California Workers Receive Some of the Lowest Benefits in the Nation for Lifetime Disabling Injuries—Hearings Start Today on Schwarzenegger Fix Seen as Inadequate

Three 2005 studies (including ones by a UC Davis professor and a separate UC Berkeley study) revealed that disability ratings for workers dropped sharply after implementation of the new post-reform rating system.

In early 2006 the California Commission on Health and Safety and Workers’ Compensation (CHSWC) recommended that the rating schedule be amended, citing the studies that showed reductions in average ratings—and therefore payments--of over 55%. CHSWC noted that in addition to these reduced ratings there were many other workers who would now receive nothing at all since their impairments are not verifiable by objective measurements used and thus are not recognized under the more strict AMA criteria adopted by the legislature in 2004. Under the AMA criteria ratings are no longer based on subjective factors such as pain.

In 2007, a follow-up UC Berkeley study documented that awards to workers even with objectively measurable impairments had declined over 41%.

Throughout 2006 and 2007 the Schwarzenegger administration continued to stall on an administrative fix, resisting implementation of CHSWC recommendations. Seeking a legislative solution, the legislature passed bills in 2006 and 2007 (SB 815) which would have raised benefits for permanently disabled workers. A third attempt, SB 1717 (Perata) will likely reach the Governor’s desk this session.

Meanwhile, insurers have had feast. Statistics from reports by the Workers Compensation Insurance Rating Bureau https://wcirbonline.org/wcirb/ (WCIRB) (a nonprofit association comprised of all companies licensed to transact workers' compensation insurance in California) show that in the 4 year period between 2004 and 2007, benefits paid to or on behalf of workers (including indemnity benefits and medical treatment ) averaged around 37% of premium dollars collected. During most of these years, insurer overhead and profits far exceeded benefits paid on behalf of workers.

Even if increasing inflation in medical costs result in some higher system costs and somewhat higher cost ratios, permanent disability is unlikely to be the major factor in overall system costs. Industry figures show that permanent partial disability payments remain a relatively small part of the overall workers’ comp expense picture. California Workers’ Compensation Institute figures for 2007 note that for 2007 permanent disability payments were 13.1% of insurer payouts.

According to U.S. Chamber of Commerce studies, California lags far behind the permanent disability benefits paid in many other states.

This week’s Division of Workers’ Compensation hearings will examine the proposal for revised rating schedule. As written, the revision would not benefit many workers who have seen their benefits slashed. Workers hurt before 2009 would see no benefit, nor would it provide a solution for workers who are not deemed impaired under the AMA but who lose their job due to being placed on work restrictions.

Most importantly, the proposed revisions would restore only approximately a third of the cuts to permanent disability benefits for the average worker who has objectively measurable impairment.

According to U.S. Chamber of Commerce statistics, California lags far behind the permanent disability benefits paid in other states. The revision being proposed would not address that in any meaningful way. For example, under the Governor’s proposal an amputated foot would be worth $36, 108 (as opposed to the current $28,820) whereas in Oregon the foot is worth $149,423 and the national average is $80,000.

Unless the administration reverses its plan, Governor Schwarzenegger’s promise to not hurt the people who get the benefits will continue to ring hollow.

Starting in 1979, Julius Young has represented thousands of individuals who have sustained life-changing injuries or illnesses while on the job. His goal is to secure the medical treatment his clients need and the maximum benefits they are allowed so they and their families can survive potentially devastating injuries. A partner of Boxer & Gerson since 1988, he practices workers’ compensation and disability law in Oakland. This article originally appeared in his blog. Workerscompzone.com which focuses on California’s workers’ compensation law, its politics, and culture. It is republished with his permission.