INTERIM JOINT COMMITTEE ON

LABOR AND INDUSTRY

Minutes of the Eighth Meeting

of the 1998-99 Interim

May 11, 1999

The eighth meeting of the Interim Joint Committee on Labor and Industry was held on Tuesday, May 11, 1999 at 6:00 PM, at the Cawood High School, Harlan, Kentucky. Senator Glenn Freeman, Chair, called the meeting to order, and the secretary recorded the members present.

Present were:

Members: Senator Glenn Freeman, Co-Chair; Representative J. R. Gray, Co-Chair; Senators Walter Blevins, David Boswell, Gary Johnson, Virgil Moore, Dan Seum; Representatives Hoby Anderson, Denver Butler, Charlie Hoffman, Dennis Horlander, Joni Jenkins, Jim Stewart, Johnnie L. Turner, Tommy Turner, and Brent Yonts.

Guests: Doug Holliday, Otis Doan, Mark Ford, Phyllis Robinson, Ronnie Cox, Sid Douglas, Attorney's at Law; Scott Middleton, James Wright, Jr., Willian Wynn, Irene Wynn, David Saylor, Victor and JoAnn Rosas, Bobby Short, Tina Hopin, JB Napier, Curtis Allen, and Charles Freeman.

LRC Staff: Linda Bussell, Adanna Hydes, Melvin LeCompte, Betty Davis, and Sandra Morris.

Senator Freeman welcomed the members of the committee and the audience who had turned out for the meeting. He said the members of the committee chose to travel to Harlan to hear the concerns of injured workers. He restated the governor's previous statements to the effect that he would be amenable to make some changes in the workers' compensation revisions made in December, 1996 could be shown that the changes went too far and were causing a hardship for injured workers in Kentucky. He said this was the motivating factor in holding the public hearings and committee meetings around the state. Following these comments, Senator Freeman asked each member of the committee to introduce himself or herself and identify the district they represent.

The first business item on the agenda was approval of the minutes of the seventh. The minutes were approved without objection. The second item on the agenda was consideration of a resolution relating to a coal contract between Peabody Coal Company and the Tennessee Valley Authority (TVA). The coal contract issue was brought to the committee's attention by Senator Paul Herron and the resolution encouraged TVA to require Peabody Coal Company to continue providing coal under the contract from Peabody's Kentucky union coal mines rather than from out-of-state nonunion coal mines. Senator Freeman said the situation is very serious and involves approximately 1500 coal mining jobs. If those jobs are lost, it will have a devastating impact on the economies of the counties involved. The resolution was adopted by voice vote.

Senator Freeman next called attention to a proposed workers' compensation rate filing. The filing is being actuarially reviewed and, if approved, would result in a small decrease, an average 5.1%, in basic workers' compensation rates for the coal industry. Senator Freeman said that out of more than 600 claims that have been filed since HB 1 became effective, few claims have actually been paid. He said that one issue he was interested in pursuing was putting attorneys back into the system so that injured workers will be able to obtain legal representation in workers' compensation claims. He said the insurance industry had saved more than one half billion dollars since HB 1 was enacted. He said this was money that injured workers had not been awarded in workers' compensation benefits. He said these numbers show that there should be changes in HB 1.

Representative Gray commented that the proposed rate reduction for coal was a small one and that not only did employers experience major savings from the 1996 workers' compensation changes, but that the profits of the insurance industry, as a result of HB 1 in Kentucky and workers' compensation reform legislation in many other states, are at an all-time high. He added that the workers' compensation rate decreases in Kentucky were much greater after enactment of the 1994 legislation which created the competitive state fund (KEMI) than they have been as a result of HB 1 enacted in 1996.

Before calling on speakers, Senator Freeman informed the audience that LRC staff had forms that could be filled out by those who were present but didn't want to make a presentation before the committee. This information will be included in the record of the proceedings.

Senator Freeman called on Doug Holliday, an attorney from Hazard. Mr. Holliday came forward with one of his clients who has had severe difficulty getting medical expenses paid over the years. Mr. Holliday said he represented coal companies and insurance carriers for the first 10 years of his legal practice, but has represented plaintiffs or injured workers for the last 10 years which he said gives him a perspective on the right to counsel under the new workers' compensation law. He said injured workers or coal miners are pretty lost in terms of understanding how to proceed under the new law. He further said that the new system brought about by HB 1 was very difficult for attorneys to understand and apply. He said even the arbitrators, judges and other officials in the workers' compensation program in Frankfort aren't sure what to advise in the application of the new law. He said the first big problem with HB 1 is medical benefits. He said all an insurance adjustor has to do is deny a request for medical benefits. That puts the burden on the coal miner or injured worker who has no chance at all against the insurance adjuster. If the worker goes ahead and files a claim, the insurance carrier or employer immediately hires an attorney which puts the worker at a greater disadvantage. He said an insurance carrier's lawyer is paid by the hour and being very innovative attorneys can file a lot of defenses which causes a lot of delays. He said oftentimes even if the worker prevails at the end, the delays in the case is something that he or she cannot tolerate because of the medical effects of the injury. At that point, he introduced his client, Roger Newton, who was denied payment of medical treatment provided in 1994. This is actually continuing because the workers' compensation carrier is still refusing to pay for necessary surgery.

