Legislature OKs Workers’ Comp Reform

The Legislature passed a sweeping overhaul of the workers’ compensation system late Friday, rolling back costs that have squeezed businesses and drained government coffers.

The action came on the last day of a bitter legislative session that played out in the shadow of the California recall campaign.

Gov. Gray Davis, in a statement released moments after the measure passed, hailed it as a major advance.

“This reform plan will help keep jobs in California and encourage expansion while maintaining benefits for injured workers,” the governor said.

Republicans, however, complained that it does not go far enough to ease spiraling premiums.

With partisan tensions infusing even the most routine debate, the Senate also approved ambitious legislation on a straight party-line vote that would, for the first time, require California employers to buy health insurance for uninsured workers.

In an initial vote in the Assembly, the measure had passed with five votes to spare. But Republicans asked that it be set aside for reconsideration later in the evening as they prepared to adjourn until January.

Under the bill, SB 2, by Senate President Pro Tem John L. Burton (D-San Francisco), employers would be required to pay for health coverage for about 1 million members of the working poor, or pay a fee into a statewide pool that would purchase policies on their behalf.

Also approved by both houses and sent to the governor were measures that would:

* Authorize the transfer from the state to the Wildlife Conservation Board of 62 acres for preservation in the Ballona wetlands fronting Santa Monica Bay north of Los Angeles International Airport.

* Authorize workers to sue their employers for violations of labor laws and to share in civil fines if they prevail. Sen. Joe Dunn (D-Santa Ana), a trial attorney, said the labor-sponsored bill, SB 796, was necessary because cumulative budget cuts and other factors have reduced the ability of the state to adequately enforce labor laws.

* Allow undocumented immigrant students to apply for financial aid for college if they have attended high school in California for three years and graduated. Existing law allows such students to avoid paying higher nonresident tuition at state colleges.

Stretching over 285 days, the legislative session at times seemed to drop from public view as the recall movement to oust Davis gained momentum.

At other points, it became a major focus -- especially over the summer, when the Legislature squabbled over closing a $38-billion budget shortfall.

Throughout, lawmakers described a polarized atmosphere within the Capitol, where frustrations were palpable and consensus rare.

A largely symbolic resolution that passed Friday -- one of the nearly 3,200 measures introduced this session -- underscored the fractious tone.

In January, the Senate passed a resolution making Feb. 6 -- Ronald Reagan’s birthday -- “Ronald Reagan Day.”

The measure was sent to the Assembly, where it languished for months. The author, Sen. Jim Battin (R-La Quinta), said Assembly Democrats objected to language extolling Reagan’s presidency.

The Assembly amended the resolution to make it less effusive, removing an assertion, for example, that the Republican president had worked in a “bipartisan manner to enact his bold agenda of restoring accountability and common sense to government.”

The Senate passed the amended version Friday.

“He’s a California governor and a Republican president and he deserves a day in California,” Battin said in an interview.

“I thought it was silly that they should be so scared about saying nice things about Ronald Reagan.”

The session’s final day got off to a typically divisive start.

Burton, a powerful presence in the Legislature who has served off and on for four decades, lost his temper at Republicans when they began voting against a Senate rule change he had proposed.

The change would have required that bills sanctioning labor contracts be in printed form at least two days before they could be voted on by lawmakers.

But Republican leader Jim Brulte of Rancho Cucamonga objected that the rule change did not apply to the provisions of the contracts themselves. He said that Republicans wanted the opportunity to examine the contracts before voting.

Burton erupted when GOP members began voting against his plan, calling them “idiots” and a “bunch of geniuses led by a genius leader.”

Although the rule change was approved on a 30-4 vote, Burton was so angered by the four Republican votes that he killed it by invoking a parliamentary tactic that, in effect, reversed the outcome.

Even the Legislature’s more productive moments were laced with partisan feuding.

The workers’ comp measure is an attempt to cope with a mounting expense that many say threatens to drive businesses out of California. Both parties have called for some sort of overhaul.

Before passing a package of workers’ compensation reform bills, the Assembly debated them for more than an hour. Democrats praised the package as an important first step that would avert a 12% insurance rate hike proposed for Jan. 1 and roll back a 7% rate hike that took effect in July.

The bills attempt to shave 20% to 30% from medical costs, the most rapidly increasing piece of California’s workers’ comp system.

Among other things, they will cap the number of times an injured worker can visit a chiropractor or physical therapist; link payments for prescription drugs and outpatient surgery centers to the federal Medicare system; adopt guidelines for care for a given injury; repeal a career retraining system that gives workers as much as $16,000 each; and reduce payments to some doctors.

