Workers’ Comp Bill Slowed by Infighting

With one week to go before the Legislature adjourns, a fight between Senate and Assembly members of a joint committee threatened to derail a bill to halt the spiraling costs of California’s workers’ compensation system.

But within hours, both sides insisted that they had made up and were getting back to work.

The dust-up illustrates the pressure building in the Capitol as lawmakers try to pare fat from a workers’ compensation system that has swelled from $9 billion in overall costs in 1995 to an estimated $29 billion this year.

Doctors, chiropractors, physical therapists, lawyers and many other interest groups are vying to protect the profits they pull from the system. But employers large and small across the state have beseeched the Legislature to find a way to halt soaring premiums.

In a statement he later withdrew as a “miscommunication,” Sen. Richard Alarcon (D-Sylmar) said Thursday that Assembly members of the workers’ compensation conference committee, which he chairs, were threatening to boycott a hearing today because they opposed deeper cuts in payments to the state’s roughly 200 outpatient surgical centers.

Those centers are where many injured workers are treated for back, wrist and other injuries. Prices charged by those clinics -- some of which are major political donors to state politicians -- are currently unregulated.

“I have to tell you we’re getting pressure from the state Assembly,” Alarcon said in a meeting in his Capitol office with several reporters. “They are threatening to boycott the hearing.”

But the three Assembly members of the committee -- Juan Vargas (D-San Diego), Fabian Nunez (D-Los Angeles) and Ken Maddox (R-Garden Grove) -- said they never intended to boycott any hearing. All three said they were disappointed that Alarcon canceled a hearing scheduled for Thursday and that they looked forward to meeting today.

“If Richard said that, it’s outrageous,” Nunez said.

Assembly Speaker Herb Wesson (D-Culver City) vehemently denied Alarcon’s charge as an “unfair assertion.”

“Sen. Alarcon should make an apology,” said Wesson. “My people were ready to go today and they will be ready to go at 10 a.m. tomorrow. Nobody ever said we’re boycotting.”

After meeting with Vargas and Nunez late Thursday, Alarcon said, “I misspoke.”

He blamed miscommunication among staff members for the confusion.

Drastic reform of the 90-year-old system that provides a safeguard for more than 14 million California workers has become a key issue with some of the candidates hoping to replace Gov. Gray Davis when the recall vote is held Oct. 7.

A major factor in the program’s ballooning price tag is the rising cost of medical services. Between 1997 and 2002, for example, the average medical cost per California workers’ comp claim rose 125%, while medical costs nationally rose an average of 22%.

The conference committee of three Assembly members and three senators is expected to consider draft legislation today that would pare roughly $5 billion through such means as limiting the number of visits injured workers can make to chiropractors and limiting what outpatient surgical centers can charge for services.

Unlike most other medical services covered under the workers’ compensation system, payments to outpatient surgical centers are not limited. In legislation under consideration by the conference committee, Alarcon had originally sought to control costs at the centers by indexing payments to 120% of federal Medicare fee schedules.

Studies estimated that such a move would save roughly $900 million a year.

Under pressure from industry, Alarcon agreed to raise payments to 150% of the Medicare fee. That would reduce the annual savings to $368 million a year, Alarcon said.

He said Assembly members wanted even higher payments for the surgical centers -- 165% of the Medicare fee. That would produce annual savings of less than $200 million a year.

“I’ve given up about $600 million on that issue,” Alarcon said. “To not require them to take a significant cut ... is not playing fair.”

Vargas, Nunez and Maddox each said he was not wedded to a particular fee schedule for the surgical centers, which have donated heavily to Vargas, the Democratic Party, Wesson and Davis.

“I don’t have a dollar figure yet in mind,” Maddox said. “It needs to be adequate to ensure we don’t solely have the lowest bidder doing highly technical surgeries.”

Vargas said he wants more than $200 million in savings from payments to outpatient surgery centers, and Nunez said he seeks savings of at least $368 million.

“At the end of the day, whether it’s Alarcon’s fee schedule or another fee schedule, we need a fee schedule in place that’s going to bring us significant reductions,” he said.

Times staff writer Virginia Ellis contributed to this report.