California Workers’ Compensation Legal Developments 2019

By Julius Young, Esq., Richard M. Jacobsmeyer, Esq., Barry D. Bloom

Welcome to the forthcoming 2020 edition of Herlick, California Workers’ Compensation Handbook.

The transition from 2018 to 2019 marked the transition from the Brown Administration to a new Governor, Gavin Newsom.

Since the publication of the 2019 edition of Herlick Handbook, there have been three new appointments to the W.C.A.B. Outgoing Governor Brown appointed Katherine Williams Dodd, Juan Pedro Gaffney, and Craig Snellings to slots as Commissioners. Recently retired W.C.A.B. Commissioner Frank Brass passed away in 2019. In July 2019 Governor Newsom reappointed Marguerite Sweeney to another term as W.C.A.B Commissioner.

In March 2019 the California State Auditor released a report critical of certain personnel actions by former Director of Industrial Relations Christine Baker, and an April 2019 report from the State Personnel Board revoked for up to a year the authority of the Department of Industrial Relations to hold career executive assignment exams and to process civil service appointments.

Here is a recap of some of the other noteworthy developments in California workers’ compensation since the publication of the 2019 edition:

I. LEGISLATION

Legislation signed by Governor Newsom in 2019 included the following:

• Worker Classification; Employees vs. Independent Contractors. The legislature passed AB 5, a hotly contested bill that was opposed by many companies using on-demand workers. This adds Labor Code Section 2750.3 and made conforming amendments to Labor Code Section 3351 and Unemployment Insurance Code Sections 606.5 and 621 to provide that with numerous specified exemptions, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services, on or after January 1, 2020, for renumeration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of certain specified conditions are satisfied. [See Herlick, Ch.2, § 2.8]
• Firefighters and Peace Officers; Post-Traumatic Stress Disorder. The legislature has added Labor Code Section 3212.15 to provide that injuries to specified firefighters and peace officers includes post-traumatic stress disorder and are rebuttably presumed to be industrial. [See Herlick, Ch.8, § 8.29, as well as revised presumption chart in § 8.27]
• Employees; State Hospital Patients. The legislature has enacted Labor Code 3370.1, and made conforming amendments to Labor Code Sections 3351 and 3208.3 to provide that each patient in a State Department of State Hospital Facility is entitled to workers’ compensation benefits for injury arising out of and in the course of a vocational rehabilitation program work assignment, subject to specified conditions, and that such a patient is not entitled to compensation for a psychiatric injury except as provided in Labor Code Section 3370.1(d).[See Herlick, Ch.8, § 8.21.]
• Medical treatment; Utilization Review timeframe; prohibition against altering or amending request for authorization. The legislature has enacted SB 537, an act to amend Labor Code Sections 138.7, 4600.4, 4603.2, 4610, 4616, and 4616.5 and to add Sections 127.1, 138.8, and 5307.12 to the Labor Code. These provisions regulate medical networks prohibit networks from altering treatment requests, give additional enforcement authorization to the Administrative Director, and exclude Saturday from counting as a normal business day. Also, the act will require publication on or before January 1, 2024 of data on physicians who treat 10 or more industrial injuries. [See Herlick, Ch. 4, §§ 4.08[5], 4.09[4], 4.10[3], 4.11[2], [4][a], [5], 4.18[1]]

In 2019 Governor Newsom vetoed a bill, AB 346, that would have expanded Labor Code § 4850 benefits to police officers employed by school districts and community colleges.

II. REGULATIONS

During 2019 the Division of Workers’ Compensation approved a series of evidence-based updates to the Medical Treatment Utilization Schedule.

Progress on several other significant regulatory reform issues had not come to fruition by the fall of 2019, however.

Interpreter regulations had not been adopted after an April 2018 DWC comment forum.

An August 2019 online comment forum on a copy service fee schedule closed, but rulemaking has not begun by the time this edition went to press.

