Enacted during crisis, SB 899 a major milestone amid decade of efforts to stabilize system
SACRAMENTO, Calif. – The Workers’ Compensation Action Network today marked the 20-year anniversary of the signing of Senate Bill 899, the major, bi-partisan reform legislation enacted at the peak of California’s historic workers’ compensation crisis.
“Twenty years ago, California’s workers’ compensation system was on the brink of collapse – quite similar to what we are witnessing today in other segments of California’s economy,” said WCAN spokesperson Jerry Azevedo. “Although SB 899 was not the final chapter in efforts to reform California’s historically troubled workers’ compensation system, it was a watershed moment in making the system more predictable, stable and effective for injured workers and employers.”
In 2004, California’s workers’ compensation was, by far, the most expensive in the nation. California employers were paying, on average, more than $6.00 for every $100 of payroll in order to secure the state-mandated coverage – more than three times today’s rate of $1.72 per $100 of payroll. Meanwhile, the insurer of last resort (State Compensation Insurance Fund) was insuring more than one-third of all California employers, compared to its 8 percent market share today.
In addition to high costs, employers and injured workers were suffering under unpredictable and chaotic system features controlled by special interest vendors. Medical care did not conform to any standard of treatment and disability benefits were based on subjective and conflicting medical opinions. Medical outcomes and return-to-work rates for injured workers were poor, litigation rates were high, and claim resolution much slower than other states.
Following earlier legislation passed in 2002 and 2003 to increase injured worker benefits and modify medical treatment, SB 899 revolutionized how medical treatment was delivered and disability benefits were calculated. SB 899 mandated that medical treatment be delivered according to nationally-recognized, evidence-based treatment guidelines, which would be ensured through a new process of “utilization review” whereby physician treatment requests are evaluated against the guidelines. Treatment would be delivered through Medical Provider Networks. SB 899 also mandate the adoption of an objective impairment rating system according to guides published by the American Medical Association. In addition, disability benefits would be based only on the portion of disability caused by the workplace injury and not prior injuries or non-work factors.
Unfortunately, in keeping with the cyclical nature of California’s workers’ compensation system, many of the core reform elements were eroded in the years after SB 899’s passage. Medical treatment began to deviate substantially from evidence-based standards and disability ratings once again became highly litigated. To prevent another system crisis, California enacted SB 863 in 2012 to reduce frictional litigation costs, ensure medical treatment is evidence-based, and disability ratings are objective and based on work-caused disability. The reduction in frictional costs achieved by SB 863 was used to increase worker benefits by hundreds of millions of dollars. Subsequent legislation also increased California’s ability to remove fraudulent actors from the system, accelerate medical treatment reviews, and increase oversight of prescription drugs.
Just as important, dozens of legislative proposals that would have eroded reforms or destabilized the system were rejected by the legislature and vetoed by multiple California governors during the past 20 years in the interest of system quality and stability.
“California remains a very high-cost state and problems persist with high litigation, high frictional expenses, high rate of claims, slow claim resolution, fraud and abusive practices,” said Azevedo. “Despite these challenges, SB 899’s passage was a significant milestone in California’s efforts to stabilize the system and prevent another plunge into crisis for the past twenty years.”
A further note about current conditions
In a sign that California’s workers’ compensation remains under constant threat, the Riverside County District Attorney announced on April 12, 2024 that a Southern California chiropractor was sentenced to 54 years in state prison and fines of $23 million for orchestrating a $150 million workers’ comp fraud scheme involving medical professionals, attorneys and recruiters known as “cappers.”
Read the Riverside County DA’s press release here: FORMER CHIROPRACTOR SENTENCED TO MORE THAN 54 YEARS IN STATE PRISON FOR $150 MILLION WORKERS’ COMPENSATION FRAUD SCHEME | Riverside County District Attorney (rivcoda.org)
The California Division of Workers’ Compensation maintains a list of medical providers that it has suspended from the workers’ compensation system, a power the California Legislature provided to the DWC with the passage of AB 1244 in 2015. Under this law, the DWC has suspended more than 1,000 providers due to a fraud conviction in the workers’ comp, Medi-Cal or Medicare programs, their suspension from Medicare or Medicaid, or due to the revocation of their license.
The DWC’s current list of suspended providers can be viewed here: California Department of Industrial Relations – DIR Fraud Prevention
