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Stalled workers' compensation reform has new chance in 2013

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Despite repeated failures in the legislature, Gov. Tom Corbett and lawmakers will try again in the next year to pass state workers' compensation law changes that would double the required time injured workers must use employer-approved doctors.

Proponents say the changes to workers' comp in House Bill 808 would reduce fraud and save companies on benefit payouts, which are worth about $2.9 billion.

"You control the care, and it results in quicker returns to work and lower costs," said Sam Denisco, vice president of government affairs for the Harrisburg-based Pennsylvania Chamber of Business and Industry.

The governor continues to support workers' comp reform, said Kelli Roberts, a Corbett spokeswoman.

H.B. 808 would have doubled the time — from 90 to 180 days — that injured workers must use employer-selected medical experts for treatment, also known as the "captive period."

The change would have injured employees continue treatments that show progress, instead of leaving for their own doctors after 90 days, disrupting progress, Denisco said.

Expanding the captive period would reduce lost productivity and prevent the misuse of workers' comp by finding doctors who unnecessarily keep an employee on benefits, thus increasing medical costs, he said. The chamber would prefer no captive period cap.

Idle legislation

Workers' comp bills have faced opposition from unions and legislative Democrats, and the bills died in each session since 2003-04, said Rep. Dave Hickernell, H.B. 808's sponsor and a Republican representing parts of Dauphin and Lancaster counties.

No Democrats on the House's Labor and Industry Committee voted for the bill in 2011, according to records. The bill got out of committee but went no further, Hickernell said.

"Whenever you deal with workers' compensation, it's a controversial issue and organized labor can get concerned about that," he said.

Representatives of the Teamsters, AFL-CIO and American Federation of State, County and Municipal Employees did not immediately return calls for comment on this story.

Part of the issue with captive periods is that they limit the injured worker's choice in doctors, said Thomas Previc, director of public affairs for the Harrisburg-based Pennsylvania Association for Justice, which represents trial lawyers.

If an injured worker can't get a second opinion, problems from misdiagnosis could worsen the longer they're captive, he said. It could be the difference between corrective surgery and permanent disability in some cases.

"We're concerned that if you limit the freedom of choice to captive doctors, then you limit our clients getting the best medical care," Previc said.

Cost containment

The business outlook for workers' comp is a mixed bag, according to state and national statistics.

The state Department of Labor and Industry's most recent annual report on workers' compensation noted that in 2010 reported lost-time work injury and illness cases decreased 3.8 percent from 2009. It was the third straight year of declines, down 26 percent from 2007.

However, total benefits paid were $2.88 billion in 2010, a 4.7 percent increase from 2007, according to the report.

Nationally, employer costs are at a 30-year low, according to a recent study by the National Academy of Social Insurance, a part of the national academies in Washington, D.C.

In 2010, employer costs were $1.23 for every $100 of covered wages, down 43 percent from 1980, according to the academy. Benefits paid to workers in 2010 were 99 cents per $100 of covered wages, or 3 cents more than in 1980. Benefits peaked at $1.65 in 1991 and 1992.

Workers' comp costs fluctuate due to the complexity of contributing factors, but state reforms are part of the equation, as are recessions, said Ishita Sengupta, director of workers' compensation with the national academy.

"If less people are employed, then less benefits are paid out," Sengupta said. "The recession and economy are large factors."

There's currently a lull in premium prices, because demand for workers' comp is low, but as the economy recovers the price will go up with hiring, she said. That was part of the reason for higher costs in the 1990s, she said.

Other issues affect rates and benefits, too, Sengupta said. Twenty years ago, cash payments for wages were 70 percent of benefits. Today, it's about 50 percent with rising medical care payments making up the difference. Painkiller abuse is a significant problem, as is physician-dispensed drugs and misclassification of employees as independent contractors so companies can avoid paying workers' comp, she said.

Businesses could face higher rates in coming years, she said.

"It seems like there's some kind of recovery in progress, so as we look at the 2011 data, we could see increased costs," Sengupta said.

Future deals

Getting a legislative deal could come down to a captive period compromise, Hickernell said. If a 180-day captive period isn't working, maybe a shorter time span could, but that's yet to be discussed, he said.

"We'd have to speak with the business community and find out if that was still helpful to them, which I imagine it would be," he said.

A compromise would be encouraging if a bill was passed to control costs to businesses, the chamber's Denisco said.

Democrats formerly part of the Labor and Industry Committee were not immediately available for comment.

Corbett is willing to work with the legislature for a solution, Roberts said.

"As we move through that process, there are a lot of divergent ideas," she said.

The governor's and legislature's plates are full in the coming session. Liquor store and lottery privatization, as well as state pension and transportation funding reforms are on the docket. Corbett also is working on the business environment for manufacturers and implications of the federal Patient Protection and Affordable Care Act.

Later in the year, the election cycle will heat up heading into 2014.

Workers' comp reform depends on the legislature, but the Pennsylvania Chamber wants cost control through eliminating abuses and employer-established medical panels, Denisco said.

"A coordinated care setting would provide best results," he said.

Workers’ compensation by the numbers

In Pennsylvania

2010 injury/illness cases: 85,560

Percent drop from 2007: 26.1

Number of fatal cases: 111

2010 total benefits: $2.88 billion

Percent increase from 2007: 4.7

 

Nationally

2010 employer cost per $100 wages: $1.23

1980 cost: $1.78

Peak in 1990: $2.18

2010 benefits per $100: 99 cents

1980 benefits: 96 cents

Peak in 1991-92: $1.65

 

Sources: Pa. Department of Labor and Industry, National Academy of Social Insurance

Jim T. Ryan

Jim T. Ryan

Jim T. Ryan covers Cumberland County, manufacturing, distribution, transportation and logistics. Have a tip or question for him? Email him at jimr@cpbj.com. Follow him on Twitter, @JimTRyanCPBJ.

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