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Home / Washington Business - January 2006 / Q&A with Gary Weeks - Workers' Comp: Sorting Out the Details |
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Q&A with Gary Weeks - Workers' Comp: Sorting Out the Details |
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Written On: January 2006 |
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Gary Weeks was appointed director of the Department of Labor and Industries in May 2005. Prior to his appointment at L&I, he was the director of the Oregon Department of Human Services. Weeks, who began his state government career in 1973, has also been director of the Oregon Department of Administrative Services and the Oregon Department of Consumer and Business Services.
Q AWB asked L&I to defer the overall workers’ compensation rate increase until the legislatively mandated audit of the reserves is completed. Is this a good idea?
A Thanks to strong investment earnings, a strong economy, the agency’s success at controlling its medical costs, and a continued decline in the frequency of workplace-injury claims, L&I will have no general rate increase in 2006. Waiting for the independent audit is not a realistic option because it is unlikely that results will be available before late 2006. I hope results from the audit will be available in time to influence a decision on rates for 2007.
It’s important to note that the general rate is a composite of rate decisions in the Medical Aid Fund, the Accident Fund and the Supplemental Pension Fund. Because of strong investment earnings and our success in controlling medical cost inflation, rates for the Medical Aid and Supplemental Pension Reserve were reduced by 10.6 percent and 16.0 percent respectively. However, the Accident Fund rates were increased by 11.5 percent. As a result, the general rate increase is slightly below zero percent. The impact of the rate decision affects the workers’ and employers’ pay equally into the Medical Aid Fund and Supplemental Pension Fund but only employers pay into the Accident Fund. Remember also that individual employer’s rates are affected by experience.
Q There are several reserve funds in our workers’ comp system. What are they and how do they work?
A The Accident Fund pays for time-loss compensation, pension and permanent partial disability benefits. Only employers pay into that fund. Employers and workers contribute equally to both the Medical Aid and Supplemental Pension Reserve funds. The Supplemental Pension Reserve Fund pays for legally mandated cost-of-living adjustments in time-loss and pension benefit levels. The Medical Aid Fund pays for medical treatment. Nationally, medical inflation in workers’ compensation has averaged 9.6 percent annually since 1996. During that same period, L&I has held inflation to 6.5 percent—actually lower than that in the past couple of years.
Q What is the impact of the recent Gallo decision, which puts some sideboards around wage calculations for time-loss compensation?
A Employer-provided healthcare benefits are considered wages for the purpose of determining injured workers’ time-loss and pension benefit amounts. The Gallo case could have expanded this to include as wages the value of employer-provided fringe benefits such as retirement, disability insurance and others. Instead, the decision affirmed our current application of the Court’s prior decision in Cockle that these employer-provided benefits are not wages.
Q What types of workers’ compensation system reforms do you have in mind?
A We’re discussing changes that might improve the system for both workers and employers. First, we will engage business and labor representatives in those discussions. I think most people would agree that our vocational rehabilitation system doesn’t serve injured workers very well; consequently we have already begun to look at possible improvements. There are many who would like to see our workers’ compensation easier to administer. I expect that both business and labor will have other suggestions to improve the system. Also, in 2006 we will propose legislation to pilot a system that would allow the employers to be involved earlier in workers’ claims. Currently, workers must submit their claims through their physicians. The legislation we propose will allow workers to submit claims through their employers.
Q During the last legislative session, legislation was introduced to change workers’ compensation retrospective rating programs. It died, but L&I promised to review the system and look at potential changes. Can you tell us where that review is at?
A We have no legislative proposals to change the retro system. As we move forward, AWB and our other customers will be asked to comment on any proposed changes. I want all L&I programs, including retrospective rating, to make consistent and transparent decisions. Currently, we are reviewing retro regulations and procedures for changes that might improve the program. At a meeting on Sept. 12, many interested stakeholders let us know they wanted a better understanding of how retro affects the rest of the State Fund, and how retro refunds and assessments are calculated.
Q Employers are pushing for wage simplification in the calculation of time loss. Is this a good idea?
A We expect business may submit wage-simplification legislation this next session. We haven’t seen it, so we cannot respond. However, as I mentioned earlier, I do, in general, support considering changes that simplify our system.
Q The employer community is also pushing for compromise-and-release legislation. Good idea? Bad idea?
A It depends. Compromise and release is a strategy in many workers’ compensation systems that affects time-loss duration and the growth of the pension population. Compromise and release could certainly give employers, workers and L&I an option we don’t currently have. However, we don’t want a system that encourages injured workers to make short-term decisions that are bad for them in the long run. Any form of compromise and release would have to be carefully crafted to protect workers. I don’t see the department supporting compromise and release unless it’s part of a large system-improvement package.
Q L&I’s ergonomics regulations sparked a bitter battle between unions and employers. What is L&I’s approach to ergonomics today?
A We’re doing a lot of outreach to employers to help them with injury prevention. We have consultants around the state who meet with employers and help them reduce hazards, and we offer a regular schedule of workshops. Employers want solutions because there are more than 50,000 workers’ compensation claims each year for ergo-related disorders. These claims represent a huge expense and loss of productivity, in addition to pain and economic hardship for the injured workers. Preventing these costly injuries would have a very positive impact on costs. We will remain focused on voluntary consultation.
Q One of the issues employers pushed is technical assistance as opposed to compliance inspections. Do you believe there are sufficient firewalls built into the WISHA inspection program to make sure a technical assistance visit does not turn into a compliance inspection?
A I certainly do recognize the concerns and fears employers feel, but we absolutely do not use consultation as a stepping stone to compliance. Employer consultations are confidential—the information is protected by law—and we take that very seriously. We have a specific policies and guidelines in place to ensure that such a thing does not happen. Of course, we have to respond when there are complaints, accidents and fatalities. In those cases where an employer has a recent consultation, the inspector would defer to the consultant or focus the inspection on the current incident. There are some rare cases where a compliance referral is necessary because of serious hazards that an employer refuses to correct, but that would be only after an extended period of follow up. I want WISHA to offer the best possible consultation services, but I also expect that our enforcement efforts will remain an important element of our overall safety and health program.
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