TUESDAY. FEBRUARY 2, 2010
Labor: Let's talk, not privatize

By DAVID GROVES
Washington State Labor Council, AFL-CIO

Business interests had the opportunity to air their concerns about Washington's public workers' compensation system and how they would like to change it on Monday in a Senate committee's work session on the issue. But while advocates for injured workers expressed a willingness to continue working with the business community to identify changes that all parties can support, the proposal to privatize the system met with aggressive opposition.

The "crippling effect" of this year's 7.6% average rate increase (as proclaimed by the Association of Washington Business lobbyist Kris Tefft) and the trend of more injured workers receiving pensions for permanent disability has resulted in  legislative proposals to allow compromise-and-release settlements, to redefine occupational disease in a way that makes it harder to receive such pensions, and "three-way industrial insurance," which means allowing private insurance companies to sell workers' compensation coverage in Washington. 

Organized labor is opposed to all three proposals -- which are not expected to advance this year -- but union leaders have repeatedly expressed a desire and willingness to continue working with the business community and the state Department of Labor and Industries to find ways that address their concerns without causing undue harm to injured workers and their families.

In particular, labor representatives who testified Monday, discussed the myriad of problems other states have experienced regulating private insurance companies, addressing extreme volatility in rates, and protecting the interests of injured workers whose claims are routinely denied or limited by private claims adjusters. 

"Our system is not perfect," testified Rick Bender, President of the Washington State Labor Council. "We want to make changes that are reasonable for business, for labor and for injured workers, but we don't think bringing in the private insurance industry is the right option."

Tom Rankin, former president of the California Labor Federation, warned that inviting private insurance companies into Washington is a "bad idea for employers," as well. He testified that 31 private insurance companies that rushed into California's market went bankrupt because they were undercharging their rates. The state of California was forced to take on $7 billion in liabilities for those companies, which meant not only assessing a new charge on all businesses in the state, but also taking out public bonds to cover the cost.

"If you privatize the industry, you're going to have to include profits, which were almost 40% of the underwriting premium in California, you have 8% in brokers' fees, you have a premium tax of about 3% and you face assessments if private insurers go bankrupt," Rankin said. "Be careful what you wish for and what you think competition will bring. In California, it brought disaster."

A panel representing business interests asserted that the state is awarding too many pensions to injured workers, offering stories and other anecdotal evidence of injured workers who did not deserve such awards. They said that, although the law has not changed with regard to what is considered occupational disease, more and more ailments and injuries are now being considered by doctors to be work-related. And they recommended allowing employers to offer compromise-and-release settlements where the worker absolves all claims against them in exchange for a lump sum.

The labor panelists pointed out that, in states the allow "compromise-and-release," employers routinely appeal claims and drag out the process so financial pressures mount for injured workers' families who have lost their source of income. After this lengthy claims-and-appeal process, a lump-sum settlement becomes difficult to resist for desperate families, even if it won't cover their future medical costs, which are difficult to anticipate.

But underlying the whole discussion was the suggestion that Washington's public non-profit workers' compensation system is already too expensive and the "crippling effect" of the latest 7.6% rate increase. 

AWB's Kris Tefft attempted to discredit an oft-cited national study by the State of Oregon that finds Washington to be a low-cost state for employers. He suggested that, among other things, the state's refusal to charge higher premiums as it attempts to smooth rate volatility with the lowest possible rate increase in 2010 skewed the study.

"That obliterates the dogmatic reliance (by defenders of our public system) on the Oregon study," Tefft said.

Ironically, also on Monday, the Washington State Labor Council had released a report -- entitled "The Grass Is Greener on THIS Side of the State" -- that explained that the Oregon study isn't the only independent national study that finds Washington to be a low-cost state for workers' compensation. In fact there are several, including the most recent performance audit of our state system.

Three years ago, before the national recession hit, the public workers' compensation fund was in strong enough shape that the state granted a 6-month "rate holiday" -- where employers and workers paid nothing for the medical portion of their coverage -- saving an estimated $315 million. The 2007 rate holiday saved employers more than 2½ times the cost of the 2010 increase, which is estimated will raise $117 million.

Pointing to that 2007 rate holiday, Committee Vice Chair Sen. Karen Keiser on Monday urged the state Department of Labor and Industries to try to do a better job at smoothing rates so employers can avoid spikes that complicate their budgeting.

"We had a rate holiday just a couple years ago and we gave away million of millions of dollars," Keiser said. "Perhaps that was a mistake." 

Also see these recent posts re: workers' compensation:

• Feb 1 -- Why the grass is greener on THIS side of the fence

• Jan. 29 -- What about the injured workers?! (WSLC Legislative Update)

• January 2010 -- Our state's workers' comp advantage ("Outside the Echo Chamber" series)

TUESDAY. FEBRUARY 2, 2010
AFL-CIO backs Patricia Smith as Solicitor of Labor

The following statement by AFL-CIO President Richard Trumka was distributed this morning:

STATEMENT BY AFL-CIO PRESIDENT RICHARD TRUMKA ON

CLOTURE VOTE FOR PATRICIA SMITH AS SOLICITOR OF LABOR

 

America’s workers congratulate Patricia Smith for receiving 60 votes to invoke cloture, clearing her way for confirmation as Solicitor of Labor.  At a time when working families are bearing the brunt of the economic recession and violations of workplace rights are rampant, Ms. Smith’s commitment to strong, fair and effective enforcement of our workplace laws is crucial.

 

Smith may well be the most qualified person ever to hold the position of Solicitor.  Her 20 years of accomplishments have won her the unanimous support of the state’s congressional delegation -- both Democrats and Republicans -- and glowing letters of endorsement from business groups in New York State.

 

Under the leadership of Secretary Solis, the Department of Labor is returning to its historical and proper role -- protecting the health, safety and welfare of working families.  America’s workers are proud that Solicitor Smith will be joining this excellent team and continuing her years of public service on behalf of working men and women.