Why Do We Have Workers’ Compensation and How Does it Benefit My Business?

The workers’ compensation system is firmly entrenched in both federal and state laws in the United States. At its core, workers’ compensation is a form of protection afforded to the employee to make sure that he or she receives compensation for a work-related injury. The first employer liability laws were passed in the United States in 1855, and by 1949, every state had created and enacted its own workers’ compensation statutes. The first employer liability statutes made it possible for an employee to sue the employer for injuries resulting from the employer’s negligent or intentional conduct. Today, workers’ compensation is a “no fault” system. This means that the employee is not required to prove any negligence on the employer’s part before being entitled to workers’ compensation benefits. Although it seems at first glance like it might not be “fair” that an employee does not have to prove the injury was a result of wrongful conduct by an employer, this can actually benefit your business. Having to prove fault can make a case last much longer and make it much more complicated. Protracted litigation is not good for your business, so removing the negligence issue can greatly benefit an employer. Workers’ compensation also means that the employee relinquishes the right to sue the employer. An injured employee may file a claim for workers’ compensation to receive medical treatment and, in some cases, salary replacement. In exchange, however, the employee cannot then also file a law suit. This keeps the employee from being able to “double dip,” meaning he or she cannot get paid twice for the same injury. This provision is good for your business because, again, it will help keep you out of court. If you do end up in a workers’ compensation dispute, California has a special court system set up for workers’ compensation, which helps to speed the process. Workers’ compensation will also benefit your business because it provides a powerful incentive to make sure your employees are properly trained and safe. It also encourages the frequent review and revision of safety protocols, and hopefully reduces the number of injuries suffered by your employees.

If you have questions about workers’ compensation and your business, contact me today at (714) 516-8188. I can help walk you through the process and answer your questions about your business.

Attorneys and Cappers Charged in Workers’ Compensation Scheme

California has taken many steps in recent years to help curtail workers’ compensation fraud.  On June 5, 2017, charges were filed against 16 people in an enormous workers’ compensation insurance referral scheme.  California law prohibits individuals or businesses from getting clients (a practice also referred to as “capping”) for attorneys or law offices.  The law also prohibits attorneys from paying cappers for client referrals, and also prohibits copy service companies from offering any consideration to attorneys in exchange for business referrals.  The penal code also prohibits conspiring to illegally referring or paying for clients as well as hiding capping from an insurance company in order to obtain benefits.  The Orange County District Attorney’s Office investigated this case for three years before bringing these charges.

In this case, Carlos Arguello III is accused of forming an “advertising” company in 2005 and securing illegal referral contracts with up to forty other workers’ compensation and personal injury attorneys.  Mr. Aguello is also accused of creating contracts that specified a monthly fee to be paid by these other attorneys in exchange for delivering a specified number of clients each month.  These “advertising” contracts targeted the Hispanic community.  The contracts also required these attorneys to use other companies he owned together with Edgar Gonzalez, which included copy companies.  Several others are accused of capping for Mr. Arguello and Mr. Gonzalez, and distributed flyers and business cards to predominantly Hispanic neighborhoods.  Once a potential client called and showed interest, a capper would be dispatched to the client’s home to have him or her sign important documents, including a retainer agreement, without ever meeting with an attorney.  The documents would then be sent to the subscribing attorney, without any input from that attorney.  The attorneys involved in the scheme are accused of allowing cappers to order, prepare, and submit documents on their behalf without any oversight.  Medical providers are also under investigation for paying for patients recruited by cappers, as well as prescribing medication and medical equipment from companies chosen by the cappers.

The charges include multiple felony counts of conspiring to refer clients for compensation, referring patients/clients with reckless disregard for commission of fraud, and insurance fraud.  The sentencing enhancements involved include aggravated white collar crime over $500,000 and loss of over $1.3 million.  Ten attorneys and six cappers have been charged.  Mr. Arguello faces a maximum of 29 years and eight months in prison, while Mr. Gonzalez faces a possible 20 years and eight months in prison.

