Calif. Commissioner Warns Workers’ Comp Savings Could Vanish

March 16, 2004

The billions of dollars in savings from last year’s workers’ compensation reform legislation will never fully materialize unless lawmakers pass important “cleanup” measures to fine tune the new laws, Calif. Insurance Commissioner John Garamendi said March 16.

Saying that employers and the state’s economy can’t afford to wait any longer for relief, Commissioner Garamendi called on lawmakers to take up the issue immediately and make last year’s reform legislation whole.

“We have new laws that promise to lighten the extraordinary burden now being carried by our state’s employers,” said Commissioner Garamendi. “But like your car, these laws will work more smoothly with a tune-up. I encourage the Legislature to act now and make sure these laws bring employers every penny of the savings to which they are entitled.”

Last year, SB 228 and AB 227 were passed to primarily reduce the out-of-control medical costs within the state’s $29 billion workers’ compensation system. The new laws would trim more than $5 billion annually from the $29 billion system.

However, if the cleanup legislation isn’t passed, technical and legal problems inherent in almost all new laws could make the savings vanish. “What good is a new car if there is no engine to make it run,” Commissioner Garamendi asked. “This workers’ compensation crisis is an impending train wreck, and California’s employers are in a car stalled on the tracks. We must pass cleanup legislation now to keep our economic recovery running.

“It is unconscionable that six months after its passage, the reform legislation has yet to be completed,” Commissioner Garamendi added. “This must be done soon so that we can continue with the second half of reform and help our employers start creating jobs once again.”

Commissioner Garamendi pointed to several key areas that need immediate legislative action:

*Clarify language to ensure that: the 24-visit per injury cap on chiropractic and physical therapy treatment is only applied after appropriate guidelines have been superseded by a preponderance of the evidence. The guidelines to be used are from the American College of Occupational and Environmental Medicine (ACOEM), and those adopted by the Administrative Director from the Department of Industrial Relations.

*Ensure that the 24 visit cap is not exceeded or abused by someone filing multiple injury claims for the same body part.

*Ensure that the presumption for the use of the guidelines – either ACOEM or those adopted by the Administrative Director – is a presumption that affects the burden of proof and applies to all medical disputes regardless of the date of injury.

*Qualified Medical Evaluators must receive mandatory training regarding medical treatment guidelines so that they can effectively determine what constitutes reasonable, evidenced-based medical treatment.

*Ensure that all workers’ compensation fraud penalties are consistently set at $150,000 in order to prevent those convicted of such crimes from arguing that they should receive a lesser penalty than intended by the Legislature.

Topics California Legislation Workers' Compensation

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