State hopes to fix workers' comp costs

JEFFERSON CITY, Mo. -- Kathy Cowan-Smith has spent the past decade watching her company's workers' compensation premiums devour more and more of her company's budget.

As human resources director for Columbia auto-parts manufacturer Octscon Inc., she has helped launched safety programs for workers and seen the number of injured employees drop substantially. But the plant's improved safety track record hasn't stopped workers' compensation premiums from soaring. Since 1996, Cowan-Smith said, Otscon's premiums have climbed from $83,000 to $126,000. Ultimately, she said, employees are the ones who suffer from the high rates.

"Every dollar that I spend in excess on our workers' comp premiums is a dollar that I'd much rather be putting toward our employees in a benefit they can use or [put] in their pockets," she said.

Cowan-Smith isn't alone. Businesses around the state have long complained about the rising insurance costs prompting Missouri's Republican-led legislature to make overhauling the workers' compensation system a priority.

Sen. John Loudon, R-Ballwin, recently introduced a bill that would limit the number of employees eligible for workers' compensation. The proposed bill would tighten the definition of a workplace injury, stating that work was "the prevailing factor" for the injury instead of a "substantial factor." Under the bill, people injured while traveling to and from work in a company-owned or subsidized car would no longer be eligible for compensation. The legislation would also limit claims from workers injured on the job while legally drunk.

Loudon said his bill should bring down premiums for Missouri companies while ensuring that only workers legitimately injured on the job receive compensation.

"Basically, the judges have expanded the law way beyond what the Legislature intended, and we're trying to tighten it back down," Loudon said.

Not everyone favors Loudon's approach.

Sen. Tim Green, D-St.Louis, said he is concerned the bill could force injured workers who aren't eligible for compensation to seek relief in court.

"The reason workers' compensation was created they wanted to make sure the employer did not have to deal with civil courts continuously," Green said.

Also, he said, if injured workers who don't receive compensation aren't able to support themselves they could become a burden to the state through social service programs.

And he questioned if the bill goes to far by denying compensation to employees who drive a company car.

"It's a very complex issue and the senate is trying to bring a very simple solution that I think has averse effects to the employer and the employee," Green said.

Declining claims

Since 2001, the number of workers' compensation claims have dropped by 17 percent, according to the state's Department of Labor and Industrial Relations Division of Workers' Compensation. Despite the declining number of cases, the average cost per claim case had continued to climb as of 2003.

Nasreen Esmail, the Division of Workers' Compensation's chief legal adviser, attributed the drop in the number of claims partly to the division's efforts to resolve workers' compensation disputes before a claim is field. As for the rising cost per claim, Esmail said a major factor is the growing cost for medical treatment. She added that if medical treatment is delayed for an injured worker, that can further drive up costs.

Whatever the reason for the soaring costs, Missouri Chamber of Commerce lobbyist Kelly Gillespie said something must be done. He said Missouri has some of the highest workers' compensation rates of any of its neighbors, putting its businesses at a disadvantage. The trend in recent years, he said, has been higher attorney involvement in workers' compensation.

"What we're seeing is that Missouri's system has gotten so bad in the past decade that we've had excessive litigation," Gillespie said. "Everybody is getting lawyered up."

He said the chamber backs Loudon's bill and sees it as a way to cut down on frivolous claims and lawyer fees.

Cowan-Smith, meanwhile, is hopeful that the new legislation will allow her company to provide her employees with better benefits. For example, she said, the company began offering free short-term disability for all its employees, because the number of workers' compensation claim Otscon Inc. has had to pay out have dropped.

Besides trying to bring down workers' compensation costs, she said she would also like to see the state improve its education on how the system works for employers -- as well as employees -- to make sure injured workers receive the help they need.

"I think that Missouri really needs an outreach program," she said. "We need to better educate all the employers on what they need to do for workers' comp. A lot of them don't know the proper procedures to go through so that the claims are filed timely and the treatment is done quickly and the employee gets back to work quickly."