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DAVIS SIGNS BENEFITS BILL:
This story includes comments by the governor and Assembly Insurance
Committee Chairman Tom Calderon during an AB 749 signing ceremony in
Century City.
IMC SKEPTICAL ABOUT CHSWC RESEARCH:
The Industrial Medical Council balked at helping pay for a research
colloquium sponsored by the Commission on Health and Safety and
Workers' Compensation because council members fear it would focus
too much on cost savings and not enough on improving medical care.
BENEFITS BILL PERMITS NEW CARVE-OUTS:
AB 749 allows the timber and aerospace industries to participate
in a controversial carve-out program that even advocates acknowledge
is unproven.
STATE TO SPEND $80 MILLION ANNUALLY ON RETURN-TO-WORK:
AB 749 also includes a provision that would create a return-to-work,
modeled after a system used in Oregon, that would encourage employers
to put disabled workers back on the job with grants and salary
reimbursements.
FLASH REPORT: DAVIS SIGNS BENEFITS BILL
CENTURY CITY - Gov. Gray Davis signed a benefits bill today that he
acknowledged will cost employers an extra $1 billion annually, saying
it's a disgrace that California ranks next to last in benefits to injured
workers.
Davis signed AB749 by Assemblyman Tom Calderon, D-Montebello in a ceremony
staged in front of a Century City construction site with injured Tosco
refinery worker Steve Duncan, his wife Gnesa, Calderon, Senator Richard
Alarcon and several labor leaders. After vetoing three previous measures,
Davis said the legislature had finally crafted a bill that strikes the right
balance of benefit increases and cost-saving reform.
"This bill essentially contains the benefits that I vetoed in year 1,"
Davis said, "but over the years the offsetting reforms have increased from
virtually nothing to $1.5 billion. I think it was worth the wait."
NEWS:
GOVERNOR EXPECTED TO SIGN BENEFITS BILL:
The Legislature wrapped up three years of haggling over a benefits
increase in a single day and adopted a package that includes several
cost-saving reforms included to win the support of Gov. Gray Davis.
LEGISLATIVE TINKERING JUST BEGINNING:
Now that a benefits increase is all but certain, Assembly Insurance
Committee Chairman Tom Calderon and Insurance Commissioner Harry Low
have turned their attention to the shaky market that pays the bills.
Calderon wants to control the growth of the State Compensation
Insurance Fund, while Low wants more control over insurance company
minimum rates.
WINNERS AND LOSERS:
The Advisor takes a look at which interest groups will gain and
which will lose from various provisions in the benefit-increase bill.
FEE SCHEDULES MOVE FORWARD:
The Commission on Health and Safety and Workers' Compensation assigns
special task forces to consider a consultant's proposed ambulatory
surgery center and hospital fee schedules.
SCIF IN TROUBLE?
The Insurance Department refutes an assertion by Tom Calderon that
the State Compensation Insurance Fund is in financial trouble.
FLASH REPORT: RATING BUREAU: NAII URGES GOVERNOR TO VETO OF
WORKERS' COMP BILL
SACRAMENTO -- To avoid further crippling California's weakened economy,
is why Gov. Gray Davis should veto workers' compensation legislation
that is significantly out of balance according to the National Association
of Independent Insurers.
The association notes the need for a boost in workers' compensation
benefits but says that such increases must be in step with cost saving
reforms.
"The huge costs in Assembly Bill 749 would hurt California's economic
environment and would overwhelm California's already troubled workers'
compensation system," Sam Sorich, NAII vice president and western regional
manager, wrote.
He charged that "AB 749 was rushed to passage with little regard for
legislative due process. A proposal with such great significance for
California's future deserves a more deliberative legislative process
with the involvement of all interested parties and the public." Sorich
refers to the lack of public input and no regard shown by legislative
leaders in running the bill through the system.
