Carve-Outs in Workers Compensation

1. Is a Carve-out in your future George Kingston Senior Consultant Bickmore Risk Services Carve-Outs in Workers Compensation

2. History of Carve-outs California law inspired by Bechtel carve-out in Massachusetts SB 983 enacted 1993 Construction only SB 853 enacted 1994 Narrowed the definition of “in the business of construction” 2004 LC 3201.7 enacted 1999 there there were 12 carve-outs operating

3. Carve-Outs in California Currently about 23 approved 5201.5 carve-outs Currently 2 approved 3201.7 carve-outs

4. 3201.5 vs. 3201.7 3201.5 Construction The Department of Industrial Relations and the courts of this state shall recognize as valid and binding any provision in a collective bargaining agreement between a private employer or groups of employers engaged in construction, construction maintenance, or activities limited to rock, sand, gravel, cement and asphalt operations, heavy-duty mechanics, surveying, and construction inspection and a union that is the recognized or certified exclusive bargaining representative that establishes any of the following: 3201.7 All other employers Except as provided in subdivision (b), the Department of Industrial Relations and the courts of this state shall recognize as valid and binding any labor-management agreement that meets all of the following requirements: (1) The labor-management agreement has been negotiated separate and apart from any collective bargaining agreement covering affected employees. (2) The labor-management agreement is restricted to the establishment of the terms and conditions necessary to implement this section. (3) The labor-management agreement has been negotiated in accordance with the authorization of the administrative director pursuant to subdivision (d), between an employer or groups of employers and a union that is the recognized or certified exclusive bargaining representative that establishes any of the following:

5. Features of Carve-Outs 3201.5 3201.7 ADR ADR Exclusive medical providers Exclusive medical providers Exclusive list of QMEs Exclusive list of QMEs JLM Safety Committee JLM Safety Committee Return to work program Return to work program VR Program VR Program Coordination with Group Benefits Coordinate with Group Benefits Drug Testing Drug Testing Incentive Programs Incentive programs Restriction of Attorneys

6. What is a Carve-Out Remove a WC program from the State mandated WC system Improve Benefit Delivery Limit litigation Controls Medical Treatment Resolve disputes Quickly Control medical treatment Improve Safety Efforts

7. What is a Carve-Out 1. Remove from State Mandated System Alternative dispute Resolution State WC Judges do not jurisdiction over claims Arbitrators replace WC Judges Substitute private PD raters for state raters Substitute private VR vendors for state VR Eliminate State QME process

8. What is a Carve-Out 2. Improve Benefit Delivery Control mediator and arbitrator response time Control Examining physician response time

9. What is a Carve-Out 3. Limit Litigation Restrict attorney involvement Limit medical legal examinations Prompt benefit delivery Reduced conflict Reduced need for defense attorneys

10. What is a Carve-Out 4. Control Medical Cost Limit physicians that can treat Limit Physicians that can act as a QME or IME Limit changes in Treating Physician Limit over treatment over utilization

11. What is A Carve-out 5. Resolve Disputes Quickly Alternative Dispute resolution Ombudsman Mediator Joint Labor Management Committee Use private raters rehab vendors Eliminate long waits associates with WC Judges Incentivize Quick response form mediators, arbitrators and others

12. What is A Carve-Out 6. Control Medical Treatment Establish exclusive medical provider panel Establish exclusive examiner Panels Limit changes in treating phuysician Limit examining physicians Limit second opinions

13. What is A Carve-Out 7. Improve Safety Efforts Required Safety Staffing Required Minimum Safety Standards Drug Testing Safety Inspection Program Incident and Near Miss Reporting Management Reports

14. What a Carve-out Isn’t Method to reduce employee benefit Method to avoid WC obligation Proven method to reduce WC costs

15. Alternative Dispute Resolution 1. Ombudsman Gate Keeper First level of dispute resolution 2. Mediator 3. Arbitration replaces WC Judge Appeal from decision of Mediator Same rules as hearing before a WC Judge. 4. WCAB Full court in San Francisco 5. State Court of Appeals

16. Possible Carve-Out Components Return to work incentives Mandatory return to work Increased indemnity benefits Financial incentives to physicians Drug testing Safety programs

17. LACCD Carve-out 23 signatory construction unions 2000 Employers Limits employee to one change of PTP Limits employee to one second opinion Limits physicians to MPN and group panel Attorney involvement barred until arbitration No control of PTP Established a JLMC Established Alternative Dispute Resolution

18. City of Los Angeles Covers service and engineers union members Establishes an ADR with Ombudsman There are no other features to this Carve-Out

19. City of Long Beach Peace Officers and Firefighters List of specialists for IME City MPN for treatment IME has sole discretion to select specialist for review of case IME decision is final without appeal No other features No ADR

20. What to consider Analyze current WC program Recognize weaknesses and problems Determine what feature of carve-out will resolve problem areas Establish benchmarks for comparison Establish expectations Avoid anecdotal performance measurements Be suspicious of unsupported claims