Information Alert:
Changes to Workers' Compensation Law in California

On April 19, 2004, Governor Schwarzenegger signed into law sweeping changes to California's workers' compensation system. The overhaul was prompted by employers' complaints that California's workers' compensation insurance rates were the highest in the nation. The bulk of the changes, particularly those affecting medical treatment, will have a serious impact on workers who are injured on the job, especially low-income workers who are not represented by attorneys. The most significant changes in the new law include:

1. Employers Allowed to Choose Injured Workers' Doctors. Under the old law, an injured worker was allowed to see his/her own doctor to treat the injury and determine whether or not the injury was covered by Workers' Compensation benefits. The new law allows employers to choose their workers' doctors. Beginning in 2005, employers are expected to set up an HMO-like medical provider network, from which doctors will be allowed to see and treat injured workers. Doctors who have not been approved by the employer as part of this network will not be reimbursed for treating an injured worker.
   
   An employer-designated physician network raises serious concerns that the physicians in the network may be less suited than the injured workers' own physicians to determine whether those workers are eligible for Workers' Compensation benefits. Although doctors from the employer's network are not supposed to reduce, delay, or deny medical treatment for injured workers, workers may be understandably apprehensive that someone other than their own physician will now control the diagnosis and treatment of their injury. The impact of this change could be significant for the low-income worker who cannot afford to have an independent doctor diagnose an injury. Also troubling is the prospect that employers may attempt to "doctor shop" for doctors who may be more likely to deny classifying workers' injuries as qualifying for Workers' Compensation coverage.
   


2. Workers' Compensation Appeals Boards Must No Longer Give Deference to the Opinion of the Workers' Doctor. Under the previous law, the Workers' Compensation Appeals Board gave significant weight to the opinion of a worker's treating doctor when deciding whether or not the worker's injury occurred on the job. The former law presumed that the doctor treating the injured worker was in a better position than the employer's (or insurance company's) doctor to determine the cause and extent of the worker's injury. Under the new law, the Workers' Compensation Appeals Board no longer has to give this degree of respect to the opinion of the worker's doctor, making it much easier for employers to dispute whether or not a worker has an injury that qualifies for Workers' Compensation benefits. Note: Even with the advent of an employer-designated network of physicians, this change in the law will still affect workers who suffered injuries prior to the January 1, 2005 effective date of the employer-designated physician provision and workers who elect to pay for treatment by their own personal treating physician.
   


3. Restriction on Independent Medical Review of Injuries. The new law allows for an independent review of doctors' determinations, but only for workers who have had three doctors' opinions stating that they are not injured or that their injury does not fall within the Workers' Compensation system. In those cases, the worker may request that an independent doctor, chosen from a panel of doctors, review the decisions of the other doctors. Given that an independent doctor may be less likely to overrule the opinions of three fellow doctors, it is possible that few workers will ever use this "review" system.
   


4. Employers Must Authorize Medical Treatment Immediately after the Employee Files a Claim. Under the old law, employers had up to 90 days to approve workers' compensation claims. During that time, an injured worker might not know whether he/she would be reimbursed for the medical costs of an on the job injury. The new law requires that employers allow an injured worker to see a doctor, without charge, for treatment within one day after the employee files a claim for a workplace injury. Thereafter, the employer must provide up to $10,000 of such treatment until the worker's claim is either accepted or denied by the employer or insurance company. This immediate treatment provision is a significant advantage for workers who in the past may have waited to see doctors out of concern that their Workers' Compensation claims would be denied, forcing the workers to pay for any doctors' bills.
   


5. Employees Must Prove How Much of Their Injury Is Caused by the On-the-Job Injury. In contrast with the old law, employees now must prove what percentage of any permanent disability was caused by their job activities. Employers will have to pay only for the percentage of the injury that was caused by work. Since employer-designated doctors will now determine what percentage of an injury was caused by work activities (versus off the job activities), employers will have a new incentive to inquire into the off-the-job activities of employees. Employees will be required to disclose all their previous permanent disabilities and impairments.
   


6. New Limits on Temporary Disability Benefits. Effective immediately for all injuries, the new law creates a two-year limit on temporary disability benefits designed to replace income lost due to the workers' injury. The change means that workers whose injuries have not healed in two years, but who do not yet qualify for permanent disability status and benefits, will no longer receive financial assistance through the Workers' Compensation system.. It is not clear how many workers this new provision will impact, although certain temporary injuries, like severe eye injuries, amputations, and HIV, will not be subject to the two-year temporary disability cut-off.
   


7. Reinstatement of Vocational Rehabilitation Program. The vocational rehabilitation program (education and retraining for workers who, due to their injuries, are unable to return to their employment) will be reinstated for workers suffering injuries that occurred on or before December 31, 2003. The entire vocational program, even for workers injured before December 31, 2003, is scheduled to end in 2009.
   


8. New Limits on the Penalties Employers Pay for Unreasonably Denying or Delaying Workers' Compensation Benefits to Injured Workers. Under the old law, employers were liable for a penalty of 10% of the amount of payment owed to an injured worker if the employer delayed or denied the payment to the worker without a good reason. The new law limits these penalties to the lesser of 25% of the amount of the payment due or $10,000. Also, a worker who wants to file a complaint that an employer delayed a payment or failed to pay without a reasonable excuse has two years after the date that the payment was due to file such complaint.
   


9. New Limits on the Penalties for Employers who Knowingly Violate the Workers' Compensation Rules. Employers who intentionally and regularly violate the rules governing Workers' Compensation are liable for up to $400,000 in administrative penalties. The penalties are not paid to employees, but instead are placed into a fund used to help injured workers return to work.
   


10. Unions May Collectively-Bargain Medical and Disability Benefits under Workers' Compensation. The new law allows unions to bargain with employers to allow their members to have better medical and disability benefits than they otherwise would be entitled to receive under the Workers' Compensation program. Given the often stronger bargaining power of unions, this change may significantly benefit union workers who suffer workplace injuries.

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