Schwarzenegger Withdraws ‘Threat’ To Pursue Ballot Measure on Workers’ Compensation
With legislators expected to pass the workers' compensation reform bill (SB 899) Friday, Gov. Arnold Schwarzenegger (R) on Thursday said that he would withdraw "his threat to take the issue directly to voters in November," the Los Angeles Times reports (Lifsher, Los Angeles Times, 4/16). The bill would provide for immediate medical care for injured workers; require injured workers to choose from a network of employer-selected physicians for treatment, or petition a medical review panel to see a physician of their own choice; require use of American Medical Association guidelines to rate impairments to injured workers; implement provisions to encourage injured workers to return to work; and allow employers to apportion workers' compensation payments to cover only work-related injuries. The bill would take effect immediately if passed by a two-thirds majority of the Assembly and Senate and would take effect after 90 days if passed by a simple majority. Schwarzenegger originally had proposed a workers' compensation reform initiative that would cut $11.3 billion from the state's workers' compensation system by prohibiting workers from receiving multiple disability payments for the same injury; requiring dispute resolution more frequently to reduce litigation costs; limiting penalties paid by insurers and employers in medical bill disputes; and establishing uniform standards for permanent disability (California Healthline, 4/15). Schwarzenegger said that he is "happy we resolved this through negotiations without having to go to the ballot" (Abate/Hubbell, San Francisco Chronicle, 4/16). Supporters of the ballot initiative said that they are "awaiting formal word" from Schwarzenegger before canceling plans to submit by the end of business Friday the more than one million signatures they have gathered to qualify the initiative for the November ballot, the Times reports (Los Angeles Times, 4/16). "We feel very comfortable with what (Schwarzenegger) was able to get in the legislation," Sean McNally, vice president of Bakersfield-based Grimmway Farms, which contributed about $1 million to the initiative campaign, said, adding, "It's more than we thought we would get" (San Francisco Chronicle, 4/16). Schwarzenegger indicated that he likely would sign the bill in a ceremony Monday, the Times reports (Los Angeles Times, 4/16).
The Los Angeles Times on Friday examined how a provision in the workers' compensation reform bill would create an "HMO-like networks of doctors." According to the Times, the provision calling for injured workers to choose from a network of employer-selected physicians for treatment will create "a new cottage industry in managed care" because "[d]ozens of new networks of workers' comp doctors probably would pop up in the state and significantly expand a relatively new line of business for health care giants like Kaiser Permanente and WellPoint Health Networks." Some businesses say that language in the bill would "slow things down and add costs" because injured workers would be allowed to seek second opinions from two other doctors in the network, the Times reports. Meanwhile, labor advocates say that the networks would be "inherently biased" because the doctors would be chosen by employers, according to the Times. Although the bill does not address the financial arrangements for doctors in the networks, it does stipulate that "physician compensation may not be structured in order to achieve a goal of reducing, delaying or denying medical treatment or restricting access to treatment." The bill also stipulates that the doctor networks should have a sufficient number of doctors in various fields and adequate geographic coverage (Lee, Los Angeles Times, 4/16).
Business leaders are "cautiously optimistic" about and labor leaders have offered "grudging acceptance" of the workers' compensation bill, but it is still "way too early" to determine how much money the bill would save and how much workers' compensation insurance premiums would decrease, the Sacramento Bee reports. Insurance industry officials said that it could take several weeks or more to determine how much money the bill would save, and officials for the Workers' Compensation Insurance Ratings Bureau, which helps recommend premium rates, would not "even hazard a guess," the Bee reports. Insurance Commissioner John Garamendi (D) said that the bill would "reduce costs" but added that the savings would "materialize over the course of time" (Kasler, Sacramento Bee, 4/16). Assembly member Keith Richman (R-Granada Hills) said that instead of voting on Friday, Republicans wanted a week to study the bill and determine its potential ramifications, the AP/Fresno Bee reports. "There's fairly broad concern about the process, about not having the opportunity to have public or expert review on what types of savings this bill is going to generate or not," Richman said. He added that the bill likely will pass, but whether it would mean "significant cost savings for employers remains to be seen" (Wasserman, AP/Fresno Bee, 4/16).
