The workers' comp reforms that were passed in 2004 were, you may recall, a very necessary action. The system had become a runaway pay off for plaintiff trial lawyers who were able to interpret the law so that an employer could never win a case. This had been going on for decades and the results were evident in the rate increases of up to 50 percent. Employers cried out for reform.
The workers' comp crisis had to reach catastrophic proportions because the fight over workers' compensation is one of the oldest in the state Capitol dating back to the 1940s when the workers' comp system was instituted. It was designed as a no-fault system for the situation of an employee being injured on the job. There are four players in the fight over workers' compensation that have weighed in every year for a very long time: employers, trial lawyers, the insurance industry and organized labor. At one time or another, each one of these four have allied with one or the other to either pass eligibility changes or increase benefits. Who wins each year definitely reflects who is in power in the state Legislature and who is governor.
The employer-sponsored reforms passed in 2004 and pushed by former Gov. Arnold Schwarzenegger tightened up eligibility for benefits and imposed stricter medical care guidelines. The results were that premiums started coming down and more insurance carriers entered the California market. Organized labor howled and complained that the changes were too draconian. The trial lawyers complained that many injured workers would not receive benefits.
Fast forward to 2011. The Workers Compensation Insurance Rating Bureau reported that during 2010 premiums paid by employers were $9.7 billion. Slightly higher in fact than 2009 but in general continuing a downward trend. This figure is 41.6 percent of the $23.3 billion that employers paid in 2004. The WCIRB's report also says that during 2010, insurer's operating expenses outstripped premium income by $41.5 billion.
With a new governor and a new insurance commissioner – both Democrats with a democratically controlled Legislature – it is no wonder that a new move is afoot, by those who supported these candidates, to undo the workers' comp reforms.
I think it is important to remember and to remind our elected officials that although employer premiums have gone down, California still has among the highest workers' comp costs in the nation. Critical also, is the impact that increasing employer workers' comp costs will have on job growth and job creation. Politicians forget this fact ... or conveniently choose to ignore it much of the time. Our job is to not let them forget!