The Cohen Group Newsletter - Volume 6 Issue 1, Article 5. January 2004
Workers' Compensation Reform and IIPP Reviews
Tim Bormann, CIH
At the end of its last session, the California state legislature passed a workers' compensation reform package in two major bills, AB 227 and SB 228. The bills were approved by Governor Davis on September 30, 2003 during the waning hours of his administration. According to Senator Richard Alacon (D-San Fernando Valley), sponsor of SB 228, the package would achieve a $5.3 billion one-time savings and an on-going annual savings of between $4.8 and 5.5 billion. This is welcome news to beleaguered employers saddled with increasing worker compensation costs. However, according to California Chamber of Commerce President Allan Zaremberg; "By some estimates these savings will barely be enough to forestall new rate increases expected January 1, 2004."
Some of the highlights of SB228 include:
 | Repeal the existing vocational rehabilitation statute and repeal vocational rehabilitation services programs. |
| Limit chiropractic and physician therapy visits to 24 for the life of the claim. This section will not apply when an insurance carrier authorizes additional visits to a health care practitioner. |
| Through the Commission on Health and Safety Workers' Compensation to perform an annual study of access to medical treatment for injured workers and recommend appropriate adjustments to the official medical fee schedule. |
| Require insurers to review their insured's injury and illness prevention program within four months of the beginning of the initial policy commencement date. |
Some of the highlights of AB227 (sponsored by Vargas) include:
| Allow California Insurance Guaranty Association the authority to issue up to $1.5 billion in bonds for paying claims. |
| Increase workers' compensation fraud penalties from $50,000 to $150,000. |
| Create 100% user funding for Division of Workers' Compensation. |
| Require insurers to use the Insurance Commissioner-approved pure premium rate when making rate filings. |
Of particular interest to our clients is the requirement of SB228 that every worker compensation insurer must conduct a review, including a written report of the insured's injury and illness prevention program (IIPP). The review must determine whether the insured has implemented all of the required components of the IIPP and evaluate their effectiveness. In addition, the training component of the IIPP must be evaluated to determine whether training is provided to line employees, supervisors and upper level management. The training must be evaluated to ensure that the recipients of the training are receiving the skills necessary to adequately address all of the insured's health and safety needs. The written report must specify the findings of the review and the changes necessary to make the IIPP effective. The reviewer must be an independent licensed California professional engineer, certified safety professional, or a certified industrial hygienist.
Requiring a review of the IIPP is similar to the requirement for companies attempting to become self-insured in Worker's Compensation. As part of the application process, an applicant for a Certificate to Self-Insure must provide an independent evaluation of the employer's IIPP. The evaluation must be in writing and the applicant employer must "abate all serious violations found in the evaluation report."
We do not know at this point how the SB228 requirement for IIPP evaluations will be administered and how supporting regulations will be developed. More importantly, it is unclear at this time how the new Governor will respond to this bill, and what, if any modifications he may seek. We'll keep you informed. In the meantime, let's hope we truly see a reduction on worker's compensation costs in the state. However, it may be some time before things get much better.
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