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California workers’ comp reform passes

In a political victory for Gov. Arnold Schwarzenegger, the California Legislature approved Friday an overhaul of the state’s  workers’ compensation program.
/ Source: The Associated Press

Handing Gov. Arnold Schwarzenegger one of the biggest victories of his new political career, the state Legislature approved an overhaul of California’s workers’ compensation program, the most expensive in the nation.

The bill passed the House 77-3 and the Senate 33-3. Schwarzenegger plans to sign the bill Monday at a Boeing Co. aircraft factory in Long Beach.

California’s 91-year-old system has some of the nation’s highest insurance premiums for employers and some of the lowest benefits for injured workers.

The bill aims to save billions of dollars by imposing stricter limits on medical benefits, setting a higher standard of proof for workers claiming to be injured, and requiring employees to use doctors approved by their employers and their insurance companies.

‘Pummeled by costs’
“We cannot continue to force our businesses, non-profits and government agencies to be pummeled by costs 2½ times the national average,” said Republican Sen. Chuck Poochigian, the bill’s sponsor. “This bill gives California businesses and their workers a fighting chance.”

The bill is considered a major victory for businesses, local governments and nonprofit groups that have seen their workers’ comp premiums soar. Business groups had complained that the costs were driving employers out of California.

Schwarzenegger had made workers’ comp reform a centerpiece of his administration. Lawmakers acted Friday to meet a deadline set by the governor, who had vowed to put an even tougher measure on the Nov. 2 ballot if they did not pass the bill.

“Why have we waited this long to do these reforms?” asked Republican Assemblyman Russ Bogh. “It’s no accident, let’s be honest. We are here today because of one thing — because over 1 million people answered Gov. Schwarzenegger’s call for signed petitions to reform workers’ compensation.”

California’s workers’ comp costs have soared in recent years from $6.4 billion in claims paid in 1997 to an estimated $17.9 billion last year. The average employer cost of dealing with workplace injuries also has gone up dramatically, from $2.68 for every $100 of payroll in 2000 to $6.30 per $100 last 2003 — the highest rate in the nation.

Broad program
Most workers’ comp systems are more limited than California’s, which covers all industries and all workers, including employees of small businesses and up to 900,000 farmworkers. California also covers many injuries and occupational diseases that other states do not.

Opponents of the bill, including attorneys and many injured workers, have largely blamed insurance companies for the surge in premiums.

The reform package would reduce disability payments from five years to two years and require workers who are accustomed to choosing their own doctors to pick from a pool of authorized physicians. Supporters say that will stop injured workers from “doctor-shopping” in search of a more favorable diagnosis.

Also, employers would be liable only for the portion of an employee’s injury that occurred at work.

In addition, the legislation would require that treatment meet American Medical Association guidelines. And it says that employees cannot collect benefits unless their injuries are scientifically measurable using medical tests such as X-rays or MRIs.

Critics warned the measure would be particularly harmful to California’s farmworkers, who frequently complain of back pain because of the stooping and lifting required to pick crops. Back pain and similar injuries are not easily detected by X-rays or other diagnostic tools.

The legislation does not regulate the amounts insurance companies can charge businesses for workers’ comp insurance. Democrats initially insisted on regulating rates, but Schwarzenegger refused, saying the reforms will spur competition among insurers to lower rates.

Even some Democrats who supported the bill expressed skepticism.

“Nothing in this package of reform guarantees that rates will come down,” said Assemblywoman Sarah Reyes.