Group Has a Plan for Workers’ Compensation : Reforms: The key proposals are a cap on costs and a uniform 3% tax on payrolls. Stress-related claims would be limited.

Charging that workers’ compensation costs are forcing businesses to cut jobs or move out of California, the San Gabriel Valley Economic Council has unveiled a proposal to revamp the system and put a cap on costs.

Chairman Tim Cullinan said the council, organized by major employers to promote business growth in the region, is seeking bipartisan legislative backing for the changes.

Under the proposal, employers would pay 3% of their payroll to a workers and family health fund. Half the money would be used to pay job injury claims, and the other half would cover catastrophic medical expenses.

Dr. Forest Tennant, who heads the council’s legislative committee, said the cost of workers’ compensation fluctuates for employers under the current system, depending on claims, but employers on average pay 3% of their payroll.

The uniform rate would allow employers to budget their costs. The proposal would also limit payments for stress-related illnesses by requiring workers to prove that at least 60% of their stress was job-related.

The plan would benefit employees by providing coverage for catastrophic illnesses.

Losers under the plan, Tennant said, would be lawyers and physicians who overcharge for services and encourage bogus claims.

Tennant, a physician who heads Community Health Projects Inc., said the state could control costs by setting medical fees and should impose other restrictions to make sure the money goes to deserving claimants, not to those who have concocted claims to milk the system.

Attorney Wilfred Briesemeister, a member of the economic council’s legislative committee, said California ranks near the top among states in workers’ compensation costs to employers but no more than 30th in benefits paid to workers.

Another committee member, Dan Stango, public relations director for a restaurant chain, said almost any employee who is reprimanded or fired these days files a stress claim.

“It’s getting to be a joke,” he said. “As a businessman, I am more than fed up.”

Stango said his company pays $225,000 a month in workers’ compensation for its 2,500 employees and has been forced to lay off workers because of the cost. Other employers are moving out of the state, he said.

The state workers’ compensation program was designed to eliminate costly litigation and to pay benefits quickly to injured workers, without costly litigation.

But critics say the program has simply moved the litigation away from the courts to a quasi-judicial system established to resolve disputed claims and that legal fees and rising medical expenses are making the costs exorbitant for employers.

Will Lee, the council’s executive director, said a trip is being organized to Sacramento in January for business people to lobby the governor and the Legislature to change the workers’ compensation system.

The council’s reform package was outlined last week at a seminar in Covina that featured talks by Assemblymen Pat Nolan (R-Glendale) and Jim Brulte (R-Ontario).

Lee said the council is attempting to line up Republican and Democratic legislators to sponsor its package or similar legislation.

Other attempts to change the system have faltered because of difficulty in resolving a complicated issue that involves powerful legal, insurance, health, business and labor interests.