Critics of a California workers’ compensation system that is both among the

Gov. Jerry Brown recently signed Assembly Bill 1244, a bill introduced by Assembly members Adam Gray, D-Merced, and Tom Daly, D-Anaheim, and approved 79-0 by the Senate and 39-0 by the Assembly.

It would ban medical service providers from participating in the state-funded workers’ compensation program if they’d ever been convicted of a felony or of a misdemeanor involving fraud or abuse in the state program or in Medi-Cal or Medicare. It also bans those suspended from Medicare or Medicaid by federal authorities for fraud or abuse and those who have “lost or surrendered a license, certificate or approval to provide health care.”

Brown also signed Senate Bill 1160 by state Sen. Tony Mendoza, D-Artesia, which addresses a tactic used by health care providers to force payment from client companies if insurers reject claims they consider suspect or invalid: placing liens on their property. The measure requires physicians and others providing care to cite the specific legal authority that allows them to place liens, not just cite an unpaid debt. It also limits selling billing rights for uncollected claims to collection companies. Finally, it freezes collection of liens by providers facing charges of medical fraud.

Mendoza’s bill ran into Republican criticism in the Senate, where some saw it as too intrusive. But it passed 26-12 and was approved 80-0 in the Assembly.

New policy fights not as charged as before

Past fights about workers’ compensation fixes in Sacramento were far more contentious.

The most memorable and consequential came early in Arnold Schwarzenegger’s seven years as governor. His first major legislative victory after taking office in November 2003 came in May 2004 when he signed a package of legislation that allowed employers to limit which doctors were allowed to treat those who had or said they had workplace-related injuries. The new laws also made it more difficult to make claims of permanent disability; reduced payments for permanent disabilities; and put limits on how many times claimants could use employer-paid rehabilitation services such as physical therapy.

Businesses paid a record $21.4 billion in premiums in 2003, according to a Sacramento Bee report. That dropped by more than half in coming years as reforms paid off, but by 2015 had rebounded to $17.6 billion.

The 2003-04 fight was so pitched because some unions and Democrats believed Schwarzenegger was actually trying to knock holes in the safety net for injured workers, not just correct abuses.

More recent policy debates have focused on how medical care providers continue to keep pushing the envelope with their billing practices, some of which are obvious frauds and others of which are more nuanced.

Less sophisticated companies targeted

In a recent interview with Kaiser Health News, the director of the state Department of Industrial Relations, which oversees workers’ compensation, noted that scams are far more likely to be used with less sophisticated companies.

“I think both abuses and fraudulent activities prey on the most vulnerable populations and we’re hopeful that appropriate treatment will be provided to workers when needed,” Christine Baker said.

Such companies often have relatively small fiscal reserves. Kaiser’s story told how a family-run Los Angeles janitorial service that employed 350 had to close after it was hit with the types of liens that are now illegal.

A bill sponsored by Senate President Pro Tem Kevin de Leon, D-Los Angeles, would have added three members to the South Coast Air Quality Management Board, which regulates air quality in Los Angeles, Riverside, San Bernardino and Orange counties.

And while that probably seems as dull as watching paint dry to nearly everyone who just read it, the measure had major implications for Republicans, local governments, business interests, environmentalists and residents of the broad district that has some of the most toxic air in the nation.

De Leon introduced the board-packing plan shortly after Republicans engineered a takeover of the board, swinging the focus from environmentalists to business interests. In December, the board disregarded SCAQMD staff recommendations and instead adopted rules on refineries backed by the oil industry, and in March it ousted the the longtime director who had been seen as anti-business.  

Representatives to the board are local city council members and county supervisors, appointed locally. De Leon’s bill would have added three seats to the 13-member board, appointed by the the Senate Rules Committee (which de Leon chairs), the Assembly speaker and the governor.

During floor debate, proponents argued that the measure was about adding diversity to the almost all-white board that had no Latinos, which defies the demographics of the heavily-Latino region. 

“Needless to say, I’m disappointed,” de Leon told CalWatchdog on Thursday. “Any time people of color are excluded from decision-making processes directly tied to their health and wellbeing, fundamental change is needed. This is a textbook example of institutional racism.”

De Leon added that Los Angeles County Supervisor Mike Antonovich, a Republican who also sits on the SCAQMD board, is termed-out and will soon be replaced by “someone far more progressive on the matter,” likely shifting the balance of power back to the environmentalists. 

