Proposed changes to workers’ compensation system raise concerns


Labor and Industry Commissioner Steve Sviggum is recommending some major changes in the state’s workers’ compensation system, including cutting coverage for undocumented immigrants and providing incentives for injured workers to waive their legal rights. But a state advisory council that meets this week may not go along with the more radical aspects of his plan.

When a worker is injured on the job, the worker’s compensation system provides for medical treatment, partial payment of wages while a worker recovers and assistance in rehabilitation and retraining. In extreme cases, workers are compensated for serious injuries such as the loss of a limb.

Under this “no-fault” process, workers are covered regardless of the circumstances of the injury and employers who purchase worker’s compensation insurance are immune from lawsuits. The goal, Sviggum said in the annual Workers Compensation System Report, is “to make people as whole as soon as possible after an injury and return them to work.”

In 2004, the most recent year for which data is available, 124,000 workers’ compensation claims were paid in Minnesota, according to the Department of Labor and Industry. About 80 percent of the claims involved medical coverage only, while 20 percent involved both medical and “indemnity” benefits, such as lost wages and rehabilitation costs.

The number of workers’ compensation claims has dropped in recent years, but the overall cost has risen, in part due to skyrocketing health care costs.

Last March, Sviggum – whose department oversees the workers’ compensation system – announced the formation of three working groups to examine health care, vocational rehabilitation and billing and auditing processes. The work groups include members of the 12-person Workers Compensation Advisory Council, created by the Legislature in 1992. The council is split evenly between employer and employee representatives and includes the president of the Minnesota AFL-CIO and the president of the Minnesota Chamber of Commerce.
Sviggum said the system was in need of reform and charged the working groups with identifying changes that could be presented to the Minnesota Legislature for action this year.

Surprise recommendations
In December, while the working groups were still engaged in discussion, Sviggum presented the Advisory Council with a 53-page list of recommendations. Among the provisions:

• Eliminating any workers’ compensation benefits – except medical care – for undocumented immigrants injured on the job in Minnesota.

• Increasing payments by 10 percent to any injured worker who agrees not to use an attorney while pursuing a claim.

Not only was the content of the recommendations surprising, it was unusual for a commissioner to independently propose changes to the system, according to people familiar with the process. Since the inception of the Advisory Council, the practice has been for business and labor representatives to reach consensus on a proposal, which the commissioner then takes to the Legislature for action.

Sviggum’s recommendation to cut coverage of undocumented workers immediately drew a strong response from immigrant, labor and faith organizations.

AFFIRM, the Alliance for Fair Federal Immigration Reform of Minnesota, wrote the Advisory Council Jan. 29 to express its concern. The change would be “bad public policy,” the group wrote. If employers don’t have to pay lost wages to injured workers who are undocumented, they might actually be encouraged to hire people for that reason, the letter’s author, Doug Mork, noted.

In addition, many undocumented immigrants work in high-risk, high-injury occupations – such as meatpacking – that are most in need of an effective, comprehensive approach. “The workers’ compensation system not only exists to deal with individual injuries and illnesses,” according to AFFIRM. “It is an essential part of our basic system of encouraging and enforcing safe workplaces.”

Similar concerns have been raised about incentives that put pressure on employees to give up their right to legal representation. The workers’ compensation system was started to eliminate the need for lengthy, costly court cases, but over the decades it has become increasingly difficult for workers to navigate the system without help.

Employers and insurers can dispute whether an injury occurred at work, whether medical treatment is necessary and to what extent an injury poses long-term consequences for the employee. In 2006, nearly 19 percent of claims were disputed.

Going nowhere?
The Workers’ Compensation Advisory Council meets Wednesday for its second meeting since Sviggum made his controversial recommendations. At its last meeting on Jan. 28, the council reviewed proposed language on some “housekeeping” changes and continued discussion in the working groups.

With the 2009 legislative session already under way, Sviggum frequently reminded the group that “the timeline does get short” to submit proposals for action by lawmakers this year.

It’s not clear whether any of the commissioner’s recommendations will be considered at Wednesday’s session.

Don Gerdesmeier, one of the labor representatives on the Advisory Council, declined to comment on specifics while the council continues to work on its legislative proposal.

“We’re all working hard to improve conditions for the injured worker,” said Gerdesmeier, political director for Teamsters Joint Council 32. “That’s what the focus of the council should be.”

For more information
Read the commissioner’s recommendations and view other reports on workers’ compensation at

The weblog, tracks current issues affecting injured workers.