But Republicans blasted the package as incomplete. They accused Democrats of lacking the political will to confront attorneys who represent injured workers, and they warned that the legislation would not save businesses enough to help those struggling with insurance premiums that have in some cases more than tripled in the last several years.

Republicans had called on the governor to hold a special session of the Legislature to craft a more comprehensive reform.

GOP leader Brulte denounced the measure as a hollow reform “designed to take the pressure off those who argue for workers’ comp reform.”

He said the measure merely “tinkered” with the system and “doesn’t go nearly far enough” for employers.

The health insurance measure affecting small businesses would amount to perhaps the most fundamental revamping of health coverage in California since World War II.

If passed and signed by Davis, the bill would apply to employers of 200 or more workers, starting in January 2006. Employers of between 20 and 200 workers would start paying in 2007. Businesses with fewer than 20 employees would be exempt.

Generally, employers already providing health coverage would not be affected.

During debate, Democrats and Republicans sparred over whether California employers -- only 5% of which would be affected by the bill -- could afford the extra costs.

Republicans said that paying for health insurance was certain to aggravate an exodus of businesses from California or result in employee layoffs.

One GOP member, Sen. Sam Aanestad of Grass Valley, a dentist, said it was unfair to impose a health insurance mandate on employers -- a cost the state was unwilling to pay itself.

“To say it is the responsibility of the employer to pay for it simply because they have the ability to pay, I think, is immoral,” Aanestad said.

Democrats countered that protecting public health was a valid state interest. Sen. Sheila Kuehl (D-Santa Monica) said the cost was reasonable because “health is really a public issue.”

In other action Friday night, the Assembly revived a tribal gaming bill that it had defeated a night earlier.

SB 411 by Sen. Denise Ducheny (D-San Diego) would give two San Diego County tribes the right to build casinos and install as many as 350 slot machines each, as long as they paid 5% of the net from the machines to the state general fund.

The bill would ratify state gaming compacts with the La Posta Band of Diegueno Mission Indians and the Santa Ysabel Band of Diegueno Mission Indians.

Several large tribes with casinos have been lobbying lawmakers to reject the measure, although 16 tribal governments supported the bill, according to Assemblyman Jerome Horton (D-Inglewood), who presented it on the Assembly floor.

He said the two Diegueno Mission bands suffer 70% unemployment and have no electricity or running water.

Near midnight Thursday, the bill had failed 36-1, with no Republican support and many Democrats not voting. But on Friday afternoon, it passed 45-1.

On a 33-35 vote of the Assembly, lawmakers killed legislation Friday night that would have curbed abuse of a consumer protection law that had been used by a Beverly Hills law firm to pursue quick settlements from thousands of nail salons, car repair shops, restaurants and other small businesses, many owned by immigrants in Southern California.

Trevor Law Group, forced out of business this summer by the State Bar, had filed thousands of unfounded lawsuits claiming violations under California’s unfair competition law.

That law allows private attorneys to sue for fraudulent, unfair or deceptive business practices or advertising.

It has been used to stop grocery stores from selling decaying meat and milk producers from encouraging pregnant women to drink raw milk.

Lawmakers had set out to rewrite the unfair competition law to halt Trevor-style lawsuits, but the bill crafted by Sen. Martha Escutia (D-Whittier) failed Thursday night on a 35-37 vote.

SB 122 would have required court review of attorney’s fees paid in connection with an unfair competition law action.

It also would have required private attorneys who are suing under the law to notify the State Bar of California.

Escutia’s bill originally contained a provision that would have allowed disgorgement, or the return of profits from businesses accused of wrongdoing, but that provision was stripped in the face of opposition.

Escutia’s bill had been joined to AB 95 by Assemblywoman Ellen Corbett (D-San Leandro), which would have required people who file lawsuits under the unfair competition law to include a bold-face notice informing defendants that they do not have to pay any settlement money immediately and should get legal advice.

Republicans and moderate Democrats criticized both bills as inadequate.

“This is a Band-Aid when we need a tourniquet,” said Assemblyman Ray Haynes (R-Murrieta). “I thought when I used the word reform, we were actually changing something.”

Assemblyman John Dutra (D-Fremont) called the bill “a sham” and had urged lawmakers to reject “this window dressing and hold out for real reform.”

Assemblyman John Laird (D-Santa Cruz), among the minority of lawmakers who voted for the Escutia bill, said: “Some people might think it doesn’t go far enough, but I think it’s targeted and goes right to the problem.”

Bruce Brusavich, president of Consumer Attorneys of California, said the shutdown of the Trevor group should stop most of the problem.

“I can’t imagine any lawyer would want to follow the trail blazed by the Trevor Law Group,” he said.

“But even with that, I think the members should have taken a harder look at SB 122 and they’ll see this is significant reform.”

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Times staff writer Evan Halper contributed to this report.