What's New In Workers' Compensation

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New legislation and programs increase benefits, change procedures and streamline some payment methods

By WILLIAM E. MALECKI

Workers' compensation affects every member of the bar in some manner. Although many lawyers do not represent injured workers, almost every lawyer is either an employer responsible for providing workers' compensation benefits to her employees or an employee eligible to receive benefits should he become injured.

When a person is injured at work, or suffers an injury or illness which is deemed to be work-related, in most cases, the employee's sole remedy will be recovery of workers' compensation benefits. (Labor Code §3600). All references are to the Labor Code unless otherwise indicated.

Generally, for a person's injury or illness to come under the provisions of workers' compensation law, the injury must both aris[e] out of and occur in the course of employment, ("AOE/COE"), that is, the employee must be "performing service growing out of and incidental to his or her employment and be acting within the course of his or her employment." (§3600(2)) and the injury must be proximately caused by the employment. (§3600(3)).

Overview of benefits

The benefits payable due to an injury or illness include both compensation and medical benefits. Compensation benefits include temporary disability indemnity (§4650(a)), permanent disability indemnity (§4650(a)), and vocational rehabilitation benefits (§4538). Medical benefits consist of "medical, surgical, chiropractic, acupuncture and hospital treatment" (§4600).

Temporary disability indemnity is paid when an employee is unable to work due to the work-related injury or illness, is paid at a rate of two-thirds of the average weekly earnings during the period of such disability (§4653) and is subject to a statutory maximum, currently $490 per week, which varies according to the date of injury. (§4453).

Permanent disability indemnity is paid when the injury "impairs a workers' earning capacity, or a workers' bodily function, or . . . creates a handicap in the open labor market." (Hanna, Calif. Law of Emp. Inj. §8.01, Rev. Ed. 1999), may either be "total" or "partial," is assessed according to a schedule which takes into account the nature of the injury, the employee's occupation and the employee's age and is also subject to a statutory maximum, which varies according to the date of injury and the percentage of disability and is currently as high as $230 per week. (§4659).

Vocational rehabilitation benefits are provided when the employee is determined to be incapable of "engaging in his or her usual and customary occupation or the position he or she was engaged in at the time of injury," (§4638(a)(1)) and when "the employee can be reasonably expected to return to suitable gainful employment through the provision of vocational rehabilitation services." (§4638(a)(2)). Benefits include a weekly maintenance allowance, necessary additional living expenses, and costs of the program itself including counseling fees, training costs, tuition, etc. up to a maximum of $16,000 total (§139.5(c)). If the injury causes death, benefits (§4700) may be recoverable by the deceased employee's dependents (§3501).

Assembly Bill 749

On Feb. 15, 2002, Gov. Davis signed Assembly Bill 749 into law. Unlike previous workers' compensation legislation which was labeled "workers' comp reform," AB 749 was not born of such lofty pretensions. Rather it was the end result of a three-year process which saw two previous workers' compensation bills vetoed by Davis. The major provisions of AB 749 can be roughly divided into three categories: benefit increases, procedural changes and new programs.

Division 4 of the Labor Code, consisting of §§3200-6000, contain the majority of the provisions related to workers' compensation. Most of the significant additions or changes to the law in AB 749 affect these sections. The following is not an exhaustive list of every provision of AB 749, but rather highlights the provisions thought to be of greatest interest and relevance to all members of the bar.

Benefit increases

The maximum temporary total disability ("TTD") rate is increased to $602 for injuries occurring on or after Jan. 1, 2003, $728 for injuries occurring on or after Jan. 1, 2004; $840 for injuries occurring on or after Jan. 1, 2005, and indexed to the state average weekly wage thereafter. (§4453 (8-10)).

The maximum permanent partial disability ("PPD") rate is increased from $170 to $185 per week for disability from 1 percent to 69 percent and remains at $230 per week for disability from 70 percent to 99 percent for injuries occurring on or after Jan. 1, 2003. The maximums increase to $200 and $250 per week, respectively, for injuries occurring on or after Jan. 1, 2004; $220 and $270 per week, respectively, for injuries occurring on or after Jan. 1, 2005, and $230 and $270 per week, respectively, for injuries occurring on or after Jan.1, 2006. (§4453(b)(6-7).

The weeks payable for percentage of PPD also increase slightly for injuries with PPD percentage between 1 percent and 19 percent. (§4658). In addition, the maximum weekly rate payable for the life pension paid to employees with PPD between 70 percent and 99 percent increases based on an index formula from the current maximum of $38.65 up to a ceiling of $77.31 for injuries on or after Jan. 1, 2006. (§4659).

