Governor signs state budget but vetoes occupational disease study

July 6, 2017


Late on the evening of June 30th last week, Governor Jay Inslee signed into law the hastily passed state operating budget, forestalling the prospect of a government shutdown later that night. The much-ballyhooed compromise provides the spending blueprint for the new fiscal biennium, through June 30 of 2019.

Focusing attention on the portion of the budget deal that funds the Department of Labor & Industries, there is a little intrigue.

While the Department appears to have received most if not all of the funding projects it requested, which was a priority for the Governor and the Democratic House of Representatives (and not nearly as funded in the Republican Senate budget proposal), a couple additional provisions were included that appear to be the work of Senate budget negotiators, echoing priorities of the Senate majority.

The one of interest to us called for a further study of occupational disease in Washington. Specifically, the Legislature provided $500,000 in funding with the direction that it be used:

. . . to conduct a study on occupational disease claims. The purpose of the study is to identify medical providers who are inappropriately submitting occupational disease claims and to develop best practices to better identify where employment is the proximate cause of diseases and conditions that are covered under industrial insurance. The study must specifically develop new tools and practices for the department and medical providers to use to assess when a disease or infection is proximately caused by distinctive conditions in employment as opposed to exposure to the disease or infection outside of his or her employment or as an ordinary condition of life to which the general public is exposed without regard to employment. The department, in consultation with the workers' compensation advisory committee, may select distinct diseases, infections, or conditions for review such as hearing loss.

While the employer community generally speaking did not ask for this study, it aligns with concerns that were raised last fall in the Senate Commerce & Labor Committee when a work session over workers' compensation cost drivers led to a series of testy exchanges between committee Vice Chair (and Senate Ways & Means Chair) John Braun, R-Centralia, and a representative for the state's trial lawyers lobby, over the scope of occupational disease coverage and the role of medical providers in it. (Click here for our post on that work session last fall.)

Since the Governor and House Democrats appear to have received all of the funding for Labor & Industries they sought, it's reasonable to conclude studies like this one were part of the compromise reached during budget negotiations over the agency's funding levels.

But the Governor decided these were questions that need not be asked, and tools that need not be developed. In his veto message on the provision, the Governor stated:

The 2011 Legislature directed the department to contract with a research entity to study the frequency and severity of occupational disease claims. The research found that the evidence suggests little reason for concern over Washington's system. The system has adequate checks and balances which ensure that only work-related conditions are compensated. For these reasons, I have vetoed [this proviso].

Well, at least the first sentence of that statement is true.

When the Upjohn Institute released its study of occupational disease claims in Washington in 2012, pursuant to the 2011 reform legislation, it presented a mixed bag of observations and conclusions about the Washington system and its position relative to other states. 

The 2012 report actually validated employer concerns that the incidence of occupational disease claims was rising in Washington as a proportion of all claims while the same ratio in nearby states was falling. It noted that occupational disease claims are more expensive than injury claims, and keep injured workers off work for much longer -- over 300 days on average. Finally, the report supported the concern that these kinds of claims are twice as likely to end in permanent total disability findings -- lifelong pensions.

But, the Upjohn Institute did conclude it "found no glaring problems with the compensation of occupational diseases" in Washington. It rested this conclusion, in part, on a controversial premise. While there are more occupational disease claims in Washington, they are more expensive, and are more likely to lead to disputes and worker disability, still, on the whole, the authors "estimate that employer costs are near the U.S. average" for workers' compensation.

Of course, the Oregon Premium Rate Study upon which this observation relied took a sharp upward turn for Washington in 2012. Whereas previously Washington's premium cost was ranked in the low 30s, in 2012 it shot up to the 13th highest jurisdiction in the country, and it has maintained a top 15 ranking since, at a time when premiums have been kept at or below wage inflation.

Further, the 2012 study explicitly did not have as its scope and object the development of best practices and new tools and practices for the Department of Labor & Industries to deploy to ensure more fairness in the outcomes of occupational disease claimants.

This veto is a tiny part of a massive budget deal, and one that Senate Republicans have generally hailed. But it will be interesting to see if, when the Senate Commerce & Labor Committee comes back into session in just six months, whether the Governor's nothing-to-see-here approach to an obvious concern of legislators will roil, rather than settle, the waters surrounding the issue.