Division of Workers’ Compensation Issues Emergency Regulation Governing Disability Under State Workers’ Compensation Insurance System
The administration of Gov. Arnold Schwarzenegger (R) on Dec. 23 issued an emergency regulation to change the guidelines for determining workers' compensation insurance payments for permanently injured workers starting Jan. 1, the Knight Ridder/Contra Costa Times reports (Temple, Knight Ridder/Contra Costa Times, 12/24/04). Division of Workers' Compensation Director Andrea Hoch submitted the proposed regulation to the Office of Administrative Law, which is expected to approve them, the San Jose Mercury News reports.
If approved, the new regulation would take effect for 120 days, during which time they likely would become permanent, following public hearings. The regulation is part of the workers' compensation reform law (SB 899) that was enacted earlier this year. The proposal is in keeping with a section of the law that requires more objective criteria for determining workers' compensation claim awards.
Under the proposed regulation, workers' compensation payments would be determined using guidelines developed by the American Medical Association to assess the extent of injuries. Classifications will include such factors as age, job and "diminished future earning capacity" (Lohse, San Jose Mercury News, 12/24/04). Injured workers would be able to appeal their awards in court, the Los Angeles Daily News reports.
The "most severely injured [workers] will get better benefits" than in the current system, and those with injuries that are less severe could get less money, according to Victoria Bradshaw, head of the Labor and Workforce Development Agency. Bradshaw said awards would be reduced for workers who are physically capable of earning a living, the Los Angeles Daily News reports (Drucker, Los Angeles Daily News, 12/24/04).
Critics of the proposal say the new fee schedule would decrease payments to permanently injured workers "while sidestepping the root cause of California's high workers' compensation costs -- greedy, unregulated insurance companies," the Knight Ridder/Contra Costa Times reports (Knight Ridder/Contra Costa Times, 12/24). Opponents of the proposed regulation say workers' awards would be reduced by 50% to 70% under the new system, more than lawmakers intended when they passed the reform laws (San Jose Mercury News, 12/24/04).
Art Pulaski, executive secretary treasurer of the California Labor Federation, said the Schwarzenegger administration "is making these cuts at a time when most people will not be paying attention" and called the emergency regulation a "weekend attack." He added, "If the governor is going to make drastic cuts in their payments, he should at least give them a chance to respond" (Los Angeles Times, 12/25).
Steve Hopcraft, media director for California Applicants' Attorneys' Association, said, "These (insurance) companies are making gobs of money on California worker compensation insurance, and they haven't lowered premiums. The bottom line is that (the regulation) wacks the heart out of injured workers' compensation, which was already too low" (Knight Ridder/Contra Costa Times, 12/24/04).
According to the Daily News, administration officials say "the only losers under the new system are workers' compensation attorneys and doctors popular with those attorneys" (Los Angeles Daily News, 12/24/04).
Rick Rice, assistant secretary of the LWDA, said, "Those truly disabled, 70% disabled or more, will fare much better under the reform law than before. But those that are not disabled, but have a good attorney, will be weeded out of this system because of the requirement to use objective medical findings" (Knight Ridder/Contra Costa Times, 12/24/04).
Bradshaw said, "Once these regulations are in place, California's disability rating system will for the first time be based on objective medical findings instead of subjective factors and work restrictions manipulated by the legal system" (San Jose Mercury News, 12/24/04).