Claims for Stress Devour Billions, Reformers Charge

SACRAMENTO —  Calling the California workers’ compensation system an “insatiable beast” that devours billions of dollars a year, a coalition of business and insurance companies warned Monday that the system will collapse unless legislators try to curtail the burgeoning number of stress-related disability claims.

Representatives of the coalition, known as Californians for Compensation Reform, said at a press conference that opportunistic lawyers and doctors are behind the skyrocketing costs in the workers’ compensation system because they “bleed millions of dollars from the system” by encouraging workers to file stress-related cases.

The answer, said the group, is for the Legislature to close loopholes in state regulations that have allowed even some workers’ compensation judges to collect thousands of dollars in stress awards while they continue to keep the jobs they claimed caused their stress in the first place.

‘Disability of Choice’

“Easy to claim, difficult to disprove, stress claims have become the disability of choice for thousands of workers in the ‘80s,” said Ed Mangiafico, president of the reform group and chairman of the May Co.’s California division.

The remarks by Mangiafico and other business leaders Monday represented the first salvo in what could be a heated legislative war over possible reforms of workers’ compensation. And almost immediately, the other side shot back with a volley of its own.

Bernard Katzman, president of the California Applicants’ Attorneys Assn., a group representing lawyers who specialize in compensation cases, criticized Mangiafico and other business leaders for generating hysteria over stress cases that incorrectly puts the blame for the increase on attorneys and the victims.

Katzman also said employers are exaggerating the problems with the workers’ compensation system. “The system is not near collapse,” he said.

Heated Discussion

No one denies that there are problems, but the question of what to do with it is heating up again in state government.

Two weeks ago, the so-called Little Hoover Commission on state government efficiency issued a scathing report. While payments to California workers are lower than those in many industrial states, the premiums the state charges California employers to support the compensation system are among the highest in the country.

Stress-related cases are the fastest-growing area of compensation claims, the commission found. There has been a 431% increase in stress cases--from 1,282 to 6,812--between 1980 and 1986, the report said. Even at that, those cases only amount to 1.7% of all cases filed.

Yet the sudden increase in stress-related cases has employers and insurance companies nervous.

“It has become an insatiable beast whose yearly appetite has grown by $700 million each year during the last three years,” Mangiafico said. “Yet benefit payments to workers have not increased by a penny during this same period.”

Mangiafico and other group leaders emphasized that they want to increase benefits to workers, but will not support any increases unless the Legislature puts restrictions on who can file for stress disabilities.

As examples of how lax the regulations are, the group disclosed several cases where workers’ compensation judges successfully applied for large stress awards and kept working. One case involved a Sacramento workers’ compensation judge who smoked and drank heavily, suffered a stroke and then was awarded a $45,000 settlement because he claimed that it was caused by job stress.

Typically, both employers and employees must hire medical experts and attorneys as expensive “middlemen” to fight over how much a worker has been damaged psychologically by his job, he said.

Employers want to change that by asking the Legislature to set standards for what constitutes stress and limiting the employers to paying for only one examination.

The group is also seeking a law that would set up “independent” psychological experts to arbitrate stress disputes, as well as a way to limit disability claims for stress that is proven to be caused by the workplace rather than, say, marital problems, the business group said.

Katzman said his attorneys group and labor would fight such moves. He said the increase in stress claims is caused by increased awareness by workers, prompted in part by stress reduction seminars put on by the employers themselves.