Dear Mr. Buehrer:
I was in the audience two weeks ago when you spoke to members of the Workers Compensation section of the Ohio Association for Justice during the OAJ Annual Convention in Columbus. I thank you for taking the time to come to our convention to share some of your views regarding the workers compensation system. You spoke of the need to make Ohio’s system more competitive and more attractive to business. Your remarks conveyed the view of the current administration that further reform legislation, including reduction of certain benefits, will be necessary to accomplish that goal.
As you are surely aware, no one is opposed to the goals represented by the perennial motto of the late Governor James A. Rhodes: Jobs and Progress. Any policy debate is not over whether we need more and better jobs, but over how to go about getting them. A perspective gained over the course a career in workers compensation law spanning some thirty four years, including several years in the law department of the BWC in addition to nearly thirty years representing injured workers leads me to offer some suggestions for improving the system without weakening the protections it affords to working men and women injured on the job.
On the employers side of the system, group rating, which in theory involves groups of businesses banding together to spread risk, has devolved in Ohio into a system which permits some employers to pay far less than their fair share of premiums, while burdening others not included in the most favorably rated groups with costs which are well in excess of the risk they bring to the system. In many instances employers who have enjoyed substantial premium discounts based on a favorable group rating have been kicked out of their group after an employee sustained an injury, and consequently subjected to extreme premium increases. In many of these situations, the increase in the employers premiums resulting from loss of group discounts was far in excess of the total compensation and medical benefits paid to the injured worker.
Obviously, the problem here is not the amount paid to the injured worker, but the disproportionate increase in premiums charged to the employer by reason of what may have been a comparatively minor claim. The previous administration had begun to address this problem, and in the Bureaus 2010 Annual Report it was noted that reforms to the group rating system had resulted in a nearly 20% reduction in base premium rates for the majority of Ohio’s private sector employers. While progress has been made in this area, there is more which can and should be done to ensure that premium contributions are set fairly and realistically, and that extreme and potentially ruinous premium increases do not result from routine and anticipated claims costs.
With respect to compensation expenditures, you voiced concern over the fact that Ohio workers compensation claims have what are called in the insurance industry long tails. You pointed out that Ohio pays out far more in benefits three, four or more years after the injury than the national average. While the temptation to address this problem by limiting the time during which claims remain open is understandable, reducing the need for long term benefits would, I suggest, be a better overall strategy than reducing benefits for those in need of them. Two ways to reduce long-term dependence on workers compensation benefits would be to support legislation which would afford injured workers a measure of job security while recovering from an injury, and improving vocational rehabilitation services available to those whose injuries are severe enough to render them unable to continue in their previous trades and occupations.
In 1995, an Ohio Supreme Court decision introduced the concept that in some instances termination of an injured workers employment could result in ineligibility for temporary total or permanent total disability compensation. There is little doubt that, as a result of this decision, many employers have adopted the pink slip as a means of controlling workers compensation costs. It has become altogether too common to see men and women with solid and substantial employment records lose their jobs in the aftermath of a work-related injury. These people are then left to seek new employment, impeded by the dual burden of an injury which limits their physical capabilities, and a history of having been fired from their most recent job. It should go without saying that one of the primary goals of an effective workers compensation system is to return injured workers to the job as soon their injuries permit. A system which gives employers a short-term financial incentive to terminate the employment of injured workers and thereby makes it more difficult for injured workers to return quickly to the labor force is both unfair to injured workers and plainly inconsistent with sound risk management principles.
Finally, both academic and insurance industry studies make it clear that effective vocational rehabilitation, including education and retraining to provide the skills necessary to secure and retain good jobs consistent with an injured workers post-injury physical capabilities, is an effective way to reduce the workers compensation costs which result from long-term dependence on the workers compensation system. In too many cases, however, BWC-backed vocational rehabilitation programs give low priority to equipping seriously injured workers with the skills necessary to return to the work force in jobs which afford wages comparable to those earned prior to the injury. An increased focus on the long term well-being of the injured worker in vocational rehabilitation decision making would better serve Ohio’s injured workers, and their employers.
A few years back, one of your predecessors was fond of saying that BWC stood for Better Workers Compensation. That is, I think, a worthy goal, and one which could indeed pay dividends in terms of Ohio’s economic development. Better, however, does not mean less. I urge you, the Governor, and the General Assembly to consider that making the system better for business need not, and should not, mean making it worse for those in need of the protection it was designed to provide.
Very truly yours,