Conversations on the Grand Bargain

Workers’ compensation is described as a “grand bargain” between labor and management. The 101st IAIABC Convention kicked off with a panel discussion about how workers’ compensation has evolved and must continue to evolve. The panel consisted of:

• Dave DePaolo – WorkCompCentral (moderator)
• Sandy Blunt – Vice President of Insurance Services, Medata (moderator)
• Frank Fennerty, Jr. – Labor Member, Washington Board of Industrial Appeals
• David Menchetti – Partner, Cullen, Haskins, Nicholson & Menchetti, P.C.
• Brandon Miller – President, Minnesota Workers’ Compensation Insurers’ Association
• Joan Vincenz – Corporate Director-Safety, United Airlines

Among the highlights:

• States are competing for jobs by cutting taxes to employers and lowering workers’ compensation benefits. This is a race to the bottom to attract businesses. As unions have weakened over the years, there is no strong voice representing workers’ to counter this push to lower benefits.
• Politically, workers’ compensation reforms have moved away from the middle and tend to focus on extremes. This is continuing to move us away from workers’ compensation being a compromise between labor and management.
• Frictional costs have continued to increase in the workers’ compensation system. These frictional costs are not necessarily resulting in corresponding reductions in medical and indemnity costs.
• We need to find the balance with regulations so that those focused on doing what is best for injured workers can practice medicine and those looking to abuse the system are controlled.
• Regulators and legislatures need to learn from surrounding states what works and what doesn’t and adjust accordingly. With 50 different states there are 50 different opportunities to learn and adapt.
• The most important goal for employers is to prevent the injury from occurring in the first place. However, if an injury occurs, the goal must be to get that worker healed and back to employment as soon as possible.
• Employers have a duty of care for their injured workers. Your workers are your biggest asset and it is important to make sure they receive the best possible care so that they can recover.
• If you treat injured workers right, that will have an impact on your culture and the relationship you have with your workforce.
• There is significant cost variation among states in spite of the fact that you have essentially the same workforce performing identical tasks at different locations. These higher costs are not resulting in better outcomes for the injured workers.
• We need to somehow remove the politics from workers’ compensation and make it about the policy, not the politics.
• There should not be variation between states on whether an injury is compensable under workers’ compensation. For national employers, it is very challenging when something is considered workers’ comp in one state and not in another.
• Should there be a minimum benefit for workers’ compensation among all states?  This is something that may need to be considered to address criticisms of the inequity in state systems.
• The situation in West Texas where the fertilizer plant exploded showed the potential perils of opt out. The company had no workers’ compensation coverage. After the accident, they filed for bankruptcy and their workers are left with no benefits. This goes against the fundamental purpose of why workers’ compensation was created.
• If you really believe that workers’ compensation is not fulfilling its purpose, then return to a tort system. Why have a system that some people can opt out of?  It should either be the law or not.
• The Canadian and European workers’ compensation systems illustrate that workers’ compensation still has a purpose in countries with socialized medicine. If there is a movement to 24-hour health coverage, it does not eliminate the need for workers’ compensation.
• Workers’ compensation needs to embrace new technologies, such as telemedicine, to ensure we are delivering the best benefits to injured workers in a timely manner.
• Employers need to use workers’ compensation claims data to enhance their loss prevention and safety programs in order to prevent injuries from recurring.
• A bi-product of a good workers’ compensation system is a climate that promotes worker safety. Worker safety has increased significantly and injury rates have declined dramatically since workers’ compensation started 100 years ago.
• Reputational risk associated with a safe work environment is important to employers as they try to attract and retain workers.