California Workers’ Compensation: Changes in the Air?

This article is excerpted from an upcoming edition of Herlick, California Workers’ Compensation Handbook.

This 2019 edition is the 38th edition of Herlick, California Workers’ Comp Handbook.

2018 was the final year of Governor Brown’s term, and as a new administration takes over in 2019 there is uncertainty as to what a new administration may have in mind for California workers’ comp.

2018 saw a number of significant changes in key workers’ compensation people.

In early 2018 the Director of the Department of Industrial Relations, Christine Baker, suddenly resigned. Andre Schoorl was appointed acting director of the DIR.

Later in 2018, Governor Brown filled two of the open slots on the WCAB by appointing Juan Pedro Gaffney and Katherine Williams Dodd, both of whom were confirmed.

I. Legislation

2018 was not a year for any major legislative reforms. Yet, there were a number of notable bills that Governor Brown did sign:

AB 1749, which clarifies that certain peace officers injured out of California while performing law enforcement duties are eligible to receive workers’ compensation benefits in the discretion of the employing entity.

AB 2046, which requires anti-fraud data sharing between governmental agencies and grants the Fraud Assessment Commission discretion to augment assessments with unused funds from the prior year assessment.

SB 880, which permits employers to conduct a pilot program of paying disability indemnity benefits by a prepaid card in lieu of paper checks.

SB 1086, which deletes a sunset clause on a law that provides an extended statute of limitations for workers’ compensation death benefits payable to the survivors of public safety officers who died as a result of work-related cancer or certain specified diseases.

AB 2334, which authorizes the Office of Self-Insurance Plans to report certain information.

AB 2802, which creates additional requirements and tools to intercept insurance payments in order to satisfy child support obligations.

Bills vetoed by Brown in 2018 include the following:

AB 479, which would have specified certain rating criteria in breast cancer cases.

AB 553, which would have required that all of the $120 million Return to Work Fund be spent each year.

SB 899, which would have excluded race, gender and national origin as apportionment factors.

AB 1697, which would have codified certain requirements for an anti-fraud analytics unit at the DWC.

AB 2496, which would have specified an employment test for janitorial workers, creating a rebuttable presumption that a worker in janitorial services is an employee.

II. Regulations

California’s prescription drug formulary went into effect in 2018. The formulary was required by AB 1124, passed in 2015, which amended Labor Code § 5307.27 to require the Administrative Director adopt and incorporate an evidence-based drug formulary into the Medical Treatment Utilization Schedule (MTUS).

The formulary regulations and MTUS drug list can be seen on the DWC website as follows:

https://www.dir.ca.gov/dwc/DWCPropRegs/MTUS-Formulary/MTUS-Formulary.htm

Also adopted in 2018 were provider suspension regulations:

https://www.dir.ca.gov/dwc/DWCPropRegs/Provider-Suspension-Procedure/Provider-Suspension-Procedure.htm

As of late 2018 it was anticipated that the DWC would be unveiling regulations on a number of additional topics: interpreter billing, home health care providers, physician fee schedule, and medical-legal billing schedule. It was not clear, however, whether regulations on these matters would be completed by the time Governor Brown leaves office.

III. Case Developments

Some of the cases covered in this edition of Herlick Handbook seem particularly noteworthy, including the following Court of Appeals cases:

