Posted on 08 Apr 04
The following news story by Dawn Love was reported in the Insurance Journal Online on April 5, 2004
California legislators and Governor Schwarzenegger have reached a tentative deal on reforming the state's ailing workers' comp system, according to The Desert Sun. An outline of a workers' comp reform package has been agreed upon, but exact details appear to be in a state of flux.
"There is a deal being mulled, but Republicans want to circulate it in public view first," said California Department of Insurance spokesman Norman Williams.
"If the legislators are going to have something, they'll have it by April 12," said John Norwood, owner of Norwood & Mattoch, the lobbying firm for Insurance Brokers and Agents of the West. "People are probably trying to draft something so [lawmakers] have consensus on what the language will look like, because language can vary substantially. Republicans have insisted that the language be out there for a week prior to a vote."
Norwood believes that bill drafting has been going on for a couple of days. Republican leaders reportedly want to wait until April 12, when the Legislature returns from its spring recess, to approve the deal. This is to give the public and interest groups time to review the proposal, according to Assemblywoman Bonnie Garcia (R-Cathedral City). The governor's office was not available for comment at press time.
In the past few weeks, negotiations have centered around rate regulation for private insurance carriers and the publicly owned State Compensation Insurance Fund, which controls between 50 and 60 percent of the workers' comp market.
Norwood does not think rate regulation of the private market will cure all of the system's problems.
"Certainly the labor unions and the Democrats have made a big deal about rate regulation, but Republicans have pushed back pretty hard, as the governor's office has, that doing a rate regulation on 25 percent or 30 percent of the market isn't going to cure all the ills of workers' comp," he said. "And at the same time, doing a rate regulation will serve as a non-incentive for people to commit capital here."
Also at issue in the negotiations is employer designation of physicians and determining objective medical guidelines for calculating permanent partial disability benefits.
Lawmakers do not have much time to reach a deal. April 16 is the deadline for business groups to submit approximately 598,000 signatures to qualify for a November ballot initiative. Joel Fox, president of the Small Business Action Committee, said that his group is on target to collect all of the required signatures. The group plans to end the signature drive if a deal is reached on significant reforms.
According to Mary-Lou Misrahy, COO of Employers Compensation Insurance Company, the public has never really had an opportunity to reform a state's workers' comp system. Reform has almost always come through the legislative process, she said.
"This is a groundbreaking way of getting workers' comp reform. My concern is that it's such a complicated issue. It is so complex and hard to understand that taking it to the voters is going to be a difficult proposition. It's an interesting way of trying to get the Legislature to do something meaningful."
For continuing developments on the progress of workers' comp reform, read Insurance Journal's Daily Headlines or go to http://www.insurancejournal.com.