Schwarzenegger, Lawmakers, Reach Compromise on Workers' Comp Plan (It saves billions of dollars)

Inland Valley Daily Bulletin, Calif. Knight Ridder/Tribune Business News ^ | 4-15-04 | By David M. Drucker,

[Joe Hadenuf]

Apr. 15--SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger and legislative leaders cut a tentative deal Wednesday on workers' compensation reform and worked into the night on details of the landmark plan designed to save California businesses billions of dollars a year.

A six-member bipartisan legislative conference committee was scheduled to begin deliberating Wednesday night over the agreement. If approved by the committee, the reform bill will face votes Friday on the Assembly and Senate floors, with passage representing a major political triumph for Schwarzenegger.

"It saves billions of dollars, it reforms workers' comp and will allow jobs to be attracted to this state -- which was the campaign promise this governor made six months ago," said Rob Stutzman, Schwarzenegger's communications director.

Although many details remain to be worked out, officials said Schwarzenegger succeeded in keeping regulation of insurance rates off the table. Agreement also was reached on a second key point he sought: allowing insurers and employers to create pools of doctors injured workers must use.

Sen. Richard Alarcon, D-Van Nuys, one of three senators on the committee, said he disagreed with some portions of the agreement, but still might vote for it in committee to get it before the full Legislature.

"I have deep concerns about supporting a workers' comp reform measure without rate regulation," Alarcon said.

Until Wednesday, Republicans -- who had sponsored Schwarzenegger's proposal to shave $11 billion in premium costs from the troubled system -- offered negative views of the talks.

But Assembly Minority Leader Kevin McCarthy emerged from a late-morning meeting with Schwarzenegger and indicated his approval of those portions of the overhaul which he had read.

Assemblyman Dennis Mountjoy, a conservative Republican from the San Gabriel Valley, indicated his approval as well -- barring any unacceptable changes made to the package by Democrats.

"Is it something I could probably vote for? Yes," he said.

State law requires businesses to carry workers' compensation insurance to cover medical and disability costs for employees hurt on the job. In recent years, premiums have tripled, even in the midst of declining accident rates and improved safety standards.

Schwarzenegger has threatened to take his reform plan to the Nov. 2 ballot -- enough signatures have been collected to do so -- if the Legislature does not act by Friday.

The governor and like-minded lawmakers are moving to stop firms like Larsen Supply Co., a 130-employee plumbing-supply wholesaler in Santa Fe Springs, from moving out of state. The company employed 140 people in 1999, but has reduced its work force since -- and could be headed toward more layoffs this year -- because premiums have soared from $30,000 annually in 1999 to $467,000 this year.

Alan Holderness, the firm's controller, was unconcerned with the political arguments over how to achieve reform. He just wants his company to realize significant, immediate savings so that it can afford to remain in Southern California, where it has been for 70 years.

"Businesses are really, really hurting," he said. "It's not as though we don't want to stay here, because we really, really do."

The administration, and some legislators familiar with the package, say it will provide the rate-relief businesses are looking for -- though Stutzman, when asked, could not provide an estimate of how many "billions of dollars" the plan would save.

Schwarzenegger aides contend the package will accomplish this without empowering the state to regulate insurance rates, which the governor opposes. Democrats are skeptical, but in the spirit of compromise dropped their insistence on including such a component in the bill.

Still, Assembly Budget Committee Chairman Darrell Steinberg, D-Sacramento, said separate legislation to regulate rates would likely be passed by Democrats and sent to Schwarzenegger's desk -- a move that could be designed to quell discontent among core Democratic constituency groups -- labor unions and trial lawyers -- that oppose workers' compensation reform.

"It's going to be up to the governor whether he chooses to also sign (rate regulation)," he said. "We're going to strongly urge him to do so because workers' comp reform without rate-relief does not accomplish ... the purpose of these intense negotiations."

The final components of the bill continued to evolve late Wednesday. But among the many factors causing rates in California to be unusually high, that have been resolved, are:

--Permanent Partial Disability: This term describes an employee who, because of an injury sustained on the job, is classified as partially disabled on a permanent basis. Steinberg said steps would be taken to end the abuse caused by classifying workers as such who should not be.

He also said additional, tentatively agreed-upon reforms would allow injured employees to get immediate medical attention, and facilitate their getting "back to work sooner rather than later."

--Apportionment: Employers are often held liable for 100 percent of an injury even when a worker's job is not responsible for causing all of it, as the employee might have had previous injuries or non job-related injuries. McCarthy said he is pleased that the proposed reforms to deal with this key issue would address this unfair practice.

Steinberg acknowledged that some workers-rights advocates were disappointed with the compromise, but noted that the package would not result in lower benefits. Stutzman agreed, saying the real losers in this process were the trial lawyers and unscrupulous doctors.

"This is part of the special interests that need to be booted out of the (Capitol). And they're being served notice through this reform ... that they don't have the influence here they had before," Stutzman said.

[Joe Hadenuf]

Not perfect, but the it starts immediately, and employers costs are expected to be reduced by about 30 percent. This is substantial.

[samadams2000]

right..anything you say.

[samadams2000]

i mean the governor..not you Joe. Sorry. Dont trust any of these crooks.

