End of Session Update
September 29, 2006

At midnight on August 31, the California Legislature adjourned sine die. For the next month, Governor Schwarzenegger weighed through the 1,172 bills sent to him for action.  Of those, he signed 910. From the workers’ compensation perspective, this session did not provide much excitement.  Legislative leadership took workers’ compensation largely off the agenda early on in this election year. The notable exception was the last minute effort to double permanent disability benefits. Senate Bill 815, authored by Senate President Pro Tem Don Perata (D-Oakland) was rushed to the Governor the last week of the session and was unceremoniously vetoed shortly after it arrived on his desk.

Bills that the Governor signed into law by and large did not make major changes to the reforms enacted two years ago. Assembly Bill 2068 by Santa Barbara area Assembly Member Pedro Nava made changes to the laws regarding predesignation of a personal physician – a seldom-used law among private sector employees. These changes will be effective January 1, 2007. Also, two new laws were enacted that address the oversight of the State Compensation Insurance Fund (SCIF) and what steps would be taken in the event that SCIF were found to be incapable of meeting its claims obligations. Should the crisis of a few years ago occur again, both the Governor and the Commissioner now have clear authority to address this type of situation.

While the Legislature was not particularly active on workers’ comp issues, regulatory implementation continues at a steady pace. Literally hundreds of pages of regulations have already been adopted to implement the reform legislation enacted in 2003 and 2004. More regulations are on the way. When completed, insurers and employers will have clear guidance as to exactly what constitutes appropriate medical treatment and their obligations to make utilization review decisions promptly. Recently-approved regulations also implemented return-to-work incentives that were created by SB 899.

While it was a relatively quiet year for workers’ comp in Sacramento, it is also clear that there is a growing concern over the adequacy of permanent disability benefits and whether the right medical treatment is being provided to injured workers on a timely basis. As indicated in his veto message of SB 815, Governor Schwarzenegger is going to let current studies guide his action on both of these issues. We are working closely with the Governor’s Office and the Division of Workers’ Compensation to make certain that the promise of SB 899 is delivered to California’s employers and workers.

Stay tuned. As we close the books on 2006 and look forward to 2007, more changes are on the way, and we will inform you know as soon as they happen.