2003 Legislative Update

The Rhode Island General Assembly concluded this yearís legislative session by passing, in concurrence, the workers' compensation omnibus bill. The Advisory Council made recommendations to both the House and the Senate resulting in two identical bills. Representative Todd Brien sponsored the House bill and Senator Dominic Ruggerio sponsored the Senate bill. The effects of the bill are immediate and outlined in greater detail below. For more information, please feel free to contact the Law Offices of Michael D. Lynch at 401-825-2700 or mailto:mlynch@mlynchlaw.com .

The first changes were procedural. RIGL ß28-35-12 was amended to provide that if there were a dispute between insurers on who should pay benefits to an injured worker and no dispute on an employeeís entitlement to benefits, the court would now, at pretrial, choose one of the insurers. This yearís legislative change removed the provision that provided for an expedited hearing and allows resolution at the pretrial hearing, hopefully avoiding litigation and a protracted, costly dispute. Also amended was RIGL ß 28-35-46.1 entitled ìTermination of PaymentóAccountingî. In this change, the provision for filing forms, prepared by the Director of the Department of Labor and Training (DLT) after benefits have been terminated, has been amended to mandate the completion of such a form only in the circumstance of the employeeís benefits being terminated after receiving 312 weeks of partial incapacity benefits. This clarifies the Directorís intent on keeping records for employees subject to the gate, but does not change the authority of the Director to design a form for his/her use in gathering data for statistical purposes. This change will also hopefully eliminate frivolous petitions at the Court.

The last procedural change had to do with commutations. The Director of the Department of Labor and Training will now be allowed to commute those claims presently being reimbursed out of the old ìSecond Injury Fundî. This will hopefully close some long-standing claims and work to the betterment of both the recipients and the system. Of course, any such commutations would have to follow the normal statutory path of obtaining the approval of the Workers' Compensation Court.

Benefit changes were minimal yet potentially very important. RIGL ß 28-33-18.3 entitled ìContinuation of BenefitsóPartial Incapacityî underwent a similar change as in the previous year. The 1990 definition of the ìgateî was preserved for another three years. More specifically, in 1990, the General Assembly legislated that for an employee to get through the ìgateî, he/she had to show that his/ her injury posed a material hindrance to regaining employment. In 1992, this was changed. The General Assembly has chosen to retain the 1990 definition and at some point in the future will decide whether or not to implement the 1992 definition.

Physician reimbursement in the area of specific compensation was also considered and amended. RIGL ß 28-33-7 was changed to bring physician charges for loss of use and MMI opinions into the fee schedule. Of course, if the physician treating the injured worker completely filled out the statutory MAB affidavit, this charge would not come into play. RIGL ß 28-33-34 was also amended to clarify when a physician or rehabilitation provider may see an injured worker.

The next changes are the meat of this yearís legislative initiative and are in reaction to the continued reluctance of some employers to secure the statutorily mandated workers' compensation coverage. They begin with RIGL ß 28-30-13 entitled ìControversies submitted to Courtî. In this section, the General Assembly has explicitly charged the Workers' Compensation Court with the power to adjudicate issues surrounding the failure of an employer to have insurance. Flowing from this, RIGL ß 28-36-15 entitled "Penalty for Failure to Secure Compensation or Personal Liability of Corporate Officers" was extensively amended, both substantively and procedurally. Substantively, the consequences for an employer not having insurance were toughened and the duties of investigation and enforcement were split between the DLT and the Court. More specifically, the criminal penalties have been toughened whereby a first offense for failure to secure or maintain the necessary insurance may be a felony and the time in prison for this failure may be up to two years.

Procedurally, the Director of the Department of Labor and Training will retain jurisdiction over the employer that fails to carry insurance only if the noncompliance was unintentional, the result of clerical error and for less than one year. Otherwise, the civil penalties of up to $1,000 per day of noncompliance and continued operation of the business will be considered as outlined above at the Workers' Compensation Court. In addition, the power of the Director to suspend the operation of a business has been both broadened and toughened. Finally, RIGL ß 28-33-17.3 entitled ìFraud and Abuseî was amended to be consistent with the new enforcement provisions, i.e. the failure of an employer to have the necessary insurance may result in criminal punishment in the nature of fines and up to two years in prison. The Attorney General still of course prosecutes these failures.

The final change had to do with the ìcoverage underî provisions of RIGL ß 28-29-6.1 entitled "Secondary provision of workers' compensation insurance". This amendment allows the insurance carrier that is obligated to pay benefits in a ìcoverage underî situation to recoup those benefits paid from the uninsured employer, whether it is a subcontractor, general contractor or construction manager. In the past, the statutory employer, e.g. in the case of an uninsured subcontractor, the general contractorís carrier would be obligated to pay the benefits and the uninsured entity would enjoy an unjust enrichment to the extent of benefits and premiums not paid. Now, the carrier may seek indemnification from the uninsured entity and the recovery will be demonstrated in the loss experience of the statutory employer.