Wilson Signs Measure to Cut Costs of Workers’ Comp : Law: Limit on payments for medical evaluations is called the first step in reforms.

Gov. Pete Wilson on Tuesday signed legislation that he and a key Democratic lawmaker said they hoped will be the first of a series of bills to overhaul California’s workers’ compensation system.

The bill, sponsored by state Sen. Patrick Johnston (D-Stockton), is intended to cut the costs of medical evaluations, which are used to determine the extent of workers’ disabilities and the proportion that can be attributed to on-the-job injuries.

“This reform, as necessary and commendable as it is, is just a first step,” Wilson said as he signed the bill. “Much more remains to be done.”

Johnston, chairman of the Senate Industrial Relations Committee, said the law will help to reverse the trend that has made California the most expensive state in which to evaluate an injured worker. But he, too, said more must be done.

“This is not the only time this year I plan to stand up here with Gov. Wilson to announce the enactment of meaningful reform to the workers’ compensation laws,” he said. “This is not the token workers’ compensation reform for the year.”

Johnston’s bill addressed the soaring cost of so-called medical-legal evaluations, which he said cost five to 10 times more in California than in other states.

Until now, fees for such evaluations were set each year by the state based on what doctors charged the year before, all but guaranteeing that the rates would rise. The bill ends that practice and instead allows the state to peg the fees at whatever level it finds to be reasonable.

The measure, passed unanimously by the Senate and Assembly, also prohibits payment for evaluations that are not admissible as evidence in a workers’ compensation case.

“If a medical-legal evaluation is found to be worth nothing, that’s exactly how much we’ll pay for it,” Johnston said. “It’s indefensible to expect payment for a useless report.”

The new law is expected to shave at least $100 million from the $11-billion system, and possibly much more. Casey Young, administrative director for the state Industrial Relations Department, said the measure might halve the cost of medical evaluations, which are running at about $1 billion a year.