Legislators Will Not Meet Governor’s Deadline on Workers’ Compensation Reform; More Talks Likely

Legislators will not meet Gov. Arnold Schwarzenegger's (R) deadline for passing a workers' compensation reform bill, but the governor is expected to urge lawmakers to continue negotiations, the Sacramento Bee reports (Chan, Sacramento Bee, 3/1). 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, 2/26). Vince Sollitto, a spokesperson for Schwarzenegger, said that the governor "encourages the discussions [about workers' compensation reform] to continue," adding that Schwarzenegger "believes having a deadline has brought focus to the process and has gotten us as far as we have today." However, Sollitto said that Schwarzenegger "will take the necessary steps in March to seek reform in November should it be necessary" (Sacramento Bee, 3/1). Serious negotiations are not expected until after Tuesday's election, the San Francisco Chronicle reports.

Sen. Richard Alarcon (D-Sun Valley) and Senate President Pro Tempore John Burton (D-San Francisco) are expected to unveil a reform package within two weeks, the Chronicle reports. "My gut is that we will have a very broad set of reforms that the governor and bipartisan support in the Legislature will embrace," Alarcon said (Hubbell, San Francisco Chronicle, 3/1). Sen. Charles Poochigian (R-Fresno), who is sponsoring Schwarzenegger's reform proposal, said that there is "plenty of room for conversation" about amending his bill but not "if reforms don't lead to predictable, quantifiable savings." Despite lawmakers' plans, business groups and other supporters of workers' compensation reform intend to gather signatures to get an initiative on the November ballot, the Bee reports. "There's nothing that stops the governor from negotiating with the Legislature past the March 1 deadline. But at some point, we're going to have to move on that initiative," Joel Fox of the Small Business Action Committee, which is sponsoring the ballot initiative, said. Allan Zaremberg, president of the California Chamber of Commerce, said, "We all want to see a legislative solution rather than going to the ballot," but he added that "any delays for the Legislature to finish the work prevent you from being on the ballot in November." It is not known whether legislators can reach an agreement on a workers' compensation reform proposal and stop the initiative campaign, the Bee reports. "You have huge vested interests. Legislators historically don't like to ignore these large contributors. It has all the makings of a soap opera," Barbara O'Connor, director of the Institute for the Study of Politics and Media at California State University-Sacramento, said (Sacramento Bee, 3/1). According to the AP/Orange County Register, the "actual drop-dead date" for legislators is April 16, when supporters of the workers' compensation reform initiative must turn in signatures (Lawrence, AP/Orange County Register, 3/1).

After the election Tuesday, lawmakers should "focus the bulk of their attention on fixing California's dysfunctional workers' compensation system," an Orange County Register editorial states. Schwarzenegger's plan and Insurance Commissioner John Garamendi's (D) proposal "each try to address the key problems in the system: excess litigation and the lack of uniform standards for determining the seriousness of medical problems," the Register contends, adding that the proposals give the Legislature material to work with. While a ballot initiative "is OK as a last resort," the Legislature needs to understand "the importance of workers' comp reform to the economy, and mak[e] needed changes before the end of March," the editorial concludes (Orange County Register, 2/29).