Calif. Commissioner Unveils Workers’ Comp Reform Legislative Package

February 11, 2004

California Insurance Commissioner John Garamendi unveiled his new workers’ compensation reform package Feb. 10. His proposal aims to bridge the gap between labor and business interests and provide a solid framework for Democrats and Republicans to address the system’s serious problems.

The comprehensive reform package will require employers to deliver immediate benefits for injured workers, allowing the employer additional time—up to one year—to dispute claims. The reforms will change the system to encourage employees and employers to work toward returning injured workers to the job faster. The package will create an independent medical examiner (IME) to resolve disputes over treatment in permanent, partial, and total disability cases. The proposed reforms will also ferret out fraudulent actors in the workers’ comp system by increasing fraud penalties.

The package also aims to add two additional voting members to the State Compensation Insurance Fund Board and clarify the Insurance Commissioner’s authority over State Fund.

Other highlights of the commissioner’s plan were revealed in a press release:
· Through the utilization of effective and efficient medical treatment require physicians to use the descriptions and procedures of AMA guidelines. Collect medical billing data to identify medical billing and treatment abuse by providers;
· Address the irrational penalty structure on refused or delayed benefits;
· Regulate minimum loss cost insurance rates to stabilize the market and pass through reform savings to policyholders;
· Establish a pilot program for qualifying carve-outs to integrate health and disability benefit delivery.

Garamendi’s reforms do not include a strong, mandatory rate-setting mechanism that labor interests are advocating. According to the commissioner, this issue will need to be addressed by the legislature in the future.

Garamendi is urging the legislature to take immediate action on his proposal. It is not in bill form but will be heard by the Assembly Committee on Feb. 11. Garamendi hopes to avoid an expensive November ballot initiative that will delay workers’ comp savings until July 2005. He is calling on the legislature to take action on his new proposal before April 1 so that savings will go into effect as early as July of this year.

“We simply can’t wait,” Garamendi said in a conference call for the media. “This proposal can eliminate the gridlock that threatens to stall meaningful reform to address California’s broken workers’ compensation system. We cannot afford to stand by while an impending political train wreck bears down on California’s employers and injured workers. The California economy cannot afford to wait any longer.”

Details of the Commissioner’s plan are available at

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