Workers Compensation: Changing Things Across the Board
When a complex problem the scale of the Workers Compensation crisis arises,
there’s no comfortable way to fix it. Going into this month’s special session,
we knew that almost no one would be pleased with the legislation, which is
crafted to provide both short-term and long-term remedies that will touch
nearly every aspect of the system. Every interest involved in the Workers
Compensation system – laborers, large businesses, and small businesses –
will sacrifice. As a result, it’s the hope of the Legislature and Gov. Bob
Wise that system will avert bankruptcy.
The financial morass that has developed within the Workers Compensation System
was decades in the making and there have been several attempts to fix it.
But we discovered in recent months that the bottom was about to drop out,
and it was up to this Legislature to take serious measures. The system’s
deficit stands at over $2.6 billion. If drastic action had not been taken,
the Workers Compensation Division would have become unable to pay claimants
as early as May 31, 2004. Our workers’ benefits were on the line.
According to the National Academy of Social Insurance, West Virginia had
the highest benefits as a percentage of covered wages in 2000 at a rate of
4.24 percent – while the national median rate was .9 percent and the average
was 1.03 percent. West Virginia also had the highest rate of growth in that
statistic. Legislators were also told by the Division that West Virginia
has one person designated Permanent Total Disability for every 75 workers
– apparently the highest ratio in the United States. Unfortunately, the system
is no longer able to support that.
To address the immediate financial needs of the system, the Legislature decided
to tap a variety of state funding sources and provide an infusion of $225
million.
The financial package includes: $170 million transferred from the state black
lung account, which carries surplus funds; $14 million from the tax-relief
package adopted by Congress last month; $10 million in general revenue; $5
million from special revenue accounts; $6 million in interest earnings; and
$20 million from the Tobacco Settlement Trust Fund, if necessary.
The 300-page bill combines numerous administrative changes intended to improve efficiency and reduce fraud.
As was proposed during the regular session, the Legislature voted to close
the second-injury fund, which has allowed a few large companies to defray
significant workers compensation costs at the expense of the entire system;
raise the threshold for Permanent Total Disability; and lower the percentage
used to calculate Temporary Total Disability.
While a version of the bill the Senate adopted earlier in the special session
would have cut off workers compensation benefits to all participants over
the age of 70, the Senate later agreed to a House proposal to cut off benefits
after age 70 only for future claimants, allowing those over the age of 70
currently receiving benefits to continue to do so.
The legislation will also remove the Division of Workers’ Compensation from
the Bureau for Employment Programs, create a Board of Managers to replace
the current Peformance Council, which will hire an executive director; and
create a new, three-member Board of Review to consider appeals. The Board
of Review will consider appeals of Division rulings and appeals of decisions
made by self-insured companies, which will now be able to administer their
own claims at a significant savings to the state.
The Legislature adopted the Workers Compensation bill, as well as several
other procedural bills, during the five-day special session, then recessed
until June 30 to allow for any technical corrections.
This has been a difficult process, and pulling the Workers Compensation system
out of debt will likely be painful for everyone involved. But based on the
work of Gov. Bob Wise’s specially appointed panel, this legislation was developed
to make the Workers Compensation Division more effective, businesses more
accountable, and place workers’ benefits on par with the rest of the nation,
so that one day, the system will be out of the danger zone.
I welcome and appreciate your input on these issues, or any other legislative
matter. Please call me at (304)340-3106 or write to Delegate Virginia Mahan,
215-E, Capitol Complex, Charleston, WV 25305.