Workers’ Comp Reform Threatened by Impasse

SACRAMENTO —  Negotiators on the verge of agreeing to overhaul California’s system for compensating injured workers have reached an impasse that threatens to scuttle any chance that lawmakers will approve a reform package before the Legislature adjourns for the year.

The delicate talks have stalled over the issue of how to deal with injured workers who are not represented by lawyers, according to Assemblyman Burt Margolin (D-Los Angeles), the bill’s author.

Unless the impasse is resolved, the bill will die for the year and the state’s workers’ compensation system, which is one of the most expensive in the nation for employers but provides among the lowest benefits for injured workers, will remain in its troubled condition.

Resolution Sought Before Adjournment

Workers’ compensation is one of about half a dozen major issues that Gov. George Deukmejian and legislative leaders hope to resolve before this year’s session ends Sept. 15. But Margolin predicted Wednesday that his bill, if it is passed at all, will not win approval until the very last minute.

“We were very close to an agreement,” Margolin said. “I am still hopeful that we can repair this breach and put the bill back on track. But it’s going to be difficult.”

Margolin’s bill would nearly double the maximum benefit for injured workers while scaling back some of the employees’ rights under the system. The measure has been the subject of months of intense negotiations and dozens of public hearings since it was proposed in April by a coalition representing organized labor, business and the insurance industry.

The original draft was endorsed by Deukmejian. But it was opposed by doctors and attorneys who represent injured workers and by public employee unions upset about proposed restrictions on their ability to collect disability payments for injuries attributed to on-the-job stress.

When Margolin sought to satisfy those objections, however, he alienated the bill’s original supporters.

“Margolin has brought a number of players into the meetings,” said Joseph Markey, a lobbyist for the business-oriented Californians for Compensation Reform. “Each party brings to the table a different perspective, and he is trying to dignify all of them. There is a limit. We think that limit has been reached.”

Although the bill won Assembly passage in July, it did so without a single Republican vote--an ominous sign that usually portends a governor’s veto. Even Margolin conceded at the time that the bill still needed significant changes.

The measure has since undergone a major transformation. As it stands now, it would increase maximum weekly benefits from the current $224 to 85% of the average weekly wage, expected to be $511 in 1992.

To pay for the benefit increase, the measure would:

Limit workers’ access to doctors. Injured employees would have to agree with their employers on a physician to evaluate their injuries or choose one from a state-approved panel of four doctors. Under current law, workers are free to choose their own physician.

Restrict stress claims. Workers seeking disability for stress-related injuries would be required to prove that actual conditions on the job accounted for at least 10% of the sources contributing to their injury. Current case law allows workers to press stress claims even if they only perceive that the job conditions were stressful but cannot prove it.

Speed the claims process. The bill would implement an arbitration system, lead to the addition of more appeals judges, and penalize employers and insurance companies that needlessly delay a worker’s access to benefits.

Revamp the vocational rehabilitation system. The bill would give workers who enter vocational rehabilitation the same benefits as they are now getting, rather than the proposed higher rate for temporary disability. Rehabilitation participants could supplement their benefits with advances from any permanent disability payments to which they are entitled.

In such a broad package, the issue on which the talks broke down this week might seem a minor one: how to handle workers who do not have lawyers. Margolin wanted these workers to go straight to the state panel of doctors rather than possibly seeing a doctor recommended by their employers. The business groups, he said, wanted the unrepresented workers to be assigned to a physician picked at random from a list of qualified doctors.

“I don’t want to put injured workers, those least able to comprehend their legal jeopardy, at risk,” Margolin said. “I have real concerns about unrepresented workers being led into going to a medical evaluator who is not unbiased.”

Markey, the business lobbyist, declined to comment in detail about the disagreement. But he made it clear that the gap between the parties is wide.