Legislature Passes Work Comp Package

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

Capitol Update, April 16, 2004 Share this on FacebookTweet thisEmail this to a friend

A comprehensive workers’ compensation reform package that will reduce system costs by several billion dollars, according to some estimates, was finalized Thursday morning around 4:30 a.m. in a conference committee at the State Capitol. The conference report was amended into SB 899.

This morning, Friday, April 16th, both houses of California's Legislature passed the workers' compensation reform package. SB 899 is authored by Senator Charles Poochigian (R-Fresno) and sponsored by Governor Arnold Schwarzenegger. The Assembly held less than an hour of debate before voting 77 to 3 in favor. Assemblymembers Jackie Goldberg (D-Los Angeles), Loni Hancock (D-Berkeley), and Hannah-Beth Jackson (D-Santa Barbara) were the only no votes. A short time later, the Senate passed the bill 33 to 3 with 4 members absent. Senators Richard Alarcon (D-Sun Valley), Joseph Dunn (D-Santa Ana) and Martha Escutia (D-Whittier) voted no. The bill now moves to the Governor's desk and he is expected to sign it this Monday, April 19th. Once signed, the bill will take affect immediately and hopefully reduce insurance rates as early as July.

Of major importance to employers, the bill makes positive changes to several of the most important cost drivers in the system that previously remained largely untouched. Under the bill, the use of objective medical findings will be used to determine permanent disability ratings, and the American Medical Association guidelines will be used to identify and describe impairment and permit apportionment to causation in permanent disability disputes. These changes will bring more stability and greater predictability to future permanent disability ratings that will lower costs significantly through fewer disputes and reduced litigation. The bill also changes the penalty provision for unreasonable delay of benefits to a reasonable penalty formula related to the severity of the violation.

In addition, SB 899 clarifies language in the "cure and relieve" standard of medical care. It also contains new ideas such as the payment of medical treatment for workers up to $10,000 until the claim is accepted or rejected; use of independent medical evaluators to resolve disputed medical services; and allowing employers that choose to provide employee health coverage to contract with Provider Networks under specified rules and protocols to treat injured workers. The bill also expands the return to work program and provides incentives for employers and employees to return to work.

"CMTA congratulates the Governor and Legislators for achieving bipartisan agreement for substantial reforms to the work comp system. California employers and employees will be the ultimate benefactors of this bill to drive down costs in a badly broken system that yielded the costliest premiums in the nation," said CMTA President Jack Stewart in anticipation of the bill's passage.

"Lowering workers’ compensation rates on employers was the most important step in the Governor’s proposal for economic reform and a more friendly business climate. With the bill's passage by a super-majority of legislative votes, we anticipate insurance premiums will decrease as early as July. This relief is urgently needed for California manufacturers who are struggling to stay competitive in this high cost state," concluded Stewart.

Though the actual savings from the reforms won’t be known for some time, this proposal goes a long way in reducing costs by providing more medical control for the employers and creating a more objective system that provides appropriate benefits for the full spectrum of work-related injuries.
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