Rules for $120 Million Fund Earn Mixed Reviews

Published by WorkCompCentral on 10/28/2014, authored by Greg Jones

The California Applicants' Attorneys Association said it supports rules proposed by the Department of Industrial Relations that would make receipt of the Supplemental Job Displacement Benefit voucher the sole factor in determining an injured worker's eligibility for payments from the $120 million fund created by Senate Bill 863.

But Southern California applicants' attorney Alan Gurvey said the one-time payment of $5,000 as proposed in the department's rules will do little for the most seriously injured workers. The department's plans have rendered "meaningless" the special fund that secured passage of the 2012 reform bill, he said.

SB 863 added Labor Code Section 139.48 creating a "return-to-work program" that makes available $120 million each year "for the purposes of making supplemental payments to workers whose permanent disability benefits are disproportionately low in comparison to their earnings loss." The bill provided no guidance on how the program should be administered beyond saying eligibility should be based on studies by the Commission on Health and Safety and Workers' Compensation, and eligibility decisions shall be subject to review on the same grounds as petitions for reconsideration.

Senate President Pro Tem Darrell Steinberg, who terms out of office next month, said the 11th hour addition of the $120 million fund allowed him to change position and support the bill.

Steinberg's office didn't return calls Monday for comment on the proposed rules.

The DIR rules would require an injured worker to receive the $5,000 Supplemental Job Displacement Benefit for an injury occurring on or after Jan. 1, 2013, to qualify for payment. The worker would be required to apply for payments through a website created by DIR under the proposals.

The DIR would be required to issue a decision on a complete application within 60 days. If approved, payment would be sent to the worker within 25 days.

A decision denying payment could be appealed to the Workers' Compensation Appeals Board, under the rule proposal.

The one-time payment of $5,000 is based on a report by the Rand Center for Health and Safety in the Workplace that estimates the number of eligible beneficiaries will be between 20,000 and 24,000.

Bernardo de la Torre, president of CAAA, said he appreciates that the rules proposed by the DIR will implement the fund in a way that creates a simple process and promises quick payment for injured workers at the lowest administrative cost.

The Rand report also recommended a minimum three-year waiting period before a worker could apply for payments based on the need to collect evidence that would show an actual loss of wages following a work injury. 

In its Initial Statement of Reasons, the DIR said requiring workers to collect post-injury wage data would postpone payment without "substantially" increasing the amount of money that workers would receive. At the same time, it would cost between $15 million and $20 million a year to administer that kind of program, the department said.

The department said its proposed system would cost only about $5 million a year to administer.

De la Torre said CAAA is asking the DIR to add to the rules language that would allow injured workers to submit applications by mail. Regulatory language stating the DIR will allow injured workers to access the application website through computers at the Division of Workers' Compensation Information and Assistance offices isn't sufficient to ensure all workers can apply, he said.

"Allowing only electronic submissions would be a hardship for some workers, particularly those with lower income and/or limited English language skill," he said. "Providing that the worker can complete the electronic filing at the district office may help some workers, but will require the worker to travel to the district office, which can be difficult and/or costly, particularly for workers in rural areas. In order to make this program accessible to all workers, we believe there should be some provision for mailing a paper application."

Gurvey, who is managing partner of the applicants' firm of Rowen, Gurvey & Win in Sherman Oaks, was less optimistic.

Gurvey said he was hopeful that the fund would offer significant help to those who are most seriously injured in light of other provisions in SB 863 that prohibited workers from receiving additional compensation for sleep, sex and psychological disorders. 

"Seriously, $5,000?" he said in an email. "For these injuries, these workers will not be at all taken care of, but perhaps that's not the intent, notwithstanding the legislators vacuous words way back when."

Gurvey said the program should be structured in a way such that eligibility is determined by a minimum disability rating. Payments should start at $100,000 and be calculated using a sliding scale that takes into account medical evidence showing the injured worker's needs.

"This is a meaningless provision of 863, and the administration of the $5,000 per worker provision will be a nightmare, costing more money than the benefit," he said.

California Chamber of Commerce lobbyist Jeremy Merz said he's still reviewing and evaluating the proposed rules. Employers will foot the bill for the new program through an annual assessment that raises the $120 million to be dispersed to injured workers.

The DIR will hold two public hearings on the proposed rules for the $120 million fund. A hearing is scheduled from 10 a.m. to 3 p.m. on Dec. 8 at the Elihu Harris office building in Oakland. The second hearing is Dec. 9 from 1:30 to 4:30 p.m. at the state building in Los Angeles.