Ohio BWC Administrator/CEO Urges Need to Pass Fair Workers’ Comp Reform

James Conrad, Administrator and CEO of Ohio’s Bureau of Workers’ Compensation (BWC) stressed the need to urgently pass a fair, balanced workers’ compensation reform bill during his testimony before the Senate Insurance, Commerce, and Labor Committee earlier this week.

Testifying on behalf of Gov. Bob Taft, Administrator Conrad explained that while Ohio has improved, more work must be done for Ohio’s workers’ compensation system to remain economically competitive.

Below are excerpts from his testimony (the entire text of the testimony will follow).

On the state of Ohio’s workers’ comp system today: “Today, it is clear Ohio’s workers’ compensation system is on the right track. According to our latest customer service survey, over 92 percent of injured workers and employers expressed their satisfaction with BWC. Since 1995, premiums for private sector employers have fallen, on average, by 32 percent and employers have received more than $10 billion in dividend credits. Workplace injuries have decreased by 30 percent since 1997. I think you’ll find that both business and labor will agree: workers’ compensation works in Ohio.”

On the need for workers’ comp reform legislation: “Some will point to many of the statistics… and argue the system is doing just fine. Governor Taft and I would argue there is much more we can improve upon if we are willing and able to seize the opportunity. If we remain content to tout our past successes and postpone debate on necessary system changes, Ohio would be jeopardizing the foundation of stability we’ve fought so hard to fortify.”

On creating a fair and balanced workers’ comp reform legislation: “As you may remember, the last attempt to reform workers’ compensation laws failed due to a few polarizing issues. The debate largely became one of business versus labor. Last fall, Governor Taft challenged BWC to create a proposal that favors no side but instead focuses on further improving Ohio’s workers’ compensation system for all stakeholders. We feel the Administration’s proposal as outlined in SB 7 accomplishes that objective; in addition, if enacted in its current form, these statues would conservatively save Ohio businesses nearly $180 million annually without interrupting benefits for deserving injured workers.”

On the need for Ohio’s legislators to take immediate action and implement fair workers’ comp reform legislation: “Ohio is more fortunate than many other states, but not immune to the pressures others are coping with at the moment. In order to keep Ohio at the forefront, this package of legislative changes will help deserving injured workers receive their rightful benefits and help keep employer premiums stable. If we do not act now, we may be forced to act in the future by cutting injured worker benefits and raising employer premiums. Let there be no doubt – the time for debate is now.”

On preserving Ohio’s status as a national leader in workers’ comp: “A decade ago, public officials across the state referred to Ohio’s workers’ compensation system as the ‘silent killer of jobs.’ BWC has worked closely with all stakeholders to turn a dysfunctional, chaotic system into a workers’ compensation leader. Governor Taft and I believe this proposal will help keep Ohio economically competitive. Ohio’s businesses demand a stable, fair system that will encourage, not impede, business development and job growth. Likewise, Ohio’s workforce rightly expects a system that actively seeks to prevent workplace accidents, but fairly compensates workers should an accident occur. If those are our goals, and I believe they are, then the Governor’s proposal shines a bright light on how we can achieve them together.”

BWC Administrator/CEO James Conrad’s testimony on Sub. SB 7 before the Senate Insurance, Commerce, and Labor Committee on Tuesday, March 1, 2005.

“Chairman Hottinger and members of the Senate Insurance, Commerce, and Labor Committee, my name is James Conrad and I serve as the Administrator and Chief Executive Officer of the Ohio Bureau of Workers’ Compensation. Thank you for allowing me the opportunity to testify today on Substitute SB 7.

“Workers’ compensation reform is one of Governor Taft’s top legislative priorities and I am pleased to appear today on behalf of the Administration. SB 7, sponsored by Sen. Cates, encompasses a balanced package of workers’ compensation law changes designed to provide further stability, clarity, and accountability within the system. For Ohio to maintain its status as a leader in workers’ compensation in the future, it is important to act on these legislative proposals now.

“Today, it is clear Ohio’s workers’ compensation system is on the right track. According to our latest customer service survey, over 92% of injured workers and employers expressed their satisfaction with BWC. Since 1995, premiums for private sector employers have fallen, on average, by 32 percent and employers have received more than $10 billion in dividend credits. Workplace injuries have decreased by 30 percent since 1997. Through the Health Partnership Program, injured workers are receiving the care they need and deserve quicker than ever. Much progress has been made since the workers’ compensation re-organization laws of the early 1990’s and I think you’ll find that both business and labor will agree: workers’ compensation works in Ohio.

