Garamendi Calls for Additional Workers’ Compensation Reforms

Insurance Commissioner John Garamendi (D) on Wednesday outlined a "set of far-reaching proposals" for further reforms to the state's workers' compensation system, the Contra Costa Times reports (Avalos, Contra Costa Times, 10/23). Speaking to a group of corporate financial executives at the Los Angeles Treasurers Club, Garamendi said the recently enacted workers' compensation reform law is "inadequate," the Los Angeles Times reports (Reich, Los Angeles Times, 10/23). Gov. Gray Davis (D) recently signed into law two bills (AB 227 and SB 228) to reform the state workers' compensation system and help reduce increased workers' compensation insurance premiums for employers. Some of the provisions in the bills include fee schedules for treatments and prescription drugs; limits on chiropractic and physical therapy visits; reviews that use national standards to determine the proper amount of care for certain injuries; and increased penalties for employer fraud from $50,000 to $150,000 (California Healthline, 10/1). Garamendi called for the creation of an unbiased system to rate the nature and severity of workplace-related disabilities, additional fraud reduction measures, limits on litigation fees in lawsuits related to workers' compensation and a more efficient administration of the system. "There is an opportunity for major reform in this area," Garamendi said. Business leaders support Garamendi's position, the Contra Costa Times reports (Contra Costa Times, 10/23). However, Dr. Jack Lewin, president of the California Medical Association, said that reforms should not include reductions in reimbursements to outpatient medical centers (Los Angeles Times, 10/23). Labor leaders did not comment "extensively" on Garamendi's proposals, the Contra Costa Times reports (Contra Costa Times, 10/23).

In related news, Gov.-elect Arnold Schwarzenegger (R) on Wednesday in his first official visit to the Capitol told lawmakers that he may call a special session next month to address workers' compensation reform and other issues, the San Francisco Chronicle reports (Salladay, San Francisco Chronicle, 10/23). Schwarzenegger has said that he supports the recently enacted reforms but also that he would seek further reforms to reduce litigation and eliminate excessive permanent disability payments. Schwarzenegger has said he intends to appoint a new team focused specifically on cost containment to the Division of Workers' Compensation (California Healthline, 10/08). The Los Angeles Times reports that Schwarzenegger "will likely have trouble resolving such complicated matters as the state's finances and workers' compensation in a short time frame." Senate President Pro Tem John Burton (D-Los Angeles) said lawmakers would have difficulty drafting legislation that would create the 20% rate reduction in workers' compensation insurance premiums sought by Schwarzenegger (Gold, Los Angeles Times, 10/23).