Important Disclaimer
December 2004
Workers Compensation Reform
Prepared By: Melissa C. Marsh
On April 19, 2004, Governor Schwarzenegger signed into law various workers' compensation reforms. This article seeks to provide a brief overview of the most significant changes. Unlike most states, California's workers' compensation system covers all industries and all workers, including employees of small businesses. Although the reform package does not change who is covered under the workers' compensation system, it does change what injuries are covered and the generosity of benefits.
Employers May Select Treating Physicians For Workplace Injuries.
California's Domestic Partner's Rights and Responsibilities Act does not affect federal laws. Since federal law does not recognize the relationships of same-sex couples, those registered domestic partners do not receive "spousal" parity under federal tax and employment laws.
Under the old law an injured worker was allowed to see his or her own doctor to treat a workplace related injury. The doctor selected by the employee was then allowed to determine whether or not the injury qualified for Workers' Compensation benefits. Under the new reforms, the employer may select the treating physician(s) for employment related workplace injuries. Employees can predesignate a treating physician only if the employer offers a group health plan or group health insurance for medical conditions unrelated to work. If the employer offers a health insurance plan the employee may predesignate his or her primary care physician (and/or the doctor's medical group) by giving the employer written notice. The written notice must be provided to the employer prior to any claimed injury and must contain: (1) the date; (2) the employee's name; (3) a statement to the effect that if you are injured on the job you designate the following doctor (name, medical group, address, and telephone number) to provide medical care; and (4) the employee's signature. If the employer does not offer a group health insurance plan, the employee does not have the right to predesignate a treating physician.
Effective January 1, 2005, employers and insurers can establish a state-approved HMO-like "Medical Provider Network" (MPN) to treat their employees for workplace related injuries. Once the MPN is approved by the Administrative Director for the Division of Workers' Compensation, employers may require their employees to choose their treating physician from the employer's MPN. Under the newly enacted reforms, the treating physician will control all decisions regarding the employee's medical treatment needs, when and if an injured worker may return to work, and under what conditions. The treating physician also determines how long an injured worker will be off the job, on temporary disability, the percentage of permanent disability, if any, and whether the injured worker will require vocational retraining.
Employers Must Immediately Authorize Medical Treatment And Pay Up To $10,000.
Under the old law, employers had up to 90 days to approve or deny a workers' compensation claim. During that time period, an injured worker faced uncertainty as to whether s/he would be reimbursed for out-of-pocket medical costs. The new law requires California employers allow an injured worker to see a doctor, without charge, within one day of the employee's claim of a workplace injury. Thereafter, the employer must provide up to $10,000 of such medical treatment until the injured worker's claim is either accepted or denied by the employer or insurance company. It is therefore imperative that employers act quickly to investigate claims to identify those claims that can be legitimately denied.
Permanent Disability Benefits.
Under the new law, the injured employee must now prove what percentage, if any, of any permanent disability was caused by their job activities. Employers will now only have to pay only for the percentage of the injury that was caused by work activities (versus off-the-job activities). If the employer sets up a MPN, the employer's designated doctors will now make that determination which must be based on the American Medical Association guidelines which helps to ensure evaluations are fair and consistent. If faced with a workers' compensation claim, the employer should require the injured employee to disclose all previous permanent disabilities and impairments. In addition, the employer would be well advised to investigate the injured employee's off-the-job activities as they may have contributed to his or her workplace injury.
Temporary Disability Benefits Limited to 24 Months.
Under the workers' compensation system, injured workers receive temporary disability benefits to replace income lost due to the workers' workplace related injury. Albeit some exceptions, the new workers' compensation reforms create a two-year limit on the receipt of temporary disability benefits. Excluded from this two-year limit are severe eye injuries, severe burns, amputations, chemical burns to the eyes, HIV, hepatitis B or C, pulmonary fibrosis, or chronic lung disease.
Vocational Rehabilitation Program.
As of January 1, 2004 injured workers will no longer be entitled to receive vocational rehabilitation benefits (education and retraining for workers who, due to their injuries, are unable to return to work). Employees injured prior to January 1, 2004, however, will be able to receive vocational rehabilitation through 2008. Workers injured on or after January 1, 2004, who have a permanent disability caused by a workplace injury may, however, be eligible to receive "supplemental job displacement benefits" (vouchers for up to $10,000) for education-related retraining or skill enhancement at state approved or accredited schools.
Chiropractic and Physical Therapy Visits Limited.
Under the new law, an employee injured at work will be limited to no more than 24 chiropractic and 24 physical therapy visits per workplace injury.
New Penalties.
Under the new reforms, if an employer delays or denies payment to an injured worker without a good reason, the employee has two years from the date payment was due to file a complaint for payment plus the lesser of 25% of the amount of the payment due or $10,000. However, if an employer is found to have intentionally and regularly violated the rules governing Workers' Compensation, the employer may be fined up to $400,000 in administrative penalties which will be placed into a fund used to help injured workers return to work.
MPNs are expected to create significant savings. MPNs are staffed with specialists in occupational injuries and illnesses that follow established medical care guidelines. MPNs can provide faster access to appropriate medical care and get injured workers back to work more quickly. California employers who carefully select the medical providers will benefit from lower medical treatment costs, increased control over return to work issues, and more reasonable disability awards. A suitable medical group should be attentive to the employer's concerns, familiar with medical-legal terminology, well versed in the treatment guidelines, and capable of providing effective, efficient medical treatment (including providing referrals to local specialists). The substantive and procedural requirements for the creation of an employer required MPN is set forth in Labor Code § 4616 et. seq. and more information can be found at California's Division of Workers Compensation.
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