• Dynamex Operations West v. Superior Court of Los Angeles County (2018) 4 Cal. 5th 903 [added to Ch. 2, § 2.8] (In a wage and hour class action case the California Supreme Court adopted a new, more broad test for determining an employee relationship. Although the case did not repudiate use of the Borello employment test for workers’ comp purposes and on its face the case applies to a wage and hour dispute, many workers’ comp stakeholders are speculating that it may be impractical for employers and courts to operate under two different employment tests.)
• County of San Diego v. Pike (2018) 21 Cal. App. 5th 1 [added to Ch. 5, § 5.10] (Court of Appeals rejects an attempt to award temporary disability after five years from the date of injury, holding this is precluded by Labor Code § 4656(c)(2). This case was watched by many stakeholders due to the potential wide application if a worker could receive TTD after five years from the date of injury by filing a timely petition to reopen before the expiration of the five years.)
• Triplett v. W.C.A.B. (2018) 25 Cal. App. 5th 556 (2018) [added to Ch. 13, § 13.2] (A football player failed to establish jurisdiction as a California hire where both the player and agent signed the contract outside California.)
• Zuniga v. W.C.A.B. (2018) 19 Cal. App. 5th 981 [added to Ch. 4, § 4.11[4]] (This is another case where an attack on the constitutionality of IMR was rejected. The court held that the requirement that IMR reviewer names be confidential did not violate due process and disclosure of names was not required.)
• State Compensation Insurance Fund v. W.C.A.B. (Guzman) (2018) 20 Cal. App. 5th 796 [added to Ch. 8, § 8.21] (Where the worker was injured when using a ground compactor on a slope, the injury was not uncommon, unusual and unexpected and did not meet the sudden and extraordinary exception requirement to trigger coverage of an alleged psyche injury where the worker was employed less than six months.)
• People ex rel. Alzayat v. Hebb (2017) 18 Cal. App. 5th 801 [added to Ch. 9, § 9.18] (In a qui tam action filed under the Insurance Frauds Prevention Act, a claim was not barred by the workers’ compensation exclusive remedy rule. This case involved allegations that the employer had given false information about a claim of injury. The case may give workers another legal remedy where the employer falsifies information.)

As always, there are too many interesting writ denied cases to list in totality, but a handful stand out include:

• Terry v. W.C.A.B. (2018) 83 Cal. Comp. Cases 1064 (writ den.) [added to Ch. 7, § 7.03] (Labor Code § 5406(b) barred a death claim where the death was more than 240 weeks after the date of injury.)
• Sutter Solano Medical Center v. W.C.A.B (Go) (2018) 83 Cal. Comp. Cases 381 (writ den.) [added to Ch. 4, § 4.07[5]] (Where the applicant self-procured surgery despite UR and IMR denial, the defendant was still held liable for indemnity benefits.)
• Parco, Inc v. W.C.A.B. (Martinez) (2018) 83 Cal. Comp. Cases 1288 (writ den.) [added to Ch. 5, § 5.10] (Where surgery resulted in removal of a bone form the hand, applicant came within the exception to the two-year cap on temporary disability as set forth in Labor Code § 4656(c)(3)(C).)
• California Department of Corrections v. W.C.A.B. (Potter) (2018) 83 Cal. Comp. Cases 1060 (writ den.) [added to Ch. 16, § 16.1] (Prison inmates are not precluded from receiving job displacement vouchers.)
• San Francisco 49ers v. W.C.A.B. (Visger) (2018) 83 Cal. Comp. Cases 1434 (writ den.) [added to Ch. 4, § 4.09[4]] (The Appeals Board had jurisdiction to determine the medical treatment issue when the defendant did not handle the expedited request for authorization in a timely manner.)

IV. Other System Developments

CAUTION:  As we usually note, California workers’ comp law is very complex, and system stakeholders must navigate a maze of statutes, case law and extensive administrative regulations.

Important developments and issues to watch as of late 2018, include the following:

• Unfinished regulations on various topics, including interpreter fees, home health care, physician fees and medical-legal billing
• Whether a workers’ compensation judge can determine that a worker is 100% disabled under Labor Code § 4662 where the rating would otherwise be less than 100% and there was no vocational evidence to establish the worker was not amenable to rehabilitation
• Whether in 2019 there will be a long-rumored legislative push to change the law and rules pertaining to cumulative trauma claims
• Whether apportionment to genetic factors will become common and whether there will be further challenges to the use of genetics as an apportionment factor
• How the legislature, the WCAB and courts will define the employment relationship in the context of “gig economy” jobs and whether the 2018 Supreme Court decision in Dynamex Operations West v. Superior Court will have implications for workers’ comp cases
• How the California workers’ comp system will deal with medical marijuana issues
• How any revised QME billing regulations affect the number of doctors serving as QMEs and the quality of reports (In September 2018 the DWC announced a stakeholder meeting to discuss possible wholesale revamping of the QME billing system.)
• How treatment guidelines for chronic pain and opioid prescribing adopted in the last few years will affect the care of workers
• How the Appeals Board will define “catastrophic injury” for purposes of Labor Code § 4660.1
• How early appointments made by the next governor may reveal the approach of the next administration
• Whether there will be changes to how the $120 million Supplemental Return to Work Fund is administered

Julius Young

Barry D. Bloom

Richard M. Jacobsmeyer

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