Calif. Employers Urge W.C. Reform

Costco, a major employer in California, said it may move some operations from the state because of the troubled workers compensation system that has sent workers comp insurance premiums soaring.

The firms comments came at a press conference called by California Insurance Commissioner John Garamendi in an effort to promote his proposals for workers' compensation reform.

Jim Sinegal, president and chief executive officer of Costco, headquartered in Issaquah, Wash., called the current workers comp system “corrupt and “unjust”, adding, “We're not going to tolerate it any longer.” The firm, he said, is “considering moving support facilities out of the state.” He was one of several employers who appeared with Mr. Garamendi.

Mr. Sinegal said Costco generates $13 billion in sales, $700 million in taxes and employs about 29,000 workers in the state.

Commissioner Garamendi supports “sweeping reforms,” including fee schedules, independent medical review, reducing fraud and stopping conflict of interest, an insurance department spokesperson said.

But after the press conference, Tom Ramstack, chief financial officer for Championship Insurance Services Inc., an agency in Fullerton, Calif., that sells workers' comp to California transportation companies, told National Underwriter he is skeptical.

“There's going to be little that's going to be done about the system, itself, until you get some competition in the state,” he said, adding that competition is needed from insurers willing to write business in the state.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 1, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Calif. Employers Urge W.C. Reform

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