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Editorial: Workers’ comp reform proposals make sense

Fri., Feb. 8, 2013

For employers looking for a new spirit of cooperation from Gov. Jay Inslee, the initial signs are not good.

The governor says changes to workers’ compensation reforms adopted in 2011 are unnecessary measures that will lower protections for injured workers and their families. We disagree.

Washington’s workers’ comp program has been a sore point with employers for years. Premiums are relatively high, in part because private insurers are not allowed to compete for the business. Business also complains that payouts to injured workers, particularly those unable to re-enter the workforce, are excessive.

Labor’s retort: Workers pay about one-quarter of the premiums, and the allegedly excessive premiums kept Washington’s program financially sound during the recession while other states were forced to borrow from the federal government to meet obligations. The reserves also kept rate increases in check.

That’s no longer true. Last year, an advisory committee determined reserves have fallen to 6 percent of obligations, less than one-half the recommended 14 percent. The gap could be as much as $3.1 billion.

Despite that red flag, the Department of Labor and Industries held the line on premiums this year because fewer claims are being filed, particularly by workers in high-risk industries such as construction. And the state is rolling out rules that injured workers see only state-approved medical providers, which has already improved claim processing. And workers get back to their jobs faster.

Reformers also had great hopes for a new program that allows workers age 55 and older to voluntarily take lump-sum payments – structured settlements – that close out the nonmedical portion of workers’ comp coverage instead of receiving open-ended, ongoing compensation; in essence, a pension.

Payments to older disabled workers represent a disproportional amount of workers’ comp costs.

Structured settlements – offered by 43 other states – allow the state to get the claim off its books, and workers to move on with their lives, possibly starting businesses of their own. The system has redundant safeguards for workers.

So far, only 27 of 57 applications have been approved. One worker sued when a settlement he wanted was rejected. The state has appealed a lower court judgment in his favor.

But 57 applications are far below projections. SB 5127 would lower the eligibility age to 40. SB 5128 repeals the 2011 law implementing structured settlements, adding sections that clarify state responsibilities and giving employers more flexibility to return injured workers to “lighter duty” that keeps them drawing a paycheck instead of disability payments.

A third bill, SB 5112, most annoys labor because it expands the potential for employers to push employees through the system before they have completely recovered.

The more Democratic and labor-friendly House may stifle the three bills short of Inslee’s desk. But, at the least, younger injured workers should be allowed to decide their futures for themselves. If nothing changes, the premiums surely will, and business dissatisfaction with them.