Workers’ Compensation Legislation Clears Both Houses

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, June 13, 2003 Share this on FacebookTweet thisEmail this to a friend

As the deadline for bills to pass out of their house of origin passed, only a few of more than 50 workers’ compensation bills managed to pass. The Assembly passed seven workers’ compensation bills of interest to employers and the Senate passed nine.

Five of the Assembly bills are authored by Democrats and two by Republicans. It is important to note that Assemblyman Juan Vargas, (D-San Diego) is the author of three of the bills, and as Chair of Assembly Insurance Committee, has a key role in any significant workers’ compensation reform.
AB 227 (Vargas) would require the Administrative Director, Division of Workers’ Compensation to develop an interim outpatient surgery facility fee schedule based on a list of criteria that CMTA believes will delay and inflate costs in a manner that would minimize important savings. CMTA will oppose the bill unless amended to address our concerns.

AB 606 (Carol Liu, D-La Canada Flintridge) would require that at least one employer member of the Safety and Health and Workers’ Compensation Commission be a representative of small businesses with less than 100 employees. CMTA is neutral on the bill because this can already be done without legislation, but is still interested in the bill because it could be used as a vehicle for workers’ compensation reform.

AB 1215 (Vargas), an insurer-sponsored bill, would allow insurers to access the quarterly wage and withholding reports filed by insured employers with the Employment Development Department for the purpose of confirming payroll reported to the insurer for premium calculations. Insurers would need employer's permission and could use the information only for auditing payroll and detecting workers’ compensation insurance fraud. CMTA has some concerns with the bill and is discussing them with the author's staff.

AB 1262 (Barbara Matthews, D-Tracy) would require the Insurance Commissioner to adopt regulations setting forth the minimum standards of training, experience, and skill that workers’ compensation claims adjusters must possess. Every insurer, third-party administrator, or self-insured employer would have to certify that they meet the minimum standard adopted by the commissioner. CMTA is in support.

AB 1483 (Keith Richman, R-Northridge) would require physicians who treat and evaluate injured workers to be certified by the Industrial Medical Council as a Qualified Workers’ Compensation Physician. It would also require the Administrative Director to establish a mandatory training program for persons in the Disability Evaluation Unit and a mandatory insurance claim administrator training program for primary handlers of workers’ compensation claims for injured workers. CMTA supports this bill.

AB 1578 (Vargas) would increase fraud penalties from a maximum of $50,000 to $150,000 on any person who makes a false or fraudulent statement, or takes certain other actions with respect to any claim under the workers’ compensation system . Beyond the penalties, the bill is little more than a spot bill that could be used as a vehicle for workers’ compensation reform. While CMTA believes that tripling of the penalty may be too severe, the bill is still being evaluated.

AB 1579 (David Cogdill, R-Modesto) would extend the prohibition of physician referrals for treatment or medical-legal purposes if the physician or his or her immediate family has a financial interest with the person or in the entity that receives the referral to outpatient surgery goods or services. This would close a loophole in the current law and reduce utilization and costs to employers. CMTA is in support.
In the Senate, five of the bills are authored by Republicans and four by Democrats. It is highly unusual for the minority party to have more bills than the majority party on a big issue like workers’ compensation. This may be a reflection of intense pressure from the business community to lower workers’ compensation costs.
SB 176 (Ross Johnson, R-Irvine) would require the workers’ compensation rating organizations to notify policy holders when the rating organization imposes a change in the policyholder's classification assignment. This would alert the policyholders earlier to changes in premiums. CMTA is still investigating how it would be done in order to insure that small employers understand the significance of the notice and what recourse is available.

SB 223 (Bob Margett, R-Arcadia) would add hospitals, clinics and physicians to current law that requires pharmacies that provide medicines and medical supplies, that are required to cure or relieve the effects of an injury covered by workers’ compensation, to provide the generic drug equivalent if available, unless the prescribing physician provides otherwise in writing. This would close a loophole that could save employers money and is sponsored by CMTA.

SB 228 (Richard Alarcon, D-Sun Valley) would require adoption of a medical fee schedule by the Administrative Director (AD) based on the Medicare payment system that could not exceed 120 percent of the fee prescribed for the same item; or 100 percent of the fee for the applicable Medi-Cal payment system for pharmacy services and drugs. The AD would be required to develop procedures to receive and review reports of medical billing fraud and report violations. Parties would be required to report claims believed to be fraudulent to the division. Employers would have to provide payment to physicians who have provided medical treatment to an injured employee within 45 days instead of 60, and the period in which to reject liability for a claim is reduced from 90 to 60 days. While discussion with the author's staff to clarify some of the provision is in progress, CMTA supports the bill.

SB 229 (John Burton, D-San Francisco) would cap workers’ compensation insurance premiums for small employers insured by the State Compensation Insurance Fund for a two year period if the employer is claim-free for five years and provides health care for their workers. "Small employer" and "health insurance" are not defined and CMTA is still evaluating the bill.

SB 354 (Jackie Speier, D-Hillsborough) would prohibit an insurer from insuring an employer for more than 15 one-hour visits to a chiropractor by an employee in connection with a claim unless the employee has obtained the approval of a physician for additional visits. The bill prohibits referrals for services to outpatients’ surgical centers and increases the penalty for an illegally uninsured employer from the maximum of $50,000 to $100,000. CMTA supports this bill.

SB 457 (Bruce McPherson, R-Santa Cruz) expresses legislative intent that the Division of Workers’ Compensation review the effectiveness of the self imposed 10 percent penalty for unreasonably delayed or refused payment in deterring unreasonably late or denied benefit payments. CMTA supports the concept.

SB 757 (Charles Poochigian, R-Fresno) would require the Commission on Safety and Health and Workers’ Compensation to conduct a survey and evaluation of existing medical treatment utilization standards in other states, at the national level, and in other medical benefit systems and prepare a report of its findings and recommendations for purposes of workers’ compensation utilization guidelines and protocols. This is sorely needed and CMTA supports this bill.

SB 899 (Poochigian) would add outpatient surgery to the list of medical goods or services for which it is unlawful for a physician to refer a person. CMTA supports this bill.

SB 1007 (Speier) would expand the definition of "common trade or business" to include specific types of manufacturers that would allow CMTA to provide a broader group workers’ compensation insurance plan for members to help reduce costs. CMTA is the sponsor of the bill.
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