Permanent disability increase sails through legislature

By CMTA Staff

Capitol Update, Sept. 1, 2006 Share this on FacebookTweet thisEmail this to a friend

California State Senate Pro Tem Don Perata (D-Oakland) had made public and private commitments to introduce legislation to increase permanent disability (PD) benefits in California’s recovering workers’ compensation system.  Last Friday, August 25, only a week before the end of the legislative session, Senator Perata fulfilled that promise and ‘gut-and-amended’ SB 815 to double the amount injured workers would receive for permanent disability.  This would be achieved by doubling the number of weeks that an injured worker will receive PD benefits.

While the business community was expecting a bill on PD, the massive increase proposed by Senator Perata came as a surprise to some.  Perata had for months talked of "tweaking" the schedule – talk that indicated he was looking at a modest increase in benefits.  SB 815 is more than a modest increase in benefits. 

Within a few days of introduction the Workers’ Compensation Insurance Rating Bureau (WCIRB) completed a detailed cost analysis of the SB 815.  They estimated a 16.6 percent overall cost increase in the workers’ compensation system.  Considering that increased PD benefits create incentive to litigate, the increase in premiums could be even higher.

Most assumed that it was the applicant attorneys, trial attorneys and organized labor that pushed for the introduction of this legislation.  However, the business community began hearing rumors that Zenith CEO Stanley Zax may be intimately involved in the bill.  On September 1 the Workers’ Comp Executive reported in a "Flash Report" that Stanley Zax was "’appalled’ at those in the industry and the employer community who do not understand the legislative intent of preserving the reforms by allowing a modest increase in PD benefits". 

CMTA does not believe that a 16.6 percent increase in premiums is insignificant. Neither do most other insurance companies.

The good news in all of this is that a veto of SB 815 is assured.  Governor Arnold Schwarzenegger has said again and again that he will not sign legislation that rolls back SB 899 (Chapter 34, Statutes of 2004, Charles Poochigian, R-Fresno) reforms. 

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