Workers’ compensation settled

ACCORD: Party leaders, governor agree on formula to reduce program’s costs

May 23, 2011 

  • AT A GLANCE

    Proposal for structured settlements

    WHO’S ELIGIBLE: Injured workers older than 55 whose claim against their employer is more than six months old. Starting in 2015, workers age 53 and up could apply. After 2016, it would be 50 and up.

    WHAT YOU GET: A settlement of any size, approved by the state then paid out over months or years. Each installment could be no smaller than $982 and no larger than $5,976, after an initial lump sum of up to $24,000.

    WHAT YOU GIVE UP: The value of the injury claim, including job retraining or long-term benefits that could eventually turn into a lifetime pension with restrictions on going back to work. But the right to seek payment for future medical care wouldn’t be given up.

Even in a year of unusual bipartisanship at the Legislative Building, this stood out: Republicans and Democrats standing together to announce a deal on one of Olympia’s thorniest issues, workers’ compensation.

A path emerged Sunday for lawmakers to wrap up their work without delaying their overdue exit any further. It came in the form of an agreement between the Legislature’s four top leaders and Gov. Chris Gregoire to reduce the costs of the state-run insurance system for injured workers by $1.1 billion by 2015.

Lawmakers are putting the plan on a fast track to approval as early as today, giving the business lobby a version of what it has been demanding: an option for workers hurt on the job to take payments to settle their injury claims.

Gregoire said the settlements, combined with other changes in the deal, would avoid double-digit increases this year in the premiums businesses pay into the system.

The compromise was denounced by organized labor, but backed by House Democrats, who had blocked the settlements when they were conceived as single lump-sum payouts to workers. Instead, the same money will be parceled out over months or years. Speaker Frank Chopp said House Democrats “held firm for injured workers.”

“I feel this is a fair deal for injured workers and everybody concerned,” Chopp told reporters.

Still, the deal represents a victory for the Senate’s pro-business coalition of Republicans and some Democrats who have banded together to force negotiations on a bipartisan budget plan and key issues like workers’ compensation.

Still up in the air is what happens to the Senate coalition’s other goals, including reducing state borrowing levels – a debate that threatens to kill more than $1 billion in proposed construction bonds for local projects. The 30-day special session called to finish writing a $32 billion budget ends Wednesday.

“The budget negotiations are going on, they’re going strong and they’re producing some good results,” Gregoire said. “They’re by no means done.”

BUSINESS CHEERS

The deal reached Sunday is intended to reduce future shortfalls in the insurance system that pays medical and rehabilitation costs for injured workers. It includes a couple reforms already signed into law, plus freezing cost-of-living increases for workers for a year, reducing pensions by the amount of previous disability awards and subsidizing wages for employers who bring injured workers back on light duty.

But its biggest savings, an estimated $545 million through 2015, is supposed to come from so-called structured settlements proposed by Gregoire.

Injured workers older than 55 – and eventually as young as 50 – could give up their claims against their employers in exchange for negotiated settlements approved by the state.

Officials think workers will rush to take the deals because they will get the money sooner and because some can find other jobs, which they couldn’t do if they end up with a lifetime pension. But everyone agrees workers who choose them will get less money from the state.

“I find this absolutely astounding that they would go in this direction,” said State Labor Council President Jeff Johnson, “change the nature of our system, totally break it away from replacing wages to some kind of monetary award not based on anything.”

Gregoire said it would be based on negotiations between the worker and either the state or his employer. And most states do offer settlements, though supporters say Washington would be the first to mandate “structured” rather than lump-sum settlements.

“What makes our system unique, strong and one of the best in the country is we don’t have the settlement agreements,” Johnson said.

The Association of Washington Business called the deal good news, saying it would provide relief for businesses that have been hit by repeated rate increases. But the group said it’s only a beginning.

“Washington state’s workers’ compensation system cannot continue indefinitely in its current state – even with the changes reflected in this agreement,” association President Don Brunell said in a statement.

Republicans had similarly measured praise, with lead Senate negotiator Janea Holmquist Newbry of Moses Lake calling it a “baby step forward.”

A centrist Democrat, Rep. Troy Kelley of Tacoma, said the deal “preserves the financial integrity of the system.”

Senate Majority Leader Lisa Brown went further.

“The agreement reached today,” Brown said in a statement, “represents the largest workers’ compensation reform in our state’s history.”

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