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LB Chamber Vows Opposition To Measures It Says Would Reverse Workers Comp Reforms
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(Feb. 24, 2006) -- Vowing to oppose ballot measures or legislation they say would reverse 2004 workers' compensation reforms, representatives of the Long Beach Area Chamber of Commerce held a Feb. 23 press event to highlight the benefits of those reforms and urge state lawmakers not to support efforts to undo them.|
LB Chamber press event at WLB HQ of SNUGTOP. Photo source: LB Chamber
LB Chamber officials tour WLB's SNUGTOP HQ. In photo center,
LB Chamber Pres/CEO Randy Gordon with SNUGTOP Pres/CEO Hartmut Schroeder. Photo source:LB Chamber
|The LB Chamber made its points at WLB's SNUGTOP Custom Fiberglass Manufacturing Company, the west coast's largest manufacturer of fiberglass camper shells and tonneau covers for pickup trucks.
The firm employs about 350 people...and between 2001 and 2004, its workers' comp costs doubled...but after the enactment of 2004 reforms in SB 889, the firm now spends $1 million less on workers comp, a 50% reduction between 2004 and 2006. Company CFO Joel Fierberg said, "Since reform, we have seen a dramatic drop in claims and cost per claim, as sanity has been restored to the system."
The LB Chamber notes that SNUGTOP used its workers' comp savings to (among other things) invest in product development for new international customers (providing about 50 SNUGTOP jobs to date), purchase equipment to help make the workplace safer and provide enhanced sick pay benefits to employees.
The LB Chamber charged that three proposed ballot initiatives recently released for statewide signature gathering "would turn back the clock to the old, broken system...Going backward...is not an option and the Chamber will do whatever is necessary to protect these critical reforms."
The LB Chamber's announcement follows a February 21 CA Chamber of Commerce website posting that charges the three initiatives would overturn parts of 2004 workers' comp reforms. The CA Chamber said "Californians Against the Job Killer Initiative" (co-chaired by CA Chamber President Allan Zaremberg) will wage "an all-out fight against these initiatives to preserve the workers' compensation reforms."
Reached for comment by LBReport.com, an attorney for the initiative proponent(s) denied the initiatives would roll back workers comp reforms, saying the measures would bring more choice for workers in choice of physician, restore balance to the system and get the system to work as it should. [Further below].
A quick check of the CA Secretary of State's website summarizes the three currently proposed ballot measures as follows:
Workers’ Compensation. Option to Sue. Initiative Constitutional Amendment and Statutes.
Provides option, 90 days after injury, for injured employee to sue employer or insurer for civil damages, rather than continue in workers’ compensation system. Allows injured employees to choose their own medical providers, with treatment paid by employer or employer’s insurer. Findings of selected provider are presumed correct unless rebutted by preponderance of medical opinion. Authorizes employee-selected medical provider to sue employer or insurer if provider’s bills are not paid within 60 days. Repeals provision allowing employers and insurers to contract with pharmacies to provide medicines to employees. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Annual costs -- potentially in the mid to high hundreds of millions of dollars -- for state and local government work-related injuries.
Workers’ Compensation. Option to Sue. Initiative Constitutional Amendment and Statutes.
Provides option, 90 days after injury, for certain private sector, non-union injured employees to sue employer or insurer for damages, rather than continue in workers’ compensation system. Allows injured employees to choose their own medical providers, with treatment paid by employer or employer’s insurer. Findings of selected provider are presumed correct, unless rebutted by preponderance of medical opinion. Authorizes employee-selected medical provider to sue employer/insurer if provider’s bills not paid within 60 days. Repeals provision allowing employers/insurers to contract with pharmacies to provide medicines to employees. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Annual costs -- potentially in the low to mid hundreds of millions of dollars -- for state and local government workers' compensation
Workers' Compensation. Benefits. Choice of Medical Provider. Initiative Constitutional Amendment and Statutes.
Increases workers’ compensation weekly permanent partial disability payments and death benefit levels in January 2007, and thereafter authorizes annual increases in death benefits tied to state average weekly wage. Allows injured employees to choose their own medical providers, with treatment paid by employer or employer’s insurer. Findings of selected provider are presumed correct unless rebutted by preponderance of medical opinion. Repeals provision allowing employers and insurers to contract with pharmacies to provide medicines to employees. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Annual costs -- potentially in the mid to high hundreds of millions of dollars -- for the state and local government workers' compensation.
CA Legislative Analyst's office website displays analyses of the proposed measures. In its webpage on the third version of the proposed measure, the LAO states regarding its fiscal effects:
Private and Public Costs for Workers' Compensation:In 2003 and 2004, several laws were passed to reduce costs of the workers' compensation system. Consequently, costs for workers’ compensation have decreased significantly since 2004 and are expected to total around $20 billion in 2006 for all employers in California. Several provisions of this proposal -- including sections concerning medical and pharmacy networks, and the legal weight given to physician findings -- modify parts of the recent laws that have contributed to lower workers’ compensation costs. In addition, the increases in benefits would raise the costs of most future permanent disability and death claims. The magnitude of all of these increased costs would be major -- potentially in the billions of dollars annually for private and public employers.