However, of the current board’s ethnic composition, and the persistent lack of diversity, belies the fact that it’s largely been in Democratic, or environmentalist, control for years. De Leon did not say whether he’d reintroduce similar measures in the future.

Local control

Many opponents of the measure argued that the bill was a power grab by state policy makers at the expense of local control. And the large bloc of Democrats who either voted no or abstained suggest that the matter is not purely partisan.

“State versus local, that’s what this is about,” said Mike Madrid, a GOP strategist who helped devise the SDAQMD takeover. “It happened to be Republicans, but it was a state/local fight.”

But it was still a big win for Republicans, who are steadily slipping in their share of voter registration throughout the state, face the very real possibility of a Democratic supermajority in the Legislature next year and are not considered a consistent threat in any statewide election. For Republicans, local offices are where they can have a policy impact.

And despite several major policy victories for environmentalists, the defeat of the de Leon measure is a big win for the advocates of economic development. 

John Husing, the chief economist of the Inland Empire Economic Partnership, has been studying Southern California’s economy since 1964. His research suggests a correlation between the rise of poverty and the rise of environmental regulations in the state. Husing argues that while the policies have had a positive impact on air quality in the region, the policies are imbalanced in relation to business development and subsequently drive poverty, which affects health. 

“The whole air-quality, green initiative is having detrimental effect on moving people out of poverty and into the middle class,” Husing said of the SCAQMD region and the neighboring central valley.

Environment v. economy

Environmentalists have often said that any job loss associated with these air-quality policies would be offset by job creation in green sectors. However, Husing says statistics say that isn’t true, at least not in areas with high unemployment, like many communities in the SCAQMD.

Citing data from the California Employment Development Department and the U.S. Bureau of Labor Statistics, Husing said from 2010 to 2016 the U.S. added 836,000 manufacturing jobs, compared to California which added 42,500 — a mere 5.1 percent. While the growth rate is on pace with with the national average, it lags by over 50 percent behind the state’s share of gross state product.

Husing said that the sluggish growth of manufacturing jobs in the state is attributed to three factors: Companies leaving, companies growing beyond the state’s borders and out-of-state companies refusing to grow in the state.

“Whose affected by that? It’s not the companies,” Husing said. “They’re doing fine some place else. It’s workers whose jobs are never created. … So you’re basically cutting off routes to the middle class for those workers.”

The vote

The measure failed just before the stroke of midnight on Wednesday, 30-36. And while it is seen as a victory for Republicans, the measure was largely defeated by the 14 assemblymembers, all Democrats, who didn’t vote.

Those who didn’t vote were Luis Alejo of Watsonville, Joaquin Arambula of Fresno, Kansen Chu of San Jose, Jim Frazier of Oakley, Rich Gordon of Menlo Park, Adam Gray of Merced (who was not present), Kevin Mullin of South San Francisco and Shirley Weber of San Diego. The six who didn’t vote and live in the region were Ian Calderon of Whittier, Eduardo Garcia of Coachella, Mike Gipson of Carson, Roger Hernandez of West Covina, Chris Holden of Pasadena and Patrick O’Donnell of Long Beach.

According to a Public Policy Institute of California poll released Wednesday, a majority of Californians support government efforts to improve the environment, despite possible rises in energy costs and ongoing debates about the legality and effectiveness of the state’s environmental policies.

The study, which surveyed around 1,700 California residents about various environmental concerns, found that the majority of Californians supported existing plans to combat global warming, and were willing to expand these laws, even if that means paying more for gasoline and electricity.

“We find strong support today for the state’s greenhouse gas emissions targets set 10 years ago,” PPIC president Mark Baldassare said. “The commitment to help reduce global warming includes a surprising willingness on the part of majorities of Californians to pay higher prices.”

Big dreams for a cleaner California

Sixty-nine percent of Californians approved of plans to reduce greenhouse gas emissions to 1990 levels, as laid out in AB32, one of the state’s landmark environmental laws.

But government plans to reduce emissions have been met with mixed results. The cap-and-trade program, created by the Air Resources Board in response to AB32, places carbon emission limits on businesses and allows them to purchase credits for exceeding those limits. But at May’s quarterly auction, businesses purchased only 2 percent of the anticipated revenues.

The program faces legal challenges as well. A lawsuit by the California Chamber of Commerce claims the program is actually an illegal tax on businesses, requiring a two-thirds vote to become law.

