There was a time, not long ago, when the Rhode Island’s workers’ compensation was broken – badly broken. But then in early1990s, business and labor interests put aside the bulk of their differences – the system was ostensibly fixed. Now, small business advocates want to make sure it stays fixed.
Efforts to reform a workers’ compensation system out of control began in the mid-1980s, but more often than not, failed to take hold. In 1985, for example, a hearing officer system was established – adding further chaos to a chaotic system.
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For the balance of the 1980s, workers’ compensation insurance rates climbed – and climbed. Small businesses were being crippled.
Finally, in 1990 a series of significant reforms began to take shape. Radical changes to the system were adopted between 1990 and 1992. The entire system was overhauled. The Beacon Mutual Insurance Company was established to handle much of the state’s workers’ compensation market. Rates soon dropped. Insurers that had left the Rhode Island market because of the high cost of workers’ compensation – like Travelers and Liberty Mutual – returned.
But the workers’ compensation system is an imperfect one. For example, a report by the New York-based Actuarial Solutions – released last year – documented significant improvements in the Rhode Island system, noting the average workers’ compensation cost decreased approximately 16 percent from 1998 to 1999. That decrease is better than the national average, of 9 percent. But ten other states, according to the report, experienced even greater decreases during the same period of time.
Utah and Arizona, for example, ranked as the lowest cost states in terms of workers’ compensation insurance.
The system in Rhode Island is unquestionably improved. But there is concern – particularly on the part of the small business community – that any sense of complacency could drive the system closer to where it was, than where it has been going.
“Every small business client I have, that is their business fear that the workers’ compensation reform will stop,” said George Furtado, a lawyer with the Providence firm Gallagher & Gallagher, who specializes in workers’ compensation cases.
Furtado is a member of the Rhode Island Small Business Administration Advisory Council and its legislative committee. The chairman of that committee is Grafton H. “Cap” Willey, IV, and a principal in the Providence accounting firm Rooney, Plotkin & Willey. Just last month, Willey expressed concerns about workers’ compensation in a letter to Sen. M. Teresa Paiva-Weed, a Newport Democrat and chair of the Senate Judiciary Committee. Willey asked that the state legislature to make sure it continues to fill vacancies on the state Workers’ Compensation Court, as soon as they arise.
The fear of the small business community is that because the system has improved, the perception may be that filling judicial vacancies may not have the same urgency as it has in the past. As Willey made clear in his correspondence to Paiva-Weed, that is not necessarily the case. Willey urged that two recent vacancies in the court be filled.
The latest vacancies, in fact, are in the process of being filled with the appointments of Edward P. Sowa, who has been confirmed by the full Senate and Dianne Connor, who has been nominated by the governor and is awaiting Senate confirmation. Sowa, in fact, is already on the court docket and scheduled to hear cases.
But the retirements will continue. Judge Carmine Rao will leave the court this fall and there is talk of other judges possibly retiring.
Willey’s letter to Paiva-Weed read in part; “The recent decrease in premiums due to the 1990-1992 reforms is gratifying; but it is our plea that nothing detrimental occur which could alter this trend. Our small business owners are aware that the court’s caseload has dropped over these same several years; however, they are also aware that each case is much more complex. Experts in vocational rehabilitation, ergonomics and of course the medical sciences are routine in many cases. ”
Gate” cases hold enormous possibility of exposure for carriers and self-insured employers. Pre-trials on new petitions are heard usually within 21 days, but never longer than 30 days from the date of filing. This pace is not only important symbolically as a contrast to the months and months of waiting prior to reform, but is more significant in its practical effect on lower premiums.”
Furtado is confident that the workers’ compensation reforms will hold, but he is watching them closely. The replacement of judges, he said, is one example of the system’s delicacy.
“Labor agrees,” said Furtado. “Business agrees. There is no dispute that these judges need to be replaced. It is to everyone’s benefit to have a system that is operating well.”
The small business community – Furtado’s clients – know first hand that the system remains a challenging one in which to operate. Simply put, workers’ compensation insurance is expensive.
“Yes, premiums have gone down,” said Furtado. “But that doesn’t mean they are cheap.”
Perhaps most encouraging is that the workers’ compensation system continues to be tweaked – and that by all accounts, business and labor continue to reach consensus on important issues.
Legislation is expected to be passed in the closing days of the current legislative session that will move rehabilitation programs under the auspices of the Workers’ Compensation Court, from the state Department of Labor and Training.
