Posted on: Friday, March 11, 2005

ISLAND VOICES: WORKERS' COMP
Let's use common sense

By Nelson Befitel
Director, Department of Labor and Industrial Relations

No one will dispute that reforming Hawai'i's workers' compensation system is a complicated process that affects several different interest groups, often at competing stances. The state administration agrees with the comments of the new chairman of the House Committee on Labor and Public Employment, Rep. Kirk Caldwell, that finding common ground is daunting.

Those who service the system will often oppose any change that will bring efficiency and cost savings because it may be perceived as resulting in lower profits for them. This reaction is not unique to Hawai'i. In fact, plaintiffs in California are currently challenging workers' compensation reform measures enacted by California's Legislature and intended to fix its long-suffering workers' compensation system.

Eventually, we must move past the hyperbole and accusations that "management wants to take away from labor," and that "labor is always finding ways to abuse and take advantage of management." Our job as the stewards of this system is to make the necessary changes that will protect the interests of the owners of the system — the employees and employers — even if it means disrupting the status quo and making several interest groups uncomfortable.

We should not tolerate the current system, which is costly and ineffective. We must find a balanced, common-sense package of changes that will bring costs under control while ensuring that injured workers receive quality medical care and benefits needed so they can return to work as soon as they are able.

Year after year, experience tells us that it is taking too long to return injured workers back to meaningful employment, and Hawai'i's employers are not paying affordable premiums.

Less than two years ago, our administration identified problems prevalent in our system and recommended changes. In determining what changes were needed, we opened our doors and listened to representatives of labor and management organizations, and numerous service providers of the workers' compensation system, including medical doctors, vocational rehabilitation counselors, attorneys and members of the insurance industry.

We also asked a working group, comprised of several of Hawai'i's most experienced and respected workers' compensation attorneys, to provide their recommendations for improvements. And we spent countless hours analyzing the workers' compensation systems from other states.

Our plan to reform our workers' compensation system evolved into a three-pronged approach. The first phase involved identifying the cost drivers and areas for improvement. In January 2004, we published and distributed to legislators a comprehensive report detailing the driving factors of workers' compensation costs and recommendations to address those issues. (This report is posted on our Web site at www.dlir.state.hi.us.)

The second phase of our reform plan was to improve the department's operations. Our study established that we needed to modernize our workers' compensation hearings process to bring greater efficiency, transparency and accountability, while ensuring that our injured workers are provided with quality medical treatment based on medical evidence. We are now making these changes by improving our departmental operations and proposing changes to our administrative rules.

The third phase involved submitting an omnibus workers' compensation reform bill to the 2004 Legislature that addressed several key cost drivers, while ensuring that the employee is entitled to quality medical care and necessary benefits. We presented a comprehensive package of changes because we recognized that there is no silver bullet, or single initiative, that will provide relief to our system. Yes, eliminating fraud — regardless of who commits it — must be accomplished, but addressing this issue alone will not fix our broken system.

The Legislature last year debated our bill but was unable to achieve consensus. None of our proposals was passed by the Legislature last year.

This year, our administration submitted a similar omnibus reform bill that incorporates changes that addresses the concerns raised by members of the House of Representatives. We are optimistic that in this second year of discourse the Legislature, having a full year to study our bill and analyze our workers' compensation system, will agree to pass meaningful reform to save our ailing workers' compensation system.

Nelson Befitel is leading the state administration's efforts to reform Hawai'i's workers' compensation system.