Maximum death benefits payable increase for injuries occurring on or after Jan. 1, 2006, resulting in death increases from a range of $125,000 for a single total dependent to $160,000 for three or more total dependents to a range of $250,000 to $320,000.

Also, the presumption of dependency for minor children is expanded to include disabled children of any age (§3501(a)); adds a provision for the total dependency of surviving parents if there are no other dependents (§3501(c)); and provides a $250,000 benefit payable to the deceased employee's estate if there are no dependents (§4702(a)(6)).

Procedural changes

Workers' compensation administrative law judges ("WCALJs") appointed after Jan. 1, 2003, must be admitted to the bar five years prior to appointment and must have experience in workers' compensation law. (§123.5(b)). Also, all WCALJs will be subject to the jurisdiction of the Commission on Judicial Performance (§123.5(b)) and be required to adhere to the Code of Judicial Ethics (§123.6(a)).

The requirement that a claim form be provided within one working day of receiving notice or knowledge of an injury . . . which results in "lost time beyond the date of injury or which results in medical treatment beyond first aid" has been narrowed to "lost time beyond the employee's work shift at the time of injury or which results in medical treatment beyond first aid." (§5401(a)).

Also, the definition of "first aid" has been expanded from simply "any one-time treatment of minor scratches, cuts, burns, splinters, or other minor industrial injury" to add "any one-time treatment and any followup visit for the purpose of observation of minor scratches, cuts, burns, splinters, or other minor industrial injury" (§5401(a)).

Under current law, when an injured employee has chosen a physician for treatment of a work-related injury, the opinions of that physician, in most cases, on disputed issues such as degree of permanent disability and need for further medical treatment issues enjoy a rebuttable presumption of correctness. For injuries on or after Jan. 1, 2003, this presumption has been narrowed and will now only be applied where the employee designated that physician prior to the work related injury. (§4062.9(a)).

Under existing law, an injured employee who selects a Qualified Medical Evaluator ("QME") from a three-physician panel while unrepresented, may not select a new QME if later represented by counsel. AB 749 will now allow such employees to select an additional QME and, if so, one for the employer or insurer as well." (§4061(e)).

Presently, certain issues, including entitlement to temporary disability indemnity payments and provision of medical treatment to injured employees, may be heard by the Workers' Compensation Appeals Board on an urgent basis as an "expedited hearing." (§5502(b)). Excluded from such hearings is the threshold issue of whether the injury arose out of and occurred in the course of employment. ("AOE/COE.") Kearney v. Workers' Comp. Appeals Bd., 64 Cal. Comp. Cases 101 (Writ Denied, 1998). A new priority calendar for such disputes allows that these cases will be set for a pre-trial status conference within 30 days of the request and that a hearing, if needed, will be conducted expeditiously. (§5502(c)).

Of interest to medical treatment providers and medical-legal evaluators is new Labor Code §4903.5. Currently, under §4903, there is no express limitation on the right of a provider to file and adjudicate a lien for payment of medical expenses. Under the new section there is now a limitation that such liens may not be filed later than six months from the date on which a final award or settlement approval is issued in the case, unless the lien claimant did not have knowledge that the injury was being claimed as work-related.

The law regarding the provision of vocational rehabilitation to an injured employee has been amended to allow employees represented by counsel to "settle the employee's prospective right to vocational rehabilitation with a one-time payment to the employee, not to exceed $10,000." (§4646(b)).

"When payment of compensation has been unreasonably delayed or refused . . . the amount of the . . . award shall be increased by 10 percent." (§4646(b)). An addition to this provision, codifying the decision of the California Supreme Court in Christian v. Workers' Comp. Appeals Bd., 15 Cal. 4th 505 (1997), now specifies "multiple increases shall not be awarded for repeated delays in making a series of payments due for the same type of specie or benefit unless there has been a legally significant event between the delay and the subsequent delay in payments . . ."

New programs

A new return to work program is created which will provide incentives to employers who return employees to modified or alternative work. (§§139.47-139.49).

The use of generic pharmaceuticals is now required unless the prescribing physician indicates that use of a specific brand is medically necessary (§4600.1) and employers and insurers may contract with pharmacies to provide medication to injured employees (§4600.2).

A new position, the Court Admini-strator (CA) of the Workers' Compen-sation Appeals Board, has been created. (§138.1). Among the various duties of the CA will be promoting "uniformity," "expedition of proceedings," oversight of WCALJs and managing WCAB trial proceedings. (§127.5).

The Director of the Department of Industrial Relations is mandated to establish an "insurance loss control services coordinator" whose primary job it will be to "provide information to employers about the availability of loss control consultation services."

A new program allowing employers in the aerospace and timber industries to create an alternative dispute resolution system has been added (§3201.7). Similar to that in place for the construction industry, through collective bargaining agreement, these employers and their unions may create a "carve out" from the regular workers' compensation procedures.

