FEDERALIZE?

Could federal oversight of state workers’ comp systems be on the horizon?

Although politically unlikely, some Congressional Democrats are proposing that. In an October 20, 2015 letter to U.S. Labor Secretary Thomas Perez, ten U.S.Senators and Representatives call for Perez to “strengthen oversight of state workers’ compensation programs by using the agency’s expertise and authorities.” They propose that ” In particular, we would welcome a report from the Department on how it will reinstitute oversight of state workers’ compensation programs, what areas it intends to address, and whether added authorities are needed to better ensure that the interests of injured workers and taxpayers are protected.”

The letter specifically references the recent NPR/Pro Publica series on changes in workers’ comp systems across the country (see link to that below) and to concerns that costs are being shifted from state workers’ comp programs to Social Security, Medicare and other federal programs.

According to one of the recent NPR/Pro Publica post:

“Until budget cuts in 2004, the Labor Department tracked changes in state workers’ comp laws and failures to meet 19 minimum and essential standards for benefits established by a 1972 commission convened by President Richard Nixon.”

California applicant attorneys have been warning that workers with chronic conditions are increasingly using Medicare to cover treatments given the high level of UR and IMR denials.

And a just released study by the Washington D.C. based Center for Economic and Policy Research titled “Rising Disability Payments: Are Cuts to Workers’ Compensation Part of the Story? Preliminary Results on the Empirical Relationship between Workers’ Compensation and Disability Insurance Awards” (by economists Nick Duffie and Dean Baker) attempts to link the increase in Social Security Disability awards with cuts in workers’ comp programs.

We can expect to see more research focus on the extent of cost shifting that is occurring. In California, a number of union officials have expressed concern to me about whether their union health trust funds are being negatively affected by workers’ comp treatment denials.

On the other hand, a September 2015 study released by the Workers’ Compensation Research Institute claimed that cost shifting was going from the Affordable Care Act to workers’ comp systems because of cost control measures in the ACA giving doctors incentive to treat conditions as work related.

I’m quite skeptical of the WCRI findings, but the whole issue is obviously ripe for more investigation.

While in the current political environment the chances of federalizing workers’ comp is near zero, the U.S. Labor Department and congressional committees could hold hearings and dig into the issue.

The study by the Center for Economic and Policy Research can be found here:

http://cepr.net/documents/rising-disability-payments-2015-10.pdf

Here is a link to the Congressional letter to the U.S. Labor Secretary:

https://www.documentcloud.org/documents/2465674-letter-from-federal-lawmakers-to-labor-on.html

And here is the link to the recent NPR/ProPublica series:

http://www.npr.org/templates/search/index.php?searchinput=workers%27+compensation

Stay tuned.

Julius Young