Workers' comp reform takes shape in Sacramento; legislators sculpt bipartisan packages to end wrangling.

Bipartisan efforts to reform California's $11 billion a year workers' compensation system were beginning to take shape in both houses of the state Legislature last week with proposals which would return half of reform savings to workers in the form of increased benefits.

Sen. Pat Johnston, D-Stockton, and Sen. William Leonard, R-Upland, met last week to meld their separate bills into a bipartisan reform package. Johnston chairs the Senate Industrial Relations committee and Leonard is vice chairman of that committee.

"He and I are talking," Leonard said. "We're both willing to compromise."

Leonard added Gov. Pete Wilson has been involved in the talks. He noted that if workers' comp reform was up to just those three elected officials, a package could be agreed on immediately.

Meanwhile, Assemblyman Steve Peace, D-Chula Vista, the new chairman of the assembly insurance committee, last week released a draft of a workers' comp reform bill written by members of both parties.

All three bills would take half of the savings from reform measures and return it to employees in the form of higher benefits.

Last year, Wilson declined to sign a workers' comp reform bill, in large part because he was unwilling to increase benefits before $1 billion in savings to employers could be realized.

But political insiders say Wilson may now be willing to bend on the benefits issue since Republicans lost a number of Assembly seats to Democrats in last year's election.

Leonard said he doesn't want to compromise but he is being forced to do so. "It's a partisan Legislature and I'm in the minority," the Republican said.

"Our biggest goal is what we can get through the Legislature and get signed by the governor," Leonard said.

The tough part will be getting a package through the Democrat-controlled Assembly, which tends to vote down party lines, he claimed.

But he noted there are 28 new members of the Assembly this year and "every legislator wants to brag back home on having passed a good workers' comp reform bill."

Leonard said his bill has a "hard savings," which means a savings of $1 billion which can be quantified by the California Workers' Compensation Rating Bureau, while Johnston's bill has a hard savings of $500 million. Johnston is also proposing to pass back half of those savings -- $250 million -- in increased benefits.

Leonard said his discussions on co-authoring a bill involve a compromise on increasing savings and giving increased benefits.

If Johnston were able to increase his bill's hard savings to $1 billion, Leonard would also be willing to give half of those savings back to workers in the form of higher benefits, Leonard said.

Jeff Shelton, chief consultant to the Senate Industrial Relations committee and aide to Johnston, said one reason Leonard's bill boasts $1 billion in hard savings and Johnston's is rated at $500 million is because of how the California Workers' Compensation Rating Bureau counts savings.

Reforms which, for example, would limit stress claims would result in savings, but those are not counted as "hard savings" because the bureau can't quantify the amount, Shelton said.

Part of the reason Leonard is able to achieve a higher savings is because his bill would eliminate vocational rehabilitation as a mandatory workers' comp benefit, a savings that can be quantified, Shelton said. Johnston's bill would require that injured workers take a 25 percent cut in maintenance benefits while undergoing vocational rehabilitation.

Johnston and Leonard also would have to hammer out differences in psychiatric claims.

Leonard seeks to allow compensation only when a psychiatric injury results from a "sudden and extraordinary" event on the job -- such as "if they saw a co-worker shot on the job," he said.

Johnston would allow psychiatric claims if the employment itself was the dominant cause of the illness.

Johnston's bill doesn't require a sudden and extraordinary event but would eliminate stress which was caused by performing routine tasks associated with the job.

Peace's bill would also allow psychiatric claims "if the employee demonstrated by the preponderance of evidence that actual events of employment were a substantial cause of the psychiatric injury."

No one from Peace's office was available to answer questions about the specifics of his bill and no cost savings estimate on it was available.

Lloyd Aubry Jr., director of the state Department of Industrial Relations and Wilson's cabinet member in charge of workers' comp reform, said, "There is some unhappiness from many quarters about that (Peace's) bill."

Some Sacramento lobbyists say the Peace effort is "too tough" on some issues and "not tough enough" on others, Aubry said, declining to elaborate.

He said, however, that both bipartisan efforts were moving along.

"Our perspective at this point is to let the legislative process work," Aubry said.

Wilson is currently selecting members of a task force of business and labor leaders, Aubry said.

The task force may later support one of the comprehensive reform efforts or may write its own reform bill, he noted.

Wilson wants a reform package passed before the end of May, when the Legislature will begin wrangling over a multibillion-dollar state budget deficit, Aubry said.