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By Karen Gentry | MiBiz
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MICHIGAN — Ask Michigan business leaders about the benefits of workers’ compensation reform that’s winding its way through the state legislature, and you’ll likely get a laundry list: lower insurance costs, attracting new business, increased hiring, and fairness and clarity for employers and employees.

Andy Johnston, VP of government affairs for the Grand Rapids Area Chamber of Commerce, said the chamber supports the modernization of the law. He commended legislators for taking on workers’ compensation reform that he says will help reinvent Michigan.

“The current law is in need of revision to reflect a lot of years of legal, economic and medical development,” Johnston told MiBiz. “Michigan businesses and workers are going to benefit from a clear, more efficient workers’ compensation system that relies less on political vacillation and interpretations of an outdated act.”

Revisions and new legal code for workers’ compensation are part of Michigan Senate Bill 708 introduced Sept. 28 by Sen. Mark Jansen, R-Gaines Township. The bill, identical to House Bill 5002, was referred to the Senate Reforms, Restructuring and Reinventing Committee, chaired by Jansen. The amended House Bill passed on Nov. 2. Johnston anticipates that Senate Bill 708 will be approved by the end of 2011.

There were many “bad Supreme Court decisions” in the 1960s that led to the current cumbersome system, said Charles Owens, state director of the National Federation of Independent Business, an advocacy organization with 10,000 member businesses in Michigan. Laws passed in the 1980s attempted to rectify those decisions. The new bills, if passed, will make it more difficult to erode the intent of legislators.

“Labor unions and trial attorneys sought out sympathetic judges and went against legislative intent, awarding claims that weren’t appropriate,” Owens said.

Delaney Newberry, director of human resource policy for the Michigan Manufacturers Association, said predictability and stability are important for an effective and efficient workers’ compensation system, and the new law will provide certainty so that businesses and employees know their rights and responsibilities.

The new law would clearly define terms such as personal injury, disability, wage-earning capacity and wage loss. The proposed law would establish the difference between total and partial disability.

Revisions also include making interest rate requirements consistent with market conditions, strengthening work search requirements for individuals able to return to work, extending the period of time the employer has control over medical treatment, making attorney fees for medical expenses consistent with other awards and deleting provisions that assume dependency for a wife.

Janet Kelly-DeYoung, director of human resources for Van Eerden Food Services in Grand Rapids, said the bills put some clarity in the administration and evaluation of workers’ compensation situations. Kelly-DeYoung has managed workers’ compensation incidents for 17 years, the first 10 years with an office furniture manufacturer.

“The rules protect the employee and protect the company. All sides are held to the same level of engagement,” Kelly-DeYoung said.

Many business leaders, including Kelly-DeYoung, agree that 98 percent of employees want to do the right thing with that small minority causing problems. Examples of workers’ compensation problems occur when an employee is injured somewhere other than at work, such as during a leisure activity or second job, and tries to claim a work injury.

Sometimes, workers are satisfied not working and getting less than what they were earning and are not vested in getting back to work, Kelly-DeYoung said.

Some workers’ compensation cases involve aging employees who are not able to do what they could 30 years ago. Kelly-DeYoung said in some cases, employers must pay workers’ compensation to an injured employee even after he was terminated for causes such as fighting or other clear violations of responsibilities.

Under the current system, some employees receive workers compensation for many years despite surgery, rehabilitation and follow-up with doctors who often err in favor of the employee.

“The employer is on the hook, potentially in perpetuity, about stuff that may have nothing to do with the original injury,” Kelly-DeYoung told MiBiz.

Owens said the new law takes into account new medical therapies and procedures such as hip and knee replacements where it’s now possible to have the surgery and treatment and be able to go back to work, he said.

The cost of workers’ compensation adds to the total cost of hiring. All employers are required to carry workers’ compensation insurance and pay higher rates due to claims. Newberry said Michigan business owners pay 82 percent more for workers’ compensation insurance than do Indiana businesses.

Workers’ comp insurance is the largest single expense for Apply with Us Staffing in Kent County, says owner Robert Haight. He noted there are currently only a limited number of insurance companies willing to cover his four-year-old company for workers’ compensation. Lowering costs could draw additional companies into the pool willing to offer workers’ compensation coverage, he said.

Chris Westgate, an attorney with Ryan, Podein & Postema PC in Grand Rapids, handles many workers’ compensation claims for injured employees. He described the pending workers’ compensation reform as “strictly pro-business legislation.”

“There’s nothing in the changes in House Bill 5002 that benefits the injured worker, which I find egregious,” Westgate told MiBiz.

He noted votes for the workers’ compensation have been down party lines. He disagrees with provisions in the legislation that would reduce wage loss benefits to injured workers based on “theoretical jobs that may or may not even exist.” He takes issue with the bills shifting the burden for paying attorney fees to the employee and/or the hospital or medical provider, as well as that the employer will direct the care of the injured worker for 90 days.

He says the legislation will not streamline the process as being touted but will have the opposite effect.

“We’re going to be very busy. It’s going to increase litigation for sure,” Westgate said.

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• andy johnston
• chris westgate
• grand rapids area chamber of commerce
• janet kelly-deyoung
• michigan
• podein and postema pc
• van eerden food services