Disability in the Senate

A journalist friend of mine recently attended a banquet for hundreds of private-detective agencies and was fascinated to hear the detectives, one by one, introduce themselves. The fascinating part: Roughly one-quarter said they specialized in investigating Californians who claim to be injured on the job.

The fact that California’s private-dick industry spends a good chunk of its time probing claims of back sprains, stress, pain and other workplace injuries is a testament to the troubles afflicting the most milked, most disastrous workers’-comp system in the United States.

Last year, Governor Arnold Schwarzenegger signed sweeping reform legislation, Senate Bill 899 by Republican State Senator Charles Poochigian of Fresno, to clean up a mess that, by all accounts, was wiping out businesses and prompting extensive layoffs and firings by companies that no longer could afford their own workers.

SB 899 is a big success. Rates are dropping dramatically, insurance companies that fled the corrupt California system are returning to the state, and severely injured workers are getting more money while the barely injured are getting much less. How incredibly sensible.

The biggest winners, besides truly injured workers, are the mom-and-pop businesses and small companies who drive the California economy. As we heard in testimony before the Legislature over the past two years, employers saw rates skyrocket 250 percent to 1,000 percent—even if they had no injured workers.

The leading cause was tens of thousands of cheaters, greedy doctors and greedy lawyers bleeding the system. California’s was far worse than any workers’-comp mess anywhere else in America, because when California screws things up, we like to do it right.

Now, under the year-old Poochigian-Schwarzenegger reforms, rates have dropped about 16 percent, and they’re expected to show a total drop of 26 percent by later this year, with further reductions in 2006.

So, if a small California factory saw its rates double from $35,000 to $70,000 a month in 2003, those rates probably will be slashed by $18,200 a month in 2005. That means that an awful lot of small factories won’t have to lay off good, decent, non-cheating employees.

But there’s a fly in this ointment: the lawyers who got squeezed hardest by reform. Under the reform, the number of “disputed claims” bound for court has plunged from 17,104 in April 2003 to 10,878 by January this year, according to California’s Division of Workers’ Compensation.

That’s 6,226 legal documents not filed, 6,226 employers who didn’t hire a detective, and 6,226 attorneys whose wallets aren’t fatter.

Boohoo!

Seth Unger, an aide to Poochigian, noted that “getting a permanent disability rating from a court is the place where the attorneys really make their money. It’s not in their interest to get injured workers off permanent disability and back to work. It’s in their interest to push the price up and increase their fee. The attorneys have waged a battle to roll back reform for the past year.”

As we go to press, the unbridled outrage of these attorneys—and their friends in the Legislature and labor unions—is focused on the woman who has faced them down: Andrea Hoch, the former chief assistant attorney general for civil law in California, who is now the unflappable rule maker responsible for following through on the reforms.

Hoch faces possible ouster by the Senate Rules Committee, which must act by May 3 to confirm her nomination by Schwarzenegger—or she’s out of a job.

At an April 27 hearing on Hoch, expect to see the same fake and highly emotional use of public theater that allowed the anti-reformers to create California’s disaster. Workers who claim the reform has ruined their lives will almost certainly be trotted out for the cameras. The lawyers will stay largely in the shadows, as usual.

It’s crucial to note that California long had a supposedly “no fault” workers’-comp system to keep employers and truly injured workers from going to court. Lawyers turned our no-fault system into a travesty. They dubbed themselves “applicants’ attorneys”—a dressed-up name implying a harmless nature. Please. They won staggering “permanent disability” ratings for often barely injured workers, linking up with doctors who endlessly treated the alleged injury. Statewide, findings of “disability” ranged wildly from city to city and doctor to doctor. Your $50 twisted knee was another man’s fortune.

It’s no surprise why, according to the California Commission on Health and Safety and Workers’ Compensation, 30 percent of “permanent disability” claims in California end up disputed in court—twice as many as in Oregon, three times as many as in Washington and New Mexico, and four times as many as in Wisconsin. In Utah, which strictly adheres to objective standards to determine true “disabilities,” only 4 percent of claims go to court, because there’s so little room for fakery.

