2004 Legislative Update

Many things have changed and developed since we last summarized the world of workers' compensation both here in Rhode Island and nationally. We will try to give a thumbnail sketch of these many issues and hope that if you have any questions whatsoever you will contact the Law Office for assistance.

Perhaps, most significantly, Chief Judge Robert F. Arrigan retired from the bench after over twenty years of service to both our state and the workers' compensation community at large. Chief Judge Arrigan is most associated with not only putting Rhode Island on the roadmap for workers' compensation efficiency but also for his implementation of the reforms to our system in the early 1990's. His named successor will comfort those with concerns for the system. Governor Carcieri tapped Judge George Healy to be the next Chief Judge. His selection was unanimous, given the advice and consent of the Senate. Judge Healy has been deeply involved in all aspects of the system, from the Court and the Advisory Council to the Medical Advisory Board and a myriad of other judicial and community activities. Judge Healy's commitment to the continuation of a well-run workers' compensation system should continue to make all Rhode Islander's proud and other states envious.

The number of cases going to trial at the Court remains static. The vast majority of cases are resolved at the pretrial stage. The Court's Appellate Division continues to consider appeals from trial decisions, the number of which remain limited in number as a result of the stiff burden of proof established by the General Assembly in 1992, i.e. that the trial decision is "clearly erroneous".

The Rhode Island General Assembly recently accepted the recommendations of the Workers' Compensation Advisory Council and enacted clarifying legislation in regards to the obligations of employers and attorneys under the Act. The legislation clarified the well-settled obligation that all business entities that employ one or more employees purchase workers' compensation insurance, including the LLC and LLP. In addition, the Act was amended to clarify the employee's attorney's entitlement to counsel fees for successfully defending or prosecuting petitions and in the event of settlement. Finally, the Court's obligations to consider the interests of the Center for Medicare Services under the Medicare Secondary Payor Act were codified, with the hope of helping CMS eliminate or avoid any backlog and allow the expedient resolution of claims to the benefit of employers and employees. These clarifying legislative changes became law on July 2, 2004.

The Court continues to hear cases at the pretrial stage well within the statutorily mandated twenty-one days. The procedure at the pretrial has changed to the extent that the argument, if necessary, is more formalized. Nevertheless, the Court continues to implement the process mandated by the Act and its own Rules of Procedure in the hopes of providing speedy and efficient hearings. The goal of course is to not only provide a forum for resolution of issues but prompt resolution.

The Medical Advisory Board continues its good work in helping to ensure that all injured workers receive prompt quality care in the event of a work related injury. The Board continues to review and revise its protocols for the care and treatment of injured workers. In addition, the Board will be considering the issues associated with the requirements of meeting the Medicare Secondary Payor Act obligations from the medical perspective. The Boards continued activities in assisting the efficiencies of our system remain available at http://www.courts.state.ri.us.

While Rhode Island's workers' compensation system remains an international model of efficiency, it will only maintain its status with the involvement of all of its stakeholders, i.e. the employees, employers, agents and policymakers. From where the system was in the late 1980's and early 1990's to where it is now remains a dramatic comparison. It will only continue in this fashion if everyone continues to stay focused and committed to maintaining the stability that much hard work has achieved. We remain available here to help you in this regard or on any other issue as it pertains to workers' compensation. We will also continue to keep you updated as issues develop.

