American Ombudsman Enterprises

Workers' Compensation ADR History

For the California construction industry during the 1980's and early 1990's, conflicts in workers' compensation were on the rise and the cost of doing business was putting pressure on employers. It was becoming increasingly difficult to justify the cost of retaining current employees, and hiring additional workers was beyond thought for many contractors.

In particular, workers' compensation insurance rates were approaching 100% of payroll costs and spurious litigation accompanied with increased legal fees put cost pressure on employers. The problems associated with the workers' compensation system administered by the State of California were impeding the operation of California's construction industry. Something had to be done.

In 1993, something was done. Under the leadership of California State Senator Leroy Greene of Sacramento, California's Legislature implemented sweeping reforms in workers' compensation. Signed into law by Gov. Pete Wilson, this reform gave California's construction industry employers and unions the 'Greene Light' to create their own workers' compensation program through collectively bargained agreements.

The new privatized workers' compensation programs created through the collective bargaining process came to be known as Alternative Dispute Resolution Programs (ADR Programs) for workers' compensation, because they are alternatives to the State system. These ADR Programs disallow the active representation of attorneys in the early stages of a dispute. Consequently, the parties are encouraged to be more pro-active and personally communicative with each other, thereby avoiding unnecessary litigation. Since 1993 any unionized construction industry in California can opt out of the State administered workers compensation system for an ADR Program. In addition, a recent enactment allows any unionized non-construction industry to create an ADR Program through the collective bargaining process.

American Ombudsman Enterprises (AOE) was the first company to recognize the latent demand for these ADR programs and was founded with the goal of meeting all the challenges of workers' compensation reform.

Since its inception in 1994, AOE has provided resolution to the majority of California's ADR Program lost-time claims. AOE administers programs for employers and union members working in a variety of construction industries. Those industries include, but are not limited to, electrical work, air-conditioning, cooling & heating, sheet metal fabrication, plumbing & pipefitting, painting & decorating, and petroleum refinery construction and maintenance.

In AOE's ADR Programs, disputed issues are resolved almost immediately, greatly reducing the possibility of litigation. Specifically, nearly 98% of all disputed issues under AOE's watch have been resolved without reaching arbitration.

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