Work Comp Bill Package Deserves Boot

Saturday, February 24, 2007 | 0

After more than a decade trying to woo businesses back to Connecticut, there are 18 bills in the state legislature that could combine to increase the reality the state is not a friendly place to start, grow or relocate a business. They are part of a workers' compensation package with elements that either go too far in allowing for larger payouts or are feel-good reforms that have little impact other than to add to the anti-business arsenal.

In 2006, Forbes magazine ranked Connecticut 28th out of 50 states for businesses. The result is buoyed by scores in quality of life (fourth) and labor pool (eighth), but dragged down by factors such as the cost of doing business and regulations, where the state is ranked 43rd.

Now add workers' compensation bills working their way through the legislature. These are the very laws that were part of reforms started in 1993 to reverse the tide of the state's fiscal crisis and have resulted in a cumulative savings of $750 million since.

The late '80s and early '90s were horrible for the Connecticut economy. At the time, businesses small and large looked for just about any reason to get out of the state. One of the huge culprits, but not the only one, was Connecticut ranked in the top three, and often at the very top, in workers' compensation payouts. This means Connecticut businesses paid out more workers' compensation benefits to employees than states much larger, such as New York and California.

Today, even after the compensation law reformation of the early '90s, Connecticut still hovers around ninth in the nation in compensation payouts. These payouts are measured and they are a better balance between the needs of the employees and the workers.

The committee to review all of the bills is the Labor and Employment Committee, led by state Sen. Edith Prague, D-Columbia.

The 18 bills being proposed span a number of compensation issues, including doubling the time limit for which an employee can apply for certain kinds of compensation from 10 to 20 days and increasing penalties for insurers who do not pay in a timely manner, which seems reasonable. But it also includes an enormous and excessive leap in the amount of compensation that can be received.

Now, an injured worker is allowed to get several weeks (or several dozen, depending on the injury) of compensation. With an appeal under current law, one of the 15 commissioners at the state Workers' Compensation Commission can double that award. For example, an injured construction worker or nurse may get about six months in benefits, if the compensation is doubled. Under the new bill, a commissioner, at his or her whim, can add up to 10 years of payouts.

Creating this kind of discretionary reward means there could be vast differences in how compensation claims are ruled -- not to mention how businesses, large and small, and their insurance carriers are hit. And although appeals within the commission and in courts will be allowed, it will also create a climate where neither employer nor employee can be comfortable with the potential outcomes of the case. With more than 50,000 workers' comp claims in the last fiscal year, the trial lawyers should do nicely, however.

Potential effects

The potential impacts on businesses come from multiple angles with these bills.

First, and most obvious, is the cost to a business of paying more for workers' compensation, based solely on a commissioner ability to increase payout amounts. With the cost of doing business rising dramatically in areas such as energy, fuel and property tax, does it make sense for the state to hit companies with more -- and random -- cost increases?

Increase the payouts for compensation and the insurance rates for these companies will rise, too. Insurance companies set rates based on industry standards. So, if a particular job has a higher compensation payout -- even if the number of cases are the same or down -- the insurance rate for that job increases. Businesses that have been blessed and not had to pay out significant compensation cases will also lose. This has the potential to hurt smaller companies the most.

Increasing the potential for a financial windfall also increases the chances for fraud. Even if the fraud is detected, that is time and money a business has expended to fight a faulty claim.

No one is suggesting employees go unprotected. As stated, some of the 18 bills have merit. But overall, the intent behind them is short-sighted.

Job growth in Connecticut is stagnant, except for the casinos. Connecticut is falling far below the national average in job creation. The work force is aging.

Creating a climate where there are greater job opportunities for a spectrum of people creates a stronger economy for everyone. A stronger economy, where businesses must compete for the very best employees, means companies must be more vigorous in their benefits for their workers.

Creating higher costs for businesses, which some of these 18 bills will certainly do, hurts everyone except the insurance companies and the lawyers.

Both houses of the legislature are controlled by Democrats, who have veto-proof majorities. The fact they are so strong means Connecticut residents have entrusted them to watch out for our interests.

That means not only caring for our workers, and statistically, we are, but for our businesses as well. It also means as we tighten our belts because of cost increases, we expect the legislature to show fiscal restraint. This well-meaning but unreasonable package of bills does not meet that criteria. They should be rejected.

This column first appeared as an editorial in Norwich Bulletin on Feb. 18, 2007.

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