Labor Federation Sues State Over Use of Workers’ Compensation Formula To Determine Disability Levels
The California Labor Federation on Tuesday filed a lawsuit in the state Supreme Court to stop workers' compensation insurers from using a formula that the unions say will excessively reduce payments to disabled workers, the San Jose Mercury News reports.
The formula -- created by Division of Workers' Compensation Director Andrea Hoch -- instructs doctors on how to rate workers' injuries, expressed as a percentage of disability. The formula replaced a more subjective rating system with one that uses quantifiable symptoms to determine payment amounts.
The lawsuit also alleges Hoch acted in violation of state law when she created the formula because she did not incorporate findings from a RAND study as mandated by a 2004 law (SB 899) to reform the state workers' compensation insurance system.
The law required Hoch to use a RAND study on the effects of certain injuries on a workers' earnings potential when creating the formula and to adjust the ratings accordingly. However, Hoch said that under the new system the RAND study could only be used in a limited way. Hoch's formula did not increase disability ratings as much as some groups said that the RAND study would have.
The lawsuit seeks to stop workers' compensation insurers from using the new formula and require Hoch to recalculate the formula using updated RAND data.
Susan Gard, a spokesperson for Hoch, said Hoch used all of the RAND data available when developing the formula and included a mechanism in the new system to collect more data on partial disability ratings (Lohse, San Jose Mercury News, 5/4).
Schwarzenegger in his weekly radio address on Saturday discussed the effects of workers' compensation reform in the state (Office of the Governor release, 4/30). The complete transcript of the address is available online. The complete address is available online in Windows Media.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.