Sponsored by Assembly Insurance Committee Chairman Tom Calderon, D-Montebello, AB 749 raises benefits for both temporary and permanently injured workers, and will index benefits to increases in the state average weekly wage starting in 2006.

Sam Sorich, vice president and western regional manager for the National Association of Independent Insurers, said that the "lack of balance" in the bill is a cause for concern.

He said that the benefit increases provided in the bill far outweigh the potential cost saving provisions and he expressed disappointment in "how the legislature handled this procedurally. I think that the issue deserved a fuller public explanation and comment period than it was given," he said.

Mark Webb, vice president for state affairs for the American Insurance Association, said the AIA agrees that "injured workers need an increase in benefits," but that "while the reforms offered in AB 749 may offset some of these increases over time, the negative impact of the benefit increases will be felt immediately by California's cash-strapped public and private sectors."

He said that AB 749 contains important reform measures that will give employers "extended control over medical treatment and partially repeal the treating physician's presumption, which is viewed as a major cost driver" in the system. The presumption assumes the accuracy of injury analysis by the doctor treating an injured worker.

Nicole Mahrt, AIA director of public affairs, said the bill is "wildly out of balance." While it does contain some reforms advocated by the insurance industry, "California's economy will pay the price. It will take three or four years to realize any cost savings in these bills."

She said one positive reform is the health care organization reform, which gives employers extended control of employee's medical care and enables them to more closely coordinate programs with employees.

Another provision is the partial repeal of the treating physician presumption, she explained. "That's something we've seen as a cost driver and we're glad they took that suggestion."

Keith Bateman, vice president, workers' compensation and health for the Alliance of American Insurers, said the bill contains some "things we like and other things we are less sanguine about."

He said the Alliance is glad to get "even a partial repeal of the treating physician presumption language. The organization also approves:

? Reform on audit procedures and penalties.

? Provision for the use of generic drugs, pharmaceutical fee schedule and outpatient fee schedule.

? Improvement in language dealing with insurer disclosures to policyholders regarding claimant medical information.

However, he said that the Alliance does not approve of state compliance for federal administrative simplification provisions, which so far have not applied to workers' comp.

Mr. Bateman said that claims of a saving of $1.5 billion are "wildly exaggerated." The legislature, he said, "says the bill will cost $2.5 billion with $1.5 billion in savings."

However, he said, the cost of utilization when the bill is fully implemented is estimated by the rating bureau at $3.5 billion. The savings estimates, he said, are "probably inflated by a factor of two or three."

Employers "obviously will not be happy with the benefit increase, particularly when the economy is in bad shape," he said.

The insurance industry has lamented that it has not been part of the legislative process and has had little to say about the contents of the bill. Mr. Sorich, however, said this was not the result of "any great animosity towards insurers."

Rather, he said, it was a desire to "reach a consensus among the governor and legislative leaders." Additional involvement of interests, he said, would have made it "more difficult to reach that consensus."

Provisions of AB 749 include:

? Raising maximum weekly benefits for temporary disability to $840 from $490.

? Doubling current life pension benefits by 2006.

? Increasing death benefits to a maximum of $320,000 from $160,000.

The bill expands membership of the Fraud Assessment Commission from five to seven members and increases civil penalty amounts for workers' compensation fraud. These funds, according to documents, would be deposited into the workers' comp fraud account in the insurance fund.

The bill also provides for a six-member board of directors to administer the State Compensation Insurance Fund.