Have Workers Compensation Reforms Gone Too Far?
Quint, Michael, THE JOURNAL RECORD
Willie Brown, one of the most powerful politicians in California, recently found himself on the other side of the fence from the working people whose causes he likes to champion.
Shortly after Brown, the Assembly speaker for California, invested in an Oakland radio station, almost all the employees filed claims seeking workers compensation for the stress they felt about the changes the owners were making.
"At that moment," Brown told an audience of insurance executives in New York late last year, "you could be sure that elimination of stress claims was No.1 on the agenda."
With the support of Brown, California overhauled its workers compensation system in 1993. One change required that the workplace be the predominant cause of the stress cited in a disability claim, not just a contributing factor of 10 percent or more.
Brown did not return three telephone calls seeking comment, but such a restriction would have made it much more difficult for the workers at his station to prove that they deserved compensation.
California is not alone. Pushed by businesses and insurers, state legislatures around the country are reining in growth in the cost of job injuries, now $70 billion a year. They are tightening the eligibility rules for collecting disability benefits, limiting recourse to the courts, attacking fraud, making the workplace safer and in some states cutting benefits.
The new vigilance in workers compensation coincides with a broader effort in the country to free businesses from expensive lawsuits through tort reforms.
Some people wonder whether the crackdown in workers compensation has not gone too far by denying benefits on technical grounds to workers with real injuries. Already, horror stories are emerging of disabled workers stuck with huge, unpaid medical bills.
But employers, who pay the bills, and insurers are pleased with the changes. Last year, for the first time since 1970, insurers spent less on claims and other costs for workers compensation policies than they collected in premiums _ 99 cents on the dollar, down from $1.21 two years earlier.
When combined with interest and investment gains, workers compensation profits have grown enough for insurers to cut prices in many states and compete for business they once shunned.
As for employers, the growth of workers compensation costs has slowed, giving them relief from a financial burden that averages 3 percent of wages but can range as high as 20 percent for workers in high-risk occupations.
These are among the changes that have produced striking results: Connecticut no longer awards disability benefits for mental or psychological disorders unless they are the result of an injury. It has eliminated cost-of-living adjustments on disability benefits and has cut some benefits by a third. Insurance premiums in the state have fallen 24 percent in the last two years. Texas tightened the eligibility for temporary income benefits. For severely injured workers, it instituted guidelines designed by the American Medical Association to measure the extent of a disability.
As a result, even though the number of injuries rose to 283,000 in 1993 from 251,000 in 1991, the number of workers with severe injuries who qualified for special supplemental payments plummeted to 39 from 1,055. Texas also restricted legal appeals by workers of rulings by compensation boards. Arkansas required workers to identify the day and time of injuries, a simple measure that state officials say has reduced fraudulent claims. "Before that, workers could just say they got hurt on the job and that was the end of it," said Lee Douglass, the Arkansas insurance commissioner.
The state also adopted a medical-fee schedule and mandated a safety program for employers. In January insurance rates fell by more than 12 percent. …