California Legislature Approves Workers’ Compensation Overhaul: Complete Bill Information on SB 863

 

On Friday, August 31, 2012, the California Legislature approved SB 863, which, if enacted, would implement an overhaul of that state’s workers’ compensation system. 

To access complete information on the bill, click here.

To view the final Senate summary of the bill, click here.

Associated Press news coverage of the development is reprinted below.

 

Should you have any questions or comments, please contact Colodny Fass& Webb.

 

Lawmakers Pass Workers’ Compensation Changes

By Hannah Dreier/September 5, 2012

Lawmakers approved a series of changes to California’s workers’ compensation system late Friday, sending Gov. Jerry Brown a 170-page bill that arose in the final days of the legislative session.

The Senate passed SB863, 34-4, hours after the Assembly approved the bill on a 68-4 vote. It was one of the final acts on the Legislature’s final day.

The changes were sought by some business groups concerned about escalating insurance costs and labor unions that have been working for years to regain benefits that were eroded in a 2004 overhaul of the $16 billion system.

The bill makes substantial reforms to the century-old system that provides medical care and compensation to workers who injure themselves or fall ill on the job.

It changes how benefits are calculated for injured workers, creates a binding arbitration process to resolve coverage disputes and eliminates coverage for conditions that most commonly lead to lawsuits, including insomnia and mental health problems.

“This is what our businesses need in California to create jobs,” said Sen. Kevin de Leon, D-Los Angeles, who carried the bill in the Senate. “This is an historic compromise that deserves bipartisan support.”

Sen. Mark Wyland, R-Solana Beach, said lawmakers should wait to act until they know more about the late-breaking bill and its impact.

“It’s all being done at the very last minute,” Wyland said. “As well intended as this may be, this is not the way to make policy of this magnitude this late in the day.”

But most senators agreed with Senate Minority Leader Bob Huff.

“The problem is the system is on the verge of collapse,” said Huff, R-Diamond Bar. “Even with the flaws in it, I believe it’s worthy of support.”

Earlier in the day, Assemblyman Jose Solorio, D-Santa Ana, said the bill would lead to a more functional system for all parties, providing consistency and certainty.

Lawyers representing certain injured workers said the changes could have unintended consequences that would fall on the shoulders of the disabled. A handful of lawmakers said they would not vote on the bill, which emerged about three weeks ago, simply because they did not know what it contained.

“I can’t take a vote on something I can’t explain,” said Assemblyman Ben Hueso, D-San Diego.

Republican Assemblyman Curt Hagman, of Chino Hills, dismissed the procedural concerns.

“This is an instance where the process worked, where the people who are involved with this both support this bill,” he said.

The bill aims to prevent lawsuits by establishing a binding independent review system to resolve medical disputes and shortens the timeline for approval of treatment, which can currently take up to two years, to three months.

Supporters said the reforms will increase compensation for disabled workers by $700 million a year, boosting benefits by an average of 30 percent for individual disabled workers. The annual savings that could result from the reforms are in dispute. Estimates range from $1 billion to less than one-tenth of that.

The rising costs associated with worker claims could force insurers to hike premiums by more than 10 percent next year, according to some estimates. That could force some businesses to lay off workers.

In a statement issued after the Senate vote, Gov. Jerry Brown praised the bipartisan support for the legislation and said it “helps injured workers and averts an imminent crisis of skyrocketing rates.”

Supporters say the legislation could reduce rates by as much as 7 percent by slowing the upward climb of medical and legal costs.

The bill addresses changes pushed in 2004 by then-Gov. Arnold Schwarzenegger that unexpectedly reduced benefits for permanently injured workers.

Labor and business advocates, as well as lobbyists for lawyers, insurers and physicians, worked feverishly in the final days of this year’s session to strike a deal. Supporters include the California Chamber of Commerce and the California Labor Federation. Three organizations are formally opposed to the bill: California Applicants’ Attorneys Association, the California Chiropractic Association and Voters Injured at Work.

The reforms could limit the role chiropractors play in treating disabled workers.

On Thursday night, the bill seemed poised to fail, with workers’ advocates concerned that it did not do enough to protect the permanently disabled. It was resurrected with the addition of a clause establishing a $120 million pool to compensate injured workers for lost future earnings.

(Associated Press writer Don Thompson contributed to this story.)

 

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