California Gov. Brown on Friday vetoed three bills insurers said would have raised workers’ compensation costs.
According to the American Insurance Association (AIA), the vetoed bills “would have unwound a key portion of California’s 2003-2004 workers’ compensation reforms.”
AB 584 would have required that utilization review physicians and psychologists be licensed in California. AB 947 would have permitted the extension of the 104-week temporary disability cap while AB 1155 addressed apportionment in permanent disability cases. AB 947 and 1155 would likely have led to increased litigation and system costs.
“The governor recognized that now is not the time to increase system costs and litigation within California’s workers’ compensation system,” said Marjorie Berte, AIA vice president of state affairs, Western region. “Now is the time to create greater efficiencies to benefit workers and employers.”
The cost-saving measure that Brown signed, AB 378, authored by Assembly Insurance Chair Jose Solorio, brings compound drugs under the pharmacy fee schedule. It removes the financial incentive for physicians to provide compound drugs and limits physician reimbursement for compound drugs.
AIA said employers, labor and insurers supported AB 378 “because it takes added and unnecessary costs out of California’s workers’ compensation system.”
Mark Sektnan, president of the Association of California Insurance Companies, agreed.
“Gov. Brown said yes to an important bill that will curb abuses in the workers’ compensation system and he said no to several bills that would have increased costs or made California’s system more litigious,” Sektnan said.
Brown also signed Senate Bill 684, which protects California employers from being dragged out of state by workers’ compensation insurers to resolve disputes. The bill also mandates that workers’ compensation insurers must provide a written disclosure to California employers that the insurer is seeking to include in the insurance contract a requirement that disputes be arbitrated or resolved in a state other than California under that other state’s laws. The bill makes it so that unless the California employer agrees explicitly otherwise, any disputes with the insurer will be resolved in California under California law.