Pennsylvania employers will have to wait a little longer for what could be one of the largest increases in workers compensation premiums in 25 years.
A dispute has slowed down the regulatory process for approving the hike, which was intended to take effect Nov. 1.
The increase is designed to account for a state Supreme Court ruling that voided a cost-saving measure in Pennsylvania’s workers compensation law, sparking fears of higher costs.
But it is being opposed by a group representing Pennsylvania trial lawyers. The group, Pennsylvania Association for Justice, filed an objection in early October with the Pennsylvania Department of Insurance. The department must approve the increase before it takes effect.
The request for higher rates was filed in August by the Pennsylvania Compensation Rating Bureau, a Philadelphia-based independent nonprofit that helps set workers’ comp premiums in the commonwealth.
An actuary hired by the trial lawyers’ group challenged the calculations and estimates used by the bureau to come up with what amounts to a roughly 6 percent increase in insurance premiums. The move is expected to cost businesses $165 million overall, the association noted.
“We respectfully request that you review his analysis and, in light of his finding, reject PCRB’s loss cost filing or delay consideration at least until you have had an opportunity to hold a hearing on this important matter,” Thomas F. Previc, the association’s director of public affairs, wrote in a letter to the department.
A man who answered the phone at the association on Thursday confirmed the filing, but declined to comment further.
The rating bureau filed a rebuttal on behalf of its work.
“We’re defending it pretty aggressively,” said William Taylor, the organization’s president.
Also defending the increase is the state Office of Small Business Advocate, an independent state agency that represents small businesses in legal and regulatory matters.
A decision on the rate hike is unlikely to take place by Nov. 1, Ron Ruman, a spokesman for the insurance department, confirmed Friday in an email. By law the department has 180 days to consider the request, which would put its deadline in February.
“We still are not sure what the department will do,” Taylor said.
The rating bureau typically files just one rate request per year to take effect in April.
Ruling struck down cost-saving tool
The court ruling itself revolves around use of so-called impairment rating evaluations. The evaluations allowed companies, in certain cases, to cap costs for paying out wages lost due to worker injury.
Established by Act 57 of 1996, a workers’ comp reform measure, the evaluations were ruled unconstitutional by the Supreme Court this summer.
State lawmakers are considering legislation that would restore use of the evaluations.
Critics have argued that other provisions of Act 57 are sufficient to hold down costs for employers, an argument echoed by the Pennsylvania Association for Justice.
In its objection to the rate hike, the group argued that the rating bureau overestimated the cost of losing impairment review evaluations.
And it noted that employers and insurers can still use a provision known as compromise and release, under which companies and employees can agree to final lump-sum settlements of injury claims.