Workers’ Comp Special Session Falls Apart

The special session of the Legislature called by Gov. Pete Wilson to overhaul workers’ compensation collapsed Friday without lawmakers enacting any reforms to the troubled $12-billion system.

The lawmakers gave up shortly after the governor announced that he would veto a compromise bill that Assembly Democrats were prepared to bring to a floor vote. Instead, they postponed a vote and recessed the session indefinitely.

The breakdown in the special session left unclear the prospects for reform of the workers’ compensation system this year. Assembly Speaker Willie Brown (D-San Francisco) said he is available to meet with Wilson next week to seek a common ground for resuming negotiations.

Even before the bill was brought from the committee to the Assembly floor, Wilson called an afternoon news conference at a Century City hotel to declare it unacceptable and warn that he would veto it.

The governor’s announcement all but aborted the extraordinary session on reforming the costly system for compensating injured workers.

Democrats seized on Wilson’s announcement as proof of their contention that the GOP governor called the special session on workers’ compensation reform as a take-it-or-leave-it “political ploy” aimed solely at harassing them before the Nov. 3 election. They argued that he never wanted the issue resolved.

Democrats also said that the governor’s bill contained too many advantages for workers’ compensation insurance companies, provisions they said work against employers and injured workers.

“Anything the insurance companies disagree with, they have a puppet named Pete to utter the drill in whatever language seems to have currency,” Brown snapped after learning of Wilson’s prospective veto announcement.

Brown called Wilson’s action a replay of the political strategy he said Wilson used to stretch out the state budget crisis for an entire summer to try to make Democrats look bad in the eyes of voters.

But at the hastily called news conference, Wilson asserted that the bill produced by the Democratic-dominated Assembly Insurance Committee was “not a real reform” and was unacceptable.

“If it gets to my desk without those reforms, it isn’t reform,” said Wilson, who maintains that high premiums paid by employers for workers’ compensation insurance are helping to drive businesses and jobs out of California.

Wilson’s bill would have redesigned the system to save employers $1 billion in insurance premiums. Half of that savings would be passed on to injured workers in increased benefits starting in 1994, depending on verification by a panel of experts that the $1 billion in savings had been realized for employers.

The Assembly Democratic bill called for granting $500 million in benefit increases at the same time employer costs were being reduced. The increases would occur over three years starting next July.

The governor’s bill also proposed tougher standards for an injured employee in order to receive compensation. His bill would require that work be the predominant cause of an injury. Current law allows work-related injuries to be included with other causes.

The Assembly Democratic bill would require work-related incidents to be the predominant cause only in cases of a stress injury claim or a claim filed by an employee who had been fired.

Assemblyman Burt Margolin (D-Los Angeles), who helped fashion the Democratic bill, called it a compromise that potentially would give employers greater savings than the governor’s $1-billion plan. “We bent over backward to take the governor’s provisions,” he said.

Margolin and Assemblyman Steve Peace (D-Chula Vista) asserted that many business owners who lobbied in the Capitol for the governor’s bill changed their minds when they learned of its insurance company protections.

Wilson’s bill would keep confidential the dividends insurance companies pay to employers at the end of the year. Democrats said the dividends, which in effect reduce employer premiums below what insurers advertise, should be made public so employers can shop around for the most competitive rates.

The governor also introduced a provision to legalize the practice of insurer surcharges. These would allow insurance companies to raise premiums midway through the term of a policy. Although the governor’s bill would allow surcharges only with employer consent, Democrats contended that employers would be forced to accept them or risk losing their coverage.

In the Senate, the governor’s plan ran into a buzz saw of opposition from labor, representatives of doctors and applicant attorneys and others. Conspicuous by their absence were representatives of business owners, who rallied for the bill Thursday but did not show up to testify Friday.

“This is their opportunity to testify,” said Sen. Patrick Johnston (D-Stockton), chairman of the Industrial Relations Committee. “This does leave us with one-sided testimony.”

But Sen. Bill Leonard (R-Big Bear), who carried the governor’s bill in the Senate, said the legislation was doomed anyway because the Democratic committee was “stacked against me.”

Times staff writer Douglas Shuit contributed to this article.