Workers' Compensation Issues
Issue Status: In April 2004, following years of massive workers' compensation rate increases, the California State Legislature responded to the leadership of Gov. Arnold Schwarzenegger, NFIB and the threat of an initiative by the people of California and finally enacted significant workers' compensation reforms that promised to significantly reduce employers' premium bills. In 2005, the reforms finally took their completed shape and began to cut costs, lower premiums and increase competition as new insurance companies entered the market.
The focus of the 2004 reforms, embodied in SB 899 by Sen. Charles Poochigian, was the restoration of objectivity into the workers' compensation system. The provisions included objective evaluation of injuries based on physical evidence, standardization of disability ratings and awards for fairness to injured employees with or without an attorney, and a restriction on doctor-shopping by injured workers seeking a bigger payout.
In 2007, there were a number of bills that would have rolled back the progress and savings from the 2004 workers' compensation reforms. NFIB was successful in defeating several bills, including those that would have allowed trial lawyers to work their way back into the system and drive up premiums. As a result of NFIB's lobbying efforts, the governor vetoed SB 936 (Perata), which would have doubled the permanent disability benefits to injured workers and would have lead to premium increases as great as 30 percent.
NFIB Position: NFIB maintains that the reforms put forth in 2004 should be left alone. As of January 2006, the average premium rate for California businesses had dropped more than 30 percent since January 2004, thus bringing the average rate back to 1996 levels. Additionally, at least 10 insurance companies had opened up new business in California, increasing competition in the market and cutting the State Compensation Insurance Fund behemoth market share by more than 20 percent. Employees' return-to-work rate has improved and fraudulent claims have been severely diminished through nationally recognized standards of treatment and medical provider groups.
Issue Status: More attempts to roll back the reforms will continue to come in the next legislative session, so NFIB will continue to vigorously defend the reforms and protect the savings that our members are realizing.