As in 2018, there has been much controversy in the workers’ comp stakeholder community over possible reforms to the Medical-Legal Fee Schedule that governs how QMEs can bill for reporting. An online comment forum closed in August 2019 after a large outpouring of opposition by QMEs to a proposed new payment structure.

Utilization review regulations were the subject of an online comment forum which closed in January 2019, but no subsequent formal rulemaking was undertaken by September 2019.

In 2019 the Division of Workers’ Compensation arranged for treating physicians to have online access to the MTUS Guidelines.

Proposed changes to the W.C.A.B. Rules of Practice and Procedure were under consideration at the time this edition of Herlick Handbook went to press.

III. CASE DEVELOPMENTS

As always, Herlick, California Workers’ Compensation Handbook notes a number of significant recent cases. Readers may want to pay special attention to the following cases from the California Supreme Court, the California Court of Appeal, and the WCAB en banc, all of which have been added to this addition:

• King v. CompPartners, Inc. (2018) 5 Cal. 5th 103 [See Herlick, Ch. 4 § 4.09[7][b]] (attempt to sue utilization review physician in tort on breach of alleged duty to the worker failed; California Supreme Court holds that workers’ comp preempts)
• Barri v. W.C.A.B. (2018) 28 Cal. App. 5th 428 [See Herlick, Ch. 10, § 10.08[1]] (this case upholds the constitutionality of the anti-fraud statutes, Lab. Code §§ 4615 and 139.21)
• Dynamex Operations West, Inc. v. Superior Court of Los Angeles County (2018) 4 Cal. 5th 903 [See Herlick, Ch. 10, § 10.08[1]] (this case is a wage and hour case but has triggered a massive debate and legislative battle over the employment status of so-called gig workers and other workers alleged to be independent contractors; in the case the court adopts the “ABC test” for determining employment in a wage and hour setting)
• Garcia v. Border Transportation Group (2018) 28 Cal. App. 5th 558 [See Herlick, Ch. 2, § 2.8.] (this is a post-Dynamex claim involving wage and hour issues and questions over the employment status of a taxicab lessee)
• Suon v. California Dairies (2018) 83 Cal. Comp. Cases 1803 (Appeals Board en banc opinion) [See Herlick, Ch. 14 § 14.4] (important discussion of the distinction between “information” and “communication” in the context of right to a replacement panel)
• City of Petaluma v. W.C.A.B. (Lindh) (2018) 29 Cal. App. 5th 1175 [See Herlick, Ch. 6, § 6.05[2]] (this case is widely seen as important for its discussion of apportionment where there was an asymptomatic underlying condition; the case is important for discussion of causation and risk factor issues)
• Allied Signal Aerospace v. W.C.A.B. (Wiggs) (2019) 35 Cal. App. 5th 1077 [See Herlick, Ch. 4, § 4.09[7][b]] (an earlier stipulation to a home care evaluation did not apply and a later dispute over home health care was required to go through utilization review and independent medical review)
• Department of Corrections and Rehabilitation v. W.C.A.B. (2018) 27 Cal. App. 5th 607 [See Herlick, Ch. 6, § 6.02[5]] (this case is important where an applicant is attempting to prove permanent total disability under Lab. Code § 4662(b) “in accordance with the fact”; the court holds that Lab. Code § 4660 governs how such a finding can be made)
• Wilson v. State of CA Cal Fire (2019) 84 Cal. Comp. Cases 393 (Appeals Board en banc opinion) [See Herlick Ch. 8, § 8.21] (this case sets forth a framework for determining when an injury is “catastrophic” so as to come within the exception of Lab. Code § 4660.1(c)(2)(B))
• Hollingsworth v. Superior Court of Los Angeles County (2019) 37 Cal. App. 5th 927 [See Herlick, Ch. 13, § 13.5] (where a civil action and a workers’ compensation proceeding are concurrently pending, the tribunal first assuming jurisdiction should determine exclusive jurisdiction)
• Pa’u v. Department of Forestry (2019) 84 Cal. Comp Cases 815 (Appeals Board significant panel decision) (the case has important implications for utilization review disputes; the Appeals Board holds that the phrase “working days” in Labor Code Section 4610(i)(1) does not include Saturdays) [See Herlick Ch. 4, § 4.09[4], [6][a].]
• Skelton v. W.C.A.B. (2019) 39 Cal. App. 5th 1098 (holding that an employee was not entitled to receive temporary disability indemnity for time lost from work to attend medical treatment appointments following her return to work, regardless of whether her injuries had become permanent and stationary, but was entitled to compensation for wage loss for attending medical-legal evaluations) [See Herlick Ch. 9, § 9.12.]
• Travelers Property Casualty Co. of America v. W.C.A.B. (Mastache) (2019) – Cal. App. 5th – (holding that a solvent insurer’s policy was not “other insurance” within the meaning of Insurance Code Section 1063.1(c)(9), meaning that CIGA was liable to provide coverage for an employee’s injury claim, when the general employer agreed to, and did, provide workers’ compensation coverage for the employee leased to the special employer, and the general employer’s insurer received a written endorsement from the special employer limiting the insurer’s liability to leased special employees and excluding the special employer’s other, non-leased employees, but the endorsement was not signed) [See Herlick Ch. 3, § 3.13.]
• CIGA v. Azar, – F.3d – (9th Cir. 2019) (holding that Medicare, as a secondary payer, was not entitled to reimbursement from CIGA, which is an insolvency insurer of last resort, not a “workmen’s compensation law or plan,” from which Medicare, pursuant to 42 U.S.C.S. § 1395y(b)(2)(A)(ii), is entitled to reimbursement) [See Herlick Ch. 3, § 3.13.]

