AGC Calls for Legislative Reform to Combat Workers' Comp Increases

AGC members and staff strenuously protested the workers’ compensation premium increases of 23-41 percent for the construction industry in 2011 during a public comment period that ended today. L&I recently announced an average increase for all businesses of 12 percent but the actual increase to construction employers would be much more.

In addition to making the case to L&I that dramatic increases will be one more drag on the industry that has yet to recover from the recession AGC is also calling on the Legislature to finally reform the system and change those elements of the program that are behind the large premium increases.

The core problems driving the increased workers’ comp rates will not be solved without legislative reform and administrative changes. The Accident Fund portion of workers’ comp which is employer paid is absorbing the increase. The Medical Aid portion which is split between employers and employees will actually have a small decrease.

The drivers of the Accident Fund increases include the duration of timeloss and the skyrocketing number of pensions. Washington State Supreme Court cases and L&I decisions have contributed to a situation in which some injured workers are receiving more on workers’ comp benefits than they had earned while working reducing the incentive to return to work. This leads to longer periods of time away from work – and 50 percent of workers off work more than two years end up with a pension.

To end this perverse effect and to maintain workers’ comp as a valuable and viable safety net for workers AGC is pursuing these legislative changes:

1) Establish a flat timeloss rate with a provision for averaging annual wages for purposes of establishing a fair compensation rate.
2) Create a settlement option. Through joint agreement allow workers employers and L&I the option to settle and release claims for a lump sum. Washington is within a very small minority of states that forbids this proven claims resolution mechanism.
3) Define occupational disease more accurately. Washington has one of the broadest occupational disease definitions in the country. It must be revised to exclude conditions that are not directly work related or are a result of the natural aging process in the general population and not a direct result of any “distinctive” conditions of employment.
4) Establish medical provider networks. Injured workers deserve access to medical providers trained and experienced in treating their particular conditions and who have a working knowledge of workers’ compensation rules for coverage. This is the practice in 42 other states and we need to establish these networks to treat injured workers.

Finally there are administrative efficiencies L&I could readily apply that would help improve service to both workers and employers while saving the Department employers and workers time and money.

1) Require Department claims managers to check with the employer to determine if the worker is being kept on salary before paying time loss benefits. A quick phone call or email could:
a. Reduce overpayments to injured workers.
b. Reduce non-recovered overpayments to injured workers (saving millions).
c. Save L&I administrative time and costs in addressing protests due to erroneous time loss payments.
d. Provide rate stability for small firms that lose premium discounts when just one day of time loss is paid.
2) On Occupational Disease Claims the Department could give workers the option of releasing their Employment Security records in lieu of writing out their entire work history and dates of employment with each employer. This could create the following efficiencies:
a. Workers would not have to complete volumes of paperwork regarding their medical conditions and employment history that is difficult to remember or write out accurately; especially if they have a condition such as Carpal Tunnel.
b. Employers would not have to protest liability assignments based on incomplete work history information.
c. The Department could reduce the need to mail out multiple letters and forms.
d. Significant improvement in the accuracy of liability orders would create fewer liability protests and Board appeals.

The new Legislative session begins January 10. AGC’s Government Affairs Council and Board of Trustees have made workers’ comp reform a top priority for the association. AGC members are strongly encouraged to participate in these efforts by:

1) Registering for AGC’s Action Alert system to be informed of the critical moments to contact Legislators about bills important to the industry. Click AGC Action Alerts.
2) Attending AGC’s Lobby Day in Olympia on Feb. 9. Click Lobby Day for details.
3) Participating in AGC’s Monday Morning Huddles brief telecons at 7:30 a.m. on Mondays during the legislative session during which AGC members can hear from AGC lobbyists the latest info on bills important to the industry. Contact Michele Willms (360-352-5000) for details.