Governor’s action overturned in California; other states workers’ comp funds under more scrutiny

Hard times are causing states to rethink approaches for funding various workers’ comp funds, and in California, a superior court judge “has ruled that Gov. Arnold Schwarzenegger illegally furloughed 7,400 employees of the State Compensation Insurance Fund this year,” according to a post at the Insurance & Financial Advisor Web site.

“Superior Court Judge Charlotte Woolard affirmed a prior ruling against the state involving the employees for the “State Fund,” which sells workers’ compensation insurance to employers and uses the proceeds to operate, according to the San Francisco Chronicle. The State Fund relies on no funding from the state treasury.”

The IFA post said the ruling would provide “back pay plus interest for the days they missed work,” but a more recent Chronicle story reports the issue is undecided. Explaining that “[t]he ruling came in a case filed by the Service Employees International Union Local 1000, which represents 6,260 fund employees,” the article also says,  “It’s unclear whether employees will be able to collect back pay for the days they were furloughed. The state fund and the SEIU believe the order entitles them to it.

“But, said a spokesman for the governor’s office, ‘The judge did not rule on the issue of back pay. She was silent on the issue.’ ”

A legislative task in Oklahoma recently heard testimony from Nevada officials that changing from a state-operated to a privately operated system has improved rates for businesses in Nevade, according to a CNBC post dated Sept. 2.

“Nevada’s workers’ compensation insurance rates have dropped since that state privatized the agency providing such insurance, Nevada executives told an Oklahoma legislative task force Wednesday.

“The task force is considering privatizing Oklahoma’s workers’ compensation agency, CompSource Oklahoma.”

The change in Nevade came a decade ago, “when it transformed the agency from a monopoly to a mutual insurance agency owned by its policyholders, said Douglas Dirks, president and chief executive of Employers Holdings, Inc.

” ‘Rates have gone down fairly consistently since the market was opened,’ Dirks said.”

Reports from Colorado include descriptions of  a “parade of angry workers [who were] hurt on the job” and subsequently testified in a recent probe of the state-chartered, tax exempt, quasi-governmental agency Pinnacol by a special committee of legislators and citizens.

According to a “Politics West” spot in The Denver Post on Sept. 1, injured workers questioned not only a surplus of coverage denials but also surplus cash reserves, too much spying on claimants and an out-of-touch perks package for agency compensation packages.

“Mike Byrd, hurt in a work-related car accident in 2004, told a special panel created by the legislature about Pinnacol denying treatments and trying to send a company nurse with him to every one of his doctor’s appointments as a ‘spy.’

“Like others, Byrd questioned how Pinnacol, a quasi-governmental agency that was struggling to remain solvent a decade ago, could grow so profitable that it has amassed a $700 million surplus.”

Also on Sept. 1,  the Durango Herald reported: “A former Durango firefighter testified Monday that the state’s workers’ compensation company spied on him and trashed his reputation in the community in an attempt to deny his claim for an injured back.”

Stahl said he was injured twice and Pinnacol paid for the first claim but refused the second. “He finally sold his house to pay for surgery out of his own pocket. Surgery has helped, but he had to retire from the fire department. He became a nurse and now is studying case management for injured workers.”

Both accounts report a few injured workers testified that their cases were handled well by Pinnacol, but the Herald piece ends thusly:

“Stahl said it was inexcusable for the state’s dominant workers’ compensation insurer to spend $143,930 for a luxury suite at Invesco Field, home of the Denver Broncos; a $133,000 trip to the Four Seasons Resort in Scottsdale, Ariz.; and a $2,515 dinner, which included two plates of $144 lobster and three bottles of $115 wine, while workers suffer.

“Pinnacol has defended the expenses as good for morale.”

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