May 3, 2007

By Frank D. Russo

The California Supreme Court just handed insurance carriers another windfall in the state's workers' compensation system a major victory in an interpretation of SB 899, the "reform" bill passed three years with a middle of the night hearing and next to no debate on the floor of either house of the legislature without the bill being in print or read by virtually all who voted on it. The result is that a worker who had a leg amputated as a result of an on the job injury will receive $3360 in compensation for his permanent injuries.

If anyone needed any further proof that the workers' compensation system needs abolishing, and that we should return to the pre 1914 system where workers could sue their employers for injuries sustained on the job, this is it. Workers' compensation was a progressive reform brought about by Hiram Johnson who was Governor of California a century ago. A bargain was struck: Workers gave up their right to sue employers where they had to prove negligence, and in return were promised an adequate system of benefits for their injuries and the medical treatment needed without delay.

Workers are getting neither of these. Even before this court decision, benefits were inadequate and there were so many delays in providing medical care that workers with other insurance, even with deductibles, were better of using their own insurance rather than relying upon that denied, delayed, and sometimes authorized under workers' compensation.

I know this, because for 26 years I represented injured workers as an attorney and often presided as a Workers' Compensation Judge, pro tem. Even defense attorneys, those hired by insurance carriers or employers, would admit that the system provided far too little to the vast majority of seriously and permanently injured workers.

You can read about today's Supreme Court's ruling in the case of Welcher v. Workers' Compensation Appeals Board in WorkersComp Zone, a blog maintained by Julius Young, an attorney who practices in this field.

Benefits to Permanently Injured Workers Down 50-70%, Insurance Profits Up

The State of California’s Commission on Health & Safety & Workers’ Compensation studied 30,000 permanent disability cases and found that the Schwarzenegger Administration’s workers compensation permanent disability schedule reduces permanent disability benefits by more than 50%, and was not based on empirical evidence, as required by SB 899

The commission’s findings parallel several prior studies showing that Schwarzenegger’s schedule reduces permanent disability compensation by an average of 50% to 70%.

Meanwhile, insurers pocketed more in profits in 2005 (the last full year for which data is available) than they spent on either benefits to workers or expenses. Insurers pocketed $9.8 billion in profit, before investment income. Insurers only spent $8.5 billion on injured workers’ benefits. During just the first two years under SB 899, workers’ compensation insurance companies in California have earned $20.7 billion in profits, exclusive of investment income.

Governor Schwarzenegger Claims Decision as Victory

Governor Schwarzenegger said: "Today's ruling is a huge victory in protecting the successful reforms to the workers' compensation system that the legislature and I accomplished together three years ago. Thanks to these reforms, we have eliminated a poison to our economy and cut premiums by almost 65% - resulting in more than $15 billion in savings."

I'm sure Mr. Welcher will be happy to hear that, along with countless other workers whose lives have been permanently altered along with that of their families.

Govrnor, put yourself in his shoes, and do something to bring this system back into balance. Seems to me that you have thrown the baby out with the bath water. A lot of people are hurting--and that is not needed for a strong economy.

For further reading, consider our past articles on this topic, some of which include links to injured workers testifying before committees of the state legislature. I'm sure you will be hearing more about this on these pages and elsewhere.

DISABILITY BENEFITS ARE INADEQUATE FOR PERMANENTLY INJURED WORKERS IN CALIFORNIA: We Don't Need to Study This to Death

Californians Injured on the Job Are Suffering

Speaker Núñez Makes Statement Regarding Workers’ Comp

TWO-YEAR EVALUATION OF GOVERNOR SCHWARZENEGGER’S WORKERS COMP. LAW

Injured Worker Says 99% Reduction of Permanent Disability Payments is a “Slap in the Face.”

Governor Should Keep His Promise That He Would Not Hurt Permanently Injured Workers