Sunday, June 18, 2017

A Move Toward Federal Influence?

In 2016, there was a great conversation about American workers' compensation. It included a great many of the thinkers involved in these many systems which cover millions of workers and their employers. The issues raised at the three summit meetings last year have been summarized in various settings, like The Conversation, Interests, and Compromise. A complete list of the issues was printed

When the Conversation planning started, there was significant discussion of Federalization. Some U.S. Senators and Representatives had written to the Secretary of Labor expressing concerns about these systems. Business Insurance wrote that the elected officials were concerned primarily "about a pattern of detrimental changes to state workers' compensation laws and the resulting cost shift to public programs like Social Security Disability Insurance." The financial health of SSDI (or lack of it) has been in this blog before. 

That Congressional interest further stimulated writing and speaking about workers' compensation, where it has come from and where it is. But the clamor has subsided somewhat. The sense of urgency seems gone. One group that recruited me in 2016 to help write a report, "for the new administration," simply decided to drop the idea. Others have struggled to maintain forward momentum against a seemingly growing sea of indifference, competing personal interests, and contrary institutional inertia.  

But, federalization seemed a hot topic in 2016. By the time the Summit, or "National Conversation," convened it turned out that federalization was not a primary concern of the participants. In fact, when the issues were listed, and topics were divided into three strata, "federalization" was listed last in the second group of priorities. Not that it is not concerning, but its immediacy or relevance was not perceived as paramount. The listing has provided perspective in this and other ways. 

At the last Summit meeting in New Orleans last November, there was discussion of the federal government. Not in the context of taking workers' compensation over, but in the context of how the federal government might impress influence on state systems. A somewhat common theory proposed was a move towards "protecting Social Security's interest" in a manner similar to the 1980 adoption of 42 U.S.C. Sec. 1935. 

According to Medicare expert Roy Franco, that concept of "protecting Medicare's interest" took about twenty years to bear fruit. It was in 2001 that the Centers for Medicare and Medicaid Services (oddly abbreviated "CMS" rather than "CMMS," but what do I know?) began to "appreciate" workers' compensation and take an interest. Anyone that works in workers' compensation knows the impact that interest has ultimately generated. Some might suggest that remaining unnoticed by the federal government has benefits. 

Some Summit attendees hypothesized that a similar law focusing on "protecting Social Security's interest" might be advocated. The fiscal angle is obvious, can the Congress find funding for this massive social program without either raising taxes or decreasing payments?  There are many who believe that shrinking federal programs is impossible or impractical, and so they see the only choices in simply how to fund what has evolved. 

That federal impact discussion brought a great many perspectives. Would the federal government take an interest in affecting workers' compensation in some manner short of federalization per se? I have had a fair number of discussions of that since November. 

I was somewhat surprised recently to see Bill to Streamline Adjuster Licensing Expected to Resurface in Congress on WorkCompCentral. This story laments the bureaucracy involved in adjusting workers' compensation claims in America. It is axiomatic that bureaucracy leads to expense, and expense tends to get passed down to those of us that pay taxes on income, purchases, property, etc. It is also a fact that costs affect what businesses charge for services, and that includes insurance companies and the costs they face with the regulation of their employees, including adjusters. 

The proponents of this federal "streamlining" law claim that "on average" the adjusters dealing with workers' compensation cases "hold licenses in 10 states," and some hold as many as sixteen. And there are a fair number of adjusters, purportedly 125,000. An industry group identified the volume and the licensing challenges in a recent survey. 

They therefore seek to streamline the licensing of adjusters, a subject heretofore a focus only of various state laws. WorkCompCentral reports that "34 states require claims adjusters to obtain licenses. But only 11 states use the uniform license application developed by the National Association of Insurance Commissioners." Reportedly "some states have reciprocity agreements for adjusters . . ., but others do not." So, adjuster licensing may be very similar to workers' compensation benefit laws, a patchwork of state requirements. The advocates want federal law to "require states that license adjusters to adopt uniform licensing requirements and reciprocity agreements." One advocate describe the "patchwork of inconsistent state rules" to be "so duplicative" and "so wasteful.” 

The proponents concede that their goal is not a foregone conclusion. In fact the same bill failed to pass in the last Congress. Despite that, the bill is being reintroduced. They punctuate their position by noting recent bills passed in Louisiana and Mississippi. This perhaps paints a picture of not just a "patchwork," but a fluctuating "patchwork."

As a long-time member of The Florida Bar, the subject of reciprocity is not new to me. Attorneys licensed in Florida cannot practice law in other states through reciprocity. In fairness, that is because Florida does not provide that privilege to attorneys licensed elsewhere. It is a mutual denial of reciprocity. It is increasingly uncommon in the practice of law, with many states participating in reciprocity agreements. 

I find myself wondering whether success on the adjuster proposal might lead eventually to discussion of national standards for licensing of attorneys? And, I wonder if there is benefit in federal action on this subject in any respect. There are those who believe that any federal government involvement in functions that have been state, such as workers' compensation, will only lead to continued and ever-increasing involvement. Those who advocate federal involvement in any element, such as adjuster licensing, may inadvertently break barriers and pave a path to federal involvement that they do not actually want. If "streamlining" works with licensing, why could it not work with benefit "sufficiency?"

The Conversations will continue about workers' compensation. It seems that the discussion will not focus on federalization directly, but that concern may perhaps receive attention if peripheral issues like Social Security and adjuster licensing consistency remain at the fore.