Category Archives: Workers’ Compensation Reform

Examining Workers’ Compensation Costs to Employers

Source: Bureau of Labor Statistics National Compensation Survey 1991 – 2014 (Credit: Sisi Wei/ProPublica)

Today’s post comes from guest author Rod Rehm, from Rehm, Bennett & Moore.

Business and insurance interests are bombarding state legislatures every day of the week to take workers’ rights away by complaining how most states’ workers’ compensation systems are too expensive.

Recently, ProPublica and NPR produced a very detailed explanation of the state of workers’ compensation, focusing, rightly so, on injured workers. This article, which was the first in the series, included an interactive graphic that showed that even though business are complaining about rising premius, workers’ compensation insurance coverage is generally at its lowest rate in 25 years, “even as the costs of health care have increased dramatically,” according to the article.

As examples, using the average premium cost to the employer per $100 of workers’ wages, Nebraska employers paid $1.93 in 1988, while they actually paid $.15 less for the premium in 2014, for a total of $1.78 per $100 of workers’ wages, according to the chart. Iowa was more dramatic, with the price of workers’ compensation insurance $2.79 per $100 of workers’ wages in 1988. It went down $.91 to $1.88 per $100 of workers’ wages in 2014.

By scrolling down in the article, a person finds another graphic that shows how employer costs have risen for other categories, but have fallen for workers’ compensation. Most notably, the cost of workers’ compensation insurance coverage (per $100 of workers’ wages) went from $2.71 in 1991 to $2.00 in 2014. During the same timeframe, the cost of health insurance went from $8.55 to $12.52 and the cost of retirement benefits went from $5.50 to $7.29, all per $100 of workers’ wages, according to the chart in the article.

The offices of Rehm, Bennett & Moore and Trucker Lawyers are located in Lincoln and Omaha, Nebraska. Six attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 90 years of practice representing injured workers and truck drivers in Nebraska and Iowa in state-specific workers’ compensation systems. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers’ Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), and the Nebraska Association of Trial Attorneys (NATA).  We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

L&I Proposes No Increase in Workers’ Comp Rate for 2013

How Much of the Savings Came Out of the Pockets of Workers?


September 17, 2012: The Washington State Department of Labor & Industries (L&I) today announced it is proposing no increase in the average rate for workers’ compensation insurance. If adopted, this would be the second straight year with no increase in workers’ comp rates.


“Had the Governor and the Legislature not adopted the 2011 reforms, I wouldn’t be making this proposal today,” said L&I Director Judy Schurke. “In fact, without those reforms, we would be facing a rate increase. Instead, we’re able to keep rates down for Washington’s businesses and workers.”  Savings due to reforms are beating expectations. L&I is now projecting the reforms passed in 2011 will save $1.5 billion over four years, $300 million higher than originally estimated.

While the reforms play an important part in lowering costs, Schurke pointed to additional factors responsible for lower costs in 2013, including:

  • Fewer claims in high hazard industries like construction are resulting in fewer long-term disabilities;
  • Overall claim frequency, or the number of claims per 100 workers, has gone down by 6.2 percent;
  • L&I has held medical cost growth below 4 percent over the past five quarters and expects continuing to do so in 2013 with the new provider network and health technology assessments;
  • L&I is resolving claims more quickly as a result of Lean and other improvements.

Today’s proposal would mean an additional $82 million is placed in the State Fund reserves by the end of 2013. In the past, the State Auditor issued strong warnings about the consequences of maintaining inadequate reserves. Schurke also acknowledged the reserves are critically low by industry standards due to increased liabilities, investment losses and drawing down the reserves to hold down rates during the recession.

The Workers Compensation Advisory Committee (WCAC), which has been working with L&I on a plan to rebuild the reserves, endorsed L&I’s proposal to hold rates steady in 2013 and begin rebuilding the reserves. Washington is the only state where workers pay a substantial portion of premiums. Workers will pay about 24 percent of the premiums in 2013. The proposal to keep rates flat in 2013 is an average for all Washington employers. Individual employers may see their rates go up or down, depending on their recent claims history and changes in the frequency and cost of claims in their industry.

Every year in Washington, about 100,000 claims are filed for medical costs and lost wages due to work-related injuries, illnesses and deaths. Each year, L&I must review premium rates and make adjustments to cover the anticipated costs of claims that occur in the next year.

Public hearings on the proposed rates will be held in:

  • Tukwila, Oct. 23, 10 a.m., L&I office.
  • Bellingham, Oct. 23, 1 p.m., Public Library Lecture Room.
  • Spokane, Oct. 24, 10 a.m., CenterPlace Event Center.
  • Richland, Oct. 25, 10 a.m., Community Center Activity Room.
  • Tumwater, Oct. 26, 10 a.m., L&I Auditorium.
  • Vancouver, Oct. 29, 10 a.m., Red Lion at the Quay, Quayside Portside Room.

