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Byline: Brent Hopkins Staff Writer

In the strongest signs yet that state workers' compensation reforms have started to produce results, several insurers have begun to slash rates - one local company by as much as 40 percent.

Politicians, patients, business groups and even insurers agree there's still a long way to go to bring the cost to employers down after years of soaring premiums. But while not all aspects have been worked out, reforms signed into law last year by Gov. Arnold Schwarzenegger and earlier efforts are having a positive impact.

Several companies have cut rates in recent months. Agoura Hills-based Employers Direct Insurance Co. announced this week that it has cut premiums nearly 40 percent since the height of the workers' comp crisis in 2003.

``This is a big announcement,'' said state Sen. Richard Alarcon, D-Van Nuys, a leading critic of reform efforts who has been pushing a bill to allow for tougher regulation of the industry and who remains concerned about the quality of care injured workers are getting.

``Forty percent is far greater than anyone had projected, so I commend them. I hope that other companies will soon follow.''

The reforms have paid off for Darren Utley, a Baja Fresh franchisee with four restaurants in the Santa Clarita Valley and Kern County. Before the reforms, he was paying as much as $16,000 a month to cover his 120 workers. He now pays a more-manageable $10,000 monthly.

``I'm really excited about what's happening,'' he said. ``What I'm seeing today is just phenomenal compared with two or three years ago. Once a person gets into our medical network, it prevents them from going to a doctor who's in collusion with a lawyer who'll blow the claim up.''

As more stringent claims procedures have taken effect and limited insurers' costs, the California market has become much more profitable than in years past.

``The way the workers' comp system was going was not good for anyone,'' said James Little, president, chairman and chief executive officer of Employers Direct. ``It wasn't a healthy business to be in because, sooner or later, everyone was going to lose.''

His company covers a relatively small swath of businesses, working with 490 companies to insure 200,000 workers since it opened in 2003. It's also a relatively new entrant to the market, free of the backlogs of cases that have weighed down other carriers with added costs. Though EDIC's small size allows it to respond more nimbly to shifts in the market than its larger competitors can, the cut resonated with those who follow the insurance business and won praise from the governor.

``Clearly, things are moving in the right direction,'' said Vince Sollitto, a Schwarzenegger spokesman. ``That said, some of the reforms are only starting to take effect. We expect that cost and rates will continue to drop. Many employers have seen not just an end to the annual double- digit increases, but have begun to see rates come down.''

The State Compensation Insurance Fund, a nonprofit carrier that covers nearly 260,000 businesses and several million workers, has dropped rates a cumulative 14.9 percent since reforms took effect.

Woodland Hills-based Zenith National Insurance Corp. dropped its rates roughly 28 percent.

To see whether other insurers are passing cost reductions along, California Insurance Commissioner John Garamendi ordered a review of prices and profits from carriers, which he expects to receive within a month. He described the drop in costs as precipitous, but said he suspected that not all the savings had been handed over to companies.

``California's finally on the down escalator, but the question is: Are we going down fast enough? As of three weeks ago, there was no evidence that we were. Premiums weren't going down quickly enough.''

But in attempts to weed out fraud and limit unwarranted treatment, some insurers have instituted dramatic crackdowns that patient advocates say go too far.

After slipping while carrying 80 pounds of gear at a presentation in 1997, salesman Alan Becker has slowly lost his ability to walk. The 57-year-old North Hills resident has been out of work for more than six years after two surgeries on his shoulder, two on his neck and one on his lower back. He takes 28 pills each day and needs a wheelchair to get around, but finds himself fighting to get his physical therapy approved under the reformed system.

Becker, a conservative Republican, said he backed Schwarzenegger's plans to change the system. ``I supported them because I've been in business. I knew what workers' comp costs were,'' he said.

`But I thought the costs were in the fraud, which should have been reformed first. That's the kind of reform I was looking for, not having whether or not a person needs therapy after surgery going to a committee. That just delays everything.''

He said he couldn't get State Fund authorization for doctor-approved pool therapy. The paperwork delays have dragged on so long that he's still waiting to get treatment his doctor signed off on in February.

``I'm just getting inundated with calls from people who are losing their homes and living in cars,'' said Bobbi Goldstein, a medical-legal coordinator for Downey Orthopedic Medical Group in Sherman Oaks. ``Everything's being denied to them. (The carriers) are basically turning everything down and trying to put doctors out of business. I see people who are truly disabled who are now getting paid less than they were in the 1980s.''

Some insurers have been overzealous in denying claims, according to Susan Gard, a spokeswoman for the state Division of Workers Compensation. While she said some aspects of the reforms are working - chiefly cost reduction - the claims-approval process still needs better implementation.

``It's scary, especially for an injured worker who's been getting a course of treatment for a period of time and then they can't get it,'' she said.

``The biggest piece of information we want to get out to those folks is that they can still come to us and have a judge make a ruling. If they've been denied, it's not like they have no other recourse.''

Brent Hopkins, (818) 713-3738

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Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Date:May 13, 2005

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