California: Paradigm Shift?

California: Paradigm Shift?

The workers' comp community is abuzz with rumors about the impending comprehensive comp reform bill.

I've not yet seen the bill (which could still be revised before it is introduced in print in the next week or so).

But based on the summary in that ran yesterday, if the bill passes it would represent a paradigm shift.

Pardon me if I am jumping the gun based on the synopsis of the bill, but one feature is quite surprising.

Since the 1990s there has been a push for data-driven analysis in California's workers' comp system. A key component of this were the RAND studies on wage losses of injured workers done by Robert T. Reville, Seth Seabury and others at the RAND Institute for Civil Justice. Those studies were prepared for CHSWC, two of whose members are apparently key negotiators in the impending reform package.

Those studies focused on empirical data on earnings losses after injuries, wage replacement, uncompensated wage losses and differential wage losses between injuries to various body parts.

Reference to the RAND studies was made in the 2004 reform, which as part of Labor Code 4660(a)(2) required the state to formulate a rating schedule "based on empirical data and findings from the Evaluation of California's Permanent Disability Rating Schedule, Interim report (December 2003), prepared by the RAND Institute for Civil Justice, and upon data from additional empirical studies." Current Labor Code 4660(a)(2) thus requires that the schedule address diminished future earning capacity as a numeric formula based on empirical data "and findings that aggregate the average percentage of long-term loss of income resulting from each type of injury from similarly situated employees".

That may be mind-numbingly dull and confusing, but it was an attempt to tether ratings to RAND wage loss replacement studies and to require that the schedule reflect the concerns raised in those empirical studies both as to wage replacement (adequacy) and comparative recovery between different types of injuries (equity).

So if the proposed bill would abandon DFEC adjustment, it appears that the RAND project and the data-driven thrust of CHSWC would be out the window. Stated another way, if the rating for the permanent disability created by a particular injury is gleaned simply from the AMA rating and adjusted only for occupation, then there would be no attempt to correlate ratings and wage losses.

Again, I look forward to getting a copy of the bill and analyzing it.

But let's call a spade a spade.

If there is not only no new DFEC factor table proposed and if in fact there is to be no DFEC modifier at all, then the project of the last 15 years is effectively gone.

As the debate over the new bill happens, I look forward to Christine Baker and Angie Wei addressing this fact with candor.

Stay tuned.

Julius Young Julius Young

This blog originally appeared on WorkersComp Zone. Reprinted with permission.

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