Critics have complained about how the cap-and-trade revenue is spent – that the money doesn’t often fund projects that meet the required emission reduction goals. Assemblyman Adam Gray, D-Merced, said he is concerned about how the revenues are spent, calling the program “a feeding frenzy for a multitude of pet projects,” according to The Sacramento Bee.

And though there has been a decrease in greenhouse gas emissions, some say the lower levels may reflect outside factors like business scale-backs during the Great Recession.

“The jury’s really out on whether we’ve seen a lot of reductions caused by cap-and-trade,” James Bushnell, an energy economist at UC Davis, told the Los Angeles Times. 

Despite varied expert opinions, 54 percent of respondents in the PPIC survey approve of the cap-and-trade program – after the surveyors gave a brief explanation to the 55 percent who had never heard of the program before.

Respondents also support a proposed new law that would ramp up AB32’s plans to control emissions, which would exceed AB32’s reduction goals and extend the program to the year 2030.

And 58 percent of those surveyed believe local and state governments should devote more resources to other environmental issues, as well – electric cars, solar power and drought management.

A big paycheck for California residents

Californians know that reducing greenhouse gas emissions could raise energy costs – and they are ready to foot the bill.

The majority of respondents said they would be willing to pay more for gas (63 percent) and solar- or wind-generated electricity (56 percent). The Legislative Analyst’s Office estimates that gas prices would rise 11 cents as a result of the cap-and-trade program.

But this widespread support of energy reforms comes alongside equally widespread opposition by those who prioritize economic concerns over the environment.

How it’s playing in 2016

Alternative energy plans come with a cost – and according to Assemblywoman Cheryl Brown, the Inland Empire may not be able to afford it. In 2015, the San Bernardino Democrat opposed a petroleum-reduction provision of Senate Bill 350, another key piece of California’s environmental policy, citing concerns that potential rising energy costs could harm lower-income families.

However, some voters said Brown’s opposition amounted to a rejection of the entire clean energy campaign and retribution was swift. Protests, rallies and criticisms from other officials have threatened Brown’s re-election, while the campaign has become a proxy war between Big Oil and Big Environment. 

“Do you ever feel that something is not going quite right?” Brown asked the Los Angeles Times in March. “They are after me, and I still don’t know why. I don’t know who ‘they’ are. But I will find out soon.”

Concerns about the impracticality of California energy reforms are reflected in the PPIC survey, as well. The majority of respondents supported clean energy programs like electric cars and charging carports, with 68 percent in favor of tax credits for purchasing electric cars, and 77 percent supportive of infrastructure for charging the vehicles.

But less than half (47 percent) are actually considering purchasing an electric car themselves, suggesting that good intentions may not match up with environmentally conscious decisions.

“The California rail authority’s failure to identify a source of funding to connect Los Angeles to the future bullet train system is not acceptable, said Hasan Ikhrata, executive director of the Southern California Assn. of Governments,” according to the Los Angeles Times. “Until the high-speed rail authority released a new draft business plan last month, the state had planned to open its first operating segment between Burbank and the Central Valley by 2022. But in a major concession to its limited funding, the plan now calls for a cheaper segment that would run from San Jose to the Central Valley by 2025.”

The catch, SCAG discovered, is that costs imposed by completing the initial segment will ensure that “all the existing funds would be exhausted, leaving uncertainty about how and when the line would ever cross the geologically complex mountains of Southern California,” as the paper added.

Disillusioned Democrats

The changes have accelerated criticism of the floundering effort — among Democrats as well as Republicans. “California lawmakers expressed dissatisfaction Monday with a plan to change the direction of a $64 billion high-speed railway,” the Associated Press noted. Southland Assemblywoman Cheryl Brown, D-San Bernardino, said “it looks like we won’t have any kind of access to the money that we, as the citizens of the Inland Empire, put into the pot,” according to the wire. And Assemblyman Adam Gray, D-Merced, complained of feeling as if he could “travel through Star Trek’s fictional teleportation device before the train would arrive in his district.”

Some officials have also grown concerned that delays have rendered budget estimates obsolete along a key stretch of track. “Construction contracts for the three San Joaquin construction packages, which stretch from Madera south to Shafter, near Bakersfield, were awarded for 18 percent to 45 percent below budgeted estimates,” the Silicon Valley Business Journal observed. But “[d]elays in land acquisition, which can be recouped through construction change orders, could wipe out the savings for that package, the rail authority reported in its draft 2016 business plan.”

