2000 Legislative Update

The Rhode Island General Assembly has enacted new legislation to amend the Workers' Compensation Act. The Advisory Council on Workers' Compensation, made up of representatives of labor, business, the State and the courts, as chaired by George Nee, Secretary/Treasurer of the AFL-CIO, met at length throughout the year and reached consensus on the issues. After careful consideration by the Senate Labor Committee, chaired by Senator Roger Badeau and the House Labor Committee, chaired by Representative Joseph Faria, the full General Assembly approved the "omnibus legislation."

The year 2000 legislation has four general components. The first is jurisdictional. As of the date of the governor's signature, any dispute between an insurance carrier and an employer, except for disputes concerning the insurer classification rates, which are heard by the Workers' Compensation Appeals Board, shall be considered by the Workers' Compensation Court. Jurisdiction over these issues previously rested with the Superior or District Courts. There will not be a pretrial hearing on these matters. The Workers' Compensation Court shall amend its rules and regulations to address the procedure for handling these disputes.

The Workers' Compensation Court will now hear all issues regarding the right to reinstatement set forth in Section 28-33-47. Previously, the Department of Labor and Training determined these issues. Additionally, the Workers' Compensation Court will now hear all disputes concerning proposed rehabilitation plans submitted for approval to the Donley Center. Any requests for reinstatement or approval of a rehabilitation plan pending before the Director of the Department of Labor and Training prior to September 1, 2000 will remain at the Donley Center for determination. All requests after that date will be heard by the Workers' Compensation Court. In order to effectuate this statute, the statutory provision allowing for the appointment of impartial medical examiners has been amended to provide that the Court may appoint a licensed rehabilitation provider to act as the independent evaluator if benefits have been paid for more than three months. The impact of these jurisdictional changes, at present, will be minimal.

The next component was a substantive fine-tuning of the 1998 reforms. More specifically, in 1998 the General Assembly enacted what is referred to as the "universal coverage" provisions, which required that all employers of one or more employees provide workers' compensation coverage. Many employers of three or fewer employees thereafter characterized these workers as independent contractors instead of employees to avoid these requirements. An employer does not have to include an independent contractor in its workers' compensation insurance program, regardless of the number of employees. This subverts the intent of the General Assembly and has left many employees outside the loop of protection otherwise afforded by those employers who complied with the statute.

To close this loophole, the General Assembly, for the first time, has defined "independent contractor." More specifically, the statute provides that an employee shall not be considered an independent contractor unless the person has filed a "notice of designation as independent contractor" form with the Director of Labor and Training pursuant to a new statute, Section 28-29- 17.1. This new form is presently being designed. Although the Workers' Compensation Court will continue to have the power to find that a worker is an independent contractor as opposed to an employee, or vice versa, the filing of this form with the Department of Labor and Training shall create a presumption of independent contractor status. This goes into effect on January 1, 2001. The "coverage under" provisions of Section 28-29-6.1 have also been amended to preclude coverage to independent contractors under the new scheme. Additionally, the fraud provisions have been amended to provide specific provisions against the miscategorization of employees as independent contractors or, alternatively, as corporate officers.

Another substantive change had to do with Section 28-33-17.1 entitled "Employees not entitled to compensation." This provision was amended to provide that where an employee is imprisoned as a result of a criminal conviction and credit is given in sentencing for pre-conviction time served, the employer/insurer shall be entitled to a credit for such payments against future entitlements. This will go into effect on the date the legislation is signed.

The third component is a procedural change concerning the mailing of memorandum of agreements to injured workers by self-insured employers, their third-party administrators, or by insurance carriers. More specifically, at present the Workers' Compensation Act, specifically Section 28-35-1, obligates the employer, through its insurance carrier or third-party administrator, to send a memorandum of agreement by certified mail. In lieu of sending the memorandum of agreement by certified mail, the employer may now include the memorandum of agreement with the indemnity check. The endorsement of the indemnity check serves the same purpose as the return receipt. This shall take effect immediately.

The other procedural changes were made at the request of the Department of Labor and Training. More specifically, first reports of injury under Section 28-32-1 do not have to be submitted in writing. The statute was amended to provide that it may be submitted "in writing or in any other manner specified to the by the director." Finally, the first report of injury may now be accessed by the Fraud Unit for investigation into workers' compensation fraud.

The last component is on the benefit side. Dependency benefits in death cases have been increased from $20 to $40 per week. Further, the COLA on death benefits is now computed from death, not date of first payment. Please keep in mind that the eighty percent (80%) rule does not apply in death cases. Additionally, the maximum compensation rate has been changed from one hundred percent (100%) of the State average weekly wage to one hundred ten percent (110%) of the State average weekly wage. The purpose of this is to bring those employees who are high wage earners into the mainstream of benefit entitlement. The number of claims this impacts is minimal and it goes into effect on September 1 2000.

The 1992 definition of "material hindrance"(sic) was again delayed a year for the Supreme Court to define the 1990 standard. In addition, the bill provides that the employee does not have to pay for medical records involving a workers' compensation claim or appeal. Finally, the Director of the Department of Labor and Training has been given the power to issue monetary penalties against employers and their carriers for failure to follow the rules and regulations of the Director. Previously, the powers of the Director were very general.

We remain available for any questions you may have in regard to the above.