2011 Year in Review: The Top 10 Workers’ Compensation Events in California

  By Robert G. Rassp, Esq.

The year 2011 has been noteworthy for many events in our workers’ compensation system and as much for events that did not occur. So this year, we will add a bonus – the Top Five Events In 2011 That Did Not Occur But Should Have in our workers’ compensation system in California. But first, we will share our totally arbitrary, un-scientifically based, non-parametric, not evidence based, and completely anecdotal analysis of the top ten workers’ compensation events in California in 2011. That last sentence perfectly describes the AMA Guides, doesn’t it? But we digressed, so here goes:

  1. The Final Decision in Wanda Ogilvie vs. City and County of San Francisco, or “Ogilvie III”
  2. New Faces at the DIR, DWC and Governor’s Offices
  3. Valdez vs. Warehouse Demo Services, MPN Anyone?
  4. Messele vs. Pitco
  5. Baker vs. Workers’ Compensation Appeals Board and the “Supremes”.
  6. Lien on Me
  7. WCAB Office Vacancies
  8. State Compensation Insurance Fund Lays Off 25% of Its Staff
  9. VR Expert Witnesses Are Back!
  10. What Do We Call The Place Where WCJs Work?

1. The Final Decision in Wanda Ogilvie vs. City and County of San Francisco, or “Ogilvie III”[fn1]

On July 29, 2011, the First District Court of Appeal issued its landmark decision reversing the WCAB en banc decisions of how a party may rebut a scheduled DFEC adjustment factor in a permanent disability rating based on the 2005 PDRS. The California Supreme Court denied a hearing in the case on October 26, 2011. So the case is binding on all WCAB trial judges, panels and the WCAB unless the legislature changes Labor Code section 4660 or a competing case eventually conflicts with the Ogilvie decision and that conflict is resolved by the Supreme Court.

The parties came up with two ways to rebut a scheduled DFEC adjustment, Judge David Hettick came up with a third way, the WCAB came up with a fourth way – the “Ogilvie Formula” – and the DCA came up with their own methods. So now you have three possible ways to rebut a scheduled DFEC adjustment factor – by showing an error in the way the data was used to arrive at the scheduled DFEC adjustment or in its application; the injured worker cannot be rehabilitated (a LeBoeufrebuttal); or a medical complication results in a higher loss of future earning capacity than what the scheduled DFEC adjustment factor reflects.