Hard to derail

But as costs have bedeviled the train, some of its opponents have busted their budgets too. “Proponents of a proposed initiative to divert high-speed rail funding to water projects said Friday that they are pulling their petitions from the street and instead will pursue a place on the 2018 ballot,” the Sacramento Bee reported. “The campaign, led by Republican Bob Huff, the former Senate minority leader, and GOP Board of Equalization member George Runner, budgeted for $2.65 a signature, spokesman Hector Barajas said.”

“This week, amid soaring signature-gathering costs, the price rocketed to about $5 a signature. Rather than pay the spiraling rate, proponents are pulling back and targeting 2018, a non-presidential year where fewer Democratic voters, and presumably less supporters of high-speed rail, turn out to the polls.”

Assembly Bill 52: Public accommodations: construction-related accessibility claims. It’s by Assemblyman Adam Gray, D-Merced, and would:

• Protect small businesses from financial exploitation and encourage compliance with construction-related requirements under the Americans with Disabilities Act.
• Reduce statutory damages in claims against small businesses if the business corrected any violations within 180 days.

Assembly Bill 54: Public accommodations: construction-related accessibility standards: tax credit. It’s by Assembly Republican Leader Kristin Olsen, R-Modesto, and would:

• Aim to deter costly and unnecessary lawsuits against businesses by providing small businesses a 60 day opportunity to cure, if construction-related accessibility standards related to an alleged Americans with Disabilities Act violation had changed within three years.

Assembly Bill 1486: Civil rights: disability access. It’s by Assembly member Catharine Baker, R-San Ramon, and would:

• Provide that a State Architect certification of compliance with the Americans with Disabilities Act would serve as presumptive evidence that public building and facilities are in compliance with the Act.

Senate Bill 67: Disability Access: statutory damages. It’s by state Sen. Cathleen Galgiani, D-Stockton, and would:

• Exempt small businesses from statutory damages for violations of the Americans with Disabilities Act.
• Extend the opportunity to cure technical violations from 60 to 120 days.

“Obviously I wasn’t that surprised,” Asemblyman Adam Gray, D-Merced, a longtime aide to Calderon, told the Los Angeles Times. “I wasn’t involved in that at all.”

While there’s no evidence implicating Gray in the alleged pay-to-play behavior by Calderon, Gray learned one thing from his disgraced mentor: how to use campaign committees to fund a life of luxury.

A CalWatchdog.com analysis of Gray’s campaign finance records shows hundreds of thousands of dollars spent on five-star hotels, luxurious golf resorts, international junkets, Hawaiian vacations, world-class restaurants, award-winning wineries and limousine rental companies. Gray’s extravagant spending can’t please California Democratic Party officials, who’ve been forced to transfer hundreds of thousands of dollars in recent weeks to defend Gray’s seat.

Gray’s lavish fundraising events

Under state law, campaign funds can only be legally spent on expenses directly related to a candidate’s election.

“Moneys in the candidate’s campaign bank account shall be spent only on expenses associated with the candidate’s election to the specific elective office designated in the statement of intention and expenses associated with holding that office,” the state’s campaign finance regulations state.

But, that doesn’t stop a candidate from spending big on lavish fundraising events. Last year, a CalWatchdog.com investigation revealed Calderon spent hundreds of thousands of dollars in campaign funds on private jets, five-star hotels, elite golf courses and extravagant meals at the country’s finest restaurants. Through Diversity PAC, Calderon spent $220,000 at luxury golf resorts, including Bandon Dunes, Pebble Beach, Indian Wells and the American Club, as well as $56,000 in luxury travel.

Gray’s campaign mimicked Calderon’s luxury spending with $21,740 in gifts at Rossini’s Menswear, $14,563 at Vista Ranch & Cellars and $2,383 at Stevensons Ranch Golf Club, all classified as expenses related to fundraising events, according to state disclosure reports.

State law bans campaign committees from making expenditures “which confer a substantial personal benefit.” However, the state’s political watchdog has carved out an exception for any activities that have a political, legislative or governmental purpose.

Gray exploited that exception to ring up $7,604 at the Ritz Carlton, $3,334 at Sheraton Hotels, $1,125 at the Hyatt Regency Indian Wells Resort and Spa and $347 at the oceanfront Terranea Resort.

