State Chamber Calls for WC Reform
By John Millrany - July 27, 2001The California Chamber of Commerce is turning up the burner on the issue of workers’ compensation insurance, which may be in for a hefty statewide hike in rates. Observers should pick up strong-on-screen blips later this summer when the Assembly Insurance Commission takes a look-see at SB-71, a Senate-passed bill sponsored by Sen. John L. Burton (D-Santa Clara).
Ina recent statement by the chamber, it was noted:
"Workers’ compensation was established in the early 1900s to provide medical care and disability payments for those injured at work. Workers liked the idea of guaranteed medical care and cash benefits while off work, while employers embraced a system that focused on treating injuries, getting employees back on their feet and eliminating lawsuits.
"Today, California’s WC system serves neither employees nor employers. Benefits for seriously injured workers don’t come close to meeting the demands of California’s increasingly high cost of living, and yet businesses pay more for WC than in any other state.
"In 1999 and again in 2000, the Legislature sent bills to the governor that would have raised benefits but left untouched a system rife with waste and abuse. The cost of the 2000 benefit increase alone was estimated at $2.7 billion. Gov. Gray Davis vetoed those California Chamber-opposed bills that because they did nothing to improve the system and offset some of the burden that the cost of benefit increases would impose on employers."
The conservative-minded chamber groused that SB-71 doesn’t specify the amount benefits will be increased. "Will it increase employer costs by $1 billion? $2 billion? $5 billion? The bill doesn’t say. What we do know is that the legislation will do nothing to fix the system and help it run more efficiently."
In opposing it, the chamber said the bill doesn’t do anything to restructure or streamline the WC system.
"Since the elimination of the minimum law in 1994," the chamber continued, WC insurance carriers " have waged a pitched battle for market share in California. Premiums gave been maintained in artificially low levels for several years, which, combined with increasing systemic costs, have undermined the financial stability of the marketplace.
"fewer workers are getting injured in the workplace and filing claims, but employers have endured a steady increase in the price of WC insurance. (We) believe that this trend is indicative of a system in need of restructuring."
Noting that the Assembly Insurance Commission is scheduled to consider SB-71 Aug. 20, the chamber said employer groups will seek amendments that will help pay for the benefit increases through "systemic improvements."
"Many believe the governor will sign a benefits increase bill this year—with or with without cost-saving measures. That’s why the chamber and other business groups believe it is imperative that businesses tell their elected representatives how increased WC costs will affect businesses and why it is critical to the health of California’s economy that legislation balances the cost of benefit increases with much-needed system reforms.
"Benefits for severely injured workers can be increased without the job loss and economic damage that would result from adding billions in costs—if the Legislature acts to control medical costs, eliminate waste and delays, and improve efficiency of the system."
According to the chamber, the following is what the Legislature can do to improve the system for workers and businesses plus help pay for increasing benefits to seriously injured workers:
- Provide quality, affordable medical treatment.
Develop effective review of medical treatment and stop unnecessary procedures that don’t help injured workers recover and return to work.
- Ensure prompt and fair payment of benefits.
Simplify confusing notices and eliminate bureaucratic inefficiencies and paperwork that foster litigation and delay in delivering benefits to injured workers and helping them return to work.
- Improve the efficiency of the system.
Hold WC judges accountable for prescribed timelines and procedures and professional conduct.
- Reduce litigation.
Hold physicians accountable for treatment decisions by removing the legal presumption of correctness.
- Continue the fight against WC fraud.
Make certain the millions of dollars spent annually to fight WC fraud are accounted for and the money is being put to the best use possible. Increase penalties for those who entice people to file fraudulent claims.
"Some of these recommendations," the chamber said, "including those that would help fight fraud and streamline the process, stem from the California Commission on Health and Safety and Workers’ Compensation, a commission composed of representatives from labor and business, which was formed in 1994 to recommend improvements in the performance of the WC system to the Legislature.
"Business groups have formed the Workers’ Compensation Action Network to inform employers about proposed changes to the WC system and facilitate contacts with legislators."
The chamber is appealing to parties interested in WC issues to ask local chambers or call the state office at 916-448-4266.
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