“However, these changes have primarily been driven by management and policy decisions, yet many of the laws governing the system during the chaotic days have not been updated for decades. Some will point to many of the statistics I just shared with you and argue the system is doing just fine. Governor Taft and I would argue there is much more we can improve upon if we are willing and able to seize the opportunity. If we remain content to tout our past success and postpone debate on necessary system changes, Ohio will be jeopardizing the foundation of stability we’ve fought so hard to fortify.

“Ohio is more fortunate than many other states, but not immune to the pressures others are coping with at the moment. In order to keep Ohio at the forefront, this package of legislative changes will help deserving injured workers receive their rightful benefits and help keep employer premiums stable. If we do not act now, we may be forced to act in the future by cutting injured worker benefits and raising employer premiums. Other states are currently struggling with their systems, but thanks to the stability reached today in Ohio we have an opportunity to plan for our future today.

“Let there be no doubt: the time to have this debate is now.

“As you may remember, the last attempt to reform workers’ compensation laws failed due to a few polarizing issues. The debate largely became one of business versus labor. Last fall, Governor Taft challenged BWC to create a proposal that favors no side but instead focuses on further improving Ohio’s workers’ compensation system for all stakeholders. We feel the Administration’s proposal as outlined in SB 7 accomplishes that objective; in addition, if enacted in its current form, these statues would conservatively save Ohio businesses nearly $180 million annually without interrupting benefits for deserving injured workers.

“The current bill is certainly more balanced than its predecessor, but it still contains several controversial components that will inspire a great deal of debate from a variety of parties. Some will argue that certain statutes, such as defining substantial aggravation and eliminating most social factors (aka Stephenson factors) when determining permanent total disability (PTD) awards unfairly alter benefits.

“However, should workers’ compensation be responsible for compensating claims regardless of whether or not it’s related to a workplace injury? With regard to the Stephenson factors, should considerations other than the medical evidence and age play a role in whether or not an injured worker is granted PTD benefits? For example, should an injured worker receive PTD benefits simply because it is more difficult to locate a job in his region of the state while another with the same injury is denied the same benefits because jobs are more plentiful in his particular area? Is workers’ compensation a strict insurance system designed to provide benefits for workplace injuries or a broader social safety net? Clarifying the law will help bring an end to this uncertainty.

“Similarly, there will be debate over whether rape and sexual assault claims should be covered even when a physical injury is not present. There are concerns that this statute could lead to an influx of “mental-only” claims being allowed. While these are legitimate concerns, should we choose to stand still and ignore the right thing to do? I am confident we can craft a narrowly constructed statute that will help these deserving injured workers while alleviating the concerns of many business owners.

“You may also hear complaints that the increased penalties for employer fraud will unfairly harm businesses. If injured worker fraud can be punished with felony penalties, why should employer fraud convictions only result in misdemeanors? In talking these past few weeks with hundreds of business owners–small and large–they make it clear they consider this a pro-business statute because they are tired of paying extra for a few businesses who willingly defraud the system.

“Finally, some suggest that we completely eliminate non-working wage loss benefits, arguing this award is unique to only a few states nationwide. Again, the Administration feels it is appropriate to take a balanced approach and is essentially tying the benefit to existing unemployment law timelines. While I would submit that nearly four years is an unreasonable length of time to support an injured worker’s search for a job, I would also argue that we have a responsibility to provide a smooth transition for legitimately injured workers who want to return to work but do not have a job to return to.

“Mr. Chairman, I will not go into extensive detail on each and every provision contained within the bill, but I do want to stress the Administration’s belief in each and every one. Undoubtedly, you will hear from various stakeholder groups who will find fault with certain provisions, but if they are truthful, I think you will also hear that most support this overall package which includes many long-sought after proposals from each one’s priority lists.

“A decade ago, public officials across the state referred to Ohio’s workers’ compensation system as the “silent killer of jobs.” BWC has worked closely with all stakeholders to turn a dysfunctional, chaotic system into a workers’ compensation leader. We did not improve by remaining complacent. We worked together to reduce costs and provide high-quality benefits to injured workers. Governor Taft and I believe this proposal will help keep Ohio economically competitive. Ohio’s businesses demand a stable, fair system that will encourage, not impede, business development and job growth.

“Likewise, Ohio’s workforce rightly expects a system that actively seeks to prevent workplace accidents, but fairly compensates workers should an accident occur. If those are our goals, and I believe they are, then the Governor’s proposal shines a bright light on how we can achieve them together.”