Stalemate Over Workers’ Comp Stalls Washington Lawmakers

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Washington state lawmakers grappling over how to fill a projected budget shortfall of $5 billion in a special legislative session may first have to end a stalemate on a more contentious issue: workers’ compensation.

There is widespread agreement in Olympia that lawmakers must do something to curb the surging costs within a state-run system that doles out billions in benefits, and Gov. Chris Gregoire said she doesn’t think lawmakers can leave the Capitol for the year without dealing with the issue. But the House and Senate – siding with labor and business, respectively – have pushed competing proposals that won’t get consideration in the opposing chamber.

“I think both are now dead,” Gregoire said. “We need to put our minds together and comes up with something that serves as an alternative – some middle ground.”

Senate leaders have approved a measure that includes an option of reaching lump-sum settlements with workers who receive benefits for a prolonged period, and Gregoire said senators are not interested in finalizing a budget until workers’ comp has been settled. But the House has made it clear they won’t accept a settlements provision.

House Majority Leader Pat Sullivan said members in his caucus have concerns about offering settlements

Washington provides about $2 billion in workers’ comp benefits each year – largely funded by premiums paid by businesses. Some large companies choose to self-insure.

The comp system surfaced as a key issue after the state auditor said reserves in the system are at risk of insolvency. About 85 percent of comp costs come from 8 percent of all claims, which involve workers who are receiving benefits for a prolonged period or have lifetime pensions, according to the Department of Labor and Industries.

Workers’ compensation rates increased by an average of 12 percent for 2011, and business groups fear another double-digit rate increase in 2012.

Gregoire recommended the state either offer the option of settlements to those over the age of 55 or limit payments for those who are receiving Social Security benefits.

Rebecca Johnson, lobbyist for the Washington Labor Council, said labor groups believe settlements will lead workers who are in a vulnerable position to accept a deal that’s a fraction of the benefits they should receive.

House leadership has pushed a series of proposals, including a program approved by the governor that would establish a health care provider network to treat injured workers and include a focus on returning to work. Another proposal passed by the House but not taken up by the Senate would freeze cost-of-living payments.

Kris Tefft, general counsel at the Association of Washington Businesses, said the House proposals aren’t enough to reform the system. He said Republicans, the governor and the Senate may have to bypass the House leadership to win approval of the changes they want.