Tenn. Workers’ Comp Reform Levels Playing Field
Published Apr 07, 2006
Marvin Windows and Doors in Ripley added 125 new jobs in the past two years, bringing its staff to 750 employees – with plans to add more in the future.
Buoying the company’s growth is the state’s revamped workers’ compensation law, passed in 2004.
“We’re much more favorably disposed to continuing to grow the business because of the legislation change,” says Michael Codega, vice president of operations for the Minnesota-based company. “It puts Tennessee more in line with surrounding states.”
The biggest change to the 86-year-old workers’ compensation system was in the dispute of claims. It’s now mandatory that all parties go through a benefit review program before filing a lawsuit, ideally avoiding a protracted court case.
The Ripley plant anticipates significant cost savings over time.
“It should result in hundreds of thousands of dollars of savings – and the cost savings to industry will be tens of millions of dollars,” says Kent Carter, director of human resources for Marvin Windows and Doors of Tennessee.
Changes are already apparent: During the first 11 months of 2005, the number of temporary disability and medical treatment disputes resolved by the Tennessee Department of Labor rose 61 percent versus the same period in 2004.
Employees also gain better protection under the Workers’ Compensation Reform Act. Insurers are penalized if they don’t pay workers and medical providers on time.
From July 2004 to June 2005, the state imposed fines against companies and insurers in 51 cases totaling more than $36,000. From July through October 2005, the state levied 24 fines totaling more than $18,000, according to the state Department of Labor and Workforce Development.
“That tells us that employers and insurance companies are getting the message that failure to make appropriate payments to injured workers in a timely fashion will hit them in the pocketbook,” says James Neeley, commissioner of Tennessee’s Department of Labor and Workforce Development. “The penalties for untimely payment are paid to the injured workers, so they are compensated for the delay in receiving the benefits to which they are entitled.”
The final phase of the Reform Act was the implementation of the medical fee schedule that provides access to quality medical care to injured workers.
The state requires workers’ compensation coverage at all construction firms and at most companies employing five or more workers.
Marvin’s 570,000-square-foot Ripley plant manufactures patio doors – potentially hazardous work – so workers’ compensation costs are an important consideration.
“We have invested millions of dollars to ensure that people are protected on the worksite and educated in how to work safely,” Codega says.
The company has the highest levels of voluntary safety management and performance as certified by the Tennessee Occupational Safety & Health Administration, but the changes in the law have still made a marked difference, Codega says.
“The application of the legislation has been faster and more fair,” he says. “The more favorable climate has encouraged us to continue growing our business in Tennessee.”
Marvin Windows and Doors is just one of many companies taking notice.
Since the workers’ compensation overhaul, Tennessee has seen a rise in requests from industrial site selectors.
“We’ve seen more existing industries in the state expanding,” Neeley says, “and we’re seeing new employers come into Tennessee.”
Story by Rebecca Denton
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