Iowa workers' comp debate revived; state spokesman makes 'clarification'

The political fight over Iowa's workers' compensation system has been revived after a news release from Gov. Kim Reynolds recently tied changes made during the last legislative session to a rate reduction in workers' comp premiums for Iowa employers. 

But according to the firm that sets Iowa's workers' compensation rates, the legislation played no part in the lower rates. 

The National Council on Compensation Insurance, which sets rates in Iowa and many other states, announced an 8.7 percent average reduction in premiums for Iowa employers that will take effect in January 2018.

Iowa Insurance Commissioner Doug Ommen approved the new rates in late August. 

In an Aug. 23 news release, Reynolds called the reduction a "direct result" of the legislation. 

"Over the past decade, Iowa’s workers’ compensation system has mutated into one that benefits trial lawyers at the expense of businesses and workers," Reynolds said in the statement. "Workers’ compensation reform rebalanced the scale to ensure employees are compensated fairly for being injured on the job while ensuring abuses are curtailed."

This spring, the Republican-led Iowa Legislature approved a sweeping package of workers' compensation reforms that cut back benefits for injured workers, made it harder for injured workers to claim lump sum payments and limited how much attorneys can reap in legal fees. The reforms took effect in July.

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The governor's news release last month included a link to the 422-page report from NCCI announcing the rate reduction. The in-depth analysis made no mention of the 2017 legislative changes. Rather, it credited the rate reduction to historical workers' compensation performance during policy years 2014 and 2015. 

"This rate reduction is wrongly being used to justify the devastating workers' compensation legislation last year," said Andrew Mertens, spokesman for the Iowa Association of Justice. "The governor's office claimed that this was a direct result of the legislation that passed when the report clearly states the opposite."

The association includes many attorneys that represent injured workers in workers' compensation claims.

The Des Moines Register's questions to the governor's office on the matter were directed to the Iowa Insurance Division.

Chance McElhaney, communications director and legislative liaison for that agency, said state officials "believe that the legislation that has passed will continue to push down the rates in the future." But he portrayed the governor's press release on the issue as an oversight.

"Our staff reviewed this press release before it went out and we appreciate the opportunity to clarify something we should have caught — that these reductions are due to the legislation and claims experience," McElhaney wrote. "Bottom line — these rates are dropping and we believe the positive environment created will allow these rates to continue to be low."

NCCI previously announced an average premium reduction of 3.9 percent that took effect in July. That announcement cited the legislation, which is estimated to cut back annual benefits by about $1.8 million annually. 

"The Iowa Insurance Division has received positive feedback from industry and consumers on the rates going down," McElhaney told the Regster.

NCCI spokesman Dean Dimke provided the Register with a document that states the latest rate reductions were "based on its review of the most recently available data," namely performance during premium years 2014 and 2015 and decreasing numbers of claims.

Business leaders and Republican lawmakers complained in the spring that Iowa's system of caring for injured workers had in recent years grown out of balance to favor workers over employers. Reform advocates painted the workers' compensation system as a "litigious lottery," "unsustainable" and "a cautionary tale."

Sen. Michael Breitbach, R-Strawberry Point, in the spring argued that the legislation contained common-sense provisions, such as not allowing someone to obtain unemployment benefits while permanently disabled and not letting people collect twice for the same injury.

"I believe this bill returns the system to its intended balance," Breitbach, the floor manager of the legislation, said at the time. 

But NCCI numbers showed that Iowa's workers' compensation premiums were already decreasing before the legislation passed. Rates fell an average of 4.7 percent last year. The numbers of Iowans injured on the job and the number of those cases litigated by state administrative courts have not increased in recent years, state data show. 

"That's a pretty persuasive case that there's no reason to mess around with Iowa," John Burton, a Republican economist and academic who studies workers' compensation, said in March.

The legislative changes came after dozens of other states had cut back workers' compensation benefits in what Burton described as a "race to the bottom."

RELATED: Is Iowa workers' comp out of control? The data say no

Though cumulative data showed decreasing costs, some larger self-insured companies still experienced significant increases in costs, Nicole Craim, the senior vice president of public policy at the Iowa Association of Business and Industry, said in the spring.

"Although overall, there was a rate decrease, it doesn't tell the story of what is happening with individual companies," she told the Register in March. "Although one person is receiving a decrease, another company could be seeing a 15 percent increase."

The cutbacks in benefits were a top legislative priority for ABI. That group, which represents thousands of Iowa manufacturers and other businesses, projected that Iowa employers would save nearly $40 million on workers' compensation premiums in 2017.

Mertens, of the Iowa Association of Justices, said Iowa's latest rate reduction is yet "another piece of evidence that the original system worked."

"That is good news but it's not surprising," he said. "Iowa businesses have seen a steady decline in costs and claims over the past 15 to 20 years."

Mertens said the true impact of the legislation will be seen with workers who were injured after the law took effect in July. Those cases can drag on for months before they're fully adjudicated, he said. 

"The real impact," he said, "is that this new law contained 20 sections that slash and claw back worker coverage and safety protections."