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Workers’ Comp Overhaul Signed, Takes Effect Summer 2014

Tennessee Gov. Bill Haslam has signed the workers’ compensation reform legislation his administration pushed through the state’s General Assembly.

Haslam on Monday put official gubernatorial endorsement to Senate Bill 200, “The Tennessee Workers’ Compensation Reform Act.” The bill swept through both chambers of the General Assembly, largely following a GOP-dominated party-line trek.

The American Insurance Association was quick to issue a press release applauding Haslam after the signing of the bill. “AIA applauds Gov. Haslam for signing SB 200 into law and for his continued leadership throughout the legislative process,” said Ron Jackson, AIA Southeast region vice president. “The Act is the right approach to providing much needed reform to Tennessee’s workers’ compensation system.”

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The new law will make the Volunteer State the 48th to no long adjudicate workers’ comp claims in court. Instead, the law creates a new state agency with the Department of Labor and Workforce Development, whose administrator will be chosen by the governor.

In anticipation of the July 1,2014 effective date, certain portions of the law go into effect immediately, such as those for the adoption of rules and the appointment of personnel to staff the new agency.

Rep. Kevin Brooks presented House Bill 194 to the lower chamber on behalf of House Majority Leader Gerald McCormick, R-Chattanooga, the bill’s prime sponsor.

Brooks predicted that the primary gains for employees will be fewer delays, better medical treatment, claim processes that are easier to follow and support from the workers’ comp division when problems arise. Gains for employers include cost reductions, predictability and more efficient claim handling, said the Bradley County Republican.

Democrats, who fought the bill throughout its movement in the General Assembly, complained that the legislation does not address the medical costs associated with workers’ comp. Opponents claimed that the high cost of health care is the reason Tennessee’s costs continue to rise, while those in the surrounding eight states continue to fall.

Following the House session, where members concurred with the Senate version, before passing 68-24, Democratic Leader Rep. Craig Fitzhugh told TNReport.com “people think it’s going to be reform, but it’s really not.”

“I’m afraid we’ll see it in a year or two and have to do something else with it. I don’t think this is going to turn out to be something very positive,” said the nine-term representative from Ripley.

Majority Leader Mark Norris, R-Collierville, carried the bill in the Senate, where it passed 28-2 with little discussion.

Amelia Morrison Hipps may be reached at amhipps@downhomepolitics.com, on Twitter @DwnHomePolitics or at 615-442-8667.

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Business and Economy NewsTracker

Legislature Approves TN Workers’ Comp Overhaul

Republican Tennessee Gov. Bill Haslam’s workers’ compensation reform legislation passed the state House of Representatives Thursday, 68-24. The bill now heads to his desk to be signed into law.

The House moved to concur with Senate Bill 200, where the bill passed by a vote of 28-2, with little discussion earlier this month. Only one Democrat – Rep. Charles Curtiss of Sparta – broke rank with the House minority party in voting against the legislation that expands the state Department of Labor and Workforce Development to oversee a process formerly handled by the courts.

“This bill is truly an overhaul of the system designed to make fundamental changes to avoid having to do it again in a few years,” said Rep. Kevin Brooks, who presented House Bill 194 to the body. House Majority Leader Gerald McCormick, R-Chattanooga, is the bill’s prime sponsor. In the Senate it was Majority Leader Mark Norris, R-Collierville.

Brooks predicts that the primary gains for employees will be fewer delays, better medical treatment, claim processes that are easier to follow and support from the workers’ comp division when problems arise. Gains for employers include cost reductions, predictability and more efficient claim-handling, said the Bradley County Republican.

Currently, the Volunteer State is one of only three states that adjudicate workers’ comp claims in courts. The legislation does away with the court system — but without any reduction of employees in the state’s 95 Chancery Courts located in each county, Democratic Leader Rep. Craig Fitzhugh noted.

Democrats complained that the legislation does not address the medical costs associated with workers’ comp. Opponents have claimed throughout the bill’s largely party-line trek to passage that the high cost of health care is the reason Tennessee’s costs continue to rise, while those in the surrounding eight states continue to fall.

House Democratic Caucus Chairman Rep. Mike Turner wondered from where the cost-savings in the new system will come. Brooks said “streamlining the process” will result in lower employer insurance premiums.

Turner said he suspects any real savings will come from lower payments to disabled-on-the-job employees. “We’re taking money out of the workers’ pocket. That’s not right. It’s not fair,” said the Old Hickory lawmakers, a firefighter who has served 13 years in the House. “We’re going to pass the savings onto business people. I’ve never seen a bill that tears at my heart like this one does.”

“I hope you understand what you know what you’re doing if you vote for this bill. We’ll be back in three or four years doing this again,” said Turner, urging members to send the legislation to summer study and to “do it right.”

