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Saturday, July 19, 2014

California Dreamer: Recent Reform Too Good To Be True

California IMR-Source: CA DIR (7-2014)
Reading it is one thing, and believing it is another. As lawyers we all know that there are at least 2 sides to every story.

This week the California Division of Industrial Relations (CA DIR) published a report of the implementation status of recent workers' compensation reform legislation commonly referred to as SB 863 (2012 enactment).

The report concludes that it is still too early to determine whether or not the legislation produced a positive impact on the system. If delay and denial of benefits is what was intended, then from what has been heard on The Street, the legislation is a win.

Basically, the latest round of reform, crafted with very little public input and enacted in "the dead of night," was intended to curb and contain costs. The "innovative process" to limit escalating medical costs, probably the largest ticket item in the entire package, was to be limited going forward through a process termed Independent Medical Review (IMR). A theoretically system that removes the medical delivery decision from the adversary system, ie. get rid of the lawyers approach.

While it sounded great on paper, the process turned out to be a constitutionally challenged nightmare that ultimately delayed and denied benefits and added insult to injury for disabled workers. Employers and carriers started to challenge everything. No one wanted to take responsibility for medical care and the system suffered from compounding delay as everything seemed to be tossed in the IMR bucket.

California is particularly important as a model for workers' compensation.  It is a national testing ground for innovation. It is a very large and extremely complex system, where even the exceptions to the rule have multiple exceptions. Luckily the California workers' compensation bar  is well organized, educated, knowledgeable and skilled. Unfortunately, the numbers of expert workers' compensation lawyers continues to become fewer as firms backout of the system for lack of economic incentive to participate.

The CA DIR report released this week basically answers nothing about whether the system improved since the SB 863 was enacted. A few charts loaded with caveats only reflect a statistical vision of political hope for improvement that is diluted with a conclusion that it is too soon to tell if it is really working as promised.

The "promise" made by Industry to Labor in 1911 for system of remedial social legislation, ie. workers' compensation, seems broken. Recognizably the cycle after cycle in California of repeated efforts to readjust the system through major systemic efforts continue to compound failures.

It is far time that California stopped dreaming about improvements that appear too good to be true and start thinking creatively on how to craft an innovative system that meets the needs of ALL the stakeholders.


Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thompson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson-Reuters). For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  have been representing injured workers and their families who have suffered occupational accidents and illnesses.