Workers' Compensation Bill Makes System More Fair

Saturday, September 22, 2007 | 0

By Gil Stein

The Mercury News editorial on workers' compensation reform suggests that the governor and Legislature use the 2004 workers' comp reform as a model for solving the state's health care crisis. Hold on there. Before we pop that champagne cork in celebration, let's make sure that the most deserving -- injured workers -- have something to celebrate. The Mercury News calls on legislative leaders and the governor to focus on the big problems in health care, get a big-picture solution, and take care of the details later. The problem is that the devil is in the details. And if the workers' comp reform is the model, the big picture solution might leave out the people the system is intended to serve.

Three years after enactment of workers' compensation reforms, injured workers are still not being taken care of. As the Mercury News editorial stated, "Seriously injured workers are still not receiving enough compensation for their injuries. Nor are they being paid promptly enough." Injured workers who suffer permanent disabilities in on-the-job accidents are receiving 50 percent to 70 percent less compensation than before the reforms. And the Rand Institute's independent study of permanent disability compensation found them inadequate - before the Schwarzenegger reforms cut them by more than half.

Workers' compensation is the only compensation that injured workers receive for a lifetime of living with disabilities caused by injuries at work. Permanent disability awards are intended to make up for a worker's diminished future earning capacity caused by his or her disability from the work injury. It may be a missing leg, or an amputated arm, or a frozen shoulder - multiple independent studies have found that injured workers were the big losers in the governor's reform.

Since the governor's reform took effect, injured workers' compensation has dropped to near the bottom of all states. Weekly benefits for permanently disabled workers in California are the fourth lowest in the nation. If you lose a leg below the hip, you'll receive the sixth lowest compensation in the nation, just $61,435, in payments of $235 a week.

Meanwhile, insurance companies are posting record profits. In fact, insurance company profits ($6.6 billion) are greater than all benefits paid to injured workers ($6.2 billion).

A bill that will probably reach the governor's desk in the next few days would restore some of the compensation taken from permanently injured workers. SB 936 (sponsored by Senate President Pro Tem Don Perata) would double permanent disability compensation for future injured workers in three annual steps.

Gov. Schwarzenegger promised he would protect injured workers. But that promise was not kept. His administration has made things worse for Californians injured on the job. Cutting already-meager compensation for permanent disabilities is unfair. Perata is offering SB 936 to put back some of the permanent disability benefits that were reduced more than 50 percent by regulatory action.

The bill will not affect any of the other cuts made in workers' compensation benefits. Only one-fifth of benefits go for permanent disabilities, so there's plenty of room to absorb the increase.

Four studies, including one by the insurance industry, have found the new regulations reduced compensation to permanently disabled workers by more than half. The evidence is clear and overwhelming, and the need for action is urgent. Injured workers are losing their livelihoods, their cars, their homes and their dignity along with their health.

It's time to restore permanent disability compensation to injured workers. It's time to re-establish some fairness and dignity for disabled workers and their families. The Legislature should pass SB 936, and the governor should sign it. Then, injured workers can join the party and pop the champagne cork along with employers and insurers.

Gil Stein is a Santa Cruz attorney specializing in representing workers injured on the job. This column first appeared in the San Jose Mercury News.

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