Schwarzenegger Tackles Workers Compensation

There's one thing almost everyone in California can agree with: The workers compensation system is a mess.

The central problem in California now is that the costs paid by employers are the highest in the country, while the benefits received by workers are about average - in part because many cases are disputed, which wastes resources.

Total costs for California employers increased to $29 billion in 2003 - eight times the gross domestic product of Haiti - from $11 billion in 1998. By one estimate, the average employer in California pays 5.2 percent of payroll for workers' compensation insurance, more than twice the average of other states. Rates are much higher in hazardous occupations: 43 percent for loggers, 33 percent for roofers, 22 percent for carpenters and 18 percent for truck drivers.

And Arnold has pledged to do something about it.

The problems include too many disputes between workers and employers, too much litigation, rising medical costs, overly complex system for determining permanent partial disabilities, and dueling doctors among other things.

What to do? No one agrees.

Many of Arnold's suggestions would be a disaster for ailing workers:

A draft ballot initiative by Mr. Schwarzenegger would raise the burden of proof for workers to receive benefits; require physicians to use objective, observable medical evidence to assess injuries; restrict an employee's choice of doctor to those agreed to by his or her employer; deny compensation for impairments that result from cumulative activities, like back sprains, unless they are proved to be "predominantly caused by actual activities of employment"; and deny compensation for other impairments unless a single work-related incident caused at least 10 percent of the disability.

In fact, according to workers compensation expert John Burton, some of these suggestions would be counterproductive

not compensating employees for injuries that arise from work but cannot be pinpointed to a particular event could have a major unintended consequence: employers could possibly be sued for large damages outside the workers' compensation system.

This type of collateral damage would set workers' compensation insurance back a century.