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Workers' comp needs a cure

Good news: Fewer Minnesota workers were hurt on the job in 2006 than at any time over the previous 10 years.

Bad news: That same year the state's workers' compensation system cost businesses $1.7 billion, more than ever before.

"Costs in the system are rising while the number of injuries are going down," said Steve Sviggum, former Minnesota legislator and now commissioner of the state's department of labor and industry.

"That is of great concern to me, and it should be to anyone who looks at it," he said.

The department is the governmental agency charged with administering Minnesota's workers' compensation system, which after undergoing a major overhaul in the early 1990s has seen little reform in recent years.

The current system is no longer cutting it, said Sviggum, and it needs to be changed.

Last spring, his office created a four-pronged task force to study the issue and come up with cost-saving recommendations for the Workers' Compensation Advisory Council, a statutorily appointed board made up of labor and business leaders that advises Minnesota lawmakers.

Sviggum has also been traveling around the state, talking to different labor and business groups about the current compensation system and why it needs to be updated.

"We are trying to look at the workers' compensation system we have, which can be very confrontational, and we're trying to take some of the controversy out of it ... and bring balanced reform," he said. "We are on the verge of costs rising dramatically if don't do reforms now."

From 1997 to 2005, the average payout per claim rose 32 percent, while average medical benefits jumped 56 percent.

"We've found that medical costs in the workers' compensation system have skyrocketed even higher than costs in the medical industry itself," Sviggum said.

As part of his travels, the commissioner stopped in Alexandria last week, where he spoke with local legislators and representatives from area businesses.

The Alexandria Lakes Area Chamber of Commerce hosted the event.

Coni McKay, the chamber's executive director, was there.

In her 11 years as director, McKay said she hasn't seen a lot of problems with worker compensation locally - her office has had one employee file a claim - but she has heard concerns from the business community that make her think it's time for change.

"It's just one of those things that requires good oversight, and oversight has to come from the top-down," she said. "I think it's the government's job to make sure good policies, procedures and structure are in place to make sure businesses can feel comfortable."

Sviggum said if left unchecked, a poor performing system could further drag down Minnesota's already lagging economy.

"We can't have workers' compensation rates two to three times the rates of neighboring states, otherwise we will have hard time growing jobs and business," he said.

Sviggum said one of the task force's recommendations is called the "15-15-15 proposal."

If adopted, it would speed up the claims process by requiring insurance companies to respond within 15 days after notice of a workers' compensation claim.

They then would have another 15 days to either approve or deny payment.

If denied, the department of labor and industry would get involved, and through dispute resolution reach a decision within 15 days.

"We are trying to overall make it more efficient, make it more timely, less litigious and more aimed at the injured worker and business who pays the premiums," Sviggum said. "We can make this system better."

Tom Jacobson, president of the Chamber's board of directors, also attended Sviggum's presentation.

He said the commissioner provided some good information on a complicated issue, and he agreed the time to take action is now, before the system falls apart.

"I don't think what we're seeing here in Alexandria is a crisis or chaos, but we're kind of on the verge where if we don't do something about these issues they could become a big problem," he said. "Costs are huge, and I don't know if that's driven by the number of claims ... so far as that medical care has gotten so expensive."

An attorney whose firm has represented both employers and injured workers in compensation cases, Jacobson said overall, fewer disputes are ending up in court, but it's when lawyers do get called in that the system really gets bogged down.

"What I'm seeing locally, there's not been a huge increase in the volume of claims, but the claims that are there tend to be far more complicated," he said. "From everybody's perspective, it just takes too long. It's a very, very slow process."

Jacobson said it's so complicated because currently there are three different laws, all with different provisions and regulations, that can come into play in workers' compensation cases in Minnesota.

"We're talking about months, if not years, before some of these claims finally get resolved. That's not good for either side, whether it's an employer or employee, both want to get these things taken care of."