Campbell (R-Irvine) is a California State Senator representing
the 35th District
in Orange County. He represents the cities of Newport
Laguna Beach, Irvine, Costa Mesa, Huntington Beach, Seal Beach
and Cypress. He can be reached through his Senate website
and through the website
for his California Senate campaign. [go to Campbell index]
Yearning For A Broken System
Worker's Compensation Insurance...
[John Campbell] 4/25/05
2004 was a big year for worker's comp. Last year, signatures
were collected on an initiative to reform the badly broken system.
The threat of this initiative and the popularity of recently
elected Governor Schwarzenegger brought Democrats to the table
and a compromise was worked out and passed with a nearly unanimous
vote. Before the reforms, businesses in California paid by far
the highest premiums in the country for worker's comp insurance;
however, the injured worker received a benefit that ranked near
the bottom of the 50 states. Highest cost and the worst benefit.
This is the definition of broken. Because of the reforms, rates
were estimated to drop about 25%.
of this, I still probably get asked more questions about workers'
insurance than just about anything else: "Are
the reforms working? Why aren't my rates lower?" The reforms
are working but many have either just gone into effect or are
still being put into place. Rates have dropped between 5-10%
and experts still believe that the 25% reduction will be achieved
within a couple of years. The good news is that fifteen new insurance
carriers have entered the California market which will increase
competition and lower rates.
With the passage of this major reform, I figured that the legislature
would take a breather on this issue for a year and give the reforms
a chance to work their way through the system.
I was wrong.
There is now a lot of activity on the workers’ comp
front, and much of it is not good. The unions and trial lawyers
have decided that they were "duped" into accepting
last year's reforms. They say that these reforms have resulted
in injured workers not being cared for. They say that rates haven't
dropped because insurance companies are not lowering their rates
as their claims go down. They also hope that the Governor is
not as strong as he was a year ago and that they may be able
to make him yield to their agenda.
So, here is what the special interests are doing:
- They have
union-organized protests around the capitol with workers
who claim they cannot get care under the new rules.
- They have
introduced a number of bills to roll back or to restrict
last year's reforms.
- They have proposed complete re-regulation of worker's comp
rates and having them established not by the market but by
newly-created state commission (despite the fact that we already
have an Insurance Commissioner, who is charged with evaluating
Speaker Fabian Nunez said this week that Democrats would
the budget until they get the repeal of last
Specifically, the speaker said, "We need to put an end to
what the new law on workers' comp is doing to injured workers
or else we are not going to move forward on a budget." He
is willing to tank the state's credit rating again to make
sure that the trial lawyers have the ability to sue even more.
- And, they
have suggested that they will block the Governor’s
appointment of Andrea Hoch to the position of Director of the
Division of Worker's Compensation. This is a critical position
because it will oversee the writing of the very important regulations
relative to the new rules on permanent partial disability (PPD).
It is in the area of PPD that a great deal of fraud has occurred
with "injured" employees (and also their lawyers) getting
large cash payouts by claiming to be "permanently disabled" and
then going back to work at exactly the same job for the same
or a higher salary. Much of the savings in the system will
come from the regulations and implementation of these rules.
Can you believe
this? And they say they are doing all this to "help
small business" and save them from the big insurance companies!
Never mind that 60% of the market is controlled by the State
Compensation Insurance Fund which is already a quasi-governmental
agency. Never mind that they are advocating a return to the broken
system that nearly put California out of business. Never mind
that the new law is absolutely not harming injured workers, rather
it is harming the incomes of a few trial lawyers. It's outrageous.
And it's disgusting.
Now, if any of this passes through the Legislature, I assume
that the Governor would veto it. But we cannot take this lying
down. If anything, the system in the future will need more reforms,
not less. So, the workers' comp issue is back on the table. And
it shows you just how important it is to have Arnold Schwarzenegger
as Governor, instead of a big union boss such as Angelides, Lockyer
or Westly. CRO