Builders’ Lobby Sponsors Washington Workers’ Comp Initiative

By | January 25, 2010

A politically active construction-industry group wants voters to decide whether Washington’s workers’ compensation system should face private competition, a move opposed by organized labor and top Democratic lawmakers.

The Building Industry Association of Washington has filed paperwork for an initiative aimed at privatizing workers’ compensation insurance in the state.

The association would need to collect about 241,000 valid voter signatures by this summer to get the measure on the November ballot. The BIAW is a frequent player in the state’s election campaigns, and is known for its aggressive support of conservative candidates and causes.

Washington is among a handful of states that don’t allow private insurers to sell workers’ compensation coverage. While some large employers in the state can self-insure, the rest pay into the state system, which is administered by the Department of Labor and Industries.

If approved, the initiative would set up a task force to recommend ways of bringing private insurers into the workers’ comp system. The Legislature would still have the final say.

“We’re not eliminating the Department of Labor and Industries,” BIAW Executive Vice President Tom McCabe said. “Everybody keeps saying it’s a nuclear option. They’ll still be in existence. They’ll just have to compete in the marketplace.”

“Decades of mismanagement and inefficiency at the Department of Labor & Industries have resulted in a high-cost system with the highest rate of lost time for injured workers in the country. Administrative expenses have spiraled out of control, our pension rate has increased more than 300 percent in a decade, and the Department is increasing taxes by nearly $120 million in 2010,” BIAW said in its outline of legislative issues critical to the homebuilding industry.

However labor officials and their Democratic allies, who control most of state government, say that the system’s costs are relatively low when compared to other states.

Yet business leaders and Republican lawmakers regularly cite workers’ compensation costs as a significant hurdle to job creation in the state, saying Washington has some of the nation’s most generous benefits for injured workers.

For example, Boeing recently announced it wanted to move construction of one of its lines to North Carolina, in part because of high workers’ compensation insurance costs, according to William Zachry of Safeway Inc., who spoke about legislative priorities in the West at the recent Workers’ Compensation Research Institute Annual Issues and Researech Conference.

“Now there is a political initiative to get that fixed,” Zachry said. This may open the market to more choices, he said, but noted that with one carrier, it will be more difficult for workers’ comp issues to be discussed in the Legislature.

But with this proposal, it seems the two sides’ long-running battle is picking up again this year, as the state tries to climb back from a long recession and most state lawmakers face re-election campaigns.

House Speaker Frank Chopp, D-Seattle, said it would be “an absolute tragedy” to privatize the state-run workers’ comp system, which has been in place for decades.

“That would be a disaster, and I hope to God the public also agrees on this,” Chopp said.

Workers’ compensation rates will climb by an average of 7.6 percent this year, raising about $117 million for the state-run system.

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