Senate: No budget until workers’ comp is cut

On April 22, Gov. Chris Gregoire announced that a special overtime legislative session was necessary to resolve differences between the House and Senate on a 2011-13 operating budget that cuts $5 billion in state programs and services. Two weeks into that special session, a budget solution appears to be at hand. But the Governor now says the Senate refuses to vote on it until they get action on $1 billion in workers’ compensation benefit cuts sought by business lobbying groups.

During the regular session, the Democrat-controlled Senate passed ESB 5566, legalizing lump-sum buyouts of injured workers for less than what they would otherwise receive in guaranteed benefits, also known as “compromise and release.” The bill’s fiscal note estimated it would lower costs $1.2 billion in just two years, as some 7,000 injured workers waive their claims for lump-sum payments that average $105,000 less per injured worker that they would otherwise get.

But ESB 5566 died in the House amid concerns over the harm it would do to injured workers, the shifting of costs to taxpayers in the form of social services for disabled workers whose lump-sums have run out, and evidence that the workers’ compensation system is already recovering from the recession-caused instability that inspired ESB 5566.

The Washington State Labor Council says ESB 5566 is simply a $1.2 billion benefit cut for injured workers because every dollar “saved” under compromise and release buyouts is simply a dollar less than what injured workers are due.

“It is difficult to believe that the Democratic-controlled State Senate is going to hold the budget hostage – on the taxpayers’ dime in special session – unless they can take $1 billion from the pockets of injured workers and their families,” said Jeff Johnson, President of the Washington State Labor Council.

The Association of Washington Business, the state’s Chamber of Commerce disagrees. After voters overwhelmingly rejected last fall’s AWB-supported Initiative 1082 to privatize the state-run workers’ compensation system, the AWB insisted that the 2011 Legislature must “reform” the system by legalizing compromise and release buyouts.

The AWB points to Oregon, which enacted sweeping workers’ compensation reforms in 1990: “Not only did labor leaders in Oregon not object to lump-sum settlements, they counted that piece of the reform package as a benefit for workers — not employers.”

However, Oregon labor leaders say allowing lump-sum settlements in their state was a mistake that has harmed injured workers.

“After much experience with compromise and release it is clear to us that injured workers get a raw deal from this aspect in our law,” wrote Oregon AFL-CIO President Tom Chamberlain in an April 20 letter to state Rep. Mike Sells (D-Everett). “By the very nature of being seriously injured at work, injured workers begin from a position of vulnerability, they are forced to hire an attorney to represent them, and the only savings in the system comes from workers receiving fewer benefits than they would have otherwise.”

Chamberlain says compromise and release is “the bread and butter of the private insurance industry. This is how they make their money. Every decision in the system becomes contested which forces injured workers into settlements.”

So the standoff continues in Olympia between advocates for injured workers in the House and advocates for cutting workers’ compensation premiums for business in the Senate. Meanwhile, the operating budget is held hostage and the costs mount for continuing the special session.