I just finished listening to Governor Schwarzenegger's 1/9/07 State of the State address.

It was a short speech that pushed big goals but broke little new ground politically. What were the themes? Among the principal themes were the following:

- Promoting green technology and clean fuels technology
- prison system reforms
- developing a water transit system for the San Francisco Bay
-political redistricting
- jumpstarting spending the bond money that was approved by voters in 2006
- promoting career technical education
- lowering the budget deficit with no new taxes
- enacting a major health care reform package

He added little to the health care proposal which was unveiled yesterday. He will push major dam and water storage projects. More bonds will be proposed to deal with some of these things.

Workers' compensation was not mentioned.

The Governor's stated theme: the need for bipartisan action to address complicated issues that have been deferred for years. Schwarzenegger continued to position himself as seeking action from the political center, appealing to both parties for support.

Several Democratic legislators interviewed afterwards expressed optimism that there will be bipartisan cooperation on these issues.

Most of the California political blogs will be commenting on the speech. For example, www.newwestnotes.com (Bill Bradley's New West Notes) covers developing California political stories. But not much new in this speech tonight.

In my next post, I'll look at the Governor's health care plan and how that will impact California's working men and women.

Julius Young
www.boxerlaw.com

Pull your retrospectoscope out of your closet. Scroll back to 2005. Arnold Schwarzenegger's popularity tanked. In the special election he called, The Governator was dealt a humiliating defeat by a coalition of unions. He lost all of his reform initiatives. Re-election prospects looked dim. Polls showed a high disapproval rate. He reached within the ranks of former Gray Davis staffers to hire Susan Kennedy, a Democrat and former abortion rights lobbyist, as chief of staff. Giving a mea culpa and admitting his arrogant ways, The Governator began to re-invent himself.

Arnold pitched himself as someone who could get things done. Bonds passed. Infrastructure built. A global warming emissions bill passed. To the chagrin of some of his business supporters, a minimum wage bill even passed... he was the man with an optimistic view of California's future.

After a bruising 2006 primary campaign, challenger Phil Angelides never managed to connect with donors or voters, or even voters in his own party. Workers' comp never became a big issue in the campaign. Injured workers never mobilized en masse. The occasional ad mentioned Schwarzenegger's claim that he was the man who reformed California workers' comp, helping the economy stay strong. Schwarzenegger won in a landslide.

And so today, broken leg and all, Arnold basked in the glow of his second swearing-in ceremony in Sacramento. A featured speaker was none other than Willie Brown, former San Francisco mayor and long-term California Assembly Speaker, the Democratic party wheeler-dealer of wheeler-dealers.

Things have come a long way. The Governator's speech today claims that he is a centrist. But will he be able to corral the right wing within his own party? Can he work with the legislature to solve the myriad problems of California's deteriorating transportation networks, schools and health care systems? Will he be willing to take on the California Chamber of Commerce, the California Manufacturers Association, big health care and pharmaceutical interests?

And will he be open to compromise with the legislature to fix the harsh consequences of his 2004 workers' comp reforms, which have harmed many truly injured workers? Or will he continue to take as his script the inflexible position on comp reforms of his insurance and manufacturer allies?

Take a look at www.arnoldwatch.org to see a list of the corporate sponsors for today's inaugural festivities. One can't help but notice that many insurers and California's corporate heavyweights are listed as inaugural sponsors. These are the folks behind the 2004 comp reforms. $50,000 from the California Chamber of Commerce. $50,000 from the California Retailers Asociation. $15,000 from AIG insurance. $15,000 from Allstate Insurance. And that is just a small sampling.

Will the real Arnold please stand up? 2007 should be interesting.

In my next post, I'll be covering his State of The State address. Stay tuned.

Julius Young
www.boxerlaw.com

As of 1/1/07, the maximum temporary disability (TD) rate for California injured workers is now $881.66. This increase is a 4.96% increase based on the automatic Labor Code cola (cost-of-living-adjustment). The cola adjustment is based on the increase in the state average weekly wage (SAWW).

