Workers' Comp Reforms Starting to Improve System

One year after Governor Arnold Schwarzenegger signed the California Chamber- supported workers' compensation reform package; the system is showing signs of improvement.

"Insured employers are beginning to realize decline in insurance premium rates," said Chamber President Allan Zaremberg. "We

The reform package, SB 899 (Poochigian; R-Fresno), fundamentally changed the workers' compensation system in California. The governor signed the bill on April 19, 2004.

Rate Reductions

Since enactment of SB 899, the reforms have caused a steady decrease in workers' compensation premiums for employers, as well as an increase in insurer options being offered to employers.

The Division of Workers' Compensation reports that average workers' compensation rates dropped 16 percent from a peak of $6.35 per $100 of payroll during the last quarter of 2003 to $5.34 per $100 of payroll by the third quarter of 2004. The Workers' Compensation Insurance Rating Bureau has recommended more reduction rates this year. Rates should continue to drop once the permanent disability rate regulations are adopted.

Fundamental Changes

SB 899 made fundamental changes in the way the workers' compensation system determined the level of injury and the amount of disability assigned to an injury. It also created a new medical network to provide quality, cost-effective care to workers. This package ensured that medical treatment follows nationally recognized guidelines and sets clear parameters for what is acceptable treatment for injured workers in the system, while also reducing excessive litigation.

Although the system is showing improvement, there is still more work to be done. SB 899 was a comprehensive package that has just begun fixing the problems within the workers' compensation system. Adoption of the permanent disability rating system will further overhaul the system.

The confirmation of Andrea Hoch as director of Division of Workers' Compensation will ensure continued implementation of the reforms in a way that assures employers can realize actual savings as quickly as possible.

"Employers and employees will both benefit-and California's economy will continue to grow-if our workers' compensation system is more efficient and less litigious," Zaremberg said. "Our challenge going forward will be to beat back the legal, regulatory and political threats to undermine those goals."

The chamber continues to fight for and promote legislative, judicial, and regulatory actions that maintain efficient workers' compensation system and provide adequate worker benefits while protecting the competitive position of California employers.