Panel Backs Repeal of Workers’ Comp Reforms

Putting Gov. Arnold Schwarzenegger on the spot, a state Senate committee voted 5 to 1 on Tuesday to overturn reforms that the insurance commissioner says should slash basic workers’ compensation insurance rates nearly 15%.

In his campaign for governor, Schwarzenegger labeled the overhaul “bogus,” but groups representing businesses and local governments said the changes would result in significant savings.

If backed by the full Senate and Assembly, the committee’s vote would move the effort to change the state’s workers’ compensation insurance system back to where it began the year. Schwarzenegger and his fellow Republicans in the Legislature “ought to be given a clean slate to start over,” said the repeal bill’s author, Senate President Pro Tem John Burton (D-San Francisco).

“If they think it’s a bogus bill, if they think they can do so much better, they should have the opportunity,” he said. “Let them sit in the endless meetings, let their constituents be all over them.”

Although Sen. Rico Oller (R-San Andreas) said this year’s reforms “did not go nearly far enough,” he said that Burton’s proposal was merely designed to “jam the governor.”

“This is politics,” Oller said. “This is not trying to establish good public policy.”

A spokesman for the governor, Vince Sollitto, said what Schwarzenegger called bogus was “the claim that [this year’s changes] represented the sum total of desirable reform.”

“They are not sufficient but they are part of the solution,” he said, suggesting that the repeal bill was “politics as usual.”

Among other things, this year’s legislation adopted cost controls for outpatient surgery centers and pharmacies and rolled back doctor’s fees for workers’ comp treatments.

Insurance Commissioner John Garamendi estimates the changes will result in $5.1 billion in one-time savings and $5.6 billion in ongoing annual savings and has recommended that insurers give employers a 14.9% reduction in basic pure premium workers’ comp insurance rates.

Schwarzenegger has proposed a series of additional reforms designed to cut an additional $11.3 billion in workers’ comp costs, but critics said his changes would hurt workers who suffer job-related injuries.

Art Azevedo, president of the California Applicants’ Attorneys Assn., a group of lawyers who represent injured workers, supported Burton’s bill, saying this year’s changes “resulted in tremendous take-aways from our clients.”

Charles Bacchi, a lobbyist for the California Chamber of Commerce, said this year’s legislation was imperfect but would still trigger “significant cost savings.” Repealing it would result in insurance rate hikes, “which would not be helpful to our members.”

Despite that opposition, the Labor and Industrial Relations Committee voted to send Burton’s bill to the Appropriations Committee, the last stop before the Senate floor.

Even the author of one of the bills in this year’s reforms, Sen. Richard Alarcon (D-Sun Valley), voted for the repeal. “We have to send a message that, first of all, the work that was done was significant,” he said.