Commission on Health and Safety and Workers' Compensation
Information Bulletin

November 26, 1996 Christine Baker
(415) 557-1304

Commission Approves Project to Study Cost Shifting
Between the Workers' Compensation and State Disability Insurance Systems

SAN FRANCISCO -- The California Commission on Health and Safety and Workers' Compensation unanimously approved a project to study perceived cost shifting between the workers' compensation system and the State Disability Insurance (SDI) system.

The workers' compensation reform legislation of 1993 imposed a cap of $16,000 on the total vocational rehabilitation benefit, which under previous statue had no limit. However, some Qualified Rehabilitation Representatives (QRR) are writing vocational rehabilitation plans for injured workers that use funds from SDI to supplement or replace the Vocational Rehabilitation Maintenance Allowance (VMRA). In order to write plans that meet their clientsà needs, some QRRs are utilizing other resources, thereby circumventing the cap.

The State Disability Insurance system provides a safety net for injured workers by paying benefits on an interim basis when their eligibility for workers' compensation benefits is in dispute, or when payment in the compensation system is delayed. SDI then attempts to recover those payments from the insurer or the worker, often through a lien filed with the Workers' Compensation Appeals Board (WCAB). With approximately 60,000 SDI lien filings a year, substantial funds are tied up in disputed workers' compensation cases. Significant time and money are expended pursuing recoveries. The Employment Development Department (EDD), which handles SDI, is not always informed of workers' compensation settlements and often settles for a fraction of the total lien.

Each of these situations suggests that substantial resources are being shifted between the SDI system and the workers' compensation system but the extent to which this is happening is unknown. The Commission's study will result in an Issue Paper analyzing these resource shifts and proposing cost-effective changes to either or both systems. The Issue Paper is expected to be published in mid-1997.

The Commission, created by the workers' compensation reform legislation of 1993, is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.

Further information about the Commission and its activities can be obtained by writing to Christine Baker, Executive Officer, Commission on Health and Safety and Workers' Compensation, 30 Van Ness Avenue, Suite 2122, San Francisco, CA 94102, by calling (415) 557-1304, or by faxing a request to (415) 557-1385. Information is also available through the Internet by accessing the Department of Industrial Relations' home page at