Original Notice.

     Preproposal statement of inquiry was filed as WSR 11-15-068.

     Title of Rule and Other Identifying Information: Creating chapter 296-14A WAC, Claim resolution structured settlement agreements, new WAC 296-14A-010 Negotiating settlements -- How is a structured settlement agreement negotiated in a state fund claim?, 296-14A-020 Employers, 296-14A-030 Continuation of benefits -- Do Title 51 RCW benefits stop during settlement negotiations?, 296-14A-040 Settlement issues -- Can issues outside of Title 51 RCW be settled as part of a structured settlement agreement?, 296-14A-050 Future claims--Can future claims be settled as part of a structured settlement?, 296-14A-060 Burden to Title 51 RCW funds -- How does a self-insured employer obtain prior approval for a structured settlement agreement if the agreement will burden or impact any funds covered under Title 51 RCW?, 296-14A-070 Protests -- What if there is an outstanding protest on a claim that has a final settlement agreement?, 296-14A-080 Payments -- What is a periodic payment schedule?, and 296-14A-090 Prior agreements.

     Hearing Location(s): Red Lion at the Quay, 100 Columbia Street, Vancouver, WA 98660, on February 21, 2012, at 10:00 a.m.; at the Tukwila L&I Office, Room C30, 12806 Gateway Drive, Tukwila, WA 98168-3311, on February 21, 2012, at 1:00 p.m.; at the Center Place Event Center, 2426 North Discovery Place, Spokane Valley, WA 99216, on February 22, 2012, at 10:00 a.m.; and at L&I Headquarters, Room S119, 7273 Linderson Way S.W., Tumwater, WA 98501, on February 22, 2012, at 10:00 a.m.

     Date of Intended Adoption: March 20, 2012.

     Submit Written Comments to: Nancy James, Department of Labor and Industries, P.O. Box 44208, Olympia, WA 98504-4208, e-mail nancy.james@lni.wa.gov, fax (360) 902-4960, by 5:00 p.m. on February 24, 2012.

     Assistance for Persons with Disabilities: Contact Nancy James by February 7, 2012, TTY (360) 902-5787, or (360) 902-4379.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Rule making is needed as part of the implementation of claim resolution structured settlement agreements, allowed by EHB 2123 (chapter 37, Laws of 2011). These agreements will be available for claims for injured workers age fifty-five and older effective January 1, 2012, fifty-three and older effective January 1, 2015, and fifty and older effective January 1, 2016. Section 301 of the legislation states that the legislature recognizes certain workers would benefit from an option allowing them to initiate claim resolution structured settlements to pursue work or retirement goals independent of the workers' compensation system. This rule making creates new rules to clarify requirements and the process for these agreements. This change is expected to significantly impact costs of workers' compensation claims.

     Reasons Supporting Proposal: The proposed rules will assist in the implementation [of] EHB 2123. This proposed rule making will include new rules to clarify the process and requirements for making application for and negotiating structured settlements, and define periodic payment schedules.

     Statutory Authority for Adoption: RCW 51.04.020, 51.04.030, 51.04.065, 51.04.069, and chapter 37, Laws of 2011 (EHB 2123).

     Statute Being Implemented: RCW 51.04.062, 51.04.063, 51.04.065, and chapter 37, Laws of 2011 (EHB 2123).

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Department of labor and industries, governmental.

     Name of Agency Personnel Responsible for Drafting and Implementation: AnnaLisa Gellermann, Tumwater, Washington, (360) 902-6593; and Enforcement: Beth Dupre, Tumwater, Washington, (360) 902-4209.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The department determined the proposed rules do not require a small business economic impact statement because these proposed rules will not impose any new or incremental costs. The proposed rules provide general guidance and specific processes to implement claim resolution structured settlement agreements allowed by EHB 2123 (chapter 37, Laws of 2011) without creating or imposing more stringent standards or requirements for the affected employers. See RCW 19.85.025(4) and 34.05.310 (4)(c) and (e).

     A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Nancy James, P.O. Box 44208, Olympia, WA 98504-4208, phone (360) 902-4379, fax (360) 902-4960, e-mail nancy.james@lni.wa.gov.

January 17, 2012

Judy Schurke

Director

OTS-4500.5

     (2) The department will perform an initial review and determine if negotiations should proceed. When deciding whether to enter into negotiations for a structured settlement, the department will consider the following nonexclusive factors:

     (a) Worker's age;

     (b) Nature and extent of injury(ies) or disease(s) related to the claim;

     (c) Nature and extent of disabilities related to the condition(s) accepted under the claim;

     (d) Other medical conditions unrelated to the claim;

     (e) Other open or closed worker compensation claims for the worker;

     (f) Other settlements for injuries or diseases;

     (g) Worker's life expectancy;

     (h) Worker's marital or domestic partnership status;

     (i) Number and age of dependents;

     (j) Worker's sources of present and future income and benefits;

     (k) Worker's employment history;

     (l) Worker's education history;

     (m) Worker's labor market;

     (n) The effect a structured settlement agreement might have on other benefits the worker is receiving or entitled to receive.

     (3) If the department decides to negotiate, it will contact the other required parties and obtain their consent to move forward in negotiations, and obtain their consent about how the negotiations will be conducted. Negotiations may be conducted in-person, by phone, or by letter.

     (4) If all of the parties voluntarily agree to a settlement, the department will put the agreement in writing. All parties must sign the agreement.

     (5) After all parties have signed the structured settlement agreement, the department will forward a copy of the signed agreement to the board of industrial insurance appeals (BIIA), and provide any necessary documentation for the BIIA approval process.

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     (2) How will an affected employer be notified of a structured settlement agreement negotiation? When the department decides to begin settlement discussions, the department will notify all affected employers by mail, and will request the employer's participation in the negotiations.

     (3) How long does an affected employer have to respond to the department's notice of a negotiation? An affected employer has fourteen calendar days from the date the notice is sent to respond to the department's request for participation.

     (4) What happens if an affected employer does not respond to the department's notice of a negotiation? If the employer does not respond to the request within fourteen calendar days, the department will consider that the employer has declined to participate and will proceed with scheduling negotiations without the employer.

     An affected employer who declines to participate as a party to a structured settlement agreement will be bound by the terms of the agreement including any impact the structured settlement may have on the employer's experience factor or on the employer's industrial insurance premiums.

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     (1) Work-related injuries or occupational exposures that have not yet occurred;

     (2) Applications for industrial injury or occupational disease benefits that have not yet been filed; and

     (3) Claims for future death benefits or survivor benefits when the injured worker is still alive.

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     (a) Notify the department in writing and give the director or the director's designee at least thirty days to either approve or deny the request; and

     (b) Provide the following information:

     (i) A copy of the complete claim file(s) of the injured worker;

     (ii) Any other information relevant to the proposed agreement; and

     (iii) All terms of the structured settlement agreement, including an explanation of the anticipated impact on the fund(s).

     (2) If settlement negotiations continue after the self-insured employer has notified the department of a structured settlement agreement that may impact any funds covered under Title 51 RCW, the self-insured employer will keep the department updated on all terms or information not previously provided.

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     (2) What is active negotiation? Parties will be considered in active negotiations when the requirements of RCW 51.04.063(1) have been met, one hundred eighty days have passed since the claim was received by the department or self-insurer, the order allowing the claim is final and:

     (a) All parties have agreed to attempt to resolve the claim(s) through a structured settlement agreement;

     (b) The parties are discussing potential resolutions; and

     (c) No resolution has been reached.

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