Senator Freeman said that this is another example of the problem that injured workers have because of the difficulty of getting legal representation because of the dramatic decrease in plaintiffs' attorney fees under HB 1.

Senator David Boswell asked Mr. Newton to explain the nature of the injury Mr. Newton experienced. Mr. Newton said he sustained a neck injury while he was a roof bolter. After the injury, he was subsequently laid off. After going to work for another company, he experienced another injury of his neck or spine. The doctors told him he couldn't work anymore except for light duty work. The company said it didn't have any light duty work. His medical condition has continued to worsen and the workers' compensation carriers have not paid for medical expenses because they have been dueling with each other.

Mr. Holiday added that the reopening provision under HB 1 also penalizes workers who try to go back to work to become a productive member of the economy. Mr. Newton, in response to a question from Senator Boswell, said he had never been offered rehabilitation.

Senator Freeman next called on Otis Doan, an attorney from Harlan. Mr. Doan said he has practiced law for 17 years. He introduced his client Scott Middleton who, according to Mr. Doan, is a 'new law' coal miner. Mr. Doan said when HB 1 was being proposed, it was proposed as an anti-plaintiffs' lawyer bill. If the coal companies and the insurance companies can take injured workers' and coal miners' lawyers out of the process, the workers have no help under the system. Without lawyers, these people have no one to stand up for them. Mr. Doan said Commissioner Walt Turner should be asked how many coal company and insurance company lawyers have been laid off since the effective date of HB 1 which was supposed to help the coal miner and injured worker. Likewise, he said Governor Patton should be asked how many jobs have been created in Eastern Kentucky since HB 1 became effective.

Mr. Doan introduced Mr. Middleton, his client. Mr. Middleton said he was injured in a coal mine in September, 1998 while performing the work of a roof bolter. He experienced a back injury; went to his family doctor who was also the coal company's doctor; received a diagnosis of a pulled muscle, given a shot and told to return to work; returned to work but could not do the job; and went back to the doctor and received a diagnosis of a disc problem with a recommendation for surgery. Mr. Middleton requested a second opinion. The company sent him to another doctor who diagnosed a pulled muscle and recommended 5 weeks of physical therapy. He took the therapy and was released to return to light duty work with restrictions on lifting and bending. The company cut off temporary total disability benefits because he had been released to return to work, even though he was on permanent lifting and bending restrictions. Mr. Middleton still could not return to work and went back to the company doctor who said there was nothing more that he could do for him. He tried to return to work even with the restrictions on lifting and bending, but the company said they simply had no light work for him. Currently he is out of work, needs surgery, and doesn't know if he has health insurance coverage.

Mr. Doan said since HB 1 passed, the insurance companies turn their backs on injured workers on settlements. He said they know they don't have to settle they try to starve the injured workers out by stringing the case out. He said anyone who votes to retain HB 1, if it comes up again, would be voting against the working people.

Mr. Doan thanked the committee for coming to Harlan and listening to the concerns of injured workers.

In response to Representative Turner, Mr. Doan said injured workers don't have any money when they come to a lawyer's office. The lawyer has to advance sufficient funds to process the case. It might take years to recover that money if they do at all--maybe 4 to 6 years down the road. However, attorneys for insurance carriers are paid monthly and advance no money up front. They get paid whether they are successful in the case or not. He further stated that unless the workers' compensation issue is corrected, Kentucky would become a welfare state. Mr. Doan said he is afraid we are going back to conditions that existed in the early days of coal mining. His grandfather told him that in those days if there was a fire or problem in the mine, they would be told not worry about the miners, but to get the mules out because they need the mules. He said if any of the members voted for HB 1, they need to think about it and look in the mirror because HB 1 meant the death of the working man.

The next speaker was Phyllis Robinson, an attorney in London, Kentucky. Ms. Robinson said she agreed with the comments of the other speakers and while she did not bring clients with her, she outlined problems she experienced under the new workers' compensation law. One of the major problems she said was that the new law put in place "legalized age discrimination" by cutting off benefits to older workers when they qualified for social security. She illustrated that point by relating the situation of a 74-year old client who was totally disabled and unable to receive benefits for more than two years.

Ms. Robinson also said that the new law not only went after the coal miner but manual laborers as well. She said it also severely affected healthcare workers who are limited to a 5-year statute of limitations for filing a workers' compensation claim. She said diseases like AIDs and Hepatitis often don't show up for 10 or more years. Because of the reduced reopening period, an exposed healthcare worker is essentially barred from recovery of benefits for workers' compensation.

