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Workers’ Compensation reform is on the horizon. The question is, will Senate Bill 71 do the job? Will it be the magic fix, the panacea all parties are looking for?

Details of SB 71 and its amendments are spilling onto the streets prior to a public hearing scheduled for Aug. 27. SB 71 was introduced by Sen. Burton and coauthored by Sen. Alarcon and Assemblyman Calderon. It passed in the Senate Labor and Industrial Relations Committee May 9 with a 5-3 party line vote. When it passed, the bill resembled a sterile new track home absent of upgrades, amenities and decorations. Anyone can go online and read the amendments to the bill, which is a good source of information. The real juice, though, the talk of the town, comes from those close to the bill, who have a stake and still a say in the final draft.

The California Applicants’ Attorney Association and the California Labor Federation are pushing hard for their proposed amendments for an increase in benefits for workers which, they hope, will be amended into SB 71. Their proposed legislation, currently under review by Gov. Gray Davis, calls for maximum weekly benefits for permanently disabled workers to increase from $140 to $230. It also increases the maximum weekly benefits for temporarily injured workers from $490 to $651 and thereafter would provide a yearly cost of living assessment.

Those favoring this amendment, estimate the cost to employers eventually to range from $1.8 to $2.4 billion a year. To justify the cost, supporters say that employers will have saved more than $4 billion a year from WC reforms enacted in 1992.

According to AP, William Herraras, president of the Applicants’ Attorney Association, calls the current WC system corporate welfare. "It shields businesses from the true cost of on-the-job injuries."

California Insurance Commissioner Harry Low has also pushed for his own reforms, which he would like to be amended into SB 71. His proposition would give him the authority to disapprove rates that do not seem justified by a company’s experience. So far, though, it seems Low hasn’t been able to convince the Legislature to incorporate his proposal into SB 71.

A surprise emerging out of the proposed legislation is language calling for an additional four new State Compensation Insurance Fund board members, which is currently governed by five directors appointed by the governor.

In an article published by the Workers’ Comp Advisor, State Fund spokesman Ron Christenson said, "The California workers’ compensation system is currently functioning in large part thanks to the role of the State Fund. Why would you want to mess with that?"

The Advisor also cites speculation that the change in the State Fund board is a move to potentially make the fund less competitive and ease tensions of those who have lost customers to the fund.

What surprises lay in store for Monday’s public hearing are yet to be seen. People on all sides of SB 71 are eager to know the outcome, so they can get on with business.

Current proposed increased benefits

• Permanently disabled workers maximum weekly benefits from $140 to $230 per week
• Temporarily injured workers maximum weekly benefits from $490 to $651 per week
• Partial disability minimum over next five years to from $70 to $130 per week
• Partial disability for ratings less than 70 would to $230 per week
• Partial disability for ratings greater than 70 would to $270 per week
• Maximum death benefits $195,000 to $215,000

Cost saving provisions to offset increased benefits

• Elimination of "presumption of correctness" for the treating physician, which employers have estimated costs them $400 million annually.
• Employers would be allowed to negotiate network agreements with pharmacies and require generic drugs.