(Written by Jack Milarch – NMHBA EVP/CEO – Originally published in the August 2014 Housing Journal)
Work Comp In The News
A Series of Court Decisions Eats Away at Business Interests
Two recent decisions by our higher courts are attracting the attention of the workers’ compensation community and the business media. Once again, the higher courts have expanded worker benefits and created precedent that will not only cause price increases but even more importantly erodes the strong philosophy contained in the work comp law of returning injured workers back to work as soon as possible.
This continues a troubling trend. Some of our readers may remember the broad publicity a couple years ago about a Las Cruces city trash truck driver who sustained a serious on-the-job injury early one morning, and post-accident testing revealed the worker was drunk. The court said the city owed work comp to the worker even though he was drunk. The court found a conflict in the law and awarded benefits. Many of us feel this decision unnecessarily sent a wrong message. This case was widely reported in the media and was the reason our Association tried (unsuccessfully) to convince the Legislature to change our work comp law relative to workers who are drunk on the job.
In the recent case of Fowler v. Vista Care, years of actual of claims management practice were overturned by a sharp reading of the text of the law. In the “Fowler” case the court decided “temporary” benefits weren’t really temporary because another section of the law calls for lifetime benefits. This decision too was caused by a conflict in the language of the law. The problem is that the court took advantage of the conflict to greatly expand benefits and again public policy supported a harmful conclusion. Injured workers now have more reasons to continue collecting benefits and not go back to work.
A Continuing Trend
It isn’t just recent cases either. This is an accumulating problem. In a 1990 case referred to as “Church’s” the court decided our work comp claims adjusters are not allowed to communicate directly with the treating physician. You would probably agree that such communication would seem essential to efficient claims management, and in fact New Mexico is one of the few states where claims managers are hobbled by this complication. The “Church’s” ruling has made workers’ compensation claims management more complicated and more expensive than it needs to be.
Unfortunately what is happening in these cases is that the courts are going through our work comp law with a fine tooth comb and finding inconsistencies and other language problems and using that to expand work comp benefits. I could go on listing many examples of this same trend over recent years. The bottom line is that our New Mexico workers’ compensation system is becoming less efficient, more difficult to administer, and less focused on getting injured workers back to work as soon as possible. And of course it’s more expensive for the employers who are required by law to pay for the whole thing.
“My rates are still pretty good, so what’s the problem?”
The problem for anybody who has employees covered by work comp occurs when there is a claim. Because of the experience modifier component of work comp the premium cost you pay is highly dependent on the “loss ratio” of your individual business. The loss ratio takes into account many statistics, but the most important one looks at the amount of premium you pay compared to the cost (paid plus future expected) of any injuries your employees suffer. Loss ratios can sometimes lower standard premiums by ½ if the loss ratio record is very good or can push it up to double the standard rate if the company loss ratio is bad. So think about the claims manager working for your work comp insurance carrier on your injured employee’s claim – the success of that person in keeping the cost of your claim to a minimum is very much dependent on the law and the court cases we discussed earlier. Even though most businesses like yours have pretty good rates, an unmanageable claim can cause a disaster for your business.
It is clearly time for the Legislature to make changes to our work comp law. New Mexico Home Builders Association and our affiliate Builders Trust have been very engaged this election season with both the Governor and House members who are up for election explaining the situation with workers’ compensation law and asking for their help in our efforts for positive business friendly change. Our goal is to make New Mexico’s work comp law so good that Governor Martinez can brag about it next time she talks to a company thinking about moving to New Mexico! We ask you to join us by talking to your legislators about why we need the legislature to act in the upcoming 60-day session. NMHBA, along with Builders Trust, has created several information sheets and flyers about the changes we feel are needed and you may get copies of these by calling Melanie at the NMHBA office.