IV. THE SYSTEM GENERALLY

California workers’ compensation rates continued to decline for most employers, as advisory “pure premium” and “average charged rates” continued to decline for many employers. According to a June 2019 WCIRB presentation, the average charged rate for the first quarter of 2019 was $2.04 per $100 of payroll (compared with $2.97 in 2014 and $6.02 in 2003). In August 2019 the WCIRB proposed an additional advisory rate cut to go into effect for 2020.

A WCIRB study on the prescription drug formulary that was adopted in 2018 can be found here:

https://www.wcirb.com/sites/default/files/documents/research_brief_californias_new_drug_formulary_one_year_checkup.pdf

Workers and their advocates continued to complain about treatment delays, problems with the QME system, the high level of insurer allocated and unallocated loss adjustment expenses, and the ratio of system expenses to benefits paid.

V. CAUTION

California workers’ compensation can be quite complex, and there are a number of issues and potential developments on the horizon worth keeping in mind:

• who will be appointed by Governor Newsom to the leadership at the Department of Industrial Relations
• unfinished regulations on a number of topics, including revision of utilization review regulations, possible adoption of a revised system for compensating QMEs, interpreter payment regulations, copy service fee schedule regulations, and home health care regulations
• how the DWC Pharmacy and Theraputics Committee will affect administration of the prescription drug formulary
• following the W.C.A.B. en banc decision in Kris Wilson v. State of California CA Fire setting forth a protocol of suggested factors for determining what is a catastrophic injury for purposes of Lab. Code § 4660.1, whether the issue will reach the Court of Appeal in other cases
• whether apportionment to genetic factors will become common and whether there are further challenges to use of genetics as an apportionment factor
• whether the growing use of artificial intelligence technology will affect workers’ compensation claims handling
• whether there are legislative attempts to reduce cumulative trauma claims or create barriers to such claims
• increasing use of data to track medical outcomes and medical provider and attorney behavior
• ongoing attempts to identify provider fraud in the California system
• how the courts will deal with medical marijuana in the workers’ compensation system
• whether there will be legislative or administrative attempts to address the increase in claims to the Subsequent Injuries Benefits Trust Fund

© Copyright 2019 LexisNexis. All rights reserved. This article is excerpted from the upcoming 2020 Edition of Herlick, California Workers’ Compensation Handbook.