Schwarzenegger Meets With Top Legislators on Workers’ Compensation Reform

Gov. Arnold Schwarzenegger (R) on Wednesday met with four Republican and Democratic legislative leaders to discuss workers' compensation reform, the Los Angeles Times reports (Nicholas et al., Los Angeles Times, 3/4). 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. 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. Schwarzenegger said he would seek to place a measure on the November statewide ballot if legislators did not pass reform legislation by March 1. However, Democrats in the Legislature have said that no workers' compensation reforms will be ready until the end of March (California Healthline, 3/3).

Senate President Pro Tempore John Burton (D-San Francisco) said, "We made progress" at the workers' compensation meeting with Schwarzenegger, adding, "I'm very hopeful we'll have a workers' comp package." Despite the negotiations, Joel Fox, president of the Small Business Action Committee, said that his group on Friday will begin collecting the more than 500,000 signatures needed to qualify Schwarzenegger's workers' compensation initiative for the November ballot. Fox said that Schwarzenegger would be able to find a legislative compromise because "[i]t's evident he can take an issue to the people and sell them on it," but added that he expects the legislative compromise to be reached after April 16, the deadline for submitting signatures. Fox said that he would keep the workers' compensation measure off the ballot if the legislative compromise "can save over 25% of the costs of workers' compensation." According to the Times, Schwarzenegger's advisers "are confident" that Tuesday's election results showed that the governor "is [Sacramento's] dominant political figure," and they said that Schwarzenegger "will marshal his popularity in waging the same sort of aggressive, well-financed ballot campaign that yielded a decisive victory on Propositions 57 and 58" if lawmakers do not pass a workers' compensation reform bill. Democratic legislators said Wednesday that they "would not be cowed in the negotiations" over workers' compensation reform, the Times reports (Los Angeles Times, 3/4).

Summaries of a recent editorial and column addressing workers' compensation reform are provided below.

• San Diego Union-Tribune: Schwarzenegger "is a savvy political tactician" and the "unmistakable" message of his meeting Wednesday with legislative leaders on workers' compensation is, "If you don't resolve this chronic problem, which is driving jobs and businesses away and preventing others from coming here, I will go to the people with another ballot measure," a Union-Tribune editorial states. Lawmakers who do not "take seriously [Schwarzenegger's] campaign promise to revamp the workers' compensation system ... could be looking for other jobs after the November election," the editorial concludes (San Diego Union-Tribune, 3/4).
  
  
• Alan Krueger, New York Times: While it is "unclear what will happen next" with workers' compensation reform, "it is clear that the state workers' compensation system needs surgery," Krueger, Bendheim professor of economics and public affairs at Princeton University, writes in his "Economic Sense" column. According to Krueger, the problems with the California workers' compensation system include high rates of litigation; a "complex system for rating permanent injuries that are only partly disabling"; the low return-to-work rates of injured employees; and high medical costs. While many of Schwarzenegger's reform proposals are good, some proposals -- including one that would deny compensation for injuries that result from cumulative activities unless they are proven to be "predominantly caused by actual activities of employment" -- could produce "the type of collateral damage [that] would set workers' compensation insurance back a century" (Krueger, New York Times, 3/4).

Links to additional media coverage of the expected effect of the passage of Propositions 57 and 58 on negotiations over workers' compensation reform are provided below.

• KQED's "California Report": The complete segment will be available online in RealPlayer after the broadcast (Margolis, "California Report," KQED, 3/4).
  
  
• "Schwarzenegger, Lawmakers Going Steady" (Salladay et al., San Francisco Chronicle, 3/4).
  
  
• "Schwarzenegger Clout Continues To Mount" (Ritter, USA Today, 3/4).