New Calif. Comp Bill Flawed Says AIA

NU Online News Service, Feb. 18, 1:44 p.m. EST?California's new law increasing workers' compensation benefits still leaves the system "fundamentally flawed" according to an analysis by an insurers' trade group.

The American Insurance Association, based in Washington, D.C., gave its views on the measure signed into law by California Gov. Gray Davis last Friday, which AIA said will raise workers' compensation benefits in the state by $3.5 billion.

Mark Webb, vice president, AIA western region said it "is incumbent upon those who negotiated this bill to acknowledge that this system is fundamentally flawed and that these flaws will continue to exist now even though AB 749 has become law."

Assembly Insurance Committee Chairman Tom Calderon, D-Montebello, sponsored the measure.

Mr. Webb said his organization looks forward to "working with this administration on the considerable task ahead to deliver the potential cost savings created in this legislation."

AIA said that while the measure contains such components as extended control over medical treatment for employers, the savings from these reforms are not guaranteed and will not occur for three to four years.

"The potential costs savings from this bill will not be realized for several years, in fact, many of the legislators that voted for this measure will no longer be in office when the full impact of this bill occurs," said Mr. Webb.

"There are many important reforms that were left out of this bill," he said.

With state and local governments and businesses throughout California struggling, Mr. Webb said, "there must be a commitment to reduce system complexity, litigation and unnecessary medical treatment, and to restore the expectations of injured workers and the employers who pay their salaries."

"Specifically, we ask the administration to deliver on the promises made to reduce the costs of prescription drugs and of outpatient surgery/facility services," Mr. Webb said.

"We hope the Legislature will reconsider whatever elements of AB 749 truly do not benefit injured workers," Mr. Webb continued. "The ability of an injured worker to compromise and forfeit vocational rehabilitation is at cross-purposes with the heavy investment in returning injured workers to their jobs, which is also contained in AB 749. Let me be clear--no amount of cash settlement for rehabilitation benefits will ever replace a job."

He noted that a recommendation by the Commission on Health and Safety and Workers' Compensation to pay indemnity benefits at a single rate was not in the measure that was approved.

The single rate, Mr. Webb said, would have greatly simplified how insurers pay benefits to injured workers and reduced the financial impact to the worker receiving permanent disability benefits that are lower than his or her temporary disability benefits.

The "significant cost increases" in the law, he said, will place a tremendous burden on California's economy. "If we are to preserve this system, we must all accept responsibility for its many failures and must now all shoulder the burden for its reform."

The AIA represents more than 410 property-casualty insurers that write more than $87 billion in premiums each year.

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New Calif. Comp Bill Flawed Says AIA

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