Counterattack looming over workers' comp.

Even as California employers are enjoying sharp reductions in their workers' compensation premiums, efforts are now under way in Sacramento to undo substantial portions of the reforms that generated those savings.

Trial attorneys, labor unions and workers' compensation doctors are mounting an all out push to increase benefit payouts to injured workers and boost fees for physicians.

Three voter initiatives that would make drastic changes to the workers' compensation system have been submitted to the state Attorney General's Office. All three would raise benefits to injured workers and give them more power to choose their doctors. But two of the measures go much further: they would effectively scrap the entire system by allowing injured workers to sue their employers.

The initiatives were submitted by a registered voter who cannot be located, and all of the traditional interest groups now pushing for reform deny they had any role in drafting the measures.

As a result, business groups and Republican lawmakers are now on the defensive, trying to keep the major reforms enacted two years ago from being undermined, either in the Legislature or at the ballot box.

Last week, a coalition of business groups formed a committee to oppose any workers' compensation ballot initiative. These business groups credit the 2004 reforms and a set of changes enacted in 2002 with bringing workers' compensation premiums down an average of 38 percent from their 2003 highs. Any attempt to reopen these reforms, they say, could send premiums fight back up again.

Instead, they would rather see some minor administrative tweaking of some of the benefit payout formulas to take care of the most egregious cases of slashed payouts.

"I'll be out in the arena if the Legislature reopens this. It's incumbent upon us who care about the business climate to step up and prevent things from passing that would harm the business climate," said state Sen. Charles Poochigian, R-Fresno, who authored the 2004 workers' compensation reforms.

Drastic reforms

Under state law, every employer in both the public and private sectors must carry workers' compensation insurance or be self-insured against worker injuries.

Between 2000 and 2004, the average premium more than doubled to $6.40 per $100 of payroll, by far the highest in the nation. This huge jump prompted many businesses to consider relocation offers from other states and became a major issue in the recall election that brought Gov. Arnold Schwarzenegger to power.

In early 2004, Schwarzenegger himself threatened a voter initiative if lawmakers failed to enact a workers' compensation reform package. At the time, Schwarzenegger was at the height of his popularity and the Legislature complied, passing the Poochigian bill over the objections of their key labor and trial lawyer supporters.

Since then, however, Schwarzenegger's popularity has plummeted, prompting the push from labor unions, trial lawyers and industrial-medicine physicians to reopen the reforms. These groups claim that the way the reforms have been implemented by the state Division of Workers' Compensation has resulted in sharp drops in benefit payouts to many injured workers.

"There's been a 50 percent to 70 percent reduction in the permanent disability benefits beyond the limits agreed upon in the 2004 reforms," said David Schwartz, a principal in the Torrance-based law firm of Ozurovich and Schwartz LLP and legislative chair of the California Applicants' Attorneys Association.

To help bolster their case, the applicants' attorneys have brought forward the stories of dozens of injured workers who have seen their benefits slashed, some as much as 95 percent. "We want to see a law passed that mandates fairer benefits for injured workers and not allow any administration to reduce benefits arbitrarily by regulation," Schwartz said.

He added that the association was still in the process of drafting legislation and has not yet decided which legislator will carry the bill. But he said that both Senate President-pro-tempore Don Perata, D-Oakland, and Assembly Speaker Fabian Nunez, D-Los Angeles, have said changing the regulations is high on their agendas.

Indeed, last week, a spokeswoman for Perata said that addressing the issue of permanent disability is "definitely a priority" for him. However, spokeswoman Alicia Dlugosh said that whether this should be done administratively or through legislation had yet to be determined.

Perata and other Democrat lawmakers are waiting for the release of a study from the California Commission on Health and Safety and Workers' Compensation later this month that will give the first statistical glimpse of the reforms' impacts.

"If the numbers say what everyone's been indicating, that benefits have indeed been cut beyond what the Legislature intended, Don is going to walk that study over to Governor's desk and figure out what can be done this year to fix this," Dlugosh said. "In so doing, we want to make sure to take into consideration the impact any changes might have on employer-paid premiums."

Premature amendments?

That in turn has raised concern from employer groups that say that it's still way too premature to make substantial changes.

"Before anybody tries to craft a solution, we have to determine whether there's a problem. Many of these reforms were enacted only a year ago; it often takes cases two or three years to go through the system. It would be a mistake to jump the gun now with changes," said Allan Zaremberg, president and chief executive of the California Chamber of Commerce.

Meanwhile, doctors specializing in industrial medicine are pushing for increased fees, saying the sharp drop in reimbursements since the reforms were enacted have devastated their ranks.

"The reforms and their poor drafting has created a climate that is hostile to physicians," said Carlyle Brakensiek, executive vice president of the California Society of Industrial Medicine and Surgery. "Doctors are getting out of workers' compensation, particularly the specialists."

Brakensiek said his organization is drafting a reform to change the fee schedules for physicians. "We hope to do this administratively," he said. But, should that fail, he said the reform proposal could be turned into legislation.

The powerful California Medical Association is also pushing for higher reimbursements.

The deadline for bills to be introduced is Feb. 24. However, proposals can still be introduced into existing legislation after that date.

All players in workers' compensation are watching the progress of the three initiatives now before the Attorney General's Office. All three were submitted by a woman named Danielle Viohl, a registered voter who lives, or at least recently lived, in Pomona. Various parties have said that they have not been able to contact Viohl. She could not be reached for this article.

The key will be whether the trial lawyers, industrial medicine doctors, organized labor or some other group will emerge to kick in the $1.5 million to $2 million it would take to obtain the necessary signatures to place one or more of them on the ballot. Groups pushing for such an initiative typically would strive to get a million or more signatures, and each signature costs at least $1.

So far, few think the money will be there for the measures.

"At this point, we don't believe these initiatives have legs," said Lori Kammerer, a Sacramento lobbyist who represents major employers on workers' compensation issues.

But business groups are still taking the initiatives seriously, especially if provisions survive to allow injured workers to file tort lawsuits against their employers. The current system guarantees monetary awards to workers who are determined to have suffered work-related injuries but bars lawsuits from workers. The workers' compensation system was set up nearly 100 years ago to head off costly lawsuits and speed up payments to injured workers.

"We will fight and defeat any of these initiatives should they get on the ballot." said Zaremberg, co-chair of the newly formed Californians Against the Job Killer Initiative.

"We cannot allow this (system) to be upended and open up every employer to the fear of meritless lawsuits."

Howard Fine Staff Reporter