Lisa L. Smith

July 10, 2007

The Workers' Compensation system for West Virginia had been out of control. The state faced an unfunded liability of $3.3 billion which was growing daily. Benefits were highest in the nation. But businesses stayed away because of the cost of compensation insurance. And loss of business meant fewer jobs.

Lisa Lewis Smith set out the facts today before Putnam Rotarians at their weekly luncheon meeting at Sleepy Hollow.

The state bit the bullet in 2003 and set the stage for privatization of Workers' Comp two years later.

"Businesses say that the 2003 reforms have helped," said Smith.

"What about the unions?" someone asked.

Smith replied that West Virginia had looked at other states which had privitized their Workers' Comp programs, and avoided many of the mistakes others had made. Labor was a part of the planning, and planning in West Virginia was quite thorough.

As a result, there has been a constant positive improvement in medical payments through early reporting, better medical care, safety programs, and help on return to work.

The fiscal hemorrhaging has stopped. Payments of $227 million in 2003 had dropped to $141 million by 2006 -- a savings of $86 million a year.

Expansion Management, a monthly business magazine that covers economic development, site selection, business climate, and expansion, now ranks West Virginia 8th in the nation in attractiveness for relocation and new business investment.

BrickStreet, an insurer which Smith noted was based in West Virginia and which provided some 500 jobs in the state, is the sole provider of Workers' Compensation until July 2008 when the market opens up to competition.

Smith, an "business ombudsman" for BrickStreet, reviewed several strategies which have helped employees return to work sooner, cut premium costs for employers, and kept costs down.

Business classifications have been increased from 94 categories to nearly 600. BrickStreet uses the classes set by NCCI -- the National Council on Compensation Insurance. Risk is much more closely associated with payments because of the better classifications, she said.

Reporting of accidents is more timely. In 2003, the average reporting time was 31 days. Currently, the time between accident and report is 12 days. The goal is 24 hours.

Litigation costs are down; protests have dropped by half. This is related to timely reporting which in turn means better medical care. And employees are back to work sooner.

Abuse and fraud are curtailed. Again, this is tied to timely reporting.

Employers are encouraged to have workplace safety programs, and there are specific strategies published for quick return to work for whose who are victims of an accident.

Smith reminded her audience that BrickStreet is a private insurance carrier. There have been instances of employers discarding invoices because they uninformed about the privatization in 2005. "Name-recognition is a necessity," said Smith.

When employers pay their workers' comp bills, they remain under insurance protection. And the insurance burden is distributed more fairly.

People need to be informed about the benefits of workers' comp and the ways we can improve safety and help people get back to work, she said.