Deal near to cut workers' comp: Boeing's wish list prompts labor's OK for a compromise

From: Seattle Times, WA - May 31, 2003

By Luke Timmerman
Seattle Times business reporter

While Boeing has been leading the drive to overhaul the state's costly unemployment system, the company is also heavily involved in changes to a law that would clamp down on workers'-compensation benefits.

Four weeks ago, business and labor negotiators appeared deadlocked over workers' compensation, but that was before Boeing started swinging a new political sledgehammer: giving other states as well as Washington the chance to build its next-generation 7E7 jetliner.

Unlike the unemployment system, which all observers agree is expensive for business in this state, workers' compensation in Washington is relatively cheap, ranking 45th in the country, according to a 2002 state-by-state analysis by the Oregon Department of Consumer & Business Services.

Still, workers' comp costs have been rising, so Boeing and business groups are pushing for a limit on expensive claims for hearing loss. The proposal would require workers to file claims within two years of their last job-related hearing injury, rather than making claims later in life, when it is difficult to tell the cause. Current law makes it difficult for employers to deny claims based on injuries many years ago, which can cost thousands of dollars.

The hearing-loss change is high stakes for all businesses. The state, which handles insurance for 160,000 businesses in Washington, figures the two-year time limit can save more than $200 million that's stashed in reserves for future hearing-loss claims. The state also figures it would save $14 million a year in the future.

Boeing, which pays its own workers'-comp claims but has to follow state guidelines, won't say exactly how much it could save, but because factories have historically been a noisy work environment, "they would stand to avoid a substantial amount of costs" in the future, said Dave Kaplan, executive director of the Washington Self Insurers Association, which represents the state's biggest employers, such as Boeing, Weyerhaeuser and Microsoft.

Labor groups dug in their heels to oppose hearing-loss limitations during the legislative session that ended last month, but now have made concessions. They say they're willing to accept a two-year time limit on claims, but the two-year clock would start only when a worker retires. Labor has also conceded to take a 25 percent cut in the hearing-loss settlements for workers.

That cut means a worker who goes completely deaf because of a job-related accident would receive a $53,682 settlement instead of $71,576 set by current law, according to the state Department of Labor & Industries (L&I), which runs the workers'-compensation system.

A worker with complete hearing loss in one ear would receive $8,947 by law instead of $11,929. Workers with partial hearing loss would also get 25 percent smaller settlements, but their hearing aids and batteries would still be paid for.

Business and labor lobbyists have not yet cut a deal but say they are working with a sense of urgency to agree by June 20, when the state's bid for Boeing's next-generation plane is due.

"This is our statement to Boeing that we want them here, and we're willing to take this loss as an act of good faith," said Robby Stern, special assistant to the president of the Washington State Labor Council.

Amber Balch, a lobbyist for the Association of Washington Business, said, "We're getting close. We're much closer than we were at the end of the legislative session."

Business interests and the state Department of Labor & Industries also want to simplify the formulas L&I uses to figure out how much an injured worker is due for lost wages and benefits. Labor says it is not willing to make those concessions because it would cut benefits for some of its members.

Businesses' complaints about Washington's workers'-compensation system have grown sharper since November, when L&I raised premiums by an average of 29 percent. The department argued the increase was needed because its reserve fund is dwindling, and investment earnings that used to float its fund have dried up. It estimates it will hit businesses with an additional 20 percent increase next year to ensure its fund doesn't go broke.

Even with this year's big increase, the state expects to collect $1.2 billion in workers'-comp premiums from businesses, and will manage $1.7 billion in workers' benefits. The state system insures about 2 million workers. The rest of the state's workers, who work for the state's 400 largest employers, are covered by their own companies' funds.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Hearing-loss payouts

Payouts by the state insurance fund, which covers 160,000 businesses, but not the state's 400 largest employers, like Boeing, which insure themselves.

1999 $43 million

1998 $38 million

1997 $30 million

1996 $31 million

1995 $26 million

Source: State Department of Labor and Industries

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