Lawmakers begin exploring workers’ comp reforms
NASHVILLE (AP) — Every day in Tennessee, a company will decide to locate or expand elsewhere because costs are too high within the state’s workers compensation system, state officials told lawmakers Tuesday.
That means lost jobs and tax revenue for Tennessee.
Members of the Senate Commerce Committee want to make sure that other factors such as the economy aren’t causing businesses to leave or stop expanding in the state. And if workers’ comp costs are driving companies away, the legislators want to know exactly what is driving the system so far out of whack.
They were seeking hard data Tuesday as Gov. Phil Bredesen’s administration began making its case that Tennessee’s workers’ compensation laws are no longer competitive with other states.
‘First we need to determine is there a problem and then what the problem is,’ said committee chairman Jerry Cooper, D-Morrison.
Administration officials said they would provide information but in the meantime gave anecdotal evidence from a few companies.
Economic and Community Development Commissioner Matt Kisber cited a letter from the president of McKee Foods, who said that for every $1,000 spent on workers comp in Arkansas, the company spends $3,920 in Tennessee. And the average cost of a musculoskeletal disorder claim is $10,200 in Tennessee, compared to $1,400 in Virginia.
Another letter from Dana Corp. to the governor said it has created nearly 3,000 new jobs at plants in Kentucky but none at its Tennessee facility because the cost of workers’ compensation here this year is 5,900 percent more than in its northern neighbor.
Part of the issue is that Tennessee is one of only two states with a court-based system, Kisber said.
‘A successful business cannot base its bottom line on chance or luck of the draw,’ he said. ‘But in our state, businesses are expected to accept chance when worker compensation claims end up in our court system. There is simply no predictability.’
Medical costs also may be a key driver of the cost, in part because Tennessee has no fee schedule, lawmakers were told. That means doctors are paid what they want to charge rather than receiving a set price as in many other states.
Another problem is the ‘multiplier’ used to determine how to compensate workers with permanent partial disabilities from an on-the-job injury.
Labor Commissioner Jim Neeley said those have been consistent complaints during his visits to factories across the state during the past year.
Neeley is one of three Bredesen Cabinet members with extensive experience in battles over workers’ comp.
During the 1990s, he lobbied for the Tennessee AFL-CIO. His nemesis at the time was business lobbyist Dave Goetz, who is now finance commissioner. And Kisber was a state legislator who sponsored workers’ comp reform legislation.
Administration officials said they’re not trying to protect businesses alone, but workers as well.
Commerce and Insurance Commissioner Paula Flowers said she would like to do something about employers who are self-insured and ‘teetering on the edge of solvency.’ If they fall into bankruptcy, injured workers have to go to court and fight other creditors to get their claims paid, she said.
Also, Neeley said Tennessee is among the slowest to ensure that injured employees get their first payment promptly. They’re supposed to receive it within 15 days but insurance companies often drag it out two or three months because there is no penalty in the law, he said.
‘Our system is not broken all the way down. It’s just got some areas that need to be looked at,’ he said. ‘I’m not saying we should take the hide off the worker, … but it’s time for us to be responsible and protect the jobs we’ve got, which benefit everybody in the state.’
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On the Net:
Tennessee General Assembly: http://www.legislature.state.tn.us/
State government: http://www.Tennessee.gov