Shea idea on structured settlements breaks logjam on workers’ compensation reform

Lawmakers in the Legislature have reached an agreement on reforming the state’s workers’ compensation system, including a plan by Rep. Matt Shea to offer limited structured settlements to older workers.

Under House Bill 2123, which passed the House 69-26, an injured worker could agree to resolve a claim through negotiated “structured settlements,” meaning the cash would be paid out over a period of time.

Rep. Cary Condotta, House Republican chief negotiator on workers’ compensation reform, said Shea suggested the idea of structured settlements after the House speaker refused to consider lump-sum settlement agreements that were proposed in two earlier measures, Senate Bill 5566 and House Bill 2109. Condotta, R-Wenatchee, said Shea’s suggestion helped to break the logjam that had held up workers’ compensation reform for weeks.

“As an attorney in private practice, Matt Shea is familiar with negotiating agreements that include structured settlements. So when we were looking for solutions that would provide ways to keep our state’s workers’ compensation system solvent and provide a sustainable system for employers and employees, Matt suggested we apply a negotiated structured settlement option for workers,” said Condotta, ranking Republican on the Labor and Workforce Development Committee. “It’s an innovative idea that gained acceptance among negotiators, and it was a key piece of the puzzle that allowed us to move forward on needed workers’ compensation reform.”

“Earlier in the year, after the Labor and Workforce Development Committee had disagreements with final settlements involving workers’ compensation, I talked with trial attorneys and labor representatives about their concerns with lump-sum settlements. They were worried that all the cash would be spent up front and the worker would not have any money left over for later. So I suggested a method we use in tort law called ‘structured settlements’ that is paid out over time so that all the money cannot be used at once,” said Shea, who serves as assistant ranking member of the committee. “Later, I said to Representative Condotta, ‘You may want to pitch this as a solution,’ and he did. The governor accepted the idea and it was written into the agreed conference legislation.”

Under the voluntary structured settlement option, workers would get at least 25 percent and no more than 150 percent of the state’s average annual wage per month, or between $982 and $5,976, until the settlement is paid in full. The option is available initially to injured workers 55 years and older, then it decreases to age 53 in 2015, and finally to age 50 in 2016.

“This option is a huge win for the state, employers, and injured workers because it allows for final settlements. It’s the first of its kind in the nation and the first substantive workers’ compensation reform in Washington in more than 50 years,” noted Shea, R-Spokane Valley. “Citizens have sent us to Olympia to stop business as usual and find innovative solutions to the problems that face our state. These are the kind of ideas we need in the Legislature.”

In addition to the structured settlements, the measure would:

  • significantly reduce rate increases in 2012 and beyond for employers;
  • provide a fraud prevention initiative and a report to the Legislature;
  • include a performance audit of claims management;
  • offset any permanent partial disability received from the final settlement to prevent double dipping;
  • incentivize employers to bring back workers sooner through light duty or transitional work options; and
  • provide payments for continued medical treatments and reopening of claims if the medical condition worsens.

With nearly 229,000 people unemployed in Washington, Shea said it was important that workers’ compensation reform was passed before the Legislature adjourned for the year.

“The double-digit rate increases are hurting the state’s economy and employers. We have been looking at a system that could become insolvent within the next five years,” said Shea. “The bottom line is that it will save 1.1 billion dollars over four years, keep our workers’ compensation system solvent, return workers to their jobs faster, and get Washington working again.”

The measure now goes to the Senate for further consideration.

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CONTACT: John Sattgast, Senior Information Officer: (360) 786-7257


Washington State House Republican Communications