"The commissioner proposed a summit, the governor-elect was very interested in it," Mr. Williams said.

He said the summit suggested by Mr. Garamendi, which would seek more expert input on the problems plaguing the $29 billion workers' comp system, would be comprised of labor, business, attorney and medical community representatives?"all the people involved in the system."

Mr. Williams continued that Mr. Garamendi and Mr. Schwartzenegger "both believe the system costs too much and they need to fix that in order to bring relief to California's economy, because it's all about jobs."

The two agreed to work together to improve workers' comp, he noted. "The commissioner strongly suggested that [Mr. Schwartzenegger] call a special session of the Legislature on this issue," he said. Mr. Williams added that the two did not indicate when they would meet again.

Since taking office in January, Mr. Garamendi has worked to change the system. He said his efforts helped push through legislation that will save an estimated $4-to-$6 billion annually.

"Our economy cannot recover unless more jobs are created to stimulate the state's revenue stream," Mr. Garamendi said in a statement. "Businesses cannot create jobs when they are burdened with the enormous weight of this dysfunctional system. The Gov.-elect and I are in very close agreement on that, and we also have similar ideas on how to deal with the problems of workers' compensation."

Mr. Garamendi recently launched the second stage of his workers' comp reform effort, detailed on www.insurance.ca.gov.

During phase two he said he will direct the department to tackle the permanent disability rating system, reinvigorate efforts to combat fraud, and work to institute 24-hour care as a health care substitute for multiple coverages already provided by employers.

The department said his plans also include work to reform the State Compensation Insurance Fund, which has experienced overwhelming growth in recent years due to the collapse of more than two-dozen workers' comp carriers.

During his meeting with Mr. Garamendi, Mr. Schwarzenegger was briefed on the department's role in protecting consumers and as regulator of the state's $87 billion insurance industry, the department said.

Mr. Schwarzenegger's announced five-step plan to "rein in the runaway workers' compensation system" calls for:

? Gaining control over abusive claims.

? Reducing excessive disability costs.

? Eliminating unnecessary costs due to litigation, fraud and abuse.

? Reevaluating the State Compensation Insurance Fund.

? Addressing other significant factors such as medical fee schedules, vocational rehabilitation expenditures and potential cost increases from recent legislation.

His plan is described on his Web site at www.joinarnold.com