Temporary disability is paid at 2/3 of the worker's average weekly wage (don't forget to include bonuses and overtime in this calculation) up to the maximum. If 2/3 of your AWW is less than the state maximum, you will be paid at less than maximum.

If you are a worker injured before 1/1/2007, your maximum temporary disability rate would NOT rise to $881.66 UNLESS you have been on temporary disability for more than two years (this is known as the Hofmeister "bump"). However, if you were injured after 4/19/04, you are limited to 2 years of temporary disability from the date of commencement of temporary disability payments, so workers injured after 4/19/04 will not get the Hofmeister "bump".

Also, note the following changes:

1. Life pension payments (for disabilities above 70%) increase by 4.96% after 1/1/03.

2. The mimimum temporary disability rate increased to $132.25.

3. Due to Labor Code 4659(c), post 1/1/03 injury cases where the worker is 100% disabled get an increase of 4.96% in weekly payments.

Julius Young
www.boxerlaw.com

Readers of the New York Times may be familiar with the year-end current events quiz done for many years by columnist William Safire. As 2006 has just turned to 2007, here is my 2007 workers' comp quiz:

1. In 2007, the legislature will:

(a) without the governor's support, again pass a bill increasing dollars in the permanent disability chart used for awards

(b) without the governor's support, pass a bill changing the "crosswalk" factor that translates an impairment percentage into a disability rating

(c) do nothing until an agreement with the governor on a comprehensive "cleanup" reform package

(d) fail to pass anything due to changes in members of the State Senate

(e) no significant action at all

2. In 2007, there will be:

(a) significant reductions in employer workers' comp premiums given news that insurers were reaping profit margins close to 50%

(b) only modest reductions in employer premiums

(c) renewed legislative efforts to regulate comp insurance rates and/or profits

(d) insurers joining the push for higher benefits out of concerns about rate regulation and/or dropping premium dollar

3. In 2007, the California Supreme Court will decide the Welcher case, choosing among several interpretations of the law of apportionment (deductions for prior awards) in a way that is:

(a) most favorable to workers (the Dykes case)

(b) most favorable to insurers (Welcher case)

(c) an in-between formula (the Brodie case)

(d)none of the above

4. In early 2007, there are many cases involving arguments as to whether the "old" pre-Schwarzenegger workers comp rating system applies, or the "new" rating schedule. By the end of 2007 we will see:

(a) a split in California Courts of Appeals as to the criteria for when the old vs. new schedule applies

(b) a Court of Appeals adopting the "Aldi" analysis that all pre-1/1/05 injuries are covered by the "old" schedule

(c) this issue resolved as part of a comprehensive "cleanup" bill signed by the governor

(d) a moratorium by the Workers' Comp Appeals Board on hearing cases involving this issue

(e) none of the above

5. In 2007, the most likely legislative change is:

(a) dropping 24 visit physical therapy and chiropractic caps

(b) limits on use of vocational testimony to rebut the rating system (per the Costa case)

(c) changing the 2 year limit on temporary disability to a longer limit

(d) allowing insurers and represented workers to choose their own QME examiners

(e) none of the above

6. In 2007 Governor Schwarzenegger will:

(a) stick to his script on workers comp

(b) agree to workers' comp changes as part of negotiation over providing health insurance to California's uninsured

(c) expand his control over comp by naming a firm pro-SB 899 reform majority on the state Workers Comp Appeals Board

(d) allow some adjustments to SB 899 by doing so administratively through the Division of Workers Compensation, "under the radar"

(e) none of these

7. The California Division of Workers' Compensation is doing a study of wage losses (note: studies of data have been previously done by the RAND think tank, by a UC Davis professor and by "Cheez Whiz," the California Comission on Health, Safety and Workers Comp). That study will lead the DWC to claim:

