California New Workers Compensation Program Takes Effect January 2013

California Governor Jerry Brown this past September signed into a law (SB 863) a $17 billion Workers Compensation insurance program that promises to increase benefits for injured employees and cut costs for businesses. The bill, according to the governor’s office, was as a result of workers compensation insurance costs in California skyrocketing in the past two years, rising from $14.8 billion to $19 billion.

The new law contains nearly 50 statutory provisions set to automatically take effect January 1, 2013, over a half-dozen more than will take effect through administrative action first and another 16 that take effect after January 1 and the following year.

The California State Compensation Insurance Fund estimated that SB 863 would cut California’s annual comp costs by $543 million. This estimate was based on $600 million in increased permanent disability benefits, and large discounts resulting from lien fees, independent medical reviews and other bill provisions. The Workers Compensation Insurance Rating Bureau (WCIRB) in its revised analysis said the bill would result in a total annual cost reduction of $880 million for 2013 and $270 million for 2014.

There are detractors of the bill, however, who are skeptical whether the bill will indeed provide savings for employers and workers compensation carriers. They are waiting to see how all the provisions will play out.

What are some of the bill’s provisions?

The new law increases payments by 30% to workers who suffer permanent injuries on the job, while shortening the wait for approval of medical treatment from two years to three months. It also will create an independent review process for medical treatment and billing disputes, fee schedules for home health care, language interpretation and other comp-related services, and fees for current and future lien filings.

The new law also ends coverage for insomnia, sexual dysfunction or mental health issues, unless they are directly related to a workplace injury. These types of claims often lead to litigation.

Wholesaler/MGU Platinum Program Managers & Insurance Services provides competitive Workers’ Compensation programs in California and other states through its brokers for Auto Dealers, Auto Repair and Body Shops, Transmission Shops, Tire Dealers, RV Dealers, Truck Dealers, Motorcycle Dealers, and a number of other specialty classes of business. These classes include: apartment complexes, bakeries, grocery stores, hotels, machine shops, restaurants, retailers, among others.

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