2 Worker’s Comp Fixes at Odds in Washington State

By | March 21, 2011

Rep. Mike Sells didn’t mince words. The Everett, Wash., Democrat doesn’t plan to allow a hearing in his committee on a state Senate bill that would allow settlements for injured workers under the state’s compensation system.

“It’s not a well written bill,” Sells said this past week, arguing that a House package is a better way to save the embattled system money.

Sells’ statement is the latest skirmish in the fight over fixing the state’s workers’ compensation system, a permanent battle ground between business and labor interests that has taken a central role in the Legislature after a state audit last year pegged parts of the system as insolvent.

Workers’ comp in Washington is a state-provided insurance system in which businesses pay premiums, although some large companies choose to self-insure. If a worker is injured on the job, they can file claims for workers’ compensation and receive money while they heal.

Last year, voters soundly declined to privatize the system, defeating a business-backed initiative with nearly 60 percent of the vote.

Gov. Chris Gregoire is pushing changes to the system, and backed a middle-of-the-road approach at the beginning of the session.

After weeks of negotiations, the Senate passed a bill earlier this month that included an option to make lump-sum payments for permanently disabled workers – a major priority for the business lobby – during a weekend voting day earlier this month.

But hours later, the House unveiled its approach: A package of bills that cover several aspects to the system. Put together, the bills aren’t major overhauls, but nips and tucks to try to save money and streamline some of the process. Overall, House leadership says they’re bills would save about $150 million during the next five years.

“We think that taking those pieces and doing all the things we’re doing will save you more money in the short run and in the long run,” Sells said, adding that the workers’ compensation system is complicated and taking pieces of it and working on those better serve to inform lawmakers and the public.

The estimated savings from the House proposals would be on top of an estimated $200 million in savings expected in the next four years to come from expanding a medical provider network _ an aspect of the system that was agreed upon by all stakeholders. Gregoire signed a bill earlier this month.

Among the bills proposed by the House to fix the system include proposals to close companies during investigations; streamline appeals for cited companies; stricter accident prevention rules and new oversight measures for employers.

House lawmakers also approved a proposal that subsidizes 50 percent of a recovering worker’s wages for more than two months to encourage a return to the job; a similar proposal is included in the Senate bill.

The House also reluctantly approved a bill that would allow certain business groups to manage their own claims – a bill opposed by labor and business groups. The measure – so called “retro” bill in reference to the business groups affected – is also receiving a lukewarm response in the Senate.

Sen. Jeanne Kohl-Welles, D-Seattle, chair of Senate’s labor committee, said that she hasn’t decided if she will hold a hearing on the retro bill. Most other House bills are moving forward, she said.

The system had about $499 million in reserves as of Dec. 31, the last figure available through the Department of Labor & Industries. That figure represents the sum of medical fund of the system, which stands at nearly $709 million; the accident liability fund that is in the red for $275 million; and the pension fund that currently stands at $65 million.

A December auditor’s report issued when the total reserves were down to $182 million found that the accident fund is insolvent. The system tanked, the report said, because of less money coming from businesses due to the recession and the drop in returns from investments.

Proponents of the Senate bill say the system needs major change even if the economy improves because it allows for a small number of workers to be on prolonged benefits.

About 85 percent of compensation costs come from only 8 percent of all claims, which involve workers who are receiving benefits for a prolonged period of time or have lifetime pensions, according to the Department of Labor and Industries.

To curb that, businesses want the lump-sum settlement option.

But key questions being asked by detractors to the Senate settlement bill is how much will it save, and how much will it cost. The settlement option was introduced to the bill as an amendment on floor of the Senate and no cost estimate has been introduced. Labor has steadfastly opposed any settlement option, saying that it leaves workers depending on good lawyers.

Earlier this session, Gregoire had proposed offering settlement to workers over 55 years of age, an idea she said would save $30 million in the short term and then about $7.5 million per year. The business lobby wants to expand that idea to include more workers, arguing it would mean more savings.

“It’s not going to get magically better because our economy is improving,” said Sen. Janea Holmquist Newbry, R-Moses Lake. “We can’t handle another year of double digit rate increases to prop up a clearly unsustainable system.”

Gregoire said this past week that she’s very interested in most House measures.

“I want to see a long-term, sustainable way for us to deal with pension costs in workers’ compensation. So we’re still working on it,” she said.

At least one thing has been resolved. Gregoire signed a bill that directs the Department of Labor and Industries to create a statewide medical provider network for injured workers, as well as expand access to the state’s Centers for Occupational Health Education. Officials say that by getting injured workers healthier and back to work faster, the bill could mean savings of more than $200 million over the next four years.

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