Gov. Signs Major Work Comp Reform Bill

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

Capitol Update, April 23, 2004 Share this on FacebookTweet thisEmail this to a friend

Governor Arnold Schwarzenegger kept his promise to clean up California's workers’ compensation system by signing SB 899 (Chuck Poochigian, R-Fresno) on April 22nd. According to the Governor's press release, "the bill will lighten the cost of doing business in California and help heal our economic climate making our state more competitive in attracting companies and expanding job growth". The bill signing ceremony was held in Long Beach at the Boeing Company and was attended by a large cross section of legislators, CMTA Vice President of Government Relations, Dorothy Rothrock, and other employer representatives.

It is important to note that SB 899 is an urgency bill that goes into effect immediately after being signed by the Governor. While no official cost savings estimate has been completed by the Workers’ Compensation Insurance Rating Bureau (WCIRB), unofficial estimates up to $5 billion are being touted by the Legislature.

Of major importance to insured employers is a scheduled insurance filing or "pure premium rate" hearing on April 29th. California's Insurance Commissioner John Garamendi (D) will be looking at the insurance rates recommended by the WCIRB for pure premium insurance rates for new policies, renewals etc., for periods after July 1, 2004. If SB 899 results in major cost savings, the savings are expected to be passed onto eligible employers through reduced premiums as early as July 1, 2004.

SB 899 is a comprehensive workers’ compensation bill that covers a broad spectrum of issues that are too numerous to cover in detail in one issue of this publication. This article covers brief highlights of the bill. Details will be provided over the next several publications.

Key provisions of the bill:

1. Restores about $102 million in user funding that will also fund the return to work program;
2. Specifies who is eligible for return-to-work program;
3. Repeals duplicate supplemental job displacement benefit language;
4. Restores the vocational rehabilitation program for pre-2004 injuries only;
5. Authorizes collectively bargained projects on health care integration;
6. Requires impartial findings of fact by Workers’ Comp Administrative Law Judges;
7. Fully eliminates rebuttable presumption for predesignated personal physician;
8. Specifies payment procedures for medical care;
9. Revises procedure for obtaining qualified medical evaluation;
10. Authorizes provider medical networks, implemented under regulations of the Administrative Director (AD) of the Division of Workers' Compensation;
11. Partially repeals spinal surgery second opinion program;
12. Establishes a system of independent medical review;
13. Approves medical provider networks of health maintenance organizations and health care organizations exhibiting competency in occupational and non occupational medicine;
14. Limits most temporary disability payments to a maximum of 104 weeks;
15. Provides for a capped medical lien filing fee to be paid by those filing liens;
16. Provides for immediate authorized medical treatment to all workers filing claim forms for occupational injury up to $10,000;
17. Revises penalty amounts in cases of unreasonable delay or denial of care or benefits to 25% of benefit delayed or $10,000, whichever is less;
18. Provides for administrative penalties of up to $400,000 for employers knowingly violating delay/denial laws as general business practice;
19. Provides for use of the American Medical Association Guides in describing physical impairments and estimating impairment;
20. Requires AD to formulate adjusted rating schedule based on empirical studies;
21. Decreases number of weeks of permanent disability for cases of less than 15% disability, and increases weeks for cases above 70%;
22. For employers over 50 workers, increases permanent disability payments by 15% for injured workers not offered return-to-work, and decreases permanent disability payments by 15% for those offered return-to-work;
23. Requires that insurers conduct review of injury and illness prevention program of all new insured employers with experience modification factors of 2.0 or more;
24. Replaces present law on apportionment with statement that apportionment of permanent disability is based on causation;
25. Requires physicians evaluating permanent disability to assess percentage of disability due to work;
26. Makes employer liable only for portion of disability directly caused by injury, and restricts accumulated percentage of disability for any body region to 100% over lifetime;
27. Requires a study of the insurance marketplace and rate effects from legislative reform;
28. Allows for predesignated physician within group health network; and
29. Provides that SB 796 (Joseph Dunn, D-Santa Ana), the private right of action for enforcement of labor code violations chaptered last year, does not apply to Division 1 and Division 4.

For a more detailed summary of the bill, go to and click on legislation, enter the bill number in search and scroll down to most recent Senate Floor Analysis.
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