(a) the results are inconclsuive and need more study

(b) major adjustments are required in the rating schedule

(c) minor adjustments are needed in the schedule

(d) none of the above

8. Regulations adopted by the state in 2006 providing for audits of utilization review practices and penalties for abuses will:

(a) curb most abuses of utilization reviews and treatment delays

(b) result in very little change in utilization review practices

(c) be the subject of further "cleanup" legislation

(d) none of the above

9. Push for further reforms will come from:

(a) California Medical Association and frustrated doctor groups unwilling to treat injured workers under the complications of the current system

(b) unions concerned about workers refusing to file for work injuries and instead draining union health trust funds to pay for medical treatment

(c) insurers concerned about dropping premium dollar and/or rate regulation

(d) legislative leaders trading comp changes for other issues

(e) none of these

10. By the end of 2007, we will see:

(a) a marked influx of labor market experts, vocational counselors and economists into the system as schedule rebutting testimony is allowed

(b) exodus of physicians willing to treat injured workers

(c) decline in the numbers of applicant and defense attorneys

(d) an effort by public legal services to provide minimal workers comp services to workers unable to find an attorney

(e) none of the above

Keep tabs on your answers. You can fax them to me at 510-835-0415. A perfect score wins a prize at the end of 2007. Apologies to you, William Safire.

Julius Young
www.boxerlaw.com

As 2006 turns to 2007, here is my list of the top 10 California workers' comp stories in 2006:

1. In December 2006, the Workers' Compensation Insurance Rating Bureau released startling statistics on California workers' comp. Insurers reaped record 46% profits (after payment of claims and insurer overhead, not counting investment earnings on
premium dollars) in 2005, even though rates for employers had decreased significantly.

2. Gov. Schwarzenegger vetoes SB 815. SB 815 would have raised benefits for some permanently disabled workers to compensate for the effects that the 2004 reforms have had on awards and settlements for workers with permanent partial disabilities.

3. The 2 year limitation on temporary disability (passed as part of the 2004 reforms) began to hit many workers who have been off work for more than 2 years awaiting or recovering from surgery.

4. The California Courts of Appeal and the California Supreme Court began to hear cases interpreting ambiguities in the 2004 workers' comp reforms. Due to conflicting Court of Appeal decisions, the chairman of the statewide Workers' Comp Appeals Board announced a moratorium on hearing cases involving apportionment issues (issues as to what is the cause of the disability or what deductions are allowable for other prior awards).

5. The Commision of Health, Safety and Workers Compensation (known as CHWSC or "cheese whiz") called for a change in the schedule for rating permanent partial disabilities. The Schwarzenegger administration responded by announcing that it is awaiting the results of its own study.

6. In the Costa case, the statewide Workers' Comp Appeals Board rejected an attempt to throw out the entire current schedule for rating permanent partial disabilities, but indicated it will, in some cases, allow vocational expert testimony to rebut the results under the rating schedule.

7.A Santa Cruz attorney representing injured workers was murdered by his client and an injured worker was arrested after having brought a weapon to the Oakland WCAB. Both events sent a chill through the system, reminding attorneys and insurers that worker frustration can lead to violence.

8. Frequent disputes arose as to whether particular pre-1/1/05 injuries were covered under the "old schedule" (pre-AMA guidelines) or the new rating system. A confusing set of fact patterns and analysis in various cases contributed to great uncertainty among claimants, lawyers and judges.

9. The Schwarzenegger administration unveiled regulations that will provide for some audits of and penalties for improperly performed insurer medical treatment reviews (so-called "utilization review").

10. Governor Schwarzenegger was re-elected, guaranteeing that any significant change in the system over the next 4 years will have to come with his administration's blessing.

In future posts, I will provide detailed commentary on many of these events. Stay tuned, though, for my next post: projections for the top stories of 2007.

Julius Young
www.boxerlaw.com