Reformists' Secrecy and Departmental Lobbying
Monday, August 20, 2012 | 0
Confirming that it is a political entity rather than an unbiased state
agency, the California Department of Industrial Relations (DIR) formally
announced support of the proposed reform a deal that the department
had a strong hand in brokering.
In its press release, DIR states,
“The Workers’ Compensation Bureau [Workers’ Compensation Insurance
Rating Bureau, aka WCIRB] approved a 12.6% rate increase on California
businesses while industry analysts also predicted even greater hikes
next year,” and that the proposed plan will reform the state’s comp
system “before projected rate increases push California to a crisis
situation.”
And rather than addressing direct inquiries about the
data that is being relied upon to project a two to one cost savings vs.
benefit increase estimate, the Department has continued to defer the
topic and keep the subject matter close at hand.
Blogger and Oakland-based applicant attorney, Julius Young of the Boxer and Gerson
law firm, asked Christine Baker, Director of DIR, quite pointedly
whether an estimate of the pricing components that was divulged to
employers in a recent closed meeting would be made available to the
press.
Baker demurred, stating "It was not finalized, and is
draft," claiming she will have an "updated estimate" Friday (today).
Later Baker told Young to "coordinate questions through Dean Fryer," the
departments public relations person, who quickly advised Young, "There
is no document available for distribution."
Which of course is not what Young asked for.
WorkCompCentral reported that there are at least two projections - one by State Compensation Insurance Fund (SCIF) and another by Bickmore Risk Services.
According
to Jennifer Vargen, senior vice president of marketing and
communications for SCIF, the carrier was not part of the negotiating
team, but put a “significant amount of work in pricing out various
provisions.”
Brian Watson, senior vice president of government
and business affairs for SCIF, said the carrier helped price components,
such as eliminating add-ons for psychological claims, sleep disorders
and sexual dysfunction, as well as the proposed increase in permanent
disability benefits. He said Baker had a chart showing the projected
costs that she presented during a meeting on Aug. 10.
Bickmore
Director of Regulatory and Alternative Risk Consulting, Mark Priven,
addressed an estimate report to Baker dated 8/13/2012, which was
prepared "at your request" and released by the California Coalition on
Workers' Compensation (CCWC) yesterday.
Noting that permanent
disability indemnity has documented ties to utilization (i.e. the more
PD available the more workers' compensation is "utilized") Priven
estimates 2013 savings of $2.666B.
$1.536B of that estimate is
saved in permanent disability indemnity, mostly by dropping the age and
diminished future earnings modification factors in the rating schedule.
In the meantime, it appears that the Administration has been busy drumming up support for a reform bill that doesn't formally exist.
CCWC, a group of active employers whose pledge is "supporting and safeguarding California's economic future," came out yesterday with a press release announcing support for the proposed reform.
Using the same argument that DIR used in its press release, that costs are increasing because the WCIRB announced a rate filing increase of 12.6 percent, the CCWC says that "California employers, public and private sector, need the cost cutting measures included in the proposed reform."
The WCIRB's rate filing expressly states that a big component of the rate increase is simply the fact that there are still 2 million workers not employed - the shrink in payroll means there's less premium to support risk and operations which means that the base rate must go up.
Using the WCIRB's rate filing as an argument to support the reform proposal is mixing apples and oranges.
But at least CCWC provides Californians with access to the materials that the Department refuses to divulge.
Here's the list:
Draft Bill Language
Cost Analysis by Bickmore Risk Services
Contents by Subject
Code Section Guide
Thank you CCWC for at least providing the public with access to information and documents upon which big policy decisions are being made, because apparently the DIR (whose mission is "to improve working conditions for California's wage earners, and to advance opportunities for profitable employment in California") doesn't feel the public has a right know.
<i>David J. DePaolo is founder, chief executive officer and editor-in-chief of WorkCompCentral.</i>
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