North Carolina Workers’ Compensation Community Looks to Raging Debate Out of Washington State

April 28, 2011, by Michael A. DeMayo

Although this blog typically covers news germane to North Carolina workers’ compensation issues, those who report on benefits and entitlement issues have been riveted by an ongoing debate out of Washington state regarding how to reform WA’s workers comp system.

Here’s the latest news in the WA workers’ comp saga.

According to an April 20th AP article, eight moderate House Democrats have unveiled a proposal to change the Washington system. In 2010, Washington Governor Chris Gregoire — along with leaders from the state’s House and Senate — prioritized workers comp reform after evidence surfaced suggesting that the system was in danger of insolvency.

One of the “harder core” plans for reforming the system would have required major concessions from workers. Hurt and injured workers would have to take “lump sum” settlements in lieu of ongoing payouts. While business groups backed this measure, injured workers voiced concerns that the arrangement would leave many in a lurch; and workers who could not afford legal representation would be at risk for decreased protection.

The new “moderate” plan proposed would provide workers some protections. Essentially, it would thread the needle. Workers would get enhanced safeguards, and a study would be conducted in three years to assess how the plan is performing, both in terms of saving money and in terms of protecting workers rights. On the other hand, while settlements from medical claims would be eliminated, “the option for lump sum settlements would remain.”

One interesting factoid from the AP article: “About 85% of compensation costs come from only 8% of all claims.” It’s very likely that a similar breakdown occurs in the North Carolina workers’ compensation system.

The so-called Pareto Principle (also known as the “80-20 Rule”) suggests that, in a variety of natural systems, 80% of inputs yield 20% of the results and vice versa (20% of inputs yield 80% of the results). So, when you get a statistic that says something like “8% of workers’ comp beneficiaries drive 85% of all costs,”– yes, at first, it sounds alarming. But it really shouldn’t be. Distributions of wealth, water, commodities, and basically everything else in the world organically wind up lopsided. This is why a small fraction of the people in the United States – and indeed in every country of the world – owns the majority of the wealth. It’s not a sinister plan – it’s just the way that distributions tend to form.

Getting away from the abstract, if someone you care about needs help from a North Carolina workers’ compensation law firm, don’t wait to get that assistance.

More Web Resources

WA workers’ comp proposal

WA Governor Chris Gregoire