By Dave North, President and CEO, Sedgwick
I am often asked how employers can best influence positive changes to state workers’ compensation systems. My advice is to speak with one voice and work together toward a common, defined goal. In recent years, many reforms were achieved when employers banded together and collectively directed change.
Real workers’ compensation reforms are not accomplished by brokers, carriers, third party administrators, or other service providers. Nor do they arise from employers separately trying to solve various problems. Reforms take a concerted effort on the part of employers speaking with a united voice. While there is no set formula for success, employer activism is key.
How can such reforms come about? The first step is to initiate the conversation. Talk with other employers in your state that may be experiencing similar problems. Your company may be plagued by issues such as a lack of cost control or the inability to direct care. Chances are you are not alone in how state legislation is impacting your company’s performance or your ability to get injured employees back to work.
It is generally not difficult for fellow employers to agree that there is a problem and see eye to eye on key challenges. However, employers must also come together and agree on how to best address identified issues. While several states have implemented positive measures in recent years, those solutions do not always apply in other states because of variances in regulations. However, these successful solutions can provide a framework for employer coalitions as they consider proposed legislative changes.
Once employers resolve to move forward with changes, those involved must agree on which part of the puzzle to solve first. Trying to resolve all issues at once can lead to a splintered and unfocused effort. However, if employers decide that as a group they want to work on one issue such as lowering workers’ compensation medical costs in a particular state, they can develop a plan and work together to achieve that goal.
In 2013, Oklahoma provided the backdrop for one of the most notable and sweeping workers’ compensation legislation reforms in decades. Workers’ compensation costs in the state significantly exceeded countrywide averages. This created a groundswell of support among employers to initiate change. Lawmakers became interested when they learned that high workers’ compensation costs were causing employers to relocate and swaying potential businesses to direct investments to other parts of the country.
A coalition of employers worked to pass Senate Bill 1062, which transformed the Oklahoma workers’ compensation system. Change was seen in the ensuing Administrative Workers’ Compensation Act, the Oklahoma Employee Injury Benefit Act, and the Workers’ Compensation Arbitration Act. While the Administrative Act provided many favorable changes for Oklahoma employers, it was the Oklahoma Injury Benefit Act that captured much of the national spotlight.
The Oklahoma Injury Benefit Act allows certain employers to leave the administrative system and administer their work-related injury claims under an employer-sponsored benefit plan. These employers must provide the same types and levels of benefits that are offered under the administrative system. However, the option does provide employers with more control over how the plan operates. Notably, exclusive remedy under an employer-sponsored plan is as broad as the exclusive remedy protections under the Administrative Act.
While the true impact of these reforms has yet to be measured and tested, Senate Bill 1062 is a shining example of how employers and lawmakers can work together to shape the workers’ compensation system.
California Senate Bill 863 is another example of the impact of employer activism. Senate Bill 863 offered tangible solutions in areas such as medical liens, independent bill review, independent medical reviews, fee schedules, and permanent disability benefits.
One state that appears ripe for change is New York. The workers’ compensation reforms passed in 2007 have not yielded desired results, thus sparking conversations among employer groups. These companies have witnessed recent changes in states such as Oklahoma and California, and they are eager to develop successful reforms in their own state.
The importance and strength of employer coalitions cannot be overstated. Employers have proven their ability to influence and create positive legislation within the workers’ compensation arena. If you are having an issue in a particular state, you can bet others are as well. I encourage you to talk to your peers, band together in solving common issues, and make sure legislators hear your concerns. By establishing a common goal and speaking with one voice, employers can facilitate more positive changes in the days ahead.
About Dave North
Dave North is the President and Chief Executive Officer of Sedgwick Claims Management Services, Inc. (Sedgwick). As CEO he is responsible for providing overall corporate leadership in strategic development and growth. He joined Sedgwick in 1995. Under his leadership Sedgwick has grown to become the largest TPA in the industry.
Dave has over thirty-two years of experience in risk management services. Prior to joining Sedgwick he was the global practice leader for risk services at a major brokerage and risk management consulting firm. There he directed the development of a total cost of risk capability encompassing property and casualty loss control services, claims management and consulting, risk management information services, structured settlements, law advisory and workers’ compensation consulting. These services were expanded around the world under his leadership.
Dave is a frequent speaker at national and regional industry conferences. He developed and taught the American Management Association course on Advanced Risk Management Strategies: Managing the Total Cost of Risk. In 2002, he was recognized by Business Insurance as one of the 35 “Rising Stars” in insurance worldwide. In 2003, he co-authored the book The Art of Self-Insurance. He has served on the board of the Workers’ Compensation Research Institute. He is past chairman of the board of the Integrated Benefits Institute.
Sedgwick Claims Management Services, Inc., is the leading North American provider of technology-enabled claims and productivity management solutions. Sedgwick and its affiliated companies deliver cost-effective claims, productivity, managed care, risk consulting, and other services to clients through the expertise of more than 11,000 colleagues in some 200 offices located in the U.S. and Canada. The company specializes in workers’ compensation; disability, FMLA, and other employee absence; managed care; general, automobile, and professional liability; warranty and credit card claims services; fraud and investigation; structured settlements; and Medicare compliance solutions. Sedgwick and its affiliates design and implement customized programs based on proven practices and advanced technology that exceed client expectations. For more, see www.sedgwick.com.