Thursday, April 24, 2008, 10:49 PM - Political developmentsDon Perata's PD increase bill passed a California senate committe vote yesterday.
Here's a video piece on the issue done by ABC news reporter Nannette Miranda:
http://abclocal.go.com/kgo/story?sectio ... id=6099877
Wednesday, April 23, 2008, 11:07 PM - Political developmentsCould SCIF actually be sold?
SCIF is the California's largest workers' comp insurer. A quasi-public insurer, SCIF just a few years ago had around half of the market share for comp in the state. That market share is probably down to the 20% range now.
Rumors are circulating that there are proposals in Sacramento for SCIF to be sold as a budget balancing move.
How this could be achieved isn't clear. But privatizing the fund could bring big bucks to a state that is facing a growing budget deficit that may already exceed $14 billion.
SCIF has a peculiar important role to play in California's insurance marketplace. It's the insurer of last resort, meaning that it underwrrites coverage on many businesses that can't get coverage elsewhere, including many small businesses. If it were to be sold there would have to be some mechanism to guarantee coverage for employers who need it.
But SCIF has been under a microscope for the past few years. Audits have revealed mismanagement. Check out my post "Takin' SCIF to the Woodshed":
http://www.workerscompzone.com/index.ph ... 110-113711
And my post "Audit of SCIF Shows Largest Comp Insurer Ran Amok":
http://www.workerscompzone.com/index.ph ... 212-010631
I'd be wary of politicians getting their hands on SCIF. For one thing, California must eventually look for permanent solutions to structural deficits, not gimmicks such as this. Sell SCIF rather than bring back the car tax? Not a good idea.
In the long run the fund has an important role to play. There may be future times when its market share will need to increase again.After all, the spike in market share several years ago was a response to instability
in the private marketplace and insolvency of other carriers.
Competition between a quasi-public carrier and private insurers is probably a healthy thing.
Legislation under consideration will help provide better oversight of the fund. Let's not throw out the baby with the bathwater. Be very concerned if SCIF goes on the auction block.
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Sunday, April 20, 2008, 10:51 PM - Political developmentsSenator Don Perata is introducing another bill to increase compensation to workers who sustain permanent disabilities.
As sure as the swallows return to San Capistrano, you can be sure that
entrenched California business interests will issue press releases attacking
the PD increase bill. Ultimately, the opposition's premise is that SB 899
"is working" and that comp costs have been lowered, providing a boost to the state's economy.
Of course, there is some truth to that, in that comp premiums have fallen, though carrier profits remain at high historical levels.
They'll also argue that any change is "premature" and that further study is needed. And they'll probably argue that change should be made via administrative regulations (as the DWC has promised, but not delivered), rather than legislatively. That's an argument they might not be making if there was a Democratic governor in the statehouse.
But before the blizzard of arguments on the cost of a PD increase, let's get real. Too often in comp the workers are lost in studies that fail to recognize the plight of individuals. So lets look at some examples of actual workers rather than statistics. Where to start? Check out this website:
These are disabled worker "horror stories" collected by attorneys for injured workers.
Even if one were to assume that a handful of these stories
are slanted, discountable or somehow inaccurate, the sheer number of these stories is troubling. These stories put a face on the notion that the system appears to compensate permanent disabilities in an inadequate fashion. I suspect that intellectually honest representatives for employers would-in their heart of hearts-recongize the inadequacy of benefits for these particular workers.
So-a challenge to the enlightened employers (and insurers) in the employer community. What's an intellectually honest response to the inadequacy of benefits? Yes, we know that you believe (and may have been correct to some degree) that the system was out of control and had to be tamed. Tell us something we don't know.
Are workers such as these pictured as "horror stories"
simply casualties of reforms for the "greater good" of salvaging the state's economy? Should there be some effort to balance the needs of such individuals with the need for the state's economy to remain competitive? To employers:read the horror stories, look at the pictures and then answer this. Are you comfortable with a system which compensates some of your workers in this fashion, knowing that less than half of insurance premiums are going to payouts for injured worker benefits? I recognize that in many quarters altruism is seen as naive and old fashioned. But I'll still ask the questions.
