An old friend of mine once said in regard to workers’ compensation reform, “When you hear the word reform, reach for your wallet.” That expression certainly applies to the disastrous workers’ compensation bill just passed by the California Legislature and signed into law by jubilant Gov. Arnold Schwarzenegger.

The new governor delivered on his promise to radically change workers’ compensation. To his corporate backers, this was a top priority. The demands came from the insurance industry, in the main, and secondarily from corporate employers. In the world of workers’ compensation, there can be a difference. (In Wisconsin, West Virginia and four other states, private insurance companies cannot operate at all. Employers and unions band together to keep the insurance carriers out of those states.)

Cutbacks hurt workers

Under the new California law, injured workers can no longer choose their own physicians. They will be forced to choose their physician out of a pool, HMO-style. The specifics have not been written as yet.

In determining medical treatments, California will now use the anti-worker guidelines of the American Medical Association. In the state of New York, this same reform is being touted by the industry and, is being soundly rejected by labor.

The new California provisions on partial and permanent disability strike at the heart of workers’ compensation. Historically, the enactment of workers comp legislation involved a trade-off. Disabled workers gave up their right to sue their employers for negligence in return for a guarantee of fair wage replacement and full medical treatment for the disability incurred. Once a determination of disability is ascertained, medical treatments were to be guaranteed for the entire life of the worker who is suffering from the disability. This is especially important for occupational diseases and chronic problems like back injuries.

Under the new California law, permanent disability has been redefined so that it will be much harder to gain a determination of permanent disability. A worker with a permanent disability now can be forced off workers’ comp and back to work.

Similarly, partial disability from a work-related injury or illness is crucial for a worker to gain any equity from the employer who caused the injury and/or illness in the first place. But under the new law, there will be a two-year cap on these payments.

Final guidelines on both of these provisions are still being written.

Liars and figures

No place is known more for cooking the books and figures than the world of workers’ compensation. Workers and their unions have almost no access to these figures. And very few independent researchers are available to check the insurance- and corporate-generated numbers. State departments of labor and insurance rely almost entirely on corporate figures for their estimates.

The estimated cost of workers’ comp in California was said to be through the roof. Why? A good question would be: Are these workers’ claims a true reflection of the hazardous conditions workers experience? Do workers in California utilize their system more than those in other states? We will never know the answers to these questions.

Political fear

The threat was specifically and repeatedly made that if the Legislature did not make changes to the state’s workers comp laws by April 16, a referendum would be placed on the ballot. Enough signatures had been collected on a business-designed ballot measure to make that happen. (Schwarzenegger reportedly donated $1 million toward the signature gathering from one of his campaign accounts.) In that situation, labor leaders feared worse consequences. The same for the Democratic Party. That explains the nearly unanimous support in the California Legislature.

It is certainly not the place of this column to question the tactics and strategies of organized labor in California. Heretofore, that state had one of the best workers’ comp systems in the U.S. It is reported that the governor agreed, in order to get employers and union support, that he would regulate premiums demanded by workers’ comp carriers. He didn’t. The final action by the governor showed that in any deal, this kind of governor was not to be trusted.

Other states beware

The actions taking place in California send a clarion call to other states seeking to protect injured workers. Radical attacks on permanent and partial disabilities; not allowing workers to choose their own physician; and using AMA guidelines in determining disability … all of these will soon being appearing in your state capitals. Get ready. Please send your experiences in today to this column.

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