HomeMy WebLinkAboutMINUTES - 08172004 - C82 1 f ,
TO: BOARD OF SUPERVISORS ' ytl'"1rd
FROM: JOHN SWEETEN, County Administrator "'
Costa
DATE: AUGUST 2, 20104 " ; County
SUBJECT: RESPONSE TO GRAND JURY REPORT NO. 0408, ENTITLED"CONTRA COSTA
COUNTY'S HISTORY OF PAYING HIGH WORKERS' COMPENSATION BENEFITS"
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION:
APPROVE response to Grand Jury Report No. 0408, entitled"Contra Costa County's History of Paying High
Workers' Compensation Benefits", and DIRECT the Clerk of the Beard to forward the response to the Superior
Court no later than September 2, 2004.
BACKGROUND:
The 2003/2004 Grand Jury filed the above-referenced report on June 4, 2004, which was reviewed by the
Board of Supervisors and subsequently referred to the County Administrator and Risk Manager, who jointly
prepared the attached response that clearly specifies:
A. Whether the finding or recommendation is accepted or will be implemented;
B. if a recommendation is accepted, a statement as to who will be responsible for implementation and a
definite target date;
C. A delineation of the constraints if a recommendation is accepted but cannot be implemented within a
six-month period; and .
D. The reason for not accepting or adopting a finding or recommendation.
CONTINUED ON ATTACHMENT: YES SIGNATURE: ] ��
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__ RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMiND TION OF BOARD COMMITTEE
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SIGNATURE(S)-
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ACTION OF BCCA N ---r APPROVE AS RECOMMENDED
if
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
AND CORRECT COPY OF AN ACTION TAKEN
UNANIMOUS{ABSENT ) AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN:
ATTESTED: AUGUST 17,2004
CONTACT: JULIE ENEA(925)335-1077 JOHN SWEETEN,CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
CC: BOARD OF SUPERVISORS MEMBERS
PRESIDING JUDGE OF THE GRAND JURY
GRANDJURYFOREMAN
COUNTY ADMINISTRATOR
RISK MANAGER
HUMAN RESOURCES DIRECTOR
BY DEPUTY
BOARD OF SUPERVISORS RESPONSE
TO GRAND JURY REPORT NO. 0408:
CONTRA COSTA COUNTY'S HISTORY OF
PAYING HIGH WORKERS' COMPENSATION BENEFITS
Workers' Compensation is a no fault benefit delivery system. State of California mandates that
every employer provide workers' compensation benefits through insurance or by self-insurance.
The State of California further mandates that an employee who sustains a job-related injury or
illness is entitled to, among other benefits:
1. Reasonable medical treatment, to cure or relieve from the effects of the injury.
'2. Tax-free disability benefits (known as temporary disability)on a temporary basis when
the employee is unable to work due to the injury. These benefits are paid based on an
employee's earnings at time of injury. It is generally calculated to be two-thirds of an
employee's average weekly earnings. There are statutory minimum and maximum rates.
3. Permanent disability compensation if the injury/condition results in decreasing the
employee's ability to compete in the open labor market.
4. death benefits in the event the cause of death resulted from the employment.
FINDINGS
1. Contra Costa County(the County) is "self-insured and self-administered.
Response:.,Agree,
2. In addition to state-mandated benefits, the County enhances its workers' compensation
benefit package, in accordance with various Memorandums of Understanding (MOUs)
and Management Regulations'cavered under workers' compensation. A MOU is a
negotiated labor contract. These enhanced benefits have been negotiated by the County
and the Unions. To date, unions have refused to renegotiate these issues until the time
of new contract negotiations.
Response: Agree. Most of the Memoranda of Understanding(MOUS) with the
County's labor unions are in effect until September 30, 2005. Those MOUS may only
be modified with the mutual agreement of the unions and the County. The current
state and local budget crises, compounded by escalating workers'compensation
costs, prompted the County to approach the labor organizations to renegotiate and
modify MOU terms, particularly relating to workers'compensation, but the labor
unions were not inclined to reopen the contracts at this time.
