Insurance Commissioner Sues State’s Workers’ Compensation Fund

State Insurance Commissioner John Garamendi (D) on Monday filed a lawsuit against the State Compensation Insurance Fund in a state court in San Francisco, requesting that the not-for-profit insurer grant access to all records, documents and employees, the Los Angeles Times reports. Workers' compensation reform legislation enacted last year requires Garamendi to report to the Legislature on the fund's financial condition (Lifsher, Los Angeles Times, 4/6). In September 2003, former Gov. Gray Davis (D) signed into law two worker's compensation bills (AB 227 and SB 228) that established fee schedules for treatments and prescription drugs; limited chiropractic and physical therapy visits; implemented 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. The State Fund provides workers' compensation insurance to more than 50% of California businesses (California Healthline, 2/12). Garamendi said he does not have enough information to review the fund's finances and to ensure that savings generated from last year's reforms are being passed to California employers through lower premiums. State Fund President Dianne Oki on Monday said Garamendi has a right to report on the insurer's financial condition, but she objected to his call for "another repetitive review" by outside consultants at the insurer's expense (Los Angeles Times, 4/6).

Senate Labor and Industrial Relations Committee Chair Richard Alarcon (D-Van Nuys) on Monday unveiled a proposal that would create a three-member Workers' Compensation Insurance Commission to regulate workers' compensation insurance rates, the Sacramento Bee reports. The panel, which would include Garamendi, a top state Division of Workers' Compensation official and Attorney General Bill Lockyer (D), would set the minimum and maximum rates insurers could charge employers for workers' compensation coverage and review insurers' requests to charge higher or lower rates. The proposal would also allow consumer groups, insurers and other outside parties to comment on rate issues, similar to a process the Public Utilities Commission employs. Some Republicans have objected to the proposal, which addresses one of the remaining points on which negotiations for workers' compensation reform "remain snagged," according to the Bee (Chan, Sacramento Bee, 4/6). Gov. Arnold Schwarzenegger (R) and legislative leaders on Friday reached an agreement on the outline of a plan to overhaul the workers' compensation system. Under the compromise, rates would be regulated only if there were enough insurers willing to sell policies in the state. If there were not enough, premiums would be capped, and the state would have to approve any increases. Maximum premiums would be based on medical costs plus a company's ratio of premiums to losses, and price controls would likely expire after one to three years. The compromise also includes measures to create a numerical rating system to determine a worker's disability; establish a two-tier payment system for workers who can return to their jobs and those who cannot; require injured workers to visit their employers' choice of physician three times before visiting their choice of physician; and permit pilot programs combining workers' compensation coverage with traditional health insurance coverage (California Healthline, 4/5). KPCC's "AirTalk" Monday included an interview with Los Angeles Times reporter Marc Lifsher about the workers' compensation reform negotiations (Mantle, "AirTalk," KPCC, 4/5). The complete segment is available online in RealPlayer. In addition, KPCC's "Talk of the City" Monday included an interview with Sacramento Bee columnist Dan Walters about the negotiations (Felde, "Talk of the City," KPCC, 4/5). The complete segment is available online in RealPlayer.