BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 947 (Solorio)
Hearing Date: 8/15/2011 Amended: 6/28/2011
Consultant: Bob Franzoia Policy Vote: L&IR 5-0
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BILL SUMMARY: AB 947 would permit disability payments for a
single injury causing temporary disability that occurred after
January 1, 2012 to be extended, and would prohibit the payments
from extending for more than 240 compensable weeks within five
years of the date of injury.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Workers' compensation Up to $8,000 annually beginning
JanuaryGeneral/
disability payments 2014 Special*
extension
* 55 percent General Fund, 45 percent special funds. The
maximum cost per claim beginning 2012 would be $137 over current
law (136 weeks x $1,010.50 per week)
- The total cost system wide is estimated at $200 to $210
million annually (9.5 percent estimated increase in temporary
disability benefits, which are 16 percent of all benefits)
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Temporary Disability Temporary disability benefits are payments
to an employee for lost wages because an injury prevents the
employee from performing usual work while recovering. An
employee that cannot work or can perform some work receives
temporary total or partial disability benefits. As a general
rule, temporary disability pays two-thirds of the gross
(pre-tax) wages lost while the employee is recovering. However,
an employee cannot receive more than the maximum weekly amount
set by law, which is $986.69 in 2011, increasing to $1,010.50 in
2012. The minimum and maximum temporary disability amounts are
AB 947 (Solorio)
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adjusted annually based on the state average weekly wage. The
minimum temporary total disability payment, regardless of
earnings, is $132.
Temporary disability payments begin when the employee's doctor
determines the person cannot perform usual work for more than
three days or the person is hospitalized overnight. Generally,
temporary disability stops when the person returns to work or
when the doctor determines the person's injury has improved as
much as it may. For persons injured between April 19, 2004 and
January 1, 2008, temporary disability payments were available
for no more than 104 weeks from the first payment for most
injuries. Persons injured after January 1, 2008 are eligible to
receive 104 weeks of disability payments within a five-year
period. If an employee's date of injury is in 2004 or later,
the employee is limited to a total of 24 chiropractic visits, 24
physical therapy visits, and 24 occupational therapy visits,
unless the claims administrator authorizes additional visits.
Payments for specified long-term injuries can continue for up to
240 weeks within a five-year period and are not taxable.
Permanent Disability Most persons recover from job injuries but
some continue to have medical problems. Permanent disability is
any lasting disability that results in a reduced earning
capacity after maximum medical improvement is reached. If a
person's injury or illness results in permanent disability the
person is entitled to permanent disability benefits, even if he
or she is able to return to work. Permanent disability benefits
are limited. If a person loses income, permanent disability
benefits may not cover all the income lost and if the person
experiences losses unrelated to ability to work, permanent
disability benefits will not cover those losses.
A doctor makes the determination if an injury or illness caused
permanent disability. The doctor also determines if any of the
disability was caused by something other than the work injury
(for example, a previous injury or other condition) in a process
known as apportionment. The disability is stated as a
percentage which equals a specific dollar amount, depending on
the date of the injury and the person's average weekly wages at
the time of injury. Permanent disability awards may increase or
decrease by 15 percent, depending on whether the person worked
for an employer with 50 or more employees and the employer
offers a salary continuation program and the person accepts
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regular, alternative or modified work. Permanent disability
benefits are normally paid when temporary disability benefits
end and a doctor has indicated the person has some permanent
effects from the injury. A person with a disability rating of
less than 70 percent would receive $230 weekly and a person with
a disability rating of more than 70 percent would receive $270
weekly. These amounts have not changed since 2006.
Fiscal Impact An initial fiscal estimate by Commission on Health
and Safety and Workers' Compensation staff using California
Workers' Compensation Institute and Workers' Compensation
Insurance Rating Bureau data is noted above for state employees.
For other employers, the estimated annual costs are in the
range of $190 million to $200 million:
- $31 million in benefits to employees of self-insured local
public agencies
- $22 million in benefits to employees of self-insured private
employers
- $145 million in benefits to employees of insured employers.
The calculations use a 15 percent midpoint estimate that could
be high or low by ten percent. This could put annual costs in
the range of $188 million to $238 million. Additionally,
treatment guidelines and caps on certain medical treatments and
patient-doctor relationships prolonging treatment could result
in the costs being over or underestimated.
First year state employee costs may be slightly higher than
noted to the extent industrial disability leave benefit payment
levels exceed temporary disability benefit payment levels.
Also, additional medical care costs are likely to be incurred
when temporary disability is extended beyond 104 weeks.
Increased costs of $210 million annually would be an overall
cost increase of 1.5 percent to the $14 billion workers'
compensation system. Total paid state workers' compensation
costs in 2009-10 were $503 million.