Calif. Comp Reform Battle Far From Over

New rules and procedures are in place, but suits threaten implementation

A year after the enactment of California’s changes to its workers’ compensation system, the legal battles they provoked are continuing, with few willing to guess when the issue will be completely resolved.

After emergency workers’ comp regulations were approved late last year, the main point of contention has been a permanent partial disability schedule established to provide an objective determination of the extent of an injured worker’s disability.

The disability schedule is being challenged by the California Applicants Attorneys Association, whose members represent injured workers, as well as by a new organization–Voters Injured at Work. Their opposition to the disability schedule is targeting the regulation as it moves through the official approval process to make it permanent, along with court challenges.

A suit filed by the worker groups against the state Division of Workers’ Compensation and Administrative Director Andrea Hoch in Superior Court in Sacramento County contends that the new schedule would drastically reduce benefits for injured workers and runs counter to the intent of the legislature by failing to include recommendations on which lawmakers based their approval.

The division argued that it has jurisdiction over the dispute, and in a tentative ruling issued on March 31, the court indicated it agreed and would dismiss the suit.

“Fortunately for California employers, the applicants attorneys’ latest effort to undermine reform has been rejected by the courts,” said Allan Zaremberg, president and CEO of the California Chamber of Commerce and co-chair of the Workers’ Compensation Action Network, a consortium of insurance and other business groups working in support of reform efforts.

Mr. Zaremberg called the ruling “an important milestone for reform,” but he said his group anticipates the CAAA will “continue its attacks on the workers’ compensation reforms overwhelmingly approved by the legislature last year.”

Susan Gard, a spokesperson for the division, said that the ruling upheld the division’s position that disputes should be brought to it first, and only then can the disputes be appealed to the court system. “You can’t sidestep the normal legal process,” she said. On April 15, the court made that ruling final.

One of the main obstacles facing challenges by the attorneys’ and worker groups, Ms. Gard noted, is that the opposition groups have not yet found an injured worker who will file a complaint challenging the regulations. “The bottom line is that there needs to be an injured worker who has been wronged,” she said. “Until then, I don’t know what they can do.”

However, the division might be facing another legal challenge to the Permanent Partial Disability Schedule from the California Labor Federation AFL-CIO, which has opposed the schedule during the administrative process.

Angie Wei, legislative director for the Federation, said that while it has not filed suit against the schedule, “we are prepared to litigate on the permanent disability regulations should they be adopted in their current format.”

The CAAA also filed suit against another provision of the reform legislation that established medical provider networks to treat workers’ comp claimants. That lawsuit was also rejected, this time because there was no specific injured worker who filed a complaint against the system.

However, the expectation is that once a worker adversely affected by the provider networks is found, the lawsuit will be back. “As soon as they can find an aggrieved party, I’m sure they’ll refile,” said Jerry Azevedo, representing the Workers’ Compensation Action Network.

Nicole Mahrt, a spokesperson for the American Insurance Association in Sacramento, echoed Mr. Azevedo’s sentiments. “They’re waiting for someone to lose access to their doctor,” she said.

Mark Gerlach, a consultant to the CAAA, noted that the organization will continue to work toward the removal of the disability schedule through the administrative process but has not given up on taking the division to court if the need arises.

If Ms. Hoch does not withdraw the schedule, he said that both CAAA and Voters Injured at Work “will continue to take all necessary action to assure that a fair and equitable rating schedule that complies with the law is adopted.”

In the end, Ms. Gard said that the division believes that the schedule will be upheld in court. She decried the lawsuits for taking up valuable resources.

“Having to deal with these types of lawsuits just takes away energy and effort” from the division’s main responsibilities of administering and overseeing the workers’ comp system, she said.

Should the CAAA be required to navigate the traditional appeal process by the courts, Ms. Gard said she could not estimate how long the process would take before the schedule issue is resolved.

Under the system in place before the legislative change, she said that the typical length of time for a dispute would be months, or possibly even years as both sides provided their own medical specialists to argue about the extent of an injury.

The new schedule was meant to reduce the amount of time a dispute would take by creating an objective standard by which a disability could be measured, but Ms. Gard could not estimate how long a dispute would take to move through the appeals process.

That uncertainty was shared by others as well. Mr. Azevedo said that he had “no idea” how long the dispute could go on, and that while the Workers’ Compensation Action Network would continue to serve as an educational resource on the issue, its resources were well below the war chest held by the California Applicants Attorneys Association, which he believes is in the $1 million range. The CAAA did not respond to inquiries concerning the depth of their resources to combat the reform law.

The AIA’s Ms. Mahrt said that legal challenges to the reforms come as no surprise given that other revision efforts in years past have been undermined by lawsuits. However, she added that the uncertainty that lawsuits create–especially since the final outcome is unpredictable–can by themselves undermine the reforms.

When asked how long she saw the battle going on until it is resolved, she responded: “Who knows? That’s the problem.”