Mass. Gov Urged to Veto Comp Provision in Budget

The Property Casualty Insurers Association of America (PCI) and several other insurance industry groups are urging Massachusetts Gov. Mitt Romney to veto a section of the 2004 supplemental budget dealing with the payment of $35 million to third party administrators (TPAs) of workers’ compensation claims.

Section 164 of HB 5076 would reportedly mandate the Workers Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) to assign a total of $35 million of written premium during a three-year period to TPAs for claims administration.

Frank O’Brien, PCI vice president and New England regional manager, said the industry spelled out the reasons Section 164 should be vetoed in a letter sent to the governor.

The letter states: “Earlier this year, the entire workers compensation insurance industry…communicated their concerns about this proposal to the legislative leaders and your administration. These efforts stopped the movement of the proposal at that time. Now, it was been tacked onto this supplemental budget without any notice or opportunity for debate and amendment in either legislative branch. Aside from the very serious substantive problems with the proposal…we believe the process by which this was adopted is not a healthy one.

“This is extraordinarily ill-conceived special interest legislation and will have a number of serious negative effects on the Massachusetts workers compensation system. It is our understanding that only one TPA firm may qualify for providing these services. If that is correct, this mandate creates an unhealthy appearance and a terrible precedent.”

The letter also says the bill would unbundle services for some assigned risk pool claims which would likely result in higher workers’ comp costs and rates for Massachusetts employers.

Because TPAs are not subject to the same statutes and sanctions as insurance companies, injured employees would reportedly be put at risk for getting poor claims service and their employers could face premium increases as a result of inadequate claims handling services or lack of coordinated loss control.