Four Years After Workers’ Compensation Cuts Passed: California is Fourth Lowest State in Payments to Permanently Disabled Worker

[courtesy of California Progress Report]

Insurance take more in profits than benefits provided
Bill to restore disability benefits passes Senate committee

By Frank D. Russo

When the legislature passed Governor Schwarzenegger’s workers’ compensation bill in April of 2004, the Governor said it was not his intention to take away benefits from seriously injured workers—those with lifelong permanent disabilities. Although he has repeatedly promised to make sure that those workers do not fall between the cracks--often saying this in his veto messages of bills the legislature has passed to do so—no action has been taken and California stands fourth from the bottom in what we pay permanently disabled workers.

The pattern is unmistakable. Insurance companies make more in profits than all the benefits paid to injured workers. [Source of chart at right: WCIRB Summary of December 31, 2007 Insurer Experience, released March 31, 2008] The statistics roll in, year after year, from those same insurance companies and from multiple studies from the state itself, showing that benefits have been slashed. The numbers shock the conscience. Yet the Governor has stonewalled, saying more study is needed. God forbid you or a loved one is seriously injured on the job.

So after members of the California Senate Labor and Industrial Relations Committee were shown a chart of what workers are paid in California compared with other states—based on U.S. Chamber of Commerce data—for grisly injuries including loss of an eye, ear, a foot, and others—the committee passed SB 1717 by Senate President pro Tem Perata.

This is Perata’s third attempt in three years to correct one of the major problems in the bill the Governor signed into law in 2004 and the way the Governor has implemented it.

Perata said: “These people were doing what they were supposed to do – working – and they got injured on the job. Now we’re punishing them. That’s not only morally wrong, it’s economically just plain stupid. We must help these workers.”

The Governor vetoed two similar previous bills by Perata, SB 815 and SB 936, because, he said, it was too early to assess the impact of the reform.

In his veto message of the first bill, SB 815, in 2006 the Governor wrote: “When the new permanent disability schedule took effect in 2005, I committed that we would monitor the impact of the new law on injured workers for 18 months, and if we found that seriously injured workers were falling through the cracks, we would fix it. That review will be completed by the end of this year, and I am committed to making any changes necessary to ensure that injured workers unfairly impacted by workers comp reform receive appropriate medical treatment and indemnity benefits.” [Emphasis added]

Since that time, multiple studies have shown that benefits for the permanently disabled have fallen dramatically. According to a state Division of Workers’ Compensation report released in May of 2007, the 2005 schedule resulted in a 43.4 percent cut in ratings and a 53.1 percent cut in benefit dollars.