Garamendi Takes On Workers’ Comp Reforms

California’s insurance chief, saying the Legislature’s recent overhaul of the state’s workers’ compensation system was “inadequate,” on Wednesday called for additional reforms including further cutbacks to outpatient surgical centers and a crackdown on costly litigation.

Insurance Commissioner John Garamendi, speaking to the Los Angeles Treasurers Club, a group of corporate financial executives, said he would meet with Arnold Schwarzenegger today in Sacramento and was hopeful of winning the governor-elect’s backing for the proposed reforms.

“From what he has said, I believe we will be on a similar, if not the same, page,” Garamendi, a Democrat, said at the Los Angeles Athletic Club downtown.

Before his victory Oct. 7 in the election to recall Gov. Gray Davis, Schwarzenegger, a Republican, said he would seek to reduce workers’ comp litigation and eliminate “excessive” permanent disability payments.

Schwarzenegger too has said the workers’ comp overhaul passed by the Legislature in early September, and signed by Davis, was not enough.

Architects of the reform package said the changes would wring out as much as $6 billion in savings, primarily by reining in spiraling medical costs. But some have questioned whether the measures would generate the targeted savings.

Garamendi said Wednesday that lobbyists representing outpatient centers and attorneys for injured workers engineered last-minute loopholes in the reforms passed by the Legislature.

Jack Lewin, head of the California Medical Assn., suggested that it would be a mistake to further reduce workers’ comp payments to outpatient centers. The just-passed reform mandates that payments to outpatient surgical centers be limited to the Medicare reimbursement rate plus 20%.

“They did get a big cut already, and we fear that some will not be viable at the presently prescribed rate,” Lewin said.

Garamendi said that fraud takes $1 billion to $3 billion a year out of the workers’ comp system and that disputes over whether injuries actually occurred on the job have led to huge legal expenses.

“Lawyers and doctors in all too many cases are abusing the system,” he said.

Arthur Azevedo, president of the California Applicants’ Attorneys Assn., a group representing lawyers whose clients are injured workers, said Garamendi had it all wrong about legal fees in workers’ comp cases.

The fees for applicants’ attorneys, Azevedo said, are the most regulated of attorney fees.