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Schwarzenegger, Nunez Reach Agreement on Reform of State Workers’ Compensation System

Gov. Arnold Schwarzenegger (R) and Assembly Speaker Fabian Nunez (D-Los Angeles) on Tuesday reached an agreement "on the last remaining obstacle" to reforming the state workers' compensation system, the Los Angeles Times reports (Lifsher/Mathews, Los Angeles Times, 4/14). The deal was reached after Democratic leaders dropped demands for insurance rate regulation, the Sacramento Bee reports (Chan, Sacramento Bee, 4/14). According to the Times, the reform package would:

  • Require injured workers to choose from a network of employer-selected physicians for treatment. However, workers could seek a waiver from a medical review panel to see a physician of their own choice. Currently, injured workers can choose their own doctors after 30 days of treatment by an employer- or insurer-chosen physician;

  • Entitle workers to receive immediate medical care for workplace injuries at a cost of up to $10,000;

  • Require the use of American Medical Association guidelines to rate impairments to injured workers and provide benefits based on workers' projected lost earning capacity;

  • Pay more in benefits to workers who do not receive an offer to return to work and pay less in benefits to workers who do receive an offer to return to work;

  • Require insurers to pay a penalty for late payments made to workers of 25%, up to $10,000, and allow insurers to "self-correct" mistakes they discover by making corrected payments; and

  • Allow employers to apportion workers' compensation payments to cover only work-related injuries and not partial impairments resulting from off-the-job accidents. In addition, workers could claim no more than a total of 100% of disability for multiple injuries to the same part of the body (Los Angeles Times, 4/14).

Assembly members Lloyd Levine (D-Van Nuys) and Ronald Calderon (D-Montebello) said they were told that the reform package would reduce workers' compensation costs by $5 billion to $6.2 billion this year, the Orange County Register reports (Gittelsohn et al., Orange County Register, 4/14).
Rate Regulation

Although Schwarzenegger previously said that he was "leaning in favor of some form of rate regulation," on Tuesday he said he found that the practice does not work, the San Diego Union-Tribune reports (Ainsworth, San Diego Union-Tribune, 4/14). "I have looked into rate regulation over the last three weeks, and I have looked at the various places they had it," Schwarzenegger said, adding, "It was not productive, and it chases companies away. What we want to do is invite more insurance companies to California" (Hubbell, San Francisco Chronicle, 4/14). Instead of mandating rate regulation, Democrats agreed to a one-year study of the effect workers' compensation reform has on premiums to ensure that "savings are passed along to employers, not pocketed by insurance companies," the Times reports. "We found a compromise. I think it's perhaps the last piece of the equation," Nunez said (Los Angeles Times, 4/14). However, some Democrats are concerned about the lack of rate regulation, the Register reports. Levine said that without rate regulation, "we won't have accomplished anything, and we can't guarantee rates will go down" (Orange County Register, 4/14). According to the Chronicle, rate regulation could be addressed by Democrats through a bill sponsored by Sen. Richard Alarcon (D-Van Nuys) that would create a three-member government committee with the authority to regulate rates (San Francisco Chronicle, 4/14).


Despite concerns from some Democratic lawmakers, Senate President Pro Tempore John Burton (D-San Francisco) said, "We're close to a deal," the Bee reports (Sacramento Bee, 4/14). Nunez said, "It looks as though we are a hop, skip and a jump from an agreement. I think, in concept, we have a deal." Senate Minority Leader Jim Brulte (R-Rancho Cucamonga) said that Republicans "will either support the bill because it makes sense or we won't because it doesn't." He added, "When we have the language in its entirety and have a chance to review it, Senate Republicans individually will decide whether they're going to support it" (Folmar, San Jose Mercury News, 4/14). At a Sacramento-area Costco store to gather signatures for his workers' compensation reform ballot initiative, Schwarzenegger said that "we're very, very close" to a legislative deal (Sacramento Bee, 4/14). However, he added, "If something goes wrong, I want to be 100% backed up" (Los Angeles Times, 4/14). According to the Bee, the reform package would be ready for consideration on Wednesday by a special six-member Assembly-Senate conference committee (Sacramento Bee, 4/14). If passed by the committee, the Assembly and Senate could hold floor votes on the bill on Friday and Schwarzenegger could sign the bill into law the same day. The bill would take effect immediately if passed by a two-thirds majority of the Assembly and Senate and would take effect after 90 days if passed by a simple majority (Los Angeles Times, 4/14).

Broadcast Coverage

KCRW's "Which Way, L.A.?" on Monday reported on a Senate committee hearing on workers' compensation reform and discussed the upcoming deadline with Howard Fine, government reporter for the Los Angeles Business Journal; Lonnie Kane, president of a Los Angeles-based based clothing manufacturer; and David Schwartz, a trial lawyer specializing in workers' compensation claims and president-elect of the California Applicants' Attorney Association (Olney, "Which Way, L.A.?," KCRW, 4/12). The complete segment is available online in RealPlayer. KPBS' "KPBS News" on Tuesday reported on statewide rallies protesting Schwarzenegger's proposed workers' compensation reforms. The segment includes comments from Felipe Hueso, an attorney who represents injured workers in San Diego and Calexico (Goldberg, "KPBS News," KPBS, 4/13). The complete transcript is available online. The complete segment is available online in RealPlayer.

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