Calif. workers’ comp reforms working better than expected, Gov. decides not to raise benefits

Reforms to California’s worker’s compensation system enacted since 2002 “have had a substantial impact on system costs,” according to a new report by the state Workers’ Compensation Insurance Rating Bureau. Meanwhile, Gov. Arnold Schwarzenegger has refused to raise benefits for disabled workers that critics say were slashed too deeply by regulations his administration adopted in 2004.

In its “2007 Legislative Cost Monitoring Report” issued Oct. 9, WCIRB found that reductions in physician fees, chiropractic utilization and physical therapy use, among other changes, have led to savings of approximately 70 percent, or $14.5 billion, to insured employers. That figure is much higher than the total reform savings expected – 49 percent, or $10.1 billion – estimated after the enactment of reform legislation.

WCIRB’s report noted that physician fees have been reduced by approximately 4 percent, inpatient facility fees reduced by 4 percent, outpatient facility fees reduced by 39 percent and pharmaceutical fees reduced by 13 percent following enactment of SB 228, which changed the medical fee schedule.

Permanent disability benefit costs were reduced by approximately 14 percent due to changes in the number of weeks of benefits per rating point of disability, and reduced by about 5 percent due to SB 899 apportionment provisions. “Permanent disability benefit costs have been reduced by as much as 60 percent, due to the SB 899 changes to the permanent disability schedule,” WCIRB stated.

Significantly, chiropractic use has been reduced by approximately 82 percent, and physical therapy utilization dropped by approximately 66 percent, the report indicated.

Services provided through medical networks increased from 33 percent in 2002 to 62 percent in 2005.

Despite the cost improvements, the Republican governor vetoed a bill by Senate President Pro Tem Don Perata, D-Oakland, that would have doubled over three years the benefits available to workers who suffer permanent disabilities on the job. He rejected an identical measure last year.

Schwarzenegger said his administration was reviewing the changes adopted by his Division of Workers’ Compensation in 2004 to determine if any increases are need to ensure injured workers receive “appropriate benefits.”

The Perata bill, he complained in his veto, would “arbitrarily (double) the number of weeks a person may be eligible to receive permanent disability benefits.”

“It (would) substantially increase costs for all permanent disability awards regardless of severity and without relying on empirical data to validate the increase,” Schwarzenegger said.

The regulations changed the way doctors evaluate the severity of job-related injuries and, critics said, led to a sharp drop in benefits for workers who suffer permanent disabilities.

The state Commission on Health and Safety and Workers’ Compensation, a board comprised of employer and worker representatives, issued a report last year that said the regulations had cut in half the average benefit.

Sue Borg, president of the California Applicants’ Attorneys Association, a group of lawyers who represent injured workers, said the administration’s regulations had cut disabled California workers’ benefits to among the lowest in the nation.

“The governor’s veto pins disabled workers at the bottom of the pile,” she said. “How many more studies does he need when four independent investigations, and his own administration’s studies, have all confirmed these harsh cuts?”

WCIRB’s October annual report is the fourth in a series summarizing the group’s evaluation of the key cost components that were impacted by recent reforms, based on post-reform costs that have emerged through mid-2007. For more information, visit www.wcirbonline.org.

The Associated Press contributed to this article. Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Topics California Legislation Workers' Compensation