Workers’ Comp Reform Bill Running Low on Time

The numbers continue to change and time is running out on a workers’ compensation reform bill that has California legislators scrambling to come up with a compromise that promises to both increase permanent disability benefits for injured workers and find savings in the state’s unwieldy workers’ comp system.

Now there’s talk of dropping reform efforts and taking them up again during a special session in December.

A hearing of the Assembly Committee on Insurance on Tuesday produced a few hours of testimony from the two parties negotiating the deal – labor and a group of large, self-insured employers – and a change that evidently cuts costs by more than $300 million annually.

A workers’ compensation reform bill was officially introduced on Monday, and the same day the California Workers’ Compensation Insurance Rating Bureau issued a study saying the bill could produce a savings of nearly half-a-billion-dollars.

But that savings will be outpaced by benefit increases called for in the bill, increasing system wide costs the tune of $300 million annually, according to WCIRB, which outlined its preliminary costs estimates in a letter released on Monday.

Senate Bill 863 appears to erase a deficit the earlier proposal left the state’s system with, but it’s far from the $1.4 billion in system wide savings that had been called for at the beginning of the process as early as October.

Those familiar with negotiations say the bill was disused during a Democratic Caucasus following the hearing and it got cool reception. The sources, who asked not to be named, say at least one suggestion was made to halt the reform efforts and take up the issue of reform again in December, during Gov. Jerry Brown’s proposed special session on Obama’s healthcare package.

Vehemently against the bill, as well as earlier proposals, is the California Applicants’ Attorneys Association, which is seeking more benefits for injured workers. A CAAA spokesman did not respond for comment.

Legislators have until Friday at midnight to rework the bill and vote on it. This leaves a few days for more hearings, and reworking of a 100-plus page document that contains roughly 60,000 words.

The bill is authored by Sen. Kevin DeLeon, D-Los Angeles. Neither he nor his representatives were immediately available for comment.

The insurance industry and the business community have been involved with the bill in more of an advisory role, according to Mark Sektnan, president of the Association of California Insurance Companies, who was cautiously optimistic that a reform bill could be voted on.

“Even though it’s Tuesday there’s a lot of time left,” he said.

Part of the progress made was in dropping a proposal to have permanent disability rates paid initially at the higher temporary disability rate to smooth transitions for workers moving from temporary to permanent disability. It’s estimated that was adding roughly $320 million annually in costs.

That was amended out, but “now there’s talk of even more amendments going into the bill,” Sektnan said.

“I think our biggest concerns continue to be whether or not the savings are real and will be realized,” he said. “The problem is there is not much savings to be found here.”

He added, “It’s a system in crisis.”

Topics California Workers' Compensation