California Department of Industrial Relations Commission on Health and Safety and Workers’ Compensation Carve-Outs in California CHSWC Meeting December 15, 2017 1
What is a “Car What is a “Carve-Out”? -Out”? • An alternative system for delivering benefits to injured workers and resolving problems and disputes • A labor-management negotiated agreement • Can cover all aspects of workers’ compensation medical and benefit delivery 2
What is a “Car What is a “Carve-Out”? -Out”? • Negotiated separately and apart from the collective bargaining agreement (non-construction) • Workers’ compensation law allows unions and union employers to create carve-outs 3
Car Carve-Outs: e-Outs: Legislation in Calif Legislation in California rnia Key legislation: • 1993 – SB 983 (New LC§ 3201.5). Permits employers and employees in the construction and related industries to engage in collective bargaining for alternative workers’ compensation procedures. • 2003 – SB 228 (LC§ 3201.7). Provides for carve- outs in any unionized industry. 4
Car Carve-Outs: e-Outs: Legislation in Calif Legislation in California (Cont’d) rnia (Cont’d) • 2004 – SB 899 (Amended LC§§ 3201.5 and 3201.7). Provides that parties may negotiate any aspect of delivery of medical benefits and disability compensation for occupational injuries to employees that are eligible for group health and non-occupational disability benefits through their employer. • 2012- SB 863 (Amended LC§§ 3201.7). Permits State of California to enter into a carve-out. 5
To be eligible, a union must: be eligible, a union must: • Be a bona fide labor organization and • Be recognized or certified as the exclusive bargaining representative of the employees involved 6
To be eligible, an em be eligible, an emplo ployer must: er must: • In construction, have an annual workers’ compensation premium of at least $250,000; or be part of a “safety group” of employers that has an annual workers’ compensation premium of at least $2,000,000 • In all other industries, have an annual workers’ compensation premium of at least $50,000 and at least 50 employees; or be part of a “safety group” of employers that has an annual workers’ compensation premium of at least $500,000 7
Par Participation in Car icipation in Carve-Outs e-Outs • Participation in carve-outs has increased steadily: From 242 employers in 1995 to 1,552 in 2015 From 3,450 employees (FTE) in 1995 to 79,400 in 2016 From $157.6 million in payroll in 1995 to $3.2 billion in 2016 Source: DIR/DWC 8
Car Carve-Outs b e-Outs by Pr Program T ogram Type pe Employer Type Program Type Private Public Total Programs Construction 19 2 21 Non-Construction 5 31 36 Total Programs 24 33 57 Source: DIR/DWC as of 12/6/17 9
Carve-Outs b Car e-Outs by Pr Program and Union T ogram and Union Type pe Program Type Union Type Construction Non Construction Public Safety (Firefighter and 27 Police) Operating Engineers 3 Building and Trades 3 Carpenters 2 Industrial, Professional and 2 Technical Workers (IPTW) Laborers 2 Public Employees Association 2 Roofers 2 Service Employees (SEIU) 1 United Food and Commercial 2 Workers (UFCW) Electricians 1 Ironworkers 1 Janitorial - SEIU 3 Painters 1 Petroleum Workers 1 Plumbing and Piping (PIPE) 1 Public and Industrial (IUPIW) 1 Sheet Metal Workers 1 Transportation 1 Source: DIR/DWC as of 12/6/17 Total Programs 21 36 Source: DWC and CHSWC staff as of 12/6/17 10
Car Carve-Outs: K e-Outs: Key Com y Components onents The potential components of a carve-out are: • Alternative dispute-resolution process. • Agreed list of medical providers, qualified medical evaluators, and agreed medical evaluators. • Joint labor-management safety committee. • Safe and early return-to-work programs offering a light duty modified job or alternative job. • Retraining programs that include an agreed list of providers. 11
Advantages f ntages for the injured w r the injured work rker: er: • Avoid unnecessary misunderstandings, disputes, and litigation • Ensure prompt, appropriate medical care • Facilitate safe, prompt return-to-work and sustained employment • Support programs to prevent workplace injuries and illnesses • Reduce delays encountered in the state system • Increase satisfaction with delivery of workers’ comp benefits • Improve job satisfaction and overall morale 12
Advantages f ntages for the em r the emplo ployer: er: • Reduce workers’ compensation costs from: Improved medical care Unnecessary disputes, litigation and delays Enhanced prevention of injuries • Improve productivity, morale among all employees 13
