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The legislation would make significant changes to the workers’ compensation system.
(Published May 13, 2013)
The full House on May 10 approved the recommendations of the Workers’ Compensation Advisory Council (WCAC), on a vote of 128-0. The bill, SF 1234, is authored by Sen. Dan Sparks (DFL-Austin) and Rep. Tim Mahoney (DFL-St. Paul).
The full Senate approved the bill on May 3 on a vote of 45 to 15.
The legislation would make significant changes to Minnesota’s workers’ compensation system and is supported by both the Minnesota Chamber of Commerce and the AFL-CIO, statutory members of the WCAC. The two most significant changes in the WCAC bill are an increase in the maximum compensation rate and an extension of workers’ compensation coverage for post-traumatic stress disorder (PTSD) injuries arising out of employment.
The League has discussed the legislation and shared concerns about its impact on workers’ compensation insurance costs with the House author, House Speaker Paul Thissen (DFL-Minneapolis), representatives on the WCAC, and staff in the governor’s office. As a result, the language in the bill has been tightened but under the amended bill, cities will still likely see some impact on their coverage costs.
Under the bill, the current maximum compensation rate of $850 per week is modified to 102 percent of the statewide average weekly wage. According to the Department of Labor and Industry, the statewide average weekly wage rate for the period Oct. 1, 2012, to Sept. 30, 2013, is approximately $916, so the change amounts to about a 10 percent increase in the cap. LMCIT estimates that it would require roughly a 1 percent increase in cities’ workers’ comp premiums to cover this increased cost.
The extension of coverage for PTSD would mark the first time the Minnesota workers’ comp law would cover “mental-only” injuries. The proposed change explicitly excludes coverage for mental impairments resulting from disciplinary action, job transfer, layoff, demotion, promotion, termination retirement, or similar action taken in good faith by the employer. Making reliable estimates of the impact of this change is difficult because there is no way to know either how many PTSD claims might occur or how much those claims will cost on average. LMCIT’s best rough estimate is that the additional cost of this change could be between 0.5 percent and 4 percent of premiums.
The bill also increases the maximum annual cost of living adjustment (COLA) from 2 percent to 3 percent, and shortens the time until the COLA applies from four years to three. Other changes include changing the formula for the amount of attorney fees that attorneys representing claimants may charge, and raising the limit on those fees; eliminating a loophole that currently allows medical providers in certain circumstances to resubmit bills at a higher rate than the payment they’ve already accepted; creating a “contract” system to manage drug treatment of chronic pain; and several other minor changes. Some of these changes could help reduce costs somewhat, while others could modestly increase costs. LMCIT estimates the net cost effect of these other changes to be very modest.
The bill will be presented to Gov. Dayton in the next several days, and he is expected to sign the bill into law.
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Contact Gary Carlson
(651) 281-1255 or (800) 925-1122
(651 ) 281-1265 or (800) 925-1122
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