Workers' Compensation

Issue

Are further reforms to Minnesota's workers' compensation system needed?

Policy

The Legislature should not consider any changes to the workers’ compensation system unless the Workers’ Compensation Advisory Council approves them. The Advisory Council was created in 1992. Its membership is equally divided between labor and management. Now that major reform is complete, the Advisory Council can and should be able to recommend changes to the system.

The Minnesota Chamber recommends that the Advisory Council approve medical cost containment reforms that deal with pharmaceutical costs, managed care, hospital costs, the medical fee schedule, utilization review and alternative dispute resolution pathways. Measures are needed because workers’ compensation medical costs have dramatically increased. According to the Department of Labor & Industry, when “adjusting for average wage growth, medical benefits per insured claim rose 94 percent from 1997 to 2008 while indemnity benefits rose 39 percent. All of the increase for indemnity benefits occurred by 2002.”

The Chamber supports maintaining workers’ compensation as the exclusive remedy for workplace injuries and will oppose any legislative effort to erode it. The exclusive remedy is the foundation of the workers’ compensation system. In Minnesota and the rest of the nation, the workers’ compensation system was established when employers agreed to pay wage loss and medical benefits to all workers injured in the course of employment regardless of fault, and labor agreed that the new workers’ compensation system would be the exclusive remedy.

Business Impact

Workers’ compensation costs have increased since 1997 for a variety of reasons. From 1997 to 2009, the overall dispute rate rose 40 percent. The leading components of this increase were medical disputes, up 144 percent, and vocational rehabilitation disputes, up 87 percent. The Minnesota Workers’ Compensation Insurers Association (MWCIA) reports that medical costs now represent more than half of all loss costs within the workers’ compensation system. The MWCIA also notes that medical costs will be a major driver of future premium increases and will continue to outpace indemnity costs.

Legislation to allow employees to sue their employers outside of the workers’ compensation system for workplace injuries would essentially eliminate the exclusive remedy of Minnesota’s law. It would encourage lawsuits against businesses and drive up system costs.