Perpetuating Bureaucracy

If there's one thing I'm learning at the California Workers' Compensation and Risk Conference in Dana Point, CA this week is that no one knows the impact of SB 863.

Predictably, those who championed the bill are saying that the costs of administration of claims is going to go down and that there are already positive results being demonstrated.

And those on the receiving end of the massive law change are less optimistic, if not outright pessimistic, that California will see any savings and just may have engineered in even more costs.

The real story in my opinion is that the changes brought about are so big, so complex, and so confusing, that no one can have any credible opinion on whether anything will change for the better.

Mark Webb, vice president and general counsel for Pacific Compensation Insurance Co., said, “we don’t know what we’ve got here; let’s not change it until we do” when counseling against any further system modifications for several years.

Max Koonce, senior director of risk management for Walmart, commented that, "at best, California is treading water.”

Martin Brady, executive director of Schools Insurance Authority and part of the SB 863 negotiating team, said “we’re finding our way; we’re midstream. It will take time to sort out the details.”

But I think the most poignant observation about SB 863 came from one of the biggest champions of the legislation, Christine Baker, director of the Department of Industrial Relations, without her really knowing what she was communicating.

Calling the Qualified Medical Examiner process and backlog a "major disaster," (to which she received applause) Baker said there was "too much friction" in the system, calling upon system participants to work together to and cooperate in the resolution of claims. She noted that no other state has a QME process and wondered aloud why we do in California.

Hmm, short -term historical memory going on up in Oakland headquarters. Let's review ...

QMEs were devised in response to one of the "other" reforms back in the 1990s. The process was seen as a way to curtail abuses in the earlier law that gave presumptive favor to the treating physician's opinion on everything medically related.

The treating physician presumption was one of the biggest bone-headed legislative changes ever made to the California system. Upset about "dueling doctors," people in Sacramento that had no understanding of the mechanics of the system decided that instead of having a doctor for the defense, and a doctor for the applicant, which more often resulted in a split in opinion (generally regarding permanent disability, but often treatment as well), they figured that the physician who had the most personal contact with the injured worker - the doctor that was his or her treating physician - knew best about the applicant's condition, needs and disabilities.

It didn't take long for injured workers and their attorneys to figure out that all they had to do was designate their favorite physicians, those whom they knew would write the most favorable reports, as the Primary Treating Physician, and then could control the medical aspects of the case, making referrals to buddies, and describing abnormally large quantities of disability disproportionate to the actual injuries sustained or claimed.

So instead of being able to have a range of evidence to choose from, Workers' Compensation Judges had a much simpler job and were making awards based on the PTP presumption.

It only took a couple of years to "reform" that part of the system, which resulted in the QME process.

The original QME process required the parties to attempt to agree on a single physician for opinions, and failing agreement required various notices to go back and forth, and to the Division of Workers' Compensation, before a panel of three was issued by the state, and then more forms, more time, and more of everything happened, assuming of course that the physicians on the panel were even available for the work. Often, they weren't.

The legacy of this, and many more of the various reforms that have occurred over my 30 years in work comp, are still part of the Tower of Babel that we call workers' compensation in California.

That's why I have to agree with Workers’ Compensation Insurance Rating Bureau President Bill Mudge, who told his audience at the conference that the reform conversation will reoccur in three years.

“All those things are still in our system,” Mudge said. “I’m hard-pressed to see how costs are not going to rise.”

It may be more than three years before "reform" enters the workers' compensation parlance again, but trust me, it will. And I have no faith that those tasked with making changes will have learned anything.

Because if there's one thing that bureaucracy is good at, it is perpetuating bureaucracy.