DWC Jeaopardy Slides · 2020-06-01 · fkdoohqjhg :&-¶v dxwkrulw\ wr uhqghu dq lqghshqghqw mxgjphqw ri 3' udwlqj lq wkh devhqfh ri uhexwwdo hylghqfh &lwlqj -dudploor :&$% uxohg wkdw

$Page 1: DWC Jeaopardy Slides · 2020-06-01 · fkdoohqjhg :&-¶v dxwkrulw\ wr uhqghu dq lqghshqghqw mxgjphqw ri 3' udwlqj lq wkh devhqfh ri uhexwwdo hylghqfh &lwlqj -dudploor :&$% uxohg wkdw$
Answers and Questions about the California Workers’ Compensation System

Saul AllweissEllen Sims Langille

Mark PrivenAlex Swedlow

Law Offices of Allweiss,McMurtry & Mitchell

2© 2020 CWCI. All Rights Reserved.

Agenda

• California Within the National Landscape

• Rate, Frequency and Benefit Development

• Pharmaceuticals and the Opioid Epidemic

• Resolving Medical Disputes

• Legal Issues

• And then…

3© 2020 CWCI. All Rights Reserved.Source: 2018 Oregon Rate Study, NCCI 2018 ASB

240% Spread between California and North Dakota

Comparisons on Leading Indicators and Cost Drivers

2018 Premium Rate

0

1

2

3

NY

CA NJ

DE

AK

GA RI

CT

VT

MT HI

WA

ME

SC

LA

WY WI

ID PA FL

NC

OK

NH SD

AL IL

MN IA

MO

NE

MS

NM CO

MA MI

KY

TN

OH

DC

AZ

MD

VA

TX

NV

OR

UT

KS

WV

AR IN ND

Reasons for the spread:• Rules and Regs• Industry mix• Loss costs, duration, medical delivery culture• Attorneys


Source: NCCI 2019 ASB

Frequency of PPD Claims (per 100k Employees)


0

200

400

600

800

CA

OK

MO

OR IL CT NJ

WI

ID IA CO

NV HI

KS

SC WV

NY

TN

AK

NM NE

NC RI

VT

MD

DE

SD MN

KY

MS IN MT

UT

TX FL PA GA

MA

AR

NH

AZ

AL

ME

LA

VA

DC MI

PP

D C

lms

/ 100

k E

Es

1,174% Spread between California and Michigan

Reasons for the spread:• Rules and Regs• Benefit Levels• Method of PD assessment• Attorneys


Where in the World is….San Diego?

Source: WCIRB

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Ind

em

nit

y C

laim

Fre

qu

ency

Accident Year

Bay Area Los Angeles San Diego


CA Claims Monitoring – Medical Benefits at 72 Months

$21,223$23,890

$26,423$28,620 $29,658 $28,671 $27,755

$25,492 $24,592 $24,045 $23,611 $24,390 $24,498

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Avg Paid Estimated Not Paid

Source: CWCI 2019

Top reasons for the stable post-reform medical trend: Revised fee schedules & enhanced treatment guidelines Reengineered medical dispute resolution process (IMR) Significant reductions in Rx and a new drug formulary Fewer spine surgeries More effective anti-fraud/abuse statutes and regulations

Stable Post-Reform Trend

Average Medical Paid – Indemnity Claims


Annual Medical Spend (2017)

3,500

360

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Healthcare Workers'Compensation

$Billions


Source: NCCI 2019 ASB

05

1015202530354045

CA HI

CO

WV

UT

TX

DE

NM FL MS RI

NJ

TN SC MI

AL

AZ IL OK

MO KS

MA

AR

DC

NC

AK CT

NY WI

VA IN IA NV

NH

NE ID VT

MT

ME


Loss Adjustment Expense

174% Spread between California and Maine

Reasons for the spread:• Rules and Regs• #1 Cost Driver: Attorneys and legal fees• #2 Cost Driver: Variations in managed care


