Decreasing Rates Reflect System Improvement

California’s workers’ compensation system has undergone major transformation in the last four years. In terms of what an average policy holder pays, workers’ compensation rates per $100 of payroll have decreased from the high in 2003 of $6.46 to $2.49 in 2007. Despite these enormous strides, California is still the second most expensive state in the nation.

Overview:

The California workers’ compensation system, created in 1913, constitutionally guarantees every worker the right to compensation for workplace injuries and all medical treatment requisite to “cure and relieve” the worker.

As the state nears the 100th anniversary of the workers’ compensation system, most would agree that the original nature of a system intended to be no-fault has changed drastically. Nevertheless, the 2003 and 2004 reforms, comprised of SB 228 (Alarcón; D- San Fernando Valley; Chapter 639, Statutes of 2003), AB 227 (Vargas; D-San Diego; Chapter 635, Statutes of 2003) and most importantly, SB 899 (Poochigian; R-Fresno, Chapter 34, Statutes of 2004), sought to and have succeeded in bringing balance and fairness to what has become a contentious system.

Major Victories

• In 2007, protected workers’ compensation cost savings by stopping roll-back of reforms and doubling of permanent disability cost increases (SB 936), plus requirement for employers to provide an injured worker with a job voucher before knowing the amount of benefit due with no avenue to recoup costs (SB 942).
• In 2007, resolved workers’ compensation temporary disability issues. Converted a former “job killer” proposal into a positive vehicle, negotiating amendments to resolve a problem in current law in a way that retains the cost savings in the 2004 reforms by maintaining the current 104-week cap on temporary disability benefits while allowing injured workers to receive those benefits within five years from the date of injury (AB 338)
• Protected workers' compensation reforms in court. See CalChamber in Court.
• In 2006, protected workers’ compensation reforms by securing a veto of legislation rolling back the reforms by arbitrarily doubling the permanent disability payments over three years without sound data with which to base the increase (SB 815).
• Safeguarded the reforms that have led to a steady decline in workers’ compensation premiums by stopping legislation that would have negated those reforms, including a “job killer” bill that would have increased costs and uncertainty in the workers’ compensation system by allowing unqualified injured workers to select and pay for medical treatment outside the exclusive remedy workers compensation system — opening up the floodgates to abuse injured workers and create liability for employers.
• Worked on numerous regulatory packages that implemented the reform proposals in the CalChamber-supported workers’ compensation reform legislative package. The regulations included the permanent disability rating schedule, medical provider networks, independent medical review, utilization review standards, audit penalties, utilization review penalties and repackaged drugs.
• Stalled legislation that would have lifted caps on the number of treatment visits allowed for chiropractic and physical and occupational therapy, previously out-of-control and overused treatment and a significant cost driver.
• Neutralized legislation that would have prohibited the administrative director of the Department of Workers' Compensation from setting a reasonable fee schedule for repackaged drugs, a major workers' compensation cost driver.

Goals

• Promote legislative, judicial and regulatory actions that maintain an efficient workers' compensation system that provides adequate worker benefits while protecting the competitive position of California employers.
• Work to ensure that workers’ compensation reforms are implemented as the reformers intended. Play a “watchdog” role to ensure that members and the media are informed about the implementation process so the legislative gains are protected, costs are reduced and the system is more efficient for employers and injured workers.

Position

Workers’ compensation costs to employers must continue to decrease to ensure that California remains economically competitive. CalChamber-supported reforms to the system are delivering significant cost savings. Employers must protect and enhance the reforms through both legislative and regulatory work in 2008. The ultimate goal is preservation of a balanced system that provides fair benefits to injured workers at a low cost to employers, while minimizing friction in the system.

Related Top Stories & Videos