State of California
Department of Industrial Relations

The California Commission on Health and Safety and Workers’ Compensation

2001-2002 Annual Report

Commission Members

Tom Rankin (2002 Chair)
Allen Davenport
Jill A. Dulich
Leonard C. McLeod
Kristen Schwenkmeyer
Robert B. Steinberg
Darrel "Shorty" Thacker
John C. Wilson

Executive Officer
Christine Baker

August 2002


TABLE OF CONTENTS

INTRODUCTION

Background
Research Approach
Research Leads to Policy Changes
      Workers' Compensation Benefit Adequacy
      Information for Injured Workers
      Workers' Compensation Medical Costs
      Other CHSWC research that shaped AB 749
Next Steps

CHSWC RECOMMENDATIONS

Workers’ Compensation Insurance Industry in California
Workers’ Compensation Medical Benefit Delivery
Return to Work
Timeliness of Workers’ Compensation Benefits
Permanent Disability Rating Tool
Occupational Health and Safety
Special Populations of Workers
California Occupational Research Agenda
Workers’ Compensation Judicial Function
Implementation and Impact of AB 749
Vigilance Against Fraud

THE COMMISSION ON HEALTH AND SAFETY AND WORKER'S COMPENSATION

About CHSWC
CHSWC Members Representing Employers
CHSWC Members Representing Labor
California Health and Safety and Workers’ Compensation Functions
For Information about CHSWC and its Activities
     CHSWC Publications
     CHSWC Informational Materials

SPECIAL REPORT:  2002 WORKERS' COMPENSATION REFORMS

Background
Benefits – Pre 2002 Reforms
    Temporary Disability Benefits
    Permanent Disability Benefits
Benefits – Post 2002 Reforms
    Overview of Benefit Increases
          Summary of Phased-In Increases on Minimum Disability Payments
          Summary of Phased-In Increases on Maximum Disability Payments
          Changes to Weeks of PD Benefit Paid
          Death Benefits
     Increases in Benefits for Lower Disability Ratings
     Impact of Benefit Increases
          Impact on Value of Permanent Disability Benefit
          Impact of Benefit Increases on Wage Replacement Rates
          Replacement Rates by Disability Rating Group for Dates of Injury in 1994 and 2006
Costs – Pre and Post2002 Reforms
     Costs and the California Economy
        Indemnity and Medical Payments as Percent of Total Payroll
          Indemnity and Medical Payments as Percent of Gross State Product
          Indemnity and Medical Payments as Percent of Personal Income
Procedural Changes
Organizational Changes
Medical Care
Lien Claims
Pharmaceutical Costs
Outpatient Surgical Facilities
Penalties
Return to Work Programs
Occupational Safety and Health Training and Educational Program
Loss Control Services
Information for Workers
Audit Procedures
Illegally Uninsured Employers
Fraud
Vocational Rehabilitation
State Compensation Insurance Fund
Insurance Rates
Impact of AB 749 on CHSWC
     New Mandates and Responsibilities for CHSWC
     New CHSWC Funding Sources

SPECIAL REPORT: COURT MANAGEMENT STUDY

Background
Goals
Research approach
Research Findings
    Delays
    Inconsistencies
    Administrative Costs
Recommendations
Status of Implementation of Recommendations

SPECIAL REPORT:  THE CALIFORNIA WORKERS' COMPENSATION INSURANCE INDUSTRY

Background
    Minimum Rate Law
Insurance Market Before Reform
Insurance Market after Reform
    Price Competition
    Changing Insurers
    Reinsurance
Profitability of Insurance Companies
    Premiums
    California Workers’ Compensation Written Premium
    Advisory Workers’ Compensation Pure Premium Rates
    Combined Loss and Expense Ratios
    Under-Reserving
    Average Claim Costs
Current State of the Insurance Industry
    Market Share
    ’September 11’ Impact on Insurance Industry
Insurance Market Insolvency
Prevention of Financial Insolvency
Solutions to Financial Insolvency
    Regulatory Supervision
    Conservation
    Liquidation
California Insurance Guarantee Association
    Background
    Current Insolvencies
    Assessments and Surcharges
CHSWC Informal Hearing on the State of the Workers’ Compensation Insurance Industry in California
Recommendations
   
Possible Research Areas

WORKERS' COMPENSATION MEDICAL ISSUES

Introduction
Current State of California’s Workers’ Compensation System
Evidence of Higher Cost for Workers’ Compensation Medical Treatment in California
Medical Cost Containment Strategies
    Managed Care
    Fee Schedules
    Utilization Review
    Treatment Guidelines
California Research Colloquium on Workers’ Compensation Medical Benefit Delivery and Return to Work
CHSWC Medical Projects Mandated by AB 749
The 24-Hour Care Pilot Project