More information regarding the rate proposal is available at The final rates will be adopted in early December and go into effect Jan. 1, 2013.


“Evidence-based coverage decisions have reduced unnecessary care and avoided $27 million in annual costs.”  (Emphasis added.)


Translation: Denying requested treatment costs the State less than authorizing it. – Ed.


Background Information:

  • On average, workers’ comp rates have increased less than 3 percent per year since 2006. This is lower than L&I’s anticipated rate of medical and wage inflation.
  • When calculated as a percentage of payroll, which is how rates are calculated in other states, the proposed 2013 overall rates would be equal to a 2.2 percent reduction.
  • Without savings from the reforms, the 2013 break-even rate would have been about 4 percent instead of minus 4.2 percent. The break-even rate is the amount needed to cover projected costs for the next year. L&I will use the difference between the break-even rate and zero – $82 million – to begin restoring the workers’ comp reserves.
  • The elements of the 2011 workers’ compensation reforms have various effective dates, beginning in 2011 and continuing through 2013. Savings estimates are now at $1.5 billion over four years, with continued savings in future years.
  • As a result of Lean and other initiatives, we are seeing a downward trend in the duration of younger claims.
  • L&I has held medical cost growth below 4 percent over the past five quarters and estimates doing so in 2013 with the new provider network and health technology assessments. Our medical costs are 26 percent less than the average workers’ comp program in the U.S.
  • Evidence-based coverage decisions have reduced unnecessary care and avoided $27 million in annual costs.
  • In 2011, the number of long-term disability claims per 100 workers fell by 6.2 percent, the largest decline since 1995. Long-term disabilities account for 85 percent of workers’ comp claim costs.
  • When hiring picks up in construction and other high-risk industries, we can expect an increase in long-term disability injuries. That’s why it’s important to examine safety practices now and be ready to bring more people back to work safely.
  • Workers’ comp insurance rates are based on the likelihood of an injury. Rates for almost half of the job classifications will change 1 percent or less next year.


As of January 1, 2012, a significant change in Washington’s workers’ compensation laws has provided an opportunity to resolve the claims of injured workers age 55 and over through structured settlements, called CRSSA (Claims Resolution Structured Settlement Agreements) agreements.  The CRSSA option is intended to provide an alternative for injured workers who feel “stuck” in the Department’s system, and wish to pursue retirement or alternative work goals outside their claims.

Causey Law Firm was one of the first workers’ compensation firms in the state to successfully negotiate for and receive approval of a CRSSA from the Board of Industrial Insurance Appeals.  

The Department has a specialized unit of experienced personnel to evaluate incoming requests for CRSSA’s from injured workers and employers.  If the Department (or self-insured employer) concludes the claim is appropriate to consider negotiations under the CRSSA, they will request the applicant provide a proposed lump sum figure to initiate negotiations.  Many factors are taken into account in determining whether or not a CRSSA is appropriate, to include whether it is in the best interest of the worker, the nature and extent of both industrial and non-industrial injuries, other claims, present and future income sources of the worker, present and future expenses, employment and education history, and the effect a settlement may have on other benefits.  All of this information is provided to the Department or employer, and if an agreement is reached, it is forward to the Board of Industrial Insurance Appeals, which is a separate state agency, for final review and approval.  As of May 2012, 18 agreements have been filed with the Board, but only six of these have been approved.

Structured settlements allow a worker to resolve all the issues in their claim (time loss, permanent partial disability, vocational rehabilitation benefits, and pension) except treatment, by closing their claim and receiving, after an initial lump sum payment, monthly or bi-weekly payments until the full amount of the settlement is reached.  An injured workers’ right to treatment cannot be compromised under the CRSSA rules and, in some cases, a worker can include authorization for future anticipated treatment in the agreement.   The amount of the settlement and payout schedule will vary depending on the unique circumstances of each claim.

As we have advised several of our clients, it may not be in your best interest to pursue a CRSSA. However, if you are an individual who wishes to pursue self-employment, retirement, part-time work, or alternate vocational avenues, and have become tired of the “system” running your life, and you’d like to have the power to resolve your claim, it may very well be appropriate to pursue this new option.  If so, please give our office a call, and we will be happy to provide further assistance.

The RETRO Program: There’s GOLD in Them Thar Hills!

The BIAW helps employers, not workers, save through RETRO. They also financially backed defeated gubernatorial candidate Dino Rossi.

Earlier this week we shared a post on the RETRO program, and the bureaucratic problems it will create that will be keenly and painfully felt by workers.

