Gino DiCaro

Perata introduces new language to roll back workers' comp reforms

By Gino DiCaro, VP, Communications

Capitol Update, Aug. 25, 2006 Share this on FacebookTweet thisEmail this to a friend

Senate Pro Tempore Don Perata (D-Oakland) has introduced last minute amendments to SB 815 (Perata) that will effectively erase a significant portion of the workers' compensation savings that employers have seen as a result of SB 899 (Chapter 34, Statutes of 2004, Charles Poochigian, R-Fresno).  

SB 815 was gutted and amended on August 24th to provide for three annual increases in permanent disability (PD) benefits.  The legislation would roughly double the cost of PD benefits for employers and create uncertainty in an insurance market that has become more stable since the reforms.  

The new bill provides for three separate increases to the PD fee schedule - the first being on Jan. 1, 2007, the second Jan. 1, 2008, and the third Jan. 1, 2009.  The increases are to the number of weeks that an injured worker is paid benefits, doubling the cost of PD to employers.  For example, a PD rating of 5 percent requires that benefits be paid to an injured worker for 15 weeks.  Under SB 815, the benefits double to 30 weeks.  

While the introduction of this legislation at the last minute was no surprise to the business community, the magnitude of the increase is alarming.  Even if Senator Perata believes recent studies and public relations activities by organized labor and the California Applicant Attorney's Association, this type of increase is not warranted.  Early anecdotal data suggests that PD benefits have been reduced by up to 40 percent under the new rules.  However, those cases had not gone through the litigation system, and early litigation results suggest that benefits have not been reduced.  It is premature to enact a massive benefit increase on premature and potentially faulty assumptions.

The Division of Workers' Compensation (DWC) has committed to analyze current trends in PD benefits and, if appropriate, to making administrative adjustments.  They are now completing a review of empirical data.  

SB 815's drastic increase to PD benefits would significantly roll back the savings realized through 2004 legislation and return California to the days of increasing premiums, high litigation and unpredictability in workers' compensation.  

CMTA is taking a leadership role with other business organizations and public sector organizations to fight SB 815.  

GRASSROOTS ALERT
Please use this link to get to your CMTA grassroots page and send a letter urging a "no" vote on SB 815. (If you are not enrolled already, the screen will prompt yout to enroll)

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