Maine reformed the Worker’s Compensation system in 1992 because the state’s Worker’s Comp system had broken down so completely that only one insurance carrier was issuing policies, and that carrier was on the verge of terminating operations in the state. Despite law requiring that every Maine employer carry Worker’s Comp insurance and the expense of the policies, it was not worth any other worker’s comp provider to do business in Maine. Maine workers and businesses were going to be left in the lurch if the system was not immediately reformed.
Although reforming Worker’s Comp took a state government shutdown to get all parties to the table, the end result has been successful, benefitting both workers and employers by ensuring coverage would be there, lowering the costs of coverage, and improving safety. The reforms, based upon the best practices in other states, brought simplicity, certainty, and stability to the Worker’s Comp system, ultimately attracting more carriers and bringing competition to the marketplace, driving costs down. Not only do carriers compete to provide coverage, they also compete to provide quality workplace safety education and training programs, furthering the workplace safety culture that is keeping our employees safer on the job.
Worker’s Compensation claims are down in Maine, meaning workers are working more safely and fewer people are getting injured on the job. But when injuries do occur in the workplace, the severity of injuries is also down. The vast majority of Maine’s injured workers are back to work in fewer than seven days.
Under the LePage Administration, premiums fell 34.4 percent, while the number of carriers in Maine grew and is now up to 327. Maine has a healthy Worker’s Comp system. More than 85 percent of filed Worker’s Comp claims are picked up voluntarily by the carriers and paid. That is efficient and effective coverage for injured workers. The most recent annual report on Maine’s Worker’s Comp system (as compiled by the Maine Worker’s Compensation Board, the Maine Bureau of Insurance, and the Maine Department of Labor) and workplace safety programs supports our conclusions. Furthermore, the report makes no call for any substantive reform of the current system.
Maine must proceed carefully when considering changes to the Worker’s Compensation system. Most of the changes proposed in the legislation of the 129th to date would lead to increased costs, and a few run the risk of substantial costs. The cost factor is important in ensuring coverage for workers.
The lower the cost of Worker’s Comp insurance coverage, the fewer the number of employers who will try to evade that cost by misclassifying employees as independent contractors. Worker misclassification not only prevents a worker from being covered by Worker’s Comp, but also unemployment insurance; it also forces workers to pay what would be the employer’s share of other payroll taxes. Keeping premiums low helps prevent worker misclassification, keeps more money in workers’ pockets, and helps educate employers about the benefits of keeping their workers safe.
Therefore, Maine People Before Politics has reviewed the proposals now before the Legislature with an eye to preserving the successes of the 1992 reforms, keeping the system’s appropriate balance between employees and employers, and ensuring individuals who have been greatly and grievously affected by a workplace injury or fatality are justly compensated.
As detailed below, the vast majority of the Worker’s Comp bills now in the Legislature roll back many of the 1992 reforms that created our stable and effective Worker’s Comp system. Although well-intended, they would put the system out of balance.
Maine needs a system that both encourages employers to ensure workers are protected and provides wage replacement and rehabilitation supports to injured workers, getting them back to work in the same or a different job—making comparable wages—as soon as possible.
Therefore, MPBP offers this brief analysis of the bills before the 129th Legislature and our policy recommendations.
Worker’s Compensation Policy Recommendations
Policy Recommendation #1: Limited Cost of Living Adjustment (COLA) implementation. Maine should implement a COLA for two classes of individuals receiving benefits. The first class of beneficiaries who should receive a COLA are workers who suffer a total and permanent injury (Section 212). These workers who are unable to work have not had an increase in their benefits since their injury, and a COLA would be an appropriate and reasonable reform. The second class of beneficiaries who should receive a COLA are the children of a worker who was fatally injured.
MPBP recommends that the COLA for workers with a permanent and total injury and for the children of a fatally injured worker begin five years after the injury or death and be adjusted annually thereafter. The increase should be tied to the compensation changes of the employer for whom the worker was working at the time of the injury or fatality, or the Maine wage for the comparable occupation and years of experience in the same NAICS classification if the employer is no longer in business.
Policy Recommendation #2: Worker Misclassification. Ensuring that individuals who are working as an employee receive the benefits of such employment, including Worker’s Compensation coverage, is important to protect workers but also to create a level playing field for employers.
Maine could do more to address worker misclassification by granting the Worker’s Compensation Board employees more powers to investigate potential instances of misclassification. Additional options could include the suspension of licenses, permits, or certifications for employers that willfully misclassify workers. Any proposed legislation should be based upon a review of best practices in other states.
Maine People Before Politics Recommendations on Selected Bills to Date
LD 312: This bill would eliminate the minimum premium. MPBP recognizes that there is a cost to doing business and issuing a premium; it should be the insurance carrier’s decision to charge a minimum premium and, if so, how much—not the state’s decision. Recommendation: Ought Not To Pass
LD 600: Establishing the causal relationship in workplace stress-related mental illness and injury is a more difficult diagnoses than most other workplace injuries—there is no x-ray or blood test that can show a definitive injury and point to a cause. Therefore, because there is the potential for more subjectivity in these diagnoses, it is appropriate for the current statute’s higher legal threshold of “clear and convincing” evidence to stand. Recommendation: Ought Not To Pass
LD 601: Maine law does not allow for a cost-of-living-increase (COLA). Maine People Before Politics recommends that Maine implement a COLA for workers who suffer a total and permanent injury (Section 212). These workers who are unable to work have not had an increase in their benefits and a COLA would be an appropriate and reasonable reform. See Policy Recommendation #1.
