WORKERS COMP REFORM UPDATE

Summary

1. The Workers’ Compensation Action Network (WCAN) is a statewide grassroots organization that consists of employer and insurer trade groups, businesses, non-profit organizations and public entities.
2. WCAN promotes the successful implementation of legislative reforms that restore the predictability and stability to the worker’ compensation system, along with reduced costs for employers and the improvement of services to injured workers.

Background

1. Workers compensation provides prompt medical care to workers injured on the job and cash benefits for a portion of lost wages on either a temporary or permanent basis.
2. This program is designed to function as a "no fault" system where there is no burden of proof for an injured worker to show employer negligence caused a workplace injury. The program acts as the exclusive remedy for workers and employers.
3. The California crisis transpired in 2003 as the cost of workers’ compensation insurance in California between 1999 and 2003 tripled.
4. It was in 2004; California ranked the most expensive state for workers’ compensation insurance and is when some type of reform was needed.
5. According to the Public Policy Institute of California, "the two most important contributors to the workers’ compensation crisis appear to be rising medical costs and increasing numbers of permanent partial disability cases."
6. Key pieces of legislation that helped with workers’ compensation reform:
   • AB 749 (Calderon) - 2002
   • AB 227 (Vargas) and SB 228 (Alacron) – 2003
   • SB 899 (Poochigian) – 2004
7. Between 2002 and 2004, the California Legislature enacted four significant reform laws. While these new laws changed many aspects of California’s workers’ compensation system, major components of these reforms sought to:
   • Increase indemnity (cash) benefits to injured workers;
   • Rein in skyrocketing medical costs by controlling medical over-utilization and adopting evidence-based medical treatment standards;
   • Produce consistent, objective measurements for compensating permanently disabled workers;
   • Reduce California’s high rate of costly litigation; and
   • Increase incentives to get injured workers back on the job.
8. Many other reforms enacted in 2004 are still undergoing legal challenges, creating uncertainty about the ultimate cost savings associated with these reforms.
9. WCAN continues to follow legislation that affects numerous employers and employees.
10. WCAN works to ensure that California employers and the media are informed about the implementation process so the legislative gains are protected and realized to ensure injured employees are given necessary medical care promptly and receive benefits timely, fraud is eliminated, legitimate disputes are resolved fairly and quickly, and system costs are reduced where inefficiencies and inequities exist.