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AGC calls for additional workers’ comp reforms at rate hearing

(Editor’s note: For the proposed 2015 workers’-comp premium rates per job classification click here.)

AGC called for additional reforms of the state’s workers’ compensation system during rate hearings held by the Department of Labor and Industries.

“A significant problem within our system is our higher-than-average frequency of long-term disability and pension claims” said Lauren Gubbe Director of AGC Group Retro during the Oct. 27 rate hearing. “While some improvement in time-loss duration and pensions has occurred through the Stay-at-Work program a problem cited in the pension study as a causing factor to our experience has yet to be addressed.  Specifically the study reported a dramatic spike in the number of long-term disability and pension cases for construction and agriculture after the impact of court decisions.”

Gubbe explained that the Avundes decision requires that time-loss benefits be calculated based on a workers intent to work versus their actual work pattern. So unless a worker waives a job offer L&I calculates time-loss based on full-time work at twelve months a year — whether or not that was ever the worker’s actual work experience. The end result is that some workers can make more on time-loss than when they were working.

“While this is clearly not the intent of the RCW legislation is necessary to allow L&I to adjust a compensation rate on claims when a worker will earn more on time-loss than when they were actually working” Gubbe said.

Additional reforms suggested by Gubbe include an expansion of settlement options which would help address the enormous costs of long-term disability and pension claims. Also current calculations of cost-of-living adjustments based on the state’s average wage have resulted in double-digit time-loss rate increases in the past. Thus the Department should consider legislation to calculate COLAs based on a more accurate and predictable measure of inflation such as the CPI.

Regarding the 1.8-percent average rate increase proposed by L&I Gubbe explained that AGC appreciates the need to build up reserves. However the indicated rate is actually negative 2.1 percent so the net is an increase of nearly four percent on average. “For some in our industry this means a rate increase of as high as 11 percent” Gubbe said. “Keeping the rates flat would still build-up the contingency reserve. This would be our preferred approach in order to help facilitate continued growth of the economy without placing additional burdensome insurance costs on employers and workers.”

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