Car Carve-Outs: OCC and Non-OCC e-Outs: OCC and Non-OCC Int Integrat grated Medical Care ed Medical Care Carve-outs offer an opportunity to negotiate integration between occupational and non-occupational medical treatment: • Agreed list of medical providers • Can negotiate dispute resolution process to be consistent with group health 14
Car Carve-Outs: A e-Outs: Advantages t ntages to OCC and Non-OCC Medical Care OCC and Non-OCC Medical Care • Improved quality and coordination of care • Elimination of duplication between group health and workers’ compensation, i.e. diagnostic tests • Same medical provider for occupational and non- occupational treatment • Improved access to care because there is no dispute over coverage • Fewer disputes (and delays) over treatment • Reduction in administrative costs of two systems 15
Car Carve-Outs: e-Outs: Alt Alternativ rnative Disput e Dispute R e Resolution solution The Alternative Dispute Resolution (ADR) process in a carve-out generally includes three (3) stages: • Ombudsman: In the initial stage the ombudsman, a neutral third party, can provide information to injured workers and attempt to avert or resolve disputes. • Mediation: If dispute resolution is not successful in the first stage, the process may move to a second stage, or mediation, in which a mediator, a neutral third party, assists in resolving the conflict. • Arbitration: If dispute resolution is not successful in the second stage, the dispute may move to the third stage, or arbitration. In this stage, both sides have an opportunity to present witnesses and evidence and to engage in cross-examination. If neither party is satisfied with the decision attained through arbitration, the employer or the employee may appeal to the WCAB Reconsideration Unit and, ultimately, to the State Court of Appeals. 16
Workers’ Com ers’ Compensation Claims Pr ensation Claims Process ocess Alternativ Alt rnative Disput e Dispute R e Resolution solution Injury Employer / Insurer / Ombudsperson Notified No Problem Problem Resolved by Ombudsperson Ombudsperson No Resolution Resolved by Mediation Mediation No Resolution Resolved by Arbitration Arbitration No Resolution Claim Closed WCAB Appeals Board Process Ends Superior Court California Supreme Court 17
The K The Key Par y Participants in a Car icipants in a Carve-out e-out Alt Alternativ rnative Disput e Dispute-R e-Resolution Pr solution Process: ocess: Roles and les and Responsibilities sponsibilities • Ombudsmen The key responsibilities include: To act as a neutral party to provide information and resolve disputes. To maintain confidentiality. To strive for objectivity and impartiality in order to consider the concerns of all parties known to be involved with the issue. To develop a range of options to resolve problems and facilitate discussion 18
The K The Key Par y Participants in a Car icipants in a Carve-out e-out Alt Alternativ rnative Disput e Dispute-R e-Resolution Pr solution Process: ocess: Roles and les and Responsibilities (Cont’d.) sponsibilities (Cont’d.) • Mediators The key responsibilities include: To engage the parties in further informal discussions if they cannot reach agreement after working with the ombudsman To facilitate self-determination: the mediation process relies upon the ability of the parties to reach a voluntary, uncoerced agreement To maintain confidentiality 19
The K The Key Par y Participants in a Car icipants in a Carve-out e-out Alt Alternativ rnative Disput e Dispute-R e-Resolution Pr solution Process: ocess: Roles and les and Responsibilities (Cont’d.) sponsibilities (Cont’d.) • Arbitrators The key responsibilities include: To be knowledgeable in the workers’ compensation dispute process To appoint an authorized health care professional to assist in the resolution of any medical issue To render a decision (award) within a specified number of days from the completion of the proceedings 20
The Appeals Pr The Appeals Process in a Car ocess in a Carve-out e-out • The Reconsideration Unit of the Workers’ Compensation Appeals Board (WCAB): If neither party is satisfied with the decision of an arbitrator, then the workers of the employer may appeal to the Reconsideration Unit of the WCAB to review the decision. Not allowed to reweigh the evidence. Only can consider whether the arbitrator made a mistake in the decision-making process. 21
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