Gino DiCaro

Possible changes to the Permanent Disability Rating Schedule

By Gino DiCaro, VP, Communications

Capitol Update, Oct. 4, 2007 Share this on FacebookTweet thisEmail this to a friend

Ever since the Workers' Compensation reforms were enacted businesses have experienced a significant decrease in comp costs, including the cost of permanent disability (PD) benefits.  Yet, this decrease has been seen as an assault on the seriously injured worker, regardless of the fact that California had some of the the highest premiums and PD in the nation before the reforms.  The debate surrounding the increase in PD benefits is reflected in recent legislation such as SB 936 (Perata) which attempts to double the PD benefits in California by 2010.  This bill is similar to past legislation that Gov. Schwarzenegger has vetoed.  The Governor's administartion has indicated that he intends to veto it again.

Nevertheless, the Administrative Director, (AD) for the Division of Workers' Compensation, (DWC) has the authority to adopt PD regulations and adjust rates as necessary; the division is now considering this approach.  The Division confirmed this week that their goal is to adopt by Feb 1, 2008 new PD regulations.   The Division is considering three specific changes:
  • Adjustments to the age modifier
  • Changes to the ranking of body parts
  • Changes to the multiplier for future earnings capacity
These proposals will definitely result in increase cost to the employer.

Currently, Carrie Nevans, acting administrative director of California's DWC, believes that modest changes to the PD rating schedule should be considered. Over the past three years, the business community has agreed that changes should be made when sufficient data had been collected.  The Division now feels they have the appropriate data needed to make changes that might result in a minimum increase of 10% in PD benefits.

Stakeholders have been meeting with the Division to discuss these proposals and are now waiting for possible regulator language.   All stakeholders are willing to discuss some regulatory changes but the business community still believes that the changes to the multiplier for future earnings capacity (which would have the largest financial impact on business) should be taken out of the regulator process and discussed through the legislative session.  CMTA will continue to oppose SB 936 and looks forward to a thorough discussion on development of regulations for the PD rating schedule.

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