State Workers’ Comp Talks Hit an Impasse

Efforts to overhaul the state’s costly workers’ compensation system stalled Friday after Gov. Arnold Schwarzenegger and four top legislative leaders failed to meet the governor’s self-imposed deadline for reaching an agreement.

“We do not have a deal,” a downcast Senate Minority Leader Jim Brulte (R-Rancho Cucamonga) said as he emerged from an hourlong meeting of the so-called Big Five in the governor’s office.

Staffers from the governor’s office and legislative committees had been holding marathon sessions in an attempt to meet the governor’s Friday deadline for producing the framework of an agreement on how to lower the skyrocketing premiums that businesses pay for workers’ comp insurance.

But Brulte said the talks had resulted in nothing more than a general sentiment that it would be better to fix the complex workers’ comp program in the Legislature rather than through a ballot initiative, as Schwarzenegger had threatened to do.

The governor is leading a business-backed campaign to collect the 598,000 valid signatures needed from registered voters by April 16 to qualify for the November ballot.

“A ballot initiative remains a valid option until there is a bill” on the governor’s desk, said Rob Stutzman, a spokesman for Schwarzenegger.

Brulte ticked off a list of major issues with the $22-billion workers’ compensation system that remain unresolved. They include figuring out how to gauge what portion of a worker’s injury is job-related; how to calculate benefits for partial disabilities such as strained backs; and how to determine the proper medical treatments for specific injuries. The contentious question of regulating insurance rates didn’t come up in Friday’s session, Brulte said.

So unproductive were the closed-door talks that the Senate’s top Democrat, President Pro Tem John Burton of San Francisco, stormed out of the room and cooled his heels reading magazines in the governor’s office until it was time to face a staked-out band of reporters and television cameras, according to sources close to the negotiations.

The talks, though stalled, are far from scuttled, according to Brulte, a Schwarzenegger spokesman and the remaining members of the Big Five: Burton, Assembly Speaker Fabian Nunez (D-Los Angeles) and Assembly Minority Leader Kevin McCarthy (R-Bakersfield).

Nunez was the most optimistic, saying the talks were 95% of the way toward a successful outcome. The next meeting has been scheduled for 6 p.m. Sunday. Less than a week remains before the Legislature’s spring break begins Thursday, although Brulte has suggested that lawmakers postpone their vacations until a workers’ comp bill is passed.

Burton blamed Friday’s setback on overly optimistic expectations among statehouse insiders that a compromise was in the offing. He also suggested that legislative staff and their bosses might have misunderstood one another about the details of proposed reforms.

Burton said the dispute boiled down to a philosophical difference between the two parties.

“We want to make sure that injured workers get their just deserts,” he said. Republicans, on the other hand, “are concerned ... that injured workers are getting unjust enrichment.”

In another development Friday, discount retailer Costco Wholesale Corp. said it would collect signatures in support of the workers’ comp ballot measure.

Costco Chief Executive James Sinegal said Friday that the warehouse store operator had ordered enough petition forms to gather up to 900,000 signatures at its California stores.

The high-profile lobbying effort comes as investors focus on Costco’s efforts to control expenses, including its workers’ compensation costs in California.

The Issaquah, Wash.-based company faces a competitive threat from Wal-Mart Stores Inc., a notoriously tightfisted rival with plans to open 40 Supercenter stores in California.

Costco’s signature-gathering drive shows that the retailer has become fed up with the pace of the legislative talks, one analyst said.

“They have been involved but more behind the scenes,” said analyst Dan Geiman of McAdams Wright Ragen in Seattle. “It doesn’t necessarily surprise me. It’s something near and dear to their heart, and something that’s impacting their bottom line.”

*

Reuters was used in compiling this report.