Workers’ Comp Reform Legislation Will Bring Stability and Fairness into System, Says AIA

The American Insurance Association (AIA) today issued a statement in response to the California State Legislature’s approval of SB 899 Poochigian (D-Fresno). According to Nicole Mahrt, director of Public Affairs for AIA’s Western Region:

“The American Insurance Association applauds Governor Schwarzenegger and the legislature for working toward compromise. We are hopeful that Senate Bill 899 will move us closer to goals of affordability for employers, stability in the system and fairness and equity for employees and employers alike. This is a significant package of reforms that discourages abuses while balancing the need for quality medical care for injured workers.

“The reform legislation’s approach to the private insurance market is responsible, not politically expedient. It recognizes the need for healthy competition in the private insurance market by restoring predictability and consistency to the workers’ compensation system.

“We are encouraged this legislation will generate long-overdue cost savings in the system. Over the next few weeks, the Workers’ Compensation Insurance Rating Bureau (WCIRB) will use their expertise to conduct a comprehensive analysis of the reforms in this bill. Immediate, conclusive savings predictions are premature and speculative. We must allow the WCIRB to conduct the appropriate actuarial analysis before we can understand the scope of the projected savings.

“It is critical that all stakeholders understand that, in several respects, this legislation creates entirely new procedures and provisions that will require some time for experience to develop before we can truly understand their impact on the system. It is equally important to note that a major overhaul of the workers’ compensation system such as this is likely to spur litigation over key provisions, which can impact the effectiveness of the legislation in reducing costs.”

Highlights of the workers’ compensation reform package include:

• establishment of employer-directed medical provider networks, along with independent medical reviews in the event of a dispute;
• a revised approach to compensating for permanent partial disability, including use of AMA guidelines for evaluation of permanent impairment;
• a significant scaling back of last year’s troublesome IIPP illness preventing program;
• reduction in the duration of temporary disability payments to two years from the commencement of payments;
• a new mandate that employers must provide medical treatment within one day of receiving a claim, even for disputed claims; and
• an insurer-financed study to evaluate cost savings resulting from the reforms.

Topics Legislation Workers' Compensation