Monday, December 17, 2012

The Regulatory Process Myth

“The intent of the Legislature was to provide a replacement for Ogilvie ratings,” Department of Industrial Relations (DIR) Director Christine Baker is quoted as saying at the Commission on Health and Safety and Workers’ Compensation (CHSWC) meeting on Friday.

Let's get one thing straight - SB 863 was not the intent of the Legislature.

It was the intent of Big Self Insured Business (and Big Labor at the desperate request of Big Self Insured Business to get their support).

And Big Labor almost didn't go along with out the $125 million bonus that was negotiated at the last minute and paid for by employers with a(nother) surcharge on insurance premiums.

The Legislature, on the other hand, was just along for the ride.

And don't believe that the lobbying and, in my opinion, undue influence, is over. Big Self Insured Business is intimately involved in drafting the regulations that are to implement SB 863.

Everyone talks about the "administration" drafting the regulations. It may be Division of Workers' Compensation (DWC) or DIR word processors that are outputting the text, but the thought, the language, the structure of the regulations don't stray far from the heavy hands of Big Self Insured Business

Empirically, scientifically, studied, without political influence or emotion; that's how we THINK regulatory promulgation occurs.

Far from it.

In truth, the regulatory process is as politically influenced as the legislative process.

Sources that are intimately involved in the regulatory processes since the passage of SB 863 have confirmed this to me. Big Self Insured Business will tell us how certain administrative systems should operate.

The way regulations are actually promulgated in this overly adversarial industry is that the people that fund the legislation dictate the terms of the regulations.

The government remains beholden to those whose interests are primarily represented in the legislative process. It is NOT government for the people, by the people. In this case it is government controlling the people as dictated by Big Self Insured Business.

And maybe that's just the way it has to be. Maybe Big Self Insured Business just got so upset with the way things have gone for so long in workers' compensation that they just decided it was time to take matters into their own hands to the exclusion of all others. Maybe the bipartisan approach just doesn't work and Big Self-Insured Business is just frustrated with opposition that doesn't offer alternatives or solutions that are viable.

But this isn't how government is supposed to work, at least not in my mind. There's room for debate, and room for compromised solutions. Back room deals, forced law, uncompromising positions, only breed contempt and further instigate adversarial relations.

At the CHSWC meeting on Friday, Baker said, “A supplemental job displacement benefit on a 2013 or later injury will show that the worker did not have an opportunity to return to work with the at-injury employer.”

Brad Chalk, legislative chairman and immediate-past president of the California Applicants’ Attorneys Association, took issue with that statement, saying after the meeting that eligibility for the program is not determined by date of injury.

Because the new Labor Code section creating the $120 million fund does not specify when the fund takes effect, applicants’ attorneys say eligibility should be determined pursuant to Section 84 of SB 863, he said. That section says the bill “shall apply to all pending matters, regardless of date of injury, unless otherwise specified in this act, but shall not be a basis to rescind, amend or reopen any final award of workers’ compensation benefits.”

Fight as they may on the regulatory language, my guess is that CAAA is going to lose this round and will need to challenge the language in a court case to the Court of Appeals or Supreme Court.

Unless for some reason Big Self Insured Business can be convinced otherwise - and fat chance on that.

Defense attorney and author of Sullivan on Comp, Michael Sullivan, told WorkCompCentral that Baker has final say.

“The statute appears to give a great deal of discretion to the director,” he said. “The fact that it says, ‘eligibility for payments and the amount of payments shall be determined by regulations adopted by the director,’ said to me that the director and the regulations the director creates will be the basis for determining questions like when are the funds going to be distributed, how are the funds going to be distributed and what is the method for collection.”

Sullivan is partially correct. The director does have final say.

But the Director is not making any decisions in a vacuum. There is influence outside the DIR's offices that are helping the Director draft the regulations and make regulatory decisions.

The representatives of Big Self Insured Business have weekly meetings to ensure that they are on the same table about all of the pending issues; a unified force with strong political power exerting near monopolistic influence over the outcome of a governmental function.

For those who are affected by SB 863 and the regulatory process now underway, making public comment on the regulations via DWC's forums, writing to the Administrative Director, or pitching directly to them, will have no effect whatsoever. You may as well throw your comments directly into the trash.

Just as the pre-SB 863 dog and pony show produced no directional change, so too do public comments on pending regulations. These are "feel good" measures - a marketing trick that is pretty transparent: there is no desire by the government to take into consideration the reasoned review of the public in matters of workers' compensation.

Small example - the regulations that were originally proposed for independent bill review called for the fee to be $325. Providers objected that the fee was too high and unsupported by any evidence as to what the actual cost is.

Instead the filed regulation set the fee at $335. No explanation, no reason, nothing tied to evidence of cost. I'm sure there is some reason for the fee adopted, but it is not explained publicly.

“Is the whole world going crazy?” said Reid Steinfeld, an attorney who specializes in medical collections and was critical of the proposed $325 fee, in an email to WorkCompCentral. “Now my co-workers are mad at me for my comments. They think the insurance company gave me a giant FU.”

Reid, you are directing your anger at the wrong interests. It's not the insurance companies, but Big Self Insured Business giving you the bird. You are focusing on the wrong constituency.

If one really wants to affect the outcome of the actual language of the regulations then look to the backers of SB 863, and the actual individuals involved. They are, de facto, making the regulations. Review how SB 863 came into being - those same tactics are being used in the regulatory process.

Don't kid yourself. Politics plays a big part in the regulatory process. It is government against the people, by a select few.

I'm not anti-SB 863. I believe that there are provisions in the bill that were necessary, were a reaction to significant problems in the California system, and I also believe those that work in the system will adjust.

There are provisions of the law, however, that require good discourse and reasoned implementation. There are times when the input of seasoned professionals on ALL sides of the conversation need to be seriously considered because those are the people that are REALLY going to implement this law and they're the ones that are going to figure out how to pick it all apart as well.

Ignore the front lines, and suffer the consequences. We've been here before. History repeats because memory is short. Is there any question why "reform" cycles so predictably?

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