SB863 will increase benefits to permanently disabled workers by $860 million a year while giving employers a break on insurance costs.

The changes were the result of months-long negotiations between business groups concerned about escalating insurance costs and labor unions that wanted to address unexpected benefit reductions for injured workers that followed changes pushed in 2004 by then-Gov. Arnold Schwarzenegger.

Sean McNally, owner of Bakersfield-based Grimmway Farms, the state's largest organic grower, said negotiations between labor and management were "excruciating at times," but the bill will mean quicker resolution because doctors will make decisions rather than courtrooms.

The legislation makes substantial reforms to the century-old system in which businesses buy insurance or self-insure to provide medical care and compensation to workers who injure themselves or fall ill on the job.

It changes how benefits are calculated for injured workers, creates a binding arbitration process to resolve coverage disputes and eliminates coverage for conditions that most commonly lead to lawsuits, including insomnia and mental health problems.

The measure also aims to prevent lawsuits by establishing a binding independent review system to resolve medical disputes and shortens the timeline for approval of treatment from two years to three months.

In addition to increasing compensation for disabled workers by $740 million a year, which will boost benefits by an average of 29 percent for individual disabled workers, lawmakers included $120 million a year in a special fund for victims of catastrophic accidents who cannot return to work.

Supporters said that without the changes in the bill, employers would face insurance premium hikes that could trigger layoffs at a time when the state's unemployment rate remains above 10 percent. There are 14.4 million workers in the state.

Opponents said the bill actually hurts those who are most seriously injured by reducing some benefits and limiting care.

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