Voluntary Settlement Option for Workers' Comp Blocked by Rep. Sells

Last week it was good news bad news for workers’ comp reform particularly the effort to have Washington join 44 other states in allowing volunteer settlements as an alternative to lifetime pensions for certain injured workers.

The good news is that the Department of Labor and Industries released a “fiscal note” indicating that should the AGC-backed legislation (Senate Bill 5566) be enacted the state would save $1.2 billion during the first two years alone if workers were allowed to choose between an up-front settlement or long-term disability claim.

According to AGC’s Director of Government Affairs Rick Slunaker this is significant as cost reductions are for both current claims and for claims that may be filed in the future. By indicating such significant savings the Department is spotlighting a path that would benefit injured workers and employers alike by significantly strengthen the long-term financial stability of the system. “The value of the cost savings contained in ESB 5566 is far and away more than any other proposal or package of proposals currently on the table” he noted.

Although this information provides another solid argument as well as political push for SB 5566 the bad news is that the Chairman of the House Labor and Commerce Committee Rep. Mike Sells (D-Everett) has said that the Senate-passed legislation won’t even get a hearing in his committee potentially killing the bill for this session.

In an attempt to break the political logjam Governor Gregoire unveiled last week a package of proposed small-scale changes to the workers’ comp system that she believes have a chance to pass the House as organized labor has indicated little desire to discuss the proposals in ESB 5566. Some aspects of her proposals already been introduced by House Democrats – but the package does not include the full-scale voluntary settlement option and important study elements contained in the Senate-passed bill.

Some of the elements of the Governor’s new plan are:

  • Freezing cost-of-living increases in disability pensions for two years with no catch-up when the freeze ends.
  • Reducing permanent disability awards when a prior partial disability award has been granted.
  • Paying employers to return injured workers to light-duty work while they recover from injuries.
  • Allowing voluntary lump-sum settlements only for certain workers over age 55.
  • Reducing but not eliminating pensions when Social Security benefits kick in.

AGC opposes the package as way too little to avoid the insolvency that auditors the Governor and L&I Director Judy Schurke have said are in the system’s near future. Without real reforms like the voluntary settlement option annual large increases in employers’ workers’ comp costs can be expected.

AGC will continue to push for passage of SB 5566. For more information contact Rick Slunaker at 360-352-5000.