Bill cutting workers' compensation benefits goes to Branstad

Legislation aimed at reducing Iowa workers' compensation costs received final passage in the Iowa Senate on Monday after a heated debate over the importance of Iowa's business climate versus the interests of injured workers.

The bill will cut workers' compensation benefits, limit benefits, change the qualifications for benefits and reduce a key interest rate calculation, according to the Legislative Services Agency.

House File 518 was passed on a 29-21 vote. All Republicans voted yes, while all Democrats and one independent voted no. The bill, which was previously approved by the House, heads to Gov. Terry Branstad, who is likely to sign it.

Business groups say changes are needed to keep costs down and reel in an out-of-control workers' compensation system that has grown to unfairly favor employees over employers. Labor advocates say the Republican-backed bill will slash aid to vulnerable Iowans who are hurt on the job and argue the current system is competitive with other states.

Sen. Michael Breitbach, R-Strawberry Point, the bill's floor manager, said workers' compensation is intended to provide a safety net, assuring a certain and easy process that keeps such matters out of the courtroom, while reducing legal fees and litigation.

The legislation includes common-sense provisions, Breitbach said, such as not allowing someone to obtain unemployment benefits while they are permanently disabled and not letting people collect twice for the same injury.

"I believe this bill returns the system to its intended balance," he added.

Sen. Nate Boulton, D-Des Moines, unsuccessfully offered an series of amendments to change the bill. He said the bill as originally drafted was a "wish list of corporations and insurance companies." But even after revisions were made in the Iowa House, the bill still takes away benefits from one of the most skilled, productive and educated work forces in the world, he contended. He noted that Iowa worker compensation rates are 11 percent below the national average and that 33 other states have cut workers' compensation benefits since 2013.

"The reality is that this isn't about Iowa. This is about a national movement," Boulton said. "State after state has gutted workers' compensation benefits, and now Iowa is on the list and Iowa workers will pay the price. This is wrong."

Sen. William Dotzler, D-Waterloo, said that if there are problems with the current workers' compensation system, representatives of workers and employers and others should sit down and iron out solutions. He told Republicans, "What you are doing is flipping the scale the other way, whether you realize it or not." He predicted that taxpayers will ultimately be forced to pick up the bills when workers' compensation benefits are cut.

The legislation will reduce payments from the Workers’ Compensation Fund by an estimated $1.8 million annually, beginning in the 2018 fiscal year, state analysts said. However, this estimate does not include the cost impact of a new training program. In addition, the legislation will increase the state general fund costs to Iowa Workforce Development by an estimated $50,000 for the current state budget year and by an estimated $205,000 annually beginning in the 2018 budget year.

State analysts said specific provisions of the bill regarding shoulder injuries will reduce benefit payments by an 68 percent, or $760,000, for an estimated 176 shoulder injuries each year. The legislation provides for community college training to enable a worker who has sustained a shoulder injury, which is common in meatpacking and other occupations, to return to the workforce.

A change in what is known as permanent partial disability injuries to the body as a whole will reduce benefit payments by 10 percent, or $1 million. In addition a change for interest calculated on workers’ compensation payments will cut the annual interest rate by an estimated 5.5 percent, providing cost savings of $60,000. Training program payments will be capped at a maximum of $15,000 per participating employee.

Records from the National Council on Compensation Insurance, which sets workers' compensation insurance premiums for Iowa and many other states, shows no large increases in premium costs, claims or medical costs associated with workplace injuries. In fact, Iowa employers saw their workers' compensation premiums decrease 4.7 percent last year.

In addition, the numbers of Iowans injured on the job and the number of those cases litigated by state administrative courts have not increased in recent years, state figures show. Adjusting for wage growth, industry data shows the average medical cost of a workers' compensation case has increased in recent years from $27,223 per case in 2007 to $31,622 per case in 2014. But that 2014 cost was 2.5 percent less than the $32,443 per case in 2013.

The legislation is supported by the Iowa Association of Business and Industry, the Iowa Business Council, the Iowa Chamber Alliance, Deere & Co., the American Insurance Association, Tyson Foods and others. Opponents include the Iowa State Building and Construction Trades Council, Iowa Professional Fire Fighters, Iowa Peace Officers Association, Iowa Association for Justice, Iowa State Education Association, Iowa State Bar Association, and others.