Gray Davis became the first California governor to be recalled largely because of his demonstrated failures on two concurrent crises, the state's budget deficit and the collapse of an ill-conceived energy deregulation program.
Although Davis had carefully positioned himself as a pro-business Democratic centrist, the state's corporate community abandoned him on the recall largely because of another issue, his signature on a bill to sharply raise workers' compensation benefits after three years of vetoing similar measures. Davis reversed himself in early 2002 because he faced a tough re-election campaign and organized labor was demanding a workers' comp increase for its support.
Business threw its support to actor Arnold Schwarzenegger as Davis' successor in the 2003 recall election largely because he pledged action on workers' comp. He quickly delivered on that promise in 2004. Pressure from Schwarzenegger and a threatened employer-sponsored ballot measure moved legislative Democrats to pass a workers' comp overhaul to lower business costs.
The overhaul, as implemented by the administration in subsequent rule-making, sharply tightened eligibility for both medical care for work-related illnesses and injuries and for weekly checks to disabled workers. It has saved employers an estimated $15 billion a year ever since.
As Schwarzenegger approaches the end of his governorship, however, his much-vaunted overhaul is beginning to show cracks, obeying an axiom among workers' comp lobbyists that every major change in the huge system brings a half-decade lull, followed by another round of political jousting.
Although Democrats and labor groups have been trying unsuccessfully to undo some of the 2004 changes, the Workers' Compensation Appeals Board, whose members are appointed by the governor, moved the ball a couple of months ago by declaring that the tight controls on medical evaluations could be ignored if deemed unfair.
Last month, the ground shifted again when the Workers' Compensation Insurance Rating Bureau recommended a 24.4 percent increase in "pure premium rates" for workers' comp policies, citing the appeals board decision as well as rising medical care costs.
Last year, the bureau's recommendation for a sharp premium increase was reduced by three-quarters in Insurance Commissioner Steve Poizner's subsequent declaration, and Schwarzenegger quickly called on Poizner to do it again. "The permanent disability rating schedule is supposed to promote consistency, uniformity and objectivity," the governor said. "The board's decision runs contrary to that mandate."
Poizner, it should be noted, is running for governor himself next year. Meanwhile, a prominent workers' comp law firm has appealed the appeals board's decision on medical evaluations to the courts, declaring that it could cost employers as much as $4 billion a year.
The workers' comp game is once again afoot.
Call The Bee's Dan Walters, (916) 321-1195. Back columns, www.sacbee.com/walters.
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