With just three days left in the legislative session, California lawmakers begin consideration of a 170-page bill to overhaul the state workers’ compensation system.
By Marc Lifsher, Los Angeles Times
August 29, 2012
SACRAMENTO — With just three days left in this year’s legislative session, state lawmakers got a dose of the strong emotions swirling through the Capitol for and against a plan to overhaul California’s century-old workers’ compensation insurance program.
The bill formally introduced Friday seeks to increase benefits for injured workers while cutting medical and legal costs to avoid an estimated 12.6% hike in premiums facing employers in January.
At issue is a 170-page bill to revise the $17-billion system to protect injured workers that is only now beginning a fast and furious trip through the Legislature. The revisions could affect nearly every one of the state’s 14.4 million employees and 864,000 employers.
“This bill is good for workers and employers and good for California,” Christine Baker, director of the state Department of Industrial Relations, told the Assembly Insurance Committee at a crowded first informational hearing Tuesday morning.
Leading the opposition is an activist group of injured workers, backed by the lawyers who represent them before workers’ compensation judges and a variety of medical practitioners, including chiropractors, surgeons, pain specialists and other providers of medical and legal services.
“We can’t establish a drive-through medical system,” said Jesse Ceniceros, president of Voters Injured at Work. “We need to slow down.”
Testimony by Ceniceros and other opponents was repeatedly interrupted by applause from supporters and was
quickly ruled out of order by the committee chairman.
Backers of the compromise bill, who crafted the deal behind closed doors over months, urged swift action. The bill technically is on the Assembly floor and could be debated and voted upon at any time.
The main negotiators — the California Labor Federation and large employers, including Walt Disney Co. and Safeway Inc. — want to fix flaws in the last big rewrite of the law in 2004. The goal is to boost benefits for disabled workers and cut soaring medical and legal costs for employers before already rising medical and legal costs get out of control and force employers to lay off workers.
“Eight years have passed since injured workers were royally screwed” by a 60% cut in permanent disability benefits, said Angie Wei, a lobbyist for the California Labor Federation. “Finally, we have a plan to do something about it … to return money back to the pockets of injured workers.”
If the Legislature fails to act, insurers might need to raise rates at least 12.6% beginning in January to keep up with rising costs of claims, according to a recent report to the state Department of Insurance by the Workers’ Compensation Insurance Rating Bureau, an industry-supported actuary.
The bill’s prospects remain uncertain. Whether it gains traction and makes its way through the Legislature before Friday night’s adjournment is iffy, acknowledged the bill’s author, Sen. Kevin de Leon (D-Los Angeles). “We’re at the first stage politically of it being thoroughly vetted by all the parties,” he said.
De Leon’s chances have been bolstered by support from Gov. Jerry Brown. The governor’s office is “fully engaged,” said Mark Sektnan, a lobbyist for the Assn. of California Insurance Companies. As a result, he predicted, the bill has a 60% chance of passing this year “because there’s an understanding that something needs to be done.”
Insurers so far have taken no public position on the workers’ comp proposal, SB 863. Nor have some of the mainstream California business trade groups such as the California Chamber of Commerce. Nevertheless, a number of smaller employers, particularly building contractors, stood in line at the Insurance Committee hearing to put their support for lower rates on record.
If it becomes law, the overhaul would raise benefits for permanently disabled victims of on-the-job accidents and illnesses by $740 million, proponents said. However, there is disagreement about whether the increased benefits would be paid for by money-saving provisions in the bill.
Estimated savings in the bill range from a high of more than $1 billion a year to a low of $100 million by making workers’ compensation more efficient, reducing legal disputes and eliminating fraud.
At the hearing, opponents contended that the bill would reduce permanent partial disability benefits for many low-wage workers, particularly compensation for workers suffering from mental problems, sexual dysfunction and insomnia. It also would make it harder to get access to adequate medical care, they said.
The proposed law provides “benefits if you break your back — but not if you break your mind,” Dr. Robert Larsen, an occupational psychiatrist from San Francisco, said at the hearing.
Rushing this legislation this week is a mistake, opponents said. Next year’s legislative session is time enough to carefully write a bill that has no unintended consequences, they argued.
“Workers’ compensation reform is too important to delegate to union leaders or to pass without time for public analysis and comment,” said Jeffrey Kavin, the owner of Greenblatt’s Deli in Hollywood.