THIS WEEK IN
Prepared by Norwood & Associates
Workers’
Compensation Update
Governor Schwarzenegger, fresh from victory on his two
propositions, delved right into his next priority—fixing
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
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
“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 (
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 (
In addition, the personal injury lawyers contributed $158,
814 in Assembly District 78 (
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
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
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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