LEGISLATIVE PANEL YEARS OF WORKERS' COMPENSATION PROBLEMS

A joint Missouri legislative committee heard a variety of testimony about problems with workers' compensation insurance during hearings here Friday and Saturday.

This was the first of several hearings planned around the state to explore potential legislative solutions to problems such as skyrocketing premiums that many businesses cannot afford.

Discussing the need for reform in workers' compensation, Mark Doerner, counsel to Department of Insurance Director Lew Melahn, told the panel that the system is not as bad in Missouri compared to other states. However, Doerner said, "But all factors that other states used for undergoing reforms in their system are present in Missouri now."

Sen. Franc Flotron, R-St. Louis, said the committee's approach to the issue is a little different than that of those who have studied the matter before. He said that usually business and labor are arguing over benefits, but this time they are working together toward solving problems in the system.

About a dozen people testified; however, representatives of several other of the large businesses in the area watched the hearing.

Melahn, Doerner, Richard Rousselot of the Division of Employment Security, and John Lichtenegger, a Jackson attorney who discussed the 2nd Entry Fund of the state attorney general's office, provided background information to the panel Friday.

Rousselot pointed out that there is no penalty for employers for not carrying workers' compensation insurance until after an accident occurs. "We don't know they don't have it until it is too late," he said.

Melahn explained that rates, by statute, are based on data provided by the National Council on Compensation Insurance. It decides whether rate increases are fair, reasonable, and adequate he said.

Sen. Henry Panethiere, D-Kansas City, the Senate chairman of the joint committee, asked why Missouri's rates had increased almost 35 percent between Sept. 1, 1990 and Sept. 1, 1991, and only 4.8 percent of that is attributable to benefit increases. By comparison, the senator noted that the state of Kansas had rates increase 24 percent.

Doerner said one reason for the difference is the type and variety of jobs in Missouri compared to Kansas.

Panethiere also suggested that an employer group should be called on to provide data besides just NCCI. "To me, most of their data is a smokescreen, so you need an actuary to understand what it means," he stated.

Several committee members also expressed concern over NCCI and whether its data was the proper source for rate information.

Dr. Gordon Eller of Cape Girardeau, a care provider for workers' compensation claimants, outlined to the committee a variety of problems in the system that he said needed examination. He urged the lawmakers to study what other states have done.

Eller focused his comments on individuals who have "illness behavior" and do not want to return to work. He said that 10 percent of the recipients of workers' compensation get 80 to 85 percent of the money. Eller suggested studying those 10 percent as a way of dealing with the problem.

Factors that tend to keep people from returning to work, Eller said, include such things as whether the person is near retirement, their level of education, and job satisfaction. He said legislation needs to account for all the "realities of the patient as a person."

Rep. Jim Riley, D-Richmond Heights, said he could not understand how a handful of cases could be responsible for driving rates up this fast.

The panel also discussed ways to provide retraining for individuals who cannot return to their jobs, the use of psychological evaluations, and better cooperation between the insurer and employer.

Judy Thrower of Cape Girardeau, who has a business with 75 employees, cited statistics from her business the last four years to show that rates have increased at a far greater rate than claims experience should justify.

Thrower recommended that a law be passed requiring companies to advise employers promptly of what claims are being paid. She also cited instances of doctors billing workers' compensation claims at a higher rate than for individuals.

Gary Hurst, who owns several pizza restaurants, also complained about huge rate increases that claims cannot justify. He also referred to problems with doctors having higher rates for workers' compensation. "I don't understand how doctors can legally have two rates," he said.

Rep. Dennis Ziegenhorn, D-Sikeston, co-chairman of the House members with Riley, said the testimony showed the magnitude of the problem. "We're starting to see the tip of the iceberg that we are taking on," he stated.