ZIEGENHORN IS OPTIMISTIC WORKER COMPENSATION BILL WILL PASS

JEFFERSON CITY - State Rep. Dennis Ziegenhorn, who is co-sponsor of a major workers compensation reform bill that was given first round approval Monday, said Tuesday he is pleased with the House version and believes it will provide a good framework for conference committee talks with the Senate.

The Sikeston Democrat, who chairs the House Insurance Committee, also said he is optimistic that lawmakers will come up with a workers comp bill before adjourning on May 15 because the need is so great.

"We are going to have a workers comp bill this year because if we don't, a lot of small businesses in this state are going to go out of business," said Ziegenhorn. "We've got to get a bill out this year."

Ziegenhorn and Rep. Jim Riley, D-Richmond Heights, chairman of the House Labor Committee, are co-sponsoring the measure. The two served as co-chairmen of a special interim committee on workers comp that held hearings around the state to identify some of the problems last fall.

The bill given first round approval this week is a substitute for one passed out of the Labor Committee that was sponsored by Rep. Larry Thomason, D-Kennett. That bill would have limited increases to 12 percent per classification each year. Any increases would have to be justified and rate increase hearings would have to be adversarial.

The substitute bill ties any increases to the Consumer Price Index, which likely would not exceed 7 percent.

Over the last year, workers comp rates have increased 38 percent and businesses have already been advised of a rate hike of 15-20 percent later this year.

Thomason and Ziegenhorn agree that workers comp reform is a priority of just about every legislator because of its impact on business.

"The bottom line is, if we don't do something on cost containment on workers comp this year, we will have people put out of business by workers comp," said Thomason. "I think there is a strong feeling everywhere to get a bill out."

Ziegenhorn noted that 18 amendments were added to his bill, but he does not believe any of them are damaging. Any revisions could be worked on in a House-Senate conference committee.

"I'm sure the Senate will change the heck out of this," remarked Ziegenhorn.

The House bill is being reviewed by the budget committee and will be taken up for final passage later this week or early next week.

Ziegenhorn said several senators, including Sen. Henry Panethiere, D-Kansas City, chairman of the Senate Labor Committee, appear to support a freeze on increases in workers comp premiums for a year.

It is also possible that the Senate will propose letting the market determine rates, rather than having them set by the National Commission on Compensation Insurance.

Ziegenhorn said that might be the best way to go, but there are potential problems. "Letting the market determine what the rates are - I believe in that," he said. "But the thing we have to watch is throwing all the bad business in the pool."

There is a workers comp insurance pool in the state that is primarily used by companies considered high risk or by small companies that do not have a lot of employees.

"The biggest problem with competitive rates is that companies will look for the best business, throwing all the others in the pool," added Ziegenhorn.

He pointed out that Illinois has recently gone to letting the market determine rates.

Ziegenhorn said it is obvious there are serious problems with workers comp and providing some kind of immediate freeze or limit on rate increases is the only immediate help that can be provided. He noted the House bill has several cost containment provisions, but it may take a while for them to have an effect.

Ziegenhorn and Thomason said they are both getting a lot of calls from business owners around the state describing some of the problems they have had with workers comp. Ziegenhorn said a trash hauler in Sikeston has a premium of $40,000 but had only $216 in claims last year.

"The funny thing to me about all this is that I have yet to find anyone whose expenses ran greater than their premiums. What does that tell you? I'm sure they are out there somewhere, but I haven't found any cases," said Ziegenhorn.

"It's obvious to me that some insurance companies out there are bailing money."

Thomason noted that some business owners who have called him have indicated they have not been able to hire additional workers they need for their business because of the increased costs of premiums.

Some of the provisions of the House bill would give administrative law judges more regulatory power to speed up the claims process, and would establish methods to enable minor claims to be settled without having to involve attorneys.

"The workers comp bill has a long way to go, but we definitely have something to work with in conference committee," said Ziegenhorn. "There will be some distinct differences between the bills we will have to work out, but I think we can."

Thomason added, "The House bill is not perfect and there are a lot of things in there that need to be modified. But even if it goes out like it is now, it will help small businesses. If we can work with the Senate on this, we can make the bill better."