Garamendi Releases Plan To Reduce Employers’ Workers’ Compensation Insurance Costs
Insurance Commissioner John Garamendi (D) on Tuesday unveiled a plan to reduce employers' workers' compensation insurance costs, which he said would "reduce costly lawsuits and get benefits more quickly to injured employees," the AP/Los Angeles Times reports (AP/Los Angeles Times, 2/11). Garamendi said that his plan is a compromise between proposals from Gov. Arnold Schwarzenegger (R) and Democrats in the Legislature, the Sacramento Bee reports (Chan, Sacramento Bee, 2/11). The plan calls for:
- Creating an independent medical examiner position for the state workers' compensation system;
- Developing incentives for employees to return to work and for employers to rehire them;
- Immediately paying benefits to injured employees;
- Explicitly defining "reasonable medical treatment" (Avalos, Contra Costa Times, 2/11);
- Giving employers up to one year to dispute a worker's injury claim, compared with the 90-day period currently allowed (AP/Los Angeles Times, 2/11);
- Using modified guidelines of the American Medical Association to determine a worker's disability (Abate, San Francisco Chronicle, 2/11);
- Linking doctors' fees under the state workers' compensation system to Medicare reimbursement rates;
- Strengthening penalties for fraud, including making it a felony for employers to operate without workers' compensation insurance and legally protecting whistleblowers; and
- Requiring State Compensation Insurance Fund, which provides workers' compensation insurance to more than 50% of the market, to stop covering businesses that can be handled by other carriers, as well as restructuring the five-member State Fund governing board to include two independent directors.
While not presented as a bill, the plan could be incorporated into legislation, Garamendi said (Sacramento Bee, 2/11). "What I am proposing is a bridge between the business community and labor interests in California that the Legislature can cross over," Garamendi said (AP/Los Angeles Times, 2/11). Garamendi added that his reforms would "redesig[n] the system in such a way as to make it less complex, and eliminat[e] or reduc[e] the culture of litigation that now hampers the system" (Sheppard, Los Angeles Daily News, 2/9). However, Garamendi said that he did not know how much money his plan would save (AP/Los Angeles Times, 2/11). KQED's "California Report" Wednesday reported on Garamendi's plan(Musiker, "California Report," KQED, 2/11). The complete segment will be available online in RealPlayer after the broadcast.
Vince Sollitto, a spokesperson for Schwarzenegger, said the governor "welcome[s] Garamendi's input" but has not completely examined the plan, the Bee reports. "The governor has laid out a comprehensive reform package that many believe provides the most comprehensive reforms and produces the most significant savings," Sollitto added (Sacramento Bee, 2/11). David Rockwell of the California Applicant Attorneys Association said that because Garamendi "doesn't want to regulate excessive [workers' compensation insurance] rates," there "is no promise of rate relief for California employers in this measure" (Contra Costa Times, 2/11). Tom Rankin, president of the California Labor Federation, agreed, saying that Garamendi's plan would not impose adequate regulations on the insurance industry. Sen. Richard Alarcon (D-Van Nuys) said he was "disappointed" that Garamendi is not "taking a tougher stand on insurance industry regulation," the Bee reports (Sacramento Bee, 2/11).
As the Legislature prepares to address proposals to reduce employers' workers' compensation insurance costs, Schwarzenegger and legislative leaders on Tuesday met for about an hour to discuss a possible compromise, the AP/Times reports (AP/Los Angeles Times, 2/11). The Assembly Insurance Committee and the Senate Labor and Industrial Relations Committee are scheduled to hold separate hearings Wednesday on Schwarzenegger's workers' compensation proposals (Crowe, Ventura County Star, 2/10). During his State of the State address last month, Schwarzenegger said he would seek to place a measure on the November statewide ballot if legislators do not pass reform legislation by March 1. As part of his "California Recovery Plan," Schwarzenegger in November proposed reducing by $11.3 billion the cost of the state's $29 billion workers' compensation program, under which employers pay $5.85 per $100 of payroll -- the highest rate in the nation -- for coverage. Schwarzenegger's plan includes measures that would prohibit workers from receiving multiple disability payments for the same injury; require dispute resolution more frequently to reduce litigation costs; limit penalties paid by insurers and employers in medical bill disputes; and establish uniform standards for permanent disability. However, Democrats in the Legislature, who generally do not support all of Schwarzenegger's reforms, have said that no workers' compensation reforms will be ready until the end of March (California Healthline, 2/6).
After the meeting with Schwarzenegger, legislative leaders said that they had agreed on a framework for further negotiations on reducing employers' workers' compensation insurance costs. "I think we all discussed what would be a realistic time line. We are moving forward in a way we can find some common ground," Assembly Speaker Fabian Nunez (D-Los Angeles) said (San Francisco Chronicle, 2/11). Nunez added, "I think the governor probably feels that as long as there's a genuine approach to doing that, the March 1 deadline he announced in his State of the State (speech) doesn't stand." However, Republicans "disputed that interpretation," the Bee reports. Rob Stutzman, Schwarzenegger's communications director, said that legislators have about three weeks before Schwarzenegger starts his ballot drive. Assembly Minority Leader Kevin McCarthy (R-Bakersfield) added, "There was no talk of moving a deadline" (Sacramento Bee, 2/11). However, Sen. Charles Poochigian (R-Fresno), who is sponsoring Schwarzenegger's workers' compensation reform bill, said, "The March 1 deadline may not be met specifically. I think what the governor wants to see is quantifiable movement forward in addressing the problem." In addition to Nunez and McCarthy, Schwarzenegger met with Senate President Pro Tempore John Burton (D-San Francisco) and Senate Minority Leader Jim Brulte (R-Rancho Cucamonga), the San Diego Union-Tribune reports (Calbreath, San Diego Union-Tribune, 2/11).
Assembly Insurance Committee Chair Juan Vargas (D-San Diego) "has an obligation to work with the governor to overhaul" the state workers' compensation system, not "merely preside over his committee's defeat of" Schwarzenegger's proposal, a San Diego Union-Tribune editorial states. Schwarzenegger has shown that he is "willing to compromise" to contain the "obscene costs" of the system, but he "seems determined ... to take his case to the people with a ballot measure" if the Legislature does not approve legislation to reduce employers' workers' compensation insurance costs by March 1, the editorial continues. "Vargas and his fellow Democrats would do well to work with the governor on this issue," the editorial states, concluding, "If the measure goes to the ballot in November, they could be in for another rude awakening" (San Diego Union-Tribune, 2/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.