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San Diego
Sunday, May 19, 2024

INSURANCE — Business to Have Say in New Workers’-Comp Bill

Compromise Expected in Legislature

The state Legislature is once again working its way through a bill on workers’ comp that opponents have said could dramatically increase premiums.

But unlike a similar bill last year, business lobbyists and Republicans are expected to play a key role in the Legislature this time around.

“The Democrats know that if they don’t have business signing off on this bill, the governor will veto it,” said Lori Kammerer, the executive director of the Sacramento-based Californians for Compensation Reform. “The Democrats need a package that the Republicans buy into.”

Thus, the final version likely will include provisions to streamline the workers’ comp process and at least partially offset the costs of the increased benefits that are at the heart of the bill.

SB-996, authored by Sen. Patrick Johnston, D-Stockton, is in a conference committee composed of three members of the Assembly and three from the Senate, to work out differences in the two houses’ versions of the bill.

The committee is holding six hearings on the proposed bill, and are scheduled to wrap them up May 22. Once the hearings are concluded, the committee will report out a version of the bill that the Assembly and Senate can only vote up or down, without any amendments.

Increase In Benefits

An increase in benefits paid to injured workers is expected to occur, but the question will be by how much and for which groups of injured workers. The most contentious area is what’s known as the zero-to-15 percent category, where a worker loses up to 15 percent of his or her normal working skills.

“Most of my clients haven’t had increases in years,” said Marc Marcus, the president of the California Applicant Attorneys Association, a Sacramento-based lobbying group that along with the AFL-CIO makes up the two biggest supporters of a benefit increase.

Business lobbyists agreed that this category hasn’t seen an increase in 15 years, but they also said that this is the area of the infamous back injuries, the leading cause of workers’ comp claims, and other classes of injuries that are the hardest to prove and thus most open to abuse.

The lobbyists are ready to accept an increase in benefits, but in exchange, they are pressing for reforms to make the system more efficient and offset the increased costs.

“We’re not against increasing benefits, but it must be done in such a way as to keep premiums from rising,” said Kathy Fairbanks, spokeswoman for the California Chamber of Commerce.

Earlier Bill Vetoed

Last year, the Legislature approved SB-320, a bill calling for a $2.1 billion increase over five years. That bill had almost no input from business interests, which vigorously fought it. Gov. Gray Davis vetoed that bill, suggesting a more modest $400 million increase spread over three years.

Marcus said the California Chamber of Commerce was responsible for getting Davis to veto the bill. He acknowledged that this year a compromise in the Legislature is likely.

“I hope we can work out something that is reasonable and merits everybody’s support,” he said, adding, “It is hard to get the Chamber to support anything.”

The cost of the SB-996 is a subject of debate. Marcus said the bill would increase the system’s costs by $1.1 billion while Kammerer said the California Workers Compensation Institute, a government entity that collects data, said the bill could increase the cost by $2.6 billion or more if the economy keeps going strongly. Last year in California, the systemwide cost was $10 billion.

Insurance companies are expected to pass on the systemwide costs in the form of higher premiums. Already this year, companies that renew at the beginning of the year have said their premiums have risen as much as 25 premium to 35 premium, particularly firms in high-risk areas.

Brennan is a reporter for the Orange County Business Journal.


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