What’s New In Workers’ Compensation?
SB899 made changes to indemnity benefits, how disability is determined and
medical treatment and payments
By William E. Malecki
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Malecki |
Workers’ compensation affects every member of the bar in some manner.
Although most lawyers do not represent injured workers or their employers, 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 that 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 or 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. It amounts to two-thirds of the average
weekly earnings during the period of disability (§4653) and is subject to a
statutory maximum (currently $728 per week) which varies according to the date
of injury (§4453).
Permanent disability indemnity is paid when the injury “impairs a worker’s
earning capacity, or a worker’s bodily function, or . . . creates a handicap
in the open labor market” (Hanna, Calif. Law of Emp. Inj. 8.01,
Rev. Ed. 1999). It may be “total” or “partial,” is assessed
according to a schedule that takes into account the nature of the injury, the
employee’s occupation and the employee’s age and weeks of employment,
and it is subject to a statutory maximum that varies according to the date of
injury and the percentage of disability. Payment currently is 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).
Senate Bill 899
On April 19, 2002, Senate Bill 899 was enacted into law. Its major provisions
can be roughly divided into four major categories: 1) indemnity benefits and
vocational rehabilitation; 2) determination of permanent disability; 3) medical
treatment and payments to providers; and 4) medical-legal procedure and penalties.
Division 4 of the Labor Code, consisting of §§3200 - 6000, contains the majority
of the provisions related to workers’ compensation. Most of the significant
additions or changes to the law in SB 899 affect these sections. The following
is not an exhaustive list, but rather highlights the provisions of SB 899 likely
to be of most practical interest and relevance to all members of the bar.
Indemnity benefits and vocational rehabilitation
“Indemnity” benefits are generally understood to be those workers’
compensation benefits that provide monetary payments to an injured employee,
as distinguished from medical treatment benefits for which payments are generally
made directly to the employee’s health care provider.
Since 1979, there has been no limit on aggregate temporary total disability
payments for a single injury. However, temporary disability will now be
limited to no more than 104 compensable weeks within a period of two years from
the beginning of temporary disability payments, except if an employee suffers
from the following conditions: hepatitis B or C, amputations, severe burns,
HIV, high-velocity or chemical burn eye injuries, chemical burns to the eyes,
pulmonary fibrosis and chronic lung disease (§4656).
The maximum temporary total disability (TTD) rate will increase to $840 for
injuries occurring on or after Jan. 1, 2005. The rate is indexed to the state
average weekly wage thereafter (§4453 (8-10)). The maximum permanent partial
disability (PPD) rate is increased to $220 for disability from 1 percent to
69 percent and $270 per week for disability from 70 percent to 99 percent, and
then will increase to $230 and $270 per week, respectively, for injuries occurring
on or after Jan. 1, 2006 (§4453(b)(6-7)).
For injuries on or after the adoption of the revised rating schedule, the eligible
payable weeks will decrease for less seriously injured employees and increase
for those more seriously injured. For larger employers (more than 50 employees),
if, within 60 days of a disability becoming permanent and stationary, an employer
does not offer the injured employee regular, modified or alternative work for
12 months, each disability payment remaining to be paid shall be increased.
Conversely, if the employer offers such work, and regardless of whether the
injured employee accepts or rejects the offer, each disability payment remaining
to be paid shall be reduced. An employee who voluntarily terminates employment
shall not be eligible for payment under this provision. This paragraph shall
not apply to an employer that employs fewer than 50 employees (§4658(d)(2-3)).
Permanent disability
Previously, the permanent disability indemnity primarily was concerned with
the “diminished capacity of such injured employee to compete in an open
labor market” (§4660). Under SB899, that definition has been modified
so that the relevant consideration is now “the employee’s diminished
future earning capacity” (§4660). The prior schedule will be replaced
with a system that incorporates the “descriptions and measurements of
physical impairments and the corresponding percentages of impairments published
in the American Medical Association (AMA) Guides to the Evaluation of Permanent
Impairment (5th Edition)” (§4660(b)(1)). Also, “an employee’s
diminished future earning capacity shall be a numeric formula based on empirical
data and findings that aggregate the average percentage of long-term loss of
income resulting from each type of injury for similarly situated employees.”
SB899 also provides that “the schedule shall promote consistency, uniformity,
and objectivity . . . and that it shall apply prospectively and shall apply
to and govern only those permanent disabilities that result from compensable
injuries received or occurring on and after the effective date of the adoption
of the schedule” (§4660(b)(1)).
