Calblog

Workers' Compensation Reform

Workers' Compensation is one of the most complex issues that is discussed in Sacramento. However, here at Calblog, we try to break it down. When it comes to workers' comp there are five major industry players Business/Employers (Chamber of Commerce), Employees (Unions), Physicians(AMA and other doctor orgs like Chiropractors), Attorneys (Applicants Attorneys), and Insurers.

Generally workers' comp "reform" consists of one group losing out after a number of other groups have decided to "gang up" on that particular one. Although this is the general way comp reform has occured in the past, the current reform is much more designed to see that most groups fare better. Although applicants attorneys probably got "hurt" the most, in the sense that the legislation added more clarity to the law and reduced certain penalty awards which were a boon to applicants attorneys. As a result of much of the vaguries in the system, much was litigated, and applicant attorneys only got paid if there was a PD determination. Often, this would drive attorneys to drive workers to get a PD determination where there may not be one. Also, this contributed to a dueling doctors problem.

In the compromise package SB 899, employers and employees both win something out of the package and attempted to make the system more reliant on genuine injury. The main aim of the package is to limit benefits to more dubious claims, while seeing to it that substantially injured workers receive better benefits. As I am writing this, I could easily write on for pages. If you want to know the low down, see the capitol update from Senator Poochigian (R - Fresno). Although the package has not been "scored," the hope is that it will reduce costs in the WC system in a range of $4 Billion-$7.5 Billion.

Update: A PD Determination is a permanent disability determination. Permanent Disability results in a annuity-type payout determined by the severity of the disability. The more severe the disability the greater the payment as well as the greater of the annuities payment length.

The estimated total cost of the system is currently $17.9 Billion in 2004, the original '04 cost was orginally estimated at $22.2 Billion. In any event, if the estimates are accurate, the range of cost savings could be from 18% to 45%.