Once again, the Pennsylvania Workers' Compensation Administration faces the possibility of federal oversight of workers' compensation programs nationwide and this has made Pennsylvania legal practitioners nervous. This is not the first time the federal government has raised this possibility and the ramifications should be contemplated seriously. In 1972, there were discussions of a federal threat to oversee state workers' compensation programs, and this led to amendments of the Pennsylvania Workers' Compensation Act that revolutionized the procedures for administering the entire workers' compensation system.
Most recently, a U.S. Department of Labor report released the possibility of a federal threat to state workers' compensation programs, which has caused concern on both sides of the fence, according to a Legal Intelligencer article from October 7 entitled, "Federal Workers' Comp Intervention Would be 'Troubling' to Business." The report issued on October 5, 2016, only mentioned that a federal role should be explored. There are no reports suggesting a formalized proposition of federal government oversight. A letter was sent to U.S. Department of Labor Secretary Thomas Perez from the Democratic Party urging the Department of Labor to look into a "pattern of detrimental changes in state workers' compensation laws" that have reduced protections and benefits for injured workers, according to the article "Lawmakers Seek Federal 'Oversight' Of Workers' Comp As States Limit Benefits," NPR, October 21, 2015. The letter also pointed out there is an emerging trend of permitting employers to drop out of state-regulated workers' compensation programs, write their own injury plans and limit benefits on their own. These trends are shifting the burden on other programs such as Social Security Disability and Medicaid.
Federal intervention has sparked fear amongst workers' compensation practitioners and administrators with regard to the increased costs to employers and insurance carriers, regulatory issues and lag in time of being able to get benefits to injured workers. There is also concern that federal requirements would take away the ability of states to have a system that works best for each particular state's economy. The response to this new report might have states look at reform efforts that will help reduce administrative costs. There was a 2012 reform in California where benefits were increased for injured workers and costs were cut through measures such as independent medical examinations and fee schedules for workers' compensation-related services, according to "U.S. Lawmakers Urge Federal Comp Oversight," Business Insurance, November 22, 2015. There is no formal proposition at this time, but we will be keeping an eye out on any new reform proposals and notify our clients if there are notable developments.
For more information please contact Wendy Smith wsmith@wglaw.com or 215.972.7903