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September 10, 2003
CA on Verge of Revising Workers' Comp

California lawmakers have agreed on a set of reforms for the state's troubled workers' compensation system, according to the Los Angeles Times.

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With the legislature set to adjourn on Friday, a committee of negotiators from both parties agreed Tuesday on a measure that's expected to be voted upon by the full Assembly and Senate sometime this week Assuming it reaches his desk, Gov. Gray Davis is expected to sign the bill.

"This is the biggest reform of workers' compensation in California's history," said Assembly Speaker Herb J. Wesson, a member of the bipartisan committee. "This is so significant that immediately the large companies and the big self-insured governmental entities will see a significant reduction" in their costs.

The cost of workers' comp has soared so much and put such a burden on employers that it has become a leading issue in the referendum on whether to recall Davis. Employers complain that it's a major reason why the economy that has shed nearly 300,000 jobs over the past 2 1/2 years. According to the Times, their premiums have climbed to an average of $5.85 per $100 of payroll.

The Times reports that the legislation is designed to generate $5.3 billion in one-time savings and about as much in each successive year. It would do this by reining in medical expenses, largely by capping fees to health-care providers and limiting injured workers' use of certain treatments.

The plan's architects say the cuts would be the deepest in the history of the 90-year-old system and would help slow the growth of total costs, which have ballooned from $9 billion in 1995 to about $29 billion this year. Backers say the plan would prevent scheduled increases in premiums for employers next year and go a long way toward rolling back rates to 2002 levels. Employers foot 100% of the bill for the mandatory insurance program.

Some groups representing business owners — which have been pleading for workers' comp reform for years — have doubted the legislation would lead to significantly lower insurance rates. These groups say lawmakers have failed to address some of the costliest aspects of the system, such as burgeoning long-term disability payments to injured workers.

"I'm astounded by the numbers. I just can't believe these numbers are real," said Willie Washington, lobbying for the California Manufacturers & Technology Assn. "I have no confidence in those numbers."

Stung by premiums that have doubled or tripled over the last several years, some California companies are freezing staffs, firing workers, closing their doors or leaving the state. Government agencies and nonprofits have likewise been slammed.

Source: Los Angeles Times (Registration required, but it's free.)

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