Judy Schurke, director of the Department of Labor and Industries.

OLYMPIA, Nov. 29.–Judy Schurke, the director of the Department of Labor and Industries during most of the Gregoire Administration, says she’ll be leaving at the end of the year when the outgoing governor begins turning out the lights. A controversial figure in the eternal battle between business and labor over workers’ comp, she defended the state-managed insurance program against efforts to introduce private competition, but wound up implementing reforms demanded by the Legislature that will trim at least some of its costs to business.

In a letter to employees Wednesday, Schurke said “this is a great time for a new director to take over.”

Schurke will step down Dec. 31. And one might expect it will make for a few interesting presentations Friday as the department makes appearances before legislative committees to outline the progress of the reform bills lawmakers passed in 2011.  Workers’ comp is the most prominent program overseen by the agency, and Schurke has been in the thick of battle since she took over the reins at the agency in 2006.

Washington is one of just four states that do not allow private companies to offer worker compensation insurance, and all but the largest companies are required to participate in the state program – the larger companies self-insure under state guidelines. Business complains of high costs relative to other states and says the state monopoly gives Washington little incentive to be efficient. Yet any talk of efficiency strikes labor as a code-word for a reduction in worker benefits. The battle came to a head in 2010 when frustrated business interests went to the ballot with an initiative that would have allowed private competition. Though the measure failed, the pressure from business prompted the Legislature to pass reforms the following year. Schurke occupied a key position in the negotiations.

“I have a strong belief in the importance of the work we do for the people of the state of Washington, and I am very, very proud of the agency we are today,” she said in her announcement. “With a change of governor there is always a mixture of excitement and apprehension in state agencies. As I see it, a new administration gives L&I even more of an opportunity to make an impression about how important our work is and how well we do it.

“We’ve been through a lot together. In L&I’s 91-year history, it’s hard to imagine a more eventful time than the past five years. These years were marked by the second-worst recession and economic downturn, one of the state’s worst industrial accidents resulting in seven deaths, and a voter initiative to privatize workers’ comp. I am proud that you have consistently performed with integrity, professionalism and commitment to our mission throughout.”

Governor Offers Thanks

Gov. Gregoire issued a statement: “Judy has my appreciation and respect for a job well done during some of the toughest times in state government. She has led a large and complex agency through some of its largest transformations including a commitment to financial transparency, streamlining of business practices, and building significant stakeholder engagement and trust. Judy has also been the state’s biggest champion of Lean management, using it across the agency and setting an example for us all to follow.

“I was especially pleased to have Judy at my side as we negotiated the most significant reforms to the workers’ compensation system in its 100-year history. Those efforts have brought results for both workers and businesses and have helped prevent significant rate increases during the great recession.

“Judy started with the agency more than 30 years ago and leaves behind a strong legacy. She improved the customer experience, engaged employees and has found solutions. I thank her for her commitment and service.”

Modest Reforms Yet Still Major

From the business community’s perspective, the 2011 reforms were relatively modest by comparison with other states. Nearly all allow lump-sum settlements for permanently injured workers, reducing payouts and offering one way for employers to keep premiums low. Schurke opposed the concept generally, arguing that by moving from the state’s current pension system, workers might choose unwisely to settle for less than the full value of their claims. Yet Gregoire and Schurke acknowledged some reforms were necessary, if only to provide a relief valve that might prevent future initiatives like I-1087 in 2010.

What the Legislature ultimately passed, after a bruising battle between business and labor, was half a loaf – “structured settlements” only for workers over age 55, with proposals for settlements to be evaluated by the state Board of Industrial Insurance Appeals. Other reforms were adopted in the way medical services ar

Judy Schurke, director of the Department of Labor and Industries.

e provided for injured workers. The reform package is expected to save the insurance program $1.5 billion over four years. Some sort of a push for full lump-sum settlements is likely in the future, but perhaps the most important feature of the reform package was that it was a rare victory for the business community in the workers’ comp field.

Schurke started her career at L&I in claims administration, beginning in a clerical position and moving up over a period of 15 years in claims positions, supervision and management. After working at Boeing and the insurance appeals board, she returned to L&I under Gregoire as a deputy director.

“Director Schurke and I did not often see eye to eye, but I do appreciate her service to the state and her willingness to consider other points of view,” said Patrick Connor of the National Federation of Independent Business. “While we did have disagreements, I thought she did as good a job as she could in trying to be an honest broker of information, and in providing some helpful information when she was able to. I guess my biggest concern, with her leaving – it will be interesting to see if the governor-elect lives up to his promise for his transition and appoints ‘agents for change,’ because that agency certainly could use some.”

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