The next speaker was Mark Ford, an attorney from Harlan who has practiced about 13 years. Mr. Ford said he has done both defense and plaintiffs' work. He said the biggest workers' compensation problem that currently exists for injured workers is that the system of compensation is tied exclusively to the AMA (American Medical Association) Guides to Impairment. He said the Guides determine what an injury is worth monetarily without any consideration for other factors such as the type of work the worker has been doing, or what the worker's education and skill levels are. He said the worst thing about the Guides is that a worker with a ruptured disc resulting in surgery is entitled to a 10% impairment rating which equates to a weekly income benefit of $36.54 for 425 weeks. Mr. Ford said a 10% impairment rating might be okay for a desk worker such as a lawyer, but a doctor won't send a coal miner, construction worker or a health care worker with a ruptured disc back to work. For all practical purposes, their work is over and $36.54 is not going to adequately compensate an unemployed injured worker who previously made $400 to $500 week. He said that many workers have back problems such as a ruptured disc. Mr. Ford said many of his clients have spent their lives doing heavy work. He said the workers' compensation law, since HB1, is designed for desk workers, and when a construction worker is compensated on the same basis as a desk worker, that indicates that we don't value construction workers, coal miners, or other manual laborers. In the case he described, Mr. Ford said the new law required a multiplier increase in cases where the injured workers could not return to work. In that case, the worker would get $54 a week rather than $36.54. On the other hand, if the results of the injury were determined to be due to the natural aging process, the benefit could be severely reduced because HB 1 excluded the natural aging process from the definition of injury.

Mr. Ford further commented on the length of time it takes to get a case through the system. Using another case example, he said it takes twice as long to get a case through the new system and that the arbitrator system is a meaningless additional layer of government bureaucracy. Finally, he commented on the hardships imposed on injured workers by the limitations on reopening .

The next speaker was Ronnie Cox, an attorney from Harlan and a law partner of Representative Johnnie Turner. Mr. Cox brought several clients to illustrate problems with the workers' compensation law brought about by HB 1.

Mr. Cox introduced Victor Rosas who was injured in April of 1996 while working at a farming operation in Georgetown. Mr. Rosas is from Central America and speaks very little English. His wife read a summary of his experience since the injury. Mrs. Rosas said the doctors told her that her husband sustained a "mortal wound" to his liver and would not survive. If he did survive, however, he would be in a nursing home because Mr. Rosas' injury destroyed his abdominal muscles and a mesh covering was applied to protect his intestines and internal organs. Despite the severity of his condition and prognosis, Mrs. Rosas said her husband's workers' compensation benefits were terminated in July 1998; he has been denied access to pain clinic treatment which was recommended; travel expenses have not been paid; Mrs. Rosas has not received payment for caring for her husband; and the insurance company canceled her husband's appointment with a kidney specialist that was ordered by a physician when one of Mr. Rosas kidneys could not be located on an MRI scan.

Mr. Cox introduced another client, Mr. Thomas Payne, who lost most of two toes in a coal mining accident. Under the AMA Guides, Mr. Thomas would receive a 1% impairment rating which ultimately resulted in a $1300 settlement. Mr. Cox said the loss of two toes wouldn't prevent a lawyer from doing his job, but it would severely impact the ability of a coal miner to do his job. Mr. Payne has trouble walking and is having trouble getting medical care and medicine. Representative Turner said the insurance carrier refused to pay for medicine and medical care since the case was settled.

Mr. Cox introduced William Winn who was having difficulty in getting medical care. He said an insurance case manager told Mr. Winn to return to work seven days after surgery even though Mr. Winn had not been released or examined by the physician following the surgery.

Mr. Cox informed the committee about another case involving a coal miner who experienced a serious back injury. In this case, the ALJ gave the client a total disability award but that the decision was on appeal. The injured worker is not receiving benefits because the case is on appeal.

The next speaker was Sid Douglas an attorney in Harlan and a former Circuit Judge. Mr. Douglas said the grossest inequity under the new workers' compensation law was the reopening provision. To illustrate, Mr. Douglas introduced one of his clients, George Saylor, who is disabled and receiving social security benefits. Mr. Saylor sustained a severe back injury in the coal mine. He had a herniated disc which required surgery. Following surgery, Mr. Saylor returned to work in the coal mines. A claim was filed because, under the new law, if a claim isn't filed within two years, he would have been denied medical benefits. Under the new law, the maximum impairment rating was 10 % and a 20% award was rendered. Mr. Saylor returned to work. About a month later, he could not get out of bed because he had another herniated disc. There had not been another injury--just an aggravation of the original injury. He had surgery again and subsequently has not been able to return to work. The problem is that Mr. Saylor's case cannot be reopened for two years under the new workers' compensation law. Mr. Saylor said he has lost everything he owned and his wife has had to get a job. In response to questions from the committee members, Mr. Douglas aid that he thought the two year limitation on reopening was intended to save money rather than to eliminate abuses to the reopening statute. He also said that reopening should not be restricted. He said it was easier to qualify for social security disability than workers' compensation. Finally, he said if employees rejected the provisions of the workers' compensation law, there would have to be twice as many judges as there are now. He said the new workers' compensation law is not a good delivery system. Senator Moore asked Mr. Douglas to submit written recommendations to the committee for needed changes in the workers' compensation law during the next session. Mr. Douglas agreed and said the first change should be change in the reopening statute.

Senator Moore commented that there would be great difficulty in getting the workers' compensation law changes in the 2000 regular session.

Following testimony from two other individuals who shared difficulties in obtaining access to and payment for medical care, the meeting adjourned.