Subject of Possible Rule Making: During the past year labor and industries underwent a performance audit which was overseen by the Joint Legislative Audit Review Committee (JLARC). Included in the performance audit were several suggestions (recommendations) aimed at improving or enhancing the retrospective rating program administered by labor and industries. Implementation of some of these recommendations would require labor and industries to establish new administrative rules (WACs). Subjects of possible rule making include:

•	Establishment of new underwriting guidelines, such as kept on salary and light duty options for injured workers;
•	Requiring the addition [of] safety performance measurements as part of the retro premium formula;
•	Offering additional group plans;
•	Consideration of hazard groups and/or safety groups; and
•	Elimination of any bias that might exist in the retro premium formula.

If these changes are adopted they would be in the form of rules and would be codified in chapter 296-17 WAC, General reporting rules, classifications, audit and recordkeeping, rates and rating system for workers' compensation insurance.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 51.16.035.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The JLARC performance audit identified several areas that if adopted by labor and industries might improve or enhance the retrospective rating program. Any change to the retrospective rating program has the potential of impacting roughly 44% of the state fund premium and the over 14,000 employers that pay this premium. Because these changes would have state-wide application and affect a large number of employers that participate in the retrospective rating program any change should be in the form of rule.

By establishing these policy changes as rules the public will have a greater opportunity to participate in their development. Labor and industries has minimal underwriting and safety measurements currently in place. None of the existing regulations however, address the depth of issues presented in the JLARC report.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: None.

Process for Developing New Rule: Labor and industries will begin the rule development process by working with the Retro Advisory Committee. Once the committee has developed general ideas, labor and industries will conduct a number of public meetings around the state in March 1999, to solicit input from customers that participate in the retrospective rating program.

Labor and industries will use this information and feedback to further modify the ideas and then make an informal presentation to the Retro Advisory Committee on April 13, 1999. Labor and industries will then conduct another series of public meetings in May or June to share the most current version of the ideas in the form of draft rules and solicit input.

Information obtained from the public meetings as well as other ideas that originate with customers will be presented to the Retrospective Rating Advisory Committee on July 20, 1999, for review. This information will also be presented to the Workers' Compensation Advisory Committee. The director of labor and industries will take into consideration the recommendations of both committees prior to a formal rule filing tentatively scheduled for August 4, 1999. Labor and industries may hold special work sessions with the committee or other retro groups to further address all of the ideas and put forth a comprehensive rule proposal.

The retro advisory committee will present the results of these meetings and rule proposals to the Workers' Compensation Advisory Board including interim reports during the rule-making process. Labor and industries would like to have new rules in place by January 1, 2000.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. A letter will be mailed to employers and groups that participate in the retro program in early March disclosing the date, time and location of these meetings. These informal meetings will not be scheduled until after a work session of the committee has taken place. Retro employers and other interested parties can call the department at (360) 902-4835 to obtain information on participation.

January 29, 1999

Gary Moore

Director

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