Administration releases first part of PD study

By CMTA Staff

Capitol Update, Feb. 8, 2007 Share this on FacebookTweet thisEmail this to a friend

The Division of Workers’ Compensation (DWC), as required by SB 899 (Chapter 34, Statutes of 2004, Charles Poochigian, R-Fresno), has released the first portion of its 18-month review of permanent disability (PD) benefits.  The study, which is an early look at return-to-work rates for injured workers, gives context to the current political debate over reducing PD ratings – a debate that has been raging ever since SB 899 was passed. 

SB 899 fundamentally shifted the way an injured worker is evaluated for and awarded PD benefits.  Under the old system, an injured worker would receive a percentage disability rating based largely on subjective criteria.  Employers believed the ratings were unfairly inflated and inconsistent.  SB 899 revised the process to require physicians to use objective criteria, set forth by the American Medical Association, when evaluating injured workers for disability.  The Commission on Health and Safety and Workers’ Compensation has released a study claiming that PD benefits have been reduced by roughly 50 percent. 

Because of this reduction, groups such as Voters Injured at Work, Californians Injured at Work, the California Applicant Attorneys Association and various labor unions have been applying significant political pressure to roll back SB 899’s reforms.  In the 2005-06 legislative session this pressure culminated with the introduction of SB 815 (Speaker pro Tempore Don Perata, D-Oakland) which sought to double PD benefits for injured workers.  The bill passed both houses despite massive opposition by employers and insurers.  Governor Arnold Schwarzenegger ultimately vetoed the legislation, indicating that he wanted to wait for the DWC study, currently underway, before taking any action on PD.

One of the most important aspects to this debate over PD is the issue of return-to-work.  A RAND study has shown that injured workers who return to their at-injury employer within 12 months of their injury date have significantly less financial damage as a result of their injury.  This is important because PD benefits are intended, according to SB 899, to compensate an injured worker for their "loss of future earnings capacity".  The study released by the DWC shows a 5.2 percent across-the-board increase in return-to-work rates, which is promising.  Perhaps this is proof that the system is working better for both injured workers and employers. 

In March the DWC is expected to release the second part of its study, focusing on the loss of future earnings capacity.  Together, these studies should provide evidentiary data to what has been largely an emotional and political debate.

The DWC will hold two public forums to allow the public to comment on the first portion of its study.  You can access the information on those forums by visiting the following link:


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