Workers' compensation plan in trouble - Short takes: news at deadline - Brief Article

Physician Executive, Sept-Oct, 2003 by James A. Hawkins

In California, the emergency fund that pays out workers' compensation claims may run out of money next year if action is not taken quickly. The California Insurance Guarantee Association is the payer of last resort for injured workers. Unfortunately, the last resort is occurring with growing frequency following the bankruptcy of many workers' compensation insurers.

The association was created in 1969 by the California legislature as a quasi-public agency to ensure that worker injuries were still covered, even if an insurer went out of business. Funded by a two percent fee on workers' compensation policies, the associa tion is currently shelling out around $90 milllon a month to compensate injured workers and their caregivers.

As recently as the year 2000, the association was only paying out about $51 million a year.

The association's executive director, Larry Mulryan, is seeking authorization to issue bonds of up to $1.5 billion to improve its cash position. He projects that the association will only be able to cover workers' compensation claims through November 2004, unless the bonds are issued or other sources of funds are found.

James A. Hawkins is a health care writer based in Aiken, S.C. He can be reached by phone at (803)414-2062 or by e-mail at hir@ix.netcom.com.