Contributor

John Campbell

John Campbell (R-Irvine) is a California State Senator representing the 35th District in Orange County. He represents the cities of Newport Beach, 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]

Liberals 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%.

In spite of this, I still probably get asked more questions about workers' comp 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 yet another newly-created state commission (despite the fact that we already have an Insurance Commissioner, who is charged with evaluating rates)
• Assembly Speaker Fabian Nunez said this week that Democrats would hold up the budget until they get the repeal of last year's reforms. 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

§