The provisions of the measure- which are expected to increase employer
costs by about $3.5 billion over four years- were not made public
until Jan. 31. AB 749 raises the maximum benefits for injured workers
from the current $409 a week to $602 in 2003 and to $840 in 2006. A
legislative committee heard the bill on Feb. 4, for which little
public notice was given. On that same day, the Legislature rushed
to pass the bill and sent the measure to Gov. Davis for his
consideration.
"The passage of AB 749 falls far short of the ideal of public
participation in the political process," Sorich wrote in the letter
sent to Davis this week. Sorich notes that the timing of AB 749
could not be worse, as California businesses are already reeling
from the global recession and, in particular, insurance companies
are recovering from the economic implications of the Sept. 11
events.
"AB 749 would impose new costs that would make it more difficult
for California businesses to compete with businesses in other states
and around the world," Sorich wrote. "Workers' compensation costs
are hurting California businesses. It is estimated that total
workers' compensation costs increased by 75 percent in just the
last two years. AB 749 would make it even tougher for California
employers to afford insurance protection for their workers."
FLASH REPORT: LEGISLATURE PASSES BENEFIT INCREASE BILL
State lawmakers late Monday sent Gov. Gray Davis a fourth benefits-increase
bill, compressing a three-year political fight into two quick floor debates
and a one-hour committee grousing session.
Democratic leaders lost some support from their party members in the rush,
but were still able to muster wide majorities for approval.
Senate President John Burton brought Assembly Bill 749 to a vote as soon as
the Senate opened its session Monday afternoon. Democrats gave him a
23-to-14 votes victory. Republicans complained that the opposition was
bending legislative rules to pass the package fast and without public input.
The Assembly Insurance Committee passed the measure on a party-line vote
after hearing from the usual line-up of opponents and supporters. The
Assembly approved the measure 44-29.
Gov. Gray Davis is expected to sign the measure within a few days
FLASH REPORT: RATING BUREAU: AB
749 TO COST $3.5 BILLION
The Workers' Compensation Insurance Rating Bureau estimates
that California's new benefit increase bill, AB 749, will cost
the state's employers $3.5 billion.
Without the usual increases in utilization that historically have
Followed benefit hikes, the bill when fully implemented would cost
$2.4 billion a year to employers, according to the Bureau. But the
$3.5 billion is likely more accurate because when benefits rise,
experience has been that employees file more claims and they may
stay away from work longer since the opportunity cost has diminished.
The most significant changes to state benefits in the bill are
Provisions for pegging temporary disability benefits to the state's
average weekly wage. High-end permanent disability benefits are
increased to $270 per week in the bill. The bill's backers say it
also contains some $1.5 billion in savings from reforms
FLASH REPORT: GOVERNOR REACHES
DEAL ON BENEFIT INCREASE
The Gray Davis administration confirmed Friday that the governor reached a
deal with labor leaders and top Democrats late Thursday to sign a $3
billion-plus increase in workers' comp benefits.
Department of Industrial Relations Director Steve Smith said negotiations
wrapped up on Wednesday night. On Thursday, Senate President John Burton
gutted language in Assembly Bill 749 by Manny Diaz, D-San Jose, and inserted
a benefit increase very similar to the package that Davis vetoed last year.
Smith, however, said the governor this year insisted on cost-saving reforms
that will shave $1.5 billion off system costs. He said the benefits will
increase system cost by $2.4 billion, creating a $900 million net increase
to insurers and employers.
That number does not include any estimate for increased utilization, which
employers and insurers regard as inevitable. The Workers' Compensation
Insurance Ratings Bureau predicted last week that the Legislature's previous
proposal, SB 1156, would increase system costs by $4.2 billion including
utilization. That estimate did not include any offset for cost-saving
reforms.
Insurance-industry lobbyist Peter Gorman said the governor's savings
estimates are unrealistic, so the final cost is likely to be higher than
$900 million. He acknowledged, however, that Davis had succeeded in
getting
some real reforms, such as the end to the presumption of correctness for
treating physicians who are not pre-designated by employees.
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And that, as they say is -30-
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Workers' Comp Advisor FLASH REPORTS are happily written and filed
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