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Employers prepare for Calif. comp fights

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SACRAMENTO, Calif.—Employers expect that legislation that would increase workers compensation benefits in California will be vetoed by Gov. Arnold Schwarzenegger, but even if it is they still plan to fight against higher benefits on several other fronts.

Several lawsuits are under way in the state in which claimants are seeking to sidestep a permanent disability rating schedule that was enacted last year following reforms signed into law in 2004 by Gov. Schwarzenegger.

California legislators on Aug. 31 adopted S.B. 815. The measure would double workers comp permanent disability payments over three years. It would increase the total system costs by a cumulative 16.6% by the time it is fully implemented in 2009, according to a preliminary review conducted by the Workers' Compensation Insurance Rating Bureau.

Gov. Schwarzenegger has not stated whether he will sign or veto the bill sponsored by Senate President Pro Tempore Don Perata, D-Oakland. Observers, however, say they expect the governor will stick to his previous assertions that he will not roll back the reforms he signed in 2004, which, among other things, forced a change in the way California rates permanent disability.

If the governor vetoes S.B. 815 "(permanent disability) will still be an issue next year either legislatively or through the courts," said Mark Webb, vp for government relations for Agoura Hills, Calif.-based Employers Direct Insurance Co.

There are several court cases under way in which claimants are seeking to undermine the permanent disability rating schedule enacted last year following the 2004 reforms, said Scott Lipton, membership director and grass roots organizer for the California Workers' Compensation Coalition, a Sacramento-based employer group.

The cases involve various disputes over benefits amounts as determined under the new rating schedule, which ranks the severity of a worker's permanent injuries.

Labor and claimants attorneys argue that the rating schedule, the American Medical Assn.'s "Guides to the Evaluation of Permanent Impairment," unfairly reduced benefits more than lawmakers intended when they adopted the 2004 reforms.

They cite a February report by California's Commission on Health and Safety and Worker's Compensation, which found that the rating schedule reduced average permanent disability awards by 50%.

Employers say, however, that the report is not reliable because it was based only on a review of cases where injured employees were not represented by attorneys. The analysis, therefore, did not consider some of the more complex and serious cases that arise in the system, they say.

Employers argue that no changes to the rating schedule should be made until the publication of a report on permanent disability and return-to-work is released by the California Division of Workers' Compensation. There is no date set for the report's release, but employers expect it will be available before year's end, said Jason Schmelzer, a lobbyist for the California Manufacturers & Technology Assn. in Sacramento.

Employers are counting on the report for a thorough public policy discussion on how injuries should be rated and then compensated, Mr. Schmelzer said. But supporters of S.B. 815 want to increase benefits without first establishing how an injured worker's disability percentage should best be determined, he added. "It's distorting the facts and complexity of the issue and that is not good for anybody," Mr. Schmelzer said.

Rating schedule cases

Meanwhile, Joey Acosta vs. Hardy Diagnostics; State Compensation Insurance Fund offers an example of a handful of court cases under way that are being watched for their potential impact on the rating schedule, Mr. Webb said.

The case is now before a workers compensation court. It seeks to increase benefits by arguing that the claimant should be allowed to have a back injury rated with the help of vocational experts who can attest to his decreased earning capacity rather than just having to rely on the rating schedule, Mr. Webb said.