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Factors such as a major push by self-insured employers, wholesale turnover in the state legislature and Republican Gov. Bobby Jindal could lead to major changes to Louisiana’s workers’ compensation laws.

“Jindal’s a bright guy. He’s smart, and if he’s really a responsible governor, he’ll look at both sides of this issue, and he’ll look at the facts, not the fictions. He’ll look at all of the data,” said Chuck Davoli, a workers’ comp attorney.

If Jindal does so, he will notice that workers’ comp is the second-most profitable line of business for insurers, Davoli said, and he’ll want to know the underlying reasons for that.

The question is whether the new members of the legislature, who lack experience with workers’ comp issues and the reasoning behind the current system, will be able to make an informed decision, Davoli said. That may be difficult because there’s a lot of misinformation around.

Davoli said the source of the misinformation is the Louisianans for Workers’ Compensation Reform (LWCR), an initiative of the Louisiana Association of Self Insured Employers (LASIE). However, Jai Sharma of Houston, who chairs LWCR, said Davoli is the one who is misinformed.

“Right now the average length of stay away from work is nine months. That’s nuts. I don’t see how an employer can stay in business like that,” Sharma said.

LWCR and LASIE say Louisiana’s workers’ comp system lags behind other states’. According to LWCR, Louisiana employers have the longest temporary disability duration rate, 40 percent higher than the median, and pay more than the national average in workers’ compensation costs, with higher premiums; indemnity, or compensation for lost wages; medical costs; claims management; and defense costs.

In addition, LWCR says the adjudication process, in which civil service employees preside over workers’ comp cases, is costly and time-consuming and creates an adversarial relationship between workers and their employers.

LWCR also says the workers’ comp system hampers employers and hinders the state’s economic growth.

Sharma says that LWCR, which represents 250 large employers and hospitals and close to 1 million workers, is taking a comprehensive approach to changing the workers’ comp system. Sharma said he is confident that changes will be made by the legislature.

The group has recommended lowering compensation costs, changing the dispute resolution process to promote consistency and efficiency, and creating quality medical provider networks to treat injured workers.

However, Davoli says the real push is from self-insured employers, who make up about 10 percent of the workers’ comp market. Davoli says LWCR is only telling part of the story.

For example, one reason Louisiana employers’ indemnity costs are higher is that almost no firms offer injured workers modified employment, Davoli said. That means letting an employee work in the office or tool room rather than on the plant floor while he recovers.

Employers could cut indemnity costs by 60 or 70 percent by doing this, Davoli said.

They basically want to take away workers’ right to choose their own doctor, wage-loss benefits and civil service protection for workers’ comp judges.

The self-insured employers want to do away with physician choice because they want to control the gate, Davoli said. Treating physicians don’t just treat the injured worker.

“They also determine causation issues. Did this accident cause this problem? They also determine disability issues. Is he capable of going back to work and if so what kind of work is he capable of doing?” Davoli said.

The treating physician also determines the worker’s impairment rating, which dictates whether any further wage-loss benefits are due, Davoli said. It’s a complicated process.

What the self-insured employers and LWCR want to do is establish a system like Texas’, where companies establish a network or panel of doctors and the worker picks one from a limited list, Davoli said.

Davoli said LWCR also wants to get rid of the loss-wage benefit. In Louisiana, workers who make less than 90 percent of their pre-injury wage get two-thirds of the difference between what they make now and what their pre-injury pay was.

The benefit lasts 10 years.

“They (LWCR) basically want to give you a permanent impairment rating and then cash you out of the system, and then have no further obligation to you,” Davoli said.

In Louisiana, workers’ comp is a no-fault system, Davoli said. Employers are immune from lawsuits, and in exchange, workers get medical benefits and help to get back to work.

But the LWCR wants it both ways, Davoli said, and you can’t have it both ways.

If the state really wants to reduce workers’ comp costs, Louisiana should actively pursue employer and insurance company fraud, as California, Florida, New York and Illinois are doing, Davoli said.

A study in New York and California found 25 percent to 45 percent of employers are underinsured, not insured or committing insurance fraud by not reporting all of their employees, Davoli said. The cost to the system is in the millions and millions of dollars and puts companies that do things correctly at a competitive disadvantage.

Davoli said the costs of employee fraud are a smidgen of those for employer fraud.



December 2007

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