SUMMARY OF LEGISLATION ADOPTED BY THE 2004 GENERAL ASSEMBLY ON WORKERS' COMPENSATION AS THE OMNIBUS BILL FROM THE WORKERS' COMPENSATION ADVISORY COUNCIL

S 2749

H 7870

The General Assembly has adopted the recommendation of the Workers' Compensation Advisory Council and sent the proposed changes in the Rhode Island Workers' Compensation Act to the Governor for his signature. This bill is an amalgam of hard work by representatives of business and labor with a goal of continuing to focus on how the Rhode Island Workers' Compensation System can maintain its status as an international model of efficiency. Having said this, the changes this year are focused on what has changed since the reforms of early 1990 and 1992, as follows (referencing the statutory citations):

1. 28-29-2. DEFINITION OF EMPLOYEE.
   This proposal would amend the definition of an employee to "exclude" general or limited partners and non-manager members of limited liability companies. This would effectively remove any ambiguity in the statute as it relates to LLP's and LLC's. The LLC and LLP designation has been a designation of choice by small and medium size businesses for the last ten years. The Workers' Compensation Act did not contemplate these entities. The changes here, and below, will effectively bring the Act up to date.
2. 28-29-17 Waiver of common law rights-notice of claim of common law right.
   This proposal, consistent with the above, would memorialize the ability of a manager of a limited liability company to claim his or her right to proceed at common law.
3. 28-29-19 Waiver of claim of common law rights.
   This proposal is consistent with the above statutes to the extent that a manager of a limited liability company may waive the common law retention and come back into the workers' compensation system.
4. 28-33-17.3 Fraud and abuse.
   This provision amends the fraud section to make it a crime for a person to willfully misrepresent an employee's status as a member of a limited liability corporation or any kind of partner. It also establishes that in the event of fraud, the manager in a limited liability company or the partners in various types of partnerships would be individually liable to both fines and /or imprisonment.
5. 28-36-15 Penalty for failure to secure compensation.
   This provision would make it clear that if the employer, regardless of the type of entity, failed to secure workers' compensation insurance then the partners, as appropriate, or the managers of a limited liability company, among others previously recognized, would be personally liable either civilly or criminally.
6. 28-33-3 Contingent attorneys' fees.
   This statute would be repealed. It should have been repealed in 1954. In that year, the Workers' Compensation Commission was established to hear all matters relating to issues between an employer and an employee as it relates to workers' compensation. Previous to that time, all such matters were heard in the Superior Court. There will no longer be any ambiguity as it relates to the Court's power to award costs and counsel fees.
7. 28-33-25 Settlement for lump sum or structured-type payment.
   This provision is changed in two significant ways. The first is to have the Workers' Compensation Court necessarily take into consideration the best interests of the Center for Medicare and Medicaid Services (CMS) (as their interests may appear) in a lump sum settlement. The goal here is to hopefully open the door to state consideration and federal recognition of Medicare Secondary Payor Act obligations. The second change returns the percentage of a settlement that an attorney may take from 15 % to 20%. This percentage was changed in 1982 during a time of chaos and perhaps abuse in the workers' compensation system that, thankfully, no longer exists. It is also recognition of the complicated nature of the statute as it has developed over time and the need to keep the best lawyers involved in the system to the benefit of injured workers.
8. 28-33-25.1 Settlement of disputed cases.
   This provision would, like in the lump sum situation, give the Workers' Compensation Court the power to consider the best interests of CMS.
9. 28-33-18.3 Continuation of benefits-Partial incapacity.
   This provision would continue to apply the 1990 definition of the Gate for another two years to those injuries that occur up to July 1, 2003. This is a significant lynchpin of the reforms of 1990 and has been operating to the satisfaction of all involved entities since that time.
10. 42-16.1-1, 42-16.1-2 Establishment of department-Director, Functions of director.
    These changes would make the Department of Labor and training and its Director subject to the Administrative Procedures Act (APA). Both the Department and its Director already are subject to section 42-35-1.1 with some exception. The Department was subject to the APA until the "reforms" of 1986. When the 1986 statute was summarily repealed in 1990, this change was overlooked. This returns the Department to status quo.

The General Assembly sent the bills to the Governor on June 24, 2004. The Governor has 6 days in which to sign the bills, accept them without signature or veto them. If he does not veto the bill by July 2, 2004, they will become law. If he signs the bills before then they will be effective on that date. If he vetoes the bills, then unless the General Assembly returns to override the veto then they will have been killed.