Doug Holmes of Strategic Services on Unemployment & Workers’ Compensation (UWC) advised his group’s membership last week of a legislative effort that would facilitate the monitoring of state workers’ compensation systems by the federal government. Holmes reported that legislation developed by the House Education and Labor Committee included language providing statutory authority for the Office of Workers’ Compensation (OWC) to “monitor” state workers’ compensation systems. The language calls for the funding of $121,000,000 for the OWC for this specific purpose.

You can access the legislative document here. The part to which I refer is on page 115.

Holmes also reported that the UWC (not to be confused with the OWC) found that language included by the House Appropriations Committee described “the intent of the expanded monitoring.” That language reads, in part:

The Committee is concerned by an ongoing and systematic decline in the adequacy of benefits provided to injured workers under the State-based workers’ compensation system. Costs for disabling workplace injuries are being shifted to Federal programs, such as Social Security Disability Insurance, because of reduced coverage under State laws. With the growth of the gig economy and misclassification of workers as independent contractors, millions of workers are falling through the cracks in State workers’ compensation systems. Given the impact to the Federal government, the Committee believes that State workers’ compensation programs should be monitored on an ongoing basis. 

So, for those of you who recall the aggressive stance of the Department of Labor under Secretary Tom Perez and President Obama, here we go again. And at the risk of being labeled a Domestic Terrorist, I will say this is a bad thing…

For those who do not recall the period (it was 5 years ago, after all), it was a time of uncertainty for the workers’ compensation systems around the nation. The industry had been subject to a broad media assault spearheaded by ProPublica, and the federal government appeared to have a growing interest in having a role in how state systems might be managed. That interest appeared to culminate with a report issued by the Department of Labor; a report that suggested workers’ compensation pays merely 10 or 20% of what it actually should be responsible for in this nation. The actuarial processes used in the determination of those numbers was not clear, and many questions remain about the legitimacy of the data underlying it. Still, the feeling that the workers’ comp industry was under assault was prevalent, and many of us predicted federal interference might soon be at hand.

And then, in a development that shocked many, Donald Trump won a presidential election, and the threat seemed to vaporize overnight. It turns out that part of making America great again was treating workers’ comp as a state’s rights issue; as it had been treated for most of its 100 plus years existence prior. Trump had bigger fish to fry. 

That was then. This is now. And many of the people who originally had comp in their sights are back at the helm.

Not to be one to say, “I told you so,” but I told you this may happen. It was probably only a matter of time, as the political winds shifted in the country, that we once again find ourselves moved back into the crosshairs of people wanting a more centralized control over workers’ comp. True, this action only calls for monitoring, but $121,000,000 for the effort is nothing to sneeze at.

Well, anywhere but Washington, DC it is nothing to sneeze at. By DC standards it is lunch money. But it could still buy a hell of a lot of Ring Doorbells…

I would suggest a prudent course of action would be an aggressive, proactive response. The federal monitoring, after all, might only be the beginning. We should assume that the federal powers that be will not like whatever “facts” the monitoring produces, and act accordingly. And the states should be willing to address those well-known shortcomings within the system. The 2016 Workers’ Compensation Summit named 29 “Imperative Issues” that could be examined further to improve workers’ compensation in this nation.  

To put it another way, the millions being proposed for monitoring workers’ compensation systems should be considered our canary in the coal mine, and the canary is indicating a potential problem. As with all problems, the best defense is usually a strong and effective offense.