Work Comp Rollback Not Likely

Saturday, June 30, 2007 | 0

By Dan Walters

Conservative Republicans may grumble about Arnold Schwarzenegger's being a RINO -- Republican in Name Only -- or even a closet Democrat, but the governor is a blood-red Republican when it comes to siding with business. His 2004 overhaul of workers' compensation is the prime exemplar.

Schwarzenegger has drifted to the left on the environment, the budget, health care and some other issues, but he constantly trumpets employers' multibillion-dollar savings in the program that compensates workers for job-related injuries and illnesses.

"I was sent to Sacramento to protect businesses, and that's why the first thing I did when I came into office was, we reformed workers' compensation," Schwarzenegger said in Chico the other day, adding, "We went in there and we reformed the system, but a radical reform. And now, as I have said, we are putting $14 billion back into the economy because we reduced the workers' comp costs by 50 percent, and like I said, another 16 percent is coming."

Before the governor spoke, Insurance Commissioner Steve Poizner recommended another 14 percent cut in premiums charged by workers' comp insurers -- substantially more than the Workers' Compensation Insurance Rating Bureau had recommended. As Schwarzenegger said, employers' overhead for workers' comp has been reduced by at least $14 billion a year, even as their insurers' profits have soared.

Despite pressure from labor unions, medical care providers and comp attorneys, a Legislature controlled by liberal Democrats has been reluctant to roll back the 2004 changes, although a bill increasing disability benefits, similar to one Schwarzenegger vetoed last year, has cleared the Senate. And last month, the 1st District Court of Appeal, ruling in the first of a long string of comp cases, declared that claims for benefits arising out of accidents before the law took effect are subject to its restrictions. The case went to the guts of the legislation -- much tighter benefits for permanent, but partial, disabilities.

Temporary disabilities carry relatively little cost, while completely disabling injuries are rare, and therefore also relatively inexpensive. For years, employers and other major players battled over costly benefits for the partially disabled, both monetary payments and medical services, and tightening eligibility was the central piece of the 2004 overhaul.

Even so, the administrative regulations that the Schwarzenegger administration promulgated later are what triggered the adverse reaction, with Democrats who voted for reform saying they never intended to impose such deep cuts on benefits to injured workers.

The coalition seeking a rollback has distributed what it calls "horror stories" about disabled workers to bolster its case, but so far has been unable to generate much public or media interest -- or even much traction for legislative change.

Had Democrat Phil Angelides ousted Schwarzenegger in last year's election, one of his first acts would have been to roll back the much-disputed regulations. But with Schwarzenegger re-elected in a landslide, the coalition's hopes now rest on administration studies being conducted on the effects of the reforms. So far, they have confirmed critics' complaints about sharp reductions in disability ratings and compensation levels. But whether they will lead to change is problematic.

When he vetoed a workers' comp benefit increase last year, Schwarzenegger said he is "committed to making any changes necessary to ensure that injured workers unfairly impacted by workers' comp reform receive appropriate medical treatment and indemnity benefits." But every time he makes a speech crowing about the multibillion-dollar savings to employers, he becomes more wedded to the status quo.

This column first appeared in the Sacramento Bee.

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