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Bill would make significant changes to the workers compensation system.
(Published Apr 19, 2013)
Next week, the House Jobs and Economic Development Finance and Policy Committee will likely consider a workers compensation housekeeping bill HF 1359, authored by Representative Tim Mahoney (DFL-St. Paul). The bill will likely be amended with language that emerged recently from the Workers Compensation Advisory Council (WCAC) that would make significant changes to Minnesota’s workers compensation system. Both the Minnesota Chamber of Commerce and the AFL-CIO have endorsed this bill.
The two most significant changes in the WCAC bill are an increase in the maximum compensation rate and an extension of workers compensation coverage for post-traumatic stress disorder (PTSD) injuries arising out of employment. The League has discussed the legislation and shared concerns with the House author, Representative Tim Mahoney and also with the House Speaker Paul Thissen.
Under the pending amendment, the current maximum compensation rate of $850 per week is modified to 102% of the statewide average weekly wage. According to the Department of Labor and Industry, the statewide average weekly wage rate for the period October 1, 2012 to September 30, 2013 is $916, so the change amounts to about a 10% increase in the cap. LMCIT estimates that it would require roughly a 1% increase in cities’ work comp premiums to cover this increased cost.
The extension of coverage for PTSD would mark the first time the Minnesota work comp law would cover “mental-only” injuries. The proposed change explicitly excludes coverage for mental impairments resulting from disciplinary action, job transfer, layoff, demotion, promotion, termination retirement or similar action taken in good faith by the employer. Making reliable estimates of the impact of this change is difficult because there is no way to know either how many PTSD claims might occur or how much those claims will cost on average. LMCIT’s best rough estimate is that additional cost of this change could be between .5% and 4% of premiums.
The bill also increases in the maximum annual cost of living adjustment (COLA) from 2% to 3%, and shortening the time until the COLA applies from four years to three. Other changes include changing the formula for the amount of attorney fees that attorneys representing claimants may charge and raising the limit on those fees; eliminating a loophole that currently allows medical providers in certain circumstances to re-submit bills at a higher rate than the payment they’ve already accepted; creating a “contract” system to manage drug treatment of chronic pain; and several other minor changes. Some of these changes could help reduce costs somewhat, while others could modestly increase costs. LMCIT estimates that the net cost effect of these other changes to be very modest.
The WCAC consists of equal numbers of business and labor representatives. It was created in 1992 to help assure that there is a balanced evaluation of any proposed changes to the workers compensation statutes, and the understanding has been that work comp amendments introduced in the legislature will not be considered by the legislature unless they’ve been recommended by the WCAC.
In recent years, that understanding has been eroding. There have been more and more work comp amendment bills introduced independent of the WCAC vetting process and some of these bills would have had a dramatic impact on the costs of work comp coverage. Without the WCAC system, the legislative process for considering workers compensation amendments would almost certainly become much more chaotic and unpredictable.
Questions? Contact Gary N. Carlson at (651) 281-1256 or email@example.com
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