CA Governor Takes Action on Workers’ Comp Bills

California Governor Brown takes action on workers’ comp bills signalling to the state and industry that his administration is open to changing the system provided it occurs in a sustainable and balanced manner whereby any cost increases are offset by cost savings.

California Gov. Jerry Brown signed a series of bills aimed at reducing workers’ comp costs to the industry and state businesses while vetoing several other proposed bills which could possible raise costs. Of note, AB 378 will bring compound drugs under the pharmacy fee schedule and SB 684 will protect California employers from costly out of state disputes with workers’ comp insurers. These two bills were supported by a wide coalition of employers, insurers and labor unions whereas the vetoed bills were greatly feared to raise costs and induce litigation for business and insurers.

Jose Solorio, a Democrat from Santa Ana, authored AB 378 which removes the financial incentives to unnecessarily prescribe expensive and possibly dangerous compound medications to injured workers. Compound medications, being a combination of other medications, are often untested and more expensive than comparable commercially available drugs approved by the FDA. Governor Brown’s approval of the bill means these drugs will now come under regulated fee rates. SB 684, authored by Ellen Corbett, a Democrat from San Leandro, rewrites dispute resolution and arbitration agreements to protect California employers from being dragged into expensive out-of-state disputes without prior written disclosure.

The Governor vetoed Solorio’s bill AB 947, which would have increased temporary disability benefits in cases where surgery occurred after the 104 week cap. Although Governor Brown agreed that injured workers need to be adequately compensated, he believed the possible tens of millions of dollars the extensions would cost employers to be too great for the workers’ comp system to bare. The Governor also vetoed a bill authored by Luis Alejo, Democrat from Salinas, which would prohibit appointment decisions based on race, sex, gender, age, etc. Most in the industry agree that AB 1155 not only duplicated existing California non-discrimination laws, but would enact costly new litigation and raise cost to employers.

Clearly, the Governor of California is dedicated to maintain current cost levels with balanced changes as they continue to negotiate a permanent increase in workers’ comp benefits for next year.