Workers' compensation is the oldest social insurance program; it was adopted in most states, including California, during the second decade of the 20th century. It is a no-fault system, meaning that injured employees need not prove the injury was someone else's fault in order to receive workers' compensation benefits for an on-the-job injury.

The workers' compensation system is premised on a trade-off between employees and employers -- employees are supposed to promptly receive the limited statutory workers' compensation benefits for on-the-job injuries, and in return, the limited workers' compensation benefits are the exclusive remedy for injured employees against their employer, even when the employer negligently caused the injury.

This no-fault structure was designed to -- and in fact did -- eliminate the then prevalent litigation over whether employers were negligent in causing workers' injuries. Litigation is now over other issues, such as whether the injury was sustained on-the-job or how much in benefits an injured worker is entitled to receive.

The workers compensation reforms put in place by SB899 and prior legislation are beginning to have a significant impact on premiums charged by insurance carriers.  According to the Worker’s Compensation Insurance Rating Bureau, the average reductions in cost have come down 16.5% in the last year and a half and it is estimated that rates will be reduced somewhere in the neighborhood of 12 plus percent in July 2005.

As a result of the reforms, California is seeing a number of new entrants into the market place and existing carriers are putting in capital and expanding their writings. This is a significant change from 2000 to 2003 when approximately 27 carriers filed for insolvency placing a real strain on the California Insurance Guarantee Fund and the State Compensation Insurance Fund.

Another significant development was the confirmation of Andrea Hoch.  As director of the Division of Worker Compensation April 28, Ms. Hoch was appointed by Governor Schwarzennegger to implement the workers compensation reforms contained in SB899. There was tremendous pressure by organized labor and the applicant attorneys to stop her confirmation.  In the Senate Rules Committee, the vote was 3-3 with your Senator Don Perata making the difference. 

The battle is still not over as the California Applicant Attorneys Association is aggressively trying to roll back these reforms.  They have created a new group called Voters Insured at Work, filed a lawsuit against the new permanent disability rating system and staged numerous rallies and media events protesting the reforms.