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Workers’ Comp Back on the Front Burner
By Allan Zaremberg

Today, California’s workers compensation system serves neither employees nor employers. Benefits for seriously injured workers don’t come close to meeting the demands of California’s increasingly high cost of living, and yet businesses pay more for workers compensation than in any other state.

In 1999 and again in 2000, the Legislature sent legislation to the governor that would have raised benefits but left untouched a system rife with waste and abuse. The cost of the 2000 benefit increase alone was estimated at a staggering $2.7 billion. Governor Gray Davis vetoed those bills because they did nothing to improve the system and offset some of the burden that the cost of benefit increases would impose on employers.

This year, Senate Bill 71 (Burton) passed the Senate even though the bill doesn’t specify the amount benefits will be increased. Will it increase employer costs by $1 billion? $2 billion? $5 billion? The bill doesn’t say. What we do know is that the legislation will do nothing to fix the system and help it run more efficiently. The Assembly Insurance Committee was scheduled to consider the bill in August, and employer groups sought amendments that will help pay for the benefit increases through systemic improvements.

Many believe the governor will sign a benefits increase bill this year – with or without cost-saving measures. It is critical to the health of California’s economy that legislation balances the cost of benefit increases with much-needed system reforms.

Benefits for severely injured workers can be increased without the job loss and economic damage that would result from adding billions in costs – if the Legislature acts to control medical costs, eliminate waste and delays, and improve the efficiency of the system. Everyone at the negotiating table agrees that injured workers deserve a benefit increase but it will not help injured workers if we throw more money into a system that is out of control.

SB 71 should be amended to include a variety of reforms that will reduce costs and simplify the system. Business organizations are calling for a series of reforms including improved review of medical treatment to guard against unnecessary procedures that prevent a worker’s timely return to work. Businesses and workers will benefit if confusing notices are simplified and bureaucratic inefficiencies and paperwork that foster litigation are eliminated. Workers’ comp judges should be accountable for prescribed timelines, procedures and professional conduct. Doctors should be held accountable for treatment decisions by removing the legal presumption of correctness. Business leaders also want to ensure that the millions of dollars spent annually to fight workers’ comp fraud are accounted for and the money is being put to the best use possible. Finally, penalties for those who entice people to file fraudulent claims must be increased.

Allan Zaremberg 
is president of the California Chamber of Commerce.

Many of these reforms were developed by the California Commission on Health and Safety and Workers’ Compensation, a commission created by the Legislature composed of representatives from labor and business, which was formed in 1994 to recommend improvements in the performance of the workers’ compensation system. We must use the recommendations developed by both business and labor representatives to reduce costs and streamline California’s benefit program for injured workers.

While businesses in California are struggling to pay soaring energy bills, higher health care premiums and rising unemployment insurance expenses, the last thing our economy needs is higher workers’ compensation rates. It is imperative that businesses tell their elected representatives how increased workers’ comp costs will affect them and why it’s crucial that SB 71 be amended to reform the system as well as give workers a needed benefit increase. Many remember how out-of-control workers’ comp costs drove thousands of jobs from California in the 1990s. We can’t let that happen again.