THIS WEEK IN SACRAMENTO

THIS WEEK IN SACRAMENTO

Prepared by Norwood & Associates

February 6, 2026

Hearing Set for ABx4 1 (Maldonado)

ABx4 1 (Maldonado), one of two bills which contain Governor Schwarzenegger’s workers’ compensation reform package, is scheduled to be heard in the Assembly Insurance Committee on February 11, 2004. The hearing will likely be a lengthy one, with all interested parties providing testimony to the committee. Representatives for all stakeholders are vigorously lobbying members from both sides of the aisle.

With the inaction of the Legislature up until now, it was unclear why a hearing was scheduled for next week. Apparently, next Wednesday’s hearing resulted from a move by Assembly Insurance Committee Vice Chairman John Benoit (R-Riverside) who, frustrated with the inaction on workers’ compensation, threatened to bypass the committee process and move ABx4 1 directly to the Assembly floor.

It was reported that Assemblyman Benoit was planning to make a motion on the Assembly Floor to remove ABx4 1 from the Assembly Insurance Committee. Moderate democratic members, who are leaning towards voting in favor of the bill, warned that such a move would force them to vote no in order to support their leadership on a procedural issue. After negotiations with fellow Democrats, a commitment was made that a hearing would be set on workers’ compensation immediately after the new Speaker of the Assembly is sworn in, which will take place on February 9, 2004.

It is still unclear at this time what is expected to happen at next week’s hearing. Will there be a vote on the bill or will a process be instituted to establish subject informational hearings on segments of the bill over the next few weeks similar to what is scheduled in the Senate? Another question is whether ABx4 1 will be amended to reflect the initiative that has now been endorsed by the Governor, the Small Business Action Committee (SBAC), the Independent Business Coalition (IBC) and Grimmway Farms.

Hopefully, more light will be shed on these issues at a meeting with supporters of ABx4 1 and the Governor’s policy staff, which has been scheduled for early next week.

WCAN Launches Aggressive Grassroots Effort in Support of ABx4 1

The Workers’ Compensation Action Network (WCAN), a broad-based coalition of employers, public entities, nonprofits, trade associations, insurers, and agents and brokers, which includes Insurance Agents and Brokers of the West (IBA West), American Insurance Association (AIA), Liberty Mutual Insurance Company, California Chamber of Commerce, the California Restaurant Association, among many others, have launched an aggressive grassroots effort to generate thousands of letters to the members of the Assembly Insurance Committee asking them to pass ABx4 1 out of the committee. To date, WCAN has sent out two action alerts to its members. The coalition’s website, www.fixworkcompnow.org, provides a wealth of information about the problems plaguing the workers’ compensation system and sample letters to help the public get involved.

Senate Schedules Informational & Bill Committee Hearings

The Senate has scheduled six informational and bill hearings on workers’ compensation reform. The hearings will take place within the next two weeks on a variety of issues relative to reforming California’s broken workers’ compensation system. The schedule and topics are as follows:

· February 11, 2026, 10 a.m., Room 2040

Informational Hearing—

Workers’ Compensation: Permanent Disability Benefits

· February 17, 2026, 10 a.m., Room 2040

Informational Hearing—

Workers’ Compensation: Medical Utilization

· February 18, 2026, 10 a.m., Room 2040

Bill Hearing—

SBx4 3 (Poochigian), SB x4 9 (Alarcon)

· February 19, 2026, 10 a.m., Room 2040

Bill Hearing—

SBx4 3 (Poochigian)

· February 25, 2026, 10 a.m., Room 2040

Informational Hearing—

Workers’ Compensation: Impact of Labor Code 5814 & Penalties

· February 25, 2026, 10 a.m., Room 2040

Bill Hearing—

SBx4 3 (Poochigian)

SBx4 8 (Alarcon)

SBx4 2 (Speier)

SBx4 4 (Johnson)

SBx4 5 (Johnson)

SBx4 6 (Johnson)

SBx4 7 (Scott)

SBx4 10 (Margett)

· February 26, 2026, 9 a.m., Room 2040

Informational Hearing—

Bureau of State Audits: Workers’ Compensation Medical Payment System

AFL-CIO Holds Employer/Employee Workers’ Comp Meeting

The AFL-CIO invited representatives of employer and employee groups to a meeting on February 5^th to discuss their workers’ compensation proposal. Insurance, attorney and medical interests were specifically asked not to attend. Reportedly, some groups in attendance were the California Chamber of Commerce, Western Growers Association, California Coalition for Workers’ Compensation Reform, Disney Corporation, California Trucker’s Association, California Restaurant Association and Costco, among others.

