Small Business California, which represents more than 3.2 million small businesses in this state, STRONGLY SUPPORTS SB 863 (De Leon), that will ensure a fair and balanced approach to correcting our costly and inefficient workers’ compensation system. This legislation accurately identifies key problem areas as described in the numerous reports produced by the California Commission on Health and Safety and Workers’ Compensation. SB 863 will provide the corrective measures to reduce costs to small businesses, and based on the savings achieved, will provide a reasonable benefit increase to injured workers.
Enactment of Senate Bill 863 is necessary now before projected rate increases hit an all- time high. California employers paid $16.2 billion for workers’ compensation in 2011, and the cost continues to rise. The California Department of Insurance Commissioner recently approved an overall average 12.7% rate increase on California businesses, while industry analysts also predict even greater hikes next year. It’s important to note that the 12.7% rate hike is an overall average, so some businesses may see higher rates! SB 863 will prevent these increases on small businesses, while also fixing the systemic problems identified by the stakeholders.
Senate Bill 863 will redirect benefits to increase payments to disabled workers, while taking the corrective steps to reduce unnecessary disputes and litigation. These steps include better oversight of the Medical Provider Networks, the establishment of fee schedules that would keep fees paid at a consistent level, and significantly reduce lien claims by providers who treat injured workers and who are not in the employers’ network.
Projected savings of upwards of a billion dollars can be saved by reducing expenses for liens, out-of-network treatment disputes and other unnecessary expenses that keep small businesses’ premiums on the rise. Injured workers would receive approximately $740 million in additional compensation benefits and California employers would save up to $800 million.
Small Business California urges the Legislature to approve this bill before the 20111-12 session adjourns. Small Businesses simply cannot afford another 12.7% increase in their workers’ compensation premiums next year. We are confident that the provisions included in SB 863 will significantly reduce the wasteful spending of our premium dollars so that injured workers can receive the reasonable benefit increases that they deserve.