The 2004 reform of California workers’ compensation was Republican Gov. Arnold Schwarzenegger’s first and virtually only victory with the Democrat-dominated Legislature. He won because Democratic lawmakers understood that if they didn’t vote for a much-needed overhaul, the state’s business organizations were poised to spend millions on an even more sweeping ballot initiative.
Before reform passed, workers’ compensation insurance costs in California were among the nation’s highest. And they were seen as a prime discouragement for job-generating businesses to move into the state or remain here. Substantial abuse of the system was also found among disability clinics.
Now the premiums charged to employers for workers’ compensation coverage have dropped to their lowest levels since 2000, according to the Workers’ Compensation Insurance Rating Bureau. This translates into an estimated $14.5 billion a year in savings for employers. Hopefully, we expect that much of these savings are sensibly ploughed back into job-generating corporate growth to help shore up a state economy being shaken by a housing slump, mortgage loan losses, record-breaking gas prices and tax-revenue falloff.
So workers’ compensation reform has undoubtedly been good for California business, and it has made some new improvements for employees, too. The system now requires treatment to begin immediately, even before any claims are processed. However, some doubters claim the fast treatment is directed at getting people back to work too soon, with not enough time allowed for workers to heal.
Increasingly, labor interests and some medical providers have been pushing to roll back the reform package. Their complaints are directed at the expanding web of rules enacted by state administrators. These opponents accuse the rules of being too rigid and going too far toward denying compensation for legitimately disabled workers.
The most recent attack is a lawsuit before the 3rd District Court of Appeal in Sacramento. It was filed by AARP and the ACLU to challenge the use of statistically age-related conditions to reduce benefits paid for job-related injuries. The lead plaintiff is a 76-year-old woman who broke her back while working as a receptionist. Her benefits were reduced 40 percent on the grounds that her presumed loss of bone density made her more vulnerable to injury.
At the moment, a bill to expand benefits for permanent disabilities is on the governor’s desk. But he has vetoed similar bills in the past, and business groups are strongly opposed to this one. Schwarzenegger has promised to review the workers’ compensation regulations at some unspecified time in the future; and we think much more needs to be done for neutralizing the ongoing challenges against valid reform.
The best way to keep alive this important benefit to California business is to assemble a blue-ribbon panel of business-labor-medical representatives and impartially rework the regulations until everyone agrees on their fairness. Otherwise, the day will come when there is no longer a Republican governor in the state Capitol to veto unwarranted weakening of workers’ compensation reform.