Workers’ Comp Special Session Falls Apart

Chances for a major overhaul of the workers’ compensation system collapsed Friday after lawmakers recessed a special session called by Gov. Pete Wilson without enacting any changes in the troubled $12-billion program.

Legislators in both houses gave up shortly after the governor announced at a Los Angeles news conference 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.

Although all sides concede the need for reform, the issue has become so politically polarized between the Republican governor and majority Democrats in the Legislature that prospects for a negotiated settlement before the Nov. 3 elections appear dim. Reform efforts seem likely to be left for the new Legislature next year.

“Nobody is giving odds on when and if it will happen,” said a top assistant to Assembly Speaker Willie Brown Jr. (D-San Francisco).

Even so, Brown and Senate leader David A. Roberti (D-Van Nuys) instructed workers’ compensation committee chairmen to continue to hold hearings and try to negotiate an accord with the Wilson Administration that could be voted on by the Legislature before the election.

Wilson’s chief spokesman said the governor was willing to negotiate with Democratic lawmakers next week but expressed doubt that there would be much progress. Wilson left the Capitol on Friday for meetings in Los Angeles, including one with business leaders and Republican U.S. Senate candidate Bruce Herschensohn.

“The failure of the Legislature to take meaningful action during a two-day session makes chances for meaningful workers’ compensation reform dismal,” said Dan Schnur, Wilson’s director of communications.

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

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

Democrats also said 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 announcement of a prospective veto.

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

But 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.

Last month, Wilson vetoed a Democratic-sponsored package of workers’ compensation bills, saying that legislation failed to fix a system regarded as one of the most expensive in the nation for employers and one of the least generous for injured workers.

The bill the Democrats proposed at the special session Friday went further in meeting Wilson’s demands than the legislation that Wilson vetoed earlier. The latest bill, for example, would require injured workers to pay 25% of vocational rehabilitation costs--a bigger employee burden than contained in the previous legislation.

But Wilson and the Democrats continued to disagree on a feature that Wilson deems crucial to reform.

Wilson wants a redesign that saves employers $1 billion in insurance premiums. Half of that saving would be passed on to injured workers in increased benefits starting in 1994, but not until a panel of experts verified that the $1-billion savings had been realized.

The Assembly Democratic bill called for granting $500 million in benefit increases starting next July, but without verification of corresponding savings to employers. Instead, the benefits would rise at the same time employer costs were being reduced. The increases would occur over three years.

The governor’s bill also proposed tougher standards for compensation for an injured employee. For example, his bill would require that work be the “predominant” cause of an injury. The Democratic plan limits predominance to stress claims. Current law allows work-related injuries to be included with other causes.

Democrats argued that Wilson’s plan would help insurers to the detriment of policy-holding employers.

Assemblymen Burt Margolin (D-Los Angeles) and 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.

Among other things, the governor introduced a new provision to legalize the practice of insurer surcharges, which 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 coverage.

In the Senate, the governor’s plan ran into 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 on 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 he believed the legislation was doomed because the Democratic committee was “stacked against me.”

Times staff writer Douglas P. Shuit contributed to this article.