Until the adoption of SB899, the Labor Code allowed for the apportionment of
an employee’s permanent disability in the case of “aggravation of
pre-existing disease” (§4663) or if the employee was suffering from a
“previous permanent disability or physical impairment” (§4750).
These sections were repealed and replaced with a new version of §4663. It holds
that apportionment of permanent disability shall be based on causation (§4663(a)),
that any physician who prepares a report on permanent disability shall address
the issue of causation of the permanent disability, and that in order for a
physician’s report to be considered complete, it must include an apportionment
determination (§4663(b)). A physician shall make an apportionment determination
by finding what approximate percentage of the permanent disability is the direct
result of the injury and what approximate percentage of the permanent disability
was caused by other factors. If the physician is unable to include an apportionment
determination, he or she shall state the specific reasons why no determination
could be made.
New §4664 holds that the employer shall only be liable for the percentage of
permanent disability directly caused by the injury. If the employee has received
a prior award of permanent disability, it shall be conclusively presumed that
the disability exists at the time of any subsequent industrial injury. This
presumption affects the burden of proof (§4664(b)). The accumulation of all
permanent disability awards issued for any one region of the body shall not
exceed 100 percent over the employee’s lifetime unless the employee’s
injury or illness is conclusively presumed to be total, pursuant to §4662 (§4664(c)).
Medical treatment and payments to providers
to the enactment of SB899, the employer or their insurer was required to provide
all medical services “reasonably required to cure or relieve the injured
worker from the effects of the injury” (§4600). This is still the law
except that what is “reasonably required” is now defined specifically
as “treatment that is based upon the guidelines adopted by the administrative
director pursuant to §5307.27 or, prior to the adoption of those guidelines,
the updated American College of Occupational and Environmental Medicine’s
Practice Guidelines” (§4600(b)).
SB899 establishes that on or after Jan. 1, 2005, an insurer or employer may
establish or modify a medical provider network for the provision of medical
treatment to injured employees. Some of the requirements for the medical network
are: it shall include both physicians primarily engaged in the treatment of
occupational injuries and physicians primarily engaged in the treatment of non-occupational
injuries; it must have enough providers sufficient to enable treatment for injuries
or conditions to be provided in a timely manner; and it must be readily available.
Also, physician compensation may not be structured in order to achieve the goal
of reducing, delaying or denying medical treatment or restricting access to
medical treatment (§4616).
Provided that “the employer or insurer meets the requirements of this
section, the administrative director may not withhold approval or disapprove
an employer’s or insurer’s medical provider network based solely
on the selection of providers . . . [and] shall have the exclusive right to
determine the members of their network” (§4616 (d)). Other provisions
indicate that “all treatment provided shall be provided in accordance
with the medical treatment utilization schedule established pursuant to §5307.27
or the American College of Occupational Medicine’s Practice Guidelines,
as appropriate (§4616(e)). No person other than a licensed physician who is
competent to evaluate the specific clinical issues involved in the medical treatment
services, when these services are within the scope of the physician’s
practice, may modify, delay or deny requests for authorization of medical treatment
(§4616(f)).
Current law that provides that for injuries occurring on and after Jan. 1,
2004, an employee shall be entitled to no more than 24 chiropractic and 24 physical
therapy visits per industrial injury would continue, but in addition, an employee
shall be entitled to no more than 24 occupational therapy visits per industrial
injury (§4605(d) (1)). Fees payable to medical providers will be limited to
the amounts paid for these services to the reasonable maximum amounts in the
official medical fee schedule in effect on the date of service (§4603.2(b)(1)).
Medical-legal procedure, penalties
Once the employee has filed a claim form, the employer shall authorize treatment
for the alleged injury and continue to provide treatment, up to a maximum of
$10,000, until the date that liability for the claim is accepted or rejected
(§5402(c)).
Present law governing how an employee not represented by an attorney may obtain
an evaluation from a physician selected from a randomly selected panel is not
substantially changed (§4062.1). However, when an employee is represented by
an attorney, rather than each party selecting its own evaluator, the law, effective
Jan. 1, 2005, will require the selection of a mutually agreeable medical evaluator
(§4062.2). Also, the presumption of correctness of the treating physician (§4062.9)
is now completely eliminated.
Present law provides that when payment has been unreasonably delayed or refused,
the amount of the payment unreasonably delayed or refused shall be increased
up to 25 percent or $10,000, whichever is less. These new provisions apply to
all injuries, without regard to the date of the injury. The new law also allows
an employer or insurer to pay a self-imposed penalty in lieu of the penalty
that may be awarded by the appeals board if the delay is rectified within 90
days of the delay.
