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Senate Finds Way to Compromise on Workers’ Comp – But Labor Plans Fight in House

Bill Would Allow Workers 40 and Older to Settle Disability Claims -- Hobbs Brokers Compromise That Delivers Middle-of-the-Road Democratic Votes

State Sen. Steve Hobbs, D-Lake Stevens.

State Sen. Steve Hobbs, D-Lake Stevens.

OLYMPIA, Feb. 5.—Looks like some of that much-promised bipartisanship was afoot in Senate after all as the chamber wrapped up its first big debate under new management, and passed a compromise measure on workers’ comp with both Democratic and Republican votes.

The workers’-comp fight, which promises to be the biggest business-versus-labor scrap of the session, now moves to the Democrat-controlled state House, where labor promises to pull out the stops in an effort to defeat an expansion of the state’s new settlement program. Officials of the Washington State Labor Council said Monday no compromise is possible on a bill that would expand the strictly limited  program authorized by the Washington Legislature in 2011. “This is a major fundamental issue for us,” said labor council lobbyist Rebecca Johnson.

Since the beginning of last year, Washington has allowed injured workers over age 55 to settle their long-term disability claims, rather than requiring them to take pensions. At least in theory, the settlements ought to save big money for the state-run insurance system and employers who self-insure, while giving workers an option they are granted in 44 other states. But after one of the biggest legislative fights of recent years, lawmakers imposed restrictions that have resulted in only a handful of settlements being awarded. Among other things, Washington is the only state that restricts settlements to older workers.

The most important of the bills passed by the Senate Monday would immediately reduce the age limit to 40. It’s not the all-ages settlement program that members of the Majority Coalition Caucus had favored. But it represents a dramatic expansion of the program, because 40 is the average age of workers filing disability claims. The key thing about the action in the Senate Monday on Senate Bill 5127 was that the measure sailed out of the chamber with seven Democratic votes, 30-19 – a signal to the House that there is support for the measure among business-minded Dems.

Behind the compromise was state Sen. Steve Hobbs, D-Lake Stevens, who spent the weekend working both sides of the aisle. “We had a lot of shuttle diplomacy over the weekend, calling different senators, and I believe we have an agreement,” he said. “I would like to thank the folks across the aisle for listening to the concerns of many moderate Democrats who are concerned about the age issue on this particular bill.”

A Curvy Aisle

Senate Commerce and Labor Chair Janea Holmquist Newbry, R-Moses Lake.

Senate Commerce and Labor Chair Janea Holmquist Newbry, R-Moses Lake.

It was the first big issue to be decided in the Senate since the upheaval that started year’s session, when two Democrats, Rodney Tom of Medina and Tim Sheldon of Potlatch, joined with the 23 Senate Republicans to create a 25-member governing coalition. The new business-minded majority might rule the Senate, but in the House, more firmly controlled by Democrats, labor interests are expected to get a more sympathetic hearing. After an inconclusive debate Friday on the bill it was clear that the measure would pass without any votes from the minority Senate Democratic Caucus. That reduced its chances considerably, members of the majority coalition acknowledged. And so it was time to deal.

“I know that if the bill goes over to the House with one side of the aisle supporting it and the other side not, then it has very little chance of passage,” Sheldon said during the final Monday debate. “Politics is the art of compromise – sometimes you gain a little one year, you gain a little more the next year. So I’m going to support the amendment, change my position and vote for the bill, because I believe there are people in this body that want to see change. We cannot sit in our positions and hold our positions forever and expect any change to occur.”

Senate Commerce and Labor Chairwoman Janea Holmquist Newbry, R-Moses Lake, said the measure “might not be as robust as I would like,” but argued that it would go a long way toward making worker-comp settlements an effective way to mitigate the big tax increases that are just around the corner for employers and workers who participate in the state-run insurance program. The Department of Labor and Industries argues that it will have to start raising tax rates in the near future to beef up its insurance reserves by $1.1 billion.

