Article by Erik Smith. Published on Tuesday, March 22, 2011 EST.

House Bills Aim to Counter Business-Friendly Senate Plan, But No One Seems Crazy About Them

The House Labor and Workforce Development Committee hears from an employer panel Tuesday.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, March 22.—Business groups are calling a House worker-comp proposal a weak substitute for the big reform bill that passed the state Senate earlier this month. They say it doesn’t do much.

Labor interests are just as unenthusiastic with the House bills, but they might be able to accept it – for exactly that reason.  
            If House Democratic leaders get their way, the year’s big talk about workers’ comp reform may come down to this – three relatively small-scale proposals that don’t offer the big fix business wants, but don’t offend their union allies the way the Senate plan does. It raises the question – will moderate Democrats battle their own leaders when the bills get to the House floor and attempt to pull the Senate bill for a vote instead?

            For his part, House Labor Chairman Mike Sells says the Senate measure won’t even get a hearing. What’s at issue are voluntary settlements for worker-comp claims – big lump-sum payments that workers might choose in lieu of long-term pensions, where the payouts are even bigger. The settlements are allowed in 44 other states but not in Washington. Business says “compromise and release” is the single most important way to rein in the skyrocketing tax increases employers face each year. Labor hates the idea. And when the Senate endorsed it in the form of Senate Bill 5566 three weeks ago, it was one of the biggest wins business has had in ages.

            Business and labor packed the room Tuesday as the rather more modest House proposal got a hearing on its way to the floor. The measures enact three smaller-scale cost-cutting and rate-smoothing proposals that have been floating about the Legislature this year. The House Labor and Workforce Development Committee is scheduled to take a vote Wednesday.

            No One Enthusiastic

There’s plenty of pressure this year for some sort of action on workers’ comp. State officials from the governor on down are calling the state system unsustainable. One key measure: The state’s average time loss per claim is 284 days, while the national average is 120. Already the governor has signed one bill that gives the Department of Labor and Industries more power to oversee doctors who bill too much, by creating a “provider network” that will monitor their performance. Business liked that one because it might cut costs. Labor was on board, too, because it also aims to force the use of “best practices” in medicine to get injured workers back on the job faster.

But where the House plan is concerned, employers and business groups are turning up their noses and labor interests are holding theirs.

            The bills “are just ribbons around the edges,” said Puyallup contractor Dave Morell. “We need a complete rebuild of the system. This does nothing for me.”

            Labor interests are unconvinced. They say the system is fine, and when the recession finally ends most of the system’s financial problems will fade away. If something really has to pass this year, they say the House proposal might be acceptable to them. Not that they’re really crazy about it.

“If in fact we have to squeeze more of the system than has already been squeezed,” said Dave Johnson of the Washington State Building and Construction Trades Council, “this is one of the least-bad representations of how we could do that.”

            What Bills Do

            The three House measures offer technical changes to the state worker-comp program, and it’s not clear how much they’ll save because L&I has yet to come up with a fiscal note. The department is expected to release cost-savings estimates soon for the House measures. A fiscal note for the Senate bill was released Tuesday night, showing that lump-sum settlements could reduce the state’s long-term liabilities by $1.2 billion in the first two years alone.

            House Bill 2023, sponsored by Assistant House Majority Leader Larry Springer, would reduce total disability awards to workers when a permanent partial disability award already has been granted for the same claim.

House Bill 2025, also sponsored by Springer, would freeze cost of living adjustments for worker-comp pensions this year.

House Bill 2026, sponsored by Sells, would create a worker-comp rainy-day fund to “smooth out” future rate increases. If Labor and Industries pegs tax rates too high, as sometimes happens, the excess money wouldn’t be returned to employers as a dividend or in the form of reduced rates. Instead, the state would bank the money and use it to offset future rate increases.

Miles Apart

Springer said the two bills filed under his name are an attempt to find a middle ground. They represent cuts to worker benefits, albeit modest ones. “It is a fact that it is a reduction in benefits, there is no mistake about that,” he said of the COLA freeze. “That never makes anybody happy. But these are extraordinary times that require some tough decisions.”

Labor representatives said they might have to choke it down, but if the Legislature thinks it has to cut benefits, the smaller the better. The real goal ought to be better medical treatment, said Craig Soucy of the Washington State Council of Firefighters. 

“That’s what’s going to save money, getting people back to work, so we want to focus on that, not compromise and release,” he said. “Someone dangles a carrot in front of them [injured workers], and they haven’t made their house payment, they’re gonna take that. That’s probably not in their best interest, when it’s 30 or 40 percent of whatever it might be following a pension.”

Sean O’Sullivan of the Association of Western Pulp and Paper Workers held up his pinky. He couldn’t quite get it to bend. He said he got it caught in a machine, cut a tendon, missed a day of work. Workers’ comp paid $600. Plenty of industrial workers face much worse injuries, and they won’t be able to resist temptation. “I’m an injured worker, you give me $40,000 to sign off on my claim, sure, I’ll take the money. I might have a wife in a nursing home or a kid I’m trying to put through college.”

It might be their choice, he said, but it won’t be the right one.

Sean O’Sullivan wags his pinky.

            Enough Metaphors to Fill a Book

Meanwhile, employers found plenty of colorful ways to describe what they see as a near-meaningless and downright pernicious House proposal. “I think this is a feel-good,” said Jerry Murphy of Green Shield Industrial Supply. “All this does is make people feel good when they really haven’t done anything at all.”

It was “a Band-Aid.”

It was a “fly speck in the pepper.”

It was “window-dressing.”

And the idea of a “rainy-day fund” that would sock away employers’ tax money for use in future years instead of whacking system costs struck many as downright offensive.

“This is not a time to proceed with caution,” said Betty Neighbors of Terra Staffing. “When the economy devastated our business and we had to lay off half our staff, and we weren’t sure how we were going to make payroll the next week, we couldn’t proceed with caution, because we were looking at failure. As is the system. The L&I system is becoming insolvent – so the experts say, it’s not just me.”

 Kris Tefft, lobbyist for the Association of Washington Business, said the employer community is united in its opposition to the House plan and its support for the Senate version. Strructural problems require structural solutions, he said.

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