WC Reform Leads to...INCREASED Insurance Rates

As outrageous as it may seem, a leading workers' compensation insurance provider has proposed a rate increase of its premiums charged to companies.  This proposed increase must be approved by the Illinois Department of Insurance.

All this seems pretty run-of-the-mill so far but it is far from that once the back story is explored a bit more.  In a story in Business Insurance recently, the request by NCCI Holdings, Inc. for a rate increase was analyzed.

While there are lots of numbers and percentages thrown about in the story, the key point on my end as someone who represents injured workers is the outrage that all this is happening at all.

In June, after much wrangling, dealing, cajoling, and threats to hold one's breath until turning blue, the Illinois General Assembly passed the long discussed and pushed for Workers' Compensation Reform legislation. 

The entire argument used by the "business community" was that workers' compensation was costing too much for employers, workers' comp insurance was too expensive, and that the reforms proposed and ultimately enacted would reduce these costs, ultimately resuling in lower premiums, fewer workers' comp cases, and more businesses being able to afford staying in Illinois.  The Democrats went along with it, right down to Governor Quinn, Mayor Emmanuel, Mike Madigan, and John Cullerton.  They claimed that these changes were necessary and also championed that they had rebuffed even more changes that business groups had pushed for.

The changes passed affected injured workers' rights to choose their own doctor, significantly reduced the value of most injuries, and slashed by 30% the amount doctors, physical therapy providers, and other medical professionals receive for treating injured workers.  Yup, everyone involved got their rights cut--workers lost some doctor choice, workers received less compensation on their cases, and the doctors who did handle workers' comp now saw their bills being paid only about 2/3 as much as before.

And business groups should have been happy with this.

Business groups thought this would reduce their costs.

But now, with this first salvo of a rate increase, it is clear these projections did not hold up in reality.

Where do we go from here?

But wait, it probably gets worse!

One thing employer and business groups pushed for was a change in the way work-related injuries were handled.  The law is and has been for quite some time that if one is injured "arising out of" or "in the course of" his or her employment--basically performing the regular and expected tasks of one's job--recovery under the Workers' Compensation Act was warranted.  This created what was more or less a no fault system, where, unlike in negligence law (think car accident cases), the injured party did not have to prove liability.  In exchange, employers had predictible and limited amounts they'd have to pay to injured workers, based upon an elaborate schedule of body parts, caps on rates, and other compensation.  Workers often grumbled that their injuries were undercompensated and manufacturers groused about costs to them and basically the system worked reasonably well despite making nearly everyone involved feel like they were discriminated unfairly.

Now, we can expect some of  the "reforms"  that business groups wanted but did not receive in the push for the workers' comp reform of the summer of 2011 will be trotted out again now that they have "proof" that the "reforms didn't go far enough."

Some things to look for would be a change in the law that would require a work injury to be the "primary cause" of injury.  Tough to explain but suffice it to say that this, and other, alleged "reforms" would predictably harm workers and provide employers yet more ammunition with which to challenge legitimate workplace injuries.

What have we learned from all of this?

Not much if we allow this to continue.  As we've written about in the aegis of "Tort Reform" and "Workers' Compensation Reform" and other allegedly "pro-business" movements, the fact of the matter is that the problems that these reforms are alleged to address are illusory in the first place.  Unfortunately,. if the general public is not aware of the effect upon them, these get pushed through with little notice, or often with cheerleading in the press for the cutting of costs.

Except when the costs don't get cut and the average worker gets hosed.