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Workers Comp Debate Relies on Faulty Numbers

Posted on October 26, 2015

The Massachusetts State Senate approved a bill on Thursday that would expand eligibility and compensation for injured workers under the law’s disfigurement provision.

statehousedomeThe vote followed a debate characterized by misinformation, inaccuracy and an unwillingness to determine the financial impact that the proposed changes would have on employers, the commonwealth, cities and towns and the workers compensation system as a whole.

Associated Industries of Massachusetts (AIM) opposes the measure and in a letter sent prior to the vote urged senators to examine the costs associated with each change.

Senator Sal DiDomenico, (D-Everett) led the Senate’s debate in favor of the bill.

The bill would expand covered disfigurement injuries to those occurring anywhere on a person’s body and raise the current $15,000 compensation for any scar to an amount equal to 22.5 percent of the average weekly salary, or nearly $29,000.

The current system was established under the workers compensation reform act of 1991 as a compromise to ensure that workers compensation covered visible scarring from on-the-job injuries while controlling a major cost factor in the system.  Injuries resulting in disfigurement (as distinct from surgical scarring) are still compensable under Massachusetts law.  The rationale behind the scarring benefit holds that certain scars could affect quality of life post injury and may also affect return to work prospects.

Senator DiDomenico, using data received from the state’s Department of Industrial Accidents, asserted that only 1,936 workers were awarded disfigurement benefits last fiscal year and only $300,000 in benefits were awarded. He further stated that the bill would lead to no more than $500,000 in new costs. 

These figures are just wrong. 

One industry source predicts an impact to premiums in the insured market (not the self-insured or public market) of 3.4 percent or $40 million. Another estimate by an insurance provider, predicted costs could increase by twice the 3.4 percent, or nearly $80 million, because nearly 20 percent of claims involve surgery.

On the public side, (where the Senate Ways and Means Committee suggested there would be zero cost impact) Massachusetts state government spends $54.4 million on workers compensation. That means cost increases ranging between 3.4 to 6.8 percent would increase bills for the commonwealth by $2 million to $3.7 million.

Only Senator Vinny deMacedo (R-Plymouth) voted against the bill, saying he was worried that “little by little, piece by piece, slice by slice” the Senate was making it more challenging to do business in Massachusetts.

AIM agrees. 

We urge the House to review the data more carefully and to listen to those with a firm grasp of the cost implications of the bill.