. Labor Code 139.48.

Provides for reimbursement to private employers with 50 or fewer full-time employees for worksite modifications to accommodate the employee's return to work.

Program will reimburse up to $1,250 of expenses to accommodate a temporarily disabled worker or $2,500 to accommodate permanently disabled worker.

The program will be funded from Labor Code sec. 5814.6 (penalties for business practice of unreasonable delay or refusal of compensation) and from transfers by the AD from the WC Administration Revolving Fund.

Also see PD Section: Labor Code Section 4658

PROVISION OF MEDICAL BENEFITS

Repeal of Treating Physician's Presumption. Labor Code sec. 4062.9.

Repeals completely the presumption of correctness of the treating physician. Section 46 of the bill makes the repeal apply to all cases, regardless of the date of injury.

Medical Treatment Defined and Pre-designation of Physician. Labor Code sec. 4600.

Defines the treatment "reasonably require to cure or relieve" as the treatment that is in accordance with the utilization schedule or treatment guidelines adopted by the AD pursuant to Labor Code sec. 5307.27 or the ACOEM guidelines.

Unless the employer uses a medical treatment network, the basic rule remains that employer has medical control for first 30 days (or longer in an HCO), and then employee gets the right to select treating doctor.

An exception to the basic rule is that employee may be treated by a predesignated physician from the date of the injury if all of the requirements for predesignation are met. It is only available if

Medical Billing. Labor Code sec. 4603.2.

Provides that all payments for medical treatment shall be at the fee schedule amount except under written contracts. The time limit to make payment runs from date of properly itemized billing.

Treatment Guidelines. Labor Code sec. 4604.5.

Provides that guidelines can be rebutted only by scientific medical evidence. States that guidelines are to be evidence-based, nationally recognized and peer reviewed.
For injuries occurring on or after January 1, 2004, imposes limit of 24 visits on occupational therapy, along with 24 chiropractic and 24 physical therapy visits, unless the employer authorizes additional visits.

Medical Networks. Labor Code sec. 4616.

Patient Rights in Networks. Labor Code sec. 4616.3.

Provides that after the first visit the injured worker has the right to choose a doctor within the medical network.

Authorizes the injured worker to obtain a second and third medical opinions in appropriate specialty within the network if he/she disputes diagnosis or treatment prescribed by the treating physician.

Authorizes out-of-network specialist treatment if approved by the employer or the insurer.

IMR to Resolve Dispute with Network. Labor Code secs. 4616.4 and 4616.6

Organizations Deemed Approved as Networks. Labor Code sec. 4616.7.

Early Medical Treatment. Labor Code sec. 5402

Requires that the employer provide medical treatment to a worker after a workers' compensation claim form is filed and until the claim is accepted or rejected.
Establishes a $10,000 limit on liability before a claim has been accepted or rejected.

AME/QME

QME System and Report Writing Labor Code sec. 139.2

Provides for assignment of a three-member QME panel upon request of employee or employer per Labor Code Section 4062.1.

Provides for Administrative Director to give notice of panel issued pursuant to Labor Code section 4062.1 or 4062.2.

Provides that the PD report writing criteria be consistent with Labor Code section 4660 (American Medical Association Guides).

Provides that the medical treatment criteria refer to section 5307.27

AME/QME and Medical Dispute Resolution.

PAYMENT OF BENEFITS

Timing of Payments. Labor Code sec. 4650.

Requires PD advances to commence upon cessation of TD payments, including termination when statutory TD limit is reached.

TD Limit to Two Years. Labor Code sec. 4656.

PERMANENT DISABILITY

PD Indemnity Chart, including Tiered PD Benefit Labor Code sec. 4658

Definition of Modified and Alternate Work Labor Code sec 4658.1

Definitions of Modified and Alternate work require at least 85% of time-of-injury earnings and location at a reasonable commute distance from residence.

PD Rating Schedule: Labor Code sec. 4660

Revises the process for determining the percentage of permanent disability.

Replaces ratable factor of "diminished ability to compete" with "diminished future earning capacity."

Defines "nature of the physical injury or disfigurement" to incorporate the AMA Guides for both descriptions and percentage impairments.

Provides that schedule shall adjust from impairment to diminished earning capacity by a formula based on empirical data of average long term loss of earnings from each type of injury for similarly situated employees, including age and occupation.

