Home page — 2004-06-14

State Compensation Insurance Fund cuts premiums...

State Compensation has announced premium cuts of 7% (link unavailable). For all of the talk about how reform of the system will cut costs, there is no mechanism to guarantee that if costs are cut, that premiums will be reduced. Watch for the profit announcements from major worker's compensation carriers over the next year.

From the California Applicant's Attorney site:

[Archived image unavailable]

The Mercury News has a great story about the difficulties with the system. Click here>>> (archived) I'm sorry, though, I don't understand. We are supposed to feel sorry for the employer who failed to give needed medical treatment and therefore was penalized? We are supposed to feel bad that so much money has been paid out for this poor woman's destroyed back?

This story is not the norm, unless you consider the way the adjuster's behaved, delaying benefits and treatment. If too much control is put in the hands of the folks at "risk management", then the people suffering will be injured workers.

So, the deadline that Governor Arnold (archived) urged last week has been missed. With pledges to work on, and comments on making steps forward and back, the political battle wages on. On one side the Governor urges workers to screw themselves by signing petitions for the ballot initiative. On the other, he claims to be negotiating in good faith.

What seems clear to me is that worker benefits are going to be downgraded. A person with a serious back injury, one requiring surgery and leaving them with constant pain, might only receive between $20 and $30,000 in "permanent partial disability" payments. Is that an unjust reward? If you think so, then sign the petition, but be careful that you never injure your back....

One quick way to end the Governor's plan to screw injured workers is to refuse to sign the petition that will put the initiative on the ballot. Anyone who works for a living is making a big mistake if they sign to end free medical choice and the "no-fault" aspect of the system.

Are insurance companies that needy that they have to be guaranteed years of million dollar profits? Don't sign the petitions...

It's this week or else, according to an Associated Press report of the Governor's latest threatened deadline (link unavailable). Appearing at what looked like a campaign rally for the business and insurance company-backed work comp initiative, the Governor gave legislators until the end of next week to pass a reform bill.

Otherwise, the Governor will take the matter to the electorate in November, and he promises that he "will win."

Wearing a campaign jacket with the slogan, "Join Arnold, Fix Workers' Comp, Terminate Fraud," the Governor promised that "special interests" in Sacramento would not halt the reform.

So workers, and their advocates, attorneys and unions, are "special interests." But the insurance companies who have donated $500,000 since the beginning of the year to the Governor's political coffers are not "special interests."

The slogan should read: "Join Arnold, Screw Injured Workers, Support Insurance Company profits."

On one hand, Governor Arnold is making statements about his desire for a legislative compromise on workers comp. On the other hand, his political action committee has contributed $1 million to the group gathering signatures for the ballot initiative. What is the Governor doing? Is he just playing politics with workers' compensation?

The proposals take medical choice away from injured workers. They eliminate the "no-fault" component of the system. They put medical treatment decisions in the hands of "faceless" medical practioners. And they essentially eliminate benefits for the permanent consequences of work-related injuries.

These seem like serious rights. Don't they deserve more consideration than this? This is not the time for playing politics.

State Senate Democrat Richard Alarcon (archived), author of some of last year's workers compensation reforms announced that savings (archived) from those reforms amounted to $7 billion based on revised estimates of the WCIRB [Workers' Compensation Insurance Rating Bureau of California].

It's hard to keep up with these numbers. The way I remember them is as follows: Estimates of the cost of workers comp for 2003 are first made at $29 billion. After the reforms they are lowered to $25 billion. The governor announces that he wants to make reforms to take $11 billion out of the system. Now, the announcement comes that 2003 is estimated at $17.9 billion.

By the way, there has been absolutely no requirement that insurers pass on premium savings to the employers paying the premiums. The insurers are on their way to millions in profit while at the same time small businesses are being pinched by increased premiums. What's wrong with this picture?

So, the Governor has scored a big, bi-partisan political victory with the passage of propositions 57 and 58 in last Tuesday's election. Now he is turning his focus to "true" workers' compensation reform.

Initiatives have been drafted, signatures are ready to be gathered. The question is, what will "true" reform mean for injured workers? Will they lose their right to choose their treating doctor? Will the no-fault system be replaced? Will the savings be passed on to employers without insurance rate regulation?

Stay tuned for further developments.

Tim Russert interviewed Gov. Schwarzenegger on NBC's Meet the Press this Sunday. I couldn't tell if Russert was giving Gov. Arnold a pass, but the questions didn't seem too tough.

Two things I noticed. There was no mention of California's Workers' Compensation system, unless the governor's comments about bringing jobs back to California count. The second thing I noticed was Gov. Arnold's discussion about President Bush carrying California in 2004.

It is possible that some of the Republican strategists have figured out that the workers' compensation issue is just the kind of thing that could energize the "Democratic base." That could be why there has been more discussion lately about compromise.

You may recall that the governor gave the legislature a March 1 deadline to deliver reform, or he would take the matter to the voters in the form of an initiative. Hopefully, wiser heads have realized that a complex issue needs more than can be delivered by the initiative process.

If the matter was on the ballot as an initiative, there would be massive action to defeat it, that would be guaranteed. That action might bring out the votes that could keep Bush from winning California and possibly, reelection to the presidency.

In a recent article in the Victorville Daily Press (archived), restaurant owner, Val Christensen, is quoted extensively. One paragraph says:

"Christensen said his business has had minimal workers' compensation claims. He blames the skyrocketing costs on fraud and abuse relating to workers' comp, including lawyers encouraging employees to deceitfully file disability claims as workers' compensation claims, thus allowing the lawyers maximum involvement in the claim."

It's interesting that the anecdotal claims of the small business owner are interwoven with a bank survey of small business owners to raise workers' compensation insurance rates as a major concern of small business owners.

However, the facts are that statewide, fraudulent claims account for less than 1% of all claims filed. Who are these "lawyers" who encourage employees to file false disability claims? And how can they possible benefit from these false claims. Work injury lawyers are paid a maximum of 15% of the award they obtain for an injured worker. Clearly a false claim would yield an award of $0.00. My mathematics tells me that 15% of 0 is 0. Is the small business owner aware that any attorney caught encouraging such a practice would be disbarred and prosecuted for a felony that might have a prison term of five years and a fine of $50,000?

I wonder why the small business owner doesn't complain about the insurance carrier raising his premiums to make up for their investment losses over the past several years. Has anyone explained to them that there is nothing regulating the insurance carriers ability to make a profit?