Fitzhugh offered six of the eight amendments from Democrats. However, each one failed, just as they did when he presented them in the Finance, Ways & Means Committee, due to tabling motions to kill each without discussion. In both situations, the tabling motions overwhelming passed along party lines.

Following the House session, Fitzhugh told TNReport.com that he tried to “have amendments that would just put a little more common sense in there.

“The problems I have with it are that people thinks it’s going to be reform, but it’s really not,” said the nine-term representative from Ripley. “I’m afraid we’ll see it in a year or two and have to do something else with it. I don’t think this is going to turn out to be something very positive.”

Following the vote, Mary Mancini, executive director of Tennessee Citizen Action, a union-backed organization that has fought against the legislation, said in a statement that “the House of Representatives has clearly shown that instead of being on the side of protecting the hardworking Tennesseans who elected them, they are on the side of special interests like big insurance companies and large corporations who already benefit from so many tax loopholes and giveaways.”

Amelia Morrison Hipps may be reached at amhipps@downhomepolitics.com, on Twitter @DwnHomePolitics or at 615-442-8667.

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Business and Economy Featured NewsTracker

Workers’ Comp Rewrite Rolls Through Senate, Bearing Down on House Floor

While Gov. Bill Haslam’s workers’ compensation reform bill has had bumpy hearings in House committees, the track was clear and the ride mostly smooth on the Senate floor Monday night as SB200 passed 28-2.

Currently, the Volunteer State is one of only three states that adjudicate workers’ compensation claims in court. If the legislation passes, an independent agency run by an administrator chosen by the governor would oversee the process.

Supporters say the new system will process claims faster and cost less while opponents say it doesn’t address the real issue of higher medical costs and that workers will receive smaller awards and have more difficulty getting claims approved.

WorkmansComp

Republican Senate Majority Leader Mark Norris, of Collierville, who carried the bill in the upper chamber, said he feels the reforms “are not only going to keep Tennessee competitive, but are going to benefit the workers of this state.”

Only Sen. Doug Overbey rose to speak in opposition to the sweeping legislation, which House Democratic leaders called “just wrong,” “shameful” and “immoral” during a show of solidarity with labor-union protesters on the steps of the Capitol last Tuesday.

“There are many good provisions in this bill,” said the Maryville Republican. “The part of the legislation I’m troubled about, though, is the part where we are creating new positions in state government.”

Overbey named 28 new positions outlined in the bill’s fiscal note, noting that there are already “spread all across the state” court clerks to file claims and judges “who have been adjudicating these claims since the workers’ compensation law came into effect.

“So my problem is that we have the processes in place in the status quo. If we were making only the substantive changes, or many of the substantive changes, I could support those, but to create all of these new positions, I cannot support it,” he continued.

While less concerned about the size of state government, groups opposing the reforms have raised similar doubts about the wisdom of moving the dispute resolution process away from the court system. The governor’s plan would place the new agency under the state Department of Labor, the subject of recent negative attention. A state comptroller’s audit found the DOL issued $73.4 million in overpaid unemployment benefits over the past six years.

Mary Mancini, of Tennessee Citizen Action, a group fighting the legislation, cited the comptroller’s findings Tuesday, telling TNReport that the DOL’s poor handling of unemployment benefits should give lawmakers pause.

“It’s being mismanaged, and it’s just completely plagued with problems now,” Mancini said of the Department of Labor. “It doesn’t make sense to add this entirely new system, an entirely new department within there without them fixing what’s wrong with it first. This is not good for working people and their families. It’s certainly not good for the state of Tennessee.”

Asked about these concerns Tuesday afternoon, Gov. Haslam told reporters that he thought the comptroller’s audit had no bearing on workers’ comp.

“I think it’s a whole separate deal,” Haslam said. “One of those is about processing claims, and one of them is about adjudicating workers’ comp issues, so those are two very, very different issues. They’re in the same department, I admit, but they’re two very different issues.

During discussion on the Senate floor, Sen. Jack Johnson noted that most of the new positions added under the bill would be converted from existing positions.

“For example, 20 existing attorney positions in the workers’ compensation division will convert to 16 workers’ compensation judge positions, as well as one chief judge position and three administrative review board judge positions,” said the Republican from Franklin.

Johnson did not address Overbey’s other concerns, that an administrator would appoint the judges deciding claims and that payments to injured workers who return to work would not be much higher than payments to those who do not.

“I am concerned there is not an incentive to get employees back to work, which is a very important incentive under the status quo,” Overbey concluded. He, along with Democratic Sen. Lowe Finney, of Jackson, both voted no, while Republican Sen. Stacey Campfield, of Knoxville, and Democratic Sen. Jim Kyle, of Memphis, did not vote at all.

At the protest rally last week, House Democratic Leader Craig Fitzhugh said the legislation would create “another administrative branch, basically, to government, which is something that we certainly don’t need to do. We have the court system that’s working well.”

