Calif. Gov. Davis Pens Workers’ Comp Bills Into Law

While the Oct. 7 recall of California Governor Gray Davis continues to be the top news in Sacramento, the governor took action this week on important measures that affect insurance.

Gov. Davis signed on Tuesday the package of workers’ compensation reform bills passed by the Legislature at the close of this year’s session. The bills-SB 228, SB 1007, AB 227, AB 1099, AB 1267 and AB 1557-are aimed at cutting workers’ compensation costs. The bills’ supporters claim that the measures will result in an annual cost reduction of nearly $6 billion. The Workers’ Compensation Insurance Rating Bureau currently estimates that the annual cost reduction is about $4 billion.

Key features in the bills, according to the Association of California Insurance Companies (ACIC), include the following:

· A pharmaceutical fee schedule is established.
· Chiropractic and physical therapy visits are limited to 24 per claim.
· The mandate for vocational rehabilitation is repealed.
· A fee schedule for out-patient surgery centers is created.
· New medical utilization guidelines are adopted.
· The presumption of correctness that was assigned to the treating physician’s decisions is revoked.
· The California Insurance Guaranty Association is authorized to issue bonds to assure that workers’ compensation claims are paid.

“It will take considerable time for the bills’ cost savings to be achieved,” ACIC President Sam Sorich commented. “The degree to which the potential cost savings will be realized remains to be seen.

“While these reforms represent important first-steps in revitalizing California’s beleaguered workers’ compensation system, more comprehensive reform will be needed to fully stabilize this marketplace. Specifically, permanent partial disability benefits, legal costs and administrative costs still need to be addressed.”