Wilson May Call New Session on Workers’ Comp

As the Legislature’s proposed overhaul of workers’ compensation sat on Gov. Pete Wilson’s desk Tuesday, there were strong indications that he will veto the package and perhaps call a special legislative session to deal with the troubled $12-billion system.

“If anything merits a special session, it would be workers’ compensation,” said Loren Kaye, Wilson’s Cabinet secretary.

A decision to call a special session has not been made, Kaye added, but “a lot of people are talking about it because the issue is so important to getting our economy back on track.”

Referring to the package of bills passed by the Legislature on Monday night, Kaye said that “from a real quick look, they don’t seem to come near to the governor’s original proposal.” He noted that although Wilson has not said that he will be veto the bills, his staff is recommending that he do so.

Yet with the ink scarcely dry on the bills, lawmakers and lobbyists were already speaking of them in the past tense, so certain were they that the package would be vetoed.

The Democratic-controlled Legislature narrowly passed the bills on a party-line vote. Republicans voted against them, increasing the chances of the governor’s veto.

Assemblyman Burt Margolin (D-Los Angeles), chairman of the Insurance Committee who packaged the bills, said the measures would cut employer costs by $1.15 billion. Injured workers would receive $575 million in increased benefits under the package, he said.

But Margolin held out little hope that the bills would survive the governor. And he renewed his criticism of Wilson for failing to become involved in talks over the problem.

“I’m perfectly prepared to work with the governor in a special session,” Margolin said. “I would have loved to have worked with the governor for the last 10 days.”

Negotiations between Democratic and Republican lawmakers, as well as labor and employer representatives, broke down over the weekend, dooming any chance of a workers’ compensation overhaul in the regular session.

But Margolin said he pushed the bills anyway because he wanted to “send a very strong message that the Legislature is serious” about fixing the system.

“If we had failed (to pass the measures), we would have been saying that these interest groups have veto power over a bill with teeth,” Margolin said.

Two of the three bills were passed with only a single vote to spare, as several Democrats became lukewarm in their support. Assembly Speaker Willie Brown (D-San Francisco) initially opposed a key part of the package, but ended up voting for the legislation.

“It was important to pass a proposal to show that the Legislature responded to one of the high-priority items,” said Sen. Bill Lockyer (D-Hayward), who wrote one of the bills.

In the fall campaign, Democrats will be able to use their vote to deflect Republican accusations that they were unwilling to take on tough issues and that they are indebted to lawyers, doctors and other interests who profit from the workers’ compensation system and lobbied against the overhaul.

But if the Democrats were worried about offending campaign donors, they also knew that their support would not result in a law because of the likelihood of Wilson’s veto.

By opposing the bills, Republicans could re-emphasize one of their campaign themes--that the Democratic-controlled Legislature is hurting the economy by failing to grant relief to employers.

The bills seek to lower costs to employers and increase benefits to injured workers. One of the bills would increase a variety of weekly benefits for disabled workers, raising the maximum pay from $336 to $448.

Democrats estimated that benefits to injured workers would increase by $575 million under the legislation. An employers group placed it at $800 million.

In more than 70 provisions, the bills attempt to lower costs, in part, by toughening penalties for fraud.

The bills seek to lower medical costs by reducing the number of doctors who could diagnose a worker’s injury to one each for the employer and employee, and by limiting the number of evaluations. As it is, medical evaluations by competing doctors are among the system’s costliest components.

The bills also would cap the cost of retraining an injured worker at $25,000. Retraining benefits would expire at the end of 18 months. Currently, there are no caps on retraining, and vocational rehabilitation costs are rising at a rate of 28%.

Another major provision sought partial deregulation of the cost of workers’ compensation. That provision would shift some authority over rates to the insurance commissioner.

The bills had several other elements that proponents say would save money, including a cap on defense attorneys’ fees, a ban on claims filed by fired or laid-off workers and a limit on disability claims based on stress.

One of the four bills was killed in the Senate. It would have limited doctors’ ability to refer patients for diagnostic tests to clinics in which they had ownership interests.

“Did we do everything?” Sen. Pat Johnston (D-Stockton), who authored one of the bills, asked as he urged his colleagues to vote for them. “No, we didn’t. But this is a significant incremental step toward reforming the system.”