Magazine article Risk Management

Legislation 101

Magazine article Risk Management

Legislation 101

Article excerpt

The past few years have produced legislation that impacts risk management departments in every state, and change is still in the air. Federal health care, state workers' compensation, federal and state tort, as well as OSHA regulations, are just a few of the areas in which reform is currently being addressed. How are these laws enacted and how do we, as risk managers, stay abreast of them? What can we do about bad legislation and regulation?

Here's an overly simplified picture of the process: A bill is proposed and voted on in one house of the legislature, sent to the other house, where it is voted on again, forwarded for the president or governor's signature and enacted into law. If only it was that clean and simple!

As special interest groups have become more sophisticated and contentious, legislators have become adept at manipulating the system to enact pet projects. One way they do this is by attaching riders to unrelated legislation.

To use an extreme example, a clause governing the color of pick-up trucks driving at night would be inserted into a highly popular law reducing all income taxes by 50 percent. The clause acts as a poison pill. To remove it, the entire bill may have to be defeated. And few officials are willing to expose themselves to criticism and potential defeat at the polls for voting against a popular bill. So, an unrelated law is enacted almost as a footnote.

Once legislation is enacted, it is sent to regulators for implementation. It is the regulators' job to interpret the intent of the legislation and create applicable rules. Unfortunately, the original intent may be lost or misinterpreted and sometimes the regulators don't agree with the law--and work to weaken it through the governing language.

In one state, a section of a workers' compensation reform bill allowed employers to offer modified jobs to their injured employees while they were recuperating. The clear intent of the law was to return employees to productive work and help employers control indemnity costs associated with lost work days. The agency charged with administering law, however, proposed a modified duty regulation that allowed an employee--by his or her own discretion--to decide if they were able to perform the modified job. An employee could report to work, claim he or she couldn't do the job and simply leave. …

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