3. The County program provides in lieu of temporary disability benefits, a "salary
continuation" program whereby permanent employees receive 86% of their regular
monthly salary, tax free, during any period of temporary disability up to 365 days for each
injury. No charge is made against sick leave or vacation accruals for this program.
Because benefits are tax free, this program provides some employees who are out of
work with higher take home earnings than when they are working.
Response: Agree.
Contra Costa County's History of Paying High Workers' Comp Benefits August 2, 2004
Board of Supervisors Response to Grand Jury Report No. 0408 Page 2
4. The County program provides up to three (3) hours per day without loss of pay of
benefits if an employee has returned to work and is required to leave work to attend
medical appointments. No charge is made against the employee's sick leave or vacation
accruals. This benefit can go on for the life of the employee as long as he remains a
County employee.
Response. Agree, with the clarification that these benefits are available only to those
employees with active workers'compensations claims.
5. The County has a "limited duty„ program which allows an employee returning to work to
work as little as two (2) hours per day.
Response; Agree, under very limited circumstances. The primary purpose of this
program is to encourage return to work as early as possible, as research has shown
that employees who return to work early recover more quickly and completely.
6. The County's Risk Management Division in 2003, surveyed five similar(employee
population, geography, and annual claim frequency) Northern California Counties. The
survey showed that the County's benefits are the highest of any county surveyed. Key
policy differences between the counties are listed below:
■ Alameda County- provides 80% salary continuation for up to 365 aggregate days.
Taxes are,withheld from the salary continuation benefit portion.
■ San Mateo County-- provides 100% salary continuation for 90 days. Thereafter, the
state-mandated benefits are paid.
■ Sacramento County—does not provide a salary continuation program. An employee
may use sick leave or vacation accruals to makeup the difference between the state
mandated weekly benefit and regular salary. Otherwise, only the state-mandated
benefits are paid.
■ Santa Clara County— provides no salary continuation program. It only pays the state
mandated weekly benefits. An employee is allowed to use available sick leave and
vacation accruals to make up the difference between the state mandated weekly
benefits and regular salary. City and County of San Francisco- provides no salary
continuation program, only paying the state mandated benefits.
Response. Agree.
7. For Findings 8, 9, 11, 12, 13, 18, 19, and 21 refer to Contra Costa County's Workers'
Compensation Program— Program Status and Trends, March 2004 as presented to the
BOS on April 20, 2004.
Response: Agree.
8. Annual Workers' Compensation costs for Contra Costa County are on the rise as shown
below:
Fiscal Year(FY)
Contra Costa County's History of Paying High Workers' Comp Benefits August 2, 2004
Board of Supervisors Response to Grand Jury Report No. 0408 Page 3
FY 01-02 $18,200,000
FY 02-03 $20,900,000
FY 03-04 Projected $22,600,000
Response: Agree.
9. In the last 12 months, estimated liabilities for future claims increased from $57 million to
$69 million, an increase of over 21%. In order to address this outstanding liability, as a
self-insured employer, it is necessary for the County to continue assessing the adequacy
of the Workers' Compensation Trust Fund, which requires ongoing review. In the last
four years, actuarial confidence level has dropped from 90% to 35%. A"confidence
level" is a measure that estimates the probability that the fund will have enough money
to cover open claims and future benefits.
Response: Agree.
10. In March 2004, the County Administrator advised the Board of Supervisors (BIOS)that
for FY 04-05 a $10 million increase over the $20 million contribution would be required.
This would elevate the reserve to a 50% confidence level, which is below actuarial
recommendations. Furthermore, the County estimates that contributions will need to be
increased again next year by a similar amount.
Response: Agree.
11. Projected future Workers' Compensation liabilities by benefit type are as follows:
Medical 57%
Permanent Disability 21%
Temporary Disability 119%
Rehabilitation 6%
Expenses. defense legal fees,
investigations, and copywork 5%
Response: Agree.
