How a Good Workers’ Comp Reform Plan Unraveled

An impressive coalition of politically powerful forces has botched a good chance to do something really decent for California workers who are injured or killed on the job.

True, the state Legislature has finally passed a bill that will help those workers, and it will certainly improve the state’s out-of-kilter, $8-billion-a-year workers’ compensation system.

But the reform measure that Gov. George Deukmejian signed last week is not nearly as good for workers as the one proposed six months ago by an unusual combination of leaders from most major business organizations, the California AFL-CIO, the insurance industry and even Deukmejian, who has vetoed all attempts to increase benefits since he took office in 1983.

Last April, members of what seemed to be an unbeatable coalition of liberals and conservatives amiably posed together for media pictures and then made their major pronouncement: They all had agreed on a legislative proposal to overhaul the massive workers’ compensation system.

One sample of the scope of their proposal: They agreed to more than double the current $224 weekly maximum temporary benefits for injured workers. The amount paid in other benefit categories such as permanent disabilities would also go up substantially.

The average worker gets far below the maximum, which is paid only to those in the high income brackets. Still, the proposed increases would have been enough to give meaningful help to all workers.

And the coalition wisely agreed to stop their perennial battles over labor’s pleas to raise the benefits.

The coalition proposed to do that by indexing benefits; that is, they would automatically be adjusted each year to keep them at 100% of the state’s average weekly wage instead of 50%, as it is now.

Indexing would mean that the business community or their political allies could not block future increases as they have for so many years, leaving benefits for injured workers trailing far behind increases in the cost of living.

There were flaws in the coalition’s proposal, but those could have been corrected by making relatively few changes.

Instead of sailing through the Legislature with the strength of that potent coalition behind it, however, the reform plan came under furious attack as soon as it was made public.

First to hit it was a small, 400-member association of politically influential lawyers who represent injured workers. They charged that the reform plan would make it too hard for injured workers to get adequate legal advice on how to file for benefits. The lawyers didn’t mention it, of course, but a reduction in the number of cases would mean a reduction in their own income.

So with the help of their friends, such as Assembly Speaker Willie Brown, the lawyers slowed the momentum of the reformers.

The attack quickly escalated as the lawyers found allies in dissident factions that surfaced within each of the groups that made up the coalition.

Some employers fumed over the size of the proposed benefit increases even though the plan would have significantly slowed expected increases in the premiums that employers pay for workers’ compensation insurance.

That employer-comforting goal would be reached by a cost-containment program that included such reforms as a sharp reduction in the number of expensive medical reports and in legal costs, and curbs on cases based on stress on the job.

Another attack on the coalition plan came when a few unions representing government employees broke ranks with the state AFL-CIO, whose executive secretary, John F. Henning, had played a key role in forming the coalition in the first place.

Many public employees feared that they would lose some benefits because of the proposed limits on stress disability claims.

There were also dissidents in the ranks of the insurance companies and even within Deukmejian’s administration.

Pretty soon a flood of amendments engulfed the original reform plan. There were six months of acrimonious legislative hearings and ugly squabbles in behind-the-scene meetings.

Finally, a watered-down compromise came after days of around-the-clock bargaining pushed by Senate President Pro-Tem David Roberti and other legislators, and by Henning, who was determined not to let any more time go by without any benefit increase at all.

The compromise increases temporary benefits from $224 to $336 a week by 1991, far below the $511 proposed by the coalition. Almost as bad was the elimination of indexing.

Neither proposal would do much to curb those continually rising medical expenses or the insurance industry’s profits that a state auditor general’s report suggested are surprisingly high.

Both proposals were designed to curb abuses such as “doctor shopping.” That’s the unsavory game in which both workers’ attorneys and employers shop around for doctors who, for a fee, write medical reports that substantiate their often widely differing claims of the extent of a worker’s injuries.

There are some other pluses in the new law, such as more administrative law judges to speed up resolution of disputes over claims made by workers. The new judges should help reduce the huge backlog of cases that is causing lengthy delays in getting benefits to injured workers.

None of the feuding factions involved in reforming the system are satisfied with the final compromise, and they all say they want more improvements.

It will be disgraceful, though, if it takes another seven years to give really adequate help to those hurt or killed on the job.

Remember, workers in at least 28 other states are already receiving higher benefits than California workers will be able to get in 1991 when all of the newly approved increases are in place.