The RETRO Program has inserted a profit motive into a system designed to spread claims costs across the state as a whole. This profit motive has created a new industry in our state – the administration and oversight by independent groups of the administration and oversight of claims already performed by the Department of Labor and Industries. These independent groups shave a portion of an employer’s refund as payment of their fees with promises of reduced claims costs and increased rebates in exchange.

Some of these groups advertise their ability to gain rebates of 11%, 15%, 17% from premiums paid by the employer. One – The Building Association of Washington or the BIAW – advertises that it helped their employer clients receive refunds of 51.8% last year. To my eye, that is more than good claims practices. It is robbing the workers and tax payers of this state.

I can assure you that the workers who paid into our state-wide system through payroll deduction did not receive 51.8% refunds.

Our legislature is scrambling through an extended session to craft a budget for the coming biennium, facing the daunting task of cutting programs that provide essential services to the neediest members of our society. The Department of Labor and Industries routinely used excess premiums to invest as a means of lessening the cost of claims for everyone involved. With enormous rebates, though, they are instead running close to the bone.

Most RETRO groups provide review and analysis of workplace conditions and practices in an effort to prevent injury claims in the first place. Some, including the largest RETRO group in the state, the aforementioned BIAW, also take funds from employer rebates and convert them into huge lobbying efforts focused not only on reform of the workers’ compensation system but of the structure of our government overall.

The BIAW was a major financial backer of the defeated gubernatorial candidate in the last race, Dino Rossi, causing Continue reading The RETRO Program: There’s GOLD in Them Thar Hills!

The RETRO Program Is More Dangerous Than It Looks

Should Washington workers be happy about the RETRO program?

In a post from last week we introduced the history of the Workers’ Compensation System and asked the question: Should taxpayer money continue to be used to support the government system that allows these cases to be brought?

A growing number of employers in Washington State are taking part in the RETRO Program, a system within the system, designed with the good intention of incentivizing safer workplaces. Employers that participate in this program pay into the system according to the risk classes of their employees, as usual, but the actual costs of their claims are tracked and compared to the amount of the premiums paid. When the amount paid in claim costs exceeds the premiums paid, the employer is assessed an extra fee. If the claim costs are less than the premiums paid, a refund of the difference is returned to the employer. On the face of it, this seems reasonable, unless we look back to my bridge analogy from last week’s post:

When a bridge is needed in Seattle, those in Yakima don’t want to pay for it, even though our entire highway system supports tourism and commerce throughout the state. So, we have an insufficient tolling system in place based on the concept that only those citizens that drive on the bridge should have to pay for it.

The burden of injury and disability claims is greater on an individual employer than if the responsibility for the costs is shared.

Instead of incentivizing a safe work place we are now incentivizing denials of claims, denial of authorization for medical procedures such as MRI scans, and strict limitations on conservative care such as physical therapy. This creates a dynamic where Claims Managers at the Department of Labor and Industries are pinned between the interests of injured workers seeking benefits and employers counting pennies.

Caught in the middle of the storm, the easy decision for a Claims Manager is to deny benefits and let the issues be sorted out through the appeals process. This leads to delays in treatment, financial hardship and unfair costs to the injured worker, who remains responsible for the cost of attorney fees in litigation, whether they win or lose, when the employers have the ability to deduct the cost of legal fees as a business expense no matter the outcome. The practical effect of this increasing determination to cut every possible cost is that small issues are now routinely raised before the Board of Industrial Insurance Appeals.

We are involved in cases before the Board where the fight is over a few hundred dollars of compensation, or authorization for a procedure or surgery. Do we really want an industrial appeals judge to decide whether a procedure is reasonable and necessary treatment? Especially when there are utilization review processes already in place to monitor the use of those resources and Claims Managers hired to administer the claims, asking workers to bear the burden of an appeal process to get their MRI scan or to keep $300 in time loss compensation paid during the few days between the doctor mailing a release to work to the Department and the Claims Manager reading the note, often when the worker had not been notified of their release, is unreasonable and it is certainly a waste of resources.

More is spent fighting each claim than would be expended simply providing the worker with the benefit. But, providing the benefit comes out of the “claims cost” column, reducing the possible rebate amount, instead of under the “legal fees” tax deduction column.

Another effect of this new dynamic is that physicians are fleeing workers’ compensation claims like rats from the sinking ship. Doctors and clinics that are already working under the administrative burden of a plethora of insurance systems – – federal, state and corporate-run – – all with differing requirements and payment schedules, now find their every recommendation questioned and scrutinized, with payment delayed or denied. If an appeal process is followed, the doctors are asked to take time out of their packed schedules to write reports or testify at hearing or by deposition to justify their opinions, actions and recommendations. Patients have limited access to care or become frustrated when their doctors refuse to participate in the processing of their claims.

For more on the RETRO program, check in for part 3 of this series later this week.