Workers’ compensation fraud is a serious problem, and the State is combating it every day.  If you have questions about workers’ compensation and your business, contact me today at (714) 516-8188 to discuss them.

“Serious and Willful”

When an employee makes a workers’ compensation claim, typically all or he she needs to prove is that he or she was injured and that injury was, in fact, sustained at work. Once the employee provides this proof, a claim is typically approved. The majority of disputes in workers’ compensation cases are not over whether an injury occurred, but rather the degree of the injury and the degree of the disability. Once that is settled, an employee will typically receive at least some degree of compensation. The employee’s burden of proof is quite low. He or she does not need to prove that the injury was the employer’s fault, but only that the injury happened and it was a work-related injury.

A claim for additional compensation under Labor Code 4553 is a different type of case. In those cases, an employee is making the claim that he or she is entitled to compensation over and above the regular workers’ compensation avenues because of the employer’s serious and willful misconduct. To prove this type of claim, an employee must prove that an employer knew of the danger but did nothing to correct it. The failure must be more than just negligent behavior. An employer must have essentially understood the fact that injury was likely to result from an employer’s failure to act but nevertheless failed to take remedial measures.

Serious and willful misconduct cases are serious for employers. Workers’ compensation does not cover these types of claims, and in fact the statute specifically provides these injuries are not insurable at all. The labor code provides that if an employer is found to have caused an employee’s work-related injury through its “serious and willful” misconduct, the employer must pay an amount equal to half the value of all benefits paid as a result of the injury. These benefits include all disability, both temporary and permanent, as well as medical and vocational rehabilitation benefits. A workers’ compensation judge has no discretion in adjusting the amount of the award, and the employer must pay the full amount of damages if the employee meets his or burden of proof. As these injuries are uninsurable, an employer must pay any recovery from the employer’s own funds.

 Serious and willful claims are very serious, and you need an experienced attorney to help you with these claims, both before and after they occur. Call me today at (714) 516-8188. We can talk about your business and these types of claims.

Regional Overview of California Workers’ Compensation Claims

Workers’ compensation is a system designed to make sure that employees who sustain work-related injuries are able to get the treatment they require. When handled properly, it can also help protect employers from liability. Different industries have different rates of workers’ compensation claims, as some types of jobs involve an inherently higher level of danger. Just as the frequency of claims varies from profession to profession, it also may vary by region.

A report released by the California Workers’ Compensation Institute determined that employees in California’s Central Valley have a different claims experience that those workers in other areas. The study determined that the time lag between when the employee notifies the employer of the work-related injury to the notification of the administrator to the initial treatment of the employee are significantly shorter than other regions in the state. The study went on to find that after twenty four months have elapsed after the initial injury, Central Coast claims average more medical visits for the purpose of rehabilitation, evaluation, management, or chiropractic care. The biggest difference, though, was in the surgery rate. Central coast workers’ compensation claims after 11.2 percent more medical payments for surgery than the rest of the state. However, the claims in the Central Coast seem to run significantly faster than in the other regions. The average claim lasts 325 days, which is two and a half months shorter than in other parts of the state. This is consistent with the fact that claims are addressed more quickly in this region over all. In 2015, the Central Coast accounted for 7.7 percent of all work-related injury claims in the state. Over the span of the last eleven years, the Central Coast accounted for an average of 6.7 percent of all workers’ compensation claims.

A large proportion of the claims reviewed in the study were agricultural claims. Almost eighteen percent of the claims involved in the study were agricultural claims. Despite this overall percentage, in the Central Coast, only 2 out of 10 job injury claims were related to agriculture.

 If you have questions about your business, workers’ compensation, and whether your business is taking the proper steps, contact me today at (714) 516-8188. I am highly experienced in guiding my clients through this area of law.

