COMP DEAL DONE PASSAGE OF INSURANCE BILL WOULD BE BIG WIN FOR ARNOLD.

Byline: David M. Drucker Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger and legislative leaders cut a tentative deal Wednesday on workers' compensation reform and worked into the night on details of the landmark plan designed to save California businesses billions of dollars a year.

A six-member bipartisan legislative conference committee was scheduled to begin deliberating Wednesday night over the agreement. If approved by the committee, the reform bill would face votes Friday on the Assembly and Senate floors with passage representing a major political triumph for Schwarzenegger.

``It saves billions of dollars, it reforms workers' comp and will allow jobs to be attracted to this state - which was the campaign promise this governor made six months ago,'' said Schwarzenegger's communications director, Rob Stutzman.

Although many details remain to be worked out, officials said Schwarzenegger succeeded in keeping regulation of insurance rates off the table. Agreement also was reached on a second key point he sought: allowing insurers and employers to create pools of doctors injured workers must use.

Sen. Richard Alarcon, D-Van Nuys, one of three senators on the committee, said he disagreed with some portions of the agreement, but still might vote for it in committee to get it before the full Legislature.

``I have deep concerns about supporting a workers' comp reform measure without rate regulation,'' Alarcon said.

Until Wednesday, Republicans - who had sponsored Schwarzenegger's proposal to shave $11 billion in premium costs from the troubled system - offered negative views of the talks.

But Assembly Minority Leader Kevin McCarthy, R-Bakersfield, emerged from a late-morning meeting with Schwarzenegger and indicated his approval of those portions of the overhaul that he had read.

And Assemblyman Dennis Mountjoy, a conservative Republican from the San Gabriel Valley, indicated his approval as well - barring any unacceptable changes made to the package by Democrats.

``Is it something I could probably vote for? Yes.''

State law requires businesses to carry workers' compensation insurance to cover medical and disability costs for employees injured on the job. In recent years, premiums have tripled, even in the midst of declining accident rates and improved safety standards.

Schwarzenegger has threatened to take his reform plan to the Nov. 2 ballot - enough signatures have been collected to do so - if the Legislature does not act by Friday.

The governor and like-minded lawmakers are moving to stop firms like Larsen Supply Co., a 130-employee plumbing-supply wholesaler in Santa Fe Springs, from moving out of state. The company employed 140 people in 1999, but has reduced its work force since - and could be headed toward more layoffs this year - because premiums have soared from $30,000 annually in 1999 to $467,000 this year.

Alan Holderness, the firm's controller, was unconcerned with the political arguments over how to achieve reform. He just wants his company to realize significant, immediate savings so that it can afford to remain in Southern California, where it has been for 70 years.

``Businesses are really, really hurting,'' he said. ``It's not as though we don't want to stay here, because we really, really do.''

The administration and some legislators familiar with the package say it will provide the rate relief businesses are looking for - though Stutzman, when asked, could not provide an estimate of how many ``billions of dollars'' the plan would save.

Schwarzenegger aides contend that the package will accomplish this without empowering the state to regulate insurance rates, which the governor opposes. Democrats are skeptical, but in the spirit of compromise dropped their insistence on including such a component in the bill.

Still, Assembly Budget Committee Chairman Darrell Steinberg, D-Sacramento, said separate legislation to regulate rates would likely be passed by Democrats and sent to Schwarzenegger's desk - a move that could be designed to quell discontent among core Democratic constituency groups - labor unions and trial lawyers - that oppose workers' compensation reform.

``It's going to be up to the governor whether he chooses to also sign (rate regulation,)'' he said. ``We're going to strongly urge him to do so because workers' comp reform without rate relief does not accomplish ... the purpose of these intense negotiations.''

The final components of the bill continued to evolve late Wednesday. But among the many factors causing rates in California to be unusually high that have been resolved are:

--Permanent Partial Disability: This term describes an employee who, because of an injury sustained on the job, is classified as partially disabled on a permanent basis. Steinberg said steps would be taken to end the abuse caused by classifying workers as such who should not be.

He also said additional, tentatively agreed-upon reforms would allow injured employees to get immediate medical attention, and facilitate their getting ``back to work sooner rather than later.''

--Apportionment: Employers are often held liable for 100 percent of an injury even when a worker's job is not responsible for causing all of it, as the employee might have had previous injuries or non-job-related injuries. McCarthy said he is pleased that the proposed reforms to deal with this key issue would address this unfair practice.

Steinberg acknowledged that some workers' rights advocates were disappointed with the compromise, but noted that the package would not result in lower benefits. Stutzman agreed, saying the real losers in this process were the trial lawyers and unscrupulous doctors.

``This is part of the special interests that need to be booted out of the (Capitol). And they're being served notice through this reform ... that they don't have the influence here they had before,'' Stutzman said.

David M. Drucker, [phone]

David.Drucker(at)dailybulletin.com

REFORM HIGHLIGHTS

Workers' compensation reform at a glance:

The new reform bill:

--Cuts costs by ``several billion'' dollars.

--Sets no limits on insurance company rates to employers.

--Requires injured workers to choose from a pool of doctors picked by employer or employer's insurance company.

--Uses American Medical Association guidelines to establish disability.

--Allows employers to pay benefits only on percentage of injury caused by work.

What Gov. Arnold Schwarzenegger wanted originally:

--Costs cut by $11 billion annually.

--Nationally recognized guidelines for permanent disability.

--Objective proof of injury.

--Proof that injuries that build up over time were mainly caused by work.

--Injured workers to pick their own physician only if employer agreed.

--Ability for employers to more easily prove that previous injury or condition contributed to a new injury, reducing amount employer must pay in benefits.

Basic elements of the current system:

--Requires employers to provide benefits for employees and generally prevents employees from suing their employers over injuries.

--Allows injured workers to go to their own doctor after 30 days of treatment by insurance or company doctor.

--Sets standardized rates for medical care providers.

--Sets fee schedules for drugs.

--Caps the number of visits to chiropractors and physical therapists.

--Sets care standards for injuries.

--Harsh penalties for failure of businesses to carry workers' compensation insurance.

Source: University of California Institute of Governmental Studies, Governor's Office, California Legislature.

CAPTION(S):

photo, box

Photo:

During a rally in Van Nuys, Carmen Roman shouts her disapproval of the workers' comp deal reached in Sacramento.

Hans Gutknecht/Staff Photographer

Box:

REFORM HIGHLIGHTS (see text)