Claims with Attorney Involvement

Source: 2018 WCRI

Exhibit 9

0%

10%

20%

30%

40%

50%

60%

NJ TN CA IL GA NC FL LA PA VA IA MN MA AR MI IN WI TX

California is #3:32% higher

than median state

California Within the National Landscape


1 Los Angeles 62.8%2 Orange 61.3%3 San Bernardino 58.1%4 Ventura 57.5%5 Sierra 56.9%

Highest Percentage

Statewide 52.9%

1 Mariposa 32.1%2 Modoc 32.7%3 Humboldt 34.8%4 Sonoma 35.5%5 Napa 35.6%

Lowest Percentage

Exhibit 10

Source: CWCI

Claims with Attorney Involvement



Avg Medical Benefits per Indemnity Claim

National Comparison on Indemnity Claims

58% higher than median state

Exhibit 11

Source: NCCI 2018


$0

$25,000

$50,000

$75,000

$100,000

RI

MA

DC HI

WV

OR MI

ME

TX

MO

NV

CO

MD

AR

NH

MS

CT

MT

PA IA WI

FL

KS IN MN VT ID OK

NY IL NE

TN

GA

NC

KY

AZ

NJ

UT

NM

SD

SC AL

VA LA

AK

CA

DE


Avg Indemnity Benefits per Indemnity Claim

National Comparison on Indemnity Claims

26% higher than median state

Exhibit 12

Source: NCCI 2018


$0

$25,000

$50,000

$75,000

$100,000

IN OR

WV

UT

FL

AR

NH WI

TX ID AZ

SD MI

HI

MS

MO

KS

NE

AL RI

MN

CO

AK

TN

MT

ME

KY

NM IA NV

VA

MA

CA

MD VT

NJ

GA

CT

PA

DC

SC

OK

DE IL

NC LA

NY


9.5 9.3

11.9 12.514.6

15.618.0

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cumulative Trauma Claimsper 100 Lost-time Claims

Accident Year

Exhibit 13

Source: WCIRB 2019

California’s Cumulative Trauma Claims

89% Increase


Claims Monitoring – Indemnity Developed to 72 Months

$17,894$19,338

$21,431$22,720 $22,738

$21,958 $22,179 $21,786$22,829 $23,541 $23,795 $24,085

$24,808

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Avg Paid Estimated Not Paid

Data valued as of Dec 2018

Average Indemnity Paid – Indemnity Claims

14% Post-Reform Increase


Closure Rates by Development Period – Indemnity Claims

Data valued as of Dec 2018

Claims Monitoring – Closure Rates

44% 43% 43% 43% 41% 41% 40% 40%43% 41%

45% 46%

55% 55% 55%52% 51% 51% 51%

54% 54% 55%

60%

64% 64% 64%61% 61% 61% 60%

64%67%

70%71% 71% 71%69% 69% 69% 70%

75%78%77% 77% 77% 76% 76% 75%

79%

84%

30%

40%

50%

60%

70%

80%

90%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Closed by Year from Injury - Indemnity Claims

1 year 2 years 3 years 4 years 5 years

Claims are closing faster


Agenda

Inpatient Spine Surgery

• 2003: MTUS sets clinical standards for spine surgery

• 2012: FBI sting shuts down Long Beach hospital scam

• 2013: SB 863 removes the duplicate payment for spine surgery hardware


Spine Surgery Utilization

Agenda

Volume of Implant-Eligible Spinal Surgeries by Payer Group Discharge Year Workers' Comp Medicare Medi-Cal Private Coverage

2010 4,980 (22.2%) 11,707 (0.9%) 1,836 (0.2%) 15,026 (1.2%)2011 4,809 (21.7%) 12,327 (1.0%) 1,901 (0.2%) 14,627 (1.2%)2012 4,784 (22.2%) 13,187 (1.0%) 2,002 (0.2%) 14,740 (1.2%)2013 4,357 (21.4%) 13,835 (1.1%) 2,122 (0.2%) 14,484 (1.2%)2014 3,771(20.3%) 14,767 (1.2%) 3,263 (0.3%) 14,226(1.2%)2015 3,476 (19.8%) 15,120(1.2%) 3,752 (0.3%) 14,071 (1.2%)2016 3,138 (18.9%) 16,080 (1.3%) 4,379 (0.4%) 13,683 (1.2%)2017 2,819 (17.8%) 16,051 (1.2%) 4,679 (0.4%) 12,692 (1.1%)2018 2,696 (17.4%) 16,102 (1.2%) 4,439 (0.4%) 11,975 (1.1%)

