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Work still required on comp fix
Publication: THE CHARLESTON GAZETTE
Published: Sunday, February 20, 2005
Byline: Paul J. Nyden
email@example.com In a dramatic special session of the Legislature earlier this year, Gov. Joe Manchin succeeded in winning passage of a new law that would ultimately privatize the state's workers' compensation system over the next several years.
Manchin and many employers have argued that a competitive market for compensation to injured workers will help reduce the cost of the system and attract new businesses to the state.
Today, the Workers' Compensation Fund has an unfunded liability of about $3 billion - the amount of money needed in the bank today to cover all future commitments of the fund.
The new legislation is not final, and lawmakers will have to take up various other measures to implement it during their regular session.
A major unresolved issue is exactly where the state will get money to fund the transition from a state-run to a private system.
The legislation passed last month asserts that the problems facing Workers' Comp were "of such critical proportions that it constitutes a threat to the long-term solvency of the fund and constitutes a substantial deterrent to the economic development of this state." In its opening paragraph, the new law states it will promote "a unified effort to make the Workers' Compensation system viable and solvent through the mutualization of the system and the opening of the market to private workers' compensation insurance carriers are required to address current crisis." Other unresolved issues are exactly what will happen to more than 800 workers at the agency. Nearly 300 are likely to be transferred to the state Insurance Commission office to continue administering the program.
Other workers will retire, some will get other state jobs, some may go to work for private insurance companies and some may simply lose their jobs.
The new law must also create a special fund run by the state to provide workers' comp coverage when private insurance companies refuse to insure employers with bad safety records.
Former Gov. Bob Wise believes the new legislation will help complete efforts begun during his term as governor and resulted in the passage of Senate Bill 2013 in July 2003.
That bill made it harder for injured workers to receive permanent total disability benefits.
Wise said: "We put together a study group and worked out a bill that restructured Workers' Comp, giving it a short-term lease on life. I believe that helped lay the foundation for the significant action the governor and the Legislature just took.
"The first bill helped show the problems Workers' Comp had and the need for everyone to be involved. If we had continued as things were going, Workers' Comp would not be issuing checks to injured workers in six months, since we were two years away from not being able to honor our commitments," Wise said.
The new law also has some strong critics, such as Charleston lawyer Stuart Calwell, whose firm often represents injured workers.
"The hard truth is that West Virginia's economy has been built on the back of the most dangerous industries - chopping down trees, mining coal and producing horrible toxic chemicals for the rest of the world to use.
"When you engage in those activities, you poison a lot of people, you kill a lot of people and you chop a lot of arms and legs off. The cost of taking care of the carnage should be put on top of the price of coal, timber and raw chemicals.
"The market should bear that cost. That is the way free enterprise is supposed to work. But we won't allow free enterprise to work. Instead, we want our injured and dead workers to subsidize cheap coal, timber and chemicals." Calwell believes the new legislation helps remove the real costs of producing products like coal and timber to future generations.
"We want to have our kids pay. Workers' comp is not a mystery. It is a simple thing. You cannot compare us with any other state. Per capita, we have the most dangerous industries of any place else in the country. The rest of the country and world is getting a free ride on the backs of our legless, lungless and poisoned population," Calwell said.
Wise believes workers' comp reforms will be a "positive factor for business, especially manufacturing." The 2003 law also protected self-insured companies - employers who get reduced state compensation premiums because they pay injured workers form their own funds - from bearing the costs of other bankrupt self-insured companies like Weirton Steel, which owed Workers' Comp $70 million went it went bankrupt.
Wise said, "Our Legislature agreed to put a certain amount of money in every year to keep that burden from being shifted to other employers, which would have hurt a lot of other companies." The state's 130 other self-insured employers include many coal companies and other private employers, such as the McJunkin Corp., Huntington National Bank, General Electric Co., The Travelers Insurance Co., Huntington Alloys Corp., Charleston Area Medical Center, United Parcel Service and Verizon West Virginia.
Bill Raney, president of the West Virginia Coal Association, praised Workers' Compensation Executive Director Greg Burton and his staff for "making great strides to modernize our program." "There is still a long way to go. But at the same time, substantial changes are being made. Hopefully, we will get back to the point where someone who is truly injured will get helped effectively."