Pressure building for revision of work comp rating schedule

By CMTA Staff

Capitol Update, Oct. 14, 2005 Share this on FacebookTweet thisEmail this to a friend

There was an eerie silence around the capitol this year on the issue of workers’ compensation.  While opponents of reform were laying the groundwork to chip away at the provisions of SB 899 (Charles Poochigian, R-Fresno), there was very little legislative action.  It was clear early on that attempts to gut the reforms that have provided rate relief to nearly every employer in California would not pass.  

California Insurance Commissioner John Garamendi reported in August of 2005 that California insurers with policies beginning after July 1st had filed rate reductions averaging 14.6 percent.  This brings the cumulative rate reduction to 26.78 percent since the reforms were enacted.  While there may be a dispute about whether or not these reductions are sufficient in light of the Commissioner’s recommendations for a cumulative rate reduction of 36.5 percent, it is clear that the reforms are taking hold and providing significant savings to employers of all sizes in California.  

The California Applicant’s Attorneys Association (CAAA) is now preparing to try to roll back the reforms.  CAAA members are concerned that the reduction in litigation and permanent disability (PD) levels will drastically reduce the income that attorneys draw from the system.  Because of this, CAAA and Voters Injured at Work (a group heavily supported by CAAA) have waged a public relations campaign aimed at convincing lawmakers that the new PD schedule is depriving injured workers of just compensation for their injuries.

Adding to the pressure being applied by negatively affected special interest groups is a recent study published by RAND.  The data in the study shows an average decrease in consultative ratings (percentage of disability determined for injured workers) of 41 percent.  In terms of dollars, average awards for PD were $36,770 before SB 899 and $18,110 after it.  This report was prepared at the request of the Commission on Health and Safety and Workers’ Compensation (CHSWC).  CHSWC is currently working on a proposed revision to the PD Rating Schedule as requested by the Senate Democrat Leadership.  For many, the decrease in PD benefits is enough to signify a need for a revision of the PD rating schedule, whether or not such a decrease is warranted in the context of the objective medical findings that characterized the reform.

CMTA is concerned that proponents of change would like to take us back to the days of very costly inconsistent ratings that were based mostly on subjective factors.  This would be an unfortunate result that would surely halt, if not reverse, the cost savings that have been experienced over the past year.
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