Workers' comp system held hostage

By Sheelah R. Yawitz

CHESTERFIELD, Mo. -- At a time of economic uncertainty, most states are doing everything they possibly can to retain businesses in their states. Unfortunately, reports of plant closings throughout Missouri are being listed in newspapers. Employers, including some leaving Missouri, are complaining that Missouri's workers' compensation costs are unfavorable as compared to other states -- an important factor when economic development is in the forefront of everyone's minds.

Why, then, is our governor instituting policies that are increasing the costs of workers' compensation in Missouri?

Since last year, employer representatives from the private and public sector have met with the Gov. Bob Holden's staff to explain that there is a problem within the workers' compensation system. Employers have tried their best to institute loss-prevention measures, and the good news is that their efforts have resulted in a decline of their frequency of claims. The Division of Workers' Compensation agrees and tells us that from 1998 to 2001 there has been a decrease of 23,000 cases.

The bad news is that workers' compensation premiums have increased far above the increases in medical costs and other fixed expenses. Employer groups have advised the governor's office that workers' compensation costs are dramatically increasing due to the escalating awards being adjudicated. Unfortunately, the recent directives from the governor affecting the workers' compensation system will increase the cost of doing business in Missouri.

Recently, the following actions have taken place:

Holden ignored strong messages by the Missouri Senate and employers when he reappointed a temporary acting chair of the Missouri Labor & Industrial Relation Commission.

Employer groups believe this appointment is contrary to law for two reasons.

First, the chair of this commission is supposed to be impartial and, by law, "shall represent the public."

This recent appointee is a previous chair and temporary acting chair of the commission and has a track record not only of reversing an unprecedented number of cases against employers, but also of making more permanent total-disability decisions as compared to previous commission chairs. Secondly, in 2001 the Second Injury Fund spent $5 million -- 18 percent -- over budget. This year, the budget is increasing again. The Division of Workers' Compensation tells us that a significant area of increase has been in permanent total-disability payments. The Second Injury Fund is financed by a surcharge on workers' compensation premiums and fully paid for by employers.

Second, it has yet to be determined whether this appointment is legal.

Case law states that temporary appointments cannot be "an attempt to circumvent the Senate's supervisory function over permanent appointments." This recent reappointee has been chair, temporary acting chair and now temporary acting chair again -- all without approval of the Senate Gubernatorial Committee -- and could stay in that position as temporary acting chair without ever receiving Senate confirmation.

Last year the Senate denied the governor's request for an additional administrative law judge. The state is supposedly in a financial crunch with budget cuts currently taking place in areas such as social services. At this same time, our governor proceeded and appointed an additional administrative law judge. This was done without appropriations. When the Department of Labor was questioned to show need, as required by statute, it responded that there was no backlog of cases in the area where the new administrative law judge is practicing, but that was the only workers' compensation facility with space to house another administrative law judge.

In the governor's supplemental budget for fiscal year 2002, Holden is proposing to sweep $1.4 million from the Missouri workers' compensation administrative fund and $1.6 million from the workers' compensation Second Injury Fund. The money would go to general revenue to pay for other expenses not related to workers' compensation. These workers' compensation funds are dedicated accounts. By law, there are specific taxes which fund these accounts with specific dedicated use only for workers' compensation activities.

Employers pay 100 percent of the taxes to finance both the workers' compensation administrative account and the Second Injury Fund.

Unfortunately, the governor, in order to reward special-interest groups that supported his candidacy, is punishing employers by holding the Missouri workers' compensation system hostage. These actions financially affect all employers, private and public, including all counties, cities, municipalities, townships, villages and school districts.

The Missouri Merchants & Manufacturers Association and the Missouri Chamber of Commerce will continue their efforts not only to keep Missouri's businesses in Missouri, but also to promote new businesses coming to Missouri, and will work with all parties to do so as long as the law is followed.

Sheelah R. Yawitz is president of the Missouri Merchants & Manufacturers Association.