THIS WEEK IN SACRAMENTO

Prepared by Norwood & Associates

March 5, 2026

 

 

Workers’ Compensation Update

 

Governor Schwarzenegger, fresh from victory on his two propositions, delved right into his next priority—fixing California’s troubled workers’ compensation system. 

 

On Wednesday, the Governor held yet another meeting of the “Big 5”— Assembly Speaker Fabian Nuñez, Senate President Pro Tempore John Burton, Assembly Minority Leader Kevin McCarthy, and Senate Minority Leader Jim Brulte—to discuss the status of a compromise proposal on workers’ compensation reform.  The new twist in the negotiations however, is the Governor’s enhanced political power given the passage of his two propositions on Tuesday and his proven influence on voters in California. 

 

Democratic leaders deny they are worried about the Governor’s clout or the possibility of a workers’ compensation ballot initiative; however, the pressure is high to produce a compromise proposal and avoid a costly initiative fight in November.  Yet another concern for the Democrats is protecting their party’s members in marginal legislative districts.  If a compromise is not reached, the Governor, Republicans, and businesses would likely mount a coordinated campaign against those Democratic members in the marginal seats to defeat them in the general election.

 

Adding to the pressure is the overwhelming support of voters for workers’ compensation reform. As reported last week, the survey conducted by the Workers’ Compensation Action Network (WCAN), the California Chamber of Commerce and the Committee for Workers’ Compensation Reform and Accountability indicated that 68% of California voters feel that the workers’ compensation system has major problems.  The survey also revealed that nearly 80 percent of California voters support Governor Schwarzenegger’s workers’ compensation reform package and would vote in favor of a ballot measure in November containing the reforms proposed by the Governor, if the Legislature failed to act. 

 

 

 

 

 

“Five & Five” Meetings Continue

 

The five representatives of employers--Jack Stewart and Willie Washington from the California Manufacturers and Technology Association, Allan Zaremberg and Charles Bacci from the California Chamber of Commerce, and Tim East from the Walt Disney Company--and the five representatives representing labor--Tom Rankin of the AFL-CIO, Barry Broad and Liberty Sanchez of the California Teamsters Association, Brian Hatch of the California Professional Firefighters, and Jay Hansen of the State Building and Construction Trade Council of California--met again this week. The meeting was also attended by two staff members from the Governor’s office, two Republican consultants, Don Moulds of Senator Burton’s office, and a staff member from the Assembly Speaker’s office. 

 

Reportedly, the topics of discussion included permanent disability, medical control, apportionment, penalties and the CIGA assessment on the deductible portion of larger deductible plans. The discussions are said to be just that—discussions rather than real negotiations.  However, the presence of the legislative staff may be an indication that the “five and five’s” role may only be as “guides” providing input on certain aspects and that the real negotiations will be between the “Big 5” who will agree on a compromise measure based on the discussions taking place between labor and the employers. 

 

Signature Gathering to Begin Today For Workers’ Comp Initiative

 

The Small Business Action Committee, Grimmway Farms and the Independent Business Coalition are set to begin the signature gathering campaign for the workers’ compensation ballot initiative.  The initiative needs more than 637,000 signatures to qualify; however, the group is shooting for about 900,000 to allow some breathing room.  The most difficult part of this campaign is the time constraint—the group only has 41 days to collect 900,000 valid signatures. 

 

To request a petition, please visit www.reformworkerscomp.com or www.fixworkerscompnow.com. 

 

Primary Election Update

 

As reported earlier, the Governor’s two ballot measures, Proposition 57 and 58, passed easily on Tuesday.  Proposition 57 passed with 63% approval and Proposition 58 passed with 71% voter approval.  Work has already begun on the negotiations of bonds.

