Schwarzenegger likely to face long fight on workers' comp

SACRAMENTO (AP) -- Gov.-elect Arnold Schwarzenegger's push for more workers' compensation savings for businesses is likely to turn into a long struggle rather than a quick fix.

The former action movie hero plans to call a special legislation session after he takes office next Monday to try to speed approval of cost-saving legislation.

"This is a critical issue the governor-elect believes needs to be addressed as soon as possible," said Schwarzenegger spokesman H. D.. Palmer. "It is one of the major issues that has caused businessmen and women to make difficult decisions on whether they are going to have to cut back, shut down or move out of the state."

But workers' compensation battles involve some of the most influential interests at the state Capitol -- doctors, insurers, labor unions, attorneys, business groups -- often pulling in different directions.

"You never see a quick solution to workers' compensation issues because you've got so many different groups involved that are affected differently by what is being proposed," said Richard Wooley, legislative chairman and former president of the California Applicants' Attorneys Association, whose members represent injured workers.

"To try to come up with something that's an effective compromise to all of these groups is incredibly difficult. It's not something that's done quickly."

Workers' comp reform was one of the dominant issues of lawmakers' 2003 session, and just before adjourning in mid-September they produced a package of legislation that state Insurance Commissioner John Garamendi predicts will cut workers' comp costs about 20 percent.

This next round could also be a long one as legislators deal with aspects of the 90-year-old system that may be more controversial than the problems they focused on earlier this year.

"It would take an extraordinary convergence of political decisions to have all the interested parties solve this problem quickly," said Charles Bacchi, a lobbyist for the California Chamber of Commerce. "Nothing's impossible, but there are a lot of roadblocks."

The situation could get even more complex if Senate President Pro Tem John Burton, responding to Schwarzenegger's campaign claim that this year's workers' comp reforms were "bogus," tries to overturn those changes.

Burton, a San Francisco Democrat, told the Republican governor-elect in an Oct. 24 letter that he planned to introduce legislation to scrap this year's reforms and allow Schwarzenegger "to start with a clean slate."

Mark Sektnan, assistant vice president of the American Insurance Association, says throwing out this year's changes "doesn't make a whole lot of sense."

"I don't believe anybody in the industry suggested that there aren't elements in the bill that are helpful," he said, adding that this year's bill was "an important first step."

Among other things, this year's legislation adopted cost controls for outpatient surgery centers and pharmacies, rolled back doctor's fees for workers' comp treatments and limited the number of chiropractic and physical therapy visits for injured workers.

Although Schwarzenegger has not issued a detailed proposal, the next round is likely to deal in large part with how much workers are compensated for certain injuries and how to define proper care for those workers.

Garamendi has proposed a multifaceted plan that makes changing the way the state rates the severity of an injured worker's disability the top priority.

The current rating system is too subjective, enabling workers with the right attorney, judge and doctor to get more in benefits than others with the same or lesser problem, critics complain.

"The goal is to eliminate the subjectivity and to increase benefits for those who are seriously and permanently injured, shifting money from those who have minor injuries" Garamendi said.

The subjectivity and the resulting "litigation and medical food fighting" between insurers and patients' attorneys help drive up insurance costs, said Bacchi.

Garamendi said lawmakers also need to adopt a strong definition of what constitutes "reasonable medical treatment" to replace the current goal to "cure and relieve" an injured worker's suffering.

Cure and relieve, Garamendi said, has "been interpreted over the years to basically be forevermore."

Schwarzenegger has outlined similar goals on his Web site, saying he wants to adopt American Medical Association standards for rating injury severity and to implement more guidelines for care.

Other parts of Garamendi's plan include putting greater emphasis on combatting workers' comp fraud, basing workers' comp physician fees on frequently updated Medicare fee schedules, creating more incentives for injured workers to return to their jobs, and meshing a workers' health insurance and workers' comp coverage to save costs.

State Sen. Richard Alarcon, D-Van Nuys, one of the authors of this year's reforms, said some changes sought by Schwarzenegger and Garamendi could be passed rather quickly but not some of the more controversial proposals that "strike at the core of benefits for injured workers."

Alarcon said permanent and partial disability ratings would be difficult to determine, as would the definition of medically necessary treatment.

Democrats, who dominate both houses of the Legislature, want to make sure that workers' comp programs are effective without harming workers, he added.

Lawmakers should let the latest reforms start working before trying to change the system again, Wooley said, adding that many of the concerns about the system will be worked as the new plan goes into effect.

Wooley questioned the sincerity of politicians who say they'll protect injured workers and said what lawmakers should do is give Garamendi the ability to bar excessive rates for the workers' comp insurance most businesses are required to buy.

"If those excessive rate regulations were in place we may not have experienced that swing (in costs) that employers are dealing with," he said.

Garamendi contends that giving him the power to throw out excessive rates would lessen competition in the workers' compensation insurance market by discouraging insurers from doing business in California.

If the changes adopted by lawmakers don't result in lower workers' comp insurance rates, he said, the Legislature could can pass a law that "forces the rates down."

The next round of negotiations won't be easy, Garamendi said, and Schwarzenegger shouldn't move too quickly.

"These are very complex issues and the unintended consequences of proposals that have not been thoroughly debated, vetted and understood can be enormous," he said.

A 29% cut from the 300% rate increase we faced this year is a joke. I heard on the radio a couple of weeks ago that unimployment insurance could triple next month. One insurer filed for bankrupcy and I'm sure it's because the 'rats doubled the amount the unemployed could draw in Ca... .........

I actually know people that got an increase of over 400%.

I think there is some confusion in your post about this topic.

UNEMPLOYMENT insurance is paid by the employer directly into the state and federal governments. Commonly called FUI (phooey) and SUI (sooey). Both parts are based upon the first $7000 of gross wages paid to your individual employee. There is no insurance company involved.

Workmen's Comp insurance premium is paid by the employer, on ALL gross wages (even sick pay, Vacation pay, holiday pay) and is to pay an employee INJURED ON THE JOB. This fraud comes from the fact that disability insurance doesn't pay near as much as Workmen's comp, so people try to say whatever injury they got over the weekend actually happened ON THE JOB.
Calif did drastically raise the weekly benefit for workmen's comp, and it doesn't surprise me that a company has gone out of business. If you can remember which one, please let me know. I do bookkeeping for a number of clients and they use a variety of insurers. I haven't heard that anyone pulled out of Calif or went belly up lately. Thanks in advance.

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