Workers’ comp

Five years after passage of Gov. Schwarzenegger’s SB 899, the evidence is clear that the law has failed Californians who are injured on the job.

While SB 899 has delivered billions in savings to employers and tens of billions in record-high profits to insurance companies, it has plunged tens of thousands of working Californians into pain, misery, poverty and despair.

Since SB 899 was implemented by the Schwarzenegger Administration, Californians injured at work receive among the lowest disability compensation in the nation. If an ear, hand, leg, eye, or foot is lost in a workplace accident, Californians receive a pittance compared to other states and even the average of U.S. states.

Just one example tells the story. According to the U.S. Chamber of Commerce, loss of a hand at work is valued at $249,000 in Iowa, $162,000 in Oregon, $238,700 in Illinois, $134,000 in New York, and just $79,000 in California. That is the total compensation injured workers receive for the lifetime loss of that hand. They can’t sue for more. The Schwarzenegger Administration places lower value on your body than virtually any other state in the nation. This is what the governor touts as his signature success. It begs the question, “Success for whom?”

According to the insurance industry’s own research bureau (WCIRB), most of the insurance premium dollars that employers have paid have gone to insurance company profits and expenses, not to care for on-the-job injuries nor to compensate permanently disabled workers. Insurance companies have pocketed $26 billion in profits – record highs, while injured workers’ care and compensation have fallen to record lows. Injured workers have seen their disability compensation plummet to near the bottom of the 50 states. Medical care has been delayed and denied to the point that most physicians have withdrawn from treating injured workers. This is contrary to what was promised, and the governor has refused to remedy this horrible situation for Californians injured while working.

Now, insurance companies are preparing to raise rates again. They are claiming that the cost of “medical care” has skyrocketed. Closer examination of the industry’s own numbers shows that the majority of this “medical care” increase is the cost of denying and delaying medical care.

CAAA is opposing the insurance industry’s proposal to increase workers compensation premiums by 24 percent. Insurance premium rates continued to decline through the end of 2008, dropping to $2.25 per $100 of payroll. This is the lowest rate in several decades, and is down over 65 percent from its peak of $6.45 at the end of 2003.

It is folly to believe insurance industry claims that the reforms are no longer reducing costs. Statutory limits on physical therapy and chiropractic treatment are still in place, medical treatment authorization requests are still judged against nationally developed treatment guidelines and are subject to utilization review, outpatient facility fees are still subject to the Medicare fee schedule, injured workers can still receive a maximum of 104 weeks of temporary disability, penalties for unreasonable delay are still minuscule, and permanent disability awards are still subject to apportionment.

In requesting a sharp increase, the insurance industry failed to account for an unprecedented drop in the number of workers compensation claims for permanent disability compensation since SB 899 took effect. The number of workers compensation claims has been cut in half since SB 899. It’s not that there has been a revolution in workplace safety. More than 250,000 Californians still get hurt at work every year. But half of them decline to enter the workers compensation system because it is widely known that company doctors control medical care and disability compensation is pitiful. Let’s face it, the group health, disability, and welfare systems are picking up half the tab for workplace injuries. So much for success in delivering medical care.