Business leaders charge new workers comp reform measures didn't go nearly far enough.

Business leaders charge new workers comp reform measures didn't go nearly far enough

The state legislature passed two new laws this summer limiting stress claims and combating fraud in the workers' compensation system but business leaders working to reduce costs in the increasingly expensive system charge they did not get the reform they wanted.

Under the new stress law, employees will be unable to file psychiatric injury claims unless they have worked at their jobs at least six months, said Roberta Mendonca, deputy of legislative affairs for the state department of industrial relations.

The other new law will impose strict penalties on doctors and lawyers who hire solicitors to encourage workers to file false claims, Mendonca said. The legislation was spurred by a TV news investigation showing the solicitors approaching newly terminated workers on the unemployment lines, she said.

"I don't think (the new laws) are going to have any effect at all," said Chris Bement, executive vice president of Thrifty Corp. and a member of the California Business Roundtable's task force on workers' compensation. Workers' compensation ranks just behind wages and health benefits as "the most costly aspect of doing business," Bement said.

Bement and other business leaders praised Gov. Pete Wilson for holding up the budget to get through a package of workers' compensation reform supported by business. Wilson's package was spurred in part by a Business Roundtable survey showing 76 percent of large California employers were concerned about the high cost of workers' compensation.

But much of Wilson's package was watered down before it was passed in July. Lobbying by special interest groups, including lawyers groups, killed the more stringent aspects, according to Bement and other business leaders.

"I think we won," said Merle Rabine, chairman of the legislative committee for the California Applicants Attorneys Association, which represents 900 workers' compensation lawyers representing employees. Rabine said his group, as well as groups representing physicians and psychiatrists, lobbied hard against the governor's proposal.

Rabine said one thing the groups opposed was a proposal that would have made job stress more difficult to prove.

Still, an employee may still file a stress claim against an employer even if the job only accounts for 10 percent of the psychiatric injury, Mendonca said. "What the governor was trying to do was change the 10 percent threshold to 50 percent, but that is not what happened," Mendonca said.

Instead, the legislature passed a law prohibiting employees with less than six months on the job from filing stress claims, but the 10 percent causation factor is still the law, Mendonca said.

Linda Gywn, vice president for government affairs for Great Western Financial Corp. and another member of the California Business Roundtable's task force, said the 50 percent causation was the "major" reform the business community was hoping for in this year's legislation. "Ten percent is a very small number of causation in terms of stress," she said.

Great Western, like the California business community in general, has seen an increase in stress cases, Gwyn said. According to a study by the Business Roundtable, mental stress claims rose by 700 percent in the 1980s in California, 28 times faster than for other disabling injuries.

"In terms of reforming the system, we really didn't get anything," Gwyn said.

The experience with the legislature was "frustrating and non-fulfilling," Bement said. "Nothing was accomplished."

Assemblyman Burt Margolin, D-Los Angeles, who voted against the 50 percent mandate, said that issue was not the one on which the business community should focus. "Fifty percent is not the solution," he said. "A better solution is to criminalize the fraud and we did it."

Now, Margolin said, any Los Angeles employer who suspects workers' compensation fraud can take the suspicions and evidence to the Los Angeles County District Attorney's office. That office will have funds to investigate allegations under the new law, he said.

Margolin was the author of a workers' compensation reform package passed in 1989 which established pilot programs, such as the industrial medical council, to license doctors who wished to practice workers' compensation medicine. But as of three months ago, only three of the 27 employees needed to staff the council had been appointed, he said.

Margolin said he blamed the "incompetence" of state officials and the "lame duck" administration of former Gov. George Deukmejian for delays in getting the council operating.

PHOTO : Workers: Some say new laws are not enough