Déjà vu Is An Occupational Hazard

By: Mark Webb

By all accounts, Governor Gavin Newsom will win coast to re-election in November. As is the case with most statewide incumbents, Newsom cruised to a significant majority of votes in the crowded multi-partisan primary election June 7.


This is the fifth time in four years Governor Newsom has appeared on the ballot. Two primaries, two generals, and one recall. During his tenure, he has endured substantial criticism over his handling of various crises, including COVID-19, wildfires, and homelessness. He faced a recall against a media personality. Yet, throughout it all, the former Lieutenant Governor, and current Chief Executive, has done very well at the polls. There is no reason to think he will not do the same this November.


But if these various vignettes seem incomplete, there may be a reason: Workers’ compensation. The parallels to be drawn between the current Governor and the last Lieutenant Governor to ascend to the position may not be the same in terms of end results – after all, Governor Newsom easily survived his recall – but they can be drawn, nonetheless.


This leads to a discussion of what happens when it is “time” for a benefit increase. Today, it is a subtext in Assembly Bill 2848 (Santiago). Twenty years ago, it was the direct object of Assembly Bill 749 (Calderon).


We are at a tipping point in Sacramento. To date, Governor Newsom has been a careful steward of the workers’ compensation system, much like his predecessor. It may also be fairly observed that with all the various policy initiatives he and the Legislature have embarked upon since 2018, workers’ compensation has not generated much of a sense of urgency from policymakers. Certainly, the exception to that is the COVID-19 presumptions currently embodied in the Labor Code and, currently, the subject of possible extension in Assembly Bill 1751 (Daly).


We occupy our time with more presumption and presumption-related bills, such as the recently amended Sente Bill 1127 (Atkins). This bill, authored by Senate President Pro Tem Toni Atkins (D-San Diego) shortens the time to make compensability decisions on claims subject to a presumption, extends temporary disability for employees subject to the presumption of compensability of cancer, and increases penalties for unreasonable denials of claims which by law are presumed compensable.


Then there was Assembly Bill 1465 (Reyes), which as introduced put the Division of Workers’ Compensation in the Medical Provider Network (MPN) business. Several bills introduced this session were expressions of angst from various sectors of the provider community on recurring issues with networks, utilization review, and independent bill review. Even if the bills are not moving, the issues remain.


In the meantime, unlike 2002, the workers’ compensation system is not in crisis. At least not a crisis conventionally measured by the state of the insurance marketplace and the amount employers are paying for workers’ compensation insurance. This benchmark, however, is not as significant it was then. Indeed, the talk of benefit increases and changes to the system is, as it has been since SB 863 (De Leόn), between the true “stakeholders” – labor and employers.


So, we are increasingly looking at a situation where a benefit increase will be attached to changes (please do not call them reforms) that for some at the table will pencil out. As noted by the analysis of AB 2848:


“However, according to information provided by the author, this bill will likely be amended in the Senate to be a larger workers’ compensation reform package. The amendments will have the goal of raising permanent disability benefits, minimizing delays associated with medical treatment requests, and reducing frictional costs within the workers’ compensation system.”


In 2000, Governor Gray Davis vetoed Senate Bill 996 (Johnston), one of several nearly identical efforts at comprehensive reform passed by the Legislature. In his message, Governor Davis wrote:


“All parties have come to recognize that the benefit paid to injured workers in California has not been increased in many years and needs to be increased. I intend to sign a bill that incorporates reasonable benefit increases and additional system reforms to ensure that California’s system of workers’ compensation operates in a fair and cost-efficient manner.”


Two years later, he signed AB 749. It did not work out too well for the system, or for Governor Davis. While Governor Newsom is likely immune to another recall, he, and the rest of us, are not immune to a feeling that maybe what we are witnessing today has been seen before.


Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.