12. One of the measurements of Workers' Compensation costs is Claim Frequency---the
number of workers' compensation claims reported annually. For FY 1999 and 2000, the
County's claim frequency was relatively stable. The claim frequency increased in FY
2001-2002 and peaked in FY2002-2003. For the FY 2003-2004, claim frequency
declined 12.6%. If this decrease in claim frequency can be sustained, it will help to
reduce future costs.
Response: Agree.
13. Another measurement of Workers' Compensation costs is Claim Severity. Claim
severity is essentially the amount of money that is ultimately paid on a claim. The County
has experienced a sharp increase in claim severity(average liability per claim).
Year Average Liability per Claim
2001-02 $17,466
2002-03 $22,998
Contra Costa County's History of Paying High Workers' Comp Benefits August 2, 2004
Board of Supervisors Response to Grand Jury Report No. 0408 Page 4
2003-04 Projected $25,834
Response: Agree.
14. Factors contributing to claim severity are escalating medical costs, including the
increased use of pharmaceuticals, medical over-utilization (frequency of medical
treatment), and protracted treatment. Protracted treatment typically results in longer
periods of time off work, and has been tied to increased permanent disability
compensation payments or settlement.
Response: Agree.
15. Another major factor affecting claim severity is the rising cost of disability. Assembly Bill
(AB) 749 passed and signed into law in 2003 by Governor Gray Davis, established
increases in new minimum and maximum temporary disability benefit rates for every
year until 2006, at which time, the rates will be indexed according to state wage data.
Response: Agree.
16. Since January 1, 2003, the maximum weekly temporary disability rate (based on
earnings of$735 and above) has increased from $490 to $602 per week. To date, with
the enactment of AB 749, State weekly disability benefits have increased more than
22%.
_ Response: Agree.
17. County departments are impacted by these increases in claims. Permanent employees,
bath full time and part time, receive the salary continuation package, and departments
are charged for the difference between the Workers' Compensation payments and the
salary continuation amount. Non-permanent employees do not get the salary
continuation`package.
Response: Agree.
18. AB 749 also increased State permanent disability (PD) benefits. An example of the
change is illustrated below:
In 2003 In 2004
Rating at 35% PD Rating at 35% PD
+124.25 weeks of benefits +144 weeks of benefits
X $180 per week X $200 per week
= $23,310 = $29,850
This is an increase of$6,540 or 28% for the identically rated disability. AB749 also
increased death benefits.
Response: Agree.
19. Open claim inventory cases have increased substantially in the last 12 months. This
includes a significant increase in open Lost-Time claims. A lost time claim refers to an
Contra Costa County's History of Paying High Workers' Comp Benefits August 2, 2004
Board of Supervisors Response to Grand Jury Report No. 0408 Page 8
employee who is medically unable to work as a result of the injury or illness, either
temporarily or permanently.
Response: Agree.
20. Repetitive Motion Injuries (RMls) are the County's fastest growing type of injuries and
are among the most expensive injuries. The County has implemented a comprehensive
ergonomic program aimed at:
• Reducing the incidence of employee work-site injuries through early identification
of potential repetitive motion injury risk factors.
• Reducing the severity of occupational injuries when they do occur to minimize
disability.
• Enabling early return-to-work for temporarily disabled employees.
• "Time efficient" ergonomic evaluations done at the actual workplace. These
evaluations can be either requested by a worker via his supervisor, (a preventive
measure) or by a Workers' Compensation claim through Risk Management(a
responding mechanism).
• Tracking evaluations for timeliness and costs.
• Negotiating discounts on ergonomic equipment from selected vendors, track
equipment orders, costs, timeliness of equipment deliveries, and salvage and re-
use of equipment.
Response: Agree.
21. To date, 343 new ergonomic evaluation requests have been completed since September
2003 by the-Count. .The result: evaluations are out faster and implementation is better
managed.
