Olympia Business Watch

Tefft: Workers' comp and UI prove that government reform is possible

Reforming government programs, especially when they're as entrenched as Washington's 100-year-old workers' compensation system, is not easy.

But it's possible.

That was one of the messages that Kris Tefft, AWB's general counsel and government affairs director, shared earlier this month at the annual meeting of the Washington Forest Protection Association.

The Legislature proved it this year by adopting significant reform legislation regarding unemployment insurance and workers' compensation, Tefft said during a panel discussion on government reform and streamlining.

The unemployment insurance legislation, approved early in the 2011 regular session, is expected to save employers $360 million.

Workers' compensation reform, passed in dramatic fashion at the end of the first special session, is projected to save $1.1 billion over the next four years.

As positive as that sounds, some employers will still feel the sting of higher workers' comp insurance costs next year. That's because the Department of Labor wants to begin rebuilding depleted reserves.

Governor signs workers' comp reform bill - will rates go down?

That's the question the Associated Press leads off with this morning, noting Governor Gregoire's signing Wednesday of HB 2123, the second of two major workers' compensation reform bills passed during the 2011 legislative sessions. 

Taken together, SB 5801, which establishes a statewide medical provider network for the treatment of injured workers, and HB 2123, which trims costs and improves several long term disability structures within the system, are projected to lower the state's workers' comp costs by $519 million in 2012, and just over $1.1 billion between 2012-2015.  The Department of Labor & Industries hailed the bill signing as "historic" on the agency website. 

Washington employers, stung by a disturbing trend of annual high rate increases the last few years, are eagerly anticipating the rate relief this new legislation promises.  I am quoted in the AP piece saying we hope the implementation of these reforms leads to years of more stable workers' comp rates for employers and the workers who pay into the system. 

It's not that rates will go down or won't necessarily go up in 2012 -- the Department of Labor & Industries hasn't embarked on the rate-setting process yet -- it's just that if rates increase, it should be much more mild than the high double-digit increases that were assured had the Legislature done nothing this year.

L&I Director Judy Schurke put it very succinctly in this comprehensive interview with TVW's Austin Jenkins shortly after the legislation passed, speaking specifically to savings from the controversial "claim resolution structured settlements" component employers backed in HB 2123:

"I think we would have in perpetuity had double digit rate increases without this change."

This graphic shared Monday with members of the state Workers' Compensation Advisory Committee shows L&I's timeline and various inputs for adopting the 2012 rates.  The agency expects to propose the rate on September 20 and adopt the final rate after public hearings on November 30.

For more information on the 2011 workers' comp reforms, take a look at this short powerpoint presentation.

Supreme Court: No Job Protection for Medical Marijuana Patient

Yesterday, the Washington Supreme Court issued a long-awaited decision in a case asking whether an employee may be fired for medical marijuana use under the state law authorizing qualifying patients to use the drug.

Employee Jane Roe, suing under a psuedonynm, was fired from Teletech, a Colorado-based call-center company with a location in Bremerton, after failing a drug test.  She failed the test because she used medical marijuana with a doctor's referral under the state's Medical Use of Marijuana Act (MUMA), passed by the voters in 1998.  

After her termination, Roe sued, claiming MUMA implicitly protects an employee's off-site use of medical marijuana, and that her termination was a wrongful discharge in violation of public policy supporting medical marijuana use.  Roe's suit was strongly supported by the American Civil Liberties Union.  Teletech was represented by AWB board member Stoel Rives LLP.

In an 8-1 decision written by the newest member of the court, Justice Charles Wiggins, the Supreme Court flatly rejected both contentions.  Analyzing the statute, the court reasoned that while it allows a defense against criminal prosecution for marijuana possession, nothing in the plain language or obvious intent of the law suggests employers would face legal liability for refusing to accommodate marijuana use by employees.

Workers' comp round-up

At long last, the Legislature has passed legislation aimed at fixing some of the problems with the state's workers' compensation system. But what exactly did they approve and what does it mean for your business?

AWB's Kris Tefft has prepared a detailed report of the various bills that made it out of the Legislature this year, including House Bill 2123, the 11th-hour compromise that cleared the way for lawmakers to pass a budget and get out of town.

The bill will, among other things:

• Create a claim resolution option beginning Jan. 1 for injured workers age 55 and over. In 2015, the age limit drops to 53, and it drops to age 50 a year later in 2016. The option allows for the settlement of all aspects of an allowed claim excluding medical benefits.
• Require that settlements must be approved by the Board of Industrial Insurance Appeals.
• Provide a wage subsidy up to 50 percent of wages for up to 66 days to employers who bring injured workers back to light duty or transitional work.
• Call for a study of the frequency and severity of occupational disease claims with a report due by Dec. 1, 2012.

A break in the logjam on workers' comp - vote coming today

It's not perfect. It's less than what employers wanted.

But it's progress, at long last.

Gov. Chris Gregoire and the leaders of the four legislative caucuses struck a deal Sunday that is expected to bring significant savings to the state's troubled workers' compensation system.

Details of the agreement, including the exact bill language, were unclear late Sunday, but the deal was expected to stave off double-digit workers' comp premium hikes next year for the vast majority of Washington employers.

"It's not the full reform we were seeking," said Kris Tefft, AWB's general counsel and government affairs director for workers' compensation. "This package is much less than what we wanted, but it's more than what we have now. It's a true compromise."

