NEWS ANALYSIS : Wilson Workers’ Comp Proposal Favors Political Contributors

Gov. Pete Wilson, who often accuses Democratic lawmakers of catering to the special interests funding their campaigns, included several provisions in his proposed overhaul of California’s troubled workers’ compensation system that favored two major financiers of his political agenda--insurance companies and doctors.

Critics of Wilson’s bill, which stalled in the Assembly last week, said it was designed to appease insurers and doctors, in some cases using language drafted by industry lobbyists.

“He’s taken care of his friends,” said Democratic Assemblyman Steve Peace of Chula Vista, who led an effort last week to amend Wilson’s bill to the point that the governor threatened to veto it. “He’s been very careful not to offend the interests who support him and his candidates.”

Wilson denied that he has favored special interests because they contributed to his campaigns. Insurance industry officials and representatives of the California Medical Assn. also said there was no connection between their financial support of Wilson’s political agenda and their treatment from the governor on workers’ compensation.

“I am not trimming my sails to get contributions and never have,” Wilson said in an interview.

Overall, workers’ compensation experts have said, Wilson’s bill would have been better for employers than the competing Democratic version, which Wilson says was shaped by the lawyers who represent injured workers. Neither plan passed during a special session of the Legislature Wilson called to address the issue.

The governor’s measure would have cut costs in the $12-billion program by making it harder for workers to file claims for job-related stress, limiting the ability of workers to get benefits for an injury that built up over time--opposed to those caused by a sudden event--and capping costs for vocational rehabilitation and medical evaluations of injured workers.

But several secondary items within Wilson’s proposal favored insurers over employers and went further in accepting doctors’ demands than did the Democratic version.

The provisions favoring insurers would have:

* Kept secret the dividends insurers pay employers at the end of every year. The dividends amount to retroactive discounts on the premiums advertised by insurers. Making the dividends public, Democrats say, would make it easier for employers to compare the prices offered by various insurers.

* Authorized insurance companies to surcharge employers midway through the term of their policies. This practice allows insurers to advertise a rate, sign up an employer and renegotiate the premium before the end of the policy term.

* Permitted insurers to set aside reserves to pay pending claims without providing justification to employers. These set-asides drive up rates for employers, even when the amount put in reserve is far more than what is ultimately needed to pay the claim.

* Allowed insurance companies to settle questionable cases without notifying the employer.

While lobbyists for the major employer groups in Sacramento backed Wilson’s bill despite these provisions, at least one employer who traveled to Sacramento from Southern California to support the measure complained that the governor’s plan did not put stricter controls on insurance companies.

“The insurance companies are making lots of money off of me right now,” said Gordon Mullens, owner of Gordon’s Cabinet Co. in Riverside. “The insurers are part of the problem along with everybody else.”

Mullens said his premiums have climbed dramatically over the last three years even as he has trimmed his payroll from 800 to 300 workers. He said he is suing his insurance company for setting aside too much in reserve, and he complained about not having a chance to advise his insurers before they settle cases.

Wilson said most of the disputes between insurers and employers would disappear if his bill became law because it would introduce more competition into the insurance market.

“If you have basic reforms, if you have savings, I think the market rate competition largely eliminates the need for those” provisions, Wilson said.

While the governor’s bill, like the one offered by Democrats, placed new limits on doctors fees, it also included sections designed to soften the financial blow on physicians.

One provision backed by the California Medical Assn. would have allowed doctors to charge higher rates if the state failed to update its medical fee schedule for workers’ compensation cases every two years.

In addition, Wilson’s bill included, almost word-for-word, the doctors’ version of a provision limiting the ability of physicians to refer patients to laboratories in which they have a financial interest.

But the governor said the bill, which he presented to the Legislature as a take it or leave it proposition, was drafted by a coalition of legislators working with his Administration. He said he was not aware of where particular provisions originated.

Wilson is fond of pointing the finger at Democrats, especially Assembly Speaker Willie Brown of San Francisco, for raising money from lawyers and others who benefit from the workers’ compensation system. Indeed, Brown in the last six years has raised $116,000 from the California Applicants Attorneys Assn. and perhaps thousands more from individual lawyers who represent injured workers. And with Brown’s help, the lawyers have fought off significant changes in the laws that guide the system.

But Wilson, who is leading a united Republican effort to take over the Assembly from Democrats, has been no less bashful in seeking contributions from others with a stake in the system.

He acknowledged, for instance, that before the June primaries he asked interest groups to contribute to a slate of moderate Republican candidates. Both the California Medical Assn. and the insurance industry contributed heavily to Wilson’s choices, according to records compiled by the secretary of state and Capitol OnLine, a computerized data service.

The doctors contributed more than $200,000 to 10 Wilson-backed Republican candidates in the final weeks before the June primaries, the records show.

The CMA, for example, gave $32,500 to Barbara Pieper in the 44th District, $22,500 to Jan Goldsmith in the 75th District, and $25,000 to Greg Cox in the 77th District, all of whom lost to more conservative opponents. The CMA also gave $22,500 to Nao Takasugi, who won the GOP nomination in the 37th district.

The Assn. of California Insurance Cos. gave $28,560 to six Wilson-backed candidates in the primaries, including $9,750 to Cox; $6,250 to Takasugi, and $4,060 to Pieper.

The insurers group also contributed $50,000 to Opportunity ‘92, the Wilson-led effort to raise money for Republican candidates.

Transamerica Insurance Co., the eighth-largest workers’ compensation insurer in the state, donated $25,000 to Opportunity ’92 at the end of September, just days before the Legislature was due to return to the Capitol for the special session.

Bob Gore, vice president of the Assn. of California Insurance Cos., said the contributions were not made in an attempt to influence the governor’s actions on the workers’ compensation issue.

“We have an independent board of directors on our political action committee,” Gore said. “They interview the candidates and make up their own minds.”

Steve Thompson, the CMA’s top lobbyist in the Capitol, said his group won its concessions not in exchange for contributions but as part of a negotiation process in which the doctors agreed to other provisions that many physicians found distasteful.

“We became an ally of reform, not part of the opposition,” Thompson said.