“Governor Brown Signs Workers’ Compensation Reform to Cut Hundreds of Millions in Waste, Protect Injured Workers and Reduce Costs to Business”

That’s the claim made in the headline of a press release issued by the Democratic governor September 18. The first three paragraphs follow:

SAN DIEGO – Governor Edmund G. Brown Jr. today signed landmark legislation – backed by both Democrats and Republicans – to reduce costs to businesses and protect workers by cutting out hundreds of millions of dollars in waste from California’s workers’ compensation system. 

The bill — SB 863 Sen. Kevin de León, a Los Angeles Democrat —  reverses a four-year trend of rate increases. Without reform, these costs would continue to escalate, which would mean higher costs for businesses and smaller payments for injured workers. 

“These significant reforms save hundreds of millions of dollars for California’s employers while preventing an imminent crisis of skyrocketing rates that would have hurt both injured workers and businesses,” said Governor Brown. “It’s extraordinary to see Republicans and Democrats come together to solve a problem before it becomes a crisis.”

The 160–page bill Brown signed was approved in the final hours of the legislative session on lop-sided votes. Supporters, like Brown, say the measure will increase benefits by some $860 million for injured workers and reduce expenses in the costly and cumbersome state workers compensation system by $1 billion.

There were five “no” votes for the bill in the 80-member Assembly and four in the 40-member Senate.

“When you introduce a … 160-page bill that purports to create all these wonderful things that we all want but it’s introduced on the final day I don’t know how anyone can support this in this fashion,” said Assemblyman Ben Hueso, a  “no”-voting Chula Vista Democrat.

“This is one of those last minute maneuvers that has me highly suspect of what’s in this bill. I can’t vote for something I can’t explain and I can’t explain whether this is going to be a good bill or a bad bill. We’re completely changing a system that’s highly complex. What’s the hurry?”

The Democratic governor and Republican lawmakers said the bill reduces the likelihood of an as-much-as 18 percent increase in workers’ compensation insurance costs.

“This bill represents a balanced approach to issues within California’s workers’ compensation system. It provides employers with cost-saving proposals that reduce frictional costs while providing injured workers with needed benefit increases,” wrote the California Chamber of Commence in support of the bill

Three paragraphs later in the letter, the chamber expresses concern the savings in the bill “may not be adequate to match the benefit increase.”

Additionally, “savings projections of this bill … show a small margin between the projected savings and costs associated with benefit increases.”

But, the chamber concludes, it “received a commitment from the (Brown) administration to timely and effectively implement the regulations critical to achieving the savings contained in the reform proposal” and this commitment gives the chamber and employers the “certainty needed” to support the measure.

The California State Compensation Insurance Fund, one of the state’s largest workers compensation insurers, said in an August 29 letter to lawmakers it would seek a 5 percent to 7 percent reduction in its rates if they passed de Leon’s bill.

A creation of the Progressive Era at the beginning of the 20^th Century, workers’ compensation was originally designed to give employees medical treatment for workplace injuries in return for waiving the right to sue employers.

The system is now a Gordian knot involving insurers, employers, unions, doctors and the lawyers who aid injured workers — some of the Capitol’s most powerful special interests.

If history is any judge, Hueso and his fellow “no” voters made the right call.

No workers compensation legislation in nearly 25 years has lived up to the glories claimed by their advocates.

That suggests this latest effort won’t either – despite support by Democrats, Republicans, business groups, labor and the governor.

On April 19, 2004, Gov., Arnold Schwarzenegger signed SB 899, another bill claiming to “reform” California’s workers’ compensation system, albeit only 75 pages in length. That bill passed the Assembly 77 to 3 and the Senate 33 to 3.

“This bill completes a process that brought together Republicans and Democrats, business and labor and all the affected parties to produce billions of dollars in savings, protect workers and root out fraud and waste in the system,” Schwarzenegger said in a news release.

“No longer will workers’ compensation be the poison of our economy. Our message to the rest of the country and the world is that California is open for business. We are making our state once again a powerful, job-creating machine.”

Even supporters of the 2004 bill, which included then Senate president Pro Tempore John Burton, a San Francisco Democrat, subsequently complained the measure shorted workers with permanent partial disabilities, reducing their benefits by more than 40 percent.

The measure approved by lawmakers on August 31 boosts payments to those injured workers by $740 million, an average increase of roughly 30 percent.

Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, premised his support for this year’s bill on earmarking another  $120 million for injured workers who can’t return to their previous occupations.

Fifteen years before Schwarzenegger’s signature on SB 899, the Legislature approved a bill aimed at lowering the costs of lawyers and doctors in the workers comp system.

Doctors’ fees were reduced but use of lawyers to secure more generous claims increased after the bill’s passage.

In 1993, the Legislature OK’d another employer-and-employee backed “reform” allegedly reducing fraud and restricting the ability to file so-called “stress” claims.

One year later, legislation was signed eliminating the minimum premium workers compensation insurers could charge employers.

The move initially spurred competition and reduced employer costs but the underpricing by insurers led to 12 carriers abandoning the market by 1997, which spiked rates and spurred employers to more stridently demand the cost-reducing “reform” supposedly contained in the 2004 bill Schwarzenegger signed.

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