A day will come under a different governor when these arguments will receive a more comprehensive sounding. Employers: is it time to start thinking about what a response might be? Saying no forever will not be
I was in Tokyo last week. I shot some video of workers there that I'll be uploading soon for your enjoymenrt. Still coming is the 1st quarter 2008 California workers' comp recap.
Friday, April 18, 2008, 06:42 AM - Political developmentsI've been on the road this week, so this space has been dark for a few days. From afar a few things caught my eye.
State Senate Pro Tem Don Perata is unveiling his proposed PD increase bill in the next few days. That'll be the third try in 3 years. Guv Schwarzenegger has twice vetoed bills passed by the legislature to increase permanent disability benefits. In many categories, California now has some of the lowest benefits for permanently disabled workers.
But an effective employer-insurer coalition has the Governor's ear, and it's unlikely that the third time will be a charm unless the bill can be part of a trade for other things the Governor wants. But it's an unusual time in Sacramento as both Governor and legislature face decisions over massive budget cuts to bring the state's budget into balance.
Also significant this week was the apparent fizzle of a comp rate regulation bill sponsored by Assemblyman Ed Hernandez. The applicant attorneys I know are divided on comp rate regulation. Some wistfully recall the days in the 80s and 90s when insurance carriers joined forces with labor and applicant attorneys to achieve legislative victories. Others recognize that without increased regulatory focus on the insurance industry the current situation could continue indefinitely......a system in which benefits to disabled workers are dwarfed by insurance overhead and profit.
In the courts, the 3rd District Court of Appeal rendered a significant decision in Foster v. WCAB. In Foster the worker had 2 successive injuries, both of which contributed to the need for temporary disability benefits. The worker argued that this entitled him to 2 periods of 104 weeks of TD. The court disagreed, holding he was entitled only to 104 weeks. You can see the decision by clicking here:
http://www.courtinfo.ca.gov/opinions/do ... 056820.PDF
I've been experimenting with introducing video to this site. Stay tuned.
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Friday, April 11, 2008, 09:07 AM - Political developmentsThe weekend is nigh.
Workers start fidgeting in their cubicles and factories.For some the weekend might normally mean salmon fishing. Not this year. What to do? An adventure to the mall with that trusty plastic card? That great American tradition of shop til you drop is fading, a victim of the credit crunch.
In a few hours the watering holes in the Bay Area will be flooded with office professionals sipping the latest trend, designer cocktails. Supporters of "one China" will be squaring off in arguments against supporters of a free Tibet. In less upscale saloons some workers will be grousing about the fading American dream and who is responsible for the mess we're in.
Before you go off on your own adventure, here's the weekend comp update.
EAMS (the project to make the WCAB paperless) has been in the spotlight. Hearing concerns among stakeholders (and particularly from physicians and other lien claimants who use EDEX), the legislature held a hearing on Wednesday. Depending on whom you talk to, EAMS is either on track or likely to have some serious flaws. Lien claimants want an EDEX-like functionality. And there's great concern as to how the system was contracted so that the DWC has only a limited number of "user licenses", which seems to leave Deloitte Consulting in a position to wring more money out of the taxpayer for more licenses for what should be a turnkey project in the first place. Still, it's a worthy and necessary project being headed by capable people.
The California Supreme Court has announced it will hear arguments in the Sandhagen case in May. Sandhagen involves issues regarding utilization review procedures. It's an important, but not earth shaking issue.
And the California Workers Compensation Institute (CWCI) released a study claiming that comp premiums have dropped to their lowest level in a decade. It's more evidence that the system is shrinking, as intended by the designers of the 2004 reform, SB 899. Whether the system maintains adequate benefits for those who are injured is very much in question, however.