BUSINESS VIEW: Washington state must reform its worker’s compensation system

Even though voters rejected Initiative 1082, which would have allowed private insurers to write workers’ compensation insurance in our state, the need to reform the system has become even greater.

Even though voters rejected Initiative 1082, which would have allowed private insurers to write workers’ compensation insurance in our state, the need to reform the system has become even greater. It has become too costly for employers and too cumbersome for injured workers, and in 2011, rates will increase an average of 12 percent.

When our state’s workers’ compensation system was established in 1911, it was designed to prevent injuries and deaths, treat injured workers quickly and effectively, be efficient to administer and settle disputed claims quickly and without need for expensive legal wrangling. But that is not what it is today.

Although safer workplaces mean fewer and fewer claims are filed each year, premium rates that state fund employers and workers pay continue to escalate at double-digit levels, up more than 66 percent since 2003. And, unless meaningful reforms occur next year, there will be double-digit rate increases for years to come.

One of the problems is too many claims in our state remain open too long, with average benefit payments now extending to 284 days and scores of them wind up in litigation. That means attorneys can receive as much as 30 percent of the worker’s benefits and claims take longer to resolve.This costs employers and workers and it has become so expensive that it is impacting our state’s competitiveness – and that means lost jobs and forgone economic opportunities. Simply put, when employers examine our costs and all of the regulatory and legal haggling involved with the system, they have a tendency to look at other places to invest and create jobs.

I-1082 would have only started the reforms. It would have created competition for the state’s monopoly and given large employers, who are able to self-insure, another option. Washington is only one of four states that does not allow private-sector workers’ comp coverage.

So a step forward would be to allow competition for workers’ compensation insurance; however, that legislation must be accompanied by systemic changes.

Gov. Gregoire and lawmakers coming to Olympia in January must take stronger steps to end fraud and abuse. Workers who draw workers’ compensation, yet are not injured beyond returning to work, must be kicked off the system. Employers and employees who moonlight and don’t report cash transactions for work and avoid paying their taxes need to be caught and punished. Medical and rehabilitation providers who fudge and allow injured workers to stay on time-loss when they are able to return to work must be stopped. It is a proven fact that the longer a person stays on unemployment or workers’ compensation, the harder it is for them to return to work.

Next, lawmakers need to address three persistent cost-drivers. They include the inability to resolve long-standing claims by offering voluntary settlements; to manage and control health-care costs; and deal with claims that aren’t always job-related.

Reps. Jeff Morris, D-Mount Vernon, and Cary Condotta, R-East Wenatchee, sponsored legislation last session that would have addressed those issues, but an intense campaign by unions and personal injury attorneys killed those bills without such as a hearing.

In the late 1980s, Gov. Booth Gardner decided he’d seen too many double-digit rate increases and had his fill with dealing with the myriad failed initiatives and legislation to make things better for workers and employers. He bounced the trial attorneys, doctors and rehabilitation interests and formed the Workers’ Comp Advisory Committee and told them to bring him changes – and it worked.

As an example of its success, employers got some certainty in claims with a seven-year closure and injured workers received an increase in benefits to help make ends meet during their recuperation.

Twenty-some years later, Washington’s workers’ compensation is again at a crossroads. We need employers, employees and Washington state’s Labor and Industries to come together again and resolve these challenges together. But that will take a concerted effort by the 2011 Legislature to do so.

Don Brunell is the president of the Association of Washington Business.

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