Section IV

Commission on Health and Safety and Workers' Compensation

Annual Report

Section IV

Health and Safety Issues

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.


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 commenters.

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:

  1. Develop a resource list of task force members, listing all activities related to educating and/or protecting young workers.

  2. Identify ways for agencies to work together to educate and/or protect young workers more effectively.

  3. Develop a prioritized list of new strategies for protecting young workers, including identification of resources or agencies responsible for carrying out these strategies.

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.