Lawmakers reach likely deal on workers' comp

OLYMPIA — State lawmakers apparently cleared a major hurdle Sunday, reaching an agreement to overhaul the state workers' compensation system.

The Legislature had been bogged down for weeks, fighting over how to rein in growing costs for the system. The state Senate refused to vote on a new two-year budget until the issue was resolved.

Legislative leaders project the agreement would save the system around $900 million over the next four years, largely by allowing older workers to settle their claims through "structured settlements" that would be paid off over a period of time.

Lawmakers hope the deal will help them barrel through their remaining work, including closing a $5.1 billion budget shortfall by the end of the session on Wednesday. But there are still issues that could blow up, including a battle over a proposed constitutional amendment to limit state debt.

Gov. Chris Gregoire held a news conference Sunday evening calling the proposed changes to workers' compensation "the largest reform in 100 years."

House Speaker Frank Chopp, D-Seattle, said the proposal "is a fair deal for everyone involved."

And House Minority Leader Richard DeBolt, R-Chehalis, said, "This is a great deal. It's probably the largest change we've seen for years."

Legislative leaders in both the House and Senate expressed confidence the legislation would become law and said it could pass as early as Monday.

The workers' compensation fight largely revolved around one issue — whether to give workers the option of settling their compensation claims for a lump-sum amount rather than pursuing a lifetime disability pension or other benefits.

Senate Republicans along with some moderate Democrats and the business community supported the idea, while most House Democrats and labor groups opposed it.

Leaders from both parties worked out a compromise that they refer to as a "structured settlement." Supporters say the option would allow an injured worker to resolve a claim by taking periodic payments, ranging from $982 to $5,976 a month, until the settlement was paid in full.

The option would initially be available to workers age 55 and older but would phase in workers age 50 and older by 2016.

The settlements would be separate from any medical benefits through the system. The injured workers could still go for existing system options instead of a settlement — getting benefits, or participating in a retraining plan, if eligible.

The proposal includes other changes as well, including wage subsidies for employers who bring workers back to a job quickly.

Gregoire's office projects the legislation would save the system $903 million over the next four years, with more than half of the savings coming from the settlements.

The agreement to pay out money over time helps resolve a concern by some lawmakers that workers going through trauma might opt for a lump-sum payment and end up spending it all too quickly.

Gregoire has maintained that something must be done to rein in costs as a growing number of workers are being awarded lifetime pensions. The trend, she says, will require significant rate increases in the future, affecting both businesses and workers.

Between 1998 and 2010, pension payments increased from $250 million annually to $700 million, according to the Governor's Office. The total cost of an average claim is more than $600,000.

The Association of Washington Business sent out a statement calling the proposal "good news," while the Washington State Labor Council said it opposes the legislation.

The Legislature has only three days to wrap up its remaining work before the end of the special session on Wednesday.

Budget negotiators in the House and Senate on Sunday said they were very close to a budget deal.

Both chambers, however, still appeared at odds over putting a proposed constitutional amendment on the ballot that, if approved, would gradually reduce spending on debt.

The measure has bipartisan support in the Senate, but labor has opposed the idea, as does House Capital Budget Committee Chairman Hans Dunshee, D-Snohomish.

Dunshee argues the proposal would tie the Legislature's hands and reduce spending on construction at a time when builders could use the work.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com