How healthy is Washington’s workers’ comp system?
Sunday, March 27, 2011
If you’re going to be hurt on the job, Washington is the place to do it.
A strained back or twisted shoulder could land you a lifetime pension through the state’s workers’ compensation program, as thousands have already learned. Hurt workers are up to eight times more likely to receive permanent disability status here than in the rest of the country, according to a state-commissioned study. That’s driving workers’ comp premiums up, and driving many employers up the wall.
Premiums are climbing an average of 12 percent this year, and by 16 percent or more at many construction-related businesses.
By the numbers
7: Number of workers’ compensation pensions awarded per 100,000 workers, nationwide.
65: Number awarded annually per 100,000 Washington workers.
40: Number in the next-highest state.
15: Percent of injured 30-year-olds who qualify for these pensions in Washington.
90: Percent of injured 65-year-olds who qualify.
Source: W.E. Upjohn Institute for Employment Research
A recently approved bill and two proposals before legislators in Olympia aim to tweak the state program that insures workers against on-the-job injuries.
But the roots of Washington’s abnormally high pension awards are so complex that it’s not clear how effective these laws would be at tackling the problem.
Fair or fraud?
For many Clark County business owners, even a partial fix is better than nothing.
Contractors can cite countless examples of what they call fraud — workers who file claims only after they’re laid off, or who are inconsistent about the date of an injury, or who seem to have had health problems even before they came to work.
In 2004, a 3 Kings Environmental dump truck driver filed a claim for a hurt shoulder that was eventually expanded to also cover a blown disk in his back, said Sheila Miklos, controller at the Battle Ground business. Though she suspects the back injury predated his time at 3 Kings, the full claim was approved by the state Department of Labor & Industries.
A former employee of Stellar J Corp. was granted permanent disability status because he had become addicted to painkillers and was struggling with depression, problems that arose out of his treatment for a temporary injury, said R.E. Kinghorn, owner of the Woodland-based company. And the original claim was filed after the worker had been laid off, leading Kinghorn to question how bad the original injury really had been.
“You can make more money from workers’ comp than from unemployment,” Kinghorn said. “L&I has created a retirement policy for the allegedly infirm.”
Especially frustrating to contractors such as 3 Kings and Stellar J is the effect these claims have on their bottom lines. A recent claim will push up the cost of providing workers’ comp — much like a recent auto accident will push up the cost of auto insurance — but it will also affect a company’s “experience rating.” Big developers will frequently only hire contractors with low enough ratings — so a lifetime pension award could limit a contractor’s ability to successfully bid on future projects.
“You’re pushing businesses out of work,” Miklos said, adding that 3 Kings has at times been disqualified from bidding on projects because of workers’ comp claims she believes should have been denied.
Though businesses often gripe about Labor & Industries, it’s elected policymakers, not bureaucratic enforcers, who created this situation — most likely to protect injured workers’ rights.
Under state law, medical conditions can be covered even if they predate a worker’s hire date, as long as the job worsened the condition in some way. Medical problems that are linked to treatment — such as painkiller addiction or depression — are also covered. And questionable claims are allowed when there’s no hard and fast evidence of fraud, due to rules that give more weight to worker statements than to those of their employers.
“An employer may already think this person is sketchy,” said Carl Hammersburg, fraud prevention and compliance manager for L&I. “He was already getting in trouble at work, maybe I knew he was drinking, there were a couple of other problems around the date of injury. This person is such a suspicious person that I’m suspicious of his motivations and actions and you need to look at his claims. Some of the time I’m sure they’re right, but we need evidence to open an investigation.”
Also pushing up the number of people who are awarded lifetime workers’ comp “pensions” are the state’s aging work force and high unemployment rate, said Elaine Fischer, spokeswoman for L&I. Older workers may be more prone to injury because of a lifetime of wear and tear on their bodies, and data suggest that workers who fear they’ll have a hard time re-entering the work force are more likely to seek more workers’ comp benefits. And fraud is a factor, accounting for an estimated 10 percent of claims.
‘A threat to you’
Businesses, unable to change the law, the economy or the age of the work force are doing ever more to limit injuries and claims.
Stellar J requires workers to sign a document after each day worked stating that they have reported any potential injuries that happened that day. It also conducts a full health screening before hiring workers and won’t offer jobs to people whose previous injuries are likely to be made worse by the job.
“Anyone who has a pre-existing injury is a threat to you,” Kinghorn said.
Although the law prohibits age discrimination, he worries that this creates a form of de facto discrimination because older workers are more likely to have past health problems.
“I’m 65, and I wouldn’t hire myself for anything.”
Miklos said 3 Kings has renewed its focus on workplace safety as well, with frequent meetings aimed at preventing injuries and daily safety reminders on work sites.
Even so, workers continue to file claims and employers continue to chafe at their interactions with Labor & Industries.
L&I officials say a recently approved legal change may provide at least some relief.
The new law will allow the state to reject medical evaluations by doctors who are too willing to rubber-stamp claims.
Several other proposals have survived in the Legislature thus far, though it’s not certain they’ll make it into law.
One would allow businesses to offer permanently disabled workers a lump sum settlement if they agree not to receive workers’ comp pensions, which will benefit businesses worried about the effect of claims on their workers’ comp tax rates. But House Democrats have said they won’t allow hearings on the Senate-passed bill, in part out of concern that it will shift too much a burden to legitimately injured workers. A state estimate that allowing these settlements would save $1.2 billion, released Tuesday, may help convince skeptical lawmakers.
Another bill, which appears to have gained some traction in the House and Senate, would partially subsidize recovering workers’ wages if an employer hires him or her back. Workers may not be able to do all job tasks while they are recovering from an injury, so those subsidies are aimed at convincing businesses to take them back.
“The longer you’re off work, the more likely it is that you’ll get into a mind-set where you stay off work even longer,” L&I’s Hammersburg said.
Yet another bill would allow business groups to manage their own claims, but labor opposition and weak support in the Senate could doom that proposal.
None of these proposals, on its own, however, is likely to bring Washington’s workers’ comp permanent disability status in line with the rest of the country. The problem is too complex for an easy fix, according to the state’s system review.
With their rates continuing to rise, contractors say they plan to keep pushing for reform.
“I have been getting more and more wound up about this,” Miklos said. “One way or the another, you have to fix the problem.”