- THE MAGAZINE
The bill passed the House 77-3 and the Senate 33-3. Schwarzenegger is expected to sign it quickly.
California's 91-year-old system has some of the nation's highest insurance premiums for employers and some of the lowest benefits for injured workers.
The bill aims to save employers billions of dollars by setting a higher standard of proof for workers claiming to be injured; requiring employees to use doctors approved by their employers and their insurance companies; and imposing stricter time limits on medical benefits.
"We cannot continue to force our businesses, non-profits and government agencies to be pummeled by costs 2 1/2 times the national average," said Republican Sen. Chuck Poochigian, the bill's sponsor. "This bill gives California businesses and their workers a fighting chance."
The bill is considered a major victory for businesses, local governments and nonprofit groups that have seen their workers' comp premiums soar. Business groups had complained that the costs were driving employers out of California.
Schwarzenegger had made workers' comp reform a centerpiece of his administration. Lawmakers acted Friday to meet a deadline set by the governor, who had vowed to put an even-tougher measure on the Nov. 2 ballot if they did not pass the bill.
"Why have we waited this long to do these reforms?" asked Republican Assemblyman Russ Bogh. "It's no accident, let's be honest. We are here today because of one thing - because over 1 million people answered Gov. Schwarzenegger's call for signed petitions to reform workers' compensation."
The actor-turned-politician previously rescinded the state's $4 billion car tax shortly after taking office in November and last month persuaded voters to approve $15 billion in borrowing to ease the state's budget deficit.
"We can declare victory, victory for California," Schwarzenegger said after the bill's passage. "Just a few weeks ago, they said this was impossible. It just shows the impossible is possible."
California's workers' comp costs have soared in recent years from $6.4 billion in claims paid in 1997 to an estimated $17.9 billion last year. The average employer cost of dealing with workplace injuries also has gone up dramatically, from $2.68 for every $100 of payroll in 2000 to $6.30 per $100 last 2003 - the highest rate in the nation.
Most workers' comp systems are more limited than California's, which covers all industries and all workers, including employees of small businesses and up to 900,000 farmworkers. California also covers many injuries and occupational diseases that other states do not.
Opponents of the bill, including attorneys and many injured workers, have largely blamed insurance companies for the surge in premiums.
The reform package would reduce disability payments from five years to two years and require workers who are accustomed to choosing their own doctors to pick from a pool of authorized physicians. Supporters say that will stop injured workers from "doctor-shopping" in search of a more favorable diagnosis. Also, employers would be liable only for the portion of an employee's injury that occurred at work.
In addition, the legislation would require that treatment meet American Medical Association guidelines. And it says that employees cannot collect benefits unless their injuries are scientifically measurable using medical tests such as X-rays or MRIs.
Critics warned that the measure would be particularly harmful to California's farmworkers, who frequently complain of back pain because of the stooping and lifting required to pick crops. Back pain and similar injuries are not easily detected by X-rays or other diagnostic tools.
The legislation does not regulate the amounts insurance companies can charge businesses for workers' comp insurance. Democrats initially insisted on regulating rates, but Schwarzenegger refused, saying the reforms will spur competition among insurers to lower rates.
Immediately after passing the reform bill, Assembly Democrats also passed a bill, 47-32, to make the state regulate workers' comp insurance rates for two years. The bill now goes to the Senate, but would probably face a Schwarzenegger veto if passed there.