Workers' Comp Reforms Okayed in California

California's State Legislature approved a package of workers' compensation reforms spearheaded by Gov. Gray Davis late last week, but neither those who support reform or those opposed to it seem happy.

The legislative package, now on its way to the desk of Davis for approval:

  • Sets fee schedules for outpatient surgery centers and drugs;
  • Expands the use of managed care and create a pilot program that gives an injured worker a second opinion for spinal surgeries;
  • Cracks down on fraud;
  • Strengthens prompt payment for doctors and hospitals to ensure better access to health care and increases penalties for those that fail to pay in a timely manner;
  • Expands the use of alternative dispute resolution; and
  • Requires rates of the top 50 workers' compensation insurance companies to be posted on the Department of Insurance Web site.

"I am pleased that real reform for businesses struggling with workers' compensation costs is on its way to my desk," said Davis. "When I announced my reform package on May 1st with Insurance Commissioner John Garamendi, I vowed to overhaul the system and stop escalating workers' compensation rates. This reform plan will help keep jobs in California and encourage business expansion while maintaining benefits for injured workers."

Republicans and many small business owners complained the reforms do not go far enough to reduce the cost of spiraling premiums.

According to legislators, the reform package averts a 12 percent workers' compensation rate hike scheduled for Jan. 1. It also rolls back a 7 percent rate hike that took effect in July.

One Republican leader complained to the Los Angeles Times that the reform measures are "designed to take the pressure off those who argue for workers' comp reform," saying it doesn't go far enough to really help employers.

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