Gov. Jerry Brown signed a bipartisan bill Tuesday intended to reduce workers' compensation costs for California businesses while increasing benefits to people injured on the job.
His office said statewide changes were needed because the cost of workers' compensation insurance has risen from $14.8 billion to $19 billion for California businesses in the past two years. Supporters said by making the system more efficient and limiting litigation, the bill, SB863, will save businesses $1 billion next year and allow increased payments to disabled workers.
Opponents, including some chiropractors and attorneys for injured workers, argued that limiting litigation would mean fewer benefits for people who are unable to return to work. According to the insurance-run Workers' Compensation Insurance Rating Bureau of California, there were 527,000 workplace injuries reported in 2011, about 174,000 of which resulted in temporary and permanent disability or death.
Brown — who was joined by business representatives, labor leaders and legislative leaders — said the bill is an example of what can be achieved when Democrats and Republicans work together. Democratic Sen. Kevin De Leon, of Los Angeles, carried SB863 and lawmakers approved it with bipartisan support last month.
"We're saving hundreds of millions of dollars for businesses, we're getting workers back to work faster and we're getting them the kind of medical care they need," Brown said before signing the bill inside a family-owned printing shop in San Diego's Barrio Logan neighborhood. Later in the day, the governor promoted the legislation at a Walt Disney Co. studio lot in Burbank.
Rebecca Aguilera-Gardiner, who runs Diego & Son Printing with her brother, said changes in the bill "not only helps the worker, it helps the small-business owner." The shop started by their father is celebrating its 40th anniversary with banners that read, "Old fashion service with the latest technology."
SB863 will increase benefits to permanently disabled workers by $860 million a year while giving employers a break on insurance costs.
The changes were the result of months-long negotiations between business groups concerned about escalating insurance costs and labor unions that wanted to address unexpected benefit reductions for injured workers that followed changes pushed in 2004 by then-Gov. Arnold Schwarzenegger.
Sean McNally, owner of Bakersfield-based Grimmway Farms, the state's largest organic grower, said negotiations between labor and management were "excruciating at times," but the bill will mean quicker resolution because doctors will make decisions rather than courtrooms.
The legislation makes substantial reforms to the century-old system in which businesses buy insurance or self-insure to provide medical care and compensation to workers who injure themselves or fall ill on the job.
It changes how benefits are calculated for injured workers, creates a binding arbitration process to resolve coverage disputes and eliminates coverage for conditions that most commonly lead to lawsuits, including insomnia and mental health problems.
The measure also aims to prevent lawsuits by establishing a binding independent review system to resolve medical disputes and shortens the timeline for approval of treatment from two years to three months.
In addition to increasing compensation for disabled workers by $740 million a year, which will boost benefits by an average of 29 percent for individual disabled workers, lawmakers included $120 million a year in a special fund for victims of catastrophic accidents who cannot return to work.
Supporters said that without the changes in the bill, employers would face insurance premium hikes that could trigger layoffs at a time when the state's unemployment rate remains above 10 percent. There are 14.4 million workers in the state.
Opponents said the bill actually hurts those who are most seriously injured by reducing some benefits and limiting care.
"In particular, the legislation restricts the ability of an injured worker to access necessary medical treatment and to receive adequate compensation if a worker is permanently disabled and cannot return to work at the same salary," Brad Chalk, president of the 700-member California Applicants' Attorneys Association, wrote lawmakers.
The reforms also would limit the role chiropractors so they would not be able to serve as a worker's primary care doctor after hitting a cap of 24 visits a year.
Kassie Donoghue, a chiropractor and director of government affairs for the California Chiropractic Association, said the cap is arbitrary and doesn't make sense because many of the cost increases are driven by prescription drugs and medical treatments. The association hopes to get that changed in further legislation.