Secondary Injuries – Kesner v. Superior Court

An employer is typically liable for work-related injuries sustained by employees. For this reason, the state of California requires all employers to carry workers’ compensation insurance to cover their employees’ possible work-related injuries. In some cases, though, a third person may sustain injury indirectly from the employee’s job. This third party could be a family member or other person the employee comes into contact with regularly. Where does a employer’s liability end?  This issue was explored in a case called Kesner v. Superior Court.

In Kesner, the plaintiff was the nephew of the employee of the defendant, Abex. The plaintiff was diagnosed in February 2011 with perotineal mesothelioma. His claims against Abex were based on the fact that his uncle worked at the Abex company for many years. During those years, the plaintiff was a frequent visitor at his uncle’s home. His uncle would come home from his job at Abex covered in asbestos dust. The uncle would then play with the defendant, and sometimes sleep near him. The plaintiff alleged that the exposure to the asbestos dust lead to him eventually contracting mesothelioma.

Abex successfully moved to have the case against it dismissed, based on the fact that the plaintiff was not an employee, and Abex owed him no duty of care, which is an essential element of a negligence claim. However, the plaintiff appealed that dismissal and was successful. The court concluded that Abex’s duty of care did, indeed, extend to the plaintiff. The court ruled that Abex could have foreseen that the harm of the asbestos dust could have extended to the third-parties residing in an employee’s home. The court was careful to delineate the harm from a tangible injury such as mesothelioma from intangible harm such as mental anguish, which the court had previously ruled was not covered by third-party liability theories. The court also emphasized that the plaintiff in this case had extensive contact with his uncle. If the contact with the third-person was incidental or occasional, an employer would not be expected to foresee such an injury.

From this case, it is clear that an employer’s liability for work-related injury does not always end when an employee physically walks out of the work-place. Employers need to be cautious about foreseeable injuries to third-parties, such as family members, as they could ultimately be held responsible for such injuries.

If you have a question about secondary injuries, contact me today at (714) 516-8188. We can discuss your business, and review its responsibilities and possible foreseeable injuries.

Workers’ Compensation Insurance Profits at Record High

Is the workers’ compensation industry disappearing?  Is there a nationwide movement to eliminate workers’ compensation insurance?  These questions are both important, and directly related to the fact that a recent study shows that workers’ compensation insurance profits recently were reported at a record high.

A recent study by Conning, Inc. revealed that workers’ compensation insurance profits experienced the lowest loss ratio seen since 1995. In addition, over the last six years, premiums for workers’ compensation insurance have been steadily rising. The study determined that these premiums were boosted by the improving and expanding economy. However, the study also determined that this growth was not sustainable and not likely to continue. In 2016, the rate of filings indicated a softening market. This was attributed to the rise in medical costs. The fact that 2016 was a banner year for workers’ compensation insurance companies came on the heels of 2015, which had also seen record growth and profits. In 2015, the combined ratio for workers’ compensation was 95.4, which was a significant improvement over the ratios demonstrated in 2011-2014, which ranged from 117.3 to 102.4. For example, in 2015, Travelers Companies was the top workers’ compensation writer with a direct written premium of $4.47 billion dollars and net written premiums of $3,96 billion.

Other studies and opinions provide harsh criticism to the rising costs. The California Applicants’ Attorneys’ Association released a statement in April 2016 indicating that the rising rate of premiums has not gone to improve care provided to workers injured on the jobs. Rather, they are concerned that the increased profits to the insurance companies have actually just resulted in lining the pockets of the insurance executives.

Mounting pressure on the insurance companies will likely lead to a dip in insurance premiums. Simply stated, the high insurance premiums cannot continue to be justified in the face of the reduction in the amount of work-related injuries and increased safety standards. Moreover, certain organizations are concerned that even in light of the higher insurance premiums and record profits, care for injured workers has dipped. Some are even citing a reduction of 70% in benefits for employees, and medical professionals dropping employees from their care in the face of frustrating road blocks thrown up by the workers’ compensation insurance companies.

If you have questions about the ever-changing workers’ compensation insurance market and how it can impact your business, contact me today at 714-516-8188. I look forward to talking with you about your business and workers’ compensation.

