Cutting a Disgrace Down to Size : An important effort to reform the destructive workers’ comp system

Despite Sacramento’s preoccupation with the state budget, the Assembly managed to take care of other notable business last week. It narrowly cleared a measure that would begin to bring about a long-needed overhaul of California’s troubled workers’ compensation system.

The special session bill carried by Assemblyman Burt Margolin (D-Los Angeles) is an ambitious attempt to reduce fraud, abuse and legal and medical overcharges. The measure now goes to the Senate, where it may encounter stiff opposition despite wide consensus in political, business and labor circles that the system that is supposed to protect injured workers has run amok.

The Margolin bill needs some fine tuning, but it provides a solid foundation for addressing the inefficiencies that make California’s workers’ compensation system the third most costly--$10.4 billion--and 35th in benefits paid--up to $336 a week--to injured workers. Disgraceful.

The bill incorporates reforms that affect each player in the workers’ compensation system, so it’s no surprise that Margolin’s bill faces opposition from the lobbies. After all, it would revamp the premium-setting system, reduce the number of medical evaluations that fraudulent workers’ compensation mills cash in on, raise the threshold for stress claims to about 51% and make lawful actions such as layoffs, demotions and personnel transfer exempt from stress claims. Margolin claims his multi-front approach would save employers more than $1 billion a year.

Reforming the current system is crucial to keeping California competitive.