2. New Faces at the DIR, DWC and Governor’s Offices

The year 2011 brought us a new governor since October 2003 whose past history with the workers’ compensation community has been quite stormy. However, the new Acting Director of the DIR (Department of Industrial Relations), Christine Baker, is very familiar with the workers’ compensation system as she headed the Commission on Health, Safety and Workers’ Compensation (CHS&WC) since its inception. Her stated goal is to balance the rights of injured workers with those of employers by reducing system-wide friction and hopefully increasing benefits without additional costs to the employer community.
With a more direct impact on practicing attorneys in the workers’ compensation system, we have a new Administrative Director, Rosa Moran, who was a sitting judge at the Oakland WCAB office (we want to say “Oakland Board” but we can’t until you see number 10 below) at the time of her appointment as AD by Governor Brown. This is the first time in memory that an AD was a sitting judge at the time of his or her appointment. Ms. Moran replaces her predecessor, Carrie Nevans, who untimely passed away in February 2011 and who had cared deeply about all stakeholders in the workers’ compensation community.
To her credit, Rosa Moran has traveled throughout the state introducing herself to the community and making herself available to meet and discuss current issues that face all of us in the workers’ compensation system. At the same time, at the end of the 2011 legislative session, the statutes that created and empowered the existence of a Court Administrator were repealed. The current administration took the position that the Court Administrator position conflicted with other divisions within the DWC in terms of rule making and judge supervision.
AD Rosa Moran has appointed PWCJ Richard Newman, the presiding judge in San Francisco as the Acting Chief Judge, a position that has not been filled under the prior administration and had only been filled once by Steve Siemers in the past. As one of his first official acts as Acting Chief Judge, Judge Newman spearheaded statewide judge’s training for the first time in two years. Also appointed by Rosa Moran as her Acting Deputy AD, is Judge Katherine Zalewski, also a sitting judge from San Francisco. The fact that we have former judges running the system is very encouraging.
With her new team in place, along with Regional Managers Tom Clarke and Mark Kahn, the new administration will guide us through the next phases of the evolution of our workers’ compensation system.
3. Valdez vs. Warehouse Demo Services, MPN Anyone?[fn2]
It seems like almost each important case that emerged in 2011 took two or three times to get it right. We have Ogilvie III, Guzman III, Almaraz III, Messele III and Valdez II. In the WCAB en banc decision Valdez, we now know that if an employer complies with the notice requirements for an MPN and complies with timely access to treatment for an injured worker, any medical reports that are obtained outside an MPN are not admissible.
But beware of Knight vs. United Parcel Service (2006) 71 Cal. Comp. Cases 1423 (WCAB en banc decision), which says if an employer or insurer does not comply with the notice and access to treatment requirements, then the injured worker can obtain treatment outside the MPN. But doesn’t Labor Code section 4605 allow an injured worker to obtain treatment at his or her own expense? The WCAB in Valdez did not address whether those reports are admissible or can be reviewed by evaluating physicians under section 4062.1 or 4062.2.
4. Messele vs. Pitco[fn3]
In another WCAB en banc decision (actually three versions of them all in 2011), the WCAB spent way too many pages explaining how Code of Civil Procedure section 1013a and Cal. Code Regulations title 8 section 10507 adds five days for mailing if a claims administrator is located within the State of California and a medical dispute triggers Labor Code section 4062.1 or 4062.2.
Basically, in a nut shell, your days to agree to an AME begin the day after an objection to the treating physician is sent; add five days for mailing. Then you can file a DWC Form 105 or 106 Request for a Panel QME list. That’s a lot of trouble for five days.
5. Baker vs. Workers’ Compensation Appeals Board and the “Supremes.”[fn4]
The name of this case should have stayed “Duncan,” the name of Christine Baker’s predecessor. So the COLA increases for life pensions occur and begin on the January 1st of the year after a life pension becomes payable, and a COLA for a permanent total disability case begins January 1st after the Applicant’s permanent and stationary date. The Supreme Court said nothing about whether COLA’s apply to death benefits.
6. Lien On Me
Northern Californians say it is a Southern California problem. Northern WCJs say it is a Southern WCJ problem. Why can’t we all just get along? Some Southern California WCAB offices are drowning in lien hearings, delaying cases in chief and interfering with other more important judicial and clerical matters. The real culprits are the unscrupulous attorneys, who send allegedly injured workers to multi-specialty medical referrals in questionable cases. In addition, a cottage industry has developed in Southern California of selling medical accounts receivables to entities that buy them for pennies on the dollar and who then bring the matters before the WCAB for collection actions.
With the shortage of staffing (see number 7), the administration in the South has done a yeoman’s job of trying to spread the pain out of specific WCAB offices and tried to be innovative to reduce the backlog. One method that is working is to send liens to the Oxnard Board on a voluntary basis where lien claimants can obtain almost immediate judicial action on a lien claim or let them rot at the Los Angeles office for another two or three years. We need help down here, not a blame game!
Please stop this “north” versus “south” nonsense. We do have different demographics, and the administration needs to reflect that in personnel and in practice. Dust off the RAND study of our adjudication system in 2001. What they wrote 10 years ago applies today.
At least we got the Guitron WCAB en banc decision[fn5] that clarifies how, when and who gets paid for interpreter services for medical treatment appointments and other medical-related interpreter services for which there is no direct statutory or regulatory guidance.
7. WCAB Office Vacancies
When the WCAB offices were fully staffed with “judge teams”, there were 224 judges. In 2011, we have lost at least 37 judge positions due to deaths, retirements, furloughs, resignations and terminations. To compound matters, if a vacancy is not filled in six months, the state generally eliminates the position completely – so if you don’t use it, you lose it. But, on top of that, if the DWC budget is cut, which it was, you also lose positions.
To make matters worse, when an office technician or legal secretary quits, he or she cannot be replaced during a hiring freeze, which Governor Brown put into effect early in 2011. We all know about State Compensation Insurance Fund losing up to 1,800 employees in the next nine months. These people are state employees. The DWC is user funded. Can’t we take the best OAs, legal secretaries, and attorneys and turn them into judge teams at the WCAB as lateral transfers? Only when insurance companies and employers start screaming about the delay of case resolution will there be any movement to properly hire and retain staff at WCAB offices. That is the history, and history hasn’t changed much.
Recently, the DWC has obtained a trickle of positions it is authorized to fill. We will see how many people actually start working. The end of furloughs in 2011 was a good start.
8. State Compensation Insurance Fund Lays Off 25% of Its Staff