WORKERS' COMPENSATION MEDICAL ISSUES (continued)

Health Care Organization Program
Fee Schedules
    Official Medical Fee Schedule
    Hospital Fee Schedule
    Inpatient Hospital Fee Schedule and Outpatient Surgery Study
Utilization Review Regulations
Medical-Legal Evaluations
    ‘Baseball Arbitration’
    Treating Physician Presumption
Medical-Legal Expenses
    Permanent Disability Claims
    Medical-Legal Exams per Claim
    Average Cost per Medical-Legal Exam
    Medical-Legal Cost Calculation
    Medical-Legal Costs
    Sources of Improvement in Medical-Legal Costs

WORKPLACE SAFETY AND HEALTH

High Hazard Consultation Program
High Hazard Enforcement Program
Loss Control Certification Unit
Workers Occupational Safety and Health Training and Education Program
Ergonomics Standard

SYSTEM PERFORMANCE

Introduction
Administrative Operations
    DWC Opening Documents
    Mix of Opening Documents
    DWC Hearings
    DWC Decisions
    Mix of DWC Decisions
    DWC Lien Decisions
    Vocational Rehabilitation
         Vocational Rehabilitation Plan Approvals
         Vocational Rehabilitation Plan Disapprovals
         Vocational Rehabilitation Decisions
    DWC Audits
Adjudication Simplification Efforts
    DWC Information System
    ‘Carve-Outs’ - Alternative Workers’ Compensation systems
Costs
    Workers’ Compensation Premium
    Workers' Covered by Workers' Compensation Insurance
    Average Earned Premium per Covered Worker
    Workers’ Compensation Expenditures - Insured Employers
         Indemnity Benefits
         Medical Benefits
         Average Cost per Claim by Type of Injury
     Workers' Compensation Expenditures - Private Sector Self-Insured Employers
      Vocational Rehabilitation Costs Compare with Total Incurred Losses
Outcomes
         Injury and Illness Rates in California
              Injury and Illness Rates by Sector
              Occupational Injuries and Illness Days Away from Work Rates by Industry
    Profile of Injury and Illness Statistics
         California and the Nation
         Industry Data
         Incidence Rates by Establishment Size
         Types of Injuries
         Demographics
               Vocational Rehabilitation
               Work Status at Plan Closure
               Vocational Rehabilitation Plan Outcomes

PROJECTS AND STUDIES

Introduction
Overview of All CHSWC Projects and Studies
               Permanent Disability
               Return to Work
               Workers’ Compensation Reforms
               Occupational Health and Safety
               Workers’ Compensation Administration
               Information Needs
               Medical Care
               Community Concerns
               CHSWC Issue Papers
               Continuing and Upcoming Efforts
Synopses of Current CHSWC Projects and Studies
    Permanent Disability
         Permanent Disability – Phase 1
              Enhancement of the Wage Loss Study to include Self-Insureds
                    Private Self-Insureds      
                    Public Self-Insureds
               Impact of Local Economic Conditions on Wage Loss
          Permanent Disability – Phase 2
                    Permanent Disability Rating Tool
                    Return to Work
                       Analysis of wage loss and RTW in other states
                       ‘Best Practices’ Encouraging Return to Work

    Workers’ Compensation Reforms
Medical-Legal Study
Update of Treating Physician Presumption Study
   Occupational Health and Safety
Workers’ Occupational Safety and Health Training and Education Program (WOSHTEP)
California Occupational Research Agenda
California Partnership for Young Workers’ Health and Safety
Evaluation of Targeting Methods–High Hazard and Loss Control
California Forum for Workplace Health and Safety
      Information Needs
Addressing Legal Services Needs of Injured Workers
Consolidating and Coordinating Information for Injured Workers
      Medical Care
California Research Colloquium on Workers’ Compensation Medical Benefit Delivery and Return to Work
Inpatient Hospital Fee Schedule and Outpatient Surgery Study
Worker Injury National Survey Project (WINS)
Barriers to Occupational Injury and Illness Treatment and Prevention Services For Low Wage Workers in California
    Community Concerns
Study of Benefit Utilization
    CHSWC Issue Papers
Study of Labor Code Section 132a
Information on IMC Disciplinary Actions Taken on QMEs
Study of Workers’ Compensation Coverage Liability for Persons in Training Programs- Labor Code Section 3368

CHSWC & THE COMMUNITY

Acknowledgements
Community Activities