LD 758: This bill attempts to place the work search standard on the former employer instead of the worker. This bill is unworkable in practice because it requires the former employer to speculate as to whether another employer would hire the employee. Such speculation is unprovable. Recommendation: Ought Not To Pass
LD 809: This clarifies the change in status of marijuana under state law when an individual is intoxicated on the job. Recommendation: Ought To Pass
LD 819: This bill is not factually correct as written. The IRS does not issue 1099s; 1099s are issued by businesses to independent contractors. This bill places a cumbersome and unrealistic burden on the worker and does nothing to prevent worker misclassification. Recommendation: Ought Not To Pass, see also Policy Recommendation #2.
LD 901: This bill reverses a statute of limitations put in place as a result of a working group of six employer representatives and six employee representatives in the 125th Legislature and passed with bipartisan support. Almost every crime except murder, incest, and rape has a statute of limitations in Maine, and a statute of limitations on reporting workplace injuries is not unreasonable. See also our response to LD 947, which also applies for LD 901. Recommendation: Ought Not To Pass
LD 947: The 30-day notice of injury requirement in Maine’s current statutes is a standard requirement across the Worker’s Comp industry. If there is something unsafe in the workplace environment causing an injury, then it is important that the employer be notified as soon as possible so it can correct the problem and prevent other workers being injured in the same way. Maine did change this to 90 days at one point, but more than 97 percent of injuries were reported within 30 days, and so the law was changed back to 30 days several years ago. Current law also includes a “mistake of fact” provision for circumstances in which a worker was unable to meet the 30-day notice requirement, so a remedy for such instances exists. Recommendation: Ought Not To Pass
LD 1095: This bill attempts to make Maine an outlier by not allowing an employer to recapture its Worker’s Comp costs when the worker’s injury was caused by a third person unrelated to the employer. In these cases, the employer is essentially an innocent party and should be allowed to be made whole. Recommendation: Ought Not To Pass
LD 1203: Worker’s Comp benefits are a wage replacement. When a person retires, it is appropriate that he or she receives the retirement benefit as current statute requires, not a continued wage replacement. Recommendation: Ought Not To Pass
LD 1204: The Legislature rarely passes bills that are retroactive actions. The cap in Maine has existed for many decades—prior to the 1992 reforms. This bill’s retroactive elimination of a cap on benefits would be substantial and could result in unfunded liability. This would certainly drive carriers out of the state, leading to less choice and higher costs. Recommendation: Ought Not To Pass
LD 1112: This law is unnecessary because this is the way such injuries are currently handled in the Worker’s Comp system under existing law. Recommendation: Ought Not To Pass
LD 1205: Current law is designed to prevent “double dipping” for the wage replacement, and Maine’s courts have been consistent in decisions to prevent the collection of a double wage replacement. This law would overturn that clear standard. Recommendation: Ought Not To Pass
LD 1253: This law would remove the 500-week cap on benefit collection for a spouse in the case of a worker fatality. Current policy provides for approximately 10 years of support for the spouse, which is comparable to the policies of many other states. Recommendation: See Policy Recommendation #1, where we recommend a COLA for the child of a fatally injured worker; that COLA recommendation should apply in the same way to the spouse, but we recommend retaining the 500-week cap consistent with the policies of many other states.
LD 1501: This bill repeals the entire “Occupational Disease Law” chapter—a core 1992 reform. An occupational disease claim applies to exposures unique to an employee’s work. This bill would dilute the clear standards set forth in Maine’s Occupational Disease Law. Recommendation: Ought Not To Pass
UPDATE April 25, 2019:
LD 1623: This bill changes the regulations governing attorney’s fees in Workers’ Comp cases. There is no compelling reason to amend the statutes as called for in Sections 1 and 2 of the bill because if an injured worker cannot afford a private attorney, Maine is the only state to provide an advocate system: the Worker Advocate Program provides free legal representation to injured workers without attorneys. If an injured worker chooses to hire a private attorney, nothing prohibits the individual from doing so. The remaining sections of the bill repeal the current sliding-fee scale. This would allow attorneys to charge injured workers whatever they want. This bill hurts injured workers and benefits attorneys, who are already being compensated for their work under the existing sliding scale. Recommendation: Ought Not To Pass
LD 1624: This bill limits the ability of an employer to terminate or discipline a worker who has filed a Workers’ Compensation claim. Under the current law, if a worker has filed a Workers’ Comp claim, an employer can discipline or terminate an employee for demonstrating a pattern of unsafe work, for not using safety equipment, or for other reasons that may have a tangential relation to a workplace injury but does not stem from the act of filing a Workers’ Comp claim. If a worker has a demonstrated history of not working safely, that employee is not only at risk of reinjuring him- or herself, but potentially other employees. This bill would prevent an employer from terminating or even disciplining the employee, putting other employees at risk. Recommendation: Ought Not To Pass.
LD 1625: This bill eliminates the 520-week cap on partial disability benefits. Maine had a cap until the 1970s. The repeal of the cap was one of the major cost drivers leading to the Workers’ Comp crisis in Maine. Recognizing this, in the 1980s, the caps began to be put back in place to try to address the spiraling costs. In 1992, a formula was set for a cap with the maximum established at 520 weeks. Maine is at 520 weeks currently, and current law allows two remedies through which an injured worker can receive benefits beyond 520 weeks, including for financial hardship. Removing the cap would have a substantial effect on costs and lead to unpredictable effects on the system. Recommendation: Ought Not To Pass