New California Workers’ Compensation Law Takes Effect in January

In September, 2012, California Governor Jerry Brown signed into law the state’s latest change to California’s workers’ compensation law. The new legislation is an attempt to reduce medical and legal costs associated with workers’ compensation claims by limiting litigation. It is the most substantial reform to workers’ compensation since 2004, when Governor Arnold Schwarzenegger passed regulations that had the unintended side effect of occasionally reducing benefits to permanently injured workers. The new law was partially passed in order to fix these unintended consequences; however, other substantial reform was included in the bill.

Some provisions of the new law include:

  • Changes in how benefits are calculated for injured workers
  • Mandatory arbitration to resolve coverage disputes
  • An elimination of coverage for certain conditions that most commonly lead to lawsuits
  • An “independent review system” to resolve medical disputes and a shortening of the timeline for approval of treatment from two years to three months

Supporters of the bill claim that the new law will provide an additional $740 million in benefits for injured workers per year. The bill also includes $120 million a year in a special fund for victims of catastrophic accidents who cannot return to work. Some experts project savings from the new regulations to be around $400 million. In addition, the California Legislature hopes that the new regulation will lower premiums for workers’ compensation.

The new law has its opponents, however. Critics argue that this attempt to reduce litigation will lower benefits for injured workers who are unable to go back to work. In particular, critics are concerned that the bill removes much of the judicial oversight of Independent Medical Reviews. An IMR is a review of the decision made by the insurance company regarding workers’ comp benefits. The IMR review is made by an expert independent medical professional. While the elimination of the review expedites the process, and may reduce costs in some cases, it could result in some injured workers not receiving benefits for their disabilities.

The California Applicants’ Attorneys Association, which is an association that advocates for Californians who are injured while working, has vowed in a press release to “ensure fair implementation” of the new law, which will include numerous new regulations that must be followed once the law takes effect.

According to the Workers’ Compensation Insurance Rating Bureau, in 2011 174,000 California workers suffered a work-related injury that resulted in temporary or permanent disability or death.

Californians injured on the job should contact an experienced workers’ compensation attorney to ensure that they receive fair compensation for their injuries under the new law.