Tom and Sheldon voted yes along with all Republican members. Members of the Democratic Caucus voting yes were Hobbs, Tracey Eide of Federal Way, Jim Hargrove of Hoquiam, Brian Hatfield of Raymond and Mark Mullet of Issaquah.

Labor Vows Fight

Rebecca Johnson of the state Labor Council appears at a Monday news conference with Jason Speicher of Laborers Local 292 and Lynn Schlotterbeck of International Brotherhood of Electrical Workers Local 76, both of whom have received benefits under the current workers' comp system.

Rebecca Johnson of the state Labor Council appears at a Monday news conference with Jason Speicher of Laborers Local 292 and Lynn Schlotterbeck of International Brotherhood of Electrical Workers Local 76, both of whom have received benefits under the current workers’ comp system.

It’s going to be quite a battle. The state Labor Council held a news conference immediately after the vote to put lawmakers on notice that it strongly opposes the bill and it’s not interested in a middle ground. Two years ago, labor battled settlements and forced the compromise that restricted the program while launching several programs for injured workers, including an expansion of medical provider networks. But this time, said lobbyist Johnson, there’s nothing to swap. “I don’t think there’s any trade for changing a safety net into a lottery system,” she said.

Settlements by their nature mean injured workers will accept less money for their claims than they would receive in long-term pension payouts, Johnson said. Exactly how much is hard to say, because only 27 settlements have been awarded so far, but estimates two years ago suggested that workers might negotiate deals for 70 to 80 percent of the value of their disability pensions. When the money runs out, labor says disabled workers will turn to programs for the poor.

It doesn’t matter if settlements are voluntary, Johnson said. “There is a power imbalance between the worker and the employer. When workers are hurt, they are not only without their livelihood, they are in an emotional and physical place that may be the hardest place they have ever been in their lives. Because the employers have time on their side and money on their side and resources on their side, it creates a fundamentally imbalanced situation.

“We see settlements taking us from an insurance safety net to something that looks a lot more like a lottery system, where the winners and the losers are determined by how good an attorney you have – for some it will be the luck of the draw. The workers’ compensation system was never supposed to be about luck or having a good attorney – it was mostly a safety net.”

Policy Arguments Galore

The debate on the Senate floor made clear that many Democrats take labor’s side. Settlements “shift liability from employers to taxpayers,” argued Steve Conway, D-Tacoma. And Karen Keiser, D-Kent, argued that business is going back on a deal forged amid legislative battle two years ago. “Today we are looking at going from 55 to 40; next year or the year after it’ll be 30 and then 20 – that’s what we call a slippery slope.”

From the other side came the traditional argument that the state-managed system is inefficient, with time-loss and pension-award rates that are highest in the country.

One of the biggest questions has yet to be answered. The Department of Labor and Industries still hasn’t estimated how much money the bill might save — though of course it didn’t take final form until Monday. But the figure is likely to fall somewhere between the $600-million-plus that has been estimated for the current 55-and-older program and the $1.7 billion that was estimated for an all-age settlement program during the 2011 debates.

In addition to changing the age limit, SB 5127 also eliminates a rule that the state Board of Industrial Insurance Appeals evaluate all settlement offers to determine whether they are in the best interest of workers – a requirement that has caused the board to reject several proposed settlements, citing a lack of information.

The Senate passed another measure, SB 5128, that would entirely eliminate the age restriction, though the more expansive settlement program authorized by that bill likely will face an even more difficult time in the House. That bill passed 25-24, with no Democratic Caucus votes. A third worker-comp measure passed by the Senate Monday, SB 5112, also passed 25-24, making largely technical changes to the retrospective rating programs offered through trade associations.

“These measures in no way cut benefits for our injured workers,” Holmquist Newbry said. “These are just additional options and choices they deserve. Forty-four other states offer voluntary settlement options to all their injured workers, and the sky hasn’t fallen and they actually have great outcomes. Under our current system, if you are on time loss or a pension, you can’t return to work – you are trapped in that system. So I’m hopeful that people can just look at the facts and realize that giving injured workers an additional choice is the right thing to do, and the right time to do it is now, before we see the rate increases that we know are just around the corner.”