Workers’ Safety Net Is Full of Loopholes

Yes, I did ask readers to send me their horror stories involving the workers’ compensation mess Gov. Schwarzenegger claims to have fixed.

But you can stop now.

I’ve got enough material to keep me busy until I’m eligible for Social Security, if it hasn’t gone belly up by then.

The responses ran the gamut, as was to be expected.

I got employers saying their premiums have fallen, but far more saying their premiums have jumped.

Some readers crucified me for taking a few pokes at Schwarzenegger, who was only trying to straighten things out, as they see it, even if he did go easy on insurance companies that stuffed his pockets with campaign money.

Some employers, including Jeff Kavin of Greenblatt’s Deli, wondered why I don’t write about fraud and abuse by attorneys, doctors and employees who “skim so much money out of the system” that premiums soar for business owners while “the worker with a real devastating injury is left with very little.”

Well, of course that’s part of the problem, and it always has been. Lest you doubt it, consider this week’s series on the creative energy at King/Drew Medical Center. Employees there filed 122 claims in 10 years for falling off chairs, collecting a cool $3.2 million for their tragic falls from a frightening height of about 18 inches.

But by far, most of the responses I fielded on the workers’ comp morass were from doctors, lawyers and injured employees telling me about treatment being delayed, denied or discontinued.

I’ve heard from a retired El Segundo teacher, 80 years old, who is suddenly being grilled (by mail) by a doctor she never met, part of a workers’ comp conspiracy to cut off her medication for a longtime disability.

I’ve spent a day and a half playing amateur arbitrator in the case of a jockey who was thrown from a horse, had hip surgery, and claims the home healthcare agency frequently failed to show up at her house, where she was alone and immobile.

“Insurance companies have stopped cutting checks ... period,” says West L.A. physician Lauren Papa. “I have patients who should rightfully receive benefits and aren’t.... They’re going on welfare, being evicted, using food stamps, etc. Worse, it’s Christmas. Do these idiots think my patients don’t want to work?”

Bruce Traney, a workers’ comp attorney, warns that it will get worse in January, when more of the impact of the governor’s “reform” package kicks in.

“If you’re a worker in California and get hurt in the next year,” Traney says, “you’re not going to be a happy person. You’ll be human flotsam thrown to the curb.”

One of the readers who got hold of me was a gent who claimed he had no ax to grind, which always makes me suspicious. But I called him anyway.

“I am the president and editor in chief of WorkCompCentral.com -- a news and information service for the work comp industry,” he said. “We don’t take sides. We just publish the facts.”

And what are they? I asked David DePaolo, the boss man and a lawyer who used to represent insurance carriers.

As DePaolo sees it, Schwarzenegger wanted to make good on his campaign promise to deliver a workers’ compensation reform measure, especially since so many of his supporters in the business world were complaining about rising premiums. He delivered the package, DePaolo says of SB 899.

But not the fix.

“There are too many inconsistencies and loopholes. That’s the bottom line,” DePaolo says.

“The governor said relief was on the way. That’s the way they played it -- that you were going to see some immediate relief. But nobody in the industry believed that. Everybody thought it was pie-in-the-sky statements made for political reasons.”

The simplistic legislative “remedy” was no match for the forces that drove up workers’ comp rates nationwide, says DePaolo. It gets pretty complicated, but he blames the stock market crash and a multibillion-dollar fraud in the international insurance market. In lay terms, we’re talking about a Ponzi scheme and bad stock gambles.

And in California, we ended up with a “reform” package that seems to have been designed to help recoup those losses for the insurance industry.

Sure, there were obvious abuses by injured workers. Some of them received medical services that exceed anything they would get from standard health insurance companies.

But do the state reforms swing the pendulum too far in the other direction?

“I would say that based on what I’ve seen, there is a great increase in the denial of medical treatment,” DePaolo says.

Great news, of course, if you’re an insurance company.

“Financially, insurance companies are doing fantastic right now because they’re bringing in more money and paying out less.”

And the sweetest part of the deal, as I noted in the last column, is that SB 899 doesn’t require them to pass on the savings to employers.

Large companies might see a decrease in workers’ comp costs because they’re self-insured and don’t get gouged by a middle-man, DePaolo says. Smaller companies might see a temporary decrease, but he expects the real impact of SB 899 to be slower price increases rather than big discounts.

“And,” DePaolo predicts, “we’ll be in a crisis again in seven to 10 years.”

Don’t everyone fall out of your chairs.