Landmark Workers' Compensation Legislation Promises Relief for CA Employers

Both the State Assembly and Senate recently passed the Workers’ Compensation Conference Committee version of two bills, AB 227 (Vargas, Burton and Nuñez), and SB 228 (Alarcón, Burton), which contain reforms that are intended to reduce system costs by an estimated $5 billion to $6 billion annually. The Governor has promised to sign the legislation when it hits his desk.

Insurance Commissioner John Garamendi said that legislation is an “outstanding” first step toward bringing lower premiums to employers struggling under the burden of the broken $29 billion system. “This is a tremendous, superb start to a complete reform of this dysfunctional system,” Garamendi said. “ This is an important first step in making this system serve the injured worker and protect the employer – not feed the appetites of those who abuse it to further their own financial interests.”

California’s workers’ compensation costs to employers are the highest in the nation, yet the benefits to injured workers are in the bottom 40 percent of all states. In 1995 the system cost all employers $9 billion. This year, it will cost more than $29 billion.

“The legislation proposed today will stop the absurd increases that employers have seen in the last year, and produce savings that will continue on an annual basis,” Garamendi said. “The individual impact of these changes will vary per employer, but I am confident that we can bring immediate relief for many.”

However, Republicans in the State Legislature claim the reforms, as passed, do not go far enough.

Some of the reforms in the proposed legislation include:

• Establishment of an official medical fee schedule for outpatient surgical centers, indexing it to 120 percent of Medicare.
  
• Mandatory adoption of interim utilization guidelines governing medical treatments.
  
• Limits on chiropractic and physical therapy treatments to no more than 24 per claim.
  
• Requires dispensation of generic drugs, unless a brand name has been specifically prescribed.
  
• Repeals existing vocational rehabilitation statute, replacing it with a new supplemental job displacement benefit for injuries occurring on or after January 1, 2004.
  
• Increasing the maximum fine for workers’ compensation fraud from $50,000 to $150,000.

For additional information regarding this workmen’s compensation legislation, you can go to www.leginfo.ca.gov.