California Insurance Commissioner John Garamendi called yesterday for a 16.4 percent decrease in state workers' compensation insurance rates.
At the same time he issued a warning to insurers against using new guidelines to improperly delay or deny medical care, saying complaints from workers have been rising.
Mr. Garamendi, in a nonbinding recommendation, called for the cut in pure premium for policies taking effect on or after July 1.
Although only advisory, insurers typically stay in line with the commissioner's recommendations. The most recent decrease, Mr. Garamendi noted, would bring the total decrease in costs for businesses to 55.1 percent since the first of a series of reforms were enacted in 2003.
"In the past three years, California has experienced a dramatic transformation of its workers' compensation system," Mr. Garamendi said.
He added, "High premium rates, which choked businesses and threatened to drive them from this state, have decreased, although some insurers have been slow to pass on the full savings to all businesses. Costs within the system continue to decrease as well, as has the frequency with which workers' compensation claims are filed."
Nicole Mahrt, a spokesperson for the American Insurance Association in Sacramento, said Mr. Garamendi's recommendation was "more great news for businesses in California."
"It shows that the reforms, as properly implemented, have really taken hold and solved the problem of escalating costs in the system," she added. "We've gone from ongoing double-digit cost increases to consecutive double-digit decreases."
However, in his recommendation Mr. Garamendi spoke of another, "troubling side of the story" affecting injured workers.
"In recent months I have heard a growing chorus of complaints from seriously injured workers who have suffered as the amount of compensation and treatment they receive has been slashed," he said.
"In the area of serious permanent disability, benefits have been cut by an average of 50 percent compared to the period prior to the reforms.
"Additionally, I have received many complaints from injured workers and medical providers regarding unnecessary delays in providing medical benefits."
These complaints, he said, led to the conclusion that "the most seriously injured workers with objective findings of disability may not be receiving fair compensation, and that utilization review is now being overused to delay and deny medical care."
Although Mr. Garamendi said he continues to believe that treatment guidelines and utilization review are "necessary and effective tools," he also cautioned that "they must be used responsibly and not as an obstacle to reasonable and prompt medical treatment."
Mr. Garamendi said that he expects the state legislature and Gov. Arnold Schwarzenegger to address the problem, and that the potential impact of such moves led him to propose the 16.4 percent decrease rather than an 18.5 decrease suggested by state insurance department actuaries.
Ms. Mahrt said that insurers "are doing everything they can to follow the law as written" when it come to utilization review and treatment guidelines. For those insurers who may not be acting in good faith, she added, "the commissioner, along with the Division of Workers' Compensation, has the authority to clamp down on bad actors."
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