 

Proposition 56, the measure which contained a constitutional amendment that would have reduced the current 2/3rds vote requirement for passage of the budget and tax measures to a simple majority, failed passage by a vote of 65% to 34%.  The measure was opposed by the California Chamber of Commerce, the California Taxpayers’ Association, the California Manufacturers and Technology Association, IBA West, a number of insurers including Nationwide Insurance Company and numerous interests representing the alcohol and tobacco industry. 

 

In addition to the major propositions on the ballot, there were several key legislative races in which liberal Democrats and moderate Democrats were vying for seats.  These races are particularly interesting because the fight between the liberals and the moderates pitted the trial lawyers, labor and teacher’s organizations against business groups and the moderate Democratic caucus all of whom contributed substantial amounts of money towards their respective candidates. 

 

The most prominent example was in Assembly District 21 (Palo Alto) where the personal injury attorneys spent $549,532 in direct contributions and contributions from independent expenditure committees supporting John Carcione.  However, in the end, the moderate candidate Ira Ruskin was victorious in an extremely close vote of 37.4% to 36.6%. 

 

Dennis Hayashi, the liberal candidate running in Assembly District 20, received $334,000 in contributions and independent expenditures.  Again, the moderate candidate, Alberto Torrico, who was heavily supported by the Moderate Democratic Caucus, prevailed by a vote of 31.9% to 22.8%.   The California Chamber of Commerce’s JobsPac, a business coalition, spent $78,000 in opposition to Hayashi.   

 

In Assembly District 69 (Santa Ana) moderate Claudia Alvarez lost to liberal Tom Umberg by a close vote of 49% to 51%. The California Chamber of Commerce’s JobsPac spent over $405,000 in contributions and independent expenditures supporting Alvarez.  The personal injury lawyers, on the other hand, spent approximately $400,000 on behalf of Umberg.

 

In addition, the personal injury lawyers contributed $158, 814 in Assembly District 78 (Chula Vista) in support of Arlie Ricasa and $177,757 in Assembly District 7 (Santa Rosa) in support of Noreen Evans.  Evans was victorious but Ricasa lost to moderate Patricia Davis.

 

Department of Insurance Issues Notice to Withdraw Approval for Discretionary Clauses

 

Just last week, the Department of Insurance issued a notice to all disability insurers in California withdrawing approval of forms that contain discretionary clauses. 

 

The Department cited a legal opinion prepared by General Counsel Gary Cohen in response to a request for an opinion as to the appropriateness of discretionary clauses under California law.  This followed a request for interpretation pursuant to Section 12921.9 of the Insurance Code requested by a law firm in Oakland who is currently representing a plaintiff in an action against Unum Life Insurance Company of America.  This code section requires opinions of the Commissioner or Chief Counsel to be made public where it is in response to a specific inquiry or fact situation.

 

The Department concluded that, among other things, discretionary clauses render the contract “fraudulent or unsound insurance” because although the contract contains the insurer’s promise to pay benefits under stated conditions, the discretionary clause makes those payments contingent on the discretion of the insurer, thereby nullifying the promise to pay.

 

The withdrawal of approval will be effective 91 days after the mailing of the notice (dated February 27th) unless, within 30 days of the mailing, an adversely affected insurer requests a hearing. Currently, the Association of California Life and Health Insurance Companies (ACLHIC), the American Council of Life Insurers (ACLI) and Health Insurance Association of America (HIAA) are meeting individually and collectively to formulate an emergency response to the Commissioner’s action.    

 

Norwood & Associates Staff Update

 

The newest addition to our staff, Peter Conlin, will be joining us on Monday.  Peter comes to us from the Senate Republican Caucus, where he serves as a consultant to the Senate Insurance Committee.  He has also served in this capacity for the Assembly Republican Caucus.  Additionally, Peter was the legal counsel to California State Assembly Speaker Curt Pringle.  We are very pleased to have Peter with all his talents and experience and believe he will provide vital strategic planning and key legislative counsel for our clients.

 

 

 

 

 

 

 

 

 

 

 

 

 

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