At first glance, it might seem a bit Scrooge-like to be congratulating Gov. Schwarzenegger for vetoing a last-minute bill that would have doubled workers’ compensation payments for permanent disability injuries such as losing a leg. But the governor did the right thing for California’s strongly recovering economy by holding the line on a key factor of workers’ compensation reform.
The growth statistics resulting since workers’ compensation reform took effect in 2005 speak for themselves. Insurance premiums dropped 50 percent and employers have saved more than $11 billion. This savings translated into more than 600,000 jobs added to California payrolls since November 2003, nearly 37,000 new jobs last month alone. Personalincome has also increased in both of the past two years, and the state’s 15 million jobs are at an all-time high.
One reason California’s economy was sputtering in 2004 was the burden of out-of-control workers’ compensation insurance costs, which had skyrocketed from $6.8 billion in 1997 to more than $21 billion in 2003. Between 2000 and 2003 some 27 insurance carriers filed for insolvency, creating a dangerous strain on the state government’s insurance guarantee funds. The system was battered by litigation, and California’s return-to-work rates for injured employees were the worst in the nation.
The vetoed permanent disability increase bill, authored by state Senate President pro Tem Don Perata, would have doubled the number of weeks a permanently injured worker is paid benefits, becoming law in three yearly stages. For example, benefits paid for a 5 percent disability injury would have jumped from the present 15 weeks to 30 weeks by 2009.
Perata’s legislation was a last-minute gut-and-amend bill that bypassed most appearances before the Legislature’s finance committees before going to floor vote. After the Schwarzenegger veto, Perata complained that the governor was not living up to commitments he made during the workers’ compensation reform negotiations in 2004.
“Three years ago Gov. Schwarzenegger made a commitment that the workers’ compensation system would not be fixed by slashing permanent disability benefits to the most seriously injured workers,” Perata said.
Schwarzenegger countered that he had pledged to have his administration closely monitor the impact of the new law on injured workers for 18 months. And if the study found that seriously injured voters were being unfairly compensated, he would fix it.
“That review will be completed by the end of this year, and I am committed to making any changes necessary to ensure that injured workers unfairly impacted by workers’ comp reform receive appropriate medical treatment and indemnity benefits,” Schwarzenegger wrote in his veto message.
To us, that seems like quite a straightforward promise. And if analysis of the facts does show that workers’ compensation benefits are unfair to permanent disability injury victims, The Examiner will be quick to call upon Gov. Schwarzenegger to act in 2007.