Judge Denies Injunction To Block Regulation of State Compensation Insurance Fund Suit During Lawsuit
San Francisco Superior Court Judge James Warren yesterday denied the State Compensation Insurance Fund a preliminary injunction that would have barred the Department of Insurance from regulating the fund's finances, the Sacramento Bee reports. Specifically, the state fund, which provides workers' compensation coverage to businesses that cannot obtain coverage from a commercial provider, sought to stop Insurance Commissioner John Garamendi (D) from directing changes to the fund's reserves while the lawsuit is ongoing (Payne, Sacramento Bee, 8/6). The fund in late May filed the lawsuit against Garamendi and his agency alleging that the state is illegally regulating the fund. Garamendi has ordered the fund to refuse to provide insurance to some employers, to charge premiums that he determined and to change its business practices. Also at issue is a state regulation requiring all insurers to maintain at least $1 in reserves for every $3 in premiums to cover claims losses and provide a financial cushion. Because of recent rapid growth, the state fund's 2002 surplus of $1.8 billion was only about half of what the state requires (California Healthline, 5/29). Fund spokesperson Jim Zelinski said that although surpluses have decreased as the fund has provided coverage to more businesses, the state fund remains solvent and has adequate reserves to pay claims. Department of Insurance spokesperson Norm Williams said the fund is subject to the same solvency regulations as other insurers, adding that the department has "no intention of taking over the [fund]" (Laing, San Diego Union-Tribune, 8/6).
The San Francisco Chronicle and Investor's Business Daily recently have published coverage about the workers' compensation system. Summaries of the articles appear below:
- Legislative reform is the only way to stop the "skyrocketing cost of mandatory workers' compensation insurance" that have caused employers to pay "increasingly higher rates while legitimately injured workers receive relatively modest benefits," according to a Chronicle editorial. The Legislature should pass a workers' compensation reform package that includes a "reasonable fee schedule" for medical benefits, treatment standards and limits on certain treatments, such as chiropractic visits, the editorial states (San Francisco Chronicle, 8/6).
- Investor's Business Daily yesterday looked at reform efforts to the state's workers' compensation system, which "is sagging under high premiums, rising medical costs, fraud and pricey legal disputes" (Lau, Investor's Business Daily, 8/5).