Thursday, June 17, 2010, 10:08 PM - Political developmentsUndoubtedly many of us in the workers' comp and employment law world are reading with great interest the revelation that Governor candidate Meg Whitman was involved in an alleged shoving incident while serving as CEO of eBay.
The story surfaced in the New York Times several days ago.
The incident dates back to June 2007. The allegation is that Whitman was being prepped by eBay employee Young Mi Kim for a media interview that day.
The Times story cites sources who noted that Ms. Kim was preparing talking points on a whiteboard in Whitman's personal conference room at eBay in San Jose when Whitman is said to have used expetives and shoved Kim.
Litigation apparently followed, and a settlement appears to have been reached in the amount of $200,000 after involvement of mediators from JAMS. The terms of the settlement are confidential, but The Times piece by Brad Stone cites several former eBay employees as confirming the resolution.
Ms. Kim apparently left eBay for about 4 months but eventually returned in October 2007. Whitman left the company in early 2008.
While it's good to know that Ms. Kim appears to have been compensated if she was shoved, what's the deeper significance of this event?
The easy answer is that it's good to be king or queen.
At many companies, if it was verified that a supervisor shoved a subordinate, the supervisor would likely be severely reprimanded. And imagine what would occur if the shoe was on the other foot.
If a subordinate cursed at and shoved a supervisor, the employee would be shown the door.
According to the piece in the New York Times, Meg Whitman was counseled by eBay HR lawyers and by a key eBay executive, Henry Gomez.
But it's good to be king or queen. Rules that apply to mere mortals are either loosely applied or don't apply at all.
It's unlikely that Whitman really paid any real personal price for her behavior, either professionally or financially. Whatever was paid essentially was a blip on the financial radar of eBay at the time.
Unless further documents regarding the event are leaked, we'll never have any indication of how seriously the eBay board took the incident.
However, the story is troubling in the context of Whitman's run for Governor. The press has little access to Whitman, so it's unlikely she will be forced to answer questions about the incident.
Whitman lives large. This is a person and a candidate who doesn't have to play by the rules that most of us must follow. Billionaires and CEOs have their own rules. They may feel entitled to shove an adviser they deem trifling.
But Whitman will not be able to sustain this bubble. Sooner or later as a candidate-or a Governor-Whitman will learn that in politics and government you can't always set your own rules.
Here's the link to the New York Times piece:
http://www.nytimes.com/2010/06/15/us/po ... itman.html
Monday, June 14, 2010, 09:46 PM - Understanding the CA WC systemIn a recent post. "Lower Still", I wrote about the precipitous decline in written premium in California's workers' comp insurance industry:
http://www.workerscompzone.com/index.ph ... 604-075757
I noted that comp premium has fallen to $6.9 billion from over $16 billion in 2004. You don't pay premium on workers who aren't working or on business you don't have.
I noted that as premium declines, allocated and unallocated loss expenses climb as a percentage of premium. And I noted that it's likely we'll see high ratios of overhead expenses in proportionto benefits paid out to or on behalf of injured workers.
According to a report posted online by the astute folks at Workers' Comp Executive (wcexec.com for those who don't know it), the chief actuary of the WCIRB, Dave Bellusci has indicated that the "combined ratio" has increased to 118.2%. Bellusci was apparently speaking to the WCIRB actuarial committee.
Crudely stated, you can think of the combined ratio as the combination of losses and expenses relative to premiums collected.
Apparently (I say apparently because I don't have primary source documents on Bellusici's presentation) the "loss ratio" (ratio of indemnity and medical paid to or on behalf of workers) was 74.6% in 09, up from 2008.
The expense ratio (which includes allocated and unallocated loss expenses, broker commissions, taxes & other operating expenses) was apparently 43.1%. That's over half of the benefits paid to or on behalf of injured workers.
So as premiums fall, overhead rises as a proportion of premiums.
We have a very expensive system to deliver indemnity and medical benefits to workers.
What was also striking was word from the wcexec.com piece that the State Compensation Insurance Fund "combined ratio" ended in 2009 with a ratio of 161.5%.
As SCIF has lost market share, its overhead reductions have apparently not kept pace with its premium losses. If those numbers are for real, it's not sustainable and there's going to be a big problem soon.
