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Major California work comp reform approved by state lawmakers

In 2004, lawmakers introduced comprehensive reform to the state's work comp system in an effort to lower costs for insurers/employers and introduce greater predictability in work comp awards. Now, California's $17-billion work comp system is once again poised to undergo significant changes as lawmakers officially gave the green light to a massive overhaul.

On the last day of the legislative session, the Assembly voted 66 to 4 and the Senate voted 34 to 4 to pass Senate Bill 863, which had its first hearing in the legislature only three days prior.

SB 863, sponsored by Sen. Kevin DeLeon (D-Los Angeles) and Sen. Jose Solario (D-Anaheim), is largely the product of ongoing negotiations between labor groups and a collection of large, self-insured employers who began gathering last October. It calls for around $750 million in additional benefits to be awarded to injured workers and roughly $1.4 billion in savings for the state work comp system.

The wording of the 170-page bill indicates that these twin goals are to be accomplished by changing the way in which work comp benefits are calculated and terminating coverage for those conditions that frequently result in litigation, including insomnia or mental health issues.

Not surprisingly, SB 863 did not initially generate much enthusiasm in Sacramento, where state legislators -- seemingly left out of the negotiations until late in the process -- questioned whether there was adequate time left in the session to carefully vet the bill.

However, it appears as if legislators, working alongside advocacy groups representing both labor and business interests, were able to learn enough about the bill and resolve any potential sticking points at the eleventh hour.

It certainly helped when Governor Jerry Brown took the unusual step of actively encouraging legislators to pass SB 863 on the last day of the session, saying it could help "avert an imminent crisis where workers suffer and rates will skyrocket."

Stay tuned for further developments on this important workers' compensation defense law story ...

This post was provided for informational purposes only and is not to be construed as legal advice.

Sources:

Insurance Journal, "Lawmakers greenlight workers' comp overhaul," August 17, 2012

Insurance Journal, "Calif. workers' comp deal gains support of government," Don Jergler, August 17, 2012

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