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Governor Signs Compensation Reform

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San Diego, CA -The Associated Press reports Governor Jerry Brown has signed a bill intended to reduce workers’ compensation costs for California businesses while increasing benefits to injured workers. Brown was in San Diego this morning to promote the measure, which supporters say will make the workers’ comp system more efficient. Some attorneys who represent injured workers are opposed to the bill saying it limits litigation.

The AP says the SB 863 bill increases payments to injured workers by about 30 percent. They say it saves costs by eliminating services that are frequently subject to lawsuits, such as enhancements for psychiatric problems, sexual dysfunction or loss of sleep.

Governor Jerry Brown says “These significant reforms save hundreds of millions of dollars for California’s employers while preventing an imminent crisis of skyrocketing rates that would have hurt both injured workers and businesses,” Brown adds “It’s extraordinary to see Republicans and Democrats come together to solve a problem before it becomes a crisis.”

Executive Secretary-Treasurer and Chief Officer of the California Labor Federation Art Pulaski say “This landmark reform provides injured workers with an increase of $860 million in benefits, while eliminating waste and inefficiencies in the system. This new law achieves a true rarity in Sacramento. It finds a way to increase benefits to those in need while reducing costs across the board.”

The Governor’s Office reports in the past two years, the costs of workers’ compensation insurance have risen from $14.8 billion to $19 billion, with an estimated 12.6% increase projected in the near future. They say by reducing systemic inefficiencies and unnecessary expenses, Senate Bill 863 will save businesses $1 billion in 2013.

The Governor’s Office says  the State of California is projected to save $40 million per year in insurance costs, millions in litigation, claims adjustment and other frictional costs. Savings to local government, including schools, cities and counties, are estimated at $170 million annually.

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