Conferees OK Overhaul of State Workers’ Comp : Health: Plan offers relief for employers, higher benefits for injuries. Long, fractious battle expected to end Friday.

Taking another step toward breaking the lock of partisan paralysis in the Legislature, negotiators Wednesday approved a major overhaul of California’s troubled workers’ compensation system.

The proposal, approved unanimously by a key bipartisan conference committee, represented a potentially far-reaching effort aimed at helping to restore the slumping California economy and improving the Legislature’s image, tarnished by years-long Capitol gridlock symbolized in part by the fractious impasse over workers’ compensation reform.

Now, if the workers’ compensation compromise package holds together--and there is serious political pressure by special interest groups to see parts of it undone--the Legislature in the last month will have accomplished what some thought impossible: approval of the state budget on time and of workers’ compensation reform.

“We got the message,” said Assembly Speaker Willie Brown (D-San Francisco).

Propelled by the momentum of adopting a state budget by the start of the new fiscal year, legislative negotiators sought to draft a bipartisan workers’ compensation reform that would receive Republican Gov. Pete Wilson’s signature.

The package was expected to be voted on by both houses on Friday before lawmakers recess for a monthlong vacation.

The workers’ compensation package was designed to extract at least $1.5 billion from the nearly $12-billion annual program, with the money split evenly between relief for employers and higher benefits for workers hurt in job-related incidents. Much of the savings will come from new restrictions in the program as well as from streamlining various components.

Some employers challenged whether there will be a savings of even $1.5 billion, but Brown asserted that the savings could amount to as much as $3 billion.

Coming to closure after marathon negotiations that spanned almost two months, the six-member Senate-Assembly conference committee approved the compromise package after meeting until midnight Tuesday and taking a final vote late Wednesday afternoon.

All four Democrats on the committee, including Speaker Brown, voted for the compromise, as did Republican state Sen. Bill Leonard of Upland and Assembly GOP leader Jim Brulte (R-Rancho Cucamonga).

Committee members set final ratification for Wednesday so that details of the massive undertaking could be fully examined. In the meantime, powerful special-interest groups unhappy with the proposal launched an unsuccessful last-minute blitz to unravel it.

Dan Schnur, Wilson’s chief spokesman, said the governor still must examine details of the multi-bill package, but “it looks like the legislation is moving in a very positive direction.”

“The governor believes there isn’t anything more important that we could do this year than to reform the workers’ comp system,” Schnur said, noting that keeping existing jobs while creating new employment is Wilson’s top priority in revitalizing the California economy.

Meanwhile, an administration official who monitored the negotiations but asked not to be identified said there were some “differences of opinion that need to be worked out, but none of those differences appear to be insurmountable.”

The California Chamber of Commerce, which represents many large employers, is in general agreement with the compromise. “We are in agreement on the broad outlines, but the devil is in the details,” said the group’s president, Kirk West.

And a top labor leader, John Henning, secretary-treasurer of the California Labor Federation AFL-CIO, said that “given the (economic) times, I think it is very good.”

For example, an injured worker suffering a maximum temporary disability now receives $336 a week in compensation. The reform would increase the amount to $490 by July 1, 1996--roughly $40 less than labor had sought.

But an organization representing workers’ compensation lawyers held a different view. Lloyd B. Rowe, president of the California Applicants’ Attorneys Assn., denounced the plan as a “cruel assault” on injured workers. “It is not reform, but a windfall to employers and insurance carriers,” he said.

Created in the early 1900s as a relatively simple way of compensating injured workers without going to court, the program has mushroomed into a highly complex, adversarial operation that fails to perform well for employees or employers.

California employers pay among the highest workers’ compensation insurance premiums in the nation, but injured employees receive among the lowest benefits.

In the middle is a vast array of politically powerful enterprises that are blamed for over-strapping the system financially, including attorneys for both sides, forensic doctors, vocational rehabilitation counselors and insurance carriers.

In seeking to strike a compromise that would produce $750 million in increased benefits for workers over the next 3 1/2 years and reduce employers’ insurance costs by the same amount, the plan would impose a variety of new controls.

For example, competing medical evaluations by employees and employers that are used to establish an injured worker’s disability generally would be limited to one per side in disputed cases. An average case now involves almost five evaluations at costs often in excess of $1,000 each, paid by employers.

Likewise, expenditures for disabled workers requiring vocational rehabilitation would be limited to a maximum of $16,000, including counseling services that now can consume 30% of the cost. The average case now costs about $20,000.

At the insistence of employers, whose insurance premiums pay for the workers’ compensation system, the committee agreed to make it tougher for workers to be compensated for stress.

The committee agreed that in order for an employee to be compensated, his employment must be the “predominate” cause of stress. Currently, an employee can be compensated if 10% of his stress is linked to his job.

In an attempt to give employers more relief, the compromise would cut workers’ compensation insurance premiums by 7% next year. Insurance Commissioner John Garamendi last month announced that he intended to make a similar cut, but the legislative proposal likely would prevail.

Others provisions in the package, which Republicans and some insurance companies opposed, would remove most of Garamendi’s regulatory powers over workers’ compensation insurance and repeal a law that virtually guarantees California carriers a profit and throw the market open to free competition in 1995.