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Legislation would make significant changes to the workers compensation system
(Published May 11, 2013)
On Friday, the full House considered and approved the recommendations of the Workers Compensation Advisory Council, SF 1234 authored by Senator Dan Sparks (DFL-Austin) and Representative Tim Mahoney (DFL-St. Paul) on a vote of 128 to 0. The full Senate approved the bill last Friday afternoon on a vote of 45 to 15.
The legislation would make significant changes to Minnesota’s workers compensation system and is supported by both the Minnesota Chamber of Commerce and the AFL-CIO, statutory members of the WCAC. The two most significant changes in the WCAC bill are an increase in the maximum compensation rate and an extension of workers compensation coverage for post-traumatic stress disorder (PTSD) injuries arising out of employment.
The League has discussed the legislation and shared concerns on the impact on workers compensation insurance costs with the House author, House Speaker Paul Thissen, representatives on the Workers Compensation Advisory Council and staff in the Governor’s office. As a result, the language in the bill has been tightened but under the amended bill, cities will still likely see some impact on their coverage costs.
Maximum Compensation Rate Changes
Under the bills, the current maximum compensation rate of $850 per week is modified to 102% of the statewide average weekly wage. According to the Department of Labor and Industry, the statewide average weekly wage rate for the period October 1, 2012 to September 30, 2013 is approximately $916, so the change amounts to about a 10% increase in the cap. LMCIT estimates that it would require roughly a 1% increase in cities’ work comp premiums to cover this increased cost.
Post-Traumatic Stress Disorder Injuries
The extension of coverage for PTSD would mark the first time the Minnesota work comp law would cover “mental-only” injuries. The proposed change explicitly excludes coverage for mental impairments resulting from disciplinary action, job transfer, layoff, demotion, promotion, termination retirement or similar action taken in good faith by the employer. Making reliable estimates of the impact of this change is difficult because there is no way to know either how many PTSD claims might occur or how much those claims will cost on average. LMCIT’s best rough estimate is that additional cost of this change could be between .5% and 4% of premiums.
The bill also increases in the maximum annual cost of living adjustment (COLA) from 2% to 3%, and shortening the time until the COLA applies from four years to three. Other changes include changing the formula for the amount of attorney fees that attorneys representing claimants may charge and raising the limit on those fees; eliminating a loophole that currently allows medical providers in certain circumstances to re-submit bills at a higher rate than the payment they’ve already accepted; creating a “contract” system to manage drug treatment of chronic pain; and several other minor changes. Some of these changes could help reduce costs somewhat, while others could modestly increase costs. LMCIT estimates that the net cost effect of these other changes to be very modest.
The bill will be presented to the Governor in the next several days and he is expected to sign the bill into law.
Questions? Contact Gary N. Carlson at (651) 281-1255 email@example.com
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