Some consolation for small business owners during the current economic crisis has been the positive impact the 2004 bipartisan workers’ compensation reforms have had on lowering insurance costs. After all, countless small businesses wouldn’t even be here to experience the worst recession in decades if Gov. Schwarzenegger hadn’t championed the passage of Senate Bill 899. As I travel throughout the state meeting with small business owners, they regularly cite the immense savings they’ve witnessed from these historic reforms – some savings in the thousands of dollars, but many saving upwards of ten thousand dollars or more. This is money they’ve been able to reinvest in employees, benefits and other efforts to promote and grow their small businesses.
The savings generated by those reforms – an average of 64 percent drop in insurance costs since 2003 – today could very well be the difference that’s keeping a small business afloat.
That’s why a recent column by The Sacramento Bee’s Dan Walters should send shivers down every employer’s spine. A review panel known as the Workers’ Compensation Appeals Board (WCAB) has gutted a major provision of the 2004 reforms that instituted a more objective and equitable system for providing permanently injured workers with cash benefits.
The system instituted by the reforms requires doctors to use a set of guidelines published by the American Medical Association to rate the injured worker’s impairment, which is then multiplied by other factors to arrive at a benefit level. This system has reduced costs by eliminating questionable awards and reducing the litigation in the system, as well as provided more equity to injured workers.
As Walters notes, the WCAB’s ruling “declares that the AMA guidelines can be sidestepped if following them ‘would result in a permanent disability award that would be inequitable, disproportionate, and not a fair and accurate measure of the employee’s permanent disability.’”
Read that as an open invitation to lawyers and doctors to devise new and creative ways to pump up disability ratings and cash benefits. It also means that permanent disability will once again be the province of subjective measurement and costly litigation. The California Applicants’ Attorneys Association is already creating a cottage industry focused on training its members how to leverage the WCAB’s ruling.
As the Workers’ Compensation Action Network notes here, the impacts from this case could be far-reaching on both future injury claims, as well as those already in the system. If this case isn’t overturned on appeal, the legislature should quickly step in to clarify that the use of the AMA guides isn’t an option.
The Governor and legislature should be outraged that state bureaucrats and self-serving lawyers are trying to reverse the bipartisan workers’ comp reforms of 2004 – reforms that are making a significant dent in helping small business owners and their employees get a leg up during these challenging economic times.
With unemployment soaring past 10%, an apparent $8 billion new budget hole, consumer confidence in the tank, and more and more vacancy signs hung in “Main Street” store windows each day, our state leaders must now join forces again in defense of workers’ comp. But before they begin to focus their efforts on continued reforms that will truly help Main Street and Californians in this economy, our leaders must first unite to send a resounding message to the WCAB and anti-reform lobby that hundreds of thousands of small businesses and jobs hang in the balance. Because they do.