Employers' Attorney Criticizes Cuts In Workers' Comp Benefits
By Steve Lawrence, Associated Press Writer - April 25, 2005SACRAMENTO (AP) _ In a surprising critique, a former president of an attorneys' group that represents employers and insurers says benefits for disabled workers have been slashed to "socially unacceptable" levels under Gov. Arnold Schwarzenegger.
Clifford D. Sweet III, in an April 21 memorandum to the "workers' compensation community,'' said the Legislature should move quickly to fix the problem.
"From the perspective of a workers' compensation defense attorney, the reduction in permanent disability indemnity payments is socially and politically unacceptable for all parties, including employers,'' Sweet said.
His assessment supports claims by the California Applicants' Attorneys' Association and others who represent workers who suffer job-related injuries that benefits have been "inappropriately slashed," at least as it relates to lower back injuries.
It comes as Andrea Hoch faces a Senate hearing Wednesday on her appointment by Schwarzenegger as the state's workers' compensation director.
Hoch's critics, who include labor leaders and workers' attorneys, say regulations she drafted will lead to average cuts of two-thirds in benefits for workers' with disabling injuries.
A spokesman for the Applicants' Attorneys Association, Steve Hopcraft, said Sweet's memo should be the "death knell" for Hoch's nomination.
"It's really got to make you stop and take a deep breath when you find that she has gone so far overboard that the other side is joining us in agreeing that benefits are totally inadequate for anyone to live on in California,'' he said.
But Sweet, a San Diego lawyer who was twice president of the California Workers' Compensation Defense Attorneys' Association, said "unintended consequences" of the law Schwarzenegger signed last year, not Hoch's regulations, are to blame.
"There's only so much any administrative director can do under the law," he said in an interview.
When they adopted last year's legislation, lawmakers and the governor failed to adjust benefit levels to reflect the fact the state was adopting a new way to rate the severity of disabilities, Sweet said.
"We are using a money chart based on an old system to compensate people with real disabilities under a new system but the numbers come out so much lower," he said.
But Rick Rice, undersecretary of the California Labor and Workforce Development Agency, suggested Sweet was critical of the legislation because it would result in less litigation over workers' comp injuries and lower income for workers' comp attorneys.
"The unintended consequence he's talking about is his future lack of income," Rice said.
He said the State Compensation Insurance Fund, a quasi-governmental agency that is California's largest workers' comp insurer, found that disability ratings for some amputation cases actually went up under the new rating system.
David Rockwell, president-elect of the Applicants' Attorneys' Association, said Sweet's analysis missed the "main point'' that Hoch's regulations don't make up for injured workers' loss of earnings. "She pulled numbers out of the air," he said.
He said it is unrealistic to hope that Schwarzenegger would follow Sweet's suggestion and sign legislation raising benefits.
Sweet said he wrote the memo after giving seminars on the new law and finding that his clients were astonished at its impact.
"These are hardened insurance adjusters who find it unbelievable that people with real injuries and real impairments are going to get practically nothing," he said.
Sweet looked at six cases involving workers who suffered lower back injuries that caused some level of permanent disability under the old rating system and calculated how much their benefits would drop under the new system.
The reductions ranged from 63 percent to 100 percent.
"For workers who suffer single-level low back injuries, the result is that truly impaired worker's benefits have been dramatically reduced to a level that is socially unacceptable, especially for those younger workers with the greatest level of impairment and the greatest loss of future earning capacity," Sweet said in the memo.
When he signed legislation last year that made sweeping changes in the state's workers' compensation system, Schwarzenegger promised the bill would protect workers while cutting skyrocketing workers' comp costs faced by employers.
Hoch's disability rating regulations implement a key provision of that bill, which had strong support from business groups and companies that sell workers' compensation insurance to employers.
Susan Gard, a spokeswoman for Hoch, said the old disability rating system was too subjective and resulted in some workers being classified as partially disabled when they really weren't.
"The old system did not accurately reflect an injured worker's disability or ability to return to work,'' she said. "The new system focuses on getting workers back on the job by encouraging resolution of claims." | 
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