Facing economic dilemmas right and left, California also has to be on guard over the rising costs of worker's compensation. Originally, worker's compensation was created as a trade off. Employees were given medical treatment for workplace injuries in exchange for agreeing not to sue employers. While  this was an equitable trade off, some people have decided to take advantage of the system. Some employees continually feign or exaggerate injuries to acquire permanent disability status, and in turn, continual compensation.

Because of these abuses of the system, worker's compensation costs have skyrocketed for employers. California's worker's compensation costs are the highest in the nation. Employers currently pay premiums that average $5.23 per $100 of worker's pay. The next highest is Florida where premiums average $4.50 per $100 of worker's pay, a $0.73 difference. In fact, California's worker's compensation costs are more than twice the national average.

Regrettably, the rising worker's compensation costs threaten to drive even more business out of California. A weak state economy coupled with high land prices have already driven up operating costs for businesses. Some businesses have already moved to other states and many more are strongly considering a move. With spiraling worker's compensation costs, businesses have even fewer reasons to stay. Those that do stay are often forced to lay off employees because of the rising worker's compensation costs.

As a small business owner, I've seen my premiums quadruple in the last five years. I have found it harder and harder to maintain a viable business. Soaring rates will continue to cripple California's economy  unless fraud, waste, and legal fees are reduced.

Unfortunately, it will not be easy fixing California's worker's compensation system nor is there are quick fix. However, we must battle to fix the system. It is already costing people their jobs, forcing business to move or shut down, and hurting an already weak California economy.

While in office, Gray Davis promised changes to protect California's business climate. Likewise, Garamendi has proposed a 3.5% discount on worker's compensation to help alleviate employer costs. But these changes are little more than band-aids over a much larger problem. It is time to tackle the issue with real solutions that will fix the problems in the system.

Governor Schwarzennegger and Insurance Commissioner Garamendi have several ideas

on how to fix worker's compensation by attacking the source of the problem: subjectivity in defining disability.

The first step is to create a uniformed standard to extent of disability. (The current system uses yardsticks.) That is, there will be defined levels to gauge the seriousness of the disability rather than relying on the ad hoc guessing of the current system. This will serve two purposes. First, it will help reduce the abuse of the system and lessen the number of fraudulent claims. Second, some of the seriously injured employees will greatly benefit because they are getting less compensation than employees with minor injuries.

The second step is to define the "cure and relieve" clause. People who abuse the system have taken advantage of this vagueness to claim benefits for "necessary" never-ending medical treatment. Everyone should receive benefits for necessary medical treatment, but everyone suffers when a few people abuse the privilege by claiming unnecessary medical treatment.

The third step is to limit the penalties injured workers can win as well as cap legal fees. Abuses of the law have created off the scale legal awards. This has provided a huge windfall for lawyers, not the injured employee. By limiting damages, we will reduce the incentive for people to cheat the system and for lawyer to only make fraudulent cases in hopes to receiving a big payday.

The final step is to institute an independent medical review. Each party has their own expert medical witness to testify about the health of an injured employee. The most important issue at hand is the health of the injured employee. An independent medical review will ensure that the injured employee will receive the treatment necessary to become healthy again without the politics of a lawsuit. Thus, we can return the focus worker's compensation back to person's health rather than a battle over money.

In the end, this is what worker's compensation is really about: helping injured employees. Many people who claim worker's compensation are justified in their claims. However, it is only those few who have abused the system that are spoiling it for everyone. They are not hurting the large companies, but they are hurting the small and medium sized companies, other employees, and the stability of the California economy. We must put an end to these abuses before it is too late.