Schwarzenegger Signs Workers’ Compensation Reform Bill

As expected, Gov. Arnold Schwarzenegger (R) on Monday signed a bill (SB 899) that will reform the state's workers' compensation system, the Los Angeles Times reports (Lifsher, Los Angeles Times, 4/20). The law, sponsored by Sen. Richard Poochigian (R-Fresno), will provide for immediate medical care for injured workers; require injured workers to choose from a network of employer-selected physicians for treatment or petition a medical review panel to see a physician of their own choice; require use of American Medical Association guidelines to rate impairments to injured workers; implement provisions to encourage injured workers to return to work; and allow employers to apportion workers' compensation payments to cover only work-related injuries. In addition, the law will require employers and workers to be considered equal before the law; limit temporary disability payments to two years instead of the current five years; increase benefits for workers who are more than 70% disabled; give small businesses a state reimbursement of as much as $2,500 for necessary workplace changes to allow an injured worker to return to work; require workers to prove that an injury exists; and eliminate payments for claims of back pain and other pains. The law took effect immediately because it was passed by a two-thirds majority of the both the Assembly and Senate (California Healthline, 4/19). Jack Hannan, spokesperson for the Workers Compensation Insurance Rating Bureau, said that the bureau by mid-May intends to have an analysis of the potential cost savings from the new law, the San Diego Union-Tribune reports (Ainsworth, San Diego Union-Tribune, 4/20).

"No longer will workers' compensation be the poison of our economy. With this great reform, I can say to everyone, 'California is open for business,'" Schwarzenegger said at a bill signing ceremony at a Boeing airplane plant in Long Beach (Stockstill, AP/San Jose Mercury News, 4/20). Schwarzenegger said that the threat of a workers' compensation reform ballot initiative "drove this legislative agreement." He added, "We will terminate the fraud and abuse that was going on in the [state workers' compensation] system. Those who were gaming the system, we're saying, 'Hasta la vista,' because the game is over." Assembly Speaker Fabian Nunez (D-Los Angeles), who attended the ceremony, said, "In balancing the needs of business and workers, we were able to deliver a comprehensive workers' comp reform while at the same time (assuring that) workers injured on the job get the treatment each and every one of them deserve" (Chan, Sacramento Bee, 4/20). Stanley Zax, head of the workers' compensation insurance carrier Zenith Insurance, said that the new law should help create "a fairer system" that will "lead to downward pressure on costs" (San Diego Union-Tribune, 4/20). However, Assembly member Jackie Goldberg (D-Los Angeles), one of the six legislators to vote against the bill, said that the new law does not guarantee any reduction in workers' compensation insurance premiums for employers (AP/San Jose Mercury News, 4/20).

Schwarzenegger's overhaul of the state workers' compensation system was "completed in the middle of the night, behind closed doors," despite campaign assurances by Schwarzenegger that he would "'open up the windows and doors of government,'" columnist Daniel Weintraub writes in the Sacramento Bee. Schwarzenegger presented the workers' compensation reforms as "all-or-nothing deals" to lawmakers who had "little chance to review what they were voting on and no opportunity to amend it," Weintraub writes. Although it is "not realistic" to expect Schwarzenegger to open negotiation sessions with lawmakers and interest groups, "it is not asking too much for a tentative deal ... to be fully vetted in a series of public hearings" to allow for criticism, Weintraub writes, adding that "all of that is part of the messy process in a democracy" (Weintraub, Sacramento Bee, 4/20).

KCRW's "Which Way, L.A.?" on Monday discussed the new workers' compensation law with Jim Contreras, chair of the workers' compensation committee at the California Small Business Association; Jamie Court, president of the Foundation for Taxpayer and Consumer Rights; and Jill Gambaro, member of the board of directors of the Los Angeles Repetitive Strain Support Group (Olney, "Which Way, L.A.?," KCRW, 4/19). The complete segment is available online in RealPlayer.