Aubry: Eliminating Workers' Comp Is No Solution


In May, gubernatorial candidate Ron Unz attracted media attention by proposing elimination of California's workers' compensation system. In place of the present system, Unz proposed one under which injured workers would be required to file civil lawsuits against employers.

Largely, his system would be the chaotic system that existed before enactment of the current system in 1913. Undoubtedly the courts would be clogged with costly lawsuits, and there would be no guarantee that injured workers would receive benefits and medical treatment in a timely manner-or even at all.

The Orange County Register, in a seriously misinformed editorial titled "A System Beyond Reform," endorsed Unz's proposal. DIR Director Lloyd W. Aubry Jr. sent the following response, which the newspaper published May 29.


May 20, 1994
Mr. Ken Grubbs, Jr.
Editorial & Commentary Director
The Orange County Register
P.O. Box 11626
Santa Ana, CA 92711-1626
Dear Editor:

You are seriously misleading your readers by suggesting in your editorial of May 19, 1994, "A System Beyond Reform," that elimination of the workers' compensation system will solve all the problems of the system and save employers significant amounts of money. Indeed, this assertion displays a breathtaking ignorance of the system and its purpose.

Eighty years ago, the Legislature provided for a system of workers' compensation as a mechanism for avoiding individual employee lawsuits in court for injuries suffered on the job. Employees gave up compensatory and punitive damages while obtaining certainty of payment; employers were liable regardless of fault but could no longer be assessed compensatory and punitive damages. By failing to suggest an alternative once workers' compensation is abolished, you have proposed a system in which:

If you are concerned about business flight from California, it is hard to imagine a greater disincentive to doing business in California.

You do suggest getting rid of the State Compensation Insurance Fund "which all workers are forced to support." This is just wrong. There are already 300 insurance companies operating in California. State Fund insures approximately 22% of the employees and 50% of the employers in the state. Employers have been contracting with private carriers for 80 years.

Finally, you termed last year's workers' compensation reform efforts spearheaded by Governor Wilson as a "minor reform". This is simply incorrect. While the Governor proposed more sweeping reforms and certainly believes the system needs further reform, the measures enacted last summer still constituted the most comprehensive overhaul of workers' compensation laws in the history of the system. Frankly, I find it hard to believe that a billion dollar reduction in cost and a 20% premium reduction is "minor".

The reforms enacted last year were significant. They severely restricted the ability of the system's middlemen-the lawyers, doctors and vocational rehabilitation counselors-to unduly profit from workers' compensation. They abolished the minimum rate law under which the insurance industry received an automatic 32% guaranteed overhead. They raised the threshold for stress and post-termination claims to such an extent that these types of abusive claims are no longer being filed. And finally, over the years, enhanced anti-fraud provisions and mechanisms have been created so that we have witnessed the wholesale closing of the so-called "medical mills" in Southern California, which were the source of much of the abuse in the system that your newspaper documented.

Your editorial is ill-informed and I think it highly irresponsible to suggest eliminating workers' compensation without either proposing an alternative or informing your readers of the implications of such elimination.

Very truly yours,

Lloyd W. Aubry, Jr.
Director