California Commissioner Asks Workers’ Comp Board to Withdraw Rate Increase

By | April 28, 2009

At a rate hearing on Tuesday, April 28, California Insurance Commissioner Steve Poizner urged the Workers Compensation Insurance Rating Bureau (WCIRB) to withdraw its request for an increase in the workers’ compensation claims cost benchmark.

WCIRB has requested a 23.7 percent increase in the Claims Cost Benchmark, with approximately 6 percent due to the recent Workers’ Compensation Appeals Board (WCAB) en banc decisions Ogilvie v. City and County of San Francisco, Almaraz v. Environmental Recovery Services and Guzman v. Milpitas Unified School District.

“Five years ago, skyrocketing workers’ compensation costs were the bane of the economy,” Poizner said. “Many jobs left our state and countless companies expanded elsewhere because of the high costs of workers compensation in California.

“Because of SB 899’s reforms, the costs in the workers’ compensation system have fallen by more than 60 percent. However, a number of factors are causing the costs to increase including the recent WCAB rulings in the Almaraz and Ogilvie cases and medical treatment costs,” he continued.

“WCIRB should withdraw the portion of the increase related to the Almaraz and Ogilvie cases. The Governor has said that he believes the ruling will not survive the appellate process in its current form and that his administration supports the effort to overturn the decisions. I believe that any increase should be considered after the judicial process has concluded,” Poizner said.

“While increased medical treatment costs may be justified, information provided at today’s hearing did not adequately support the request. Insurers have the ability to control costs through medical treatment guidelines, utilization review and medical provider networks. So rather than explain why costs are going up, all I heard is that they are going up and we should pass them along in the form of rate increases. This is unacceptable,” Poizner said, “and the public deserves better.

“Because of this, I have decided to continue this matter to a special investigative hearing to examine medical inflation. I will call all parties – including insurers and medical service providers – to the table to get a clear answer to why costs are spiraling. When we get those answers, I will ask the Governor and the legislature to make the necessary changes to ensure a stable and effective workers compensation system,” he concluded.

Jack Hannan, marketing and communications director for the WCIRB said his group is reviewing transcripts from hearing, watching the course of the cases involving the en banc decisions that have been appealed, and plans to respond to questions posed by the DOI’s actuaries by June 8.

“Whenever a public hearing is held, there are a number of questions asked by Department’s actuaries, where they want to see additional data and we don’t have that information in front of us at that moment. It’s customary that there’s a list of things we provide to the Department before the close of record, which in this case is June 8,” Hannan said.

June 8 is the date of the second hearing on medical treatment costs, which will be held at 1 p.m. in Sacramento.

Sources: CDI, WCIRB

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