In the 1960s, a popular interoffice cartoon depicted a beleaguered bureaucrat with an S-shaped piece of paper, a pen dripping with what might be either ink or blood, and the caption, “You mean you want the revised revision of the original revised revision revised?”*
That just might summarize the feelings of Governor Arnold Schwarzenegger and others who have been through the wringer with a series of revised reforms of California’s workers comp system, beginning during the era of Schwarzenegger’s predecessor.
Washington state is another West Coast hotbed of workers comp issues this election cycle, but as regular readers here can attest, we have often discussed the Governator and the California system.
The San Francisco Chronicle reported today that “One of Gov. Arnold Schwarzenegger’s crowning achievements, the overhaul of workers’ compensation, is in danger of unraveling as employers begin to face rising costs even though disabled workers now get less in benefits.
“One sign of trouble is the state Department of Insurance hearing scheduled for today at which the group representing workers’ compensation insurers will argue that they need a 27.7 percent rate increase.”
Crowning achievement tarnished
In an Oct. 10 article, the San Diego Union-Tribune said, “Insurance Commissioner Steve Poizner will have to decide on the proposal before the end of the year. He rejected a similar request last year, saying that the insurers had to show that they were cutting down on their costs before charging more for their insurance.
“Schwarzenegger and other critics note that medical costs have risen only 2 percent in the past year, while loss expenses dropped from $7.8 billion to $7.3 billion. “Where is the money being spent? This question must be answered before employers are asked to pay more,” Schwarzenegger asked in August, when the board initially floated an initial proposal for a 29.6 percent increase. The board has since trimmed the request to 27.7 percent after discovering that some insurer expenses had declined more than expected this year.”
Permanent disability awards reduced by half
The Chronicle piece says that advocates for injured workers contend that the people who most need this sort of coverage are taking a hit “by rule changes that have cut average awards for permanent disability in half since 2005.”
Another problem, says BusinessInsurance.com, involves the often-secretive process of arbitration. It’s a huge red flag anytime consumers have to sign onto deals that preclude access to courts in favor of arbitration. In this case, though, there’s an added layer: the possibility of forcing involved parties to submit to laws outside the state of California.
A.B. 2490
Concerning the bill known as A.B. 2490, an Oct. 11 post at the industry trade site reports:
A California lawmaker said Gov. Arnold Schwarzenegger sided with insurers in vetoing legislation that would have required workers compensation insurers to submit dispute-resolution clauses to the state’s insurance commissioner for approval.
A.B. 2490 also would have required workers comp dispute-resolution clauses to specify that California law applies in coverage disagreements involving California employers.
The bill, sponsored by Assemblyman Dave Jones, D-Sacramento, additionally sought to mandate that policyholders and insurers with contracts containing such clauses, including arbitration language, settle any California disagreements in a venue within the state.
Deregulation looked good–at first
By way of background, the Chronicle says that Schwarzenegger inherited a system in crisis when he took over in 2003. “Deregulation of the system in 1995 had ushered in years of price cutting that, at first, benefited employers with lower rates but eventually boomeranged when 29 insurance firms went bankrupt between 2000 and 2004.”
With fewer companies writing policies–that is, with less competition–prices took off.
Two reform bills passed under former Governor Gray Davis, the Democrat who lost to Schwarzenegger in a recall election, reduced medical costs by restricting “the power of doctors to prescribe unnecessary or excessive treatments,” says the Chronicle. The bill Schwarzenegger signed shortly after taking office resulted in more cost controls and changes in the awards for permanent disability ratings.
Falling costs, judicial response
Costs have fallen, but the disability changes have fueled a dogged opposition coupled with a judicial backlash against veto power that has sent three cases to the Supreme Court.
We’ll be following the results of today’s hearing.
I-1082 hotly debated in Washington State
In Washington State, the initiative known as I-1082 (which we addressed here), is a polarizing measure that proponents say will result in a de facto raise for workers and opponents say will hurt education, small business and –eventually–the workers themselves.
According to an Oct. 10 piece in the Kitsap Penninsula Business Journal, the measure would not only end a state monopoly on issuing workers comp insurance but also would end “Washington’s unique status as the only state in the nation that forces workers to pay a portion of workers’ comp.”
‘Business community’ support
Calling the measure, which goes to the electorate in November, one that is backed by the “business community,” the Journal says that although “some employers voluntarily pay their employees’ share of workers’ comp taxes already, others do not, opting to deduct the workers’ portion from every paycheck. These workers [therefore] will receive a pay raise when I-1082 passes.”
The article also provides a link to an “online calculator” described as being able to show workers what their potential raises might be.
Measure would ‘pit injured against insurance industry’
In an Oct. 10 guest opinion piece in The Seattle Times, a state senator and a state representative penned a vigorous rebuttal that begins thusly:
This November, voters will determine the outcome of an initiative that would add costs to every university, community and technical college in the state, force small businesses to pay $315 million extra next year and every year after that, and pit people who get injured at work against the insurance industry.
That’s Initiative 1082, a shining example of how the citizen’s initiative process has been co-opted by special interests.
In some ways, I-1082 is dangerously simple. It would end Washington’s public nonprofit workers’ compensation system by allowing private insurance carriers to cover workers’ comp in our state. But when you explore the fine print, it becomes obvious that I-1082 benefits the few at the expense of our state’s business owners and working families.
Perhaps needless to say, this, too, is a piece of legislation that we’ll be following.
*(NOTE: Here’s a link to the cartoon, on page 148, where it is described as a 1970′s era artifact collected from Tennessee; however the author remembers seeing it after it was passed around in the Fort Worth Regional Office of the U.S. Postal Department, where his father worked in the 1960s.)
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Frequently enough, a workmen’s compensation case may be so complex as to demand legal representation. However, sometimes what seems like a cut-and-dried situation to an injured worker may result in a smaller award than envisioned–or even a denial. Have you, a friend or a loved one been injured on the job? Whether you’re merely seeking answers about your rights or believe a lawsuit may be necessary, be sure to seek counsel with attorneys trained and experienced in workers’ compensation. Here’s some resources:
Workers compensation basics
Injury on the job
Filing a claim
