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William M. Zachry's workers comp reform efforts help lower costs statewide

William M. Zachry's workers comp reform efforts help lower costs statewide

William M. Zachry's efforts to improve Safeway Inc.'s risk management program and lower its cost of risk have played out not only in the supermarket chain's facilities, but in the California State Capitol, benefiting both Safeway and other employers through savings generated by workers compensation reform.

Mr. Zachry, now the Pleasanton, Calif.-based company's vice president of risk management, said when he arrived at Safeway as vice president of workers compensation in 2001, the company's workers compensation system was out of control. David F. Bond, Safeway's senior vice president of finance and control, charged Mr. Zachry with fixing it.

After doing what he could internally, Mr. Zachry realized that real improvements would require legislative change.

“One of the comments in conversations that David and I had was ... I can fix Safeway's (workers compensation) administration, but to really fix workers compensation we have to change the laws,” Mr. Zachry said. “And David said, "Well, what are the chances of doing that?' and I said, "Slim and none.' “

“I just looked at him and said, "Really,' “ recalled Mr. Bond. “He came back two weeks later with a contact in then-California Sen. (now U.S. Rep.) Jackie Speier's office.”

“I was working with her staff, and the biggest cost driver back in '01, '02 and '03 in California was chiropractic care,” said Mr. Zachry.

While the national average number of chiropractic visits by injured workers at the time was 15, in California it was 32, Mr. Zachry said. His efforts to promote reform that would rein in California workers compensation costs led to two bills — A.B. 227 and S.B. 228 — being introduced in 2003. Among other things, they mandated adoption of utilization guidelines, limited chiropractic visits and provided a procedure for employers to seek second opinions on recommendations of spinal surgery.


His suggestions ultimately “wound into several other bills, and it turned into those two up there — 227 and 228,” he said, pointing to enacted copies of the legislation on the wall of his office. “I have wording in all of these.”

After a 2003 recall election in which Arnold Schwarzenegger replaced Gray Davis as California governor, there was a push for further workers compensation reform — and Mr. Zachry was involved.

“At first there was some reluctance on the part of the Republicans to work with me until some of the folks said, "Well wait a minute, Bill actually knows comp. And he's not really here as a Republican or a Democrat, he's here as an employer who really gets it,'” Mr. Zachry said. “So we were directly involved in the Schwarzenegger bill.”

That sweeping workers compensation reform measure, S.B. 899, which then-Gov. Schwarzenegger signed into law in 2004, “completely changed the face of workers comp” in California, Mr. Zachry said, saving California employers an estimated $15 billion annually by reducing the frequency and cost of litigation, producing consistent outcomes for injured workers, encouraging return to work, improving medical treatment affordably and ensuring injuries falling under workers comp were the direct result of employment.

The Safeway risk manager's role in California's workers comp reform earned him the Risk & Insurance Management Society Inc.'s 2005 Richard W. Bland Memorial Award, presented in recognition of a significant contribution in the areas of legislation or regulation related to risk and insurance.

In 2012, Mr. Zachry was again at work, this time in Sacramento, Calif., on further workers compensation reform efforts. That measure, S.B. 863, was intended to both improve benefits for injured workers while stabilizing employer costs through such provisions as increased utilization of medical provider networks and independent medical and bill review.


In all of the legislation, the position Mr. Zachry promoted was informed by his philosophy that providing the best medical treatment for injured workers reduces workers comp costs.

“It's his sense of fairness in this whole thing,” Mr. Bond said. “(Mr. Zachry) really looks at it very objectively. He doesn't look at it from the point of view of what's best for the bottom line of Safeway. He looks at it from the perspective of what's in the best interests of the employee, what's the common good.”

“There are a lot of things that go into reducing the costs. But what we really got the big bucks from was improving the medical care,” Mr. Bond said. “And the legislation that Bill pushed through in California allowed us to make the improvements.”

In working with state leaders to promote workers compensation reform, Mr. Zachry recognized that signed legislation doesn't mean the task is completed — and realized that often reforms won in legislation are eroded in the process of writing regulations and through subsequent case law.

“Usually, the employers would get involved in the legislation and declare victory and go home, and then there would be regulations and there would be case law and they would undo it all,” Mr. Zachry said. “And I said that's not going to happen. So we were very active in working on the regulations, and I'm co-chair of the (California) Chamber of Commerce Amicus Committee to make sure the case law supports our legislation.”

Mr. Zachry is quick to say that the California workers comp reforms weren't the result of his efforts alone, but involved a number of employers. The Safeway risk manager's role in workers compensation reform efforts hasn't been limited to California.


“We have wording in Texas legislation and other states as well,” he said. “We have been very influential in trying to get a system that gets the benefits to the injured workers but limits the mischief, that limits the expenses.”

“We've influenced legislation in Illinois,” said Mr. Bond. “There are a couple of other states that have used Bill's wording ... I offer him up to any business group that wants to talk about workers comp or workers comp reform.”

Mr. Zachry's role in California's workers compensation system became more formal in 2009 when then-Gov. Schwarzenegger appointed him to the board of the California State Compensation Insurance Fund. In January of this year, Gov. Jerry Brown appointed him to another five-year term on the board. He's also a board member of the California Self-Insurers' Security Fund and was chairman of the California Fraud Assessment Commission from 2000 to 2009.

“The nice thing about Safeway is they didn't say, "Well, you're the workers comp claims geek — you can't go up and talk to people,' “ Mr. Zachry said. “I spent literally two years in the capital working on legislation and regulations to get these things fixed.”

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