Editorial Editorial (February 13, 2004)

Down to wire on workers' compensation

With just 17 days left for the state legislators to meet Gov. Arnold Schwarzenegger's demand that they have a comprehensive workers' compensation reform bill on his desk, the Pleasanton City Council and Chamber of Commerce have joined in the rush to push reforms through the Legislature in time to have an economic impact on this year's state finances. Meeting in an extraordinary joint session, the two Pleasanton groups exchanged views and heard from experts on the effect workers' compensation is having on local government and business. The news, at least as far as the Pleasanton city government is concerned, is not all bad. Even with much-publicized reports of failed businesses and cash-short county and municipal budgets because of ever-increasing workers' compensation costs, the city of Pleasanton has managed to decrease its payouts for its 365 full-time covered employees and the 225 firefighters who work for the Livermore-Pleasanton Fire Department, a jointly operated agency whose costs are shared by the two cities.

In their report, Deputy City Manager Nelson Fialho and representatives of the city's workers' compensation administrator, Innovative Claims Solutions (ICS), said that the number of injury claims has stayed about the same at 69 for the last two years, while many other cities have seen their costs soar. Through aggressive new programs that include monitoring and modifying workers' claim, the city was able to close 77 open claims, decreasing its estimated future liability by $570,000 to $1.1 million, a 35 percent decrease from the previous year. Because the state law allows employees to predesignate their own doctor for medical evaluations in filing a claim, the city felt it had lost control over the accuracy and completeness of the reports it was getting back from those medical providers. To backstop those reports, a nurse-case manager contracted by ICS now goes with the employee at the time the doctor reviews and analyzes the condition and then reports back on what has been determined as appropriate treatment. This has resulted in more employees who might otherwise have been placed on temporary disability being provided with alternative workplace opportunities, such as scanning files in the City Clerk's office while a back injury is healing.

Still, ICS representatives and others warned that state-mandated benefits will increase and could make workers' compensation much more expensive for Pleasanton no matter what steps are taken to control costs. The temporary disability benefit, for example, has gone from $490 a week two years ago to $602 in fiscal 2002/03 and is $728 this year. That payment kicks in once an injured worker has been off the job more than three days. Fialho and ICS contend that their program of claim control and cost containment will keep Pleasanton's costs lower than other municipalities that have no similar control in place, but that unless major reform comes at the state level, costs will start to climb again. This could be especially true in claims filed by firefighters and inspectors, whose high-risk emergency employee status puts them in a special category under workers' compensation. Where other municipal employees are entitled to limited disability benefits, those in fire departments can stay off work for up to a year with a medical examiner's approval and receive 100 percent of their salary tax-free while recovering.

Schwarzenegger wants to reduce what he calls too much generosity in the system. He is supporting two bills, SB 43 and AB 41, which could wring as much as $11 billion out of workers' compensation costs to public agencies and businesses by more closely supervising medical diagnoses, treatments and disability evaluations, much along the lines of what the Pleasanton city government is already doing. At their meeting, the council members voted 3-1 to ask city staff to work with legislators on reforming workers' compensation. At its meeting next Tuesday, Feb. 17, the council will be asked also to formally support the two Schwarzenegger-backed bills, a vote that would reinforce this city's and business community's support for much-needed reform in California workers' compensation laws.

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