Business Looks to Spike Hike in Workers’ Comp

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Ever since the Workers’ Compensation Insurance Rating Bureau in March recommended a 24 percent increase in employer premiums, pressure has been mounting on the bureau and state Insurance Commissioner Steve Poizner for relief.

Poizner has routinely tried to keep proposed increases to workers’ comp rates as low as possible. Although insurance companies don’t have to follow Poizner’s recommendation, it is considered a guidepost for where rates should be headed.

The commissioner gets input from the bureau, an industry-funded organization, before the recommendation. The bureau justified the 24 percent hike its largest single recommendation in six years by citing rapidly escalating costs for medical treatment of claims and the impact from a trio of rulings from another state entity, the Workers’ Compensation Appeals Board.

The February rulings appear to undo the central cost-saving provisions of the 2004 reforms pushed through by Gov. Arnold Schwarzenegger. The reforms established treatment and payment guidelines for workplace injuries in an effort to keep costs down.

But the appeals board ruled simultaneously in three cases that judges handling workers’ compensation appeals could disregard the guidelines in individual cases. Insurance companies and employers fear this would open the floodgates for appeals from injured workers and their attorneys seeking higher reimbursements for claims.

The rating bureau attributed one-fourth of its recommended increase to expected fallout from the appeals board rulings.

In early April, as uproar over the decisions gathered steam, Schwarzenegger requested that the appeals board reconsider its rulings, which it is now doing.

Meanwhile, at a hearing last week on workers’ compensation insurance rates, Poizner asked the rating bureau to knock off the portion of its recommended rate increase linked to the appeals board rulings. He also has launched another set of hearings into the reasons behind the increase in medical costs for workers’ compensation claims.

Poizner, who is running for the Republican gubernatorial nomination, has until June 30 to issue his decision. In most years, he has significantly scaled back the bureau’s recommendations for rate increases, claiming they were too aggressive. Given pressure from Schwarzenegger and the business community and his own campaign for governor, he’s expected to issue a recommended rate increase in the high single digits this year.


Credit Bank Reinstated?

A state lawmaker has introduced a bill to overturn a judge’s freeze of an emissions credit bank set up by the South Coast Air Quality Management District. The freeze elicited an outcry from small businesses and government agencies.

State Sen. Rod Wright, D-Los Angeles, last week unveiled SB 696, which declares the Legislature’s intent to allow the emissions credit bank to remain in place. If passed with the required two-thirds vote, the bill would immediately overturn a judge’s ruling that halted the emissions credit program.

Los Angeles Superior Court Judge Ann Jones in November sided with environmentalists who had sued the AQMD over its practice of granting discounted pollution credits to small businesses and public agencies. Environmentalists argued the discounts removed the incentive to reduce emissions. On the open market, such credits could run up to $2 million for a single piece of manufacturing or construction equipment. The discounts could drop the price by 50 percent or more. In many cases, the credits were given with no charge. Jones ordered the agency to stop granting the discounts.

Wright said the freeze on these discounted credits was hurting small businesses and public agencies working on infrastructure projects because they couldn’t afford the market prices as fewer credits were available each year. He noted that the AQMD, major business groups and labor unions were supporting his bill.

“SB 696 is urgently needed to save jobs and get Southern California’s economy up and running again,” the lawmaker said last week.


More Wright

Meanwhile, another business-backed bill from state Sen. Rod Wright cleared a hurdle last week.

SB 356, which would give small businesses more input on regulations being issued by state agencies, passed the Senate’s Business, Professions and Economic Development Committee last week on a 6-2 vote.

Wright’s bill has won support from numerous small business organizations, including the National Federation of Independent Business, Small Business California and the Small Business Action Committee. They all said that small businesses bear a disproportionate burden from regulations passed by government agencies.

The bill next heads to the Senate Appropriations Committee.


Swine Flu Guidelines

The California Occupational Safety and Health Administration last week issued swine flu guidelines for all employers in the state.

The three-page document, available online at dir.ca.gov, recommends that employers post signs warning employees to cover their mouths when they cough and to wash their hands frequently.

The document singles out employers in the health care and social services sectors, recommending that employees who have contact with sick patients wear face masks.


Staff reporter Howard Fine can be reached at [email protected] or at (323) 549-5225, ext. 227.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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