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Barry Pearlman
By: Jack Duffy
Barry Pearlman

Title: Founder, Pearlman, Borska & Wax
Resume: In addition to maintaining a full caseload, he is the managing partner of the firm. Pearlman specializes in litigation of workers' comp matters involving complex legal and factual issues, representing employers, insurance carriers, and third-party administrators in coverage disputes, defense of workers' comp claims and other employment law issues. He is an experienced litigator with numerous successes before the Workers' Compensation Appeals Board, Superior Court and the Appellate Courts of the State of California.
Schools: University of California at Los Angeles, Southwestern University School of Law
Boards and Commissions: As a respected member of the workers' comp community, Pearlman is a frequent lecturer and instructor on current trends in procedure, law and strategy. He is a member of the State Bar of California and was an arbitrator for the State Bar.
Certifications: Pearlman is a certified provider of continuing education by the Division of the Workers' Compensation Medical Unit and the California Department of Insurance.
Mentors: Marvin Shapiro, Ron Feenberg, Jerry Goldberg
Interests: Any reading Pearlman does is to learn more about California law in all areas, not just workers' comp. His free time is spent outdoors hiking and being on the water.

A founder of the Southern California workers’ comp defense firm, Pearlman's knowledge of workers’ comp and his style have earned him the respect of colleagues in both the defense and applicant community. His firm, with its slate of esteemed attorneys, has a reputation for taking on tough cases, including the death benefit case Six Flags v. WCAB. Pearlman sat on the governor’s Workers’ Compensation Community Task Force. He also sat on the Administrative Director’s Advisory Committees on Permanent Disability and the Medical Provider Networks.

What are the top three issues in California workers’ comp today?  
Controlling medical expenses, including pharmaceutical expenses as well, would be the first issue. Ensuring adequate permanent disability to legitimately injured workers while protecting the validity of the California workers’ comp system would be my second [issue.] The system should be able to accommodate an increase in PD for those legitimately and seriously injured, along with adjustments for those injuries based upon subjective complaints only. The third is the establishment of appropriate procedure before the [Workers’ Compensation] Appeals Board to ensure all parties obtain due process. An example of where there was no due process to the employer was with the passage of Rule 30d. Employers were not allowed to obtain a medical evaluation on AOE/COE if the claim had already been denied. With the Mendoza decision, this has been, at least for now, corrected. The rules and [regulations] need to reflect the legislative intent of SB 899 and prior legislation. Each party must bear their burden of proof and be allowed to appropriately present their positions to unbiased workers' compensation judges.

Are we headed for a hard market, and if so, when will it come? How long should we expect it to last? What are the repercussions?  
Yes, we are headed for a hard market, and we’re in the beginning stages now. All indications are that the cost of claims is substantially increasing, that the cost of litigation is substantially increasing, and that the risk analysis for workers’ comp insurers is becoming more difficult. The result will be that there will be less profit for workers’ comp carriers in California, which will reduce the number of competing carriers and put a greater share of the insurance liabilities with State Fund. It’s too early [now] to tell how long it will last. That partly depends on whether we have a Democratic governor or a Republican governor in 2011. I expect that it will last at least until we have a new governor and then we’ll have to see what happens.

It looks like the State Fund sale isn’t going to happen, but it looks like we may be heading for a hard market. What does that mean for State Fund? Will its market share increase to the same levels as it did previously? Does State Fund need any additional reforms in governance that might make a difference in how it handles its business? For instance, a proposal this year—it looks like the bill is dead for this year—would require that board members be confirmed by the Senate. Is that a good idea?  
Yes, you can expect that the percent of insurance market held by State Fund will increase, but I don’t believe that it will increase back to the level before. Some of the laws passed by SB 899 have put a stopgap in place to prevent that from happening. [As for governance,] State Fund is not a public agency, it is quasi-public, and I think [it has] taken some steps to reform itself. I don’t think it makes sense to have further governmental intervention, including Senate confirmation, because that brings it closer to being a public entity rather than quasi-public.

Are medical provider networks a help or a hindrance? How should they be improved?  
I believe that the majority of employers in California find that providing medical provider networks has been a help, but the methodology by which they’ve had to come by a medical provider network has become [difficult]. It includes notices, things they have to do to ensure that they are able to get the benefit of a medical provider network. The way to [improve] that is to reduce the employers’ obligation in providing notices and by making the process more simplistic. This will also ensure that the employees are provided more prompt and appropriate medical care without bureaucratic red tape.