2010 - '18 -45.9% 37.5% 141.8% -20.3%


Agenda

• Pharmaceutical Updateo Opioid Utilizationo Rx Formulary Early Returns


Analgesic Opioid Prescriptions & PaymentsLost Time Claims by Service Year

55% decline in scripts & 73% decline in payments between CY 2008-2019

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Scripts 33% 33% 32% 32% 31% 29% 28% 26% 25% 22% 18% 15%Payments 31% 32% 31% 30% 28% 25% 24% 22% 20% 15% 11% 8%

0%

10%

20%

30%

40%

Source: CWCI 2019

Pharmaceutical Trends

Data valued as of June 2019


Distribution of Prescriptions by Therapeutic GroupLost Time Claims by Service Year

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Anti-Inflammatory 16% 16% 16% 16% 16% 15% 18% 20% 22% 23% 24% 24%Opioid 33% 33% 32% 32% 31% 29% 28% 26% 25% 22% 18% 15%

0%

5%

10%

15%

20%

25%

30%

35%

Anti-Inflammatory

+45%

Opioid

-55%

Data from CY 2008 – June 2019

Source: CWCI 20195

Opioid Trends


0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

51% 51%47% 47% 48% 49%

45%

37%

31%26%

Percent of Claims at 24Ms with 1+ Opioid Prescriptions

Claims with Opioid PrescriptionsIndemnity Claims: AY 2008 – 2017 at 24 Months

-49%

Source: CWCI 2019


Opioid Trends


-30%

-20%

-10%

0%AR CA CT DE FL GA IA IL IN KS KY LA MA MD MI MN MO NC NJ NV NY PA SC TN TX VA WI

-10%

-25%

-20%-21%

-18%-17%

-10%-8%

-16%-13%

-18%

-10%

-19%

-12%-10%

-15%-12%

-10%

-16%

-20%-22%

-11%-13%

-11%-11%-13% -14%

Percentage Change in Claims with Opioid PrescriptionsIndemnity Claims: AY 2012/14 – AY 2016/18

Source: WCRI 2019

National Pharmaceutical Trends & Pain Management


0

1,000

2,000

3,000

4,000

5,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

3,077 3,050 2,929 2,651 2,5982,155

1,717 1,4121,151

904

Average Cumulative Morphine Equivalents per Claim

Claims with Opioid PrescriptionsIndemnity Claims: AY 2008 – 2017 at 24 Months

Source: CWCI 2019


-71%

Opioid Trends


-60%

-40%

-20%

0%

20%AR CA CT DE FL GA IA IL IN KS KY LA MA MD MI MN MO NC NJ NV NY PA SC TN TX VA WI

-34%

-52%-50%

12%

-23%

-37%-42%

-21%-21%-15%

-50%

-10%

-33%

-44%

-30%-37% -37%

-44%

-31% -31%

-48%

-23%

-44% -45%

-30%-36%

-44%

Percentage Change in Opioid Strength (MMEs)Indemnity Claims: AY 2012/14 – AY 2016/18

Source: WCRI 2019

National Pharmaceutical Trends & Pain Management


Legalized Marijuana – 1996-2019

Source: ProCon.org

Beginning in 1996, states began to pass legislation permitting medical marijuana

In 2012, states began passing legislation permitting recreational use of marijuana

Today, 33 states have laws allowing medical marijuana, and 11 other states + DC also permit recreational marijuana

Alternatives in Pain Management: Marijuana on WC

46 States Allow Some Form of Marijuana Use


2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

All Generics $60 $63 $68 $76 $79 $92 $85 $58 $50 $39

$0

$20

$40

$60

$80

$100

$120

$140

-54%

All Therapeutic

Groups

The Impact of the 2015 Medi-Cal Fee Schedule Change on Generics

Average Paid Per Generic Script: CY 2009 – June 2018

Pharmaceutical Trends

Source: CWCI 2019


Early Returns on CA Formulary

MTUS Drug Formulary

AB 1124 - October 2015; Goes live Jan 2018Created 2 categories: Exempt & Non-Exempt

