Calif. Commissioner Applauds Vargas’ Workers’ Comp Reform Bill

February 27, 2004

Calling it California’s best hope for a comprehensive solution to the workers’ compensation crisis, Assemblyman Juan Vargas (D-San Diego), and California Insurance Commissioner John Garamendi announced the introduction of ABX4 15, aimed at reforming the broken workers’ compensation system.

Garamendi and Vargas, who have worked closely on the workers’ compensation issue, believe the legislation has the potential to bridge the differences between workers and employers and to break down obstacles currently slowing passage of reform.

“Assemblyman Vargas and I have crafted a far-reaching, powerful piece of legislation that should serve as the backbone to the ultimate creation of a comprehensive reform of this broken workers’ compensation system,” said Commissioner Garamendi. “This legislation must be passed soon, by March 31 in order to benefit employers this year. We cannot afford to stand by while an impending political train wreck bears down on California’s employers and injured workers.”

Assemblyman Vargas added that this measure contains important elements that will help complete the overhaul of the system that began with new laws he helped push through last year. “This bill strengthens the reforms established in last year’s legislation and will serve as a compromise measure,” Assemblyman Vargas said.

Commissioner Garamendi is scheduled to announce the advisory pure premium rate for the workers’ compensation system in July. If reform legislation is signed by March 31, he will be able to calculate the potential savings and adjust his recommendation accordingly to provide some relief to employers this year.

If, however, legislation is not passed by that date, the potential for savings to be felt by employers this year will be lost. “That is why this legislation must pass soon,” Commissioner Garamendi said. “California’s employers and its entire economy cannot wait any longer.”

The new bill, introduced Feb. 19, calls for significant changes in the workers’ compensation system, including:

• Creation of an independent medical examiner (IME) to resolve disputes over treatment in permanent partial and total disability cases

• Requiring employers to deliver immediate benefits for injured workers, allowing the employer additional time – up to one year – to dispute claims

• Through the utilization of effective and efficient medical treatment require physicians to use the descriptions and procedures of American Medical Association guidelines. Collect medical billing data to identify medical billing and treatment abuse by providers

• Make uninsured employers subject to felony charges, as opposed to the current misdemeanor charges

• Change the system to encourage employees and employers to work toward returning injured workers to the job faster

• Add two additional voting members to the State Compensation Insurance Fund Board. Clarify the Insurance Commissioner’s authority over State Fund

• 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

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