Four Years After Workers’ Compensation Cuts Passed: California is Fourth Lowest State in Payments to Permanently Disabled Workers

“We’ve jumped through every hoop the administration has asked for – it’s time for the governor to sign this bill,” Perata said.

The committee also heard from Sue Borg, President of the California Applicant’s Attorneys Association (CAAA) whose members represent injured workers. Earlier in the day she held a news conference with the chart of benefits reproduced above in the background. This is some of what she had to say:

“It has now been four years since the enactment of SB 899. Study after study has shown that injured workers have suffered a dramatic reduction in permanent disability benefits because of this Governor’s regulations implementing his Permanent Disability Schedule. It was not the intention of the legislature to reduce permanent disability benefits in this fashion and the Governor, himself, stated that he did not want to harm injured workers. Last year and the year before that, when the Governor vetoed the legislature’s latest effort to correct this serious wrong, he said that his administration would correct the problem administratively. Months and years have gone by and this has still not been done.

“Despite Governor Schwarzenegger’s promises and despite the State’s own studies documenting the terrible losses, injured workers continue to suffer. California’s workers are now at the bottom compared with states across our nation for compensation when they are permanently injured on the job. The charts behind you show just how badly California workers fare under this Governor’s permanent disability schedule. And these good, hard-working people behind me are just two examples of what this Governor’s policies mean to real people. They lose their health, they lose their livelihoods, they lose their homes and the lives they worked so hard to achieve.

“With SB 1717, Senator Perata tries yet again to correct these terrible wrongs. This bill goes only part of the way to restoring the permanent disability benefits taken away by SB 899. And it does so in a manner that can be absorbed by the insurance carriers without increasing premiums. We urge the legislature to once again support this effort and we urge the Governor to make good on his promises to those working men and women who are injured on the job in California.”

Borg noted that SB 1717 contains modest increases phased in over a three-year period and that it will help only those people injured on or after the effective date of the new schedule adopted by the Schwarzenegger administration in regulations after the 2004 ill passed.

Here is a summary of SB 1717 provided by Senator Perata’s office:

SUMMARY OF SENATE BILL 1717 (Perata)

Intent Language

Section 1 of the bill is intent language stating that the purpose of the workers comp reform bills of the last few years was to make the comp system fair, but that it will likely be several years until we know the full implications of all of the changes and that in the meantime we need to make sure workers are receiving adequate benefits. It also states that the bill is not intended to undermine the positive effect reform bills have had on employers and workers.

Doubling the Number of Weeks PD Benefits are Paid

Section 2 of the bill doubles the number of weeks a permanently disabled worker receives benefits. It makes the change in three equal increments over three years. This has the effect of doubling total benefits; if an individual was entitled to $170 per week for 20 weeks, under the bill he or she would be entitled to $170 per week for 40 weeks.

The bill does nothing to change the conditions of eligibility. This means that it only impacts those workers who were already entitled to permanent disability benefits. During the three-year period in which the bill adjusts benefits for injured workers, the Administrative Director for the Division of Workers Compensation can continue to collect data.

Elimination of the “Bump Down” Provision

The third part of the bill, which differentiates itself from its two successors vetoed by the Governor (SB 815, SB 936), eliminates a current provision in workers comp law that allows an employer to reduce the permanent disability payments by 15 percent if the employer offers regular work, modified work, or alternative work for a period of at least 12 months.

According to several studies, including a Division of Workers’ Compensation study released in May of 2007, the 2005 schedule resulted in a 43.4 percent cut in ratings and a 53.1 percent cut in benefit dollars.

Also in May 2007, a report by the U.S. Chamber of Commerce said that the 2005 Rating Schedule slashed permanent disability benefits by more than 50 percent, making them among the lowest in the nation.