QHow should utilization review be improved?  
The process of utilization review could best be improved by providing more discretion by the claims department in evaluating the need for medical treatment and authorizing that medical treatment based on their experience without using utilization review. Utilization review should be limited to where a reasonable claims person with reasonable experience cannot determine whether medical treatment is reasonably necessary to cure or relieve the injury according to ACOEM guidelines in Labor Code section 3600.

What needs to be done to improve return-to-work?  
Return-to-work seems to be an extremely strong tool in both reducing the employers’ exposure and providing the best possible outcome to the injured worker. First, it’s much easier for employers to return employees back to work because they don’t have to retrain new employees. Second, with the current economy, it’s in the best interest of the employee to return back to work instead of re-entering the labor market and having to find a new job. Appropriately following the American Disabilities Act and the Fair Employment Housing Act is an adequately interactive process during the pendency of workers’ comp claims, and will return employees back to work.

What do you see, other than medical, as the next big cost driver?  
I don’t know if pharmaceutical [costs are] considered a part of medical, but clearly pharmaceutical is a big cost driver. Other than that, the big cost driver now is the fact that the Legislature has chosen to make the permanent disability schedule rebuttable, and the applicants’ bar is looking for every way possible to rebut the permanent disability schedule, both for physical and psychiatric claims. At the California Applicants’ Attorneys Association convention there was a whole seminar on the rating of psychiatric injuries.

Is it realistic to deal for more cost-cutting reforms in exchange for increasing PD benefits?  
I think that for the legitimately injured worker it is necessary to establish a methodology by which permanent disability can be increased. In order to do that there has to be a way to reduce the medical and pharmaceutical costs so that the system does not revert back to the way it was before SB 899.

Where do you see applicant attorneys focusing litigation in the future?  
[Their focus] appears to be rebutting the permanent disability schedule for psychiatric and physical injuries and using the COLA to increase the value of their claims.

Now that Obama’s health care bill is law, is there any correlation with workers’ comp? The language changed a bit. Is there a greater connection? Is there anything that has emerged in the law that would change their answer from last time?  
I think that, based upon my experience, the federal health care bill will have little impact on how a case will be handled and evaluated. It could have a substantial impact on employer expenditures, which could result in reduction of workforce, which in turn could also result in increased workers’ comp claims.

What is the effect of more than $1 billion in payroll being absorbed by self-insured groups?  
Those employers that are self-insured seem to be able to better control their expenses, but the reserving policy for self-insured employers, especially with regard to future medical care, has become exceedingly costly. I don’t see that the increased numbers of self-insureds has affected the insurance market in California. Even though we have a substantially greater number of self-insureds, we also have a substantially greater number of carriers writing in California.

What does the future hold now that Almaraz/Guzman & Ogilvie have been reconsidered? Will there be a benefits increase?  
I think we need to wait for the Court of Appeals decision. The argument was just heard a few weeks ago on Guzman. That is yet to be determined. I think that the legislative intent was that the permanent disability rating schedule [should] be the methodology by which workers’ comp claims are evaluated, but the Legislature did, in the statutes, make the presumption rebuttable. I don’t think we’re going to see a substantial change in whether the permanent disability schedule is rebuttable. That being said, it’s hopeful that any decision from the Court of Appeals will substantially limit the number of cases that Almaraz/Guzman and Ogilvie will in fact be applied. [As for whether there will be a benefits increase,] every study seems to indicate that for the truly legitimate injured workers who have sustained serious injury, permanent disability should be increased. I don’t know that we’ll see that benefit increase. The Legislature is more concerned with budget and ecology as opposed to workers’ comp.

Governor Schwarzenegger signed bills maintaining the right of injured workers to predesignate their own physicians (SB 186), tweaking utilization, and limiting the denial of benefits (AB 1093). What impact could these, if any, have on costs?  
The problem with predesignation is that employers are not educated enough on how to appropriately provide predesignation forms to employees. Employees are not adequately informed of the results or the methodology by which to predesignate. It’s not being used very much. The idea of predesignation was that the employee’s doctor, who is most familiar with their condition, would be the treating physician. The reality is that the unions and the physicians themselves are having employees predesignate doctors who, they believe, will be of greater benefit when a workers’ comp claim is filed. We’re missing the point. Schwarzenegger never liked the predesignation form and changed the law [… but it was brought back.] There’s not a substantial impact one way or the other; all physicians should comply with ACOEM guidelines. The impact should be minimal, but this is California.

Where does the greatest liability lie in Medicare Set-Asides?  
The actions of Medicare are substantially affecting our ability to settle cases in California. The result is that cases are not being settled, more litigation is [being incurred] and the employees seem to require more medical care and treatment when they have an open medical award instead of closed by way of settlement. Keeping an open award requires reserves on the case by carriers and employers.