Insurers Oppose New California Workers' Comp Mandate

A California bill to prohibit a workers' compensation insurer from rescinding or modifying an authorization for medical services after the services are rendered is before Gov. Arnold Schwarzenegger.

Sponsored by Assemblywoman Bonnie Lowenthal, D-Long Beach, A.B. 361 would commit insurance companies to paying for all services it authorized a doctor to provide. It passed the state Assembly, 78-0 and the Senate 33-6. Schwarzenegger has until Oct. 11 to rule on legislation passed during the just-completed session.

Insurers oppose the legislation, saying it would result in payments for unwarranted services. The bill would harm the ability of employers and workers' compensation carriers to manage medical claims, American Insurance Association Assistant Vice President, State Affairs Steve Suchil said in a statement.

"Carriers experience claims situations where injuries are not job related or where medical care is provided that is not appropriate. This bill would force authorization in those instances," he said.

California's Workers' Compensation Insurance Rating Bureau recently approved a rate filing with a 22.8% increase in the claims cost benchmark, to be effective Jan. 1, 2010. An evaluation of March 31, 2009, loss experience determined an increase in the claims cost benchmark of 16%, primarily due to increased medical costs. The WCIRB projects the impact of three Workers' Compensation Appeals Board decisions to merit an additional 5.8% increase (BestWire, Aug. 14, 2009).

The top five writers of workers' compensation in California in 2008, according to A.M. Best state/line data, were: State Compensation Insurance Fund of California, with 22.6% market share; American International Group Inc., with 7.6%; Liberty Mutual Insurance Cos., with 6.7%; Travelers Group, with 6.3%; and Berkshire Hathaway Insurance Group, with 5.7%.