Critical Analysis

California workers try to secure benefits

By Mary Fricker

Press Democrat staff writer

One million times a year, California workers seek help from their employers for an on-the-job injury.

Most believe the state’s workers compensation laws — created at the turn of the century and overhauled four years ago — will be a safety net.

Instead, many will step into a world where, at perhaps one of the most vulnerable times in their lives, they will wander for years with little help.

This is a world where doctors can earn $500 an hour writing reports, lawyers can earn $100 an hour arguing about benefits that are set by law, judges can make $85,000 a year and insurance chief executive officers can be paid $2 million a year.

All while hundreds of thousands of injured workers — among them school teachers, laborers and office workers — face years of frustration and delays to get medical care and $39 to $490 a week.

That’s the California workers compensation system. And it is damaging lives.

”This system chews people up, and I don’t like it,” said Edward C. Woodward, president of the California Workers’ Compensation Institute, the research arm of the insurance industry. ”This would be a scandal anyplace else in the world.”

After 1993 legislation made the most sweeping changes in workers compensation in 20 years, The Press Democrat conducted a 12-month investigation to see how well the reorganized system is

serving California workers injured on the job.

It found a system that serves the powerful voices of employers, insurance companies, doctors and lawyers, while workers remain unheard.

Among the findings:

* Benefits are the lowest in the nation for six out of 10 workers with a permanent injury. Overall, benefits are so low that California ranks 45th out of 50 states.

* Injured California workers must go to court to get benefits 20 percent of the time, double the rate 12 years ago and more than four times the national average.

* Insurers mishandle half their claims. In one of every five cases, the insurer won’t properly notify workers of benefits, and in one of every six cases workers won’t be paid all the money they’re owed, according to state audits.

* Fraud is overstated. While some insurance companies claim one out of three workers lie about their injuries, or 33 percent, the actual number of fraud cases sent to prosecutors is less than 1 out of 100, or less than 1 percent.

* The state has one information counselor for every 20,000 workers comp cases, symptomatic of a bureaucracy that greets half of worker calls with a busy signal and can’t even say how many claims are filed each year.

* No state agency regularly monitors claims to see, for instance, whether insurance payments are received on time or whether injured workers are receiving appropriate medical care.

Conflict and confusion

To assess how claims are handled, The Press Democrat conducted the first-ever media analysis of state computer data, analyzing 26,400 North Coast workers compensation claims covering six years, as well as another 77,800 cases in central and southern California at the Santa Barbara and Long Beach appeals boards.

It found that conflict and confusion are imbedded in a system that is taking longer to resolve disputed cases every year, while the number of disputed claims is increasing faster than the growth in the work force.

One out of five injured workers will spend almost three years struggling with claims adjusters and doctors and lawyers to get the benefits they are guaranteed by law.

The nature of claims is changing as well, moving from warehouse to office with a growing number of cumulative strain injuries such as carpal tunnel syndrome, which are more difficult to assess and harder to quantify.

”I wouldn’t want to be an injured worker in this system, due in huge part to the inherent complexity, subjectivity and inefficiency,” said Doug Widtfeldt, vice president of the Association of California Insurance Companies. ”Delays and disputes are an endemic problem.”

The California program — funded by employers and run by insurance companies, or employers who self-insure — covers 13 million workers, almost twice New York or Texas. Every year, it costs employers roughly $8 billion, pays insurance companies about $1 billion in profits, pays doctors and medical providers $2 billion for medical care, pays workers $2 billion, and spends the rest on administration.

And it makes everyone unhappy. Worker’s comp in California is an equal-opportunity headache.

Employers worry about costs. They resent workers who take advantage of the system. They resent insurance companies that make generous profits. They wonder how they can possibly compete with companies from other states and nations where workers compensation is cheaper.

Insurance companies feel caught between two masters: One their customer, the employer-policyholder, who demands cost controls; and the other the injured worker, who is desperate for quick assistance. They chafe under a mountain of often-conflicting regulations piled on them by state legislators.

Doctors and other medical professionals resent claims adjusters who second-guess their treatment recommendations. They worry that they won’t get paid. They despair over the paperwork.

Lawyers resent the ever-tightening legislative screws that regulate their services and their fees.

“No one trusts anyone in this system,” said Gregory Vach, an employer representative on the state Commission on Health and Safety and Workers’ Compensation.

Complicated, adversarial

Nearly everyone agrees there are too many laws, too many options, too many deadlines, too many conditions, too many forms, too many paths, too many participants, too many delays.

”We have evolved a system that is so complicated, so complex, that it can’t be understood by the participants, by the practitioners, or even by the experts and technocrats,” Woodward said.

”If those of us who study it full time can’t understand it, what chance does an injured worker have? Not much.”

It pits each player against all the others, which experts say forestalls solutions.

”We have to agree there’s a serious problem, it’s systemic, and quit trying to blame each other for a system we’re all being victimized by,” Woodward said.

True, many of California’s injured workers will sail through the program without difficulty. For the 600,000 workers a year who have a minor injury, go to a doctor for treatment and don’t miss work, workers compensation often works as it was intended.

‘Short end of the stick’

But many of the 400,000 workers a year who miss time from work or have a permanent disability will have a different experience, including the 200,000 — among them, 5,000 on the North Coast — who will have to litigate.

They will discover difficulties in many subtle and surprising ways.

“The injured worker is getting really the short end of the stick when it comes to what needs to be done in this system,” said David R. Caine, a workers comp expert for the California Chamber of Commerce and past president of the California Self-Insurers Association.

Many will slam into a wall of suspicion and distrust that will paralyze them with shame and frustration and delay their recovery.

Some will lose their jobs, their homes and their families — not to mention their health — because of delays and low benefits.

Eventually, many will have to turn to taxpayer-funded safety nets such as State Disability Insurance, Social Security, food stamps and Medicare to get by.

“Daily I watch workers’ worlds crumble in front of them as they fall further in debt,” said John Frailing, last year’s president of the California Applicants’ Attorneys Association, an association of attorneys for injured workers.

That wasn’t how it was supposed to be.

Workers compensation was historically a compact between employers and employees that grew out of the Industrial Revolution. Injured workers gave up their right to sue their employer — and the uncertain outcome of litigation — in exchange for prompt, certain but modest benefits, including medical care and a stipend while they were out of work.

Broken bond

In general, workers compensation benefited both employers and employees, and it revolutionized workplaces in industrialized societies around the world — protecting employers from lawsuits, encouraging them to keep safe workplaces and guaranteeing workers prompt care without litigation.

But for many California workers, the compact has broken down.

Employers still are protected from civil lawsuits and expensive jury verdicts. But many injured workers will not get prompt, guaranteed benefits without litigating through a special workers compensation court system.

The 1993 legislation, which climaxed four years of overhaul efforts, had the primary goal of reducing costs to employers and raising benefits for some workers.

Since then, average employer costs have fallen 34 percent.

”The people I represent, fully insured employers, are relatively happy,” said Jim Contreras, vice president of the California Small Business Association.

”The employers have stepped up to the plate and won some victories.”