Organized labor, which has fought workers' comp reform for years, denounced the deal as "atrocious" and "absolutely astounding." But House Speaker Frank Chopp, who had been standing firm with labor, called the agreement a "fair deal for everyone," including injured workers.

When asked about labor's opposition, Gregoire said it's normal for some groups to express concern whenever there is change. "This is a fair package," she said. "Their interests were discussed."

Brunell: Tax amnesty a bright spot in our dismal economy

The recently completed - and wildly successful - tax amnesty program gave state coffers a welcome boost, but the one-time windfall is no substitute for substantive reform, AWB President Don Brunell writes in his weekly column.

Allowing injured workers the option of a lump-sum settlement, which is broadly supported in the Legislature, would help rescue the state's failing workers' compensation system and save struggling employers more than $2 billion, he writes.

But union leaders and their supporters in the Legislature are apparently betting that the economy will recover on its own.

They're wrong, Brunell writes. Arun Raha, the state's chief economist, reported last week at AWB's Spring Meeting that tax collections are flat, the economy has slowed and Washington still has 176,000 fewer jobs than it did when the recession began.

"Against this backdrop, it is more critical than ever to help employers keep or grow jobs," Brunell writes. "Sadly, it appears some lawmakers still haven't gotten the message."

TVW takes a revealing look at Oregon's workers' comp success story

The Legislature has come to a virtual standstill over ... workers' compensation.

Unlikely as it may seem to some political observers, the decidedly un-sexy subject of workers' comp reform has emerged as the main stumbling block this year in the state Legislature. Within the debate, something known as voluntary settlements have become the primary focus of argument.

Jessica Gao, host of TVW's The Impact, tracked down a pair of Oregon officials -- one former and one current -- for this report on workers' compensation. And they both had some interesting things to say about voluntary settlements.

Gary Weeks, the former head of the state agencies overseeing workers' comp in both Oregon and Washington, called them a necessary part of a complete workers' comp system. Weeks -- who entered into the current debate here in Washington earlier this year with a letter supporting voluntary settlement agreements -- reiterated his position in the interview.

He also dismissed Gov. Chris Gregoire's proposal to limit voluntary settlements to workers 55 or older, saying age shouldn't matter.

John Shilts, the current administrator of the Workers' Compensation Division of Oregon's Department of Consumer & Business Services, spoke about the successful turnaround of Oregon's workers' comp system since the landmark 1990 reform package agreed to by labor and business.

Brunell: Workers' comp on the brink of collapse

In Illinois, the workers' compensation system is so out of control that a state lawmaker introduced a bill to abolish it and put workers' comp cases into the courts, AWB President Don Brunell writes in his weekly column.

It hasn't come to that yet here in Washington, but the system is headed for collapse without some kind of major reform, Brunell writes.

The state Senate approved a bill that would begin to address the problem, but it's stuck in a House committee where Speaker Frank Chopp, D-Seattle, is refusing to let it come to floor vote.

This despite overwhelming support in the Senate, which approved it on a bipartisan 34-15 vote, as well as a letter from Gary Weeks, the former director of the state agencies that oversee workers comp in both Washington and Oregon.

There is still time for Gov. Chris Gregoire, Speaker Chopp and the House Democrats to act on workers' comp, Brunell writes.

"Wouldn't it be better to make the needed reform now before the situation becomes so drastic that lawmakers introduce legislation to toss it out completely?"

Workers' comp struggle on display at Lobby Lunch

Rep. Mike Sells was blunt: "I don't believe it will get out of the House," he said of Engrossed Senate Bill 5566, the business community's top priority of the session.

Sells, the House Labor & Workforce Development Committee chairman and one of two guests today at AWB's Lobby Lunch meeting, followed that with, "I'm happy to answer questions."

The audience had a few, but no sooner had Sells, D-Everett, answered them and departed for the Hill when Rep. Cary Condotta, the ranking Republican on the committee and second speaker of the day, countered with some reasons to be optimistic about the proposed workers' compensation reform bill.

Work is continuing, even at this moment, to find a way to bring it to the floor said Condotta, R-East Wenatchee.If lawmakers can find a way to accomplish that, he has no doubt it will pass in the House just as it already did in the Senate.

"The votes are there," he said. "They really are."

Senate budget banks on workers' comp bill

The Washington State Wire reported Tuesday that Senate Republicans were insisting that Engrossed Senate Bill 5566 be included in the Senate's budget proposal and, sure enough, here it is.

The bipartisan Senate spending plan assumes passage of the bill, meaning it is now officially NTIB -- Necessary to Implement the Budget.

It's an important designation because it means the bill did not die in yesterday's cutoff, despite organized labor's campaign to stall it in the House.

The bill achieved the status thanks to the Senate's recognition that voluntary settlements -- which have drawn the most heat from opponents despite clear evidence that they work -- would actually save the state something like $16 million in reduced workers' comp premiums over the next two years. That's in addition to the estimated $1.2 billion savings the bill would bring to the overall workers' comp system during the first two years.

"This makes it more difficult to walk away from," Senate Republican Leader Mike Hewitt, R-Walla Walla, told reporter Erik Smith.

AWB's Kris Tefft called it "a nice chunk of change in a tough budget climate."

It shouldn't come as a surprise that the Senate budget writers included ESB 5566 in their proposal. After all, the chamber already passed the bill with a strong bipartisan vote.

Still, it's getting harder by the day for the House to keep pretending the issue will just go away.