Tennessee Workers’ Comp Reform a Win-Win
Published Apr 07, 2005
Vance Hyndman was no stranger to shock.
Hyndman’s dynamite crew routinely rattled the earth on construction sites. But on Oct. 2, 2002, after test-drilling one blast site, they received a fateful 3 p.m. call to take their truck to another job for Franklin-based R.P. Industries.
“Somehow or another, we hit the overhead power lines,” says Hyndman, now 34.
His co-worker died instantly. Vance would lose both legs and sustain severe burn damage. As he roused from a coma, endured months of rehabilitation and learned to walk on artificial legs, Hyndman’s wife, Wendy, found herself entering the challenging waters of workers’ compensation.
The couple secured weekly benefit checks and medical coverage from R.P. Industries’ insurer. And after a five-hour mediation, Vance Hyndman reached a settlement through Tennessee’s innovative benefit review program to avoid a protracted court case.
“I feel good about it,” he said. “If I had to do it all over again, I would do the same thing.”
Accidents like Hyndman’s are why Tennessee requires workers’ compensation coverage at all construction firms and most employers with five or more workers.
Tennessee added the benefit review program in 1992, and mediation cases rose from 26 that year to 4,000 a decade later. Still, many cases continued down costly avenues, with court awards double those in neighboring states.
Enter Gov. Phil Bredesen, who in 2004 introduced a bold overhaul of the 86-year-old system with mandatory mediation and savings pegged at $30 million a year.
“I’ve been around a long time in this state and I’ve never known another governor to personally introduce a workers’ compensation bill,” says James Neeley, commissioner of Tennessee’s Department of Labor and Workforce Development. “Based on what we’re hearing from the employer community, they really appreciate the governor stepping up and they’re very happy that we were successful.”
Employees gain better protection under the new law, too, says SueAnn Head, Workers’ Compensation Division administrator. Insurers will be penalized if they don’t pay workers and medical providers on time.
A medical impairment rating registry of physicians will eliminate the dueling doctors phenomenon of the past “hopefully without any intervention at all on the part of the court system,” Head says. “We think that should bring more uniformity and consistency into the system.”
The new law also yields a break on insurance rates. The National Council on Compensation Insurance analyzed Tennessee’s changes and recommended a 6.3 percent rate reduction across the board, Neeley says. An additional 6.9 percent reduction was expected in the summer 2005 fee schedule.
Since the workers’ compensation overhaul, Tennessee has seen requests from industrial site selectors soar.
“Our work has more than doubled in a lot of those areas simply because of the legislation,” Neeley says. “We’ve seen more existing industries in the state expanding. And we’re seeing new employers come into Tennessee.”
Workers’ Comp Reform Basics
Key outcomes of the overhaul include:
* Mandatory use of the benefit review program for all workers compensation cases. If mediation fails, parties may still take a case to court but mediation often streamlines the process.
* Revamped medical ratings. In the past, injured employees who returned to work could obtain up to 2.5 times the state’s permanent partial disability rating. Now, the multiplier is capped at 1.5 after state officials cited too-frequent use of the maximum.
* Annual savings in the system of $30 million.
* Beginning July 1, 2005, a new medical fee schedule brings costs in line with neighboring states.
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