LEGAL TRENDS - July 2008

Workers’ compensation continues to be an issue in many states and countries. We are lucky that this is not the case in Rhode Island.  The reason is that the stakeholders in our system continue to work together to resolve potential problems before they become an issue. Please accept the following as an update on what is going on in Rhode Island’s workers’ compensation system.

 The Workers’ Compensation Advisory Council made two recommendations to the General Assembly this year.  One was the Omnibus Bill. The other was for a study commission, the parameters of which are outlined below. The recommendations were accepted and resulted in two bills passed by the General Assembly. On July 7, 2008, these bills became law without the Governor’s signature.  The following is a summary of the new law.  

The first of the two bills is the Omnibus Bill (S 3111). The first section of the bill concerned benefit entitlement. In Rhode Island, many benefit awards rely upon “the most recent edition of the AMA (American Medical Association) Guides to the Evaluation of Permanent Impairment”.  On December 22, 2007, the Sixth Edition of this guide was released. The medical community is just now getting up to speed on its components and its effect on benefits is unclear. As a result of the legislation, Rhode Island will join many other states in delaying reliance on the Sixth Edition and continuing to utilize the Fifth Edition pending further review by the Medical Advisory Board and the Advisory Council. There is a statement in the bill that the effective date of this change is December 22, 2007 and it shall not impact existing orders, decrees or agreements. Nevertheless, this may create some issues for interim awards.

The next change was specific to the Rhode Island Airport Corporation (RIAC) and their police.   The definition of “employee” was amended to include police and crash rescue and firefighting personnel at the airport. This will not impact these employees entitlement to IOD benefits.  It allows RIAC to insure the workers’ compensation portion of the risk and have those issues resolved at the Workers’ Compensation Court. This change was effective upon passage or July 7, 2008.

The exception for “arborists” from the Workers’ Compensation Act was removed. The Advisory Council found that there was no good basis for this exception and that most arborists bought the insurance anyway. This change will go into effect on January 1, 2009.

The General Assembly revisited the “Gate”. Essentially, the 1990 definition of the “Gate” will be extended for another three years. The 1990 definition has continued to work and the 1992 definition includes the use of the AMA Guides (which are being placed on hold). Both the 1990 and 1992 definitions maintain stability in the system. This goes into effect upon passage.

There were some “housekeeping” changes with regards to the Department of Labor and Training. Prior to these changes, an insurance company had thirty days to notify the DLT of a change in coverage. Because these notices are now electronic, the time limit was changed to five days. The goal here is to help the DLT better enforce compliance. Another change related to penalties for failure to have insurance.  Previously, the judges at the Court had no discretion in levying a civil penalty, regardless of the circumstances, within parameters of $500 to $1,000 per day. Under some circumstances, this was enough to close a business when its owner made an innocent mistake. The legislation now allows a judge to suspend or reduce the fine based on consideration of the gravity of the offense, resources of the employer, effect on the employees of the company, the reason for the lapse of coverage and the recommendation of the DLT. Overall, the change should result in fines that reflect the totality of the circumstances for the failure to maintain insurance.

The final change in the Omnibus Bill related to the Uninsured Employers Fund. This change delayed capitalization of the Fund until 2010 and its application to those who suffer injuries after January 1, 2011. The realities of the budget were the reason for this change. All of the other financing components of the Fund, i.e. filing fees from the Court, remain intact. 

The other bill created a “Joint Commission” to study the “Underground Economy and Employee Misclassification”. Its purpose is to study both concepts as they relates to workers’ compensation, taxation and unemployment, and to propose possible solutions to a developing problem thereby lessening the impact on government and law abiding businesses and workers. In layman’s terms, the “underground economy” is the “cash” economy and the growing use of the “independent contractor” to avoid responsibility for workers’ compensation premium, payroll and unemployment taxes and other sources of government revenue. We expect that appointments to the Commission will take place soon and constructive suggestions will be made in time for consideration by the General Assembly next year.

On another front, the Department of Labor & Training remains focused on compliance. Beware to the employer in this state who attempts to skirt the system.  Director Powell recently informed the Advisory Council that this year’s workers’ compensation assessment on premium will remain at six percent (6%). This is good news for employers of the state, and is an indication of the efforts by the Department and the Court to keep expenses in check. The Medical Advisory Board continues to re-visit its protocols for treatment. The Board was also involved in consideration of the use of the most recent edition of the AMA Guides.  This involvement will continue.   

At the Court, the pre-trial calendar remains at twenty-one days from filing to hearing.  Resolution continues to occur in the vast majority of cases at the pretrial level.  This allows the timely trial of the more complicated issues that deserve and need a full trial. Judge Rotondi retired from full time service on the Bench.  However, both he and retired Chief Judge Arrigan continue to assist the court when needed. There remains one opening on the Court that we hope the Governor will fill shortly.

We hope the above assists you in understanding the goings-on in workers’ compensation.  As always, we appreciate the opportunity to serve you in any way we can.