Governor Says Lobbyists Slow Comp Reform

Gov. Arnold Schwarzenegger accused special interests Tuesday of undermining efforts to cut a legislative deal that would lower workers’ compensation insurance costs.

In an interview with The Times, the governor complained that interference from lobbyists representing workers’ comp attorneys, labor unions and insurance companies was surfacing “10 times a day” in the Capitol, making it difficult to overhaul the costly system for aiding injured workers.

“I feel very strongly that special interests are running this building,” Schwarzenegger said during a 35-minute session in his office. “It’s terrible and the trick is to figure out how to get around that.”

Though frustrated, Schwarzenegger said he remained optimistic that an agreement was “around the corner” after weeks of painstaking, secret negotiations involving the same special interests he denounced.

The governor’s comments came as staffers for the so-called Big Five -- the governor and the top four leaders of the Legislature -- crunched numbers and drafted bills that could be put before their bosses as early as today.

Estimates of the timetable for action varied among members of the group Tuesday.

Assembly Speaker Fabian Nunez (D-Los Angeles) said he hoped to have one or more bills passed and ready for the governor’s signature by the end of the week. Senate President Pro Tem John Burton (D-San Francisco) warned fellow Democrats to be prepared to vote early next week, when they’re currently scheduled to be on spring recess.

Republican leaders, meanwhile, said they’d prefer to delay a vote until even later so the public -- including special interest lobbyists -- has time to review the complex measures.

Schwarzenegger, who denounced special interests when he was a candidate in last fall’s recall election, said he was shocked at the power of the lobbyists. “I did not know to what extent they have influence in this building here,” he said. “It’s unbelievable.”

The governor, in office less than five months, doesn’t understand how complex bills get passed, some lobbyists suggested.

“He is naive if he does not believe that competing special interests is how public policy is made,” said Art Azevedo, president of the California Applicants’ Attorneys Assn., which represents injured workers.

Barry Broad, a labor union lobbyist, said he was surprised at the governor’s criticism. “We were in a month and a half of meetings at the governor’s office at the governor’s invitation” so we could talk about these issues, Broad said.

In the statehouse, he said, calling someone a “special interest” is code for “someone you don’t agree with.”

As the governor griped about lobbyists, upstairs in the state Assembly, members traded partisan potshots over the elusive “conceptual” deal that lawmakers are hurriedly trying to craft on workers’ compensation.

Democrats accused some Republicans of trying to undercut a legislative compromise in hopes of rallying support for a GOP-backed workers’ comp initiative that supporters are pushing for the November ballot.

“They would prefer to see this go to the ballot than to find a real solution to overhaul the workers’ compensation system,” Nunez said. “They need this for November to bang the political drum to get more people out to vote for them. This is not responsible governance.”

Republicans countered that the Democratic majority was trying to rush through an agreement that has no “real reform” and wouldn’t provide the billions of dollars in insurance premium reductions demanded by California businesses.

“There are some areas we have agreed on, but is it 90% or 95%? No, it’s not there yet,” said Minority Leader Kevin McCarthy (R-Bakersfield).

The wrangling could be either a sign of frustration or the precursor of a breakthrough, statehouse observers said.

Legislative staff members are closing in on a compromise that would cut medical costs while still allowing injured workers some degree of freedom to choose their doctors. An agreement to impose some price controls on insurance rates also appears to be settled, sources close to the working groups confirmed.

But Republican lawmakers noted that strong disagreement remained over creating a schedule of benefits for paying people who have suffered so-called permanent partial disabilities.

Other issues still in contention include the creation of a hybrid form of insurance that could save employers money by melding traditional employer-provided health insurance with workers’ compensation coverage.

The proposal could cut employers’ overall health bills by as much as 45% by cutting out lengthy, contentious bureaucratic wrangles with insurance companies, said Steve Thompson, vice president of the California Medical Assn.

Labor negotiators, he said, have signed off on the so-called 24-hour healthcare coverage plan for unionized workplaces.

But Allan Zaremberg, president of the California Chamber of Commerce, said there was “a huge disconnect between 24-hour, group health coverage and workers’ comp.”

He said a reform bill must reduce unnecessary medical treatment and “permanent disability costs.”

Meanwhile, employers shouldn’t expect savings to result in lower premiums when insurance renewals are sent out in July, Schwarzenegger cautioned in the interview.

“I don’t think that you will see immediate relief” from sky-high workers’ comp insurance rates, the governor said.