4/20/2006 - On April 19, 2006, Governor Schwarzenegger met with business, non-profit, and local leaders to mark the second anniversary of the enactment of workers' compensation reform (SB 899), legislation that revolutionized California's workers' compensation system. Businesses and employees have realized dramatic gains from his reforms, including reduced costs, improved healthcare, a more accountable system overall. The Governor commits to keeping these reforms in place and supports strong regulations to ensure real, lasting change.

Fixing a crippled, costly system

• Workers’ compensation costs were skyrocketing before the Governor’s election. Costs to insurers had jumped from $6.8 billion in 1997 to $21.8 billion in 2003.
• Governor Schwarzenegger made workers’ compensation reform a cornerstone of his first six months in office, with remarkable results.

Lowering costs and protecting workers

• Workers hurt on the job should never have to wait for help. SB 899 keeps costs down by providing for prompt, effective medical treatment.
• SB 899 restored accountability to the evaluation and treatment of injured workers by creating medical provider networks, medical treatment guidelines, and a new permanent disability rating schedule.
• SB 899 also established a return-to-work-provision that rewards employers who return injured workers to their jobs.

Helping businesses, non-profits, schools, and government thrive

• The impact of these reforms was immediate, and the benefits continue today.
  • Pure premium rates have dropped 47% since the summer of 2003, including another proposed reduction of 16.4% by the Workers’ Compensation Insurance rating Bureau beginning July 1, 2006.
  • Charged rates dropped by 31.6% per $100 in payroll between July 2003 – September 2005.
• For policies incepting in 2006, cost savings are estimated at:
  • $8.1 billion compared to 2003 costs
  • $15 billion compared to projected costs absent any reform
• State and local governments are benefiting from workers’ compensation reform.
  • Los Angeles County reported one-year savings to taxpayers of $141 million and project more than $700 million through 2010. Government agencies across California are replicating these kinds of savings, making money available for critical needs such as public safety and infrastructure.
• Rate drops have also provided schools and non-profits with more money to invest in key programs to support students and vulnerable communities.

Ensuring real, lasting change

• The Governor’s reform efforts have continued long past the signing of SB 899. Implementing clear, accurate regulations is critical to ensuring that real reform takes hold.
• The Administration supports regulations related to SB 899 and prior reforms, including:
  • Medical provider network (MPN) regulations
  • Independent medical review (IMR) regulations
  • Permanent disability rating schedule (PDRS) regulations
  • Pre-designation of personal physician regulations
  • Utilization review (UR) regulations
  • Supplemental job displacement benefit (SJDB) regulations
  • Workers’ compensation information system (WCIS) regulations.
• Other regulatory packages are in progress:
  • Return to work regulations
  • Penalties for utilization review violations and Labor Code section 5814.6 penalties Medical treatment guidelines
  • Revised qualified medical evaluator (QME) regulations
  • Repackaged drugs
  • Official medical fee schedul