The state Legislature’s newly approved workers’ comp reform bill (A.B. 749) imposes steep benefit hikes for injured workers that will likely hit employers hard in the pocketbook. After vetoing similar measures three times before, Gov. Davis has now signed the bill into law. We’ll run down the new law’s major provisions.
Benefits Boosted
Maximum weekly temporary disability benefits for injured workers will jump from the current $490 to $602 in 2003, $728 in 2004 and $840 in 2005. Thereafter, maximum benefits will rise annually by the percent increase in the statewide average weekly wage.
The new law also boosts benefits for permanently disabled workers, including a pay hike and an increase in the number of weeks an injured worker may receive permanent partial disability benefits. And death benefits for families of workers killed on the job will double from the current $160,000 maximum to $320,000 by 2006, based on the number of dependents.
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Insurance Premiums May Rise
The enhanced benefits are estimated to cost employers about $2 billion to $3.5 billion per year. And the new law specifically authorizes insurers to increase their rates to reflect the higher benefit levels. The law also increases fines for employers who don’t maintain workers’ comp coverage.
Reform Provisions
Besides the benefits hike, the new law includes changes to the workers’ comp system designed to help reduce costs. Estimated savings to employers from these reforms range as high as $1.6 billion. The modifications include:
- increased penalties for workers’ comp fraud
- required use of generic prescription drugs and the development of an official pharmaceutical fee schedule
- changes to the audit system
- limits on the time for filing liens
- simplified notices to injured workers
- limits on the presumption that the treating physician’s findings are correct
- no longer requiring that certain disputes be submitted to arbitration
- revised rules for settling vocational rehabilitation claims.
New Return-To-Work Program
The law also creates a Workers’ Compensation Return-To-Work Fund, which would reimburse participating employers that bring injured workers back to work. It is a crime for employers to make fraudulent reimbursement claims under the fund.