Political Developments

Tuesday, November 15, 2011 | 0

Last Thursday the heads of the California Department of Industrial Relations and the Division of Workers' Compensation, Christine Baker and Rosa Moran, appeared at the California Applicants' Attorneys planning conference in San Francisco.

Baker and Moran both reiterated that they were open to ideas about how to make the system more effective and efficient.

Areas of concern include such issues as the costs of liens, utilization review, the qualified medical evaluator system and the Electronic Adjudication and Management System (EAMS).

It's clear that they are interested in looking at a permanent disability benefits increase, but the mantra is that there must be system savings to finance an increase.

This is not really big news, since both have made the rounds of various industry conferences and stakeholder groups this summer and fall.

And I understand that meetings with them will continue soon.

What is not clear, however, is whether the administration is really committed to undertaking an omnibus reform or whether at the end of the day they will prefer to attack various problems areas to squeeze additional savings.

Baker so much as acknowledged the possible approaches, noting that the decision on that might be made up the ladder from her pay grade.

Doing a big reform deal has potential risks and rewards for many stakeholders.

Employers seek to keep comp costs low. At the moment it would appear that they have little to complain about though comp costs could rise depending on medical usage trends and depending on whether Almaraz-Guzman and Ogilvie are really that big of a deal (which is not necessarily that clear). Another round of comprehensive reform might keep rates stable or it might unleash a round of unintended consequences.

Union groups (which include the Cal Fed and various other unions that tend to operate independently of the Cal Fed in Sacramento) want a benefit increase. But achieving a one-time benefit increase through further takeaways could be flirting with disaster. And rank and file union members have been very unhappy with many of the details of the 2003/2004 reforms.

Insurers probably would like to see an increase in premium volume, particularly as claim frequency is down due to the economy. Reform that is poorly thought out could further squeeze insurer profit margins.

Attorneys want to see a benefit increase, but only if it will be sustainable.

And not if it is done by sleight of hand, i.e. "raising benefits" but making it almost impossible to help workers recover a fair settlement.

Doctors and medical providers may be vulnerable, since medical costs have been increasing more than other components of the system. But squeezing doctors can result in access to treatment problems which can make the system unworkable.

And for the Brown administration itself, comprehensive reform may not make that much sense right now.

Why? It's early in his term, and there are huge other fights that beckon. Budgetary disaster. Problems with social services. School funding. University funding (note the spread of Occupy to university campuses). The monetary shortfall in the unemployment system. Water policy. The list of pressing and nasty issues goes on and on.

Further, there will be lots of turnover in the legislature next year.

I could well be wrong. Comprehensive reform proposals could be ready to go into print.

But if I was sitting in Brown's chair, I'd probably just as soon keep comp on the back burner for now. Comp is out of the headlines at the moment, which is where Brown wants it. If I were Brown I'd do some incremental things, largely through regulation.

Workers' comp is known as a tar pit for California politicians, so why rock that boat now?

Stay tuned.