Calif Comp Law Misses Mark, Insurers Say

By Caroline McDonald

NU Online News Service, Feb. 20, 3:47 p.m. EST?Insurance industry representatives believe that California's new workers' compensation law has flaws and they hope to have a say in fixing them.

The measure, sponsored by Assembly Insurance Committee Chairman Tom Calderon, D-Montebello, and signed into law last week, includes a benefits increase for injured workers--disability and life pensions that the California rating bureau estimated could cost the state as much as $3.5 billion.

It also doubled fraud penalties and includes reforms that will save an estimated $1.5 million. The cost of the benefit increases, Rep. Calderon estimated, will cost employers one cent per employee per hour.

Nicole Mahrt, spokeswoman for the American Insurance Association in Sacramento, Calif., said the AIA hopes there will be a cleanup process to fix areas of the legislation.

"There are a couple of things left out of the bill that we will ask the Davis administration to look at," she said.

One of those items is a revision of the permanent disability rating schedule, which continues to be "inconsistent and confusing," she said. "Two people can have the same injury and get different permanent disability ratings."

Ms. Mahrt is concerned that "There continue to be fundamental flaws in the system that were not addressed. Potential cost savings in the bill won't be seen for several years if they do occur at all."

In the meantime, she said, employers will be hit in July with "skyrocketing rates."

Keith Bateman, vice president, workers' compensation and health for the Alliance of American Insurers in Downers Grove, Ill., questioned the bill's savings of $1.5 billion.

"We agree that each succeeding version of the bill has had more reforms than the prior version, but there is still a long way to go to reach savings of $1.5 billion," Mr. Bateman said.

Though there is potential for significant savings in the medical cost control areas, actual savings will depend "on how the Davis administration administers those provisions," he said.

Sam Sorich, vice president and western regional manager, National Association of Independent Insurers, said that, "Overall we still think there is a lack of balance in the bill. Although there are some cost-saving features, we think those are far outweighed by the benefit increases that have been created."

He added that, "We're concerned that the bill could lead to further disruption in the workers' comp system and market."

The costs of expanded benefits have been understated by bill supporters, Mr. Sorich said.

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Calif Comp Law Misses Mark, Insurers Say

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