Commentary: Carriers Profit at the Expense of Workers

Saturday, April 22, 2006 | 1

By David N. Rockwell

Contrary to recent claims from the Schwarzenegger administration, SB 899 has been a disaster for California's working men and women. For injured workers, SB 899 has caused the delay or outright denial of needed medical care, and severely reduced already inadequate indemnity benefits. Physicians are fleeing the workers' compensation system, and most employers in the state report absolutely no savings in their workers' compensation insurance costs. The only real "winner" that has emerged after two years under SB 899 has been the insurance industry, recording a record profit margin of more than 50%!

The recent statement by Sunne Wright McPeak and Labor Victoria Bradshaw on the second anniversary of SB 899 that attempts to take credit for everything good that has happened to the California economy in the last two years is "pure fantasy." That's the opinion of Dan Walters, political columnist for the Sacramento Bee, but one I strongly agree with. In his April 21st column, Walters said that to contend that California's $1.5 trillion economy was significantly impacted by SB 899 "is simply ludicrous."

And, in any case, the Administration's statement ignores the fact that much of the savings in the workers compensation system are attributable to the statutory changes in AB 749, SB 227 and AB 228 all of which were enacted under Governor Davis...

The harm caused by SB 899 is clear. As the Commission on Health and Safety and Workers' Compensation (CHSWC) has demonstrated, benefits to permanently disabled workers in California have fallen by 54%. This does not even take into consideration those workers previously considered permanently disabled who will no longer qualify for any benefits because of the Administration's wrongful interpretation and implementation of SB 899, possibly up to 30% of those who would have been eligible for benefits under the old schedule.

Consider one of my clients, a 36 year old woman who has worked for 18 years as a checker at a supermarket. She has bilateral carpal tunnel syndrome and tendonitis of the elbows. The company doctor who has treated her has indicated that she can not return to her full work activities, and the company will not allow her to return to work. Nevertheless, under the new Permanent Disability Rating Schedule, she has no permanent disability. Thus, she is unable to work, but will receive nothing in return for her permanent disability caused by her 18 years of service to her employer. The Schwarzenegger Administration's statement turns its back on this woman and others like her who either will receive no benefits or greatly reduced benefits under its scheme.

The Administration's statement relies on unscientific "surveys" of interest groups and supporters of the Governor's agenda, such as the Chamber of Commerce, to buttress its claims that businesses are benefiting from SB 899. Contradicting this misinformation is the careful study by the Union Bank of California in its 2006 Small Business Survey released in March 2006. In individual interviews of nearly 2000 small-business owners in January of 2006, the Union Bank determined that, while there has been some relief, 29% of small-business owners said that their 2005 workers compensation premium has increased, and more than half stated that their premiums were the same as the previous year. Only 15% stated that their premiums had decreased from the previous year.

The problems workers are having obtaining necessary medical treatment were documented in the survey of members conducted by the California Medical Association last year. That survey found that physicians are routinely having even simple requests for treatment denied by out-of-state physicians or even nurses. Delay is routine, and unjustified denial of treatment requests is widespread. A large percentage of physicians are cutting back on treating work related injuries, and many are simply leaving the field. The bottom line is that workers are either not receiving any treatment for work injuries, or are getting treatment though their private health insurer or even through public programs. Far from saving money, the unfair restrictions in SB 899 are shifting the cost of medical treatment for work injuries to the workers themselves, or to private health plans and taxpayers.

So, who has benefited from SB 899? Insurance companies' profits provide the answer. According to data compiled by the Workers' Compensation Insurance Rating Bureau, in 2004 California workers' compensation insurance company profits totaled $9.7 billion, while the total amount paid out to injured workers for medical treatment and all types of indemnity benefits were only $8.5 billion.

There is no denying that injured workers have suffered greatly due to the Schwarzenegger Administration's wrongful interpretation of SB 899. Medical treatment and indemnity benefits have been improperly and outrageously reduced. The Governor had promised not to hurt injured workers by SB 899, but in fact he has done just that. He has broken that promise. We call upon Arnold Schwarzenegger to live up to his word and not to ignore the true cause of this state's improving economic climate: the working men and women who generate California's wealth.

Article by David N. Rockwell. Rockwell is President of California Applicants' Attorneys Association, and a partner in his firm Frailing, Rockwell & Kelly. He can be reached at drockwell@thevision.net -------------------

The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.