A Carve-Out Program That Solves Workers’ Compensation Woes

Roger D. Wilson

Attorney at Law
Rains Lucia Stern, PC

The Problem: A Slow, Confusing and Frustrating System

Sergeant Miller was faced with a dilemma: wait until the TPA authorized his surgery and risk exacerbating his injury and prolonging his recovery time, or follow the advice of the orthopedic surgeon and risk having to pay for the surgery and physical therapy out of pocket. S
ergeant Miller injured his right shoulder when a drunk driver swerved his car into Miller’s patrol car. Sergeant Miller’s injury seemed slight at first, but the pain became more severe as the days passed. Sergeant Miller sought medical treatment and reported to the doctor that he was injured while at work. Due to the “delay” in seeking medical treatment, Sergeant Miller’s employer’s third party administrator (TPA) rejected his workers’ compensation (WC) claim. Sergeant Miller waited roughly 90 days until the TPA changed its position and accepted Sergeant Miller’s WC claim. The TPA directed Sergeant Miller to an industrial doctor for diagnosis and treatment. After five visits, Sergeant Miller had no improvement in his shoulder. Sergeant Miller sought a second opinion from a local orthopedic surgeon, who recommended surgery to repair his damaged shoulder. Sergeant Miller requested approval from the TPA for the surgery, but the TPA refused.

Sergeant Miller sought assistance from his employer, the city’s human resources manager and his union, but all said they could do nothing to speed up the TPA’s decision. Frustrated, Sergeant Miller hired an attorney to force the TPA to make a decision. Sergeant Miller experienced more delays, yet another examination by an agreed medical examiner, and legal expenses. Still, after several months, he had received no treatment for his injured shoulder.

Sergeant Miller was forced to use his accrued sick and vacation time while he waited for medical treatment. He also incurred enormous medical expenses, paying for his own orthopedic surgeon. Finally, after two years of maneuvering the conventional WC system, the TPA reluctantly approved Sergeant Miller’s shoulder surgery. Due to missed work time, his department was forced to pay overtime to cover his shifts.

Everyone involved in Sergeant Miller’s work-related injury — the department, his employer, the TPA, the medical providers — felt helpless and unable to move his WC claim toward resolution and return him to work. This case is fictional, in part, yet it demonstrates the inherent problems of California’s statutory WC system.

The Solution: A Carve-Out Program

The statutorily authorized WC carve-out programs (WCCPs) enable both employers and union employees to take control of their WC claims processes by creating and negotiating a WC system unique to their employment setting.

Labor Code Section 3201.7 allows employers and unions in unionized settings to negotiate alternative WC procedures and create WCCPs. The labor code does not limit the design or structure of WCCPs, so simple or comprehensive WCCPs are acceptable.

Only a few public sector union WCCPs have been implemented, most of which are basic. Perhaps the most widely cited example is the City of Long Beach program, created by the police and fire unions and the City in 2008. For Long Beach, the primary goal was to “expedite resolution of medical-related disputes in WC claims.” To achieve this, Long Beach’s plan called for the development of a medical provider network (MPN) that incentivizes independent medical examiners with slightly higher patient-visit fees to expedite patient visits, diagnoses and treatment for Long Beach employees participating in the WCCP. Utilization of an MPN eliminates the need for statutory examinations that substantially slow down the claim process. Using the MPN-only program, Long Beach was able to achieve its goal. However, MPN-only programs, like the Long Beach plan and others, are fairly basic, rather than comprehensive WCCPs, and do not address other aspects of the WC process perceived to be problematic.

The Fresno Police Officers’ Association/RLS Program

After years of watching their members endure the hardships of a broken WC system, the leadership of the Fresno Police Officers’ Association (FPOA) made a decision to address the problems. FPOA studied existing simple WCCPs, but opted to take a more comprehensive and global approach like those used in several private sector WCCPs. The FPOA, along with the assistance of Rains Lucia Stern, PC (RLS), created a unique public agency WCCP that addressed every aspect of the WC process. The FPOA program exceeds the scope of all existing public agency WCCPs and is the first program of its kind in California. The comprehensive Fresno WCCP uses an MPN, but also creates a claim ombudsperson to communicate with the injured employee, the employer’s TPA and the medical provider to resolve complaints promptly. The Fresno WCCP also uses medical-legal case nurse advocates; a joint committee (JC) of labor and management to oversee, manage and modify the WCCP; and a panel of arbitrators and mediators. Significantly, the JC is composed of members from the Association, the Department, the City, the TPA and a professional arbitration director, and it identifies and selects ombudspersons, nurse advocates, mediators and arbitrators. The goals identified by the comprehensive FPOA WCCP include: expedite claims handling, reduce claim costs and ultimate loss development, expedite employee return-to-work time, improve employee morale, reduce overtime costs and avoid the statutory claim dispute process of the WC Appeals Board (WCAB).

Under the simple, MPN-only WCCPs, a party unhappy with treatment decisions is forced to litigate such disputes using the WCAB process. In contrast, the comprehensive FPOA WCCP uses a team approach to resolve disputes early, through the skills of the ombudsperson, nurse advocate and, if necessary, a mediator and arbitrator. This team approach results in substantial savings in time and resources for employees and the employer, and promotes an environment of communication, cooperation and trust between employees and employers not found in traditional WC settings. The comprehensive FPOA WCCP also benefits the City by creating significant savings in time and resources. In turn, those savings are shared with the members of the FPOA.

The FPOA, the City and RLS worked collaboratively over several months to achieve consensus on the details of the design and implementation of the WCCP. Comprehensive agreements have been negotiated to clearly define the rights of the FPOA, individual members and the City.


If Sergeant Miller had worked for an employer with a comprehensive WCCP, he would have had an ombudsperson and nurse advocate communicating with him, the TPA, and his medical providers within a few days of his injury to ensure that he received prompt medical attention, diagnosis and treatment. Any disputes he encountered along the way would have been addressed and resolved quickly within the framework of his WCCP. In fact, statistics reported by the State of California’s Division of Workers’ Compensation in its Alternative Dispute Resolution Carve-Out Program Report for the calendar years 2004 to 2011 show that in 2011, 89% of carve-out claims were resolved in one year or less, and 94% of the claims were resolved before the mediation stage.

Any association, regardless of size, will likely benefit from a comprehensive WCCP, which is probably the best solution to a slow, confusing and frustrating WC system.

Notice: Making a false or fraudulent workers’ compensation claim is a felony subject to up to five years in prison or a fine of up to $50,000 or double the value of the fraud, whichever is greater, or by both imprisonment and fine.

About the Author

Roger D. Wilson is an attorney with Rains Lucia Stern, PC, who practices in the firm’s collective bargaining and legal defense practice groups. He represented FPOA in collectively bargaining its workers’ compensation carve-out program.