This document is the third annual report of the California Commission on Health and Safety and Workers' Compensation.

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.

The reform legislation was enacted because, during the late 1980s and early 1990s, California employers had one of the highest workers' compensation premium costs in the nation, while the maximum indemnity benefits to California injured workers for temporary and permanent disability were among the lowest in the nation. Moreover, California had one of the highest rates of workers' compensation claims filing, which also increased costs to employers.

The reform legislation made sweeping changes to the whole California workers' compensation system, specifically in the areas of insurance, fraud, psychiatric and post-termination claims, medical care, medical-legal evaluations, vocational rehabilitation, alternative benefit delivery systems, benefit levels, injury prevention, disability evaluation, claims adjudication, and information systems. This reform legislation affects not only industrially-injured workers, but the entire workers' compensation community -- employers and employees, insurers, medical care providers, applicant and defense attorneys, state government agencies, and members of the public.

To fulfill its mandates, the Commission has been assessing the impact of the 1993 workers' compensation reform legislation on the affected systems and upon the workers' compensation community.

The Commission has solicited the opinions of all affected by the reform legislation to determine areas of concern and to ascertain the optimum point to begin formal evaluations of specific functions. The workers' compensation community has responded enthusiastically by making presentations at Commission meetings, participating in educational programs, serving on project advisory committees, providing statistical data, inviting Commission members and staff to attend their meetings, and sharing their perspective of and expertise in the workers' compensation system.

The Commission has contracted with independent research organizations in the academic and private sectors to work with state agency personnel and interested members of the workers' compensation community to identify, describe, measure and propose solutions to problems and difficulties in the current workers' compensation system.

These studies and other activities form the basis for Commission findings and recommendations contained in this report.

This annual report is organized by sections:

Executive Summary: Findings and Recommendations

Section I The Commission on Health and Safety and Workers' Compensation

Section II Reform Legislation Impact on the Workers' Compensation Community

Section III Workers' Compensation Issues

Section IV Health and Safety Issues

Section V Program and Agency Operations

Section VI Commission's Future Activities