The new PD schedule is to be adopted by January 1, 2005 (Section 4660(e)) and is also applicable to injuries before January 1, 2005 if there has been no comprehensive report, no treater's P&S report, and no obligation for employer to issue Labor Code Section 4061 notice (i.e., TD has not ended).

APPORTIONMENT

Apportionment Labor Code sec. 4663

Provides that apportionment "shall be based on causation."

Provides that reports addressing PD must address causation and must determine percentage of PD caused by injury and by other factors, or refer to another doctor to evaluate apportionment.
Specifies that injured employee must disclose previous disabilities or impairments upon request.

Apportionment Labor Code sec. 4664

Specifies that employer is liable for the percentage of PD directly caused by the injury.

Provides that any prior awarded disability is conclusively presumed to continue.

Accumulation of all PD awards not to exceed 100% for any one region of the body.

Apportionment Labor Code sec. 4750, 4750.5 are repealed

All apportionment provisions are now in Labor Code Secs 4663 and 4664.

Lien filing fee Labor Code sec. 4903.05

Specifies that the filing fee is assessed on liens filed on behalf of providers as well as liens filed by providers.

Admissible Evidence Labor Code sec. 5703

The list of admissible evidence to the appeals board will also include the medical treatment utilization schedule in effect pursuant to Section 5307.27 or the guidelines in effect pursuant to Section 4604.5.

PENALTIES

Private Attorneys General Exception Labor Code sec. 2699

Provides that the right of employees to prosecute for civil penalties for Labor Code violations that could be prosecuted by the state does not extend to civil penalties under workers' compensation under Division 4, Audit Penalties, under Labor Code Section 129.5, or discrimination under Labor Code Section 132a.

Penalty for Unreasonable Delay Labor Code sec. 5814

Provides that penalties for unreasonable delay or denial of compensation may be applied at the discretion of the WCAB, up to 25% of the amount of payment delayed or denied, or up to $10,000, whichever is less.

Provides that the employer can avoid the 25% penalty by paying a self-imposed 10% penalty of the delayed payment along with the delayed payment within 90 days of discovery, if delay is discovered by the employer before the employee makes a claim for penalty.

Provides that potential penalties are deemed resolved by Compromise and Release or Stipulations and Award or by trial of the underlying benefit unless expressly reserved.

Provides that any Labor Code section 4650(d) no-fault penalty is credited against the 25% penalty.

Provides that no unreasonable delay in the provision of medical treatment shall be found when the treatment has been authorized by the employer in a timely manner and the only dispute concerns payment of a billing submitted by a physician or medical provider as provided in Section 4603.2.

Provides a two-year statute of limitations from the date the payment of compensation was due on recovering penalties awarded under Labor Code Section 5814.

These provisions shall become operative June 1, 2004 and shall apply to all injuries, without regard to whether the injury occurs before, on, or after June 1, 2004.

Penalty for General Business Practice of Delays Labor Code sec. 5814.6

Provides that any employer who knowingly violates Labor Code Section 5814 for a general business practice of unreasonable delays or refusals is liable for a civil penalty of up to $400,000.

Penalty amounts are to be deposited into RTW Fund pursuant to Labor Code Section 130.48.

This section shall become operative June 1, 2004.

IIPP

Injury and Illness Prevention Program Labor Code sec. 6401.7

Provides that the requirement for insurers to review their insureds' industrial injury prevention plan (IIPP) only applies to those insured employers with Ex-Mod of 2.0 or greater.

Provides that the review be conducted within six months of the commencement of the initial insurance policy term.

Provides that the reviewer need not be "independent."

FRAUD

Fraud Reporting Labor Code sec. 3823

Grants civil immunity to the people who are required to report fraud when such person acts in good faith, without malice, and reasonably believes that the action taken was warranted by the known facts, obtained by reasonable efforts.

STUDY OF EFFECTS OF REFORM

Study of Effects of Reform Labor Code sec. 138.65

Provides that the DWC AD contract for a study of effects on workers' compensation insurance rates as a result of the 2003-2004 reforms.

The study is to be completed by January 1, 2006.

SB 899 Effective date:
SB 899 provisions apply
> Prospectively from April 19, 2004 (date of enactment)
> Regardless of date-of-injury, unless otherwise specified.

Revised: April 29, 2004