Recent Workers’ Compensation Bills

This year has seen several significant workers’ compensation bills go across the Governor’s desk. The Governor vetoed several and approved others. Having a grasp on the current legislative activity can provide important insight into the law’s trend and potential future activity.

One bill he vetoed was Assembly Bill 1643. This bill proposed several additions to the current workers’ compensation system, including that breast cancer and prostate cancer receive equivalent impairment ratings and it would also have prohibited apportionment in certain women’s conditions such as pregnancy and osteoporosis. The Governor reasoned that breast and prostate cancer are different conditions with different medical repercussions and should not be treated the same way. He also reasoned that gender discrimination was already illegal, and the conditions concerning certain women’s conditions were unnecessary.

Another veto was for Senate Bill 897. This bill would have provided that if a firefighter or police officer was disabled by a qualifying catastrophic injury, the special leave benefits would be doubled from one to two years. The Governor reasoned that the financial stress this would place on already financially strapped departments would be too great, especially in light of the fact that there was only one example of an officer losing benefits while out on temporary disability.

The Governor did sign AB 1244, which is aimed at reducing workers’ compensation fraud. AB 1244 would require the administrative director to suspend any physician or provider from participating in the workers’ compensation system if that person had been convicted of a crime involving fraud or abuse of Medi-Cal program, Medicare, or workers’ compensation system. Such a provider or physician would also be suspended from participation if its license had ever been suspended for fraud or abuse.

The Governor also signed SB 1160. This bill provides that if criminal charges are filed against a physician or provider for an offense involving medical fraud, there would be an automatic stay against a lien filed by that physician or provider. The bill also prohibits assigning or factoring a lien after January 1, 2017, except in certain circumstances. These circumstances would include when the provider or physician is no longer in that line of business.

If you have questions about the current state of the law or how the new laws may impact your business, contact me today at 714-516-8188. I can review these laws with you and discuss how it may change your workers’ compensation plan.

Shrinking Workers’ Compensation Insurance Market

Over the years, injuries in the work place, and therefore workers’ compensation claims, have declined. This is due to several factors, such as technology and better material handling procedures, but one important factor is the workers’ compensation insurers. Insurance companies require businesses and individuals to mitigate the risk of injury to their employees. Coupled with the mandatory nature of workers’ compensation insurance, this has led to a drop in work-place injuries.

Recent studies indicate that this trend will continue. In fact, one study determined that by the year 2024, although the work force would grow in the United States, the number of work place injuries would drop by 15.2%, with an annual frequency improvement of 2.5%. For California specifically, the same study determined that work place injuries would drop by 12.5%. With such a large projected drop in injuries, the need for workers’ compensation insurance may also be disappearing.

The end result is that because the workplace is safer and safer each year, there will be fewer injuries every year. That means there will be fewer work place injuries and deaths to insure. Assuming this trend continues, as is projected, at some point, businesses will probably be compelled to demand why they are required to carry a type of insurance for injuries or deaths that rarely occur. Self-insurance is strictly limited and regulated in California and other states, but if the rate of injuries and deaths sufficiently drops, it is likely that businesses will be more apt to push for more practical self-insurance regulations, as commercial workers’ compensation insurance becomes, if not obsolete, at least financially illogical. After all, if insurance premiums are consistently much more than the cost to the employer to compensate the amount of injuries sustained by workers, it would make sense for a business to want to self-insure. Moreover, if this is a consistent trend seen by most businesses, it would be even more logical for self-insurance to become more attainable.

The insurance companies’ first line of defense to this would be to lower insurance premium prices and consolidate their own businesses to save on costs. Essentially, by insisting on more and more safeguards to reduce their own costs, insurance companies have made their own business less useful.

Despite the possibility that the future may hold more simple regulations for self-insurance or even eliminate the requirement for workers’ compensation insurance entirely, that is not today’s reality. Contact me today at 714-516-8188 to discuss your workers’ compensation issues and whether your business could be at risk.

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