Workers' Comp Still Imperfect
By Associated Press - January 2, 2005Next year, reforms to the $29 billion workers' compensation system projected to further reduce costs to insurers ought to be reflected in lower insurance premiums for employers.
Already, fraud reduction and the passage of the system overhaul has produced a 5 percent average rate decrease by the state's largest insurer, the State Compensation Insurance Fund.
That drop is even more significant when balanced against an increase of 3.5 percent recommended by the Workers' Compensation Insurance Rating Bureau. Seems someone's projections are out of whack.
We agree with Insurance Commissioner John Garamendi, who said State Fund, with 55 percent of the market, must lead the industry in rate reduction. He's right that rates must reflect the more than 22 percent drop in loss costs to insurers since last summer.
The rate reductions thus far three since the reforms were passed however, back up the commissioner's contention that market forces, rather than regulation, would bring down rates and ensure competition in an insurance field with too few policy writers.
It's imperative that as much of the savings as possible be passed on to employers rather than simply buoying bottom lines for carriers. Call it job and relocation stimuli for businesses. However, healthy profits are necessary in order to make the state more attractive to out-of-state insurers as well.
New rules making it much tougher to fraudulently claim permanent disability ought to further reduce payout costs for carriers as well. If premium reductions for employers don't soon follow, Garamendi may have to revisit regulation.
However, as good as the outlook for employers, there have been disturbing reports of injured workers receiving inadequate treatment.
Especially egregious are reports that at least one reform, intended to put workers back on the job, has instead been used to deny legitimate benefits, sometimes retroactively, and to withhold treatment and payment for medications.
Additionally, critics say insurance carriers have been given free rein for such mistreatment because under the legislation (SB 899) scheduled to take effect Jan. 1, penalties have been reduced to the point that they no longer serve as a deterrent for wholesale denial of claims.
California Applicants' Attorneys Association has been working to bring awareness of some alleged egregious behavior by some of the largest carriers in the state. President David Schwartz had this to say in a Dec. 25 news release about the new partial disability compensation schedule filed by the Schwarzenegger administration before the Christmas recess.
"Gov. Schwarzenegger left behind a lump of coal for California's injured workers today as he flew off to his mountaintop retreat for a long vacation...
"The governor's new schedule severely reduces permanent disability benefits to injured workers. The administration has refused to follow the statute and the Legislature's intent.''
Acknowledging that personal injury lawyers may have a vested interest in returning to less-than-strict standards, Garamendi must nonetheless investigate these claims as well because the entire system exists as a safety net for those who have suffered injury on the job.
Rooting out fraud is absolutely necessary but it's imperative legitimate injuries be acknowledged and treated.
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