Legislative Intent:• Improve quality of care• Reduce Rx costs• Reduce friction costs (UR and IMR)


33.2%

54.3%

12.4%

35.2%

52.9%

11.9%

38.5%45.1%

16.4%

0%

20%

40%

60%

Exempt Non-Exempt Not Listed

2016 2017 2018

Percent of Prescriptions by Formulary Category

Exempt:+9%

Non-Exempt:-15%

Not Listed:+38%

Early Returns on CA Formulary

Source: CWCI 2019Fill Dates paid as of June 2018


Agenda

Reinforcing clinical decision-making via Independent Medical Review

Medical Dispute Resolution


Independent Medical Review

IMR letter volume decreased by 12% from 2018 to 2019


0

40,000

80,000

120,000

160,000

200,000

2003 2005 2007 2008 2010 2012 2013 2014 2015 2016 2017 2018 2019

17,433 13,257 8,810 12,244 7,596 7,939 5,068 2,885 2,641 1,910 1,584 1,726 1,3771,141

143,983165,525

176,002 172,194 184,735

163,354

Texas California

Source: Texas Dept of Insurance, CWCI 2019

Medical Dispute DecisionsCY 2003 - 2019

Texas vs. California

Unintended Consequences: Resolving Medical Disputes

• Medical Disputes are most often triggered by Attorneys• CA payers cover all costs; Texas does not• Incentives drive behavior


IMR Uphold Rates

0%

25%

50%

75%

100%

2014 2015 2016 2017 2018 2019

91.3% 88.4% 91.2% 91.0% 88.6% 88.2%

Uphold Rates

Consistent Uphold Rates on UR Denials and Modifications


How much care is approved or denied for injured workers in California?

Results across All Services after IMR in 2018*

Approval Rates after UR & IMR

*Services performed and/or reviewed from January 2018 to October 2018

Approved/ Approved with Modification

94.1%Denied5.9%


Agenda

Legal Update


• *King v. CompPartners: Applicant brought civil action against UR MD, alleging negligence for failing to warn him of dangers of abrupt withdrawal from Klonopin. When drug was withdrawn, the worker suffered four seizures, resulting in additional physical injuries.

• Supreme Court issued unanimous decision:

• Injuries arising from the utilization review process are compensable under workers’ compensation.

• Exclusive remedy protections preempt a civil court claim against utilization review provider.

• Concurring Opinion: Legislature should examine whether existing safeguards provide sufficient incentive for competent and careful utilization review

*CWCI has been granted amicus status in this case

URO Civil Liability

Case Law


• Dynamex v. Superior Court: Package delivery drivers filed class action lawsuit in civil court for violation of wage/hour laws. Company claimed that drivers were not employees entitled to wage/hour protections, because under the Borello common-law test they were just independent contractors.

Case Law

Independent Contractors

• Supreme Court ruled that definition under wage/hour laws must be read broadly to include all workers who would ordinarily be viewed as working in the hiring business, but not so broadly as to include individual workers who have traditionally been viewed as genuine independent contractors working only in their independent businesses. Thus, in a wage-and-hour class action, the proper standard for determining whether plaintiffs are independent contractors is the new “ABC” test, and not the common-law test set forth in Borello.

A) worker is free from control/direction of hirer regarding performance of work; andB) worker performs work that is outside usual course of hiring entity’s business; andC) worker is customarily engaged in independently established trade, occupation, or business of same nature as work performed.


• Hikida v. Costco: AME opined that applicant was 100% permanently and totally disabled, that the PD was due entirely to CRPS, that the CRPS was due entirely to surgery provided on an industrial basis, but that the underlying carpal tunnel injury was 10% due to non-industrial causes. WCJ awarded apportionment, and applicant appealed.

Case Law

Apportionment

• Court of Appeal disallowed apportionment. Applicant’s permanent total disability was not caused by the carpal tunnel syndromebut by the CRPS stemming from industrial medical treatment. Because the employer is liable for the medical treatment, the employer is liable for any disability resulting from failed medical treatment -- without apportionment. Aggravation of an industrial injury or infliction of a new injury resulting from treatment are foreseeable consequences of the original injury.


