Should You Take The Doctor's Word For It?
by John Bitar, Esq.
The heart of every Workers' Compensation case begins with the physician's rating within the AMA Guides. A recent study published in the AMA Guides Newsletter, investigated more than 6,200 AMA impairment ratings revealing an error rate of 78%! The resulting AMA ratings averaged more than twice the impairment that should have been provided.
According to the study, key observations suggested that inaccurate ratings are often the result of bias, confusion, and misapplication of the AMA Guides. The result of these inaccurate reports could cost employers almost $10,000 per report. Other studies suggest that for every 100 claims, employers could be overpaying $800,000, on average. How many claims do you have?
Why the confusion?
In 2004, the California Legislature passed SB 899 as emergency legislation to address the skyrocketing costs of Workers' Compensation claims. The goal was to control medical and legal costs by using objective and consistent measurements for determining permanent disability.
Under Labor Code section 4660(b)(1), The American Medical Association(AMA) Guides(5th Edition) was adopted for description and measurement of physical impairments and the corresponding percentages of impairments published within the AMA Guides, for injuries that occur after 2005.
Following passage of SB 899, the changes appeared to work. According to the Workers' Compensation Insurance Rating Bureau (WCIRB), the average pure premium rate per $100 of payroll dropped from $4.80 in 2003 to $1.68 in 2008.
Since 2008, however, the average pure premium rate has been rising. Recently, the WCIRB submitted a pure premium rate filing to the California Insurance Commissioner recommending a 29.6% increase for 2011. It appears that since 2008, this trend has been moving upward rapidly.
Why the Increase?
There is a multitude of factors that go into the filing to trigger the increase in premium. From the litigation standpoint, recent court decisions Almaraz/Guzman and Olgilvie have played large roles and have garnered a lot of attention and buzz within the Workers' Compensation community. These cases have given injured workers new opportunities to challenge the conservative analysis of impairments in the AMA Guides and rating schedule in an attempt to increase permanent disability and case value.
While Almaraz/Guzman and Olgilvie remain the talk of the town, according to the WCIRB, they will boost system-wide costs by only 5.8%. Misapplication of the AMA Guides cost businesses far more every year. Therefore, it remains critical to make sure reports have been rated correctly within the strict interpretations found in the AMA Guides.
How to get an accurate report?
Take control by having the right attorney. It is most important that businesses challenge injured employee medical reports to reveal the true value for each workers' compensation claim. It is recommended that businesses address reports for inaccuracy early to reduce additional litigation costs and liability exposure. In cases with battling reports, where two doctors are in conflict regarding the employee's injuries, it is crucial to uncover any inaccuracies. Correcting the inaccuracies will reduce costs to the business for the immediate claim and for future modification ratings.
An employer must take control of these costs to ensure overall savings on liability expenses which translate directly to the bottom line.
Whether your business is self insured, has a high deductible or a standard insurance policy, you may request that your TPA or carrier use the services of a specific law firm or attorney for workers' compensation claims. Your business should form a relationship with your workers' compensation attorney and create a direct channel of accountability for quality work.
