Requiem For Desired Legislation

Wednesday, June 3, 2009 | 0

By Julius Young

A quiet burial was held last week.

The decedent? The bill to increase permanent disability benefits, SB 773 (Florez). Similar bills had passed the California legislature for three straight years, only to be vetoed by Governor Schwarzenegger. In 2008, it was SB 1717 (Perata), which also was killed by the governor.

But this year was different. Given the magnitude of California's budget crisis, the Democratic legislative leadership apparently felt that they were not prepared to move forward on bills that would result in some increased state costs.

Local governments and public entities were said to have been lobbying hard in recent days against any bills that could raise their costs.

Those costs are going to rise anyway. For example, the State Compensation Insurance Fund has filed notice of a 15% rate increase.

Most of the probable rate increases are spurred by increasing medical costs and increasing "loss control expenses" in the comp system. We'll be hearing a lot more about that in about a week, as Insurance Commissioner Poizner holds a hearing on medical treatment costs.

Looking at the big picture, it's notable that insurance rates dropped by around two-thirds from 2003. In 2003, the average rate was around $6.50 per $100 of payroll. By 2008 it dropped to $2.25 per $100 of payroll.

SB 773 died in committee, in the Senate Appropriations Committee "Suspense File" to be exact.

Also failing to emerge from committee was a bill pushed by Voters Injured at Work, SB 3 (Cedillo). SB 3 would have
simplified the job displacement voucher process for workers unable to return to work with their employer.

We're in a year where legislators are having to say no to many of their treasured, long-term allies. In this case, it means no to labor and the applicant attorneys. A $24.3-billion deficit tends to focus the mind.

The cuts that are under consideration are extreme. When closing over half of the state parks is under consideration, you know it's a big deal.

Support for UC and CSU professional schools may be on the chopping block. UC Hastings may lose $10 million in state funding.

Funds for doing DNA sampling on unidentified dead bodies is on the chopping block.

Get the idea?

State workers won't be immune to further cuts. Already, state workers have seen their pay cut by approximately 9%. Each furlough day amounts to a 4.6% reduction in monthly wages.

Under consideration are more cuts. This could be a 5% wage cut (which would require legislative action), or another furlough day (doable by the governor without legislative approval).

These cuts have been imposed on the Department of Industrial Relations/DWC despite the existence of user funding. More on that in another post.

But let us first praise the dead.

SB 773 (like SB 1717 before it) was designed to restore some of the Draconian cuts to permanent disability awards that ensued after the 2004 reforms.

Studies by University of California researchers demonstrated that disabled workers were receiving far less money to compensate them for disabling injuries. Benefits are some of the lowest in the nation for many types of injuries.

Meanwhile, since 2004 insurers have reaped record profits. Though carrier margins may be tightening somewhat (due to medical costs, which are roughly 70% of dollars paid out), the market is still quite competitive.

Few in the insurance industry would have the chutzpah to claim that current PD benefits are adequate. SB 773 was designed to make PD benefits more adequate.

R.I.P. my friend.


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Julius Young is an applicants' attorney with Boxer & Gerson LLP in Oakland. This column was reprinted with his permission from his blog, http://www.workerscompzone.com
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