Workers' compensation is back on the front burner, under attack again by Chamber of Commerce

Workers' compensation is back on the front burner, under attack again by Chamber of Commerce
BY DAVID RANII - New OBserver Staff Writer

When a coalition of business groups led by the powerful N.C. Chamber launched an assault on workers' compensation benefits six years ago, trial lawyers and organized labor turned back the attack with a grass-roots lobbying effort.

But the controversy over the state's system for compensating workers injured on the job has been simmering ever since. And this year the business groups are taking another run at the system they love to hate with the help of a not-so-secret weapon - both the state Senate and House are controlled by Republicans for the first time in more than a century.

The fireworks already have begun.


Last Tuesday - a day before the introduction of a workers' comp bill co-sponsored by Rep. Dale Folwell, a Forsyth County Republican who is speaker pro tem - hundreds of injured workers, union members, AARP members and others descended upon the General Assembly in a show of support for the status quo.

Critics of the current system complain it's rife with abuse and gives injured workers an incentive to stay at home. They cite a study by the nonprofit Workers Compensation Research Institute that found that total costs per claim in North Carolina averaged more than $42,000, 44 percent above the median of 16 states studied.

"It has really developed over time, I think, into a system that kind of rewards people for staying out of work or avoiding coming back to work, and it kind of punishes, to a certain extent, those who come back to work," said Raleigh lawyer Bruce Hamilton, who represents insurers and employers in workers' comp cases.

Supporters of the system say employers want to push injured workers who can't perform their old jobs into unsuitable positions that pay much less and may not offer benefits such as health insurance.

They say the WCRI cost study is flawed. They go on to say that cost-per-claim is irrelevant considering that data compiled by the Oregon Department of Consumer and Business Services shows that premiums paid by North Carolina employers for workers' comp insurance are just a tad above the national average.

They defend the workers' comp benefits available today and contend that cutting them would shift the costs from businesses to taxpayers. And they tell heart-rending stories of workers whose lives and financial well-being have been overturned by severe injuries.

Down-sizing benefits "is going to put the injured worker in a tough spot," said Jeremy Sprinkle, communications director and general operations manager of the state AFL-CIO. "Who is going to look out for that person? That person is going to have to go on public assistance of some sort."

The business lobby contends that reforming the system will improve North Carolina's ability to attract and retain employers and, ultimately, will mean more jobs.

Kevin Toomey, CEO of Greensboro's Kayser-Roth, which makes No Nonsense and Hue brand hosiery and apparel, said North Carolina needs to "level the playing field" because nearby states have more business-friendly workers' comp systems.

He said of North Carolina's workers' comp system: "If I would look to expand here, if I had a piece of paper that said 'pro' and 'con,' it would be 'con.'" Kayser-Roth employs 1,300 workers in North Carolina at its headquarters and at plants in Asheville, Burlington and Lumberton.

Advocates for workers say such arguments are a red herring. The current system, they note, hasn't prevented Site Selection magazine from perennially ranking North Carolina's business climate first in the nation .

Nobody gets rich on workers' comp.

Compensation for being off work is capped at two-thirds of a worker's wages, up to a maximum of $836 per week. Once a worker starts receiving benefits, the amount is frozen; there is no cost-of-living increase.

Medical costs stemming from the injury also are covered. Workers also can be compensated for severe injuries. The loss of a hand, for example, entitles the injured worker to 200 weeks of additional benefits.

The benefits cap

The most hotly contested provision in the wide-ranging bill before the House would cap the length of time most workers can receive benefits. Currently, there is no cap.

"If I get hurt on the job today, I can collect benefits until I die," said Ray Evans, director of the N.C. Rate Bureau, which represents the nearly 300 insurers that offer workers' comp policies in the state.

The bill calls for capping income benefits for most workers at 500 weeks, a little more than 9-1/2 years. It carves out exceptions for "totally and permanently disabled" workers with severe injuries such as: loss of both arms, both legs or both eyes; "severe paralysis" of both arms or both legs; and severe brain injury.

In addition, workers already receiving workers' comp benefits would be grandfathered in and wouldn't be affected by the cap, Folwell said.

Folwell wields a chart showing that of the states surrounding North Carolina, South Carolina and Virginia have 500-week caps, and Tennessee and Georgia limit benefits to 400 weeks. That compares to "lifetime" benefits in North Carolina.

