Governor Claims Workers’ Comp Changes ‘Huge Success’

April 21, 2006

Gov. Arnold Schwarzenegger declared the sweeping workers’ compensation changes he pushed through the Legislature two years ago a “huge success,” but critics called them a disaster for injured workers.

“Governor Schwarzenegger broke his promise to protect injured workers,” said Mark Hayes, president of Voters Injured At Work, a group that represents employees who suffer job-related injuries. “He has not fixed workers’ compensation, as he claims, but has made things worse for Californians injured on the job.”

Schwarzenegger said when he took office in 2003 high workers’ comp insurance rates were driving businesses out of the state and costing jobs.

“Our economy was going downhill because of it,” he said.

He credited himself and legislative leaders for turning the system around and cutting insurance rates by 40 percent.

“This is a huge success because of the bold leadership of everyone coming together,” he said at a news conference. “Because of that, we have new business coming back again to the state of California. … We’ve created a positive business environment in California.”

But the actual drop in employer costs may be less than the 40 percent cited by Schwarzenegger. State Insurance Commissioner John Garamendi said last November that workers’ comp insurers had cut their rates 26.7 percent on average since mid-2003 despite a 46.2 percent drop in the cost of paying claims.

Nancy Axtell, director of safety and risk management for Pride Industries, a Roseville firm that hires the disabled, said her company’s insurance claims costs had dropped 40 percent.

“These are phenomenal numbers,” she said as she appeared with the governor. “The best part of all of this is not only has my company saved a lot of money, we’ve been able to expand and hire more people with disabilities.”

Nancy Flick, the owner of a San Carlos carpet company, said she had experienced similar savings.

But other small employers report no changes in their rates or even increased costs.

Surveys by Union Bank of nearly 2,000 small businesses found 92 percent of those questioned in 2005 and 85 percent surveyed in 2006 reported their workers’ comp insurance rates had either remained the same or increased.

“There’s always exceptions to the rule, but the bottom line is there’s been an average of 40 percent drop in workers’ comp costs,” Schwarzenegger said.

Critics said Wednesday that much of the savings went into insurance company profits while injured workers have seen their benefits cut and treatment delayed by new review requirements.

Dr. Mark King, a Sacramento physician who spoke by telephone at a news conference organized by critics of the legislation, said the vast majority of his workers’ comp patients “are not receiving adequately or timely authorization for care.

“They are simply in general ignored, to be honest,” he said. “When they are actually addressed for care there are a substantial number of hoops to jump through at multiple levels. … It’s very difficult for me to get somebody back to work if I cannot do anything for them.”

Ralph Jones, a former winery worker from Fairfield who was injured when he slipped on an oily floor in 2002, said he’s been denied surgery despite a recommendation from a company doctor.

“I would just like to get my life back,” he said. “That’s been my goal all along. This new law that’s come into effect has just kind of shut everything down.”

In another criticism of the governor’s legislation, the state Commission on Health and Safety and Workers’ Compensation reported in February that regulations adopted to implement part of the bill had cut benefits for permanently disabled workers by 50 percent _ despite Schwarzenegger’s pledge that the legislation wouldn’t hurt truly injured workers.

“For this governor to bully the most vulnerable is shameful,” Hayes said. “Cutting already-meager compensation for our permanent disabilities while letting insurance carriers pocket billions is a new political low.”

Schwarzenegger said the changes brought on by the 2004 legislation had resulted in more accurate diagnoses and prevented patients from exploiting the system.

“There are some people who may have gotten less because maybe they gamed the system before,” he said. “This is a system that can’t be gamed as much anymore. I think people have gotten their fair share and benefits are the way they ought to be.”

But Assembly Speaker Fabian Nunez, D-Los Angeles, said the results of the 2004 legislation had been a “mixed bag” and that some “legitimately injured workers are getting shortchanged.”

“It is time for the governor to work with the Legislature and make the changes necessary to provide adequate benefits for the injured worker,” he said.

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