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Calif. workers compensation reform bill could increase costs by $300 million: Report

Calif. workers compensation reform bill could increase costs by $300 million: Report

A workers compensation reform bill introduced in the California Senate last week would result in a $300 million increase in comp costs for insurers and employers by 2014, according to analysis by the California Workers' Compensation Insurance Rating Bureau.

S.B. 863, introduced Friday by state Sen. Kevin de León, was submitted after weeks of discussions between employers, labor unions and other workers comp stakeholders in California.

The 126-page bill would:

• Increase permanent disability benefits for injured workers in the state.

• Create an independent review process for medical treatment and billing disputes.

• Allow employers to avoid paying permanent disability indemnity benefits if they have offered work to an injured employee that would pay at least 85% of his or her wages at the time injury.

• Eliminate impairment ratings for sleep dysfunction, sexual dysfunction or psychiatric disorders caused by compensable injuries.

• Establish a fee schedule for home health care, language interpretation and other comp-related services.

In a report to the California Department of Industrial Relations last week, WCIRB said the bill would increase comp system costs in the state by 1.4% annually, or $300 million, by 2014.

That's based on a 2.2% reduction in comp system costs for 2013, followed by a 3.7% increase in costs for 2014. The 2014 costs would result from an increase in permanent disability benefits and higher claim frequency, San Francisco-based WCIRB said.

In a statement Monday, the American Insurance Association noted that WCIRB's analysis is preliminary, and does not account for certain factors, such as implementation costs and loss adjustment expenses.

The "report shows there is much more work to be done in reining in California's workers' compensation costs and in re-balancing the system financially," the statement said.

California's legislative session ends Aug. 31. If S.B. 863 is passed this week, WCIRB would conduct additional analysis on the bill's expected financial impact, a bureau spokesman said.

The California Applicants' Attorneys Association said it "strongly opposes" the bill because injured workers would face obstacles to receive increased benefits.

The "measure contains provisions that make it extremely difficult for many injured workers to qualify for the disability ratings needed to access the increased compensation," the Sacramento-based association said in its statement Monday. "Insurers will not have to pay the increased benefits because many workers will end up with lower ratings."

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