The complete text of SB899 can be accessed at www.leginfo.ca.gov. SB899 is
integrated into the text of the Insurance and Labor Codes in Workers’
Compensation Laws of California, 2004 Supplement, Matthew Bender and Co. available
through LexisNexis. The text may also be ordered from the Legislative Bill Room,
712 R Street, Sacramento, CA, 95814 or at 916-445-2323.
The Workers’ Compensation Section of the State Bar of California
publishes the Workers’ Compensation Quarterly and offers classes at its
own Spring and Summer Educational Conference as well as the State Bar Annual
Meeting and the State Bar Spring and Fall Education Institutes. The section
also has a Web page accessible through the Sate Bar Web site at calbar.ca.gov.
Other excellent resources include the California Applicant’s Attorney’s
Association (“CAAA”) and the California Workers’ Compensation
Defense Attorney’s Association. They can be accessed at www.caaa.org and
www.cwcdaa.org.
On the publication side, Hanna, Calif. Law of Emp. Inj., Rev. Ed. 2002; Herlick,
California Workers’ Compensation Law, Rev Ed. 2002 and California Workers’
Compensation Practice, CEB, Rev. Ed. 2002 are very informative resources.
William E. Malecki is an attorney with State Compensation Insurance
Fund, a certified specialist in workers’ compensation law and a member
of the State Bar Workers’ Compensation Section.
Certification
- This self-study activity has been approved for Minimum Continuing Legal
Education credit by the State Bar of California in the amount of one hour
of legal ethics.
- The State Bar of California certifies that this activity conforms to the
standards for approved education activities prescribed by the rules and regulations
of the State Bar of California governing minimum continuing legal education.
Self-assessment test
Answer the following true-false statements after reading the MCLE article on
Rule of Professional Conduct 2-100. 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 415-538-2504.
- The benefits payable due to an injury or illness include both compensation
and medical benefits.
- Permanent disability benefits are only paid when an injured employee is
totally disabled.
- If the injury causes death, benefits may be recoverable by the deceased
employee’s dependents.
- Under SB899, temporary disability benefits will be limited to 52 weeks
of payments.
- For injuries on or after the adoption of the revised rating schedule, the
eligible payable weeks will increase for all injured employees.
- Under SB899, that definition has been modified so that the relevant consideration
is now “the employee’s diminished future earning capacity.”
- The new permanent disability rating schedule will be based on the guidelines
of the California Occupational Physician’s Association.
- SB899 also provides that the permanent disability rating schedule shall
apply prospectively and shall apply to and govern only those permanent disabilities
that result from compensable injuries received or occurring on and after the
effective date of the adoption of the schedule.
- Formerly, the Labor Code allowed for the apportionment of an employee’s
permanent disability in the case of aggravation of pre-existing disease or
if the employee was suffering from a previous permanent disability or physical
impairment.
- New §4663 states that apportionment of permanent disability shall be based
on causation and that any physician who prepares a report on permanent disability
shall address the issue of causation of the permanent disability.
- Any physician who prepares a report on permanent disability may address
the issue of causation if requested by either party.
- A physician shall make an apportionment determination by finding what approximate
percentage of the permanent disability is the direct result of the injury
and what approximate percentage of the permanent disability was caused by
other factors.
- What is “reasonably required” treatment is now defined specifically
as “treatment that is based upon the guidelines adopted by the administrative
director pursuant to §5307.27 or, prior to the adoption of those guidelines,
the updated American College of Occupational and Environmental Medicine’s
Practice Guidelines.”
- SB899 establishes that on or after Jan. 1, 2005, an insurer or employer
may establish or modify a medical provider network for the provision of medical
treatment to injured employees.
- One requirement for the medical network is that it shall include only physicians
primarily engaged in the treatment of occupational injuries.
- Also, physician compensation may not be structured in order to achieve
the goal of reducing, delaying or denying medical treatment or restricting
access to medical treatment.
- The administrative director may withhold approval or disapprove an employer’s
or insurer’s medical provider network based solely on the selection
of providers.
- A registered nurse who has received training and is certified in utilization
review may modify, delay or deny requests for authorization of medical treatment.
- Once the employee has filed a claim form, the employer shall provide treatment
for an alleged injury and continue to provide treatment, up to a maximum of
$25,000, even if liability for the claim is accepted or rejected (§5402(c)).
- Effective June 1, 2004, a new version of §5814 provides that when the payment
of compensation has been unreasonably delayed or refused, the amount of the
payment unreasonably delayed or refused shall be increased up to 25 percent
or $10,000, whichever is less.
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