Imagine a workers compensation delivery system where there is optimized & timely medical treatment for the employee, and at the same time, reduced cost for the employer. A system where there are collaborative efforts between the labor management group, and employer, to reduce injuries and lower the experience of the group. And a system, that provides a forum for continuous improvement for other employer, employee collaborations. If this sounds appealing to you, then the state of California’s carve-out system may be right for you!

Today’s Situation

The Workers Compensation in California is in disarray. For the employer, the cost of Workers Compensation Insurance, in California, is among the highest in the Country. For the employee, the Workers Compensation benefits, paid, are among the lowest in the country. It is for these reasons, that employers have begun active cost containment measures, with the end result being: inadequate medical care to employee and an adversarial relationship between the employee/labor group and the employer.

History of Carve-outs

In California, the Carve-out alternative process has been in affect, for the construction industry, since 1993 (with the passage of Senate bill 983). In 2003, this law was expanded to other labor groups with the passage of Senate bill 228.

Through early data of this alternate program, there has been improved cost savings for the employer (though not as much as anticipated) and enhanced medical delivery for the employee.

The following are excerpts from the CHSWC “Guidebook to Carve-outs in Workers Compensation”:

What is a Carve-out?

A carve-out is an alternative to the dispute resolution procedures in the state workers’ compensation system. A carve-out is created through a collective bargaining agreement.

The goals of a carve-out may include:

• Improve safety programs and have fewer injury and illness claims.
• Increase access to quality medical providers and medical evaluators.
• Lower costs of medical care.
• Reduce disputes.
• Improve collaboration between unions and employers.
• Increase satisfaction of all parties.
• Provide the opportunity for continuous improvement by renegotiating the terms of the carve-out on an as-needed basis.

Carve-out Components

• Alternative dispute resolution process (Ombudsmen, Mediator, and Arbitrator)
• An agreed list of providers of medical treatment that may be the exclusive source of all medical treatment.
• An agreed, limited list of qualified medical evaluators and agreed medical evaluators that may be the exclusive source of qualified medical evaluators and agreed medical evaluators.
• Joint labor-management safety committee.
• A light-duty, modified job or return-to-work program.
• A vocational rehabilitation or retraining program that includes an agreed list of providers of rehabilitation/retraining services that may be the exclusive source of providers of rehabilitation/retraining services.

Benefits to the Carve-out System

• Reduction in injuries and claims as labor and management negotiate over effective safety programs.
• Effective medical delivery as the quality of medical care may improve due to various factors, including an agreed selection of quality providers willing to provide care and effective case management to improve the continuity of care.
• The right to negotiate any aspect of the delivery of medical benefits and the delivery of disability compensation to the employees who are eligible for health care coverage for non-occupational injuries and illnesses through their employer.
• Alternative dispute resolution process responding to employees’ needs without litigation.
• Cost savings for unions, employers, and workers through fewer claims, fewer disputes, and discounts from insurers.
• Satisfaction by unions, employers, and workers.

Carve-out Steps

• Union Files a Petition with the Administrative Director (AD) for the Division of Workers Compensation (DWC) to enter into a contract.
• AD checks to see if petition is complete.
• AD verifies Petitioner status as the exclusive bargaining agent.
• AD issues a letter advising the union and employer of eligibility to enter into negotiations for a period not to exceed one-year.
• Union and employer negotiate a carve-out agreement.
• Union and employer submit the application to the AD.
• Employer submits a copy of the collective bargaining agreement with approximate number of employees covered under this agreement.
• Employer submits a statement that nothing invalidates the collective bargaining agreement.
• Employer submits name, address, and phone numbers of contact persons.
• Employer submits evidence of insurance program large enough to meet statutory requirements. Union submits LM-2 or LM-3.
• Union submits name, address, and phone number of contact persons.
• AD checks that the application is complete.

Summary

Through are multidisciplinary team of professionals, FireLife can facilitate with the negotiation, creation, and implementation of this unique program. For more information with regard to this program, please feel free to contact us here or contact the Division of Workers Compensation through the California Department of Insurance.

Some of the material above was utilized through material provided by the CHSWC.