U.S. lawmakers urge federal comp oversight

While a group of U.S. congressmen has called for greater federal involvement in workers compensation programs, it will be up to state governments to revise their comp programs to ensure injured workers receive the benefits and medical care they need.

“I think we'll see more regulation on the state level versus any kind of federal oversight,” said Christopher Flatt, managing director and leader of Marsh L.L.C.'s Workers' Compensation Center of Excellence in New York.

A group of Democratic Senate and House of Representative members asked the U.S. Department of Labor last month to increase federal scrutiny of state workers comp programs following reports by National Public Radio and investigative journalism website ProPublica Inc. detailing workers comp benefit cuts nationwide and opt-out programs in Texas and Oklahoma.

The letter said the lawmakers are “concerned about a pattern of detrimental changes to state workers compensation laws and the resulting cost shift to public programs like Social Security disability insurance.” The lawmakers also said they believe “changes to workers compensation over the last decade have been pushed by big businesses and insurance companies on the premise that costs are out of control.”

“We believe the Department of Labor should take a renewed interest in strengthening oversight of state workers compensation programs by using the agency's expertise and authorities,” the letter reads. “In particular, we would welcome a report from the department on how it will reinstitute oversight of state workers compensation programs, what areas it intends to address and whether added authorities are needed to better ensure ... that the interests of injured workers and taxpayers are protected.”

Democratic presidential candidate Sen. Bernie Sanders, I-Vt.; Rep. Bobby Scott, D-Va.; Sen. Patty Murray, D-Wash.; Rep. Chris Van Hollen, D-Md.; Sen. Ron Wyden, D-Ore.; Rep. Sander Levin, D-Mich.; Sen. Al Franken, D-Minn.; Rep. Frederica S. Wilson, D-Fla.; Sen. Sherrod Brown, D-Ohio; and Rep. Xavier Becerra, D-Calif., all signed the letter.

Workers comp experts say they don't believe the Labor Department has jurisdiction over state comp programs, though it does oversee some federal programs for injured workers. These include the Longshore and Harbor Workers' Compensation Act, which covers maritime workers, and Black Lung Benefits Act, which covers coal miners.

Implementing uniform workers comp regulations across states likely would be difficult because it would require buy-in from numerous stakeholder groups, said Pam Ferrandino, New York-based executive vice president and casualty practice leader at Willis North America Inc.

“In a perfect rational world, maybe national standards would make sense,” Ms. Ferrandino said. “But the reality is there is so much special interest into the process at the state level — whether it's attorneys, lobbyists, regulators, workers comp boards and maybe even insurance companies — that like workers comp to be managed on a state-by-state basis.”

Cost-prohibitive?

Keith Bateman, vice president of workers compensation at the Chicago-based Property Casualty Insurers Association of America, believes that it would be difficult for the federal government to oversee workers comp programs for each state since it would be costly.

“The federal government has trouble overseeing its own programs, much less the programs of 50 states,” Mr. Bateman said.

He noted that a federal commission was convened back in 1972 to determine a series of recommendations to improve state workers comp programs.

Many states adopted recommendations made by the National Commission on State Workmen's Compensation Laws, such as mandating employers of all sizes to provide comp insurance and requiring coverage for occupational diseases. But Mr. Bateman believes that the current national political climate would prevent a similar commission from having much impact today.

“That was the sort of the high-water mark of the national standards effort,” he said.

Marsh's Mr. Flatt said the Pro-Publica and NPR reports highlighted workers comp cases that raise questions of whether injured workers are being treated fairly. In light of the reports, he believes states might look at reform efforts that would help reduce administrative costs while bolstering benefits.

He pointed to 2012 California reforms as a possible template for state law changes that could happen in light of recent criticism. The California reforms increased benefits for injured workers and cut costs through measures such as independent medical reviews and fee schedules for workers comp-related services.

“I think making attempts to drive out unnecessary costs in the system, while at the same time creating a better way to treat employees or make sure they're getting the best care, that's the kind of legislation ideally we'd want to see, and I think we will see it,” Mr. Flatt said.

Ultimately, state legislators may be best equipped to work with employers, insurers and labor unions to determine how best to represent the needs of those stakeholders, said Joe DiGiovanni, senior vice president of state affairs with the American Insurance Association in Washington.

“There's no reason why reasonable minds shouldn't be able to sit down and promote something without putting a layer of federal standards over what's probably best dealt with locally,” Mr. DiGiovanni said.