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Alternative Dispute Resolution Program and Special ADR Policy

SPECIALIZED CLAIMS HANDLING FOR EMPLOYERS AND THEIR UNION WORKERS

For employers who hire unionized employees, State Fund offers an Alternative Dispute Resolution (ADR) program that will allow these employers who have signed specific collective bargaining agreements and labor-management agreements (also called “carve-out” agreements) with their employees’ union to utilize ADR to provide medical benefits and adjust and settle claims for workplace injuries.

The carve-out agreement(s) negotiated by a union with a group of employers will have customized procedures for resolving disputes that vary from the statutory procedures for settling claims for injured workers that are set forth in the CA Labor Code. However, the carve-out agreements must provide the injured worker with benefits that are at least equal to the benefits required by the Labor Code.        

ADR is an alternative to the traditional approach to resolving workers’ compensation claims. With ADR, an injured worker will report the injury and then use the services a professional neutral ombudsperson hired by the union trust who is knowledgeable in workers’ compensation law to quickly determine if the injury is work related. The ombudsperson will recommend to the injured worker the appropriate medical treatments and other benefits as set forth in the carve-out agreement.  

ADR provides employers with flexibility to manage the overall costs of their workers’ compensation program by promoting voluntary agreement early on with the injured worker on effective medical treatment and thereby reduce litigation over the scope of medical treatment. ADR can provide accelerated claims resolutions and expedited medical treatment and potentially quicker return-to-work outcomes for injured workers.

For an employer who is eligible to participate in a union ADR program, State Fund will issue the employer two insurance policies. One policy is an ADR policy that will provide for payment of the benefits for the injured union employee as agreed to in the carve-out agreement. The other policy is a traditional workers’ compensation policy that will provide coverage for the employees that are not union employees and are not eligible for ADR.  

State Fund’s ADR program has separate premium base rates that include an expense load (currently 4%) to support the administrative costs of ADR. The ADR process replaces litigation with services of an ombudsman and if needed, mediation and arbitration procedures designed to resolve claims quickly and appropriately.

A well managed workers’ compensation program, that includes the ADR process for an employer’s unionized employees, results in a comprehensive system that is designed to efficiently manage the costs of workplace injuries and provide injured workers with benefits equal to or better than provided by traditional workers’ compensation alone. 

Note: State Compensation Insurance Fund is not a branch of the State of California.

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