Schwarzenegger Promises WC Reform

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, Oct. 10, 2003 Share this on FacebookTweet thisEmail this to a friend

Governor-elect Arnold Schwarzenegger now starts the daunting task of reinvigorating California's sluggish economy. Key problems he identified are a runaway workers’ compensation system and burgeoning unemployment insurance costs that are stifling businesses.

On October 1, 2003, Governor Gray Davis signed a package of workers’ compensation bills that were estimated to save employers more than $4 billion a year beginning January 1, 2004. However, Governor-elect Schwarzenegger has indicated that it falls far short of the $11 billion needed to bring California's cost in line with other states.

According to Schwarzenegger, a comprehensive workers’ compensation reform package should rein in costly premiums and unnecessary costs so that more dollars can go toward expediting benefits to injured workers, while retaining and creating new jobs in California. As Governor, he will:

* Work with the legislature to:
* Implement objective and enforceable utilization
guidelines and establish well-defined networks
of providers.
* Eliminate excessive permanent disability payouts
by adopting American Medical Association
guidelines for impairment ratings.
* Reduce unnecessary litigation and judicial
involvement by adopting an effective Independent
Medical Review process.
* Initiate a comprehensive review of the State
Compensation Insurance Fund to assess its current
financial condition and take action as necessary.
* Appoint a new team to the Division of Workers'
Compensation and make cost containment job one.

Unlike recent legislation, Schwarzenegger promises to work to address all significant drivers behind the workers’ compensation crisis, including judicial fee schedules, vocational rehabilitation expenditure, potential cost increases arising from the recent legislation, and more.

CMTA is pleased to see workers’ compensation reforms high on Schwarzenegger's agenda. We are encouraged by his recognition that real cost savings cannot be obtained and retained without addressing major cost drivers such as subjective medical findings for permanent partial disability ratings, excessive litigation, fraud and system abuse. CMTA believes that significant changes in these areas to tighten up eligibility and increase predictability are needed in order to reduce employers’ workers’ compensation costs. CMTA looks forward to working with the new governor and his staff.
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