CONTRIBUTORS

Culture change in Augusta leads to big drop in workers’ comp rates for employers

Posted March 05, 2014, at 12:16 p.m.
George Danby

Workers’ compensation has long been considered one of the biggest financial drains on Maine businesses that have had to endure the high costs and bureaucratic red tape of an outdated system that no longer served the best interests of employers and workers.

But there is finally encouraging news for workers’ comp, and it would not have happened without a series of changes that began when Maine voters opted for Republican leadership in the governor’s office and Legislature in 2010.

The Maine Bureau of Insurance last month received a recommendation to decrease workers’ compensation rates by an average of 7.7 percent. This is expected to save Maine businesses more than $15 million. It’s the largest rate decrease since 1998. Maine is one of the few states in the nation that will see a rate reduction.

This is a much-needed breath of fresh air for Maine businesses that are struggling to grow and, in many cases, barely stay above water as they deal with the challenges of a slow national economic recovery and the burdensome regulations of the Affordable Care Act. A drop in workers’ compensation rates will enable them to expand, invest in new equipment and, most importantly, hire new workers.

It took bold new leadership to put this into motion during the 125th Legislature that began in 2011.

Back in 1992, the Maine Legislature passed a law that required the Maine Workers’ Compensation Board to establish a fee schedule that detailed what hospitals could charge for medical procedures related to workers’ comp claims. That fee schedule, however, was never implemented until Paul Sighinolfi took over the board in 2011. In the interim, hospitals were able to use a random, inconsistent method to charge for workers’ comp claims, a system that often resulted in the hospitals overcharging for their services.

With Sighinolfi’s guidance, the Legislature approved a fee schedule that placed caps on what hospitals could charge for workers’ comp related procedures. Since those changes were implemented, there has been a steady decrease in workers’ comp rates in Maine, culminating with this month’s dramatic drop of nearly 8 percent.

Another contributing factor to the reduction was fewer workplace accidents in our state.

According to Sighinolfi, changing Maine’s workers’ comp system requires a shift in the culture that is akin to “turning around an oil tanker.”

Despite the bureaucratic inertia that prevented changes within the system for decades, significant progress was made on other fronts when the Legislature was under Republican control from 2011 to 2013. A series of reforms were passed that will likely lead to more good news for employers. Among them were changes in how the maximum benefit for total disability cases are calculated that will bring Maine more in line with the rest of the nation. Under the new law, an employee would have to have a minimum of 12 percent impairment to qualify for permanent disability benefits for injuries that occurred between 2006 and 2012. Also under the new law, employers will no longer be required to pay benefits to an employee during the appeals process, and the time in which an employee has to report an injury was shortened from 90 to 30 days.

The reasons for these important reforms were twofold: first, we wanted to protect the workers’ comp system for those who need it most. Secondly, we wanted to institute a culture change within the system that focused on getting injured Mainers healthy and back to work, instead of merely being a source of disability checks.

During the 126th Legislature, there have been several attempts to turn back the reforms that we passed. Given the positive news we are seeing regarding workers’ compensation, we were right to reject them, and the people of Maine are better off for it.

Sen. Garrett Mason, R-Lisbon Falls, serves on the Maine Legislature’s Veterans and Legal Affairs Committee.

 

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