Clearly, the purpose of the meeting was to try to separate employers from the insurance industry in the workers’ compensation debate. More importantly, labor and their allies want to convince employer groups that it is time to re-regulate the insurance industry and cap fees paid to agents and brokers, as well as defense attorneys. This is part of labor’s plan to split the business community and divert the attention away from the real cost drivers that have been identified by literally every report or commentator on the workers’ compensation system in California.

Commissioner Garamendi Warns Against Workers’ Comp Initiative

California Insurance Commissioner John Garamendi, speaking before a conference on agricultural safety issues this week, warned of an impending “train wreck” if the workers’ compensation reform battle goes before voters on the November ballot. Garamendi said that a workers’ compensation initiative on the November ballot would cost $40 million for the contending sides. In addition, he warned that a ballot initiative, if passed, would only delay reforms that could save California employers between $5 million to $10 million in the next year. He encouraged the audience to work with labor groups and legislators to settle the workers’ compensation issue before March 31; however, he did not voice support for any specific legislation. Garamendi is expected to unveil his own workers’ compensation reform proposal next week.

Garamendi Calls Pharmacy Actions Illegal

In other news, Insurance Commissioner Garamendi called the practice of pharmacies charging injured workers cash upfront to get prescriptions filled illegal and promised to take action against the pharmacies which are doing so.

Pharmacies such as Walgreens and Long Drugs are complaining that they have been burdened by the reduced reimbursements they receive under the workers’ compensation cost-savings measures that became law on January 1. They have threatened to start forcing injured workers to pay cash for their prescriptions if the rates are not increased. Some drugstores are already charging injured workers for their drugs while others have simply stopped filling the prescriptions.

Garamendi said he plans to use the administrative function of the Department of Insurance, under provisions of the California Labor Code, to fine drugstores three times the cost of the prescriptions if they continue to bill the workers upfront. He also said he intends to file a class action lawsuit to stop the practice.

Mercury General & Subsidiaries Accused of Deceptive Advertising

In a move sure to rekindle the debate regarding the definition of brokers and agents, the California Department of Insurance is accusing Mercury General Corporation and three of its subsidiaries of violating insurance laws between July 1996 and April 2003 by converting most of their company agents in California into independent brokers. The Department said that the dispute over how to classify brokers and agents could spell the difference between proper marketing and alleged misrepresentation of the actual premiums paid by car owners. Since brokers could charge their own service fees, premiums were pushed above levels approved by the Department, thereby violating state law. Regulators allege that the fees, which ranged between $15 to $200 per policy, meant Mercury was claiming in advertisements that its premiums were lower than they really were. Mercury Chief Executive George Joseph, denied the state’s charges.

The actions by the Department of Insurance follow an April 2003 ruling by a San Francisco Superior Court judge that found that Mercury broke the law by blurring the line between agents and brokers. Mercury is currently appealing the ruling, while backing a bill (AB 1297) in the Legislature that would clarify the definition of an agent and a broker. The Department’s allegations against Mercury are likely to have a significant impact on the negotiations relative to AB 1297.

Illegal-Immigrant License Making Second Attempt

One of last year’s most controversial bills, a measure to give driver’s licenses to illegal immigrants, has returned to the Legislature. The author of the bill, Senator Gil Cedillo (D-Los Angeles), and Governor Schwarzenegger are currently negotiating a compromise bill that would allow both liberals and conservatives to claim a victory. The compromise bill, SB 1160, would likely impose stricter security standards and insurance mandates on illegal immigrants who want to drive legally. A spokesperson for Governor Schwarzenegger said that the Governor is willing to consider legislation in this area so long as his concerns about security standards, background checks and assurances of insurance are addressed. SB 1160, which currently contains only intent language, will likely be developed through further negotiations.

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