Tentative Workers’ Comp Deal Reached

Gov. Arnold Schwarzenegger and legislative leaders agreed Friday on the outline of a plan to overhaul the state’s workers’ compensation system. The governor then left for an eight-day vacation in Hawaii.

“It’s pretty well cooked,” said Senate President Pro Tem John L. Burton (D-San Francisco), who has spent hours in negotiations with Schwarzenegger in recent weeks.

The governor “feels good about the work that was done this week with the four legislative leaders,” said Rob Stutzman, his communications chief. “We’re in a good place.”

But officials stopped short of declaring a final deal, as aspects still needed to be refined.

Staff members are drafting what is expected to be a 1,000-page bill meant to revamp an insurance system whose rising costs are blamed for chasing some businesses out of California.

Differences have not yet narrowed to the point where the governor is ready to abandon his effort to gather enough signatures to put a workers’ comp overhaul on the November ballot. As late as Friday night, aides were urging people to sign the petitions in case a legislative solution fell through.

Burton said the negotiators hoped to have the voluminous legislation drafted by April 8, in time for lawmakers to review it over the weekend.

If there are no hitches, he said, public hearings could be held April 12, clearing the way for the legislation to be voted on by the Senate and Assembly shortly thereafter.

The remaining worry, Burton said, is “basically whether or not the language of the bill accurately reflects the intent of our discussions and then the logistics of how you get the ... thing done by next week.”

Sen. Dick Ackerman (R-Tustin), who is to succeed Jim Brulte (R-Rancho Cucamonga) as Senate GOP leader, said, “We’ve got a general agreement on a lot of points. The governor wants to get something in print because he realizes each of these points affects another point.”

The most contentious and complex issues in the workers’ comp debate involve changes in managing medical care for injured workers and deciding the level of permanent disability benefits for employees who have suffered on-the-job accidents.

Multiple sources close to the negotiations say the deal is shaping up as follows:

* Permanent disability: The plan would create a set of so-called objective medical conditions based on guidelines for determining the extent of a worker’s disability. The list of conditions would follow American Medical Assn. guidelines that have been adopted in workers’ comp programs in other states.

The seriousness of the disability would be translated into a numerical rating based on the worker’s estimated lifetime wage loss as calculated using a database developed by Rand Corp. The higher the rating, the greater the payout in benefits.

* Back to work: The deal would set up a two-tier system for getting injured workers back on the job so they can collect paychecks instead of disability payments. Employers would be encouraged to provide alternative duties that injured workers could perform without aggravating their condition. Workers who cannot return to work would receive higher benefits than those who can.

* Doctor choice: The plan would eliminate the current system that allows an injured worker to choose his or her own physician after receiving treatment for 30 days from a doctor picked by the employer or the employer’s insurance company. A worker would be required to make three visits to the company doctor before being allowed to go to a personal physician. A request to see a personal doctor would be reviewed by an independent panel, which would decide which provider would treat the patient.

* Rate regulation: Regulation of premiums for workers’ comp insurance, a key point of contention, would occur only if there were not enough insurers willing to sell policies in California. In that case, premiums would be capped, and rate hikes would have to be approved by the state. Maximum premiums would be set based on medical costs and a company’s ratio of premiums to losses. Price controls probably would expire after one to three years.

* Combining coverage: Companies and their unions could agree to create cost-saving pilot programs combining features of current healthcare systems, such as health maintenance organizations and preferred provider organizations, with workers’ compensation coverage. Employers could save money by paying only one health insurance premium to cover workers and their families both on and off the job. Workers would benefit by having on-the-job injuries treated by their personal physician rather than by a doctor hired by their employer or an insurance company.

“We haven’t seen any language yet. You can’t do anything until you see language,” said Assembly Minority Leader Kevin McCarthy (R-Bakersfield). “There’s some concepts. There are still disagreements. But I do see it moving in a better direction than I saw it moving last week.”

Reports of a framework for a deal on workers’ comp were greeted with relief by economists worried that high insurance rates were a barrier to hiring.

“It’s very, very important,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. “You can’t [overestimate] the psychological impact of this. Employers were being cautious about hiring, and I think this could start to get the state’s job market growing a little more rapidly.

“Hopefully, it’ll stop the ads by Nevada [urging California companies] to come do business there.”

But some attorneys who represent injured workers were critical of the proposed deal.

“The poor and middle-class workers will lose, and corporate insurers will gain,” said Art Azevedo, president of California Applicants’ Attorneys Assn. “I am very disappointed, and we will oppose it.”

Azevedo blasted the proposal to restrict workers’ ability to choose their own physician, calling it “obscene.” The concept has also raised concerns among chiropractors -- a group that has drawn fire for contributing to the recent rise in workers’ compensation costs.

Lauren Papa, a Los Angeles chiropractor, says she has no problems with the proposals on doctor choice. But she expressed concern about how a panel might resolve disputes between a worker and an employer about who should be the treating physician.

“I’m panicked for the patients,” she said. In many cases, she said, uninsured workers are coming to see her for temporary treatment while they wait for approval on tests and surgeries that are hard to get.

And signs that the reform package won’t include strong regulation of workers’ comp insurance rates worried some consumer advocates.

A lack of regulation would be “far worse than a disappointment,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights. “It’s devastating for the California economy.

“If we want to give businesses and the public relief, we have to truly regulate insurance rates.”

The Hawaii trip is the longest vacation the governor has planned since taking his family to Idaho over the Christmas holiday. Aides defended his decision to leave with the workers’ comp issue not completely settled.

“While staff is working and while the Legislature is out of town, the governor is taking some time with his family,” said Margita Thompson, spokeswoman for Schwarzenegger. “Phones do work in Hawaii.”

Times staff writers Michael Finnegan, Elizabeth Douglass, Don Lee and Evan Halper contributed to this report.