Workers’ Comp Extra Ordinary Session has Extra Ordinary Hearings

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

Capitol Update, Dec. 8, 2003 Share this on FacebookTweet thisEmail this to a friend

Following up on the promise to curb runaway workers’ compensation costs and give California's sluggish economy a boost, two bills sponsored by the administration are currently being heard in each legislative house. ABx4 1 (Abel Maldonado, R-Santa Maria) and SBx4 3 (Charles Poochigian, R-Fresno) are identical bills that contain comprehensive reform language estimated to reduce employers costs by as much as $11.4 billion.

After a hastily-noticed information-only hearing called by the Assembly Insurance Committee on November 19th to discuss ABx4 1, it became painfully clear that only a few people had read the bill and that more time was needed by the committee and the public to complete an analysis of the bill. Surprisingly, the Assembly Insurance Committee has not held another hearing.

The Senate Labor and Industrial Relations Committee scheduled several informational hearings prior to taking up SBx4 3 and invited employers, organized labor, insurers, medical and legal panels to testify about workers’ compensation in general.

Insurance Commissioner John Garamendi provided an overview of workers’ compensation insurance in California and the potential impact of recently enacted legislation (SB 228 Richard Alarcon, D-Sun Valley, and AB 227 Juan Vargas, D-San Diego) on workers’ compensation insurance costs. Commissioner Garamendi also presented his “Workers’ Compensation Road Map” for fixing California's broken system. It is currently being drafted into legislative language.

The focus of the informational hearing was on divergent views and the estimates on cost savings that could be attributed to SB 228 and AB 227. The Workers’ Compensation Insurance Rating Bureau presented their estimated cost savings from the bills and described how they had arrived at the savings amount. They were met with many questions and criticism by some committee members. Other presentations included the RAND Institute on recently concluded workers’ compensation studies of permanent disability, the Hays Group Study on California's workers’ compensation insurance market, and the Commission's study on the State Compensation Insurance Fund and residual markets.

For the informational hearings only, the committee took the unusual step of requiring people to testify under oath. CMTA declined to testify believing it would compromise the trust of members who provided specific information to CMTA under the belief that it would not be divulged. CMTA was invited to provide its information to the committee in writing.

SBx4 3 was heard in the Senate Labor Committee on December 2nd. Committee Chair Richard Alarcon indicated at the beginning of the hearing that no vote would be taken on the bill at the request of the administration and that more hearings would be necessary to fully debate the highly complex and controversial provisions in the bill.

The bill would reform major cost drivers such as the use of an injured worker's subjective description of pain in determining permanent partial disability ratings and instead would require the description of pain to be based on some objective medical finding in order to be compensable. The bill would also require the use of widely accepted medical guidelines such as the American Medical Association Guides in order to determine permanent disability ratings along with more employer control of medical treatment.

SBx4 3 contains some relatively new ideas, such as:

* The use of independent medical evaluators to resolve disputed medical services;
* Clarifying language of the "cure and relieve" standard of medical care; and
* Allowing employers, that choose to provide employee health coverage, to contract with Health Care Organizations under specified rules and protocols to treat injured workers.

The bill would also expand some of the existing and pending cost savings changes in recent legislation such as revising Labor Code Section 5814 penalties and changing the Alternate Dispute Resolution (ADR) for other industries to mirror the current ADR provision for the construction industry. This would further assist in reaching the goal of $11 billion in savings.

No future hearings are scheduled at this time.
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