GARAMENDI WILL AIR WORKERS' COMP PLAN.

Byline: Harrison Sheppard Sacramento Bureau

SACRAMENTO - Insurance Commissioner John Garamendi plans to propose a workers' compensation reform plan today that attempts to find common ground between other plans he believes are too business-friendly or too labor-friendly.

Gov. Arnold Schwarzenegger already has a plan that will be examined by the Legislature this week, but Garamendi said it might be too friendly to employers without protecting workers enough and will likely not survive the legislative process intact.

Garamendi said Monday that his plan would reduce the amount of litigation plaguing the system, which takes money away from employers and injured employees.

``We redesigned the system in such a way as to make it less complex, and eliminating or reducing the culture of litigation that now hampers the system,'' Garamendi said.

Workers' compensation costs California employers more than $30 billion a year, according to Garamendi, compared with $9 billion in 1995 when he ended an earlier term as commissioner. Employers now pay $6.30 out of every $100 of their payroll for workers' compensation, an increase of about $1 per $100 in only a year.

Garamendi does not yet have an estimate on cost savings his plan would provide to California employers, but has a consultant studying that issue now.

Sen. Charles Poochigian, R-Fresno, who is sponsoring Schwarzenegger's plan, said he thinks the governor's plan could save employers $11 billion a year. On average nationally, employers are spending $2.46 per $100 of payroll, he said.

He said he would be open to incorporating some elements of Garamendi's plan, as well as those that come from others, but said the governor's plan does more to save money and is farther along in the process.

So far, the governor's plan is the only comprehensive proposal pending in the Legislature, although there are several smaller bills and organized labor has been circulating some ideas but has not yet produced a formal proposal.

Reforming the system, Poochigian said, is going to be very difficult.

``It's a Byzantine system,'' Poochigian said. ``Coursing through it is a very daunting challenge to anybody. There are lots of special interests that profit from the system that are disinclined to do anything substantial that might impair their bottom line.''

Businesses throughout the state have complained that the spiraling costs of workers' compensation premiums is dragging down the California economy, driving companies out of state and preventing business expansions.

Garamendi plans to release his proposal at a press conference today in Los Angeles, in which he will appear with labor leaders as well as business leaders such as Bonny Herman, president and CEO of the Valley Industry and Commerce Association.

Garamendi's plan has dozens of provisions, but among the highlights, it would:

--Allow benefits for an injured employee to begin immediately, even if an employer is disputing the claim. Under current law, benefits can be held up if an employer disputes a claim. But Garamendi's plan would also extend the time for employers to file their challenges to one year, up from 90 days.

--Use guidelines by the American Medical Association for diagnosing a disability, to ensure more consistency in diagnosis and treatment.

--Provide immunity to whistle-blowers who report suspected fraud.

--Increase penalties on employers who fail to carry workers' compensation coverage.

Schwarzenegger has made reforming the system one of his priorities for his first 100 days in office. He has also demanded that the Legislature pass a workers' compensation reform package by March 1 or he will start circulating an initiative for the November ballot.

Proponents of the governor's plan dispute Garamendi's contention that it does not protect workers. The plan, for example, protects workers by increasing benefits for the most severely injured workers, according to Vince Sollitto, a spokesman for the governor.

``The governor's proposal is a comprehensive plan that seeks to not just reduce costs to employers, but improve benefits for our most severely injured workers and provide rationality and consistency in benefits,'' Sollitto said.

The state's workers' compensation premiums are the highest in the nation, Sollitto said, but that does not currently translate into better benefits for workers. Both Garamendi's and Schwarzenegger's plans seek to reduce the amount of litigation that they believe is siphoning off funds that could go to injured workers or be retained by employers.

The Governor's Office has not seen a complete copy of Garamendi's plan although it has had discussions with him about some elements, Sollitto said, so it is not able to offer a full critique yet.

Another group likely to oppose the plans from Garamendi and Schwarzenegger is the attorneys who make their living representing injured workers, and whom some politicians blame for exacerbating the problem.

Arthur Azevedo, president of the California Applicants' Attorneys Association, disputed the idea that attorneys are exacerbating the problem, saying only about 1.2 percent of the total claims involve lawyers, and that those that are usually settled before going to trial.

``It is a very nonlitigated system,'' Azevedo said. ``Eighty percent of the cases, even where they are litigated, are pretty much resolved (before trial).''

``The problem with the insurance commissioner - who seems more interested in headlines than he is in helping workers in the system or even helping employers - is he forgets why workers consult attorneys, and that's delays (in benefits).''

But Garamendi said his plan is designed to have benefits begin more quickly for employees, allowing them to flow immediately after an injury even if an employer disputes the claim. The benefits would not stop until the employer's dispute is upheld. Under the current system, the benefits stop as soon as the employer files a challenge.

The Legislature is starting to hold workers' compensation hearings this week. Most leading Democrats said they are not trying to meet the governor's arbitrary deadline of March 1. Instead, they have said March 31 is a better deadline, because any laws passed by then can take effect in time for the new rates to be recommended in July. Any laws passed later than that, including in a November ballot initiative, would have to wait a year before providing relief to businesses.

Assembly Speaker Fabian Nunez said after his swearing-in Monday that workers' compensation is one of the Assembly's top priorities this year, but he agreed he didn't think a plan would be passed by March 1 because of the complexity of the system.

``Each of us has heard the pleas from small-business owners,'' Nunez said. ``They face some tough choices. I tell you that each and every one of us wants to respond to those pleas because they understand the difficult choices that small businesses face in this state. But we must find a way to balance those needs with the needs of workers who are injured on the job.''

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com

COMPARING THE PLANS

Insurance Commissioner John Garamendi today will release his plan to reform the workers' compensation system. Gov. Arnold Schwarzenegger has already proposed a plan, sponsored in the Legislature by Assemblyman Abel Maldonado, R-San Luis Obispo, and Sen. Charles Poochigian, R-Fresno.

Both have hundreds of provisions, but below are a few highlights:

Garamendi plan:

--Allow benefits for an injured employee to begin immediately, even if an employer is disputing the claim. Under current law, benefits can be held up for 90 days if an employer disputes a claim. But Garamendi's plan would also extend the time for employers to file their challenges to one year.

--Use guidelines by the American Medical Association for diagnosing a disability.

--Tie physicians' fees to the fees in Medicare.

--Increase the penalties on employers who fail to carry workers' compensation coverage.

--Provide immunity to whistle-blowers who report suspected fraud.

--Add two more members to the State Compensation Insurance Fund board, expanding it to seven members. Unlike the current five members, the new members would not be required to be SCIF policyholders.

--Grant the insurance commissioner the same regulatory authority over the SCIF as he has over private carriers.

Schwarzenegger plan:

--Increase benefits to permanently disabled workers, if the system's overall costs are brought down to the national average.

--For cumulative injuries, making sure they are truly work-related by using the higher standard of ``predominant cause'' rather than a partial cause. For example, currently if a worker has an injury that is caused mostly by activities on personal time but exacerbated at work, that can be treated as a work-related injury.

--Require that medical doctors, rather than other kinds of providers such as chiropractors and therapists, be the only ones to determine permanent disability.

--Establish an independent medical review process.

--Remove prisoners from eligibility for compensation.

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COMPARING THE PLANS (see text)