1. The Latest from Sacramento June 28, 2011 California Workers’ Compensation:

2. Welcome Jerry Azevedo, Workers’ Compensation Action Network APCO Worldwide Jason Schmelzer, California Coalition on Workers’ Compensation Shaw / Yoder / Antwih, Inc.

3. Who We Are Workers’ Compensation Action Network  Broad-based, statewide coalition of employers and insurers dedicated to defending and advancing reform of California's workers' compensation system Includes every major employer trade association in California Insured, private and public self-insured employers Nonprofit organization  Educate lawmakers, the business community and members of the media on workers’ compensation issues Track outcomes of recent legislative reforms Disseminate original material Provide media commentary Conduct annual Legislative Education Day  Mobilize grassroots network to support/oppose legislative proposals

4. Who We Are California Coalition on Workers’ Compensation  Statewide association of employers committed to maintaining a workers’ compensation system that provides quality benefits at a reasonable cost to employers Founded in 1985 and governed exclusively by CA employers  Advocacy Intimately involved in the development and passage of 2004 reforms Serve as the voice of California employers in legislative and regulatory venues Unrivaled experience and knowledge of workers’ compensation policy in Sacramento  Education Annual conference on workers’ compensation trends, strategies, and public policy Coordinate annual Legislative Education Day

5. What We’ll Cover Today Who’s Making Decisions in Sacramento How and Why Decisions Are Being Made Pending Legislation What You Can Do

6. Decision Makers Governor Jerry Brown DIR Director Christine Baker DWC Director ??? Labor Secretary Marty Morgenstern Senator Darrell Steinberg Senator Ted Lieu Gideon Baum Senate Labor & Industrial Relations Assembly Speaker John Perez Assemblymember Jose Solorio Mark Rakich Assembly Insurance AdministrationLegislature

7. Context for Decisions State % Rate (May 2011) Michigan10.3 Mississippi10.3 Florida10.6 California11.7 Nevada12.1 Five States with Highest Unemployment Rate  State Budget Deficit Tax extension negotiations have sputtered All cuts budget and legislator pay  Economy and Jobs Tax receipts up in early 2011 Employment continues to lag CA unemployment at 11.7% US Average is 9.1% Nevada only state higher at 12.1%  Redistricting and Open Primary Final maps from redistricting commission not yet released Electoral uncertainty because of modified districts Impact of open primary undetermined

8. Context for Decisions Year200020022004200620082010 Rank by Most Expensive 3112135 % of National Median 148%216%236%166%121%131% California Workers’ Compensation Costs VS Other States and the National Median

9. Context for Decisions $50,017$49,190 $45,652 $38,687 $38,656 $44,944 $51,612 $58,418 $61,664 +23% +60% California Workers’ Compensation Costs Per Indemnity Claim

10. Context for Decisions Costs per Claim VS Rate per $100 of Payroll VS Premium Volume

11. Context for Decisions California regulators seize SF’s Majestic Insurance, propose rehab plan April 22,2011 WCIRB Accident Year Combined Loss & Expense Ratios 168 144 113 79 5655 68 90 111 130

12. Context for Decisions Levels of Permanent Disability:

13. Context for Decisions Almaraz  Declined by 5 th District Court of Appeal Guzman  Affirmed by 6 th District Court of Appeal, Declined by Supreme Court Ogilvie  Oral arguments held last week by 1 st District Court of Appeal “California's non-partisan Legislative Analyst's Office has concluded that these rulings could lead to (1) changes in PD ratings, (2) increased incentive for litigation, and (3) decreased uniformity in determining PD. Ultimately, these effects would likely lead to increased benefits for workers and higher costs for businesses and governments.”

14. Assembly Bill 378 Compounded drugs bring big profits to California doctors, study finds January 29, 2011 Unusual coalition pushes for restrictions on compounded drugs December 28, 2010

15. www.cwci.org/research.html Assembly Bill 378 Compound Drugs, Co-Packs and Medical Foods

16. Assembly Bill 378  AB 378 removes the profit motive for prescribing compound drugs Ban on self-referral Imposition of temporary fee schedule  Recent reports indicate that the increase in utilization of compound drugs may be driven by profit-motive instead of medicine Utilization spike following repackaged drugs regulations Suspect arrangements with compound drug manufacturers Physician dispensing spike  Hearing in Senate Labor & Industrial Relations Committee July 6, 2011 Strong opposition by medical community Partnership with labor, employers, and insurers. Compound Drugs, Co-Packs and Medical Foods

17. Senate Bill 863 State Senator Sees Zombie Liens as a Grave Issue June 6, 2011 LIENS

18. Senate Bill 863  SB 863 reforms the medical lien process Time limits on when liens can be filed o 18 months for medical providers o 5 years for third party payers (insurers) Requires documentation for liens to be valid Implementation 7/1/2012  LIENS have become a major cost driver Clogging the WCAB Increasing litigation costs Increasing medical costs  SB 863 passed Senate Labor and Industrial Relations on 6/2/2011 Currently in the Senate Appropriations Committee No hearing scheduled LIENS

19. Assembly Bill 947 Employers balk at bill to extend temporary disability payments June 10, 2011 Temporary Disability Benefits

20. Assembly Bill 947  AB 947 would eliminate the 104 week cap on TD benefits Creates broad new exception for claims not P&S by 104 weeks New Exception captures any claim where treatment extends beyond 104 weeks  Temporary Disability is a major cost-driver in WC The current cap drives RTW Cap elimination allows for gamesmanship in WC by medical providers and attorneys seeking to profit off of injured workers  Passed Senate Labor & Industrial Relations on 6/22/2011 Sent to Senate Rules Committee Will be referred to Senate Appropriations for evaluation of fiscal impact Temporary Disability Benefits

21. Assembly Bill 375 Expanding workers' comp benefit to nurses could cost SF May 9, 2011 Hospital Worker Presumption

22. Assembly Bill 375  AB 375 creates a presumption for hospital employees Neck and Back injuries removed from the bill MRSA and blood-borne pathogens are presumed to be industrial Applies to hospital employees who engage in direct patient care  Presumptions increase cost in WC Overcoming the presumption is almost impossible Proliferation of presumptions in a problem Cost increases to counties and University of California, which run public hospitals  AB 375 passed Senate Labor & Industrial Relations on 6/22/2011 The bill has been referred to the Senate Appropriations Committee, but no date is set for the hearing Hospital Worker Presumption

23. Assembly Bill 1155  AB 1155 would reopen litigation on the validity of apportionment The bill prohibits apportionment when the prior non-industrial disability is caused by age, race, gender, or another protected class Amendments have been offered by the opposition  Apportionment is a fundamental issue of fairness Employers only liable for disability caused by workplace injury Will open up new litigation on apportionment  AB 1155 will be heard on 6/29/2011 in Senate Labor & Industrial Relations No fiscal committee Apportionment

24. What Can I Do? Learn About the Issues Join a membership organization Be Heard Write, call or meet with your legislature User-friendly online advocacy tool Visit www.fixworkerscompnow.org and click Take Action!www.fixworkerscompnow.orgTake Action!

25. Get Involved www.fixworkerscompnow.org

26. Thank You Questions?