Benefits May 9, 2005

Labor Federation Challenges California Disability Formula

May 9, 2005 (PLANSPONSOR.com) -The California Labor Federation is asking the state Supreme Court to toss a formula that critics say sharply cuts permanent disability awards by 50% or more for severely injured workers.
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According to the Sacramento Bee, the federation’s lawsuit against the state Division of Workers’ Compensation fuels renewed debate over last year’s sweeping changes to the giant state-run program (see Golden State Lawmakers Send Workers’ Comp Bill to State House ).

The union’s case is the second legal challenge to the permanent disability rules. The applicants’ attorneys filed a similar lawsuit in Sacramento Superior Court this winter. But last month, the court ruled it had no legal authority to consider the issue.

California Governor Arnold Schwarzenegger pushed hard for worker’s compensation reform in California, which has the nation’s most expensive system. California’s worker’s comp costs have soared in recent years, from $6.4 billion in claims paid in 1997 to an estimated $25 billion last year. The average cost of dealing with workplace injuries also has risen dramatically, from $2.68 per $100 of payroll in 2000 to $6.30 per $100 in 2003 – the highest rate in the nation (see Business, Labor Fret Over CA Workers’ Comp Proposal ).

David Schwartz, president of the applicants’ attorneys, said Thursday the group plans to refile the lawsuit within two weeks with the 3rd District Court of Appeal in Sacramento. The association also might consider supporting the labor federation’s lawsuit, according to the Bee.

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