Schwarzenegger, Lawmakers Miss Friday Workers’ Compensation Deadline, Focus Talks on Insurance Fund

Lawmakers failed to meet Gov. Arnold Schwarzenegger's (R) Friday deadline for reforming the state's workers' compensation system, as discussions were "bogged down" with a number of issues, the San Jose Mercury News reports (Folmar, San Jose Mercury News, 3/27). According to Senate Minority Leader Jim Brulte (R-Rancho Cucamonga), lawmakers remain in disagreement over how to gauge what portion of a worker's injury is job-related; how to calculate benefits for partial disabilities; and how to determine proper treatments for specific injuries. The question of whether reform legislation should include a provision to impose partial regulation of insurance rates was not discussed at Friday's session (Lifsher, Los Angeles Times, 3/27). Schwarzenegger and other members of the so-called "big five" group working on the reform package continued to talk Sunday evening, reaching an agreement that the quasi-public State Compensation Insurance Fund, which controls 50.5% of the state's market, "could single-handedly drive down rates with the right enticement from lawmakers," the Times reports. Schwarzenegger and his staff are studying a proposal that would eliminate a two-year-old law that requires the fund to follow the same standards for capitalization and financial solvency reviews required of private insurers. Elimination of such risk-based capital standards would allow the fund to lower its $11 billion in reserves and cut rates to customers, a move that could be followed by private insurers. The change, when implemented as part of a workers' compensation reform package, could cut employers' premiums by at least $159 million per year, according to staff working on the negotiations (Lifsher, Los Angeles Times, 3/29). Legislative staffers were scheduled to continue negotiations on Monday, but no new talks among the governor and lawmakers are scheduled. Schwarzenegger still hopes that lawmakers can pass legislation before they adjourn for spring recess on Friday, according to the Sacramento Bee (Chan, Sacramento Bee, 3/29). Brulte has said he wants any legislation crafted by lawmakers to be circulated publicly for seven days before a vote, even if lawmakers have to cancel their spring recess (Folmar, San Jose Mercury News, 3/27).

Washington state-based Costco Wholesale on Friday announced that it will collect signatures to qualify a ballot measure on workers' compensation, Reuters/San Diego Union-Tribune reports. According to James Sinegal, Costco has ordered enough petition forms to gather up to 900,000 signatures at its California stores; it needs 598,000 valid signatures to qualify the measure for the November ballot. According to Sinegal, Costco overpaid by $40 million for workplace injury insurance in California in 2003. He added that workers' comp costs in the state are higher than in the other 36 states in which the company has stores, combined. One analyst said that Costco's signature-gathering effort "shows the retailer has become fed up with plodding legislative talks" about reforming the workers' compensation system, Reuters/Union Tribune reports (Reuters/San Diego Union-Tribune, 3/27). The San Jose Mercury News on Sunday profiled one former Costco employee's experience receiving care through the state's workers' compensation system (Lohse, San Jose Mercury News, 3/28).

The San Francisco Chronicle on Monday ran a series of articles examining the state's workers' compensation system.

• "System Seen as Ripe for Overhaul": The article examines problems in the system in general, reform efforts and the possibility of a November ballot measure if a compromise is not reached (Abate, San Francisco Chronicle, 3/29).
  
  
• "Insurance Executive: Workers' Comp Provider Says Issue Too Complex for Ballot Initiative": The article profiles Stanley Zax, chair of Zenith National Insurance, who says that while he "wants a reform bill," his experience makes him doubt legislation "would actually restrain costs," according to the Chronicle (Abate, San Francisco Chronicle, 3/29).
  
  
• "Fraud Investigator: Expert Sees Fraud by Bosses, Not Workers, as a New Twist": Fraud investigator Steven Begley said that the "hot rip-off in the insurance racket" is premium fraud by employers, according to the Chronicle (Hubbell, San Francisco Chronicle, 3/29).
  
  
• "Book Editor: Woman Pleased With Way System Worked After Her Injury": The article profiles a book editor who was treated for a repetitive strain injury in 2000 and said she had a "good experience" with the state's workers' compensation system (Abate, San Francisco Chronicle, 3/29).
  
  
• "Physical Therapist: Reforms Result in Treatment Delays": A physical therapist said that if the state "imposes medical guidelines as strict treatment standards, it will be a disaster." The therapist suggests "a far higher level of accountability" among physical therapists "that would allow insurers to track treatment with more precision," according to the Chronicle (Hubbell, San Francisco Chronicle, 3/29).
  
  
• "Attorney: Injured Workers' Lawyer Defends Role": Workers' compensation attorney Jeremy Smith said that reforms would "make it far harder" for him to argue on behalf of injured workers and "would hamper a worker's expectation of being treated fairly by the system," the Chronicle reports (Hubbell, San Francisco Chronicle, 3/29).
  
  
• "Corporate Executive: Pushing Legal Standards To Limit Missed Work": Bill Zachry, who runs Safeway's workers' compensation program in 22 states, says that California's system is "plagued by excessive medical and legal costs" and that it "disempowers the employees," the Chronicle reports (Abate, San Francisco Chronicle, 3/29).