Workers’ Comp
2004 was a big year for workers’ comp.
Signatures were collected on an initiative to reform the badly broken system. The threat of this initiative and the popularity of recently elected Gov. Schwarzenegger brought Democrats to the table and a compromise was worked out and passed with a nearly unanimous vote.
Before the reforms, businesses in California paid by far the highest premiums in the country for workers’ comp insurance. However, the injured worker received a benefit that ranked near the bottom of the 50 states. Highest cost and the worst benefit,this is the definition of broken. Because of the reforms, rates were estimated to drop about 25%.
In spite of this, I still probably get asked more questions about workers’ comp insurance than just about anything else: “Are the reforms working?” “Why aren’t my rates lower?”
The reforms are working but many have either just gone into effect or still are being put into place. Rates have dropped between 5% and 10% and experts still believe that the 25% reduction will be achieved within a couple of years. Fifteen new insurance carriers have entered the California market, which will increase competition and lower rates.
With the passage of this major reform, I figured that the Legislature would take a breather on this issue for a year and give the reforms a chance to work their way through the system.
I was wrong. There now is a lot of activity on the workers’ comp front, and much of it is not good.
The unions and trial lawyers have decided that they were “duped” into accepting last year’s reforms. They say that these reforms have resulted in injured workers not being cared for. They say that rates haven’t dropped because insurance companies are not lowering their rates as their claims go down. They also hope that the governor is not as strong as he was a year ago and that they may be able to make him yield to their agenda.
So, here is what the special interests are doing:
They have union-organized protests around the capitol with workers who claim they cannot get care under the new rules.
They have introduced a number of bills to roll back or to restrict last year’s reforms.
They have proposed complete re-regulation of workers’ comp rates, having them established not by the market but by yet another newly created state commission (despite the fact that we already have an Insurance Commissioner, who is charged with evaluating rates).
Democrat Assembly Speaker Fabian Nu & #324;ez said that the party would hold up the budget until they get the repeal of last year’s reforms. He is willing to tank the state’s credit rating again to make sure that the trial lawyers have the ability to sue even more.
Can you believe this? And they say they are doing all this to “help small business” and save them from the big insurance companies!
Never mind that 60% of the market is controlled by the State Compensation Insurance Fund, which already is a quasi-governmental agency. Never mind that they are advocating a return to the broken system that nearly put California out of business. Never mind that the new law is absolutely not harming injured workers, rather it is harming the incomes of a few trial lawyers.
Now, if any of this passes through the Legislature, I assume that the governor will veto it. But we cannot take this lying down.
If anything, the system in the future will need more reforms, not less. So, the workers’ comp issue is back on the table. And it shows you just how important it is to have Arnold Schwarzenegger as governor, instead of a big union boss such as Phil Angelides, Bill Lockyer or Steve Westly.
John Campbell
State Senator
R-Irvine
Holy L.A.!
I don’t know if you in Orange County heard that we Catholics recently elected a new pope.
I only mention this because while Cardinal Roger Mahoney, Archbishop of Los Angeles, made several appearances on the cover of the Los Angeles Times, the Bishop of Orange was nowhere to be found.
This is why Arte Moreno wants to call the team the Los Angeles Angels!
Martin Sanchez
Oceangroup
Long Beach
OCBJ Online
I love the Business Journal’s daily e-news. Attractive, bite-sized and very readable!
Walter Cruttenden
Cruttenden Partners
Newport Beach
Taxes
Now that tax day has passed, it adds insult to injury to know that “the lawsuit tax” is taking money out of our pockets, just to make personal injury lawyers richer.
According to a study, completed by Tillinghast-Towers Perrin, each U.S. citizen pays $845 annually in his/her share of lawsuit costs, a 4% increase versus 2003.
This is a hidden cost that everyone pays. Lawsuits increase the cost for food, healthcare and services that we use every day.
In addition to the financial costs, lawsuit abuse clogs courts, delays justice for legitimate victims and threatens jobs.
Rather than pandering to this special interest, legislators ought to act in the best interest of all Californians.
Maryann Maloney
Executive Director
Orange County Citizens Against Lawsuit Abuse
