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California Governor Takes Action on Workers Comp Bill

Source: Workers Comp Executive

Posted on 11 Oct 2011

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California Governor Jerry Brown signed several workers’ comp bills including legislation that controls the costs of compound drugs. But observers noted that the makings of future deals can be found among the bills that Brown vetoed -- a list that includes several costly workers comp measures favored by both labor unions and applicant attorneys. Employers and industry experts say the action is in keeping with the administration’s signals that it would not raise costs on employers this year while working toward a deal to increase permanent disability benefits next year.

 “The veto messages are consistent with the messages [the administration’s] been telegraphing for the last several weeks,” says Mark Sektnan, president of the Association of California Insurance Companies. “Make sure any benefits increase is off-set with a cost decrease, which is the way workers’ comp has always worked.”

AB 378 , authored by Jose Solorio (D-Santa Ana) and signed by the governor, removes financial incentives associated with prescribing expensive and questionable compound medications. It has the support of labor and employers saving potentially millions of dollars every year.

He also vetoed Solorio’s bill AB 947, which would have increased temporary disability benefits up to 240 weeks in circumstances where surgery or recovery from surgery has occurred after the 104 week cap. Employers feared the potentially tens of millions of dollars in costs to the system if it became law, a concern the governor echoed in his veto message. He notes that injured workers’ need to be adequately compensated, but maintains that workers’ compensation reforms "need to be addressed on a broad and balanced scale—ensuring workers receive adequate, timely benefits and treatment while also ensuring that the costs of the system are sustainable.”

In addition, Brown said no to AB 1155 authored by Luis Alejo (D-Salinas), which would prohibit apportionment decisions based on characterizations such as race, gender and age. In his veto message, Governor Brown points out that the courts have already recognized that basing a disability award on these types of characterizations is “antithetical to our state’s non-discrimination policies,” adding the bill would just increase litigation and employers’ costs.

“We were very concerned about what those bills would have done to employer reserving requirements,” says Juli Broyles, lobbyist for the California Association of Joint Powers Authorities, adding the costs would have been especially difficult for public employers.  “Public employers have cut staff and budgets to the bone."