The California Workers' Compensation & Risk Conference inDana Point opened with a session featuring employers andstakeholders in the industry weighing in on the current state ofCalifornia Workers' Compensation and future outlook for 2015. Panelists were moderator Mark Walls, VP Communications &Strategic Analysis at Safety National, William Zachry, VP of RiskManagement at Safeway, Tim East, Director of Risk Management at TheWalt Disney Company, Bill Mudge, President & CEO at WCIRBCalifornia, Kurt Leisure, VP of Risk Services/Asset Protection atthe Cheesecake Factory, Seeta Ambati , Esq., (defense attorney)Partner at Laughlin, Falbo, Levy & Moresi, LLP, and JamesButler, Esq., (plaintiff attorney) Attorney at Law at Butler ViadroLLP.

The panel began with a look at where California Workers'Compensation is today:

• California holds a quarter of the nation's workers'compensation business.
• To date, 80 new carriers have entered the California marketsince 2004.
• California is among the top three states in terms of averagemedical costs per claim.
• California has experienced double-digit increases in premiumsover the last two years.

Cost drivers to the California Workers' Compensation systeminclude:

• A high frequency of claims handling in the state relative topayroll, with Los Angeles County having the most claims in theregion.
• A multitude of expensive permanent disability claims thatinclude attorney involvement.
• An increased frequency of opioid prescriptions, which hasdoubled.

SB 863 is California's answer to addressing these costs,however, it is too early to provide tangible data that supports ifthe reform has been successful. Some early data shows that costsrelated to liens are down but costs related to independent medicalreviews (IMR) are significantly higher than expected.

Panelists were split as to whether the SB 863 reforms have beensuccessful. Some say that, although too soon to judge, they areseeing the following positive indications that it is working:

• Generally, rate increases have been cut in half due to coststaking a downward trend.
• The highest costs are coming from old medical claims, ratherthan recent claims.
• Because this is the first time that California has experiencedcost decline in quite some time, panelists thought that the costcuts may make the state appear more employer friendly and it willencourage companies to return.

Panelists noted that there are still some kinks to work out inthe reform. One stated that the Independent Medical Review (IMR)process, which has been designed to take non-medical professionalsout of the medical decision-making process, is working well. On theother hand, the opioid decision-making process in place iscurrently not solving the costly opioid problem. Overall, peopleare still learning the new process, but they think that outcomeswill be positive over time. They think that the measures are inplace to help get the injured worker healthy and back to work. Moston the panel felt that that peer-to-peer review is the rightapproach and the system is better than it was.