Calif. Democrats Renew Efforts to Fix Workers’ Comp

On the defensive to wring more savings out of the state’s $29-billion workers’ compensation system, California Democrats on Wednesday took up the gauntlet thrown down by Gov. Arnold Schwarzenegger and his Republican allies to move quickly on additional reforms.

Senate Majority Whip Richard Alarcon (D-Sun Valley) said he and his colleagues would be pushing several bills in coming weeks that would build on the estimated $5 billion to $6 billion in cuts achieved through reform legislation passed in September.

Still, Alarcon served notice that Democratic lawmakers wouldn’t be pressured into signing away worker protections to benefit employers and insurers, who have been newly energized by Schwarzenegger’s forceful championing of industry-backed cost cutting.

On Tuesday, Schwarzenegger proposed slashing an additional $11 billion from the cost of addressing work-related injuries by, among other things, overhauling the permanent disability portion of the workers’ comp system, limiting the penalties that injured workers can win from insurers or employers and expanding the use of dispute resolution to reduce costly litigation.

Though willing to cooperate with Republicans on several areas, Alarcon said Wednesday that he also was preparing a worst-case strategy with a bill that would simply abolish California’s workers’ comp system and allow injured workers to sue companies for on-the-job injuries.

Such a measure is unlikely to win passage, as it would scrap the nearly century-old contract between workers and employers that is the heart of California’s workers’ compensation system, as well as those of other states: Employers will provide injured workers with the medical care they need in exchange for protection from lawsuits.

But it was a signal from Alarcon that Democrats are prepared to turn up the heat on their opponents even as the spotlight is burning on them to do something about soaring workers’ comp insurance premiums, which are more than double the national average.

“We clearly need to lower the costs. Employers are literally dying on the vine,” Alarcon said. “But we’ve also got to protect working people.... I won’t support anything that compromises care.”

Since Schwarzenegger’s inauguration Monday, lawmakers have been scrambling to line up legislation aimed at overhauling California’s crumbling workers’ comp system, the costs of which have soared from less than $10 billion in 1995 to nearly $30 billion today.

The newly minted governor has made reform of the system one of his highest priorities. He has threatened to take his cause straight to the voters in the form of a ballot initiative if the Democratic-controlled Legislature fails to deliver, a move that even Republican allies quietly dismiss as little more than posturing given the devilish complexity of workers’ compensation.

Alarcon’s threat to unleash a bill designed to dismantle the entire system has only added to the saber rattling. But away from the TV cameras, signs emerged Wednesday that lawmakers were willing to find common ground and move ahead with fixes in some key areas.

Chief among them is reform of the permanent disability component of the workers’ comp system, which many believe is too costly, subjective and unfair. Though he didn’t reveal many details, Alarcon said he was crafting legislation to overhaul permanent disability, which also is a cornerstone of the Schwarzenegger plan.

Alarcon said he also was drafting bills aimed at exempting some of the state’s tiniest employers from the workers’ compensation system and capping rate increases by insurers.

Meanwhile, hearings began Wednesday on a bill by Assemblyman Abel Maldonado (R-Santa Maria) that incorporates Schwarzenegger’s workers’ comp reform proposals.

In addition, Sen. Jackie Speier (D-Hillsborough) on Wednesday introduced legislation aiming to require independent medical review of all medical care of injured workers that is challenged by employers. It’s an idea that has proved unpopular with many fellow Democrats but one that is favored by Schwarzenegger.

“We would love to find a way to work with the governor on this,” said Brian Perkins, a spokesman for Speier.

While acknowledging the bruising fight that lies ahead, business groups credited Schwarzenegger’s celebrity persona and mandate from voters for bolstering their chances of snagging additional workers’ compensation changes.

“Last year you couldn’t get anyone in the building to even talk about some of these things. Now they’re on the table,” said Charles Bacchi, a lobbyist for the California Chamber of Commerce. “Gov. Schwarzenegger has helped redefine the debate. That in itself is progress.”