Progress Reported in Negotiations on Workers’ Comp

Gov. Arnold Schwarzenegger and legislative leaders are closing in on a deal to fix California’s costly workers’ compensation insurance system.

On Tuesday, the governor urged negotiators for labor unions, employers and lawmakers to agree on a framework for an accord by the end of the week. Meeting that deadline would provide time for a bill to be drawn up and passed by the Legislature before lawmakers leave for spring break April 1.

“We’re getting to put-up-or-shut-up time,” said Barry Broad, a labor union lobbyist participating in the talks. “There are intensified negotiations between the governor’s office and legislative leadership.”

A tentative agreement is being crafted that could shave billions of dollars a year off the workers’ compensation premiums paid by employers in California. Sources close to Republican and Democratic negotiators said the proposed reforms were likely to include at least three cost-saving elements:

* New methods for determining financial benefits for injured workers who have suffered permanent, partial disabilities.

* A faster process for getting people back on the job after accidents.

* Regulation of workers’ compensation insurance rates to guarantee that lower costs generated by the reforms are passed on to employers and not kept as profits by insurers.

The governor’s office won’t comment on details of the talks, other than to say that Schwarzenegger “wants to see a solution reached this week.”

Meanwhile, the governor is pursuing an alternative plan of gathering signatures for a workers’ compensation reform initiative that he plans to put before voters in November if lawmakers don’t produce a bill to his liking. The signatures must be turned in to the secretary of state’s office by April 16.

Labor groups and Democratic lawmakers, led by Sen. Richard Alarcon (D-Sylmar), have been adamant that any cost-saving reforms be accompanied by regulation of insurance rates.

Both the Republican governor and Democratic Insurance Commissioner John Garamendi initially opposed calls for regulation. The concern was that excessive government intervention could scare insurers away from the California market.

But Garamendi recently changed his stance and ordered his legal staff to draw up a proposed bill that would give him power to set workers’ comp rates as he does with other insurance.

On Tuesday, Garamendi went over the fine points of his proposal during a 47-minute sit-down with the governor.

“We certainly discussed [rate] regulation, permanent disability and back-to-work [issues] in considerable details,” Garamendi said.

Although the governor’s office wouldn’t confirm it, there was word in the statehouse hallways that Schwarzenegger “would be willing to support” putting a ceiling on rates “if it’s part of a broader package,” Alarcon said. He estimated that talks toward reaching a compromise on a workers’ comp bill were “well over 90%” completed.