Tuesday, June 18, 2013

Glad I Don't Have That Job

The hornet's nest that was started with the $120 million excess disability fund created by SB 863 in California is finally starting to take shape, and as many figured, this last minute, ambiguous provision raises more questions than it satisfies.

SB 863 says eligibility to the fund is to be determined by the director of the Department of Industrial Relations and that any director determination shall be subject to review at the trial level of the Workers’ Compensation Appeals Board “upon the same grounds as prescribed for petitions for reconsideration.”

WorkCompCentral reported this morning that a budget trailer bill, AB 76, now awaiting Gov. Jerry Brown's signature, limits application of the fund to injuries on or after Jan. 1, 2013, allows for the carryover from one year to the next any unspent money in the account, but doesn't restrict that money to only financing the fund, doesn't dictate what happens when the fund goes short, and doesn't set up an allocation system to prevent first in line preferential treatment.

The fund measure is part of a much broader budget bill, affecting the Water Code, Public Utilities Code, Harbors and Navigation Code, as well as the Labor Code, setting up partisan political fighting.

AB 76 passed through the full Senate on Friday, 23-11 with all Republicans opposed. The Assembly then followed with a 53-25 vote, with Republicans opposing the measure again.

What's funny to me is that Republican leader Bob Huff of Diamond Bar told the Senate, “Colleagues, ask yourself how comfortable you are with a final product produced by three people in a closed room that neither you, nor your constituents have had a chance to review.”

I thought that's how most legislation goes through the legislature...

California's lawmakers have given the director of DIR an incredible amount of power, and responsibility, since neither SB 863 nor AB 76 give her much direction in terms of operating procedures and rules for the fund.

Employer advocates are concerned that the fund will be volatile, since there are no rules regarding excess monies or fiscal shortages.

Employee advocates worry that allocations can't be firmly projected setting up first come, first served disputes.

The arguments are uniquely aligned - the number of cases that will qualify for the fund from one year to the next is obviously not fixed and there is no way to predict exactly how many are to get how much year in and year out.

The DIR is currently waiting for a Rand Corp. wage-loss study before it sets the criteria for workers to receive payments from the fund. Assuming timely release of that report, DIR hopes to get draft regulations out by the end of summer.

The Rand researchers are smart people. It will be interesting to see how they put the numbers out there that will allow some sort of reasonable predictability to fund allocations, and to annual employer assessments.

Both sides are rightly concerned that fund monies will end up the fodder of future legislatures looking to plug budget gaps, and the director will not be able to override such legislative raids with her rules in such situations.

In the grand operational scheme of things, the fund doesn't represent a whole lot of money. But to injured workers with significant wage loss, the fund may make a huge difference.

The DIR, and in particular its leader, Christine Baker, have a very difficult, delicate task ahead. I expect the regulatory process enabling the $120 million excess disability fund to be particularly contentious.

Baker is a strong leader. Implementation of the fund is going to be a huge challenge.

And in all of the SB 863 drama, the how and what of such regulations will likely be the defining moment of Baker's career.

I'm glad I don't have that job.

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