The reforms will benefit the two real stakeholders in workers' compensation: the employer and the injured worker. Half of the savings from reform will benefit the employer in terms of lower workers' compensation premiums, while the other half will pay for higher benefits for injured workers.

The legislation signed by Governor Pete Wilson last July mandated an immediate seven percent decrease in premiums. On December 1, the Department of Insurance ordered an additional 12.7 percent reduction in the minimum rate in anticipation of savings. That order brings the total reduction in premiums as a result of reform to nearly 20 percent.

In general, the reforms include:

• Increased benefits to injured workers. Starting July 1, the maximum weekly benefit for temporary and permanent total disability will increase from $336 to $406; on July 1, 1995, the maximum will increase to $448; and on July 1, 1996, the maximum will increase to $490.
• Psychiatric injury reforms. Psychiatric injuries will not be compensable unless work is the predominant cause of the injury compared to all other factors combined-that is, over 50 percent. The only exception is for employees who are victims of a violent act or exposed to one. In those cases, an employee will have to show only 35 to 40 percent work-related causation.
• Post-termination claim reforms. For psychiatric injury claims filed after termination, employees must show that the injury was reported to the employer or treated prior to notice of termination, occurred between notice and separation, was the result of sudden or extraordinary employment events, or there has been a finding of sexual or racial harassment. Stress associated with a lawful and good faith personnel action will not qualify. In the case of other types of injuries, the injury must have been reported to the employer before separation or there must be evidence in the employee's medical records. A post-termination claim would be valid in cases of cumulative trauma or occupational disease in which the injury did not become apparent until after termination.
• Medical treatment cost reforms. Employers and insurers may require injured workers to be treated in managed care for up to one year. Physicians generally are barred from making "self-referrals," referring patients to facilities in which they have a financial interest. The medical treatment fee schedule is expanded to cover hospitals, drugs, and pharmacy services.
• Litigation reforms. Opinions on medical issues will be rendered by the treating physician, whose opinion will be presumed correct in law. If a dispute exists, in order to reduce costly evaluations, only one additional evaluation by an independent evaluator will be allowed.
• Vocational rehabilitation reforms. A $16,000 cap has been placed on vocational rehabilitation expenses. Employers may terminate liability for vocational rehabilitation by offering an employee modified or alternative work lasting at least one year. Except in limited circumstances, employees will be limited to one plan. Out-of-state will not be permitted without approval of the employee and the employer.
• Employer rights. If an employer notifies the insurer and Appeals Board that he or she believes no compensation is due, no award may be issued without the employer receiving prior notice of the proceeding. Insurers, upon request, must provide an employer an itemized report of the reserves for a claim. Insurers must provide non-privileged documents and discuss all elements that affect the employer's premium. Grounds for canceling a policy are limited.
• Anti-fraud provisions. Restitution will be required for medic-al evaluations or treatment connected with a fraudulent claim. It now is a felony to offer a financial incentive to an adjuster (or for an adjuster to accept) for referral or settlement of a claim. Collecting benefits associated with a fraudulent claim is prohibited. Any fees recovered from an attorney or law firm illegally employing a runner or capper will be allocated to the prosecuting district attorney.
• Collective bargaining alternative to workers' compensation. Large employers and groups of employers in the construction industry may establish, under a collective bargaining agreement, alternatives to the workers' compensation system. Management and labor would agree to a limited list of providers, as well as to an alternative mechanism to resolve disputes.
• Labor-management oversight. A Commission on Health and Safety and Workers' Compensation, composed of employers and employees, will monitor the workers' compensation system.
• Minimum rate law repealed. The state's 80-year-old minimum rate law is repealed effective January 1, 1995, increasing competition among carriers and allowing the free market to set rates. While the Division of Workers' Compensation has issued the implementing regulations, Cal/OSHA is implementing a portion of workers' compensation reform. The legislation requires insurers to provide workers' compensation loss control consultation services to targeted employers, including employers with the greatest workers' compensation losses and whose industries have the most significant preventable health and safety hazards. Each carrier's loss control services must be certified by Cal/OSHA, and the carriers must submit an Annual Health and Safety Loss Control Plan.