[jamndad5]

Can ya hear Cali's engine beginning to rev??????????????

[Joe Hadenuf]

I don't. But what I am hearing is that the trial lawyers are the true losers here, and other details that I am just to tired to type in right now.

[Tacis]

Hey, there are entire villages in Mexico being supported by the multiple fake worker comp clams of a single wetback!! I certainly hope Arnold has done nothing to stop the humanitarian assistance to these folks.

[ServesURight]

Sounds like a plan, Stan. Of course, I'm skeptical of any "agreements" that included the Rats.

[BlkConserv]

Still, Assembly Budget Committee Chairman Darrell Steinberg, D-Sacramento, said separate legislation to regulate rates would likely be passed by Democrats and sent to Schwarzenegger's desk

The Democrats are totally beholden to their special-interest groups. Regulating rates would be a disaster - no insurance company is going to cheerfully provide Workers Comp coverage while sustaining annual revenue losses.

[umgud]

If the dems don't pass it by tomorrow, or if they screw it up, will the initiative Arnold is putting before the voters a better deal than this bill?

[AuntB]

"Not perfect", that's what I was going to say. But it's a start and I'm for it if it does nothing else but this as stated in the article, "the real losers in this process were the trial lawyers and..."

[truthkeeper]

ping

[Bronco_Buster_FweetHyagh]

Agreement also was reached on a second key point he sought: allowing insurers and employers to create pools of doctors injured workers must use.

Nope. No fraud here. Move along, nothing to see.

[Lancey Howard]

The company employed 140 people in 1999, but has reduced its work force since -- and could be headed toward more layoffs this year -- because premiums have soared from $30,000 annually in 1999 to $467,000 this year.

This staggers the mind.
Why on earth is that company still in California? Even if its premium gets cut 30% (to what, $326,900?) it's still utter insanity to stay, in my opinion.

[Southack]

Once again Arnold delivers. The car tax was repealed. The illegal alien driver's license law was repealed. Now workman's comp is being reformed.

1. 2. 3. Arnold keeps on delivering, much to his critic's chagrin.

But all of that aside, will the California news media notice what happens when honest businessmen work on California's problems rather than scheme to appease special interests all day and night?

Gray Davis certainly didn't solve these problems, and he had about as many years in office as Arnold has had months.

[John Jorsett]

The thing I worry about is someone slipping in some poison pills that no one notices until the deadline for the November ballot initiative is past. A lot of legislation slides through Sacramento without anyone reading it. Then a few months later they're saying, "I voted for WHAT?"

[Amerigomag]

I am hearing is that the trial lawyers are the true losers here

Again, best to wait for the legislation and then decide.

The assumption that trail lawyer's would be looser is only a matter of more difficult discovery. Nothing reported about the proposal prevents a "second opinion" from the same group that now offers the primary opinion.

Nothing published about the settlement forces the insurers to immediately lower their rates because someone thinks the costs (risks) will be lower.

This proposal is a step in the correct direction but it's also a step backward if it undermines approval of the pending initiative which contains real reform.

[Amerigomag]

The car tax was repealed.

Don't mind your enthusiasm but don't care for your distortion.

Schwarzenegger reinstated a general fund subsidy of the "car tax", he didn't repeal the car tax. It is still in full force and effect at 2% of assessed valuation and you still pay the tax when you pay your state income taxes.

The difference isn't slight. The difference isn't a point of view.

[Southack]

In a low key ceremony in Sacramento this afternoon, Arnold Schwarzenegger was finally sworn in as the Governor of California, according to Fox News. Schwarzenegger was joined by his family, various celebrities and four of the five living former California governors. Immediately after his inaguration, Arnold issued an executive order repealing the car tax put in place by his predecessor, the recalled Gray Davis.

[Democratshavenobrains]

Everyone has to admit that the Governor of California has to deal with the more crap than any other governor. He should be cut some slack, no matter what party he belongs to, as long as he is really trying to do a good job.

[SierraWasp]

I don't begrudge the fact that Arnold is effective in an extremely hostile environment. I cannot, however, swoon over his success until I see the poisons he had to swallow to achieve the appearant "victory!"

On a radio news cast about it, I heard them state that the onerous fixation the lib/dems had demanded to cap the rates insurers could charge was excluded... BUT, the benefits employees were not reduced, either!!! How the hell is that going to work???

You know what? That sounds EXACTLY like the failed energy deregulation law passed unanimously by both houses and signed by a Repellican Governor, just before Gray Davis got elected!!!

So hold on to your horses, before you blindly bow in Arnold's direction exclaiming that "we are not worthy!" Egg would not look good on a Southack face, nor on the struggling faces of the business men and women of CA!!!

As soon as they clear the yolks from their bloodshot enraged eyes, the word Republican will be more of a curseword than ever before in CA's history and your Party will be over in this state for generations to come! Demonicrats would love nothing better than to "laugh last" after the abject humiliation of Doofus Davis!!!

Democrats are playing for keeps, not something to amuse themselves with after a successful movie career in Hollyweird, or something new to impress their liberal spouse with!!! Here! Have another helping of that "hasty pudding!" It's got a poison pill inside!