• *City of Petaluma v. WCAB (Lindh): Police officer with history of occasional migraines sustained repeated blows to his head resulting in severe headaches; he later lost vision in one eye. QME apportioned 85% of PD to pre-existing disease process (vascular spasticity). WCJ and Appeals Board denied apportionment because QME cited to “risk factors,” and apportioned to injury instead of to disability.

• Court of Appeal published decision reinstated apportionment: Where disability results from both industrial and non-industrial causes, apportionment is required.

• Applicant’s Petition for Review was denied by Calif Supreme Court on 3/13/19.

*CWCI and CAJPA have been granted amicus status in this case

Apportionment

Case Law


• Dept. of Corrections v. WCAB (Fitzpatrick): Psyche QME opined applicant was “on strict psychiatric grounds totally and permanently disabled,” but the scheduled PD rating was 99%. WCJ bumped to 100% “in accordance with the fact” under §4062(b). Defense challenged WCJ’s authority to render an independent judgment of PD rating in the absence of rebuttal evidence. Citing Jaramillo, WCAB ruled that §§4660 and 4662 offered different paths to prove total permanent disability.

Case Law

Permanent Total Disability

• Rejecting the statutory analysis in Jaramillo, the COA held that WCJ may not use §4662(b) as a separate path by which to award 100%. Instead, applicant must rebut the scheduled rating pursuant to §4660 and Ogilvie. Otherwise, a WCJ could make a subjective determination that may lead to inconsistent and non-uniform PD ratings, contrary to the legislative intent.


• In en banc decision, WCAB held that analysis of “catastrophic” under § 4660.1(c)(2) requires fact-specific determination of nature of underlying physical injury, including:

o The intensity / seriousness of treatment for the physical injuryo The ultimate outcome when permanent and stationaryo The severity of the physical injury and its impact on ADLso Whether physical injury is analogous to specified injurieso If physical injury is an incurable and progressive disease

• Wilson v. Cal Fire: Firefighter sustained severe physical injury requiring prolonged and intensive medical treatment. Parties stipulated to psychiatric injury, but WCJ declined to award increased PD for a psychiatric compensable consequence.

Case Law

“Catastrophic” Injury


Scope of Settlement

interpretation of C&R would support a finding that internal claim was intentionally omitted. Applicant appealed.

• WCAB: Overruled. Defense failure to list “internal” in ¶1 of C&R is fatal, despite multiple references to resolution of internal claim in ¶9.

• CWCI’s amicus brief provided evidence from the rulemaking file demonstrating a regulatory intent to permit parties to list body parts in either ¶1 or ¶9 of the C&R form.

• Writ denied 7/29/19; defense appeal to Supreme Court denied on 10/9/19.

• *Universal Furniture v. WCAB (Morales): C&R listed both specific and CT injuries, but did not list all body parts included in CT claim. After C&R became final, AA sought to pursue “internal” for CT claim, arguing that it was not covered by C&R. WCJ ruled for defense, stating that no reasonable

Case Law

*CWCI has been granted amicus status in this case


• Dennis v. Dept. of Corrections: Inmate injured during work program with resulting disability and eligibility for Supplemental Job Displacement Benefits. Dept issued notice of modified work but that IW was not eligible because he had “voluntarily terminated” his employment when he was released from prison. IW disputed the offer to the AD, and was denied. IW’s appeal of AD decision to the WCAB was filed more than a month past the deadline set forth in 8 CCR 10133.54(g).

• In this case, employer had failed to make a bone fide offer of employment and thus could not avoid obligation to provide voucher.

Case Law

SJDB Voucher

• In an en banc decision, WCAB held that 8 CCR 10133.54 is invalid, because it exceeds the statutory authority granting AD power to adopt rules for proper administration of SJDB program

Documents

DWC Jeaopardy Slides · 2020-06-01 · fkdoohqjhg :&-¶v dxwkrulw\ wr uhqghu dq lqghshqghqw mxgjphqw ri 3' udwlqj lq wkh devhqfh ri uhexwwdo hylghqfh &lwlqj -dudploor :&$% uxohg wkdw