Workers’ compensation protects employees who are injured on the job by paying the worker’s medical bills and lost wages. In Rhode Island, the workers’ compensation law underwent a major overhaul in 1990. And with the coming of the new year, it will change again.
As of Jan. 1, 1999, businesses will be required to insure all employees — now, those with fewer than four are exempt. The law will exempt designated corporate employees — the president, one vice president, one treasurer and/or one secretary — who will not be considered employees, but may nonetheless elect to be covered.
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Companies caught violating the new statute will be fined $100 per day and forced to shut down until all employees are covered. Recently, Providence Business News discussed the new law with four individuals whom it will directly affect: Chief Judge Robert Arrigan of workers’ compensation court, Donald Vass, president and chief executive officer of Beacon Mutual Insurance Co., Bill Allen, vice president of Troy, Pires & Allen Insurance, and Lenette F. Boisselle, vice president of governmental affairs for the Northern Rhode Island Chamber of Commerce.
PBN: Discuss how each of you is preparing for Jan. 1, when the new law will take effect?
BILL ALLEN of Troy, Pires & AllenAllen: I’m an insurance salesperson, and obviously the influx of new business into the insurance marketplace for workers’ compensation will have an impact on us in the month of December. A lot of people are going to have to be educated on the workers’ compensation provisions — or on workers’ compensation at all, because many of our small clients really have no clue as to what it does. We’re starting the education process now.
BOISSELLE, of the Northern Rhode Island Chamber: This is a busy time for us as well right now, as we are doing the education, just as Bill was suggesting. And trying to help especially our smaller businesses to help them understand, what is workers’ comp., why do we have workers’ comp. to begin with, who’s covered, how do they get it — those are the types of questions that we are hearing. It’s fear out there for many small businesses who haven’t been in the market since the pre-’90 reform days, and have visions of huge premiums. That’s just not the case, as it used to be.
DONALD VASS of Beacon Mutual: Beacon, as you may know, is the carrier of last resort in Rhode Island. So, any of the businesses that would be unable to get insurance from a private carrier would come to Beacon and Beacon would have to take them. Anyone that comes to us with a check and a completed application we have to take. So, we are anticipating a large influx of new business come the first of the year. We have mixed blessing regarding this. There are going to be good employers coming in who keep good records and do everything properly and there are going to be employers that do not keep good records and are going to be very difficult to get the proper premium from, and that’s going to be a negative factor on the good employers because it’s going to impact the rates if we’re not collecting (the proper) premium from everyone. It’s going to cause the rates for the good employers to go up.
ARRIGAN, Chief Judge of the Workers’ Compensation Court: I agree with Lenette and Don, it’s essentially an issue of education, basically. Once more we’ll go back to basics, show people what they have to do and how they’re supposed to do it. I think one of the things that will probably lessen the difficulty that you might have had with this change is the fact that the implementation was put off for a six- month period of time. But I think we’ve become much more sophisticated in Rhode Island in the last five years, particularly since the 1992 reform package. So there really shouldn’t be a fear out there either from and employer point of view or an employee point of view.
I think the support of this legislation by the Advisory Council, on which both Don and I sit, was fundamentally, the intent was a fairness issue. A more difficult problem (for the council) seemed to be coming at us and that was the issue of fraud. Not so much employee fraud but employer fraud. How much is there? Nobody seemed to have a handle on (it).
Vass: I think one of the things that has to be remembered is that this is not unique to Rhode Island. There are only 15 states that have numerical exclusions (for the workers’ compensation law) of any sort, and of those they’re not clear. Some of them, Florida, the one that comes to mind, if you’re a contractor everyone is included, there are no exclusions. Every state in the northeast requires everyone to have comp., including sole proprietors, partners — there are not the exclusions that exist in Rhode Island. We’re not taking the lead in this area, we’re sort of following what’s going on.