With Insurance Commish Steve Poizner now a lame duck, it'll be interesting to see how the politics play out and whether the WCIRB pushes for a rate increase soon.
And at some point will the interests of insurers and employers diverge?
Sunday, June 13, 2010, 10:49 PM - Political developmentsAll indications are that public employee pensions will be a major issue in the upcoming Whitman Vs. Brown race. Workers' comp is unlikely to be high on the radar, but the public pension issue is being pitched by both Schwarzenegger and Whitman.
At a time of crushing budget shortfalls, PERS and STRS are said to be in need of additional funds. CalPERS recently delayed billing the state for an additional $600 million, but that may be a temporary respite. Cash strapped counties and public agencies have high pension costs.
For those of you out there interested in the issue, there's now a website, pensiontsunami.com, devoted to promoting the concept of reform. Another site that tracks the issue is calpensions.com.
It's a difficult issue for politicians and groups who have ties to public employee unions.
Is this an issue in states other than California? You bet.
How are other states dealing with the issue? Dale Kasler's piece in the Sacramento Bee, "Benefits Embattled Across U.S." gives us some answers:
http://www.sacbee.com/2010/06/13/281860 ... s=Business
Kasler notes that Arizona, Illinois, Mississippi, Virginia and Michigan have instituted reduced pension benefits for new hires. Some of those are very conservative states of course, But some are very "union friendly".
Its an issue which Jerry Brown will need to address as the campaign proceeds. After announcing his candidacy, Brown indicated he would consider pension reform but oppose any move to privatize pensions.
Friday, June 11, 2010, 08:40 AM - Political developmentsTo the ramparts! All hands on deck!
We're under attack again....from Nevada. Californians-and our legislature-are pictured as a group of Orangutans.
Nevada? Things aren't going well there. With an unemployment rate of 13.6%, Nevada's jobless stats are worse than California's 12.7% rate.
Las Vegas has suffered some of the worst housing price declines in the nation. Is it really the "Capital of the new Mega-West"?
On a recent visit to the Nevada side of Lake Tahoe, the casino business looked truly sad. Large areas of cavernous casinos were roped off. Business can't be good at the Bunny Ranch.
Winnemucca is still, well, Winnemucca.
But what better way to dig out of a hole than attack your fellow state?
Here, for your viewing pleasure are the videos in the just released "Kiss Your Assets Goodbye" campaign from the Nevada Development Authority. Unlike the previous campaign, these do not mention workers' comp costs:
Wednesday, June 9, 2010, 10:06 PM - Political developmentsIn two key California Democratic primary contests yesterday, candidates backed by labor and environmental advocates won tight victories over "business Democrats".
In Fremont, council member Bob Wieckowski eeked out a win over Garrett Yee. Yee, who had been a Republican several years ago, reaped large contributions from insurance industry interests. Wiekowski was supported by nurses, environmental groups, trial lawyers, and many applicant attorneys.
Yee, drawing lots of support in the Asian community, may yet have a future in politics.
But in this showdown (in what appears to be a likely solid Democratic district come November elections), Wieckowski prevailed. Bright and energetic, Wiekowski is likely to be a significant player on the Sacramento scene barring some unexpected electoral debacle.
Meanwhile, in San Diego, Assemblywoman Mary Salas nudged out former Assemblyman Juan Vargas in a Democratic primary battle to establish the likely successor for the California Senate seat of Senator Denise Ducheny, who will be termed out. The same forces that lined up in the Wieckowski-Yee race lined up in the Salas-Vargas race.
Insurance interests have sought to put legislative seats "in play" in an effort to get more leverage in future battles.
Another race to watch will be the June 22 special election on the central coast that pits Republican Sam Blakeslee against former Democratic Assemblyman John Laird. Democrats would love to pick up a California Senate seat in their quest to obtain a 2/3 majority.
Meanwhile, yesterday's legislative tests did score a number of wins for Assembly Speaker John Perez and California Senate Pro Tem Darrell
Steinberg. They'll be part of the key negotiatiors-part of the "Big Five"- in negotiations with either a Brown or Whitman administration.
It's all part of the geography of politics, the big game that ultimately turns policy battles over workers' comp into the sausage of legislation.