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Michael Grabell: California Workers’ Comp Law Gets Criticism, Praise at Senate Hearing

Some hearing witnesses say the 2012 reform law had unintended consequences.

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Image from Flickr via CWA Sara Steffens

By Michael Grabell
By arrangement with TomDispatch

An architect of California’s recent workers’ comp reform testified Wednesday that the law was being misused by insurers and that the system may need to be streamlined to make it fairer for injured workers.

In remarks before a senate committee, Angie Wei of the California Labor Federation said the state needs to crack down on insurers using the law as an excuse to deny medical care and eliminate some of the layers of medical review that give employers and insurers multiple chances to overrule workers’ doctors.

Several reforms of the state’s workers’ comp system over the years have given insurers more control over workers’ medical treatments, she said.

Insurers can steer workers to certain doctors by setting up medical provider networks. But if they don’t agree with these doctors’ recommendations, they can pick outside doctors to review them, Wei said. Then, under a system set up by the new law, if injured workers challenge the decisions of the outside doctors, the disputes are sent for a final review by an anonymous doctor picked by a state contractor. These reviews have upheld nearly all the insurers’ medical care denials.

During the hearing before the Senate Labor and Industrial Relations Committee, testimony about the law’s impact fell largely along expected lines.

“Why should the employers and insurers get another bite at the apple that increases friction and drives up costs and delays for everybody?” asked Wei, who negotiated the law with business representatives.

Wei’s comments came as part of the California senate’s first oversight hearing on the contentious 2012 workers’ comp law. The legislation sought to restore some benefits that had been severely cut years before and to speed up the system by moving decisions over medical disputes from judges to doctors. Costs would be controlled by reducing infighting and waste.

But earlier this month, ProPublica and NPR reported that some insurers were using the new law to reassess medical care that had been approved years before. In one case, a paralyzed warehouse manager had his home health care terminated, leaving him for hours at a time with no one to help him.

The investigation by ProPublica and NPR found that California is one of more than 30 states since 2003 that have cut benefits, created hurdles to getting medical care, or made it harder to qualify for workers’ comp.

During the hearing before the Senate Labor and Industrial Relations Committee, testimony about the law’s impact fell largely along expected lines. Insurer representatives said the law is working as intended. Employers complained that administrative costs are still too high. Workers’ lawyers said the new medical reviews were denying injured workers vital care.

Wei said that while nearly every other player in workers’ comp took a hit during the recent reform, insurers were left unscathed.

But some testimony highlighted unexpected ramifications of the law. Dr. Brendan Morley, a pain specialist who heads the California Society of Industrial Medicine and Surgery—an organization of physicians who treat injured workers—said doctors have become increasingly frustrated as their recommended treatments are rejected during the review process.

“Not all reform is good reform, and there can be unintended consequences,” he said, citing ProPublica and NPR’s investigation. “This is driving a lot of good physicians out of the workers’ comp system.”

State officials and other hearing witnesses defended the law as a necessary fix to a system that had become dysfunctional and expensive.

“It is not perfect, but it is certainly better than it was before,” said Christine Baker, director of the state’s Department of Industrial Relations, which oversees workers’ comp.

Last week, in response to our story, the workers’ comp agency warned insurance companies not to use the new law to deny approved home health care. It has also launched an audit of the insurer that removed the paralyzed worker’s aide.

Data presented at the hearing by the state and by the California Workers’ Compensation Institute, an insurance research group, showed that most medical care is getting approved. But when disputes reach the final stage, the new medical reviewers are upholding insurance company denials about 90 percent of the time.

Alex Swedlow of the research institute said that means insurers “got it right.” He added that most of the review requests are coming from a small number of physicians.

But Bernardo de la Torre, an attorney for injured workers, said the data distorts the picture because the overwhelming majority of claims involve minor injuries, which involve routine, inexpensive treatment. He said the claims that often end up in disputes involve the most serious—and typically more costly—injuries.

The data, he said, proves the new review process is merely a “rubber stamp” for insurer decisions.

Wei said that while nearly every other player in workers’ comp took a hit during the recent reform, insurers were left unscathed.

“I think it’s time,” she said, “to really zone in on the insurance company industry and to understand what it is that they’re doing to affect the plight of injured workers.”

NPR correspondent Howard Berkes contributed to this report.

Related coverage: Read about the demolition of workers’ compensation and how what your limbs are worth depends on where you work. For more, see the full investigation.

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