Governor Proposes New Worker’s Compensation Rules

By Tom Chorneau | December 30, 2004

The Schwarzenegger administration has released a sweeping set of regulations aimed at revising how doctors evaluate permanent injuries to workers and how much compensation they are paid.

The new regulations, unveiled last week, are a key element of the landmark reform of the state’s compensation system approved by the Legislature last spring and aimed at cutting billions from the rates employers pay for insurance.

The new proposal calls for the use of guidelines developed by the American Medical Association for measuring permanent disabilities. The administration also wants to employ a new formula for translating the degree of injury into dollars paid in compensation.

Union officials and worker advocates said the new regulations will result in cutting benefits for workers. Critics also complain the public only has a few days to comment on the plan before they could be adopted.

“Gov. (Arnold) Schwarzenegger is making these cuts at a time when most people will not be paying attention,” said Art Pulaski, executive secretary treasurer of the California Labor Federation. “Injured workers deserve better than a weekend attack like this. If the governor is going make drastic cuts in their payments, he should at least give them a chance to respond.”

The new rules have been sent to the Office of Administrative Law, which has up to 10 days to consider the regulations.

The proposed rules have been in the making since the passage of the worker’s compensation reform legislation last spring.

Reforming the workers’ compensation system was a major milestone for Schwarzenegger in his efforts to improve the California economy. The 91-year-old system was known for charging the nation’s highest insurance rates while delivering inadequate care to workers.

Rates paid by employers for worker compensation insurance jumped an average of 149 percent from 2000 to 2003, according to the Department of Insurance.

The reform legislation included caps on disability payments and a requirement that injured workers must choose physicians authorized by employers and insurance companies.

The other big change focused on how permanent disabilities were evaluated and compensated.

Supporters said the administration’s new regulations provide a major step forward in bringing down the cost of workers’ compensation insurance.

“For the first time, California will have a system that measures permanent impairment based on clear, objective factors,” said Allen Zaremberg, president of the California Chamber of Commerce.

But critics, like David Schwartz, president of the California Applicants’ Attorneys Association said the new rules will “severely reduce permanent disability benefits to injured workers” because of how the new compensation formula works.

Pulaski said that many injured workers will get fewer benefits under the new system and some will not get any compensation at all.

“Gov. Schwarzenegger made a promise to injured workers that they wouldn’t suffer as a result of workers compensation reform,” said Pulaski. “Now he is slashing benefits in half for workers on permanent disability.”

Not so, said Sen. Chuck Poochigian, R-Fresno, who was the lead author of the reform legislation, who called the proposed system in line with what the Legislature agreed to last spring.

“Even with the implementation of a new permanent disability schedule, California’s overall benefit system remains more generous than many states,” Poochigian said.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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