The Assembly Insurance Committee on Thursday voted to approve a bill (ABX4 16) that would allow the insurance commissioner to oversee workers' compensation insurance employer premium rates for two years, the Sacramento Bee reports. The bill would establish minimum and maximum premium rates for a carrier-based formula that takes into consideration expenses, profit margins and claims costs. Under the bill, the insurance commissioner would have to approve rates that exceed the established maximum. The full Assembly on Friday will consider the bill, according to the Bee (Chan, Sacramento Bee, 4/16).
Summaries of recent editorials addressing the workers' compensation reform legislation are provided below.
San Diego Union-Tribune: Schwarzenegger's refusal to cap premium rates is "key" to passing the workers' compensation proposal and would allow savings to "flow from the implementation of an objective medical standard," especially for permanent disability claims, a Union-Tribune editorial states. While many legislators have not "had time to digest the bill's specifics," the measure is necessary to stop the "chronic exploitation" of a system that has forced employers to pay "exorbitant premiums, prompted an explosion of litigation and provided injured workers with paltry benefits," according to the editorial. However, the governor and Legislature "must follow through by fine-tuning" the measure to ensure that employers' workers' compensation insurance costs are reduced, the editorial states (San Diego Union-Tribune, 4/16).
San Francisco Chronicle: The workers' compensation package would "cut costs by reducing litigation, fraud and inefficiencies" without limiting "the rights of injured workers to receive prompt treatment and fair compensation," according to a Chronicle editorial. However, the "complex and ambitious measure" will require "further tweaking," as Republican and Democratic lawmakers continue to debate the consequences of regulating premium rates versus allowing a "more competitive market -- which this bill promises," the editorial concludes (San Francisco Chronicle, 4/16).
San Jose Mercury News: A ballot initiative on workers' compensation would be "a much worse route to reform than legislation" and would result in an "expensive, contentious campaign and a choice for voters between the one-sided solution embodied in the proposed initiative or no solution at all," a Mercury News editorial states. The legislation is not as "business-friendly as the initiative would be," but it contains "a better balance between the needs of injured workers and of employers," according to the editorial (San Jose Mercury News, 4/16).
- Wall Street Journal: A sign that the workers' compensation reform bill represents true reform is the "scorn the bill is receiving from the special interests -- trial lawyers and unions -- who've run roughshod over workers' comp for decades," a Journal editorial states. The "biggest [potential] change" to the state workers' compensation system is a provision that would require injured workers to choose doctors from an employer-approved pool, "rather than run to any chiropractor who'll prescribe years of massages," the editorial states, adding that provisions in the bill also would "pu[t] the decisions for who qualifies and for what back into the hands of the doctors rather than the courts" (Wall Street Journal, 4/16).
KPCC's "AirTalk" on Thursday included a discussion of the workers' compensation reform efforts. Guests on the program included Arthur Azevedo, president of the California Applicant Attorneys Association; Assembly member Jackie Goldberg (D-Los Angeles); Martin Hopper, California state director of the National Federation of Independent Business; Brendan Huffman, director of public policy for the Los Angeles Area Chamber of Commerce; Marc Lifsher, staff writer for the Los Angeles Times; and Vince Sollitto, deputy press secretary for Schwarzenegger (Mantle, "AirTalk," KPCC, 4/15). The complete segment is available online in RealPlayer. In addition, John Myers, Sacramento bureau chief for KQED Radio News, will discuss workers' compensation reform on KQED's "This Week in Northern California" Friday (Davis, "This Week in Northern California," KQED, 4/16). The complete segment will be available online in RealPlayer after the broadcast.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.