The Monument - Community News for Gray, New Cloucester, Cumberland, N. Yarmouth, Raymond and Windham Maine

Marty Riskin's cartoon is below

ACT NOW OR PAY LATER -- 1992 WORKERS' COMPENSATION REFORMS ARE IN JEOPARDY
Guest Editorial by Jon A. Fitzgerald, Attorney, Bernstein, Shur, Sawyer & Nelson

The waning days of the current legislative session will shine a bright spotlight on issues currently plaguing Maine's workers’ compensation system. Amidst ongoing budget debates and Legislative Leaderships end of session push to complete its business well in advance of the April 17 statutory adjournment date, Governor King has just submitted legislation to reverse a decision handed down in February by the Maine Supreme Court.

With the addition of this new piece of legislation, Governor King now has two very important legislative proposals focused on the workers’ compensation system that are still pending during the final days of the last legislative session in which he will participate as the Executive. The gravity of the present situation is underscored by the King Administrations focus on the system and its attempts to construct reasonable solutions. Acting outside the constraints of party politics and unencumbered by aspirations for higher political office that might otherwise prevent calling attention to these difficult and contentious issues, Governor King's actions deserve our collective attention.

The Governor has introduced two bills seeking to: (1) reform the governance and fiscal management of the Maine Workers’ Compensation Board; and, (2) overturn a Maine Supreme Court Case to prevent Maine businesses from absorbing a staggering increase in workers’ compensation costs. In Kotch v. American Protective Services, the Court ruled that work-related and non-work-related injuries could be combined for the purposes of determining whether a worker is eligible for lifetime benefits, even if that pre-existing, non-occupational condition was not affected by the work-related injury.

The outcome of the pending legislation will clearly influence the cost of doing business in Maine, but it is up to the Legislature to determine the direction in which that cost will move. In these challenging economic times, neither the state nor its many businesses, large or small, can afford unanticipated cost increases for workers’ compensation insurance. How big an increase are we talking about? Early projections suggest the Maine Supreme Court decision alone will cause workers’ compensation premium rates to rise sharply in order to collect the additional $43 million annual price tag.

While that decision, in isolation, may translate to an approximate 15% increase in premium rates, it is critical to keep in mind there are other factors that drive up workers’ compensation costs, including the cost of health care. It is also important to understand that $43 million is a conservative estimate because the expense to self-insured companies will likely be considerably more. Moreover, that figure does not account for the retroactive cost for cases already in the system. The retroactive impact could be staggering.

The fact that Maine could again rank among the most expensive states for workers’ compensation costs is significant, but perhaps not as noteworthy as the policy ramifications of the Maine Supreme Court's decision. As articulated by the Court, when the 1992 Blue Ribbon Reforms were enacted, the Legislature intended to preserve long-term benefits for workers suffering from the greatest degree of impairment. Intuitive as it may seem to want to reserve the highest level of benefits for those employees suffering from the most severe occupational injuries, the Court has opened the floodgates by ruling that pre-existing, non-occupational diseases or conditions can combine with injuries incurred on the job for the purposes of determining eligibility for lifetime benefits.

In other words, a person who injures their back while working may qualify for a higher level of benefits if they also suffer from a condition, such as high blood pressure, asthma or an old knee injury, that was neither caused by nor aggravated by the work injury. As a result, that person may actually have a higher degree of impairment and qualify for greater workers’ compensation payments than an individual with a sole work injury.

If the system is designed to compensate workers who are injured on the job, then it is inappropriate to consider non-occupational injuries or conditions, having no connection to the actual work injury, for the purpose of determining the level of benefits to which an individual may be entitled. It is not only contrary to logic and sound policy, but failing to reverse the Court's ruling will turn the present workers’ compensation insurance system into a hybrid policy of disability insurance for non-occupational injuries, hardly what the 1992 reforms were intended to accomplish.

Any decision to include this broader pool of non-work related injuries to the workers’ compensation system is a radical departure from existing policy. That is why our Governor has put this issue squarely in front of the Legislature. Such a drastic policy departure should only be the product of reasoned deliberations by policy makers in Augusta making a conscious and defensible choice. It must be defensible because, in the event that the Legislature fails to act, legislators will have to explain to policy-holders and businesses across the state why their workers’ compensation rates have risen so sharply. For Maine businesses receiving notice of premium increases during the summer and fall, as well as for policy-makers in Augusta, the economic and political implications of a failure to act will be acute.

Jon A. Fitzgerald is a legislative and regulatory attorney at Bernstein, Shur, Sawyer & Nelson in Portland and Augusta. His practice concentrates on representing clients in the Maine Legislature and before state regulatory agencies. He is a resident of Falmouth.