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Originally published May 23, 2011 at 8:37 PM | Page modified May 23, 2011 at 10:19 PM

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Workers' comp revamp goes to governor's desk

Breaking through a key political obstacle to passing the state budget, the Legislature approved a bill Monday to rein in growing costs in the workers' compensation system, including a controversial provision aimed at reducing total spending on long-term disability claims.

Seattle Times staff reporter

quotes L&I is required to report annually to the Legislature through 2014 on the structure... Read more
quotes Good job legislature ,lets hope the savings go back to the businesses and not to the... Read more
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Breaking through a key political obstacle to passing the state budget, the Legislature approved a bill Monday to rein in growing costs in the workers' compensation system, including a controversial provision aimed at reducing total spending on long-term disability claims.

The bill also gives the state Department of Labor & Industries other tools to curb spending on long-term disability claims, such as employer subsidies to allow injured workers back to light duty. In addition, it eliminates cost-of-living benefit increases for next year.

An amendment added late Monday makes the bill's changes effective immediately upon Gov. Chris Gregoire's signature; she's expected to sign it. But that won't reduce employers' tax bills this year.

The changes, combined with others signed into law in March, would save the system $500 million in the first year and a total $1.1 billion over four years, L&I estimates.

"We would certainly expect that savings to be manifested in lower premium tax rates to employers," said Kris Tefft, a lobbyist for the Association of Washington Business.

The soaring number of long-term disability pension awards — a problem even before the Great Recession — is pushing the state's system toward insolvency.

About one in 20 long-term disability claims becomes a lifetime pension, L&I reports, compared with one in 45 in the early 1990s.

Long-term disability claims make up about 8 percent of all claims but account for 85 percent of the system's costs, officials say.

But these pensions often are the only choice workers have when they can't find another job. Injured workers sometimes spend years trying to get a decision on a pension, and sometimes see their application rejected.

Washington would join more than 40 states where injured workers with permanent disabilities can opt for "compromise and release" settlements that more quickly resolve their claims.

Allowing the state to reach settlements with injured workers would save the system $265 million in the first year and $70 million annually, L&I officials said.

The legislation passed Monday calls for "structured settlements" that essentially would be for a lump sum, but would be paid to the worker over time.

Injured workers who settle would still have their medical care covered.

Only those age 55 and over who have missed work for 180 days or longer would be eligible initially, but such settlements could cover workers as young as age 50 by 2016.

Attorneys representing the injured would have their fees capped at 15 percent of the settlement. In the case of an unrepresented worker, an administrative judge could approve the settlement "only if the judge finds that the agreement is in the best interest of the worker."

Labor unions blasted the structured-settlement provision. "Workers who are injured on the job should not have to 'settle' for something less than the 'sure and certain relief' they are guaranteed by law," said Jeff Johnson, president of the Washington State Labor Council, in a statement.

This year L&I adopted a 12 percent average rate increase.

The new package makes it less likely that a double-digit rate increase will be needed next year, L&I officials said.

That's good news for Jenifer Lambert, vice president of Everett-based Terra Staffing Group, which employs as many as 1,200 workers a week.

Even though the temporary staffing company has had fewer claims than average, its taxes have jumped each year, she said.

"I would like to see systemic change that would provide more predictability and certainty to our rates," Lambert said.

L&I is required to report annually to the Legislature through 2014 on the structured settlements and their impact on employers, the state fund and injured workers.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com

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