POWER BUNGLER ALARCON AN OBSTACLE TO WORKERS' COMP REFORM.

Byline: JILL STEWART Capitol Punishment

FIXING workers' compensation comes down to strengthening the spines of a few power players in Sacramento. They must find what we pundits call the ``political will'' to go against their own short-term self-interest.

This point was made on March 10 when Van Nuys' own Democratic state Sen. Richard Alarcon - who bears heavy responsibility for dragging out California's workers' compensation crisis - made a boob of himself.

Alarcon misunderstood an e-mail sent to politicos whose actions will determine if Sacramento dumps this crisis in the laps of voters in November.

The update, sent by the Workers' Compensation Insurance Ratings Bureau, restated the size of the workers' comp market. The bureau shaved $2.2 billion off the size of ``self-insured'' groups - businesses and governments, like Safeway and Los Angeles County. The e-mail also included a widely anticipated update confirming that partial reforms signed by Gov. Gray Davis resulted in about $4 billion in savings.

Alarcon often slams business and has trouble understanding basic economic concepts like markets. He huffily called a press conference to blast a demon he felt was getting rich off figures he did not grasp - private insurers.

He added apples and oranges, lumping together the $4 billion-plus savings and the $2.2 billion reduced market size. He insisted that nearly $7 billion had gone into insurers' pockets. He called for rate regulation.

It's worth noting that Alarcon needs TV time, as he's running for mayor of Los Angeles.

The next day, Insurance Commissioner John Garamendi made clear the e-mail had been misconstrued. When Garamendi wryly replied ``No comment'' to a query about Alarcon's antics, the gathered media erupted in laughter.

When I talked with Alarcon, his allegations got even more mangled.

Alarcon says the ratings bureau had forecast a $1.4 billion jump in costs, a result of a law giving higher benefits to injured workers. He says the e-mail shows that those costs largely failed to materialize, yet insurers got to charge higher rates. Declares Alarcon: ``I want $1.4 billion refunded by the gougers!''

Wrong again.

The new law cost $900 million, lower than forecast because of changes in the mix of employee claims. Other workers' comp costs still skyrocketed, so refunds are absurd.

Jack Shannan, spokesman at the ratings bureau, was dumbfounded: ``Politicians are going to say what they are going to say.''

Vince Sollitto, spokesman for Schwarzenegger, does get it. He said piecemeal reforms have merely ``slowed the rate that costs are growing.''

I'm giving Alarcon a hard time for good reason. He holds a powerful position as chairman of the Senate Labor and Industrial Relations Committee. He affects millions of people and has no right to be so ill-informed.

Last year, I saw Alarcon kill major reforms that would have ended this crisis. Those bills copied intelligent states with good benefits at low prices that keep lawyers out of it. Alarcon condescendingly lectured the legislators pursuing reform. He protected his moneyed friends, the trial lawyers. The media largely ignored the travesty.

Republican state Assemblyman Abel Maldonado of San Luis Obispo, who is sponsoring Schwarzenegger's reforms, says, ``California has 1,350 claims per 100,000 workers, while nationwide it's 400 claims per 100,000 workers. ... This points to litigation, litigation, litigation. Attorneys are urging people to put in claim after claim.''

In 2002, lawyers drained nearly $500 million in fees from the system, says the Commission on Safety and Health and Workers Compensation.

California has the worst return-to-work rate for injured workers in the United States. Yet we're more of a service state, not industrial. In a study of 12 big states by the Workers' Compensation Research Institute, California sent far fewer injured workers to hospitals - indicating lesser injuries. Yet California's average indemnity benefit to the partially disabled in 2002 was $21,819 - double and triple that of Illinois, Indiana, Texas, Wisconsin, Connecticut or North Carolina.

Lawyers demand - and regularly win - multiple permanent disabilities on the same injured spot. Say you hurt your shoulder and are awarded a 70 percent ``partial permanent disability.'' You will get a fat check. If you get another job and injure that shoulder again, you can get another lucrative 70 percent disability on the same spot.

We have Californians with arms and legs that are 300 percent disabled. Quite a trick.

California employers pay $6.30 in workers' comp costs for every $100 in salaries. The national average is $2.46 per $100. No other state is so screwed up.

Maldonado declares: ``We have people like Mr. Alarcon ... who don't want to buck the applicants' attorneys. That is exactly what it is all about - that trial lawyers are a big source of campaign funds.''

Alarcon is not the only obstacle. But he helps explain why things don't get fixed. He shows us why, when leaders operate from fear instead of from strength, the rest of us pay.

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Photo:

(color) Sen. Richard Alarcon, D-Van Nuys, holds a powerful position as chairman of the Senate Labor and Industrial Relations Committee.

Julio Cortez/Daily News