California Insurance Commissioner Steve Poizner announced he will hold a hearing April 28 in San Francisco to investigate "why medical costs are skyrocketing in the workers' compensation system."
His action came after the Workers' Compensation Insurance Rating Bureau governing board voted to recommend a 24.4 percent increase in the Workers Compensation Claims Cost Benchmark.
Mr. Poizner said in a statement that the hearing he will convene will include all stakeholders in the workers' comp system, including doctors, insurance companies, applicant attorneys and labor, to determine why workers' comp medical costs are increasing.
"These soaring costs are unsustainable and must be controlled if we are to prevent a repeat of the workers' compensation crisis we saw earlier this decade," he said.
Commissioner Poizner's announcement also mentioned that he is concerned about the quality of WCIRB data and his department is in the process of completing a top down review of the bureau's operations with a report of findings expected in June.
After WCIRB recommends a rate to the Department of Insurance, the commissioner holds a hearing on the proposed change. After the hearing, the Commissioner can accept or revise WCIRB's recommended change in the Claims Cost Benchmark.
The commissioner issues recommended rate levels, but he has no authority to set workers' comp insurance rates. The Workers Compensation Claims Cost Benchmark, formerly known as the Pure Premium Rate, is the estimated change in claim costs over the next 18 months.
Mr. Poizner noted that the state has been losing jobs and seen skyrocketing unemployment, and as a former business entrepreneur, "I know how hard it is to make a payroll and the impact that workers' compensation insurance costs have on businesses.
"The last thing that California's employers need is increasing workers' compensation costs when so many of them are struggling to keep the employees they have."
He mentioned that, "Over the past two years, I have carefully scrutinized WCIRB's proposed rate increases and rejected or reduced every single unwarranted increase in the benchmark. In 2008, I cut a 16 percent increase in the benchmark to just 5 percent. In 2007, I rejected a 4.2 percent increase and held rates steady."
He promised to "give this WCIRB recommendation the same level of careful scrutiny I have given previous requests. I will not allow California's job creators to be burdened with unnecessarily high workers' compensation costs."
Since its high in 2003, the Workers Compensation Claims Cost Benchmark has fallen 63.4 percent.
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