Party Is Over on Workers’ Comp

To Nancy Behravesh, Gov. Arnold Schwarzenegger was a breath of fresh air. Behravesh operates a Santa Monica preschool called Les Enfants, and like a lot of business owners in California, her workers’ compensation bills were killing her.

That’s why she was more than happy to join Schwarzenegger’s reform crusade early this year. She signed a petition supporting workers’ comp relief, and when Schwarzenegger took his bows for getting a bill through the state Legislature, Behravesh was not forgotten.

Just last month, a large envelope arrived at Les Enfants. Inside was a certificate of appreciation from the Small Business Action Committee and a color photo of a smiling Gov. Schwarzenegger. The certificate thanked Les Enfants for teaming up with the governor “in ending the ‘Small Business Killer’ laws, rules and regulations....”

Behravesh was flattered.

Then she got another envelope. It contained her workers’ comp bill, and the party was over.

The decrease she had banked on didn’t come through.

In fact, her premium went up.

Way up.

“It went from $22,000 to $32,000,” Behravesh says. “I’ve never had an increase like that.”

When Behravesh mentioned the jump to other preschool operators, she found that she wasn’t alone.

“Mine went up $21,000,” says Ellen Khokha of Santa Monica’s Growing Place.

Khokha discovered that her employees had been reclassified by her insurance company even though they performed the same jobs this year as they did in previous years. They went from early childhood educators to day-care workers, a switch that put them in a higher premium category.

Why?

“It’s just part of the shenanigans the insurance companies are pulling,” says Jamie Court of the Foundation for Taxpayer and Consumer Rights.

Insurance companies stand to save millions of dollars under the reforms, which placed strict limits on the claims of employees injured on the job. But the reform bill did not require the insurance companies to pass their savings on to clients.

They’re working on the honor system.

You trust them, don’t you? Gov. Schwarzenegger does.

You think it could have anything to do with the fact that Schwarzenegger -- Mr. Campaign Finance Reform -- has raised insurance industry money like an Olympic panhandling champion?

The governor’s haul tops $1 million and counting, about half of which is from industry players involved in workers’ compensation reform.

Insurance Commissioner John Garamendi has called for workers’ comp premium reductions totaling 22% to match the savings by insurers, but the insurers are in the driver’s seat. They don’t have to listen to what he says.

Garamendi says insurers have dropped premiums by about 10% on average, with huge variations based on ambiguities and quirks, such as the reclassification of preschool workers and those in other industries.

“There’s a widespread problem of changing classifications, the result of which is higher premiums with no real change in the risk,” Garamendi said.

“Often it makes no sense whatsoever, and we are constantly dealing with this issue,” he added, citing an example of an insurance company that classified secretaries as heavy equipment operators.

Meanwhile, the California Applicants’ Attorneys Assn. is charging that as insurance company profits soar, horror stories are beginning to surface among permanently disabled employees who are seeing their benefits slashed. I’m already on the trail of a couple of them, but feel free to e-mail me leads on others.

I should point out that the workers’ comp fiasco isn’t Schwarzenegger’s fault alone. The phony reform bill got stamped by the Legislature, after all.

But Schwarzenegger is the one who touted the reform as if it were the breakthrough of the century, predicting a 40% reduction in insurance rates. Then he told Larry King the savings would be as high as 70%, but who can blame the governor?

If I had failed to deliver on virtually all my major campaign promises, I’d go on Larry King as often as possible. Schwarzenegger could have said workers’ comp savings were 670%, and Larry King would have nodded like a bobblehead, even as Arnold’s approval ratings went up another notch.

Getting back to Nancy Behravesh at Les Enfants, I got hold of her agent at NEK Insurance Inc., and he said Behravesh was wrong about being reclassified. She was reclassified years ago. Her premium went up because her payroll increased, the agent said.

Behravesh disputes this, saying she gave small raises to several employees, but her payroll didn’t increase enough to justify a leap from $22,768 to $32,184.

How many injured worker claims did she have? I asked.

None.

In 15 years, she hasn’t had a single claim.

Is this any way to treat someone who just got a certificate of appreciation and a photo of Gov. Schwarzenegger for joining his fight to slash workers’ comp rates?

“I hope he can do something for me because he and his wife are always talking about children and the family, and I’m trying to run a business taking care of these 72 children,” Behravesh told me at Les Enfants, where tots followed her around asking for hugs.

As popular as the governor is, maybe Behravesh can sell his photo on EBay to help defray the devastating rate hike.

Steve Lopez can be reached at steve.lopez@latimes.com.