HOUSE BILL REPORT

EHB 1396

BYRepresentatives Wang, Patrick and Cole; by request of Department of Labor and Industries

Revising industrial insurance disability benefits.

House Committe on Commerce & Labor

Majority Report:  Do pass.  (11)

      Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisher, Jones, R. King, O'Brien, Patrick, Sanders, Sayan, C. Smith and Walker.

House Staff:Chris Cordes (786-7117)

AS PASSED HOUSE FEBRUARY 13, 1988

BACKGROUND:

The amount of basic workers' compensation disability and death benefits paid monthly to workers or beneficiaries is based on a schedule that varies depending on the marital status of the worker and the number of children.  The amount is limited by statute to seventy-five percent of the state average monthly wage.  Minimum amounts are also established in the dependent schedule.

Compensation for an occupational disease claim is based on the payment schedule that was in effect at the time the worker contracted the disease or was last exposed to injurious substances.  For many occupational diseases, the disease does not manifest itself for many years after the date that the worker was last exposed to the injurious substance. 

If a worker is awarded a permanent partial disability award based on a back injury that does not have marked objective clinical findings, the award is automatically reduced by twenty-five percent.

SUMMARY:

The schedule is deleted that bases workers' compensation disability and death benefits and minimum benefits on the number of dependents of the injured worker.  The basic disability or death benefit monthly payment to an injured worker or surviving spouse is established at 66-2/3 percent of the injured worker's wages at the time of injury. The maximum monthly benefit is increased from 75 percent of the state average monthly wage (SAMW) to 100 percent of SAMW beginning July 1, 1988, and to 150 percent of SAMW beginning July 1, 1990.  The minimum benefit is eliminated. 

The rate of compensation for occupational disease claims filed on or after July 1, 1988, is established as of the date that the disease requires medical treatment or becomes disabling, whichever occurs first, without regard to the date on which the disease was contracted or the date the claim was filed.

The reduction in the permanent partial disability award for back injuries that do not have marked objective clinical findings is deleted.

Technical changes are made to remove references to the compensation payable for children, in conformity with the deletion of the dependent schedule. It is clarified that death benefit payments made on behalf of a child of a deceased worker are to be made to the person having legal custody of the child.

EFFECT OF SENATE AMENDMENT(S):  The Senate amendment strikes the original bill and inserts the following provisions. Beginning July 1, 1988, the maximum monthly benefit payable to an injured worker or beneficiary is 100 percent of the state average monthly wage.  The definition of "wages" for the purpose of determining the monthly wages on which to compute an injured worker's industrial insurance benefits is amended to include tips, to the extent that tips are reported to the employer for federal income tax purposes.  For workers whose employment is exclusively seasonal or essentially part-time or intermittent, a 12 month averaging formula is established to determine the monthly wage.  The rate of compensation for occupational disease claims filed on or after July 1, 1988, is established as of the date that the disease requires medical treatment or becomes disabling, whichever occurs first, without regard to the date on which the disease was contracted or the date the claim was filed. The reduction in the permanent partial disability award for back injuries that do not have marked objective clinical findings is deleted beginning July 1, 1988.  In providing cost of living adjustments, the Department of Labor and Industries or self- insurer may adjust the compensation rate to the nearest whole cent.

The department is authorized to provide job modification benefits for a worker entering employment with a new employer.  Job modification with a new employer or a new job is made a return- to-work priority under a vocational rehabilitation plan.

The department is directed to adopt a rule that mental conditions and disabilities caused by stress are not included within the definition of occupational disease.

The time period for reopening an industrial insurance claim is changed to one seven year period, running from the date the first closing order becomes final.  However, the director may provide proper and necessary medical care at any time.  After July 1, 1988, an order denying an application to reopen must be issued within 90 days of the filing of the application or it is deemed granted.  The department may extend the 90 day time period an additional 60 days for good cause.

The program allowing self-insurers to close certain industrial insurance claims is extended until June 30, 1990.

The provision is deleted that requires the Insurance Commissioner, in evaluating the relationship of the industrial insurance reserve fund to its outstanding annuities, to value the annuities on the basis used for new cases.

The sections of the bill changing the maximum benefit rate and eliminating the reduction in back injury awards take effect July 1, 1988.

Fiscal Note:      Requested February 5, 1988.

House Committee ‑ Testified For:    Joe Dear, Department of Labor and Industries;  Clif Finch, Association of Washington Business (with concerns);  Joe Albo, Washington State Trial Lawyers;  Marlin Sande, Washington Self Insurers Association (with concerns);  Gail Mayes and Bob Sevart, Injured Workers Awareness Coalition (with concerns).

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The industrial insurance trust funds have reached solvency, in part because of benefit reductions in recent years.  The current benefit structure for injured workers is inequitable because highly paid workers are penalized. With some reductions in administrative costs, a fair compromise for benefit increases could be achieved.

House Committee - Testimony Against:      None Presented.

VOTE ON FINAL PASSAGE:

      Yeas 58; Nays 36; Excused 4

Voting Nay: Representatives Amondson, Ballard, Barnes, Baugher, Beck, Betrozoff, Brooks, Brough, Bumgarner, Butterfield, Chandler, Doty, Ferguson, Hankins, Hargrove, Holland, Lewis, May, McLean, Miller, Moyer, Nealey, Padden, Patrick, Prince, Rayburn, Sanders, Schmidt, Schoon, Silver, Smith C, Sommers D, Taylor, Walker, Williams J, Wilson S

Excused:    Representatives Allen, Fuhrman, King P, Williams B