“Terranea is a land unto itself,” boasts L.A.’s oceanfront resort, where Gray spent a few hundred dollars in candidate travel, lodging and meals in Nov. 2013. “As the location of many Hollywood films and television shows, all who come to Terranea feel as though they’ve walked onto the set of paradise.”

Gray’s junkets to Maui, Cuba

Gray has been no stranger to the legislative junket circuit. He billed his campaign account for thousands of dollars in expenses for trips to Maui and Cuba, which were organized by lobbyists and special-interest groups. According to his campaign finance disclosure reports, Gray paid $1,000 to Californians Building Bridges for a deposit on a 2013 trip to Cuba.

Founded by Sacramento lobbyist Darius Anderson, CBB has little to show in the way of charitable activities. CBB, according to its most recent tax return, provided no financial support to domestic or international charities.

In addition to his trip to Cuba, Gray used campaign funds to reimburse the Independent Voter Project for nearly $2,900 in expenses at an infamous conference held annually at a luxurious Maui resort. That doesn’t include another $812 in charges at the Fairmont Maui. At the annual conference, lawmakers enjoyed time at the beach, extravagant meals, fine wines and rounds of cocktails while discussing policy issues with lobbyists, business executives and union leaders.

“Limousine liberal” spent thousands at popular steakhouses

You could even say Gray is a “limousine liberal,” having rung up multiple charges with limousine rental companies and chauffeur services. The $1,332 in charges to limo rental companies included nearly $900 spent on July 3 with Baja Limo. On the same day, Gray spent several hundred dollars in meals at Chops Steakhouse and Grange Restaurant and Bar, two of his most-frequented restaurants in Sacramento.

Bars and restaurants were another common item on Gray’s campaign report, including $2,817 at the Branding Iron Restaurant, nearly $2,600 at Chops Steakhouse, $2,000 at Simon’s Cafe and nearly $1,400 each at Frank Fat’s and Grange Restaurant and Bar.

The Humane Society of the United States, which gave Gray low marks on its 2013 legislative scorecard, may want to chat with the Democrat lawmaker about his habit of eating at steakhouses. In addition to Chops, Gray’s campaign paid for meals at C2 Steak House, Morton’s and Ruth’s Chris.

Sac Bee looks at credit-cards transactions

Legislators commonly ring up thousands of dollars in ambiguous credit-card charges. According to the Sacramento Bee, “A first-ever review of lawmakers’ credit-card spending by the Sacramento Bee found that many lawmakers provided only the barest of descriptions of their expenses on state-required campaign reports – despite a 2008 rule meant to improve disclosure.”

Gray was no exception, showing $42,643 in charges to his Wells Fargo credit card labeled “travel, office supplies, meeting and event expenses.”

CalWatchdog.com analyzed campaign spending reports for both Gray’s 2014 re-election campaign committee and a second, ballot-measure committee, called Valley Solutions: Assemblymember Adam Gray’s Ballot Measure Committee Supporting Propositions 1 and 2.

Similar to Gov. Jerry Brown’s ballot-measure committee, Gray has used the second campaign account to accept larger campaign checks from special-interest groups and big corporations that lobby the Legislature, including $35,000 from the California Independent Petroleum Association, $25,000 from the San Manuel Band of Mission Indians and $15,000 from tobacco giant Philip Morris.

Democrats, special interests forced to rescue Gray

Gray’s extravagant campaign spending left him unprepared for a strong challenge by Republican Jack Mobley. In the past two weeks, the California Democratic Party has spent more than $235,00 on Gray’s campaign. This cycle, state and local Democratic Party committees have transferred more than $310,000 toward Gray’s reelection effort. Gray has received roughly a half-million dollars in campaign contributions in the last two weeks of the campaign, including late contributions from big business and big labor.

Gray’s luxurious lifestyle has gotten him into trouble with the state’s political watchdog.

Earlier this year, according to the Sacramento Bee, “Gray, a Democratic assemblyman from Merced who earlier worked as a Calderon staffer, agreed with the FPPC to pay a $2,000 fine for not reporting $1,900 worth of golf Yocha Dehe contributed to his campaign during a fundraiser at the tribe’s casino in December 2011.”

It wasn’t the first time Gray’s been in trouble with the state’s political watchdog. In 2010, Gray was fined $400 by the FPPC for failing to report two gifts on his annual Statement of Economic Interests.