Will Voters Decide Calif. Comp Reform Fate?

By Caroline McDonald and Daniel Hays

NU Online News Service, Feb. 27, 10:30 a.m. EST?It is still to early to tell whether California's struggle to reform its workers' compensation system will be settled by voters or legislators, according to a knowlegable Sacramento lobbyist.[@@]

Gov. Arnold Schwarzenegger has said he will back a ballot initiative to make changes if legislators fail to deliver a bill making substantial changes to the system by Monday.

However, according to Sam Sorich, president of the Association of California Insurance Companies, it is not clear how absolute the governor's deadline is.

The ACIC leader said that there is a feeling among legislators "that progress is being made" even though the measure supported by Gov. Schwarzenegger--Senate Bill 3, sponsored by Sen Charles Poochigian, R-Fresno--is still stuck in committee.

The hope is, Mr. Sorich said, that within 30-to-40 days a measure can win passage and plans for an initiative can be put aside. Besides the legislation backed by the governor, there are "20-to-30" other bills that have been introduced concerning workers' comp reform, Mr. Sorich said.

Several combinations of business groups have filed initiatives. Two are awaiting title approval so signature collection can begin and one, the Workers' Compensation Benefit and Eligibility Restrictions initiative, requires 373,000 signatures. Gov. Schwarzenneger has not publicly endorsed any of them, Mr. Sorich said

The ACIC president speculated that once the March 1 deadline passes, the governor could put the wheels in motion for an initiative, but if legislation goes through the ballot move could be dropped.

For the governor to seek to make a change through a voter proposition is "very risky with no guarantee at all" it would pass, Mr. Sorich noted.

He said that one factor at play is Tuesday's upcoming state election, which has two bond issues that the governor supports on the ballot as well as primary candidates. Mr. Sorich said if the bond issues pass, it should strengthen Mr. Schwarzenegger's hand when he tells legislators he intends to reform workers' comp with an initiative.

Meanwhile, a workers' comp proposal that has been advanced by California Insurance Commissioner John Garamendi is given little chance by insurance group executives. Mr. Garamendi is backing Assembly Bill X4 15, introduced by Assembly Member Juan Vargas, D-San Diego, an insurance department spokesman, Norman Williams, told National Underwriter.

He added that Mr. Garamendi is speaking to constituent and employer groups, and is asking them "to put pressure on legislators" by contacting legislators and Gov. Schwarzenegger about AB X4 15. Right now, he said, "there is a gulf between labor and business on the issues." Mr. Garamendi believes "this is a bridge bill that can be a compromise."

However, Keith Bateman, vice president for workers' compensation insurance at the Property Casualty Insurers Association of America in Des Plains, Ill., said he doesn't think Mr. Garamendi's bill "will be particularly relevant to the debate."

He said the focus will be "on the governor's bill and labor's proposal, and not on the commissioner's proposal." As for the bill's ability to bridge the gap between labor and business, he said, "nobody's asked for a bridge at this point, so my sense is it's his suggestion, but it's not in play."

Mr. Williams said Mr. Garamendi does not believe the bill will survive in its current form, but that it contains the elements necessary to bring both sides together in agreement.

The governor set a deadline of March 1, "and the legislature is working, but it's not clear if they are going to meet that," he noted.

The commissioner's deadline, Mr. Bateman said, is March 31, "because then he can account for the potential savings in his next advisory rate."

Mr. Bateman said PCI does not support legislation introduced Feb. 20 that would allow California employers to hire Native Americans without paying for workers' comp insurance. The tribes contracted would need to be self-insured temporary staffing services. "This would be creating an exception and we would oppose that," he said.

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Will Voters Decide Calif. Comp Reform Fate?

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