Article by Erik Smith. Published on Tuesday, March 14, 2011 EST.

New Law Regulates Doctors Who Receive Workers’ Comp Funds – Also Signs Bill Forcing B.C. Residents to Pay Washington Sales Tax

Gov. Christine Gregoire signs the workers’-comp measure Monday, flanked by lawmakers, state officials, and key players in business and labor.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, March 15.—Gov. Christine Gregoire signed a workers’ comp reform measure into law Monday, but there’s no telling what’s going to happen with a broader and more controversial reform bill that awaits action in the House.

            Also Monday, the governor signed a bill that will require residents of British Columbia to pay Washington sales tax when buying goods south of the border, cleaning up a mess that could have cost state and local governments hundreds of millions of dollars.

            By signing the workers’ comp measure, Senate Bill 5801, the governor enacted one small part of the sweeping reform bill she proposed to the Legislature earlier this year. The new law allows the state Department of Labor and Industries to create a “provider network” that will allow new scrutiny of doctors who treat injured workers. Those who fail to meet state standards can be removed from the system. The measure is a response to business concerns that some doctors are more likely than others to promote long-term disability pension claims. And by requiring doctors to adhere to “best practices” for treatment of injuries, the measure won union support as well.

            The bill also expands the state’s Centers for Occupational Health and Education, treatment centers that are aimed primarily at workplace injuries. In pilot form these projects have scored better results than typical medical treatment. The plan is to offer similar programs statewide by December 2015.

            “We know we need to help more workers return to good health and get back on the job after an injury, as well as reduce costs for our taxpayers and businesses,” Gregoire said. “This bill does both. It improves outcomes for our employees, while saving more than $200 million over the next four years. I’m proud of our workers’ compensation workgroup, which pulled together leaders from our business and labor communities. This bill is the result of their work, and it has strong bipartisan support.”

            Small Piece of Bigger Bill

            The measure is a piece of the big reform measure Gregoire proposed this year, the only part on which business and labor managed to agree. Lawmakers broke it off and ran it as a separate bill, figuring they’d save the rest of the fight for later.

            The governor and the Department of Labor and Industries are pushing this year for a group of sweeping reforms that aim to reduce costs for the state-managed system. Without change, they warn the system will become “unsustainable” as claims costs skyrocket and business chafes under double-digit rate increases every year. Although the current system is favored by labor interests, the governor warns that business ultimately will retaliate with an initiative making radical changes to the system that labor will like even less.

            A somewhat-altered version of the governor’s bill, dropping some elements and expanding others, made it out of the Senate a little over a week ago. The key provision of that bill is that it allows workers to choose lump-sum settlements of claims rather than long-term pensions. Senate Bill 5566 faces strong opposition from the Washington State Labor Council and other labor interests, and it is unclear whether the bill will get a hearing before the House labor committee, much less a vote.

            No Tax Break for B.C. Residents

            Senate Bill 5763 takes care of a major glitch in state law that was discovered only after the state Legislature finished its business last year. Washington provides an exemption from state sales tax for residents of provinces and states that charge a sales tax of less than 3 percent. The idea is that residents of states and provinces with either no tax or a low tax would not spend a dime on durable goods in Washington if they faced a nearly 10-percent penalty.

            What Washington didn’t consider was the fact that many Canadian provinces are moving toward something called a “harmonized sales tax” – a combination of the provincial sales tax and the national value-added tax. Despite the name, the state Department of Revenue doesn’t consider it a sales tax.

            British Columbia adopted the new tax July 1, catching the state of Washington by surprise. What it meant was that B.C. residents suddenly didn’t have to pay sales tax in Washington. And local governments along the Canadian border that depend on Canadian shoppers for a big chunk of their tax revenue were suddenly looking at multi-million-dollar losses. The state stood to lose big money as well.

            Lawmakers didn’t think it was worth returning to Olympia to settle what was seen as a small-scale problem affecting mainly the Bellingham area. The city and Whatcom County sued the state Department of Revenue to keep British Columbians paying tax – a case in which the department was happy to cooperate. And a Skagit County judge issued a temporary restraining order.

            Now, with the governor’s signature on Senate Bill 5763, Bellingham and Whatcom County can breathe easy. The harmonized sales tax will now be treated as a sales tax. Washington won’t give Canadian shoppers a break.

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