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The Honolulu Advertiser

Posted on: Saturday, May 7, 2005

Workers' comp change could save $98M yearly

By Dan Nakaso
Advertiser Staff Writer

Workers' compensation rule changes go into effect Thursday that state labor officials estimate will save Hawai'i businesses $98 million a year by streamlining the system and getting treatment for injured workers much faster.

Learn more:

The 111-page report, "Recommendation to the Governor on Proposed Rules for Workers' Compensation Reform 2005," is available at www.hawaii.gov/labor.

Gov. Linda Lingle approved the administrative rule changes this week despite a bill passed by the Legislature that specifically prohibits state labor director Nelson Befitel from putting them into effect.

Lawmakers who pushed for the so-called "handcuff bill" aimed at Befitel argued that the rule changes blurred the separation of powers between the executive and legislative branches because the rule changes were similar to bills that the Legislature killed last year.

Lingle is expected to veto the "handcuff bill," the only piece of workers' compensation legislation that survived the session.

Befitel yesterday called the administrative rule changes signed by Lingle the most significant reform to the system since 1995. "Small businesses, self-insured employers, businesses across the board will pay less to settle claims," Befitel said. "Basically this will benefit businesses in general."

The rule changes:

• Revamp the Department of Labor and Industrial Relations' hearings and resolution process for disputed workers' compensation claims. The changes also allow both sides the option of turning to alternative dispute resolution, similar to arbitration hearings.

"Right now, if an employer denies a work comp claim, basically it could drag on and on and not come to a hearing until five or six months down the road," Befitel said. "In the meantime, that person's getting medical treatment on his own dime. Our new rules say the injured worker can file an application for a hearing and within 60 days that person will have his day in court before a hearing officer and have a ruling."

In June, the labor department's 17 hearings officers will undergo special training in Hawai'i from the Nevada-based National Judicial College in response to the changes. The department is also looking to fill four vacancies for hearings officers.

• Base medical treatment for injured workers on current medical "best practices" guidelines.

"Right now, patients go to their doctor and the doctor has to submit a treatment guideline and have it approved by the department," Befitel said. "Now we have a set of guidelines that everyone will have to adhere to. And if you have a dispute over a treatment guideline, now we have a system to expedite the process. That's a big difference."

In the legislative session, lawmakers and labor officials heard sometimes-conflicting testimony over the issue of vocational rehabilitation. The labor department has deferred enacting new vocational rehabilitation rules and instead plans to hold public hearings later in the year.

Harold J. Dias Jr., president of Hawai'i State AFL-CIO, which represents 65 unions and 90,000 members, said he is "disappointed, but not surprised" that Lingle approved the rule changes.

"This illustrates a colossal failure of the administration in not being able to bring the various parties together, vocational rehab workers, doctors, patients and certainly the unions," Dias said. "They only viewed it from one side, which is business. To institute these types of sweeping changes without considering the various parties is irresponsible. It clearly demonstrates the insensitivity to working families in the state and certainly to injured workers. Anybody who participated in the hearings on the rules would have seen the overwhelming response against them."

Dias disputed that businesses will save an estimated $98 million each year, a figure based on a University of California-Berkeley study that looked at California's workers' compensation system.

"I'm sure it will save businesses money," Dias said. "But that's not what workers' comp was founded for. The system is for injured workers and we are all for making the system more user-friendly. We're all for cleaning up administrative problems and loopholes in the system. But we shouldn't be looking at it as diminishing any benefits for injured workers."

Bev Harbin, president of the Employers' Chamber of Commerce, however, said Lingle's approval of the rules "is the best thing to have happened to small business in this session. It will so help the employees and employers and the doctors.

"We are the worst state with the highest disability payments. It takes so long to get injured employees the right treatment right away. What the physicians have to go through fighting for treatment plans and with insurance companies and hearings, it's ridiculous."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.