Workers’ compensation reform bill not coming in 2023 legislative session

The Colorado Capitol on April 27, 2023

A long-circulated bill that sought major changes to how workers’ compensation benefits are calculated for those suffering permanent partial disabilities on the job will not be introduced during this legislative session, one of its sponsors told the Colorado Chamber of Commerce.

Rep. Andy Boesenecker, D-Fort Collins, confirmed his intention to hold off on the bill in 2023 with Meghan Dollar, the chamber’s senior vice president of governmental relations. Boesenecker and bill backers had negotiated with business organizations and leading Colorado workers’ comp insurance provider Pinnacol Assurance over the past few months, seeking to see if there was a way to find consensus before the May 8 adjournment of the legislative session.

The bill, as originally drafted, would have repealed the 107-year-old schedule-of-injuries model that determines the amount of pay that workers receive for permanent injuries to various parts of their bodies, paying them instead based on a whole-person model with more benefits. It also would have eliminated the cap on total benefits that partially disabled workers can receive throughout the course of their treatment – combined changes that the National Council on Compensation Insurance estimated could add $195 million in costs to a $1 billion system.

A changing bill

In response to stakeholder feedback, Boesenecker and Jefferson County Democratic Rep. Sheila Lieder came back with a second draft that kept the schedule in place but aligned most injuries with current schedules that allow for 208 weeks (four years) of pay. It also replaced existing benefit caps — $113,372.35 for a worker that is 19% or less disabled and $276,741.83 for those with a disability of 20% or more — with a $300,000 cap on all injuries.

Colorado state Rep. Andy Boesenecker speaks to the Colorado Chamber of Commerce Health Policy Council in March 2023.

However, even that effort, which business groups continued to oppose, won’t get introduced in the remaining week-and-a-half of the session. Boesenecker didn’t say why, but he is the sponsor of several major pieces of legislation, including a bill to limit hospitals’ use of facility fees and another to give local governments a right of first refusal on many apartments that are for sale, that continue to be debated and negotiated.

Colin Larson, Colorado Restaurant Association director of government affairs, said that while Boesenecker was very accommodating throughout negotiations, the episode was concerning because of how it varied from the traditional process around proposed workers’ comp changes. Instead of having labor and business groups sit down to discuss if there are areas where the law can be improved, as happens every few years, backers presented a bill idea and then moved forward from there in what felt like a more political process than a joint effort, Larson said.

“I think it underscores the importance of not doing a major bill that requires nuance and negotiation at the end of the session — because of all the time it requires,” Larson, a former legislator, said in an interview. “Having served with Rep. Boesenecker, I think he’s someone who values this process and doing it the right way … And I would be shocked if that wasn’t a big part of his consideration here.”

Colin Larson is director of government affairs for the Colorado Restaurant Association

Workers’ compensation insurance costs

Even with the changes in the second draft, the bill likely still would have had a significant financial impact on the workers’ compensation system — and on insurance premiums for all companies. Most critics of the proposal also believed it would hit the industries with the most traditional on-the-job injuries, including constructions firms and restaurants, the hardest.

While the original NCCI evaluation of the bill pegged its cost increase to Colorado’s workers’ comp system at 17.6% to 19.5% when self-insured companies were included, the same group estimated the cost hike of the second proposal at somewhere between 13.1% and 14.4%. The change to the schedule-of-injuries model would have knocked proposed payouts for average claims down from 400 weeks of pay to 208, but it still would have represented a significant increase from the existing schedule, in which damages could range from four weeks for the loss of a little finger at the distal joint to 104 weeks for the loss of a foot below the ankle.

Stephanie Tucker, president-elect of the Workers’ Compensation Education Association, had said that while the bill would create a short-term spike in costs, the years-long premium decreases offered by Pinnacol and other insurers likely would resume shortly. And that immediate spike in costs is necessary to create a more equitable compensation structure — and one more equivalent with most other states — that acknowledges that workers suffering life-altering injuries not only lose a limb but often lose a career and must be retrained for a new profession.

“Tips the balance”

“This just tips the balance of the cases a little bit to make it much more fair,” Tucker told The Sum & Substance last month. “It’s a short-term increase that’s well worth it for the individuals.”

But the proposal also came as the most affected industries not only are dealing with labor shortages that have created wage inflation but have taken on a host of new costs over the past three years that are both market- and government-caused. The price of goods is up at the same time that employers are having to offer at least six annual days of paid sick leave and fund a statewide family-and-medical-leave insurance system under which workers can take as many as 12 weeks of partially paid leave for medical or familial reasons beginning next year.

What’s next

Few observers expect Boesenecker’s decision to shelve the bill this year to bring an end to the discussion about big-picture reform of the workers’ compensation system, and negotiations likely will continue after the session ends.

But as business groups battle efforts to ratchet up air-quality permitting regulations and pay out new dependent benefits from the currently insolvent Unemployment Insurance Trust Fund, it’s one less debate that will have to happen this spring.

“Even though states adjust work comp benefits differently, Colorado would have been an outlier from the rest of the country and especially among neighboring states,” Colorado Chamber of Commerce President/CEO Loren Furman said, adding her appreciation for Boesenecker’s willingness to consider the cost impacts throughout negotiations. “As we see Colorado’s business climate decline, legislation such as this would have further contributed to our drop in competitiveness nationally.”