Response: Agree. As of June 2004, 498 evaluation requests have been completed
22. Risk Management has set up an ergonomic training web-based program for all
departments. It is a program that workers can access for ergonomic training both at
home and at work.
Response: Agree. The online training program takes about 40 minutes to complete
and can be completed in small segments for maximum flexibility.
23. Beginning July 1, 2003, the County assumed responsibility for directing medical care for
injured employees during the first 30 days following a claimed industrial injury. They
have established two providers: Kaiser Occupational Health and Muir/Diablo
Occupational Medical Clinic. Thus, the employee is directed to an occupational medical
program staffed by occupational medical professionals dedicated to the treatment of
industrially injured employees.
Surveys conducted by Kaiser and Muir/Diablo indicate this program is getting positive
feedback as this program met with initial reluctance by the Unions. This system is
providing a speedier delivery of care and provides proper documents to process claims.
Response: Agree, with the claritication that the County may only exercise medical
control of cases for which the injured employee has not"pre-designated"a personal
ContraCosta County's History of Paying High Workers' Comp Benefits August 2, 2004
Board of Supervisors Response to Grand Jury Report No. 0408 Page 6
physician. Legislation effective January 9, 2004(SB 228)permits the County to
require that an injured employee be seen by a County-designated physician, and
eliminates the presumption of correctness that formerly attached to the diagnosis of
the injured employee's treating physician.
24. In April 2004, in compliance with new State Laws AE227 and S13228, the County
developed a plan to implement American College of Occupational & Environmental
Medicine guidelines to provide proper treatment and to control medical costs.
Response: Agree.
CONCLUSION
The cost of workers' compensation continues to grow at a rate with which the County's general
purpose revenues cannot keep pace without impacting other programs. It is imperative that the
County continue to take steps to reduce the frequency and severity of workers' compensation
cases to slow the growth in workers' compensation costs. Several of the current benefits create
an environment of disincentives to return to work.
i RECOMMENDATIONS
1. Direct the County Administrator to try to negotiate in the new labor contracts and MOUS
the following:
('a) Reduce thdur tion of the salary.,continuation program from 365 days to 60
days.,(Sixtydays is the average length of a disability.)
('b) Change the three -hour rule, which allows an employee time off work without loss
of pay or sick leave to see a doctor. Eliminate this benefit for future workers'
compensation programs.
(c) Implement a more restrictive "limited duty„ policy so that an employee would have
to work for a minimum of four hours per day.
Response: Will not be implemented because it is unreasonable. The Board's
position with regard to future labor negotiations has not yet been determined. The
discussions which precede such determinations are, by law, privileged to take place
in dosed session meetings of the Board.
2. Direct the County Administrator to try to reopen current labor contracts and MOUS to
implement the recommendations set forth in No. I (a), (b) and (c) above.
Response: Has been implemented. On April 20, 2004, the Board of Supervisors
authorized the County Administrator to approach the County's labor organizations
with an offer to re-open the labor contracts for the purpose of discussing strategies
that could reduce the costs of the workers'compensation program and, thus,
preserve jobs that were at risk for elimination due to pending budget cuts.
Contra Costa County's History of Paying High Workers' Comp Benefits August 2, 2004
Board of Supervisors Response to Grand Jury Report No. 0408 Page 7
The County Administrator contacted the labor unions for this purpose, but the unions
were not inclined to re-open the labor contracts at this time, as was indicated in the
County's response to Finding No. Z.
3. Make the web-based ergonomic training program mandatory for all County employees.
Response: Will not be implemented because it is not reasonable. The web-based
ergonomic training program is currently offered to County employees at no charge
on s voluntary basis and can be accessed by an employee with supervisory approval.
A computer with Internet access and capabilities is required for access.
At this time, all County employees do not have access to computers with Internet
capabilities nor does the County have the facilities that would be necessary to
provide Internet access to all County employees.
The County will, however, explore with its labor organizations the concept and
mechanics of making the web-based ergonomic training mandatory for all employees
as part of negotiations for new labor contracts effective October 9, 2005.
b