The Ripley representative also noted that the real costs to employers “are coming from medical costs, and this bill doesn’t even touch those at all. It only looks at the already reduced benefits to an injured employee.”

On Tuesday, HB194, the companion to SB200, passed the House Finance, Ways & Means Committee along party lines. The bill is now headed to the House Calendar & Rules Committee.

Despite his best efforts, the six amendments offered by Fitzhugh all failed without discussion. Each one was met with a tabling motion to kill it without discussion.

Saying that he supported previous workers’ comp reforms, Fitzhugh urged committee members to not pass the bill, but to study it and look at the medical costs involved, which he believes “are the real drivers of cost in Tennessee.”

He also stated that he didn’t think that now is the appropriate time “to ramp up an entire new department,” given that the Department of Labor and Workforce Development is without a commissioner.

John Klein Wilson contributed to this story.

Amelia Morrison Hipps may be reached at amhipps@downhomepolitics.com, on Twitter @DwnHomePolitics or at 615-442-8667.

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Health Care NewsTracker

Governor’s Workers’ Comp Revamp Chugging Forward

Gov. Bill Haslam’s pro-business workers’ compensation reform legislation sailed through committees in the House and Senate last week and is headed for the next round of hearings in both chambers this week.

Rep. Jimmy Eldridge
Rep. Jimmy Eldridge

Rep. Jimmy Eldridge, chair of the House Consumer and Human Resources Committee, said the “Workers’ Compensation Reform Act of 2013” must pass through four more committees before reaching the House floor.

“I’d like to see this bill go to give all the members of the Tennessee General Assembly on the House side the opportunity to engage in the conversation and good debate on this important piece of legislation,” said the Republican from Jackson.

Despite its passage, it was clear not every member of Eldridge’s committee thinks the bill addresses the issues businesses say are driving costs upward.Tennessee workers' comp bill

“Where we’re messing up is in our medical costs. This bill doesn’t address that at all,” Democratic Caucus Chair Mike Turner told the committee. “I don’t care what they tell you, they’re not telling you the whole truth about this bill.”

House Bill 194 passed the House Consumer and Human Resources Committee along party lines, 7-3. Its companion, SB 200, sailed through the Senate Labor and Commerce Committee, 9-0.

Jeff Bates, managing partner of TA Staffing in Nashville, and Brian Hunt, general manager of Southern Champion Tray in Chattanooga, both addressed the House committee in favor of the reforms.

Bates said 10 percent of the claims his company sees take 75 percent of money paid out for workers’ comp.

“You have to protect the truly injured worker, but at the same time you can’t have lingering claims controlling and bogging down the system to the point where it costs three to four times as much to settle a claim in Tennessee as it does in other states,” Bates said.

Hunt said 70 percent of the injuries at his company are “categorized as strains and sprains. They also account for 79 percent of our compensation dollars.” He noted that over the past five years the company has shelled out indemnity payments totaling nearly $1 million.

Rep. Kevin Brooks, who presented the bill on behalf of House sponsor Rep. Gerald McCormick of Chattanooga, said these issues emerged from a two-year study:

  • Tennessee’s rates are higher than neighboring states.
  • Employees are being harmed by lengthy delays in the current system.
  • Employers and employees are having trouble “navigating what is a complex and difficult workmans’ compensation system.”

Rocky McElhaney, a Nashville attorney who spoke on behalf of the Tennessee Association for Justice, said higher costs were a “red herring” to distract from harm to workers.

Rocky McElhaney
Rocky McElhaney

“Since the 2004 reforms, benefits paid to injured workers in Tennessee have already decreased 41 percent,” McElhaney said. “We’re paying workers less on average than our competing states.”

McElhaney said payments to physicians are actually what’s driving costs. He said state statistics showing how long cases take to adjudicate were skewed because only a sampling of cases were used.

In 2012 cases took 166 days start-to-finish on average, down from 309 days in 2008, McElhaney said, citing data from the Administrative Office of the Courts.

Rep. Glen Casada disputed the claim that the bill is heavily skewed toward employers.

“We as legislators must look at the macro of this, which is when Goodyear leaves, and their number one statement on why they left was workmans’ comp costs,” the Franklin Republican said. “All of a sudden, we’re not looking at dozens, we’re looking at 1,900 that are no longer here in Tennessee working.

“If that were to have a ripple effect, Bridgestone, Nissan – and I could go down the list – all of a sudden thousands of folks that work no longer have jobs in Tennessee. That is my concern.”   

HB 194 goes before the House Government Operations Committee Tuesday. SB 200 goes before the Senate Government Operations Committee Wednesday.

Amelia Morrison Hipps may be reached at amhipps@capitolnewstn.com, on Twitter @CapitolNews_TN or at 615-442-8667.