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The way to spot real reform, according to an editorial signed by the California Manufacturers & Technology Association: “Lawyers hate it.” Lawyers for injured employees may not love the compromise workers’ compensation bill hammered out in the wee hours Thursday, nor the initiative measure being readied today for the November ballot. But it’s not clear that reform of the $20 billion system will drive them out of business, either. The president of the state’s applicant attorneys association says the principal piece of reform that is aimed at reducing legal fees won’t have much effect at all on what he claims isn’t a big part of workers’ comp costs in the first place. “This is bureaucratic insanity,” said Art Azevedo, president of the California Applicants’ Attorneys Association. “I call it a daisy chain of ignorance.” Like the initiative, the compromise bill carried by Sen. Charles Poochigian, R-Fresno, includes provisions aimed at standardizing awards for permanent disability, the bread-and-butter of workers’ comp attorneys. The initiative calls for using “adaptability” — a measure of how well an injured worker can perform certain jobs in the labor market. The rehashed SB 899 that emerged Thursday calls for using American Medical Association guidelines for injured workers to help determine the extent of an injured employee’s permanent disability. This is needed, say reformers, because similar injuries ended up with divergent disability rankings by workers’ comp evaluators. “Ratings for the same disability injury, when evaluated by different evaluators, can range wildly,” said William McClure, a workers’ comp specialist for the county of Los Angeles, which is budgeting $352 million a year to provide workers’ comp insurance to 82,000 full-time employees. “We had evaluators rating [the same injury] as a 15 to 75 percent disability.” “Folks in California who are the most significantly injured weren’t being adequately compensated, and folks that had minor injuries were being overly compensated,” said Steven Jimenez, a workers’ compensation specialist at Adelson, Testan, Brundo & Popalardo in San Francisco who represents insurance companies and employers. Workers’ comp attorneys make the bulk of their fees from representing injured workers with permanent disability claims. Their fees are usually limited to between 10 percent and 15 percent of the applicant’s award. Reformers have argued that leaving the standards for workers’ comp vague virtually invites applicant attorneys into cases where permanent disability awards are a possibility. “If there was nothing to fight about, no one would need lawyers,” Jimenez said. According to the Workers’ Compensation Action Network, a coalition of business interests that includes the California Chamber of Commerce, the California Manufacturers & Technology Association and the California Association of Cities and Counties, partial permanent disability cases account for 82 percent of the state’s total benefit costs. A study by the California Workers’ Compensation Institute, a nonprofit group funded by the insurance industry, showed attorneys were involved in three out of four permanent disability claims between 1992 and 2000. Those cases accounted for 93 percent of the litigation expense in the workers’ comp system, according to the study. Both the initiative — backed by Gov. Arnold Schwarzenegger, who toured the state’s Costco stores this week to drum up petition signatures — and proposed legislation slated for a floor vote today target what proponents of change call “doctor shopping.” Jimenez says provisions to restrict whom workers can see for their injuries are also expected to reduce disability claims since medical costs “increase the value of the case.” The ballot initiative specifically allows an employer to approve an employee’s practitioner choice before an injury ever takes place. As drafted, the proposed state legislation requires employees to select from a pool of doctors on a designated panel. “If the company selects the doctor, that’s not going to engender trust in the very beginning,” said Azevedo. The state’s legislative analyst has estimated potential savings from passage of the workers’ comp initiative at “potentially in the hundreds of millions of dollars,” although state lawmakers have backed away from making any definitive cost-savings claims. But Azevedo said he doesn’t expect the proposed reforms to discourage clients from hiring workers’ comp attorneys to guide them through the complicated labyrinth of rules and regulations. He also says employees can still decide to hire a lawyer if they don’t like the deal they’re getting through their employer’s system. “If [employees] are mistreated by an adjustor or manhandled by a company doctor, what do you think they will do?” he said. He predicted the proposed changes won’t scare away workers’ comp specialists, but will further complicate things for “the general practitioner who is a true scholar of the law who wants to represent a broad range of clients. I think he’s going to find it more difficult, and that’s a bad trend.” As for the actual cost that litigation contributes to workers’ comp claims, attorneys representing both employees and employers say fees are getting blamed for their relatively small role in a much larger fiscal mess. Total disability awards — which can yield large attorneys fees — are rare, and usually handed down for catastrophic accidents resulting in amputations or blindness. They max out at $602 per week of the plaintiff’s life. More common are “partial” permanent disability awards averaging about $23,000, paid out over time. Since most applicant attorney awards are limited to 12 percent to 15 percent of that fee, workers’ comp law is a volume business. “If you settle three cases a week, you can make a living and pay overhead,” Azevedo said. He added that applicant attorneys may have been left to battle business interests without the help of their higher-profile brethren in the plaintiffs bar because Democrats are unwilling to take on a governor with star power. “The Democratic leadership negotiated on their knees,” Azevedo said.

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