Davis Signs Two Workers’ Compensation Bills Into Law
As expected, Gov. Gray Davis (D) on Tuesday signed into law two bills (AB 227 and SB 228) to reform the state workers' compensation system and help reduce increased workers' compensation insurance premiums for employers, the San Francisco Chronicle reports (Abate, San Francisco Chronicle, 10/1). Some of the provisions in the bills include fee schedules for treatments and prescription drugs; limits on chiropractic and physical therapy visits; reviews that use national standards to determine the proper amount of care for certain injuries; and increased penalties for employer fraud from $50,000 to $150,000 (California Healthline, 9/30). Davis signed the bills at a ceremony at the Los Angeles Area Chamber of Commerce. According to supporters, the legislation could save employers as much as $5.7 billion per year (Jones/Dickerson, Los Angeles Times, 10/1). The Workers' Compensation Insurance Rating Bureau, a not-for-profit association that represents insurers and recommends premium rates, estimates that the legislation will save employers between $3.5 billion and $4.1 billion per year. The bureau on Monday recommended that insurers in the state reduce their premiums by 2.9% in 2004. Insurance Commissioner John Garamendi (D) recommended a 4% reduction in premium rates (California Healthline, 9/30).
Under the legislation, workers' compensation insurance premium rates "will begin to go down, and like every reform we intend to monitor it like a hawk," Davis said, adding that he would call a special legislative session to address the issue in the event that "things don't work out like we expect" (Chan, Sacramento Bee, 10/1). Sen. Richard Alarcon (D-Sun Valley), a supporter of the bills, said that insurers should pass on expected savings from the legislation to employers. "If the premiums don't come down, the insurance companies will have hell to pay," Alarcon said (San Francisco Chronicle, 10/1). However, opponents said that the bills "fail to address key weaknesses" such as "subjective medical findings, which result in legal disputes that drive up costs," according to the Times. Allan Zaremberg, president of the California Chamber of Commerce, called the bills a "first step" but said that their enactment "doesn't solve the crisis" in the state worker's compensation system. Gubernatorial candidate Sen. Tom McClintock (R-Thousand Oaks) said the legislation will make only "cosmetic changes" to the system (Los Angeles Times, 10/1). Rob Stutzman, a spokesperson for gubernatorial candidate Arnold Schwarzenegger (R), called the bills "bogus election-year politics that don't go nearly far enough" (San Francisco Chronicle, 10/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.