AIA Urges Calif. Gov to Veto Legislation Unraveling 2004 Workers’ Comp Reforms

The American Insurance Association (AIA) is urging Gov. Arnold Schwarzenegger (R) to veto SB 1023, authored by Senator Joe Dunn (D). This measure rolls the clock back by reinstating redundant penalties that were eliminated in the 2004 workers’ compensation reform legislation.

“This bill is unnecessary. Current law provides a number of penalties designed to discourage and punish unreasonably delayed benefit payments to injured workers,” said Steve Suchil, AIA assistant vice president, Western Region. “For example, Labor Code Section 5814 provides for fines of up to $10,000 for delayed payments before or after an award is made. SB 1023 tries to return to the old system where penalties were used to increase attorney fees, not punish bad actors.”

Specifically, SB 1023 would require employers (or their insurers) to pay a $2,000 fine if they fail to fully comply with an appeals board order or award within 10 days after that decision is made. Second and subsequent delayed payments would result in additional $5,000 fines.

“The recent Workers’ Compensation Insurance Rating Bureau’s recommendation to decrease rates another 15.9 percent further documents that the 2004 reforms are working. Any legislation that chips away at these effective, cost-saving reforms should be vetoed,” said Suchil.