(March 6, 2013) The California Chamber of Commerce has identified the first “job killer” bill of the year. SB 626 (Beall; D-San Jose) severely undercuts the recent balanced workers’ compensation reform deal agreed to by labor unions and employers. The bill proposes dramatic cost increases for California employers and would leave them worse off than before the reforms of last year were enacted.

2012 Reforms

In 2012, labor unions and the business community came together to reform the California workers’ compensation system, passing CalChamber-supported SB 863 (De León; D-Los Angeles). The goal of this reform package was to provide injured workers with needed benefit increases, but offset these increased costs by closing certain loopholes and making the workers’ compensation system operate more efficiently with fewer disputes and litigation. The reforms achieved this balance—injured workers are guaranteed nearly $1 billion in benefit increases, while employer costs are projected to be reduced after regulatory implementation of system reforms. The proposals contained in this reform were forged and vetted by representatives of both labor and employers through a multi-year process of research, discussion and extensive negotiations.

SB 626

SB 626 eliminates the entire balance of the deal and would erase hundreds of millions of dollars in projected savings. Specifically, SB 626 would roll back reforms dealing with timely, high-quality medical treatment and a more predictable – and less litigious – permanent disability system.

SB 626 assaults the reforms on many fronts:

• It eliminates the cornerstone cost-saving provision contained in SB 863—independent medical review.  Under SB 626, independent medical review decisions would be fully appealable to the Workers’ Compensation Appeals Board, taking medical necessity decisions away from physicians and putting them back in the hands of judges. It would also result in treatment delays for injured workers. The savings associated with independent medical review are estimated at around $400 million.
• It repeals a provision in SB 863 that eliminates impairment ratings for psychiatric add-ons in some, but not all, cases.  Numerous data driven analyses demonstrated applicant attorneys had excessively abused this add-on to artificially inflate permanent disability ratings.
• It repeals a provision in SB 863 that prohibits a chiropractor from being a primary treating physician once the maximum number of chiropractic treatments have been received.
• It unnecessarily limits utilization review and independent medical review by requiring that the reviewing physician hold the same license as the physician requesting treatment. Current law requires reviewers to be competent to evaluate the specific clinical issues involved in the medical treatment and utilize relevant, evidence-based medical treatment guidelines, which are not state-specific.

Leaves Employers Worse Off

Not only will employers face pre-reform escalating costs if this bill is enacted but they will also be burdened by an additional $1 billion in benefit increases with no expectation that this cost will be offset by system savings.

SB 626 is a giant step backwards for California employers during the current fragile economic recovery. Additionally, SB 626 reverses a bipartisan labor-employer compromise. These types of agreements between key stakeholders that enjoy overwhelming bipartisan approval should be encouraged and protected, not attacked and diluted.

2013 Job Killers

The CalChamber will continue to add legislation to the “job killer” list throughout the year as bills are amended or new language is introduced.