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Home / Washington Business - November/December 2004 / Chair's Column: Workers’ Comp Needs Reform Soon The Question is How Best to Accomplish It |
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Chair's Column: Workers’ Comp Needs Reform Soon The Question is How Best to Accomplish It |
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Written On: November/December 2004 |
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Written By: By Tom Lemly - Chair, Board of Directors |
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Tom Lemly is a partner in the Davis Wright Tremaine law firm in Seattle, where he specializes in all aspects of labor law.
My law practice is devoted to resolving complex workplace issues and much of my work with the Association of Washington Business as chair of the Human Resources Council revolved around employment law legislation, regulations and litigation. One of the key issues has been workers’ compensation and, like you, I am frustrated by the complexity of our system, its poor performance for both the self-insured and state-fund employers, and the growing costs.
Workers' comp undoubtedly needs to be reformed and those reforms need to happen soon. The only question is, what is the most effective way to achieve those reforms and avoid making the system even more expensive?
Last year, we commissioned the Washington Research Council to look in depth at our workers’ comp system. We needed the facts. We’d seen reports that costs were about average compared with the rest of the country, but that wasn’t what we were hearing from our members.
We wanted to know if the 29.5 and 9.8 percent rate increases respectively imposed in 2003 and 2004 were the result of losses in investment income from the workers’ comp reserves or was something systematically wrong? It didn’t make sense to us that workers could be receiving high benefits while employers were paying low premiums.
The Council found that Washington benefits were significantly higher than the national average and growing. For example, using 1998 figures (the most recent at the time), total temporary disability benefits were about 17 percent higher in Washington than the U.S. average and Washington’s permanent disability benefits were more than double the national average — $680,849 per claim compared to $301,536.
Courts Made System Work
Our courts have recently made a bad system worse. In April 2000, the Washington State Supreme Court found that workers’ comp benefits for seasonal workers cannot be adjusted to reflect their intermittent work history where the “intent” of the workers was year-round work. The Court’s decision in Avundes resulted in many seasonal workers being eligible to receive more in workers’ comp benefits than they earned in wages while working.
In 2001, the Court ruled in the Cockle decision that the cost of employer contributions for health care benefits must be included in wage calculations for workers’ comp time loss (short term disability) benefits, thus bumping up benefits and costs. AWB is currently arguing before the state Supreme Court to not expand the wage calculation formula even further to include fringe benefits such as retirement, training programs, life and disability insurance and vacation.
There are other issues which all contribute to workers’ comp costs and need attention. They include selection of independent medical examiners to resolve disputes over diagnosis and treatment, when and how to provide vocational rehabilitation and retraining programs, and the need to streamline claims management and improve worker safety programs.
These complex issues do not lend themselves to sound bites and the meat axe approach of the initiative process.
That is why the AWB Board and Executive Committee in September voted overwhelmingly to oppose the Washington State Labor Council initiative (I-334) to “reform” workers’ comp (by making it more costly) and deferred action until Dec. 8 on the Building Industry Association of Washington (BIAW)’s counter initiative, I-333.
AWB Opposes Unions
Simply put, we need to make sure the initiative to the Legislature is the most effective approach. At the end of the day, will it accomplish the needed reform?
At our Policy Summit, both Attorney General Christine Gregoire and Sen. Dino Rossi acknowledged that workers’ comp needs reform. Both said they wanted a chance to reform it. Gregoire stated during our debate at Semiahmoo that she wanted to bring together a group of employers and workers to resolve differences after the election. She clearly rejected both I-334 and I-333.
Rossi said he opposed all initiatives and wanted a chance to restore the confidence in government by solving problems with the Legislature, which includes workers’ compensation.
So the next logical question is, where do we go from here?
First, we need to successfully argue to the Supreme Court to not expand Cockle and, in fact, reverse the decision all together. We have initiated that action as I write this column.
Second, AWB needs to be prepared to reopen discussions with labor over reforms to workers’ comp after the elections. AWB staff is working to clearly define the issues and their impacts in preparation for the renewed discussions.
Third, AWB needs to decide in December whether the initiative is the best way to accomplish workers’ comp reforms and what the potential is for it to backfire and make the system worse. AWB also needs to be ready with legislation for 2005 if the discussions fail or never materialize, or if we decide to not support I-333.
The bottom line is AWB needs to make sure we are heading down the path that has the best chance for genuine reform of an expensive and complicated system that is getting worse.
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