Washington reform measure passed but grumbling persists

More than $1 billion may be saved in the state's workers' comp system due to approved legislation. Nevertheless, neither business nor labor representatives were ecstatic over the changes.

Lawmakers were able to agree on a reform plan just as a 30-day special legislative session was about to wind up. But representatives for employers say more will need to be done while those for organized labor were clearly unhappy about a controversial provision of the legislation.

Included in H.B. 2123 is a structured settlement option for older workers. It would allow permanently injured older workers to receive settlements paid over a period of time.

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"This legislation overturns a central tenet of our workers' comp system," said Jeff Johnson, president of the Washington State Labor Council. "Washington had one of the few remaining true workers' comp systems. Since 1917 workers have paid a share, of 27 or 28 percent. This legislation is a complete travesty."

Washington is the only system in the nation that is funded by both employers and employees. An audit last year indicated reserves were at the risk of insolvency.

Businesses faced an average rate hike of 12 percent this year and were likely to see another double-digit premium increase in 2012.

State officials have said the majority of costs stem from 8 percent of claims involving workers receiving benefits for a prolonged period of time or who have lifetime benefits. A proposal to allow lump-sum settlements, similar to those in other states, was scrapped.

The option of a structured settlement will initially be offered to workers over the age of 55 and will be expanded to include those over 50. That provision is expected to save more than $500 million over the next four years.

But labor leaders say the idea could result in injured workers accepting less benefits than they would otherwise receive. "Settlement agreements make them less than a true workers' comp system," Johnson said. "Workers can only negotiate down."

It was unclear whether the labor group would begin an initiative drive, which would require more than 240,000 voters' signatures by early July to qualify for the November ballot. Johnson said they're planning an all-labor meeting later this month to assess the legislative session.

Business advocates were quoted as saying the settlements would provide much-needed relief. However, they also said more changes would be needed in the future.

In addition, the legislation also includes a stay-at-work program to encourage employers to provide light duty or transitional work for injured employees. Employers would receive wage subsidies and other incentives for up to 66 workdays within a consecutive 24-month period.

Other provisions of the legislation include:

Suspending cost-of-living adjustments for FY 2012 with no catch-up and delaying the initial adjustment.
Adjusting pension benefits for prior permanent partial disability awards.
Eliminating the interest on permanent partial disability award schedules.
Providing safety and health investment grants.
Creating an industrial insurance rainy day fund.
Increasing fraud prevention efforts.
Requiring a performance audit.
Studying occupational disease claims in the system.

Read more at the WorkersComp Forum homepage.

June 23, 2011

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