Garamendi Develops WC Rate Plan

The rate plan "isn't something that we advocate for," department spokesman Byron Tucker told National Underwriter. "We believe that this sort of regulation could stifle competition. However, we were responding to the request of the legislature."

Mr. Tucker said the mandatory base rate is in the proposal stage and that no numbers have yet been decided upon.

"If the legislation should move forward and the legislature deems it to be acceptable to them, at that point the commissioner would work with the Workers' Compensation Insurance Rating Bureau and our own internal actuary to set them," he said.

He added that Mr. Garamendi believes it is critical that the March 31 deadline set by Gov. Arnold Schwarzenegger to pass legislative reform be met and "remains hopeful that it can be implemented."

If the legislation isn't implemented, however, "the next step would be an initiative, which the commissioner believes is not the correct path to address such a complex problem," he said.

Mr. Garamendi said in a statement that only by expanding the presence of private insurers "can we fundamentally right the serious problems of this system, particularly as they pertain to the State Compensation Insurance Fund and its 60 percent share of the market."

He continued that while some lawmakers have suggested that full rate regulation is the answer, "I believe that there is a better approach that more effectively addresses the needs of employers, while not unduly discouraging insurers from expanding or entering the market."

Mr. Garamendi said the proposal passes the savings immediately to employers without imposing a "cumbersome, long-term rate regulation system." He noted that "failure to pass through available savings to employers will constitute an Unfair Practice under the Insurance Code."

If legislative reform is not passed by March 31, however, "the earliest that savings could materialize is July of 2005," he said.

Mr. Garamendi warned earlier this week that billions of dollars in savings from last year's workers' comp reform legislation will not fully materialize unless lawmakers pass "cleanup" measures to fine tune the new laws.

Last year, SB 228 and AB 227 were passed to primarily reduce medical costs within the state's $29 billion workers' comp market. The new laws, he said, would trim more than $5 billion annually from the system.

Mr. Garamendi noted key areas that need immediate legislative action:

? Clarifying language to ensure that the 24 visits per injury cap on chiropractic and physical therapy treatment is only applied after appropriate guidelines have been superseded by a preponderance of evidence.

? Ensuring that the 24 visit cap is not exceeded or abused by someone filing multiple injury claims for the same body part.

? Ensuring that the presumption for the use of the guidelines is a presumption that affects the burden of proof and applies to all medical disputes regardless of the date of injury.

? Qualified medical evaluators must receive mandatory training regarding medical treatment guidelines so they can effectively determine what constitutes reasonable, evidenced-based medical treatment.

? Ensuring that all workers' comp fraud penalties are consistently set at $150,000 in order to prevent those convicted of fraud from arguing that they should receive a lesser penalty than intended by the legislature.