State and Local Government Costs for Workers’ Compensation. The state and local governments are expected to spend roughly $2.5 billion for workers’ compensation for their own employees in 2006. The state and local governments could experience cost increases similar to those of other employers. Cost increases potentially could be in the mid to high hundreds of millions of dollars each year.
Other Effects on Governmental Finances. The impact on governmental revenues would depend on how the measure affected workers’ compensation costs and other costs of work-related injuries. Increased costs may reduce business profitability, thereby decreasing income tax revenues. Partially offsetting this decrease could be a gain in the gross premiums tax paid by insurance companies. The net effect of these impacts is not possible to estimate.
There is a possibility that increased benefits under this measure would reduce the number of persons seeking assistance from state health and social service programs. Such a reduction could result in state and local savings for various programs. To what extent such a reduction would occur is not known.
Fiscal Summary. This measure would have the following major fiscal impact:
- Annual costs -- potentially in the mid to high hundreds of millions of dollars -- for the state and local government workers’ compensation.
The LAO reaches similar conclusions about fiscal impacts of version 2 and fiscal impacts of version 1 of the proposed ballot measures.
The proponent(s) of the proposed ballot measures don't (yet) have an internet web presence that we can find...but a Secretary of State contact number refers calls to offices of Bay Area law firm Remcho, Johansen and Purcell, where attorney Margaret Prinzing told us:
"The initiatives would not roll back reforms. Rather, they would bring more choice for the workers. They would provide workers' choice of physician, and restore balance to the system for workers and provide some incentives to get the system to work the way it should. By that I mean making sure workers receive the health care and the benefits that they constitution promises to them."
So what about that LAO verbiage about fiscal costs, which sounds uninviting to taxpayers?
"If you read the LAO's analysis, it points out that it really is difficult to predict with precision the impacts the measures would have. Part of this is because what we're trying to do is make sure workers get the health care they need, which they're not getting now, and with the care they need they'll be restored to health sooner so they can get back to work and don't need the benefits from their employers anymore, and then they'll be earning a salary and paying their taxes and that's a good result for the workers and everyone in California." .
So, who are the proponents of the measures? "I'm not authorized to speak about that, but there are a whole lot of folks in the state who support this kind of reform."
When the proponents surface, they clearly won't include the LB or CA Chambers of Commerce.
On its website, the CA Chamber says all three versions of the "Worker Empowerment Act" propose to eliminate the use of medical provider networks established under SB 889 and reinstate the ability of the injured workers and/or their advocates to (after 30 days) select a different doctor who'd be granted a presumption of correctness. And it says all three proposals "would undermine the ability of employers and insurers to utilize pharmaceutical benefit managers to help contain the cost of prescription drugs within the workers’ compensation system."
Version 3 of the initiatives "proposes an increase in benefits for injured workers that could be greatly inflated by any prospective increase in the minimum wage; versions 1 and 2 include provisions that would eliminate workers' compensation as the exclusive remedy for injured workers and grant injured workers the ability to pursue an action at law," the CA Chamber says.
The LB Chamber's policy/political website (www.longbeachadvocacy.biz) has a workers' comp advocacy page...and as of Feb. 24, text on the page stated in part:
If [workers comp] reform is undone, we can expect the same problems we saw prior to reform. The economic vitality of our region will suffer. Long Beach companies will be forced to scale back services, raise costs, or lay off employees. Many businesses will look outside the state when contemplating expansion, relocation, or simply shutting down.
Furthermore, these reforms are still in the implementation phase, with much more time needed to accurately determine what their true impact on the system will be. What we do have is an initial assessment from the California Department of Industrial Relations, which was released earlier this month.
The report found that to-date the reforms have:
- Decreased workers’ compensation rates by 46% (from average rates of $4.81 per hundred dollars of payroll to $2.59 from July 1, 2003 to January 1, 2006 (a three-year period).
- Rates are now below where they were in 1996. (Adjusted for changes in the mix of payroll by industry.)
- The reforms have saved more than $8 billion and as much as $15 billion compared to what costs would have been without reform.
- Competition among insurers is increasing and more employers have options other than State Fund.
- They reduced the high incidence of unnecessary and costly litigation
- They are producing consistent and predictable outcomes for disabled workers and encourage return to work
- They are improving medical treatment using proven methods of delivering quality care affordably and expeditiously
- They are ensuring that injuries directly result from employment and benefits reflect degree of causation related to the injury
- State regulators have adopted most of the administrative requirements of SB889
- Best of all, reports confirm that the quality of care for injured workers has improved, and that workers are returning to work ready to make contributions the their employer’s company.
The LB Chamber's release said savings generated by SB 899 "remain at risk because of the ongoing barrage of lawsuits and litigation. It may be some time before courts settle some of the issues being challenged. Until then, the total savings from reform is unlikely to materialize. This reform is a work in progress and will take some time to settle down. Results are still being studied."
The LB Chamber vowed it "will continue to monitor this issue and do whatever it can to ensure that regulations are kept to a minimum and do not place Long Beach businesses at a competitive disadvantage."
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