But in California, platoons of private detectives got hired to try to figure out which complaints were exaggerated.

“California has the worst return-to-work rate in the nation,” noted Schwarzenegger spokesman Vince Sollitto, “mainly because they were in litigation, it was all being contested, and it was highly litigious.” Workers were encouraged to stay home and fight.

Now, as of January 1, Californians who claim “back injuries” or “stress”—but are really out golfing, moving furniture or working at a strenuous new job—are the big losers. Why? Because California under SB 899 now uses objective American Medical Association (AMA) guidelines to determine a disability—just as 41 other far more sensible states and the federal government do.

To illustrate how corrupt California has been until now, keep in mind that until now the lawyers and unions made sure AMA guidelines were banned here. AMA guidelines could not be used to determine a workers’-comp disability in California. Good Lord.

Noted Sollitto, “Both the fakers and the people with significantly lesser injuries will see a reduction in awards. That’s very unfortunate for attorneys because it is money out of their pockets. But if you are really hurt, under the new law you will get more money.”

Sadly, the Rules Committee, like many powerful legislative committees that supposedly represent voters, is often more interested in serving contributors such as attorney groups.

I called state Senate President Pro Tem Don Perata, the most powerful Democrat in Sacramento and the chairman of the Rules Committee, to find out if Perata planned to vote against Hoch. Perata, a possible swing vote, could seal Hoch’s fate. Perata didn’t call me back. But rather than condemn him, let me apply my pop psychology to what I suspect is going on behind closed doors.

I see Perata as a decent person trying to do what he thinks is right most of the time. That’s saying something in Sacramento. But he’s in a dicey spot, elected by other senators to his job as Senate president pro tem by a razor-slim margin. He’s been named in media reports involving an investigation of his son for alleged misuse of public funds. No evidence has emerged that Perata did anything wrong, but the probe has weakened him.

Perata’s Senate leadership job might be in trouble if he sides with Republicans and against Democrats on April 27. He’s under pressure from the lawyers, as are all the Democrats, to vote against Hoch even if he thinks Hoch is doing a stellar job.

But at least Perata is a thinking man, still considered a possible swing vote as we went to press. Quite a contrast to Assembly Speaker Fabian Núñez, who has attacked the disability-awards reforms and made headlines by threatening to hold up the entire 2005-2006 California budget if he didn’t see rollbacks in the reforms. He later withdrew his threat.

The back story here is that Sacramento’s entrenched special-interest groups, including doctor groups and unions, went along with 2004 reform only because of the intense pressure from the public itself. Arnold threatened to take a much tougher reform plan to voters, and polls showed that Californians eagerly would back Schwarzenegger’s stricter fixes, if voters were given a chance. In the end, the only holdouts on workers’-comp reform were the lawyers.

Now, with intense partisanship back in vogue in Sacramento, many Democrats have been forced to side with the attorneys, saying they never dreamed the disability reforms would be so strict (yeah, it’s pretty rough when California ends up doing what 41 much smarter states already do).

Hoch has refused to buckle to the lawyers, writing clear, concise rules that follow the AMA guidelines and are not open to broad legal interpretation or legal loopholes. No more exaggerated claims of “pain” in order to get huge payouts and time off work.

Boy, that Hoch must be an awful person.

Susan Gard, spokeswoman for the state Division of Workers’ Compensation, noted that before reform, California had by far the most expensive workers’-comp rates in the nation, yet it also boasted the worst worker benefits and terrible medical outcomes for the truly and seriously injured.

“We saw many bad outcomes, such as a worker who would start out with a back strain, end up with surgery and never return to work,” noted Gard. “We were seeing treatment upon treatment. The system was creating the opposite of the outcomes intended.”

Hoch, a champion of the truly and severely injured and of California’s devastated small-business community, should be getting an award for State Worker of the Month. Instead, she may not even keep her job.