INSURANCE COMMISSIONER JOHN GARAMENDI UNVEILS
WORKERS' COMPENSATION REFORM LEGISLATIVE PACKAGE

LOS ANGELES - Seeking to avert a political stalemate that could derail efforts to reform California's broken workers' compensation system, State Insurance Commissioner John Garamendi today unveiled his comprehensive legislative package to address the system's serious problems.

The plan, which focuses on eliminating the "culture of distrust" between employers and injured workers, was presented today at a press conference at the Science Center Elementary School in Los Angeles. Commissioner Garamendi proposes that his plan serve as a bridge to span the gap between labor and business on the issue.

"This proposal can eliminate the gridlock that threatens to stall meaningful reform to address California's broken workers' compensation system," said Commissioner Garamendi. "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."

Partial highlights of the Commissioner's plan include:

1. Creation of an independent medical examiner (IME) to resolve disputes over treatment in permanent partial, and total disability cases
2. Require employers to deliver immediate benefits for injured workers, allowing the employer additional time - up to one year - to dispute claims
3. 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
4. Make uninsured employers subject to felony charges, as opposed to the current misdemeanor charges
5. Change the system to encourage employees and employers to work toward returning injured workers to the job faster
6. Add two additional voting members to the State Compensation Insurance Fund Board. Clarify the Insurance Commissioner's authority over State Fund
7. Address the irrational penalty structure on refused or delayed benefits
8. Regulate minimum loss cost insurance rates to stabilize the market and pass through reform savings to policyholders
9. Establish a pilot program for qualifying carve-outs to integrate health and disability benefit delivery

"These reforms will inject predictability and bring stability to California's workers' compensation system and help lure more insurance companies into the California market," said Commissioner Garamendi. "The current system breeds litigation. My proposal fosters cooperation and removes the distrust that contributes to this problem."

California's employers pay the highest workers' compensation premiums in the nation, while injured workers receive benefits that are below average when compared to other states. The system's problems stem from a premium price war sparked after the minimum rate law was eliminated in 1995, an incredible escalation in medical costs within the system, inefficiencies that cause excessive and costly litigation, and unchecked abuse and fraud.

Last year, through his Garamendi Plan for Workers' Compensation Reform, Commissioner Garamendi helped push through legislation that is expected to save more than $5 billion annually in costs to the system. But more is needed.

"The second half of reform is essential to California's economic recovery," Commissioner Garamendi said. "Unless we bring this out-of-control system in line with reality, the costs will stifle job creation, slash benefits, and drive businesses out of the state."