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Analysis: New Republican-backed bills would cut injured workers’ benefits

Last week all pretense of bipartisanship in State Senator Rodney Tom’s new coalition was abandoned with its introduction of five anti-labor bills purposely intended to weaken worker’s compensation. The new caucus formed by Senators Tom and Sheldon and the Republicans is trying to rush these bills through to passage. A floor vote is expected in the near future.

We at NPI urge you to call and write your state legislators (especially your state senator) and let them know that you oppose these bills.

Q: What is worker’s compensation?

A: Workers who are injured on the job are sometimes suddenly deprived of the ability to support themselves and their families. Worker’s compensation is a legally mandated insurance benefit that guarantees disability insurance for wages, medical expenses and vocational rehabilitation. For some injuries this is temporary. Some injuries result in permanent disability. In the case of workplace fatalities, the surviving spouse and children receive the pension; the image of the widow and children of a slain police officer not becoming homeless applies here.

The agreement is that the employee does not sue the employer. And, in return, the employer pays the insurance premiums into the system. Workers who take steps to increase safety may participate in a “retrospective” or “retro” program offered by the Department of Labor & Industries in which they pay lower premiums.

Q: It’s 2013. Aren’t workplace injuries a thing of the past?

A: Some occupations, such as police officer or firefighter, have known risks. Unfortunately, in occupations such as farming, manufacturing or logging, not all employers have a safety culture or strive to earn a safety certification from a standards organization.

In 2011, more than a hundred people died from workplace injuries. More than twenty-five percent of the cost of worker’s compensation arises from overexertion. People feel pressured to work beyond the limits of their physical capabilities.

The cost of workers compensation could be lower if more employers fostered a strong safety culture. But instead of cutting costs by preventing injuries, this set of bills cuts the benefits paid to the workers.

Q: Wasn’t worker’s compensation just revised in 2011?

A: Yes. With Senate Bill 5566 the guarantee of a pension was modified and a cash settlement option was allowed. The settlement option was opposed by organized labor because a cash payment might be far less than the value of a pension. Remember that the injured worker has not yet been paid for the time lost and may feel pressured to settle in order to pay mounting bills. The settlement money can go to creditors, then leaving the worker in the care of the social services system, funded by the taxpayer instead of the employers’ insurance premiums. SB 5566 provided some protections to make sure the workers understood the terms of the settlement. But some workers could be subject to shoddy legal representation.

One of the arguments against the new bills is that the recent changes have not had time to be evaluated.

Q: How do the new bills affect injured workers?

A: Here is a bill-by-bill analysis. Note  that SB stands for Senate Bill. The corresponding House bill has the prefix HB.

SB 5124 / HB 1464

Under the current system, the amount of a worker’s monthly benefit is based on both wages and medical benefits. Under 5124 the medical benefits are excluded in determining the amount of the pension. This could reduce the amount paid to the worker by as much as forty to sixty percent.

SB 5126 / HB 1465

This bill undermines the definition of workers compensation as an assured benefit workers can rely on independent of any other proceedings. Under 5126 the state can recover some of the damages if the injured worker sues a third party, such as an equipment manufacturer. This could intimidate some workers into not taking workers compensation in order to receive all of a third party settlement. Any other settlements are no longer independent awards to the worker.

SB 5127 / HB 1097

5566 allowed structured settlements for workers age fifty-five and over, with the age dropping to fifty-three in 2013 and to fifty in 2016. Under 5127, there would be no age restrictions on who could receive a lump sum settlement.

A worker age fifty-five may have a good estimate of his or her medical conditions and expenses from the injury until retirement. In contrast, a worker age thirty cannot predict how the injury will affect future health. A worker with a severe injury at the age of thirty could suddenly lose the ability to walk at the age of fifty. The settlement could be insufficient to cover the effects of the injury at a future time.

A cash settlement can be spent quickly or could be taken by creditors. Then the injured worker is thrown back onto the social services system, paid for by the taxpayer rather than by the employers.

SB 5128 / HB 1463

Under the current law, all lump sum agreements negotiated between the worker and the employer must be approved by the Board of Industrial Insurance Appeals (BIIA). Before the final approval a settlement officer must explain the terms of the agreement to the worker and ensure that the worker understand the agreement. Under 5128 if the worker has been represented by an attorney, the conference is not required. This removes the protection for a worker who may have had shoddy or unethical legal representation.

Under the current law a settlement covers all anticipated expenses with the exception of medical care, which can be renegotiated. Sections 1.(1)(a)(i) and 1.(7) compromise this and imply that a settlement could include medical expenses and prevent future liabilities if a medical condition worsens.

Another part of this law applies to the worker who has an injury that is not permanently disabling, receives a settlement and returns to work after rehabilitation. If the worker suffers a subsequent injury, the initial injury could be declared a pre-existing condition causing the recent disability. In this situation the worker could not file a new claim. So if a person’s knee is hurt in the first injury, future injuries to the knee might not be covered.

This bill also requires the expenditure of money for outside consulting firms to do a study of the system every few years, including a comparison with other states. This implies that instead of being a leader, the state is being cautioned make sure it is not more progressive than other states.

SB 5112 / HB 1313

This bill applies to employers in the “retro” or safety program. Under 5112, they are granted a new right to require an injured worker to come in for a new medical evaluation as often as twice per year.

The employer has the right to choose the doctor or nurse doing the evaluation as long as the practitioner is on the approved provider list. This makes it easier to challenge the injured workers paid leave status. It places the decision in the hands of the employer’s medical provider rather than the patient’s own doctor.