Allen: Along those lines, the customers that I’ve spoken to (and) explained that Rhode Island is really the only state with a numerical exemption in the area, and that their competitors in Massachusetts or Connecticut are all really at a disadvantage to them, start to see the picture, and can more easily understand that they’re not going to be put at an unfair disadvantage — as long as the rates hold in line. The rates in Rhode Island are still a little bit higher than the neighboring states in a lot of the classifications, I think adding the additional dollars into the system will bring the rates down, because obviously there will be more dollars to pay for losses.
Boisselle: There’s an emphasis (in the new law) on getting the employee back to work , and that’s where the emphasis should be placed. That helps to keep the cost of the system down. That’s where the employer and the employee can work together to keep costs down and go forward. To me that’s the key, helping that employee get back to work as quickly as possible.
PBN: How will the law affect competing businesses in Rhode Island?
Boisselle: Well, as they mentioned earlier, Massachusetts covers everyone. So Rhode Island — if you were a three or under employer and you didn’t carry workers’ comp. — you might be at an advantage. It’s going to be more of a level playing field, although the rates are different in some of the categories.
Allen: And there’s very few Rhode Island employers who don’t have someone working –particularly in the contracting fields — who don’t have someone working in (Massachusetts).
Vass: Right. And so they’re working illegally. And Massachusetts for one is very tough on employers.
Allen: It’s not unusual to get a phone call from someone on a job site saying, ‘I just got kicked off the job site because I don’t have workers’ compensation’ — this is someone working in Massachusetts — saying, ‘I need workers compensation today.’ And it’s, under those circumstances, not an easy thing to do, to try to find a Massachusetts carrier that will write a Massachusetts policy on the spot, or within a day or two. It’s not easy. But now this will, obviously, go a long way toward fixing that problem.
PBN: An Occupational Safety and Health Administration consultant told me that one of the leading causes of injury in the workplace — and the subsequent rise in workers compensation costs — is ergonomics. Including repetitive motion injuries and workers failing to follow proper safety procedures. How are companies and the insurance industry dealing with this?
Vass: We have a staff of ergonomic experts and a half a dozen physical therapists work on our staff, and that work with large and small employers. In the case of large employers it’s job site training. In case of small employers we hold sessions throughout the state where we invite the small employers geographically to participate in training programs, so we are addressing ergonomics both with the large and small employers, and we are the largest carrier in the state.
Arrigan: I think from a government point of view, over the past several years the department of labor and training has conducted numerous seminars which have included ergonomics as a topic. Before ’92 we were woefully in the rear on the issue of ergonomics and safety. I think if there’s one little piece left to be done in the reform, which was basically left until now, it’s this issue of safety and ergonomics as a method. I think you’ll find, if I could look in to the crystal ball, in the next year or so there will be an ever greater emphasis on safety and ergonomics.
Allen: The experience rating formula really takes in that safety issue, and as Don alluded to, Rhode Island has the lowest threshold to get into the experience rating formulas of any state in the country. A small employer can therefore really benefit by adopting the safety issue — there again that’s an education issue: they’re going to have to be educated to know that that’s going to happen. I would think that most of the one to three employee firms that are going to come into the program will meet that $2,000 minimum premium for an experience rating mod.
Vass: We insure the Rhode Island Builders Association safety group. It has a lot of small contractors in it. And it’s amazing how attention to safety can keep loss ratios down. Their board of directors requires them to hold tool-box sessions on safety, and the employees have to attend so many meetings a year, the employers have to attend meetings to stay qualified, and the results have been phenomenal. The group’s been in place since 1994, they’ve gotten big dividends back, they’re now getting a large discount on their premiums. The results have been great.
Boisselle: The challenge for us, as a chamber, with the repetitive injuries is dealing with the small employers. You have to remember, many of these folks are mom and pops, and they’re busy trying to bill, trying to make sure their books are in line, trying to make sure their phone system works — many, many issues they face day in and day out. The challenge is to get them to be able to take a breath, and to look at the safety issues. And to then implement some of the safety programs.