This is probably the most tragic and significant development in our system this year. Corporate America now runs SCIF, and they brought in “street sweepers” to make the company “profitable” even though the California Constitution Article XIV section 4 says nothing about being profitable when it created our state fund. SCIF is changing as we speak. In order to get out of its union contracts, it decided to close offices and consolidate its locations so that clerks, secretaries, underwriters and auditors have to spend hours traveling to and from work or are forced to quit. Then it outright sends lay-off notices. And then it offers a severance package with a deadline of December 31, 2011, that includes probably giving up the right to reinstatement as a state employee.
For those of us who know and are friends with “SCIF-ites”, we are sick at what the leadership of this company is doing to its hard working and dedicated staff’s morale. We all laughed at the “State Fund Shuffle” where cases are assigned to different adjusters and attorneys. But when they started taking their attorneys cars away, it began to get seriously wrong.
9. VR Expert Witnesses Are Back!
With LeBoeuf getting resurrected by the DCA in Ogilvie III, and with many of us prosecuting cases under Labor Code section 4662 that an injured worker is permanently totally disabled “based on the fact,” vocational rehabilitation experts are back. There has been considerable litigation over the reasonableness of charges by vocational experts as discussed in Costa vs. Hardy Diagnostics (2006) 71 Cal. Comp. Cases 1797 (WCAB en banc decision).
In 2011, Governor Brown signed into law Labor Code section 5307.7 that mandates the Administrative Director to develop an official hourly fee schedule for vocational experts. This will hopefully standardize charges for this very important service, especially since a rebuttal of a standard DFEC adjustment in two out of three methods described by the DCA in Ogilvie III requires vocational rehabilitation expert testimony as does a section 4662 case.
10. What Do We Call The Place Where WCJs Work?
The year 2011 marks the first time in five years that we can call it the “Van Nuys Board” or the “L.A. Board” or the “San Francisco Board.” In other words, no more turf wars over what a Board or “District Office” is. To us old timers, it will always be “The Board.” The WCAB is the “WCAB.” Let’s not get confused.
AND NOW, THE FIVE THINGS WE DIDN’T GET IN 2011 BUT SHOULD HAVE
Ok, so these are more of a wish list than anything realistically discussed by the legislature, DWC, or WCAB in 2011:
1. A New and Improved PDRS
Yes, in 2011 we needed updated WPI to proportionate wage loss data in order to have a more accurate permanent disability rating schedule. We actually have it already, from 2007 data that resulted in the proposed 2009 PDRS that was not adopted by the prior AD due to political pressure. We probably have more recent data than that.
The statutory deadline for a revised PDRS pursuant to Labor Code section 4660 was December 31, 2010. It didn’t happen in 2011. Neither did eliminating the AMA Guides from our workers’ compensation system (we are dreaming). We could have done much better legislatively by repealing section 4660 and adopting a more realistic disability rating system such as a combination of Subpart P, Title 42 of the Code of Federal Regulations for the Social Security Act, and the 1997 PDRS or having state workers’ comp administrations commission the Institute of Medicine to come up with an evidence based disability rating schedule that is based on epidemiological data and not based on the opinions of a bunch of occupational medicine doctors.
2. Utilization Review Should Not Apply to MPN Physicians, and Liens Should Be Compartmentalized
Now, we are very happy to see insurance companies and claims administrators save medical treatment costs, but not to a point where the community standard of care for medical treatment is abrogated. How reasonable is it where your treating physician prescribes a standard of care only to have a utilization review denial based on the opinion of an unqualified physician in Texas who never examined the injured worker?
We actually had a sophisticated client investigate a UR denial to discover that the physician’s signature was an electronic signature and the physician was on a sabbatical from his medical practice and was completely outside the United States. In addition, his license to practice medicine was inactive in the state in which the UR denial originated.
The new administrative director can approve a regulation that states if an employer or insurance company has a medical provider network pursuant to Labor Code section 4616, then Utilization Review is not allowed for the physicians within that network. If there is a dispute over treatment guidelines, then the case should go to a QME or AME. Existing law already allows that if the employer or claims administrator feels that an MPN doctor is abusing the system, they can remove him or her from the MPN.
Similarly, for liens, the DWC Medical Unit should utilize existing staff, like people from the “Return To Work” unit who had nothing to do, train them on bill review and mandate disputes over medical treatment billing be resolved administratively and not through the WCAB. In addition, the AD should adopt one fee schedule – 120% of Medicare or Medi-Cal costs, regardless of the date of service and regardless of any so called “extraordinary circumstances.”
Liens should be segregated between cases where injury AOE/COE is in dispute, AOE/COE is accepted, but parts of body are in dispute, and cases where injury is accepted, but some treatment is self-procured for accepted parts of body.
3. The AME/QME Dances On
The panel QME process is generally a waste of time, money and substance. Why not have a system where each party chooses his or her own QME in one specialty. If the injured worker wants more than one, he or she has to have a judge approve it upon a showing of good cause, unless Defendant agrees to more than one specialty or an AME says you need another specialty. This avoids the delay of having the Medical Unit acting like judges and screening our DWC Forms 105 and 106 and then taking three months to issue a list of three incompetent panel QMEs.
4. The WCAB Becomes Fully Staffed, and the Demise of EAMS
Ok, we are in Fantasy Land, but these are real things that Did Not Happen In 2011 and Should Have. First of all, if the WCAB was fully staffed, we could have a statute or regulation in place that requires a status conference 90 days after an Application for Adjudication is filed in order to triage cases where AOE/COE is in dispute, AOE/COE is accepted, parts of body are in dispute, and for judicial control over priority hearings, expedited hearings, MPN and self-procured treatment issues. In other words, we can reduce lien volumes and unnecessary court hearings if the WCAB itself takes early control over discovery, like we do in civil cases in some areas of California.
Don’t get us wrong. EAMS set sail under prior DWC administrations years ago, and the people from DWC who worked on it did a yeoman’s job. The problem is that EAMS is paperless for the DWC, but not for us, and we don’t like it. We like Applications for Adjudication of Claim that is one page, not five. We like DORs that are one page, not two. Plus cover sheets plus separator sheets, etc. An e-filer’s yellow proof of filing and proof of service is sometimes ten pages long – for a one page document to be filed!
We look forward to real improvements in WCAB office staffing next year along with improvements in EAMS. Please pass a regulation that allows e-filers to use paper, such as for walk through C&Rs and Stips. Please! Please reinstate Rule 10417. Pretty Please!
5. Sexual Dysfunction and Sleep Disorders Only Apply in Brain Injury and Spinal Cord Injury Cases
Ok, so we are also dreaming. We are tired of hearing these things alleged in every case from some law firms. We don’t quite understand how an injured worker’s sexual dysfunction is related to his or her diminished future earning capacity unless his or her usual and customary job at the time of injury was a sex worker of some sort.
All kidding aside, we wished 2011 marked the year our colleagues realized that the workers’ compensation system is intended for people who are actually significantly injured as a result of work related injuries and are not trying to use the system to bump up a rating in an otherwise questionable case.
See you next year!
Footnotes:

