Correctional Officers Guide for the New Workers’ Compensation Law- SB 863

Correctional Officers Guide for the New Workers’ Compensation Law- SB 863

By John A. Ferrone Esq. Adams, Ferrone & Ferrone

     Correctional officers, who have sustained a work injury, such as a staff assault or a presumptive injury to the heart, will be faced with a host of new and complex work comp laws outlined in Senate Bill 863. SB 863 is the latest in a long line of “reform” measures to the already-complicated workers’ compensation system. This article will provide a brief guide for correctional officers on the major changes in the new law.

     In 2004, then-Governor Schwarzenegger passed SB 899 which dramatically altered the work comp system by changing the permanent disability rating system, the scope of medical treatment, the resolution of medical disputes, and also applying a cap on certain benefits.

     Over the course of the next eight (8) years, the work comp system has been plagued with significant delays with medical treatment. When a treatment dispute arose due to Utilization Review (UR) delaying or denying an officer’s recommended treatment (such as surgery, physical therapy or MRI), the injured officer was required to resolve this treatment dispute by being evaluated by a State Panel Qualified Medical Examiner (PQME), or an Agreed Medical Examiner (AME) if the injured officer had an attorney.

     Typically, this means the injured officer is off work wasting the IDL benefit while the treatment dispute is resolved, which could easily take up to 6-10 months to resolve. Meanwhile, the officer is dwindling away with little or no authorized medical treatment.

     The latest “reform” measure in SB 863 was an attempt to “fix” this problem. Unfortunately, some of the new changes went too far. The most significant change in SB 863 is the how medical treatment disputes will be resolved. The new structure is called Independent Medical Review (“IMR”). IMR will apply to all medical treatment disputes for injuries occurring on or after January 1, 2013. More importantly, as of July 1, 2013, IMR will apply to ALL cases regardless of the date of injury. The IMR process comes with its own deadlines and procedural requirements. Properly navigating this new system may prove to be difficult.

     The goal of the IMR is to resolve the medical treatment disputes under 60 days. However, there are significant problems with the IMR system. Under IMR, the injured officer will no longer be evaluated by a PQME or AME when a treatment dispute arises. The officer will now be required to appeal any UR denial to IMR, which is controlled by a single company called Maximus Federal Services.

     First, the decision of IMR can only be appealed to the WCAB on limited grounds—fraud, conflict of interest or mistake of fact. Importantly, the Workers’ Compensation Judge does not have the power to overturn the IMR decision. If an appeal is granted, which is highly unlikely given the narrow standards, the Judge may only direct a further review with a different reviewer.

     Secondly, the injured officer can no longer be evaluated by a PQME or AME to resolve treatment disputes. IMR is another paper review process, like UR, that has no avenue for a face-to-face evaluation. In other words, a doctor who has never seen the injured officer will control the type of treatment the officer receives. Any attempt to avoid this by going to a PQME or AME will fail because SB 863 definitively states this cannot be done—the report would not admissible in a hearing for purposes of resolving a treatment dispute.

     The new IMR provisions in SB 863 have yet to be fully tested, but there should be serious concern for the lack of an appeal process when an IMR decision continues to deny medical treatment. What is the injured officer going to do when IMR affirms a denial of surgery or other recommended treatment, given the fact there is basically no appeal and no further medical evaluations allowed? It is reasonably foreseeable that officers will essentially be forced to use their own private health insurance (incurring added expense with co-pays) for an accepted work injury due to the new IMR system.

     Since the passage of SB 863, there has been an attempt to amend the law to allow appeals but the bill (SB 626) was pulled. However, correctional officer have another potentially more effective alternative. Bargaining Unit 6 now has the authority to create a workers’ compensation carve out or alternative dispute resolution (ADR).

     The ADR is a labor-management agreement that involves designing an MOU to cover the work comp issues, such as treatment disputes. The City of Long Beach has already launched an ADR program in 2008 for both the police and fire fighters. The City of Huntington Beach and the County of Kern have also agreed to ADR systems with both of its police and fire unions, and are expected to be in force in the very near future. A study of the Long Beach program revealed significant reduction in time off work, delays in treatment and resolution of disputes. It has surpassed all expectations in improving the inherent delays in the work comp system. The City of Long Beach continues to utilize the ADR system and will not have to face the uncertainty of the newly passed IMR procedures.

     The State of California and its bargaining units should consider the benefits of the ADR system rather than the current system that is fraught with uncertainty.  Despite the negatives, there is some good news with SB 863. The new law has increased permanent disability benefits and also created a “Return to Work Fund.” Under the prior 2004 reform of SB 899, injured officers were largely undercompensated for their injuries, especially with physical injuries. Injured officers were losing their jobs and receiving as little as $10,000 or less in permanent disability compensation, which paid out at only $230/week. If the officer is under fifty (50) years old, the officer was then faced with being off work and applying for an industrial disability retirement through Cal-PERS. Unfortunately, the retirement process can easily exceed six (6) months with no guarantee of it being approved. That leaves the officer receiving only $230/week while Cal-PERS makes its determination.

     Under the new law, the weekly permanent disability benefits will be increased over the next two years with the max rate going to $290/week. Additionally, the new law changes the way permanent disabilities are rated, which should increase the officer’s overall permanent disability award. SB 863 further established a “Return to Work Fund” that will make additional payments available to injured officers whose permanent disability ratings are disproportionately low in comparison to their wage loss. For the officer who sustains a career ending injury and receives a low disability rating, that officer may now appeal to the Division of Industrial Relations (DIR) and seek additional disability payments. Hopefully, that officer will not have to find a way to survive on the $230/week previously being awarded.

     The dust has yet to fully settle on the latest ‘reform’ effort in the work comp system. The increases to the permanent disability benefits were long overdue, but the IMR provisions need a defined and real appeal process. An alternative to the IMR system is the ADR carve-out that police and fire unions negotiated in Long Beach, Huntington Beach and Kern County.

     About the Author-John A. Ferrone is a partner in the law firm of Adams, Ferrone & Ferrone. The law firm specializes in the representation of public safety regarding contract negotiation, grievances, internal affairs, officer involved shootings, workers’ compensation, retirement, and personal injury. The law firm has offices in Westlake Village, Newport Beach, Bakersfield, and San Diego.

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