May 1, 2007
Legislative Updates

The fight to maintain a fair and balanced workers’ compensation system goes to
court. Recent decisions by the Appeals Board preserve reforms, while the Supreme
Court is asked to decide how apportionment is to be calculated.

Three years after Governor Schwarzenegger signed SB 899, efforts are still being made
to undo these major reforms. Recently, the Workers’ Compensation Appeals Board
reversed itself and reconsidered its opinion in Pendergrass v. State Compensation
Insurance Fund, a case that would have significantly expanded the number of claims to
which permanent disability ratings would have been assigned under the law prior to SB
899. The Board’s new decision reaffirms the intent of the reforms to apply to as many
cases as possible. Two cases are pending before the Supreme Court that deal with the
way in which apportionment, the process to determine the extent to which a previous
injury affects the extent of the injury for which benefits are claimed, is calculated. Once
again, the stakes are high if reforms are going to be preserved.

Whether in the courts, the Legislature, or the many administrative agencies that
implement workers’ comp laws, the need to remain vigilant is as important now as it was
when the Governor signed the reforms into law. Costs have dropped significantly, but the
challenges to keep these costs down are still great. Employers Direct is at the forefront in
this ongoing fight and is working closely with the business community.

A proposed ballot measure, the “Fair Medical Treatment for Injured Workers’ Act,” was
cleared for petition gathering on April 12. The measure would unwind virtually all
medical cost containment reforms in SB 899 and prior laws. While the effect of this
measure would be significant, most political observers believe that the proponent,
Turlock-based applicant attorney William S. Morris, does not have the resources to
collect the over 400,000 valid signatures by September 10 to qualify this for the ballot.
Employers Direct serves as technical advisor for the Coalition Against the Job Killer
Initiatives (CAJKI), an employer-insurer coalition organized to fight this latest threat.
Working with the Legislative Analyst’s Office (LAO) and the Attorney General,
Employers Direct and coalition consultants successfully secured fair and balanced
analysis of this initiative, underscoring its potential for raising workers’ compensation
costs for California employers by billions of dollars.