"If you were in one of those border states, wouldn't you want to make sure that [companies] have a copy of this?" Folwell said.

But opponents of a cap say it isn't fair and isn't right.

"It doesn't make sense to halt benefits if a person still can't work," said Victor Farah, a Raleigh lawyer who represents injured workers.

A cap, Farah and others argue, would be especially devastating to young workers who expected to be wage-earners for decades - until injuries derailed their careers.

"At age 25, you haven't paid enough money into Social Security to get much of anything," said Dan Deuterman, a Greensboro lawyer who represents injured workers. "So you can't get Social Security disability. You won't even get Social Security retirement."

Another hot-button proposal in the bill would give employers and insurers the ability to talk with an injured worker's doctor without the worker's consent.

At the same time, however, the bill would extend the weeks of benefits for workers with partial incapacity who are physically unable to perform their old job and end up taking another at lower pay. The bill would extend the benefits, which call for workers to receive two-thirds of the difference between their old wages and their new wages, from the current 300 weeks from the date of the injury to 500 weeks.

300 weeks vs. unlimited

The current system, business groups say, discourages injured workers from taking a lower-paying job because workers balk when they compare 300 weeks of benefits versus the potential for unlimited benefits if they don't go back to work at all.

Capping those unlimited benefits and simultaneously extending temporary benefits would provide "a balance" to the system, said John McAlister, lobbyist for the N.C. Chamber.

If it becomes law, "there is no more incentive to stay out of work than there is to come back to work," he said. Meanwhile, the employer would have greater incentive to find the worker the best-paying job possible because the employer would be on the hook for 200 additional weeks of incentives.

But supporters contend that capping benefits for most workers at 500 weeks would be cruel to future Daniel Raybons and Frank Etheridges.

Raybon, 36, of Zebulon, didn't let his cerebral palsy stop him from getting work as a grounds maintenance worker. But his dozen years on the job ended in 2006 after he had an accident while driving a small utility vehicle. He broke his femur in the accident, and the resulting infection ultimately necessitated amputation of his right leg above the knee, according to interviews with Raybon and his mother, Cathy Mitchell.

Today Raybon uses a wheelchair. He's been outfitted with three different prostheses but, so far, hasn't been able to walk on his own. And, instead of living independently as he used to, he has moved in with his mother and her second husband. Last year, his mother quit her job as an office manager to take care of him.

"He takes 24-hours-a-day care," she said. "There is bathing and toileting and exercising and going to and from places."

Etheridge, 61, is a former major for the State Capitol Police in Raleigh who hurt his neck and shoulder on the job in the summer of 2004. He never really recovered.

But he loved his work and was determined to return. He took a desk job, but the constant pain and an inability to meet the department's requirement that he be able to use his gun - "I couldn't squeeze my trigger" - forced him to retire.

Today Etheridge drinks his coffee only from styrofoam cups, because tremors make it difficult to hold on to objects.

His reduced income on workers' comp has been a financial hardship, but that's not the worst part.

"Our lives are not the same and never will be," said his wife, Vicky. "I'm no longer a wife; I'm a caretaker. ... If I could have anything, I would like my husband back."

Injuries such as Raybon's and Etheridge's don't appear to qualify for more than 500 weeks of benefits under the bill proposed last week.

From the employer's perspective, Rod Jennings, the workers' compensation manager at Goodyear's 3,000-worker tire plant in Fayetteville, argues that reforming the system "is absolutely essential for this state."

Goodyear, which is self-insured, has spent $133 million on workers' compensation claims since 2000. That figure includes payments for lost wages, medical costs and administrative expenses, including litigation costs. Goodyear's workers' comp costs in Fayetteville are more than 50 percent higher than the company's average manufacturing plant on a man-hour basis, which compensates for different-size plants, according to data supplied by Jennings.

Jennings blames the difficulty of getting employees back to work under the current system for the higher costs.

"It has a huge impact on our cost per tire," he said. "We have to make [nearly] 2,500 tires a day just to pay the workers' comp costs."

Sen. Doug Berger, a Democrat from Youngsville, anticipates that any bill that is able to win a majority in the General Assembly and be signed into law by Gov. Bev Perdue would be a "balanced" measure forged by compromise.

An overriding issue, Berger said, is that Republicans suffer injuries in the workplace too.

Read more: http://www.newsobserver.com/2011/04/10/1116636/workers-compensation-is-back-on.html#ixzz1JEfyOBYs