Debate over workers’ comp change simmers at NH House panel hearing
Bill would lift cap on partial disability payments
A bill that would allow people with a partial disability to collect workers’ compensation indefinitely could raise workers’ comp insurance rates from 5 to 30 percent, an insurance industry trade group told the New Hampshire House Labor Committee Wednesday.
But workers’ comp attorneys said the change would only affect a small number of people – injured workers who could work part-time, and are currently entitled to the difference between their current wages and 60 percent of what they would have made it they were healthy enough to return to their former job.
Under current law, those workers could collect that amount for 260 weeks, or five years, but worker’s compensation could cut indemnity payments (though still provide medical costs.) Senate Bill 99, which the Senate passed on March 7 on a party-line vote, would remove that cap. (Insurers would still be able to challenge whether a worker was still disabled at any time.)
There is no such cap for those on total disability, so the cap actually discourages people from going back to work, said Heather Menezes, a Manchester workers’ comp attorney. “They may be able to do it in five years, but if not, partial disability could be a trap.”
Even though the change would affect a small percentage of the workforce – some say under 1 percent – the cost could be huge, according to the National Council on Compensation Insurance.
NCCI estimated that the amount paid to those affected would go up anywhere from 200 to 600 percent, depending on the percentage who would return to work. That would add 5 to 30 percent to insurance costs and the premiums employers would have to pay for compensation insurance.
“Our concern is that the bill will dramatically change the landscape,” said George Roussos, a lobbyist representing a local and national insurance trade group. “Five percent is not insubstantial, but 30 percent is catastrophic.”
The reason the range is so large, said Christian Citarella, an actuary at the New Hampshire Insurance Department, is that there is so little data. New Hampshire is currently on the low end of states that have caps, and the handful that don’t have caps all have different systems. (New Hampshire, for instance, pays out 60 percent indemnity when most other states pay two-thirds). For that reason, “you are in uncharted waters,” he said.
The concern, he said is that this would make New Hampshire “an outlier.”
Deb Stone, an independent actuary who specializes in workers’ comp questioned the high-cost scenario that assumes no one would be able to work full-time.
“That doesn’t seem like the real world,” she said, but she also noted that NCCI also didn’t give a good reason for the assumption behind the 5 percent scenario.
But even a 5 percent increase would be a concern, testified Ashley Haseltine, president of the Greater Derry-Londonderry Chamber of Commerce. “For large employers it might be a minor blip, but we have new businesses that are teetering on the edge of success and anything can be a tipping factor.”
Karen Shea, a case manager for the New Hampshire Motor Transport Association, which has a third-party workers’ comp trust, thinks the estimates might be too low, since they just focus on a small population that would be directly affected, “not the 80 percent who are successful and getting better. Some of them, she said, might not go to work when there is an option to collect benefits for life.
“When you hit people in the pocket, it’s an incentive to go to work,” Shea said.
When asked if getting back 40 percent of their former income isn’t enough of an incentive to return to work, she said no, because “it’s tax-free money.”
She gave the example of some people who don’t go to work because they are in pain.
“People can go to work in pain,” she said. “You are going to be in pain whether you are sitting at home or at work. At work, you forget about your pain.”
But Leslie Nixon, another workers’ comp attorney, said that the change would only affect the most seriously disabled people who were injured on the job. “Employers don’t hire people like that, and it is they that are bearing the burden,” more than their employer or the insurer, she said.
Besides, she added, “we are not talking number or insurance rates, but real people.” And if rates go up, then it gives employers, “an incentive to do more to prevent injuries.”