Settlements should save $1.1 billion over four years
OLYMPIA – After tying the Legislature in knots for much of the last three months, changes to the state’s century-old workers’ compensation sped through both houses Monday with comfortable margins.
The changes, which also have the support of Gov. Chris Gregoire and should soon become law, are projected to save the disability system some $1.1 billion over the next four years and stave off double-digit rate increases for businesses.
The largest change is a new statutory provision allowing injured workers over a certain age to accept voluntary “structured settlements” and leave the state’s system of disability payments, retraining and pensions. The bill also contains new programs for returning workers to the job, creates a “rainy day” fund and improves the claims negotiation system.
But the blade that cut the knot was the structured settlement option, first proposed by state Rep. Matt Shea, R-Spokane Valley, to the House Republicans’ chief negotiator Cary Condotta when talks were deadlocked over lump-sum payouts to workers. Some Democrats, including House Speaker Frank Chopp, opposed those payouts because injured workers with mounting bills might feel pressured to settle quickly for less than their claim was worth.
Shea, an attorney, suggested paying out money over time through a structure set by statute, similar to the way settlements are sometimes paid out in damage lawsuits.
“It’s an innovative suggestion that gained acceptance among negotiators, and it was a key piece of the puzzle that allowed us to move forward on needed workers’ compensation reform,” Condotta said in a prepared statement.
The settlements will be added to the system later this year for injured workers age 55 and older. The age limit will drop to 50 by 2016.
Vickie Kennedy, chief policy adviser to the director of Labor and Industries, said those workers will still have the current options. After being injured and receiving all the medical treatment recommended by doctors, they can receive partial disability payments, retraining for a new job, or if the injury is so severe they can’t return to work, a pension. If they dispute the amounts of disability payments or pension, they can appeal and go through litigation that may take months or years.
Under structured settlements, they could settle with the state and the employer for a negotiated amount. At that point, they’d be removed from the disability, retraining or pension system, and receive the settlement over time through a formula that allows the first payment to be as much as $24,000 and agreed-upon monthly payments to be no more than about $6,000.
“There are workers who may say, ‘I don’t want to go through training, I don’t want to litigate,’ ” Kennedy said. Some workers on a pension who suffered catastrophic injuries might not want to trade the pension for themselves or their family for a structure settlement that will be exhausted at some point. “It’s not a tool to resolve every claim.”
Structured settlements are used in other states to settle workers’ injury claims in court, but Washington will be the only one where they are part of state law, she said. The department is already getting calls from injured workers seeking more information.
While structured settlements do seem better than lump-sum payments, state Rep. Timm Ormsby, D-Spokane, said he’s concerned that the proposal is untested and didn’t get a public hearing where representatives of business and labor could suggest possible pitfalls and improvements. Some injured workers could become a “demonstration project” for a new system that doesn’t work as well as supporters think, Ormsby said.
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