The new reforms took effect on January 1, 2013 and are projected to save the state $1 billion per year in workers’ compensation costs. The reforms have the support of both business organizations and workers’ advocate groups.
However, some in the workers’ compensation insurance industry worry that the reforms will not control costs as intended. Industry experts explain that in recent years, workers’ compensation insurance companies have experienced increases in their loss ratios and have passed these costs on to employers through increases in premiums.
They fear that the reforms do not cut costs enough to stave of these loss ratio increases, and, as a result, will force workers’ compensation insurance companies to leave the state or fold.
New reforms make changes to permanent disability benefits
The reforms will increase benefits for permanent disability by about 30 percent over the next two years, or around $740 million per year. In 2004, workers’ compensation reform decreased the amount of benefits awarded to injured workers. In a reversal, now, permanent disability benefits will reflect the loss of future earnings more accurately.
Simultaneous with the boost in benefits, comes a change in how permanent disability determinations are made, a change that will likely decrease the amount of workers who receive such status. While a worker’s occupation, age at the time of injury, and the nature of the worker’s injury will still be considered, the worker’s reduced future earning capacity and ability to compete for jobs will no longer be factors in permanent disability determinations.
In addition, those suffering from sleep dysfunction, sexual dysfunction or psychiatric disorders are now ineligible for permanent disability unless their conditions arose from a workplace injury.
Changes to Independent Medical Reviews
Independent Medical Reviews, or IMRs, have been a long-standing component of California’s workers’ compensation system. IMRs are used when there is a disagreement over appropriate medical treatment for an injured worker.
Prior to 2013, however, the parties in disagreement could choose to seek their own independent medical opinions and use those to argue their side in front of a workers’ compensation judge rather than use the state’s IMR program. Now, disagreements over medical treatment must be resolved using an IMR.
When an IMR is requested, the Division of Workers’ Compensation will contract with an independent medical expert who will review the case and issue a final decision that cannot be appealed unless there is a suspicion of conflict of interest, fraud or discrimination.
Reforms to the Medical Provider Network program
Lastly, there are changes to the state’s Medical Provider Network (MPN) program. The MPN was established in 2004 to give employers more control over which providers injured workers could use. The program was meant to decrease costs to employers, but, in reality, costs went up and workers had a more difficult time accessing appropriate medical treatment.
Now, employers must notify workers about how the MPN works and make the chosen providers accessible within the network. They must also tell workers that they have the right to change physicians as long as they stay in the MPN and inform them about how they can make the switch. If employers fail to provide this information, and this failure denies a worker treatment, he or she is entitled to find treatment outside the MPN.
Hopefully, California’s new reforms will provide more benefits and better service to both injured workers and employers. If you have been injured in a workplace injury, it would be wise to contact an experienced workers’ compensation attorney.