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Labor commissioner outlines need for reform of workers' compensation

WILLMAR -- A push is under way to make Minnesota's workers' compensation system more responsive to employer needs and the needs of injured workers.

Four work groups studying potential reforms are expected to make their recommendations by this fall to the Workers' Compensation Advisory Council. The result will be a reform bill introduced next year to the Minnesota Legislature.

"This system has the potential of becoming better," said Steve Sviggum, commissioner of the state Department of Labor and Industry, which oversees worker safety and workers' compensation.

Sviggum was in Willmar Wednesday as part of a multi-city tour to explain the reform initiative and build support for it.

The state's $1.7 billion system for treating and rehabilitating Minnesotans who have been injured on the job is in better shape than it was 20 years ago, when rates charged to employers were two to three times higher than neighboring states, Sviggum said.

A reform bill enacted in 1995 did much to stabilize the rates, he said.

There's still room for significant improvement, however, particularly in getting injured employees back on the job and simplifying the way medical providers are paid for providing care through workers' compensation, Sviggum said.

In 2006, the most recent year for which statistics were available, 120,900 workers' compensation claims were filed in Minnesota. Most were for medical costs associated with treating work-related injuries.

The average payout on all claims in 2004 was $6,900. That's up from 1997, when the average claim was $4,650.

Since 1997, claim rates have been falling, and they leveled off in 2004 and 2005. Medical costs, however, have been rising.

While Minnesota's workers' compensation system is cost-competitive with surrounding states, the state could lose this edge if reforms aren't made within the next few years, Sviggum said Wednesday.

The goal is a balanced bill that will equally meet the needs of employers and workers, he said.

"We're trying to make sure that both business and labor are included in the system," he said.

Pricing is among the issues being studied this summer by the work groups. The groups also are looking at issues such as getting injured workers back on the job sooner, and protecting workers from losing their health insurance benefits if they end up on a lengthy medical leave because of a work-related injury.

An area that's slated for particular attention is how medical clinics, surgery centers and hospitals are paid for providing medical care for injured workers.

It's not unusual for providers to wait 12 to 18 months to get paid, or for portions of the bill to be denied, Sviggum said.

"It's a system that has become very convoluted," he said.

Of the dozen people who met with Sviggum at a meeting hosted Wednesday morning by the Willmar Lakes Area Chamber of Commerce, reining in fraud and abuse -- which contribute to higher costs for employers -- was one of the foremost concerns.

"We know there are abuses to the system. They have to be nipped in the bud," said Willmar business owner Russ Bennett.

"I'd like to see some teeth" in enforcement, agreed Harry Fenstra, a Willmar insurance agent.

Fraud accounts for only a small percentage of workers' compensation claims but it's "the one thing that irks people," Sviggum said.

He said part of the reform proposal likely will include more resources for fraud investigation.

"Our goal is to try to rid the system of the fraud that takes place and still get the injured worker the benefits he or she deserves," he said.

State Sen. Joe Gimse, R-Willmar, said he'd like to see workers' compensation rate reductions for employers with active safety programs. Gimse was recently named the Senate Republican representative on the Workers Compensation Advisory Council, which will be crafting the reform bill for the Legislature.

Sviggum said lower rates for meeting safety standards are already in effect in some states. "That is something we will consider," he said.

He called safety measures "the most important insurance you can buy."

Many industries have made major investments in safety training and technology in recent years, and it's had an impact, he said. "Job-place injuries have gone down dramatically."