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PD Benefits and Savings Main Focus of 2012 Legislative Session

Posted on 04 January 2012 by admin

By Greg Jones, Western Bureau Chief

California lawmakers return to Sacramento today for the start of a legislative session that observers say could see significant workers’ compensation legislation, possibly including a bill that will aim to cut system costs in order to pay for an increase in permanent disability benefits.

Bills that were put on hold or failed to advance last year, such as a measure targeting liens and directing the Division of Workers’ Compensation to develop a fee schedule based on the resource-based relative value system (RBRVS), are also expected to resurface this year. Similarly, some measures that were vetoed by Gov. Jerry Brown last year might also be modified just enough to sidestep legislative rules prohibiting the reintroduction of failed legislation in the second year of a two-year session.

But the biggest question as the gavel drops on the new session is whether stakeholders will be able to form a consensus on the broad reform that Brown referenced in last year’s veto messages. Brown vetoed measures passed last year that would have made retraining vouchers available to workers sooner and allow injured workers to collect temporary disability benefits for up to five years. In veto messages, he said it was important to ensure injured workers receive appropriate benefits, but he was “reluctant to enact piecemeal changes” and that reform of the workers’ comp system must “be addressed on a broad and balanced scale.” Labor has been interested in restoring permanent disability benefits that were slashed with adoption of a new Permanent Disability Rating Schedule in 2005, under Gov. Arnold Schwarzenegger’s administration. Brown and his administration have made it clear that savings must be identified as part of any proposal to increase benefits. Jason Schmelzer, a lobbyist for the California Coalition on Workers’ Compensation, said he thinks it is possible that legislation identifying savings to pay for benefit increases will come together this year. Schmelzer said he will be focusing on working with stakeholders to create acceptable legislation to fund an increase in permanent disability benefits. “There’s a general agreement that additional PD in exchange for systemic savings is a deal that could come together,” he said. “It’s just a matter of everybody getting on the same page.”

Mark Sektnan, president of the Association of California Insurance Companies, said he is also expecting to see a push for legislation to increase permanent disability benefits. However, he said labor has a full plate this year with pension reform and a fight against Ballot Initiative 1487, certified for the November election, which would prohibit political contributions from paycheck deductions. “The question is how much can labor ask for,” Sektnan said. “Is this the year they can push PD or do they need to wait a year? Labor has been quiet on it so I’m not sure what’s on their agenda.” The California Labor Federation did not return a call from WorkCompCentral for comment on its plans for the 2012 legislative session. Brad Chalk, president of the California Applicants’ Attorneys Association, said his organization plans to focus on the larger reform bill. He said CAAA doesn’t have plans to introduce any other bills, but would reconsider that position if the reform measure falls apart. Sektnan said if a plan to finance an increase in permanent disability benefits does come together, all of the elements will probably be included in a single bill that won’t be ready until late in the session. The large number of moving parts in such legislation would make a last-minute bill the only practical way to get it done, he said. Delaying a PD bill could give the Division of Workers’ Compensation more time to identify possible savings. Last October, Administrative Director Rosa Moran said she was forming nine committees to explore areas of potential savings in the state’s comp system. So far, the only area that’s seen much development involves payments to copy services. The division posted on its website a survey asking stakeholders to answer questions about what services are appropriate for a copy service to provide, and said it planned to follow it up with a second survey asking about appropriate charges. There are legislative deadlines to keep in mind for moving bills out of committees, but, as is demonstrated year after year, those deadlines are little more than suggestions. Even after deadlines pass to move a bill from policy committees or the legislative house of origin, a lawmaker can always strip language from a bill and replace it with new language, referred to around the Capitol as “gut-and-amend” legislation.

At the same time, Schmelzer said regulatory changes could be introduced at the division level to complement legislation. Outside of the possible permanent disability bill, Schmelzer said the California Coalition on Workers’ Compensation has no plans to carry any legislation of its own this year. It might, however, have to play defense on issues resurfacing from last year. Schmelzer said he has heard of plans to bring back language from AB 211, by Gil Cedillo, D-Los Angeles, which was vetoed by Brown on Oct. 9, 2011. The bill would have made a $6,000 supplemental job displacement voucher available to an injured worker when the treating physician determines the injury is permanent and stationary and there will be some degree of permanent disability. Legislative rules prohibit lawmakers from reintroducing in the same two-year session identical measures that are voted down on the floor or vetoed by the governor. Schmelzer said he anticipates the voucher bill and others will resurface. Another bill that might get a replay is AB 947, which would have allowed up to 240 weeks of temporary disability benefits for an injured worker recovering from surgery, instead of the current 104-week cap. Senate Bill 923 by Kevin DeLeon, D-Los Angeles, requiring the division to transition to a medical fee schedule that uses the resource-based relative value scale, is on the state Assembly’s “unfinished business” agenda for possible reconsideration today. The bill failed to clear the Assembly on the last day of the session last year. Steve Cattolica, vice president of governmental affairs for the California Society of Industrial Medicine and Surgery, said he does not expect the bill to actually come up for a vote again this year.

If it is not called for a reconsideration vote today, or it fails on reconsideration, the measure will be dead, said Cattolica, who opposed the measure last year. Senate Bill 863 by Ted Lieu, D-Torrance, called for a three-year window on filing liens for services provided before July 1, 2012, and an 18-month window after that date. Lieu withdrew his bill from consideration in 2011, but planned to reintroduce it again this year. The lien measure could also be swept into the broad reform package stakeholders are working on.

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