Tuesday, September 4, 2012

With 863 Comes New Administrative Burdens, Expense

I woke up Saturday morning with several text messages and voice mail on my cell phone - everyone's excited about the passage of SB 863.

Maybe "excited" is the wrong word - there was some concern in some of the messages, there was some hope in some of the messages; clearly, though, SB 863 is a game changer for many in the industry, and of course injured workers and employers.

And for the Division of Workers' Compensation (DWC) itself - for SB 863's true import to the overall system won't really be known until the DWC compiles its list of work to do for the implementation of SB 863, and puts into place the various systems to accomplish some of the more difficult tasks. The operational chores facing the DWC are tremendous.

For instance, DWC has past experience with lien filing fees, and it was not a good experience. The administration and collection of fees cost more than the fee itself which led DWC to eventually request a moratorium on the practice.

That practice is back now, but with even more complexity as there are now two levels of fees and a distinction between services for which a lien can be filed and those for which a lien can not be filed.

Section 63 of SB 863 adds Labor Code section 4903.05. This is the lien filing fee section. It applies only to liens for services that are covered by subdivision (b) of section 4903 and "claims of costs."

Subdivision (b) of 4903 deals with, "The reasonable expense incurred by or on behalf of the injured employee, as provided by Article 2 (commencing with Section 4600) and, to the extent the employee is entitled to reimbursement under Section 4621, medical-legal expenses as provided by Article 2.5 (commencing with Section 4620) of Chapter 2 of Part 2."

Section 4600 is concerned with, "Medical, surgical, chiropractic, acupuncture, and hospital treatment, including nursing, medicines, medical and surgical supplies, crutches, and apparatuses, including orthotic and prosthetic devices and services, that is reasonably required to cure or relieve the injured worker from the effects of his or her injury shall be provided by the employer. In the case of his or her neglect or refusal reasonably to do so, the employer is liable for the reasonable expense incurred by or on behalf of the employee in providing treatment."

4600 also deals with interpreters, transportation to and from a medical appointment, right to seek treatment from a private physician not part of a medical network, and a couple of other details.

Sections 4620 and 4621 are about medical-legal expenses.

On and after January 1, 2013 liens for the provision of the services covered by the above code sections (i.e. the majority of lien claims) are subject to a filing fee of $150 AND "proof that the filing fee has been paid." The fee shall be collected electronically. How the proof of payment is to be administered is not provided. And other than the statement that the fee shall be collected electronically, that topic is not dealt with.

In addition, any lien filed prior to January 1, 2013 is essentially now invalid unless an "activation fee" of $100 is paid under new Labor Code section 4903.06 - which operates much the same as 4903.05.

Presumably then, EAMS will have to be modified to include a "shopping cart" system applicable to liens, and this will affect both of EAMS inputting systems: e-filing and Jet filing. The Division has 4 months to get this done - not a lot of time when dealing with government procurement contracts involving, in particular, computer system modification. While the DWC can interpose necessary regulations on an emergency basis, getting the operational system to perform the necessary function on an emergency basis is going to be an expensive challenge.

This is just one small example, because in addition to collecting filing fees DWC must also begin promulgating new fee schedules for copy services, a new medical fee schedule, new interpreter regulations, new return to work regulations, permanent disability regulations and rating system, new EAMS regulations, etc.

In 2004, SB 899 brought upon the DWC huge new obligations, mandates and requirements. DWC at that time had a difficult time meeting those obligations timely, and some weren't met as required, albeit DWC was also short of staff at that time, and allocated staff budgeting kept shrinking after 899's enactment. But DWC at that time had nearly double the amount of time to prepare since SB 899 was passed in April of 2004. While some of SB 899 was passed as an emergency measure, most of it was deferred to January 1, 2005 for implementation.

DWC doesn't have the luxury of 8 months under SB 863 and in my estimation, SB 863 doubles the amount of new work required of DWC. It's a huge commitment and I can only hope that the Brown Administration and the Legislature see to it that DWC has enough money, personnel and resources to get the job done in time. 

While DWC is "user funded" it still goes through the budgetary process, and during the height of the last recession was ham-strung by the Schwarzenegger Administration's dictate that no agency could have all of its money because that would look bad to the rest of government.

At least DWC has been hiring judges and support personnel - we have to assume that the agency's financial ability to meet its charges under SB 863 will likewise see adequate funding.

SB 863 is seen by critics as a return to 899 politics. Let's hope that it's not a return to 899 administrative constraints.

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