January 27, 2012

Session Ramps Up to Full Speed

Capitol-ism last reported on the starting days of this legislative session which focused on Governor Daugaard's State of the State Address.  Last week was shortened to two days as the entire state took several days to celebrate the life of former Governor/Congressman Bill Janklow.

As week three comes to a close, the process has hit its full stride, bills have been filed and hearings have begun.  This is the start of a process best described by the old line "When in times of trouble and doubt . . . run in circles, scream and shout."  To make this panic induced process seem stately, everyone in the Capitol uses the hallways encircling the rotunda as their "circle" and the veterans make it look quite professional (the key is keeping your eyes steady).

First Up - Workers Compensation - A good result but there's work ahead.

HB 1054 - Amending certain provisions of workers compensation.

Dickens began his epic tale "Christmas Carol" by telling the reader that Jacob Marley was dead and that the key to the entire story was remembering that fact.  Nothing so dramatic here, but the report on HB 1054 must begin with that exact phrase.

HB 1054 is dead.  Capitol-ism reports on the bill because it introduces several concepts that are going to be discussed in the future and learning the business community's thoughts will be essential.

The bill had three parts.  Section one increased the number of days an employee has to report a claim from the current three working days to seven working days.  Section two allowed the use of out-of-state medical experts.  The current law restricts medical evaluation to South Dakota medical providers.

Section three was a provision to avoid a worker being caught in competing claims between workers compensation and the medical coverage.  On occasion, medical insurance refused to pay, insisting that the claim was a comp claim and the worker's compensation policy had rejected the injury as a work-related claim.  In this case, the employee was caught in the middle, frozen by competing denials and getting pummeled by health providers as they sought to be paid . . . by anyone.  There was general agreement on section three, which means that the legislative process would deem it dull.  Now, let's review the first two sections.

Longer Reporting Periods - During the major workers compensation reforms of the mid 1990s, one of the things that became very clear was that getting workers to report injuries immediately was key to getting them healed faster, holding down medical costs and making sure that hazardous situations in the workplace were corrected as fast as possible.  HB 1054 would have taken that reporting window from three working days to seven working days.

Why the change?  The issue was discussed among lawyers who handle lawsuits on workers compensation.  Both plaintiff lawyers and defense lawyers looked at the real application of the three day limit and found that court decisions and a part of the law telling courts to construe claims in favor of employers have made the limit ineffective.  The provision to favor employees is a bit like the rule in baseball where ties go to the runner.  The law also says the three day rule is met if the employer is aware of it and the courts have gone so far as to rule that telling the boss "my back hurts a bit," without reference to anything on the job, is enough to meet that rule.

When the State Bar Association asked the insurance company if there was going to be a large impact on rates or claim costs by increasing this limit, the conclusion was that a seven day reporting period would NOT cause a substantial increase.  They used the term "negligible increase" which may mean different things to insurance companies looking at rates as income, as opposed to policy holders who feel those same "negligible" costs and payments.  NCCI, which is a rating company with nationally recognized expertise in workers compensation costs, agreed.

A Trade Off - Section two of the bill allows the use of independent medical examiners.  This is important with very complex medical claims or ones that might be rarely seen in South Dakota but more common in another region such as in the Twin Cities.  Under current law, a company cannot require an employee to see a specialist if that specialist does not practice in South Dakota.

During the Bar Association's process, the ability to use independent medical examinations was seen as a benefit that more than balanced the increase in reporting deadline, especially since the evidence considered was saying that the reporting deadline would not increase costs.

The Bar Association embraced this trade off and presented it to the Workers Compensation Advisory Board, which embraced only part of their conclusions and proceeded to bring the issue to the Legislature.

Enter Business Community - The business community in general and the lobbyists who have survived the "work comp wars," including the South Dakota Chamber of Commerce and Industry, saw the increase in the reporting deadline and did everything possible to keep the life of the bill to about three days.

If there was evidence that increasing the reporting period could be considered benign, it wasn't evidence that rang true to the business leadership and members of any business group in the Capitol.  A doctor can hold a syringe in front of most patients and say "this won't hurt" all day long, but the pointy end of that thing knows better.  There was no time to prove the assertions that made HB 1054 seem acceptable.  The bill died in committee on a vote of 9-5.  The vote is posted below.

More Work - The Chamber told the Bar Association that there was a willingness to review this proposal between now and next session to see if there is indeed a balanced benefit from this proposal.  With that commitment in mind, the Bar Association has decided against using legislative procedures that could be used to bring the bill back to life.  We shall meet and review a process that we hope does not produce any worker's compensation claims.

Here is the vote on HB 1054.  Note - The legislature uses the term "deferred to the 41st legislative day" to table bills.  There is no 41st legislative day but this motion allows for discussion.  Under Mason's Rules of Order, a motion to table is non-debatable.

HB 1054, House Judiciary, Deferred to the 41st legislative day