The TACC visited Sacramento last month to voice its opposition to a bill seeking to raise the costs of the state’s egregiously expensive workers’ compensation system. The bill, SB 563, would have significantly increased system costs by undercutting recent reforms to make the system more cost-effective. A massive overhaul of the state’s workers’ compensation system took place in 2012 to address bipartisan concerns over permanent disability (PD) compensation and high system costs. The compromise resulted in an increase of benefits paid to permanently disabled workers, and regulatory overhaul to reduce “frictional” system costs for employers. Although the reform was a win for both business and Labor, it left employers with a degree of unmitigated risk: should the system’s “frictional” costs not be reduced as forecasted, the not retractable PD benefit increase would drive system costs even higher.
SB 563 sought to rollback key elements of the 2012 reform forecasted to produce employer cost savings. Specifically, SB 563 attempted to eliminate the Utilization Review and Independent Medical Review process for many treatment requests– the mechanism to control for abusive uses of benefits by employees. The bill came at a time when the system finally began to see a trace of cost savings. A recent study published by the Workers’ Compensation Research Institute found that in 2013, the average payment per medical claim in California decreased by five percent. Although California still ranks worst in the Nation for its high workers comp system costs, it is the first time in recent years that the costs have not increased annually.
The TACC showed strong opposition to the bill on behalf of Torrance businesses. The TACC’s visit, phone calls, and letters, in conjunction with advocacy efforts by a broad coalition of business groups, helped to keep the bill from being heard in the Senate Appropriations committee. SB 563 failed for the year without ever coming to a vote in the committee.
