State Sen. Edith Prague, D-Colombia, announced the release of a report Tuesday from the Center of Justice and Democracy in New York that claims the workers’ compensation system is broken from the reforms of the early 1990s. The report “Workers’ Compensation: A Cautionary Tale,” shows how the system fails workers, while boosting insurance company profits. The Connecticut Business and Industry Association disagrees with the report’s conclusion and points out that there are two sides to every issue.
“Workers’ compensation is an unfortunate example of how a seemingly fair program can be manipulated by political forces into a nightmare for those it was originally meant to help,” said Amy Widman, the author of the center’s report. According to the report, Connecticut’s 1993 overhaul of workers’ compensation has been a windfall for insurers, with profits now double the national average. “However, these huge profits were gained by deep cuts in benefits paid to workers,” the report states. From 1993 through 2004, total benefits paid to injured workers represented 55 percent of insurance company revenues, resulting in after-tax profits of $882,539,000, according to the report. “Connecticut’s system is currently designed to punish injured workers,” Prague said. She said in January, the start of the next legislative session, she would work to repeal some of the reforms the Connecticut Business and Industry Associated ushered through over a decade ago. “Their push was a hoax,” Prague claims. CBIA’s Vice-President of Governmental Affairs, Bonnie Stewart disagrees. Stewart said in a telephone interview Wednesday that every year since the reforms were made there’s been legislation to repeal some or all of them, but it doesn’t happen because the system works. She said group of people looking to repeal the reforms is the Trial Lawyers Association because the discretionary benefits granted to workers takes one-third of their award away and reduces what an attorney is eligible to receive in compensation from their client.She said Connecticut is also the only state that still awards discretionary benefits. She said since the reforms were put in place, only 10 percent of cases go to the Workers’ Compensation Commission for a hearing, which means about 90 percent are resolved before a hearing. “The thing about our system is it works well. It’s informal and simple so you don’t need an attorney to navigate it,” Stewart said. This means, “disputes are resolved faster than in most systems.“Prague said the reforms in 1993 may have helped businesses see a slight reduction in premiums, but it didn’t create any additional jobs in the state because the premiums were based on lies by the insurance companies. She said insurance industry overreacted to an exaggeration of fraudulent claims. The report states that most studies have shown about 1 percent of claims are fraudulent. In Connecticut, according to the report, “Insurers’ overstatement of losses in rate filings leaves employers blaming injury losses for their expenses when insurance profits are really to blame.“Prague said the 1993 reforms lowered the employees benefit amount to 75 percent of their average pay and limited the amount of time they could receive it.The report showed that Connecticut’s payouts to workers have lagged significantly below national averages, by about as much as 21.2 percent in 1996 with an overall average from 1993 to 2004 of 65.2 percent of the premium dollar in Connecticut versus 70.9 percent nationally. In addition, Prague said the no-fault system leaves the permanently disabled worker without any ability to sue, either their employer or a third party. She said some people are avoiding the system all together and going straight to court to recover their losses. Stewart said in the no-fault system the employee gets paid regardless of whose fault it is and they receive better medical treatment. She said now instead of having to wait for the Workers’ Compensation Commission to rule in a case, the employee can go see a specialist right away and reduce the chances their injury will become permanent. Click here to read a copy of the report and here for the CBIA Web site.