Lawmakers Seek Federal 'Oversight' Of Workers' Comp As States Limit Benefits

Updated 7:30 p.m. ET with Kline comment

Ten ranking Democrats on key Senate and House committees are urging the Labor Department to respond to a "pattern of detrimental changes in state workers' compensation laws" that have reduced protections and benefits for injured workers over the past decade.

In a letter to Labor Secretary Thomas Perez, the lawmakers cited an investigation by NPR and ProPublica, which found that 33 states have cut workers' comp benefits, made it more difficult to qualify for benefits or given employers more control over medical care decisions.

The letter also referred to NPR/ProPublica stories last week that detailed an emerging trend of permitting employers to drop out of state-regulated workers' comp programs, write their own injury plans and limit benefits on their own.

"State workers' compensation laws are no longer providing adequate levels of support and compensation for workers injured on the job," the lawmakers wrote. "The race to the bottom now appears to be nearly bottomless. ..."

The letter is signed by Bernie Sanders, the Democratic presidential hopeful and ranking minority member of the Senate Budget Committee; Patty Murray, D-Wash., the ranking member of the Senate Labor Committee; Bobby Scott, D-Va., the ranking member of the House Workforce Committee; and seven other senior Democrats on House and Senate Budget, Finance, Employment, Workforce, Ways and Means, and Social Security committees.

In a statement, the Labor Department said the agency "shares the concerns. Every year injured workers and their families are bearing more and more of the cost of workplace injuries and illnesses."

The agency said it would review the letter and work "with stakeholders to find real solutions" but did not commit to any specific action. An NPR/ProPublica request to speak with Perez was declined.

Until budget cuts in 2004, the Labor Department tracked changes in state workers' comp laws and failures to meet 19 minimum and essential standards for benefits established by a 1972 commission convened by President Richard Nixon.

Scott says the benefits cutbacks make federal action necessary, even though workers' comp is legislated and managed by states.

"If these workers aren't getting benefits under workers' comp a lot of them end up getting benefits under Social Security Disability or Medicaid [and] food stamps because they're not working," said Scott. "And so there is a strong federal interest in making sure that the workers' comp programs pay appropriate benefits."

The federal trust fund that pays for Social Security disability benefits is expected to end up short of funds next year, and cost-shifting from workers' comp is partially blamed.

The Center for Economic and Policy Research is releasing a study Wednesday that estimates that more than 20 percent of the increase in federal disability cases is due to cuts in workers' comp programs.

A 2007 study by J. Paul Leigh, a health economist at the University of California, Davis, estimated that workplace injuries not covered by workers' comp cost government programs about $30 billion a year.

Federal intervention may also come as the result of the "opt out" movement in Texas and Oklahoma, in which employers shun heavily regulated workers' comp and are permitted to write and administer their own largely unregulated workplace injury plans. South Carolina and Tennessee are considering opt-out laws now, and proponents are aiming for a dozen states by the end of the decade.

Promoters of these opt-out plans say they are federal workplace benefit plans governed by ERISA, the Employee Retirement Income Security Act, even though ERISA specifically excludes benefit plans "maintained solely for the purpose of complying with applicable workmen's compensation laws."

In an August statement to NPR and ProPublica, the Labor Department said it is "studying" the claims that ERISA governs opt-out plans. "The department is interested in ensuring that worker rights and benefits are protected," the agency wrote.

This effort by Democratic lawmakers to draw attention to workers' comp cutbacks is not likely to result in legislative action, given Republican control of Congress. They're more likely to get results by appealing to the Obama administration, which has used administrative authority in the past year on a range of workplace issues, including overtime, paid sick leave and the misclassification of employees as independent contractors.

Rep John Kline (R-MN), who chairs the House Workforce Committee, issued a statement agreeing with his Democratic colleagues on one point.

Changes in workers' compensation, Kline said, "shouldn't be designed to deny workers basic protections or shift costs to taxpayers."

But Kline also defended "reform" that states and employers have long sought in workers' comp policies "out of legitimate concerns for higher costs and fraud."

"I appreciate the concerns that have been raised," Kline continued, "but I would have reservations about putting the U.S. Department of Labor in charge of state workers' comp laws, especially when we know the department has proven unable to properly administer workers' comp programs already under its jurisdiction."

That's a reference to federally-administered programs for federal and postal employees, coal miners with black lung, longshore and harbor workers, and certain current and former Department of Energy staffers and contractors.

"This is a state responsibility and the states have to get this right," Kline said.

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