This information was originally shared in the Torrance Chamber’s weekly e-mail to members. I thought employers would be interested in reading the information, so I’m sharing on my blog.
A massive overhaul of the state’s workers’ compensation system took place in 2012 with support from both business and labor groups. In short, the law addressed bipartisan concerns with permanent disability (PD) compensation by establishing higher benefits for permanently disabled workers while reforming the system to reduce system costs for employers. An important distinction in the policy legislatively-enacted the increase of PD payments to employees but did not legislatively-enact the employer savings. In order for employers to see any cost-savings, a series of second-and-third order regulatory effects must successfully occur. The distinction also left employers at risk for higher costs should new policy be introduced to undermine the 2012 reform.
It appears the 2012 reform has stifled the system’s cost increase. A recent study published by the Workers’ Compensation Research Institute found that in 2013, the average payment per medical claim decreased by five percent. Although California still ranks worst in the Nation for its high workers comp system costs, it is the first time in the last decade that the costs did not increase annually.
Unfortunately, California Legislators have already undergone movement to weaken the pro-business reforms set in place in 2012. SB 563, introduced by Senator Richard Pan, seeks to change the current medical review process, a key feature of the 2012 reform for employers. The recently established Independent Medical Review (IMR) process was estimated to save the system $400 million by efficiently resolving medical disputes. Senator Pan’s proposal significantly threatens the reduction of potential savings for employers that were included in the cost-benefit assessment of the original policy.
If you are a CA employer, you may want to contact your legislator and let them know how this will negatively impact your business. Small business owners have had many new laws passed in recent years causing their employment (and other costs) to rise making it more difficult to remain profitable and in business, and this is another one that can impact you.
