Home page — 2004-04-18

So, a deal has been done....

Workers' Compensation reform passed the State Legislature on Friday, April 16, 2004. The State Senate legal analysis (link unavailable) of the bill can be found here. For a complete copy of the text, as downloaded from workcompcentral.com, click here (archived). Now we live with the consequences..... > posted by Charles Wear > 4/17/04; 8:54:36 AM      Comment [0] (link unavailable)

Governor's influence tested this week....

As State Senator Richard Alarcon holds hearings on insurance rate regulation, the Governor drums up support for the draconian business-backed workers comp initiative. The Sacramento Bee says this week (archived) is a test of the Governor's clout. Can he get the legislators to dance to his tune and get a workers' comp reform bill passed this week? > posted by Charles Wear > 4/12/04; 11:23:46 AM      Comment [0] (link unavailable)

Governor takes insurance cash?

The Mercury News reports (link unavailable) that the Governor has accepted and kept political contributions from one of California's largest workers' compensation carriers. Has the Governor broken his pledge to not accept insurance company dollars while he is negotiating workers comp reform? Will the reported deal be derailed by the insurance company special interests who refuse to be regulated in any way? Will the alleged savings be passed on to employers or will they line the bank accounts of the insurance companies? > posted by Charles Wear > 4/9/04; 7:57:17 AM      Comment [0] (link unavailable)

Some say deal is near...

The Governor is in Hawaii. The legislators are on easter break. But Sacramento leaders say a deal is near>>>. (archived) > posted by Charles Wear > 4/3/04; 8:06:22 PM      Comment [0] (link unavailable)

Another deadline bites the dust....

Is Governor Arnold becoming like the little boy who cried "Wolf", only his cry is "Deadline." Check out this story from the Sacramento Bee>>>. (archived) > posted by Charles Wear > 4/3/04; 7:45:57 AM      Comment [0] (link unavailable)

Columnist gives excellent analysis of workers comp politics

Columnist Daniel Weintraub of the Sacramento Bee gives a thoughtful (archived) and, I believe, accurate analysis of the political situation surrounding the workers compensation reform talks. It is a must read for anyone interested in the political implications for the Governor. > posted by Charles Wear > 4/1/04; 5:28:56 PM      Comment [0] (link unavailable)

Farm workers rights to suffer?

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?

From a February 11 News Release: (archived) "SACRAMENTO, CA – Injured workers’ advocates today renewed their call for workers’ compensation insurance rate regulation, and called Insurance Commissioner John Garamendi’s proposed changes “incomplete” for failing to include caps on rates, and “flawed” for sentencing injured workers to live in pain, without adequate treatment. “After injured workers’ benefits were cut by more than $5 billion last year, most insurers did nothing but pocket record profits. The Commissioner would reduce benefits to injured workers but allow unlimited profits for insurance companies. Garamendi’s plan includes a floor on rates, but no ceiling, so insurance companies can continue to gouge California employers. That’s not right,” said David Schwartz, President-Elect of the California Applicants’ Attorneys Association (CAAA). “Garamendi’s plan takes away benefits from injured workers, benefits that are already too low. You can cut injured workers’ benefits down to zero, and without regulation insurance companies may not reduce premiums by a single dollar.” "

The Governator says that the problems with the Workers' Compensation system in California can be traced to "unscrupulous" lawyers, among others.

Quoting Gov. Arnold's campaign site (link unavailable):

"The only people who are sure to benefit from this costly broken system are the unscrupulous medical providers, lawyers and un-entitled claimants who have learned to game the system at the expense of California's employees and employers. In the end, workers' families lose, especially the millions whose jobs may be in jeopardy due to the rising cost burden on employers. "

If one is not burdened by the truth, then statements such as this one should be allowed to stand...However the truth is that in 1913, employers, workers and the state made a constitutional pact that established a system which would give workers injured on the job access to medical treatment and benefits and relieved employers from the significant liability of personal injury lawsuits for work injuries.

The system benefits mostly claimants who are entitled benefits. Fraudulent claims are a fraction of 1 percent of those filed.

As one of those lawyers who works on behalf of injured workers, I can state that the fees earned are paid by the workers from their benefit payments and never exceed 15% of recovery. If anyone is trying to game the system, it is insurance carriers who have posted millions in profits from investments, and apparently are greedy for more.