In California, workers' compensation has long been a critical component of businesses and workplaces. Unfortunately, over the years CA's workers' comp system became bogged down by ever-increasing costs and communication breakdowns that only added to the financial strain on employers. It had become an uncontrollable mess with each side blaming the other for its woes. However, the system has been reformed and become more efficient. Keep reading for a brief history of the workers' compensation system in California.
Overview of the CA Workers' Compensation System Prior to Reforms
The California Workers' Compensation System has undergone several reforms that have shaped its history up to today. Beginning in 1917 the system was built to reduce risks for workers and compensate them fairly if an injury occurred. This act incorporated a no-fault benefit system managed by the state. However, this program soon went the way of many social programs, and costs were cut to support other parts of the state’s budget.
As the system fell apart, it became clear that workers and employers alike would be at a disadvantage. Regulators and representatives were deaf to protests and bureaucracy choked out compensation leaving thousands without coverage. As a result, counties developed a patchwork system with many intermediaries taking advantage of the gaps. It was not until 2013 that things changed. The reforms aimed to simplify the process and increase efficiency while reducing costs for employers.
The new system streamlined claims processing created mandatory settlements and established an independent medical review process. While some have criticized the reforms for limiting injured workers' access to benefits, the overall impact has been positive, resulting in a reduction in legal disputes and lower insurance premiums for employers.
The Need for Reforming the System
The workers' compensation program in California is massive with more than 16 million workers with coverage. In 2021, more than 680,000 claims were filed. With so many workers and a complex web of moving parts, reform has been difficult as previously mentioned.
Additionally, those who attempted to take advantage of the void mismanagement left behind also took advantage of injured workers. This resulted in massive amounts of legal disputes while millions were out of work and without coverage. To complicate the issue further, the tech sector’s explosion in Silicon Valley increased the number of jobs, workers, and potential compensation claims.
The tech industry helped to push CA’s worker’s compensation system into overdrive. Soon enough, reform became not only inevitable but essential to the longevity of the system. As mentioned in the previous section, by 2013, the state passed necessary reforms to support California workers.
These reforms included:
- Mandates that medical care for injured workers meet evidence-based treatment guidelines
- Disputes would be handled by experienced judges
- Medical care would be directed by a body outside of the government
- Physician's fees and schedules would be standardized
- Liens would be restricted
- Duplicate payments for spinal surgeries and implants would be removed
- Ambulatory surgical fees would also be controlled
The Successful Outcome of Reforms
As a result of reform and years of collaboration by regulatory bodies the CA workers’ compensation program has bounced back. There are still barriers to coverage and plenty of issues, but the overall impact has been positive. A study by the Workers’ Compensation Insurance Rating Bureau of California has tracked changes since 2013 and found that in the first five years alone, the reforms saved the state over $2.3 billion annually. Additionally, indemnity benefits increased by $900,000 each year. Employers saw a drop in premiums and workers had more coverage than ever.
Without the commitment of both employers and labor groups to reach an agreement, the dysfunctional workers' compensation system would not have been able to support employers and workers. The system has come a long way, but there are still small gaps that leave individuals vulnerable.
Because of this, our firm strives to provide comprehensive support for our clients. We have helped countless clients get the compensation they need for their injuries in and outside of the courtroom. At the Law Offices of Wax & Wax, we have a passion for justice, and with our 100 years of combined legal experience, our clients can be sure that their cases are in capable hands.