1. Ogilvie vs. WCAB (2011) 197 Cal. App. 4th 1262, 129 Cal. Rptr. 3d 704, 76 Cal. Comp. Cases 624 “Ogilvie III;” Ogilvie vs. City and County of San Francisco (2009) 74 Cal. Comp. Cases 248 (“Ogilvie II” WCAB en banc decision); Ogilvie vs. City and County of San Francisco (2009) 74 Cal. Comp. Cases 1127 (“Ogilvie I”).

2. Valdez vs. Warehouse Demo Services (2011) 76 Cal. Comp. Cases 970 (WCAB en banc decision) issued on 9/27/11, 76 Cal. Comp. Cases 665 issued on 7/14/11, 76 Cal. Comp. Cases 330 issued on 4/20/11. You need to read them together to get the full picture.

3. Messele vs. Pitco (2011) 76 Cal. Comp. Cases 1187 issued on 11/4/11; 76 Cal. Comp. Cases 956, issued on 9/26/11. The later one counts but refers to the earlier lengthy decision that adds 5 days for mailing. The US Postal Service announced on December 5, 2011 that a “First Class” letter will no longer be delivered the next day – it will now take between two and five days for delivery, rather than one to three days as previously advertised. Does this mean CCP section 1013a needs to be amended?

4. Christine Baker vs. WCAB, (2011) 52 Cal. 4th 434, 257 P. 3d 738, 129 Cal. Rptr. 3d 133, 76 Cal. Comp. Cases 701, August 11, 2011 California Supreme Court decision.

5. Jose Guitron vs. Santa Fe Extruders (2011) 76 Cal. Comp. Cases 228 (WCAB en banc decision).
© Copyright 2011 Robert G. Rassp, Esq. All rights reserved. Reprinted with permission.

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