Deal on California Workers’ Compensation Overhaul Appears Likely

A small group of labor unions and large employers has been meeting quietly since April to craft legislation that would cut administrative, legal and medical costs enough to fund a significant boost in benefits paid to workers who suffer permanent disabilities from job-related injuries or illnesses. And an agreement seems imminent.

"We are very hopeful that we will be able to deliver to the Legislature a significant bill that both restores some modicum of justice to the injured worker and brings efficiency and less friction to the system," said Angie Wei, a key negotiator with the California Labor Federation of the AFL-CIO.

And in a prediction likely to please business interests, the labor leader said, "We think we can deliver real savings to the employers who pay the bills."

Senate Labor Committee Chairman Ted Lieu (D-Torrance), whose panel handles workers' compensation bills, is optimistic that something substantial can be achieved.

"I'm glad both sides are working together to hammer out an agreement that is fair for everyone," he said. "Preventing cost increases to employers and helping injured workers are vital goals."

The goal of the talks, which have been blessed by the administration of Gov. Jerry Brown, is to find a way to increase permanent disability benefits without raising insurance premiums paid by tens of thousands of small and large businesses and nonprofit organizations across the state.

Those rates have fallen about 60% since lawmakers and then Gov. Arnold Schwarzenegger in 2004 approved a landmark revision of California's workers' compensation laws. Sacramento lobbyists and state officials say they expect to see detailed provisions of the new overhaul when it's formally introduced in the Legislature early next week.

Quick action is considered essential because the annual legislative session adjourns Aug. 31, and lawmakers say they are ready to check it out.

The package is expected to be a priority partly because this is an election year, and the unusual alliance of big businesses and unions gives both groups, which hand out millions of dollars in campaign contributions, plenty of political clout.

The plan is being presented Thursday at a closed-door meeting called by the California Chamber of Commerce. Attending will be the employer representatives who negotiated the deal

Although the details are not public, representatives of employers have said they're open to providing more financial assistance to injured workers after eight years of support for a law that reduced their benefits.

Permanent disability benefits fell by more than half to an average of $12,000 per injured worker last year from $25,000 in 2004, according to a UC Berkeley Survey Research Center study.

Money to pay for the increase may be found by removing some of the frictions and inefficiencies from the system, said Martin Morgenstern, Brown's secretary of labor and workforce development, in an interview earlier this year. The administration is not commenting on the recent negotiations.

A 2009 analysis estimated potential savings of $793 million to $1.5 billion. Much of the funding could come from simplifying criteria for calculating benefits for various types of injuries.

Other savings, it suggested, could be achieved through changes in the fees paid to doctors and hospitals for outpatient surgeries and by cutting into a backlog of more than a half a million outstanding medical bills that have been piling up in the Los Angeles regional workers' compensation courts.

Such savings would give employers a sound basis for endorsing a hike in benefits to injured workers, said Jerry Azevedo, a spokesman for the Workers' Compensation Action Network, a coalition of businesses, nonprofit organizations and insurance companies.

"Employers would like to see a package that has verified cost savings that would be greater than the price tag" of any benefit increases, he said.