Garamendi Advocates Workers’ Comp Reforms

State Insurance Commissioner John Garamendi, in a bluntly worded speech, told a conference at UCLA Friday that “all the middlemen” are going to have “to take a smaller slice of the pie” for the state’s troubled workers’ compensation system to survive.

Garamendi appealed to the audience at the conference of people involved in the insurance issue to “put aside the interests of your own organization” and work in common to see that legislation is adopted to drive down the costs of the system for compensating injured workers without cutting into necessary benefits.

But after his talk, several participants approached the commissioner with appeals for exceptions to the reforms that Garamendi and Gov. Gray Davis proposed this week.

The workers’ compensation program has been beset with financial problems in recent years, with many carriers dropping out of the business because it is not profitable.

That has left a state-run fund responsible for at least half of the policies held by California employees.

Officials said litigation and high fraud costs have contributed to a situation in which California has among the highest premiums but pays among the lowest benefits of any state.

Davis on Thursday called for several reforms, including containment of medical costs, expedited care for injured workers, prompt payment of health-care providers, and reduction of legal conflicts between employees and employers.

Accusing insurance companies of not taking sufficient steps to crack down on fraud, Garamendi said that fraud has grown so bad that “there are many in the medical and legal community involved in organized crime.”

To the audience, he said: “If you don’t think I have the power to bring about change, test me.”

The commissioner also suggested that the State Compensation Insurance Fund -- the state-run agency that sells half the coverage -- faces the prospect of bankruptcy without a lowering of medical costs to Medicare payment levels.