The Latest from Sacramento

1. California Workers’ Compensation: The Latest from Sacramento June 28, 2011

2. Welcome Jerry Azevedo, Workers’ Compensation Action Network APCO Worldwide Jason Schmelzer, California Coalition on Workers’ Compensation Shaw / Yoder / Antwih, Inc.

3. Who We Are Workers’ Compensation Action Network • Broad-based, statewide coalition of employers and insurers dedicated to defending and advancing reform of California's workers' compensation system • Includes every major employer trade association in California • Insured, private and public self-insured employers • Nonprofit organization • Educate lawmakers, the business community and members of the media on workers’ compensation issues • Track outcomes of recent legislative reforms • Disseminate original material • Provide media commentary • Conduct annual Legislative Education Day • Mobilize grassroots network to support/oppose legislative proposals

4. Who We Are California Coalition on Workers’ Compensation • Statewide association of employers committed to maintaining a workers’ compensation system that provides quality benefits at a reasonable cost to employers • Founded in 1985 and governed exclusively by CA employers • Advocacy • Intimately involved in the development and passage of 2004 reforms • Serve as the voice of California employers in legislative and regulatory venues • Unrivaled experience and knowledge of workers’ compensation policy in Sacramento • Education • Annual conference on workers’ compensation trends, strategies, and public policy • Coordinate annual Legislative Education Day

5. What We’ll Cover Today Who’s Making Decisions in Sacramento How and Why Decisions Are Being Made Pending Legislation What You Can Do

6. Administration Legislature Decision Makers

7. State Budget Deficit • Tax extension negotiations have sputtered • All cuts budget and legislator pay • Economy and Jobs • Tax receipts up in early 2011 • Employment continues to lag • CA unemployment at 11.7% • US Average is 9.1% • Nevada only state higher at 12.1% • Redistricting and Open Primary • Final maps from redistricting commission not yet released • Electoral uncertainty because of modified districts • Impact of open primary undetermined Five States with Highest Unemployment Rate Context for Decisions

8. California Workers’ Compensation Costs VS Other States and the National Median Context for Decisions

9. California Workers’ Compensation Costs Per Indemnity Claim $61,664 +23% $58,418 +60% $51,612 $50,017 $49,190 $45,652 $44,944 $38,687 $38,656 Context for Decisions

10. Costs per Claim VS Rate per $100 of Payroll VS Premium Volume Context for Decisions

11. WCIRB Accident Year Combined Loss & Expense Ratios 168 144 California regulators seize SF’s Majestic Insurance, propose rehab plan April 22,2011 130 113 111 90 79 68 56 55 Context for Decisions

12. Levels of Permanent Disability: Context for Decisions

13. Almaraz • Declined by 5th District Court of Appeal “California's non-partisan Legislative Analyst's Office has concluded that these rulings could lead to (1) changes in PD ratings, (2) increased incentive for litigation, and (3) decreased uniformity in determining PD. Ultimately, these effects would likely lead to increased benefits for workers and higher costs for businesses and governments.” • Guzman • Affirmed by 6th District Court of Appeal, Declined by Supreme Court • Ogilvie • Oral arguments held last week by 1st District Court of Appeal Context for Decisions

14. Unusual coalition pushes for restrictions on compounded drugs December 28, 2010 Compounded drugs bring big profits to California doctors, study finds January 29, 2011 Assembly Bill 378

15. Assembly Bill 378 www.cwci.org/research.html Compound Drugs, Co-Packs and Medical Foods

16. Assembly Bill 378 • AB 378 removes the profit motive for prescribing compound drugs • Ban on self-referral • Imposition of temporary fee schedule • Recent reports indicate that the increase in utilization of compound drugs may be driven by profit-motive instead of medicine • Utilization spike following repackaged drugs regulations • Suspect arrangements with compound drug manufacturers • Physician dispensing spike • Hearing in Senate Labor & Industrial Relations Committee July 6, 2011 • Strong opposition by medical community • Partnership with labor, employers, and insurers. Compound Drugs, Co-Packs and Medical Foods

17. State Senator Sees Zombie Liens as a Grave Issue June 6, 2011 Senate Bill 863 LIENS

18. Senate Bill 863 • SB 863 reforms the medical lien process • Time limits on when liens can be filed • 18 months for medical providers • 5 years for third party payers (insurers) • Requires documentation for liens to be valid • Implementation 7/1/2012 • LIENS have become a major cost driver • Clogging the WCAB • Increasing litigation costs • Increasing medical costs • SB 863 passed Senate Labor and Industrial Relations on 6/2/2011 • Currently in the Senate Appropriations Committee • No hearing scheduled LIENS

19. Employers balk at bill to extend temporary disability payments June 10, 2011 Assembly Bill 947 Temporary Disability Benefits

20. Assembly Bill 947 • AB 947 would eliminate the 104 week cap on TD benefits • Creates broad new exception for claims not P&S by 104 weeks • New Exception captures any claim where treatment extends beyond 104 weeks • Temporary Disability is a major cost-driver in WC • The current cap drives RTW • Cap elimination allows for gamesmanship in WC by medical providers and attorneys seeking to profit off of injured workers • Passed Senate Labor & Industrial Relations on 6/22/2011 • Sent to Senate Rules Committee • Will be referred to Senate Appropriations for evaluation of fiscal impact Temporary Disability Benefits

21. Expanding workers' comp benefit to nurses could cost SF May 9, 2011 Assembly Bill 375 Hospital Worker Presumption

22. Assembly Bill 375 • AB 375 creates a presumption for hospital employees • Neck and Back injuries removed from the bill • MRSA and blood-borne pathogens are presumed to be industrial • Applies to hospital employees who engage in direct patient care • Presumptions increase cost in WC • Overcoming the presumption is almost impossible • Proliferation of presumptions in a problem • Cost increases to counties and University of California, which run public hospitals • AB 375 passed Senate Labor & Industrial Relations on 6/22/2011 • The bill has been referred to the Senate Appropriations Committee, but no date is set for the hearing Hospital Worker Presumption

23. Assembly Bill 1155 • AB 1155 would reopen litigation on the validity of apportionment • The bill prohibits apportionment when the prior non-industrial disability is caused by age, race, gender, or another protected class • Amendments have been offered by the opposition • Apportionment is a fundamental issue of fairness • Employers only liable for disability caused by workplace injury • Will open up new litigation on apportionment • AB 1155 will be heard on 6/29/2011 in Senate Labor & Industrial Relations • No fiscal committee Apportionment

24. What Can I Do? • Learn About the Issues • Join a membership organization • Be Heard • Write, call or meet with your legislature • User-friendly online advocacy tool • Visit www.fixworkerscompnow.org and click Take Action!

25. www.fixworkerscompnow.org Get Involved

26. Thank You Questions?