First set of work comp reforms become law
 Jan. 24, 2013

The Division of Workers’ Compensation (DWC) is beginning to implement changes to SB 863, last years comprehensivework comp reform bill. SB 863 should balance benefit increases to injured workers with cost savings to employers. There are several aspects of SB 863 that became law on January 1, 2013 without requiring any regulatory action. They include:

Permanent Disability Rates
Permanent disability (PD) indemnity benefits will automatically increase for injuries occurring on or afterJanuary 1, 2013. The new minimum permanent disability rate will be $160 per week and the new maximum rate will also increase based on the injured worker’s level of permanent disability indemnity as follows:

  • $230 per week for PD ratings from 1% to 54%
  • $270 per week for PD ratings from 55% to 69%
  • $290 per week for PD ratings between 70% and 99%
  • For a rating of 100% (totally permanent disability), the base weekly payment rate is the same as the temporary total disability indemnity in effect at the date of injury, but is subject to cost of living adjustments

For injuries on or after January 1, 2014, the new maximum rate will be $290 per week for all PD levels.

Death Benefits - Burial Expense
For an injury on or after January 1, 2013 that causes the employee’s death, reasonable expenses for the employee’s burial will increase up to $10,000.

As expected, implementing manyaspects of SB 863 require that regulations be established. The following is a brief outline of several key changes enacted by SB 863 that require regulatory implementation:

Independent Medical Review (IMR)
For injuries on or after January 1, 2013, and effective July 1, 2013 for all dates of injury, medical treatment disputes will be resolved by physicians through a process known as Independent Medical Review (IMR). This replaces the burdensome and often costly current adjudication system. Going forward, if utilization review denies, delays or modifies a treating physician’s request for a specific course of medical treatment for the reason that the treatment is not medically necessary, the injured employee can request a review of that decision through an IMR conducted by a physician. To ensure that injured employees receive timely and appropriate medical treatment, the physician review will be prompt and predicated upon evidence-based standards.

Lien Filing and Activation fees
Lien resolution has historically been a burdensome process. Now, any initial lien for reasonable medical expenses incurred by, or on behalf of, the injured employee (except disputes subject to independent medical review or independent bill review) and filed on or after January 1, 2013, is subject to a lien filing fee of $150. For medical treatment expense lien claims filed before January 1, 2013, a $100 lien activation fee must be paid prior to filing a Declaration of Readiness to Proceed to request a lien conference or prior to appearing at a lien conference. If the $100 lien activation fee is not paid by January 1, 2014, the lien claim is dismissed as a matter of law.

Return to Work
SB 863 also produced changes that relate to whether or not an injured worker can return to work. Among those changes are:

  • The 15 percent increase ordecrease in the permanentdisability rate associated with whether or not the employer was able to offer the employee regular, modified or alternative work has been eliminated for injuries occurring on or after January 1, 2013.
  • The Supplemental Job Displacement Benefit voucher value that is currently linked to theinjured worker’s PD rating willbe a fixed amount of $6,000, regardless of the PD rating, for injuries occurring on or after January 1, 2013.
  • Newly-added Labor CodeSection 139.48 creates a $120 million "Return to Work Fund,"to be established and administered by the Department of Industrial Relations. The fund will be available to individuals who are injured at work on or after January 1, 2013 and whose PD benefits are disproportionately low when compared to their earnings loss. Proposed regulations regarding the fundwill be issued in the near future.

The DWC is updating their website frequently, where you can follow their progress on implementation. Additionally, CMTA will provide routine updates on the implementation of SB 863 throughout the year. Hopefully, these changes will improve California's beleaguered workers' compensation system.

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