Employers and insurers responsible for providing disability indemnity payments may now make these payments by electronic deposit if the employee received paychecks electronically or voluntarily consents, unless the employee objects in writing. (§4651(a)). When payments are made by check, the employer or insurer is not to be penalized if the bank delays negotiation of the check due to their own laws or regulations (§4651(b)) so long as the check is drafted to be immediately negotiable. (§4651(a)).

William E. Malecki is an attorney with State Compensation Insurance Fund, a certified specialist in workers' compensation law and a member of the Workers' Compensation Section's executive committee.

ASSESSMENT TEST

Answer the following questions after reading the MCLE article on changes in workers' compensation law. Use the answer form provided to send the test, along with a $20 processing fee, to the State Bar. If you do not receive your certificate within four weeks, call Ibrahim Bah at 415/538-2028.

1. When a person is injured at work, or suffers an injury or illness which is deemed to be work-related, in most cases the employee's sole remedy will be recovery of workers' compensation benefits.
2. Generally, for a person's injury or illness to come under the provisions of workers' compensation law, the injury must either aris[e] out of the employment or occur in the course of employment.
3. Medical benefits consist solely of medical, surgical and hospital treatment.
4. Temporary disability indemnity is paid when an employee is unable to work due to the work-related injury or illness, is paid at a rate of two-thirds of the average weekly earnings during the period of such disability and is subject to a statutory maximum, currently $490 per week.
5. Permanent disability indemnity is assessed according to a schedule which takes into account the nature of the injury, the employee's occupation and the employee's age and is also subject to a statutory maximum, which varies according to the date of injury and the percentage of disability and is currently as high as $230 per week.
6. Vocational rehabilitation benefits are provided when the employee is determined to be incapable of "engaging in his or her usual and customary occupation or the position he or she was engaged in at the time of injury" (§4638(a)(1)) and when "the employee can be reasonably expected to return to suitable gainful employment through the provision of vocational rehabilitation services."
7. The majority of the provisions in AB 749 are contained in the Insurance Code.
8. The maximum temporary total disability ("TTD") rate is increased to $1040 for injuries occurring on or after Jan. 1, 2005.
9. The maximum permanent partial disability ("PPD") rate is increased from $170 to $185 per week for disability from 1 percent to 69 percent and remains at $230 per week for disability from 70 percent to 99 percent injuries for injuries occurring on or after Jan. 1, 2003. The maximums increase to $200 and $250 per week, respectively for injuries occurring on or after Jan. 1, 2004; $220 and $270 per week, respectively, for injuries occurring on or after Jan. 1, 2005, and $230 and $270 per week, respectively, for injuries occurring on or after Jan. 1, 2006.
10. Maximum death benefits payable increase for injuries occurring on or after Jan. 1, 2003, resulting in death increases from a range of $125,000 for a single total dependent to $160,000 for three or more total dependents to a range of $250,000 to $320,000.
11. Workers' compensation administrative law judges ("WCALJs") appointed after Jan. 1, 2003, must be admitted to the bar five years prior to appointment and must have experience in workers' compensation law.
12. The definition of "first aid" has been expanded from simply "any one time treatment of minor scratches, cuts, burns, splinters, or other minor industrial injury" to add "any one time treatment and any followup visit for the purpose of observation of minor scratches, cuts, burns, splinters, or other minor industrial injury."
13. A new priority calendar at the Workers' Compensation Appeals Board will allow for pre-trial status conference within 30 days of the request.
14. New Labor Code §4903.5 provides that there will now be limitation that medical liens may not be filed later than three months from the date on which a final award or settlement approval is issued in the case, unless the lien claimant did not have knowledge that the injury was being claimed as work-related.
15. The law regarding the provision of vocational rehabilitation to an injured employee has been amended to allow employees represented by counsel to "settle the employee's prospective right to vocational rehabilitation with a one-time payment to the employee, not to exceed $1,000."
16. The use of generic pharmaceuticals is now prohibited unless the prescribing physician indicates that use of a generic brand would not be harmful to the patient.
17. A new position, the Court Administrator of the Workers' Compensation Appeals Board, has been created to promote "uniformity," "expedition of proceedings," oversight of WCALJs and to manage WCAB trial proceedings.
18. The Director of the Department of Industrial Relations is mandated to establish an "insurance loss control services coordinator" whose primary job will be to "provide information to employers about the availability of loss control consultation services."
19. A new program allowing employers in the automobile and transportation industries to create an alternative dispute resolution system has been added, similar to that in place for the construction industry, through collective bargaining agreements.
20. Employers and insurers responsible for providing disability indemnity payments may only make such payments by a check drafted to be immediately negotiable.