March 27, 2017 | By Elissa Rex
“We need to give other states the option because competition will improve the system.”
– Levi McCathern, Texas Attorney
Best’s News Service via Bestwire – March 23, 2017 03:03 PM
Austin, Texas – A new report claiming the Texas workers’ compensation model performs better than mandatory systems will be used by proponents to tout alternative systems to state lawmakers. However, insurance trade groups, which have opposed these bills, warn there are several key issues to be considered.
The voluntary system in Texas — the only state in which employers are not mandated to purchase workers’ compensation coverage — has helped employers and employees by shortening disability periods after accidents, reducing the number of claims disputes, lowering costs and speeding claims payouts, according to the report from the Texas Public Policy Foundation, a nonprofit, nonpartisan research institute that promotes free enterprise in Texas.
The report “goes a long way to clarify and confirm public policies that support a competitive alternative to workers’ compensation,” according to Bill Minick, the president of PartnerSource, a retail insurance broker and consultant specializing in the design, implementation and support for workers’ comp alternatives in Oklahoma and Texas.
Legislation for alternatives to workers’ compensation has emerged in Arkansas and Florida — bills Minick said “popped up organically” based on data showing alternatives provide superior outcomes. Minick said supporters have six years of legislative and political experience to use in informing state lawmakers about alternative workers’ comp systems. The TPPF report, he said, “should be very influential in that process.”
The American Insurance Association said the report mischaracterized the Texas workers’ compensation system, noting employers have to opt into the system. About 78% of Texas employers are covered by the state’s regulated workers’ compensation system.
“The strength and stability of the Texas’ workers’ compensation marketplace is due to the reforms that were enacted in 2005,” said Fred Bosse, the AIA’s Southwest Region vice president.
He noted the Texas system — and the Oklahoma system state courts declared unconstitutional — raise policy questions lawmakers must consider. These include ensuring the uniform protection of workers and employers; uniform recompense for a work-related injury, regardless of employer; and not allowing cost-shifting to other benefit programs or to a public benefit program.
Minick said fewer costs are shifted when programs such as those in Texas achieve better medical outcomes and better wage-replacement benefits. He also claimed no greater incentive exists for workplace safety than the negligence liability exposure for Texas nonsubscribers.
The report also noted a 2016 U.S. Department of Labor report, which said state workers’ compensation systems increasingly are failing to provide workers with adequate benefits. Potential policy remedies recommended by the DOL included consideration of increased federal oversight of state workers’ compensation programs (Best’s News Service, Oct. 5, 2016). The TPPF report claimed some career Labor Department officials are pushing to abolish or impair the Texas system lest it be emulated elsewhere.
“Intentionally or unintentionally, this ends up being a response” to the DOL report, according to Levi McCathern, a Dallas-based attorney. “Not only do we not need to federalize [workers’ compensation], we need to give other states the option” because competition will improve the system.
An attempt to gain Labor Department comment was not immediately successful.
By Thomas Harman, Washington Bureau manager, BestWeek.