By HOWARD FINE
Efforts are under way in Sacramento to undo substantial portions of the workers’ compensation reforms that have generated big cuts in premiums for many employers.
Trial lawyers, unions and workers’ compensation doctors are mounting a push to increase benefit payouts to injured workers and boost fees for physicians.
Three voter initiatives that would make drastic changes to the workers’ compensation system have been submitted to the state’s attorney general. All would raise benefits to injured workers and give them more power to choose doctors.
Two of the measures go further: They would allow injured workers to sue their employers.
“This would be another negative blow for jobs in the state,” said Alex Bhathal, executive vice president of Tustin swimsuit maker Raj Manufacturing Inc. “For all the talk about improving the business environment, we have seen little in terms of concrete results.”
The rollback would add insult to injury for Raj. The company, which employs about 400 people locally, hasn’t seen a reduction in premiums, Bhathal said, echoing sentiment from some manufacturers, builders and other businesses seen at risk for claims.
“In fact, they rose last year,” he said.
Raj expects savings down the road based on the company’s improved safety scores, he said.
“Even with the expected future savings, our workers’ comp costs will probably remain at a very high level and be a major hindrance to future hiring in the state,” Bhathal said.
On Defense
Business groups and Republican lawmakers are on the defensive, trying to keep the major reforms enacted two years ago from being undermined, either in the Legislature or at the ballot box.
Last week, a coalition of business groups formed a committee to oppose any workers’ compensation ballot initiative. The groups credit the 2004 reforms and a set of 2002 changes with bringing premiums down an average of 40% from their 2003 highs.
Any attempt to reopen these reforms, they say, again could send premiums up.
Instead, the groups rather would see minor administrative tweaking of some of the benefit payout formulas to take care of the most egregious cases of slashed payouts.
“I’ll be out in the arena if the Legislature reopens this,” said state Sen. Charles Poochigian, R-Fresno, who authored the 2004 workers’ compensation reforms.
Every employer in the public and private sectors must carry workers’ compensation insurance or be self-insured against workplace injuries.
What Brought Reforms
Between 2000 and 2004, the average premium more than doubled to $6.40 per $100 of payroll, by far the highest in the nation.
This huge jump prompted many businesses to consider relocation offers from other states and became a major issue in the recall election that brought Gov. Arnold Schwarzenegger to power.
In early 2004, Schwarzenegger himself threatened a voter initiative if lawmakers failed to enact a workers’ compensation reform package.
At the time, Schwarzenegger was at the height of his popularity and the Legislature complied, passing the Poochigian bill over the objections of labor and lawyers.
Since then, Schwarzenegger’s popularity has plummeted, prompting the push to reopen the reforms by unions, lawyers and doctors. These groups claim that the way the reforms have been implemented by the state Division of Workers’ Compensation has resulted in sharp drops in benefit payouts to many injured workers.
“There’s been a 50% to 70% reduction in the permanent disability benefits beyond the limits agreed upon in the 2004 reforms,” said David Schwartz, a principal in the Torrance-based law firm of Ozurovich and Schwartz LLP and legislative chair of the California Applicants’ Attorneys Associa-tion.
Dems Back Changes
Senate President Pro Tem Don Perata, D-Oakland, and Assembly Speaker Fabian Nu & #324;ez, D-Los Angeles, have said changing the regulations is high on their agendas.
Employer groups say it’s still way too early to make substantial changes.
“Before anybody tries to craft a solution, we have to determine whether there’s a problem,” said Allan Zaremberg, president and chief executive of the Sacramento-based California Chamber of Commerce. “Many of these reforms were enacted only a year ago. It often takes cases two or three years to go through the system. It would be a mistake to jump the gun now with changes.”
Doctors specializing in industrial medicine are pushing for higher fees, saying the sharp drop in reimbursements since the reforms were enacted have devastated their ranks.
The powerful California Medical Association also is pushing for higher payments.
The deadline for bills to be introduced is Feb. 24. Proposals still could be introduced into existing legislation after that date.
All players in workers’ compensation are watching the progress of the initiatives now. All three were submitted by a Danielle Viohl, a registered voter who lives, or at least recently lived, in Pomona.
Various parties have said that they have not been able to contact Viohl.
Long Shot?
The key will be whether the trial lawyers, industrial medicine doctors, labor or some other group will emerge to kick in the $1.5 million to $2 million it would take to obtain the necessary signatures to place one or more of the measures on the ballot.
So far, few think the money will be there for the measures.
“At this point, we don’t believe these initiatives have legs,” said Lori Kammerer, a Sacramento lobbyist who represents major employers on workers’ compensation issues.
But business groups still are taking the initiatives seriously, especially if provisions survive to allow injured workers to file lawsuits against their employers.
Fine is a staff writer with the Los Angeles Business Journal. Purnima Mudnal contributed to this story.
