FOR IMMEDIATE RELEASE:
Friday, May 27, 2005 Contact: Steve Hopcraft 916/457-5546
INJURED WORKERS, ADVOCATES FILE LAWSUIT TO STOP GOVERNOR’S PERMANENT DISABILITY COMPENSATION CUTS IN CALIFIORNIA SUPREME COURT:
Permanently Disabled Workers’ Compensation Cuts “Unconstitutional”
SAN FRANCISCO – VotersInjuredatWork.org and attorneys for injured workers filed a lawsuit today in the California Supreme Court challenging the governor’s deep cuts in injured workers’ permanent disability compensation. The lawsuit seeks to block the governor’s drastic reductions in the already-meager compensation injured workers receive. The lawsuit charges that the Schwarzenegger Administration’s Permanent Disability Ratings Schedule (PDRS) “is inconsistent with SB 899, undermines the Legislature’s balanced approach to reform, and threatens to relegate thousands of workers to subsist on constitutionally inadequate benefits.”
The lawsuit charges that the Administration failed to “link the new permanent disability ratings to wage loss by using empirical data and findings” on whether the new schedule would provide adequate benefit levels, as guaranteed in the California Constitution. Instead, the Schwarzenegger Administration “substituted policy judgments for empirical data and assumptions for empirical studies.” The suit asks the Supreme Court to “invalidate” the schedule and order the Administration to replace it with a schedule that “complies with the law.”
Mark Hayes, president of VotersInjuredatWork.org, an injured workers’
advocacy group, said, “The consequences for injured workers are horrible. Californians injured at work will lose their cars, their homes and their good credit under these ratings. Injured workers will end up on welfare, because there’s no way to live if present disability compensation – already too low – is reduced.”
Injured workers’ advocates and California Applicants’ Attorneys Association President David Schwartz said that the Schwarzenegger Administration’s “permanent disability ratings schedule is unconstitutional because benefits to injured workers are inadequate.”
Schwartz said that Schwarzenegger’s Administrative Director, Andrea Hoch, “Refused to consider whether benefits would be adequate for injured workers. There is no legal basis for what she has done, which she calls a ‘policy decision.’ Her own Commission on Health, Safety and Workers Compensation has said her regulations reduce permanent disability compensation by 50%. Nowhere does the law give her authority to make a ‘policy decision’ that severely reduces permanent disability benefits to injured workers.”
Director Hoch testified before the State Senate Committee on Industrial Relations in December that she did not even know how the new PDRS would change overall benefit levels.
Schwartz said that the new cuts set permanent disability levels “lower than they were in 1983. Injured workers will lose up to two-thirds of the meager compensation they get now.” A study by the RAND Institute for Civil Justice (RAND) found that “adequacy” requires replacement of two-thirds of a worker’s pre-injury earnings.
Four studies, including one by the insurance industry’s own ratings bureau, have found the Schwarzenegger ratings reduce compensation to permanently disabled workers by more than half. One was conducted by a UC Davis Medical School professor; another by the State’s own Commission on Health, Safety and Welfare Compensation (CHSWC); yet another by an insurance defense expert; and the fourth from the insurance carriers’
own ratings bureau. In April, thousands of injured workers protested the takeaways from permanently disabled workers in the biggest-ever demonstration by injured workers. Originally adopted on January 1, 2005 under the governor’s emergency powers, the schedule recently became permanent. The Studies have consistently shown Schwarzenegger’s schedule will reduce permanent disability compensation by an average of 50% to 70%.
Here are some examples of injured workers who would be harmed by the governor’s proposal:
A carpenter with an injury to both shoulders who cannot lift his arms, or work, above the shoulder, would be rated 46% disabled and receive $51,550 presently. That same injured carpenter would be rated just 18% disabled and receive only $16,050 under the Administration’s plan. In 1983, this same injured worker would have received $28,000 (equal to $52,532 in 2004 dollars), significantly more than under the Administration’s proposal.
A warehouseman with a leg injury that requires amputation just below the knee, and gets an artificial leg, would receive $62,000 under the present schedule. Under the governor’s proposal, he would receive just $36,000. (In 1983, this same injured worker would have received $34,000, which is worth $64,150 in 2004 dollars. [Consumer Price Index Conversion