Workers’ Comp Overhaul a Must, Panel Concludes : Economy: Little Hoover Commission says costs to business have tripled and are driving firms from the state.

Members of a state watchdog panel agreed Monday that California’s $11-billion, fraud-ridden workers’ compensation system must be overhauled if politicians want to keep businesses from leaving the state.

The Little Hoover Commission found that the system’s costs to businesses have tripled in the last 10 years.

“I’m convinced that legislators got a message about their performance in 1992 that gives them some real impetus--that’s the voters kicking them in the behind--to say, ‘You guys, men and women, go to Sacramento and do your job,’ ” Sen. Bill Leonard, R-Upland, told reporters during a news conference.

According to the report, one Los Angeles-based business pays $400,000 a year for workers’ compensation premiums, versus the $4,000 a similar-sized firm in North Carolina pays.

A UC Irvine poll released last week said that more than half of Orange County’s executives are unhappy with state government, and that their main gripe involves the cost of workers’ compensation.

The poll also found that, while the number of executives very likely to leave Orange County in the next five years is small--at 13%, up from 7% last year--their No. 1 concern is the cost of doing business, which includes providing insurance for workers who file claims for on-the-job injuries.

Jone Pearce, a UCI professor of management and a contributor to the poll, said last week that workers’ compensation claims have risen as the recession has dragged on, and that the program costs are making bosses wary of hiring even as the economy starts to improve.

In fact, Pearce said, some employers no longer look on new hires as potential productivity enhancers but as possible workers’ compensation claimants.

Gov. Pete Wilson describes the system as victimized by fraud and graft.