Tuesday, April 24, 2012

WA RTW/SAW Experiment Forgets Tolerance

Return to work/stay at work (RTW/SAW) programs in workers' compensation have numerous complex issues inhibiting success, all of them tied to the great unknown variable we call human behavior.

In the early days RTW/SAW was thought of as vocational rehabilitation. The thought was (and is in some states) that if the right set of services were provided to the injured worker that new skills could be developed, jobs identified, and the worker would be motivated to get a job.

What happened in a lot of states where vocational rehabilitation services were part of workers' compensation was that a cottage industry cost a lot of money but could not provide any good data or evidence that such services worked.

In many cases vocational rehabilitation services were provided up to statutory or regulatory maximums and then the injured worker would be left to his or her own devices.

Many states still have vocational rehabilitation programs with varying degrees of success.

California started a new trend when vocational rehabilitation was replaced with incentive programs that attempt to provide financial reward to the employer for taking back injured workers and penalizing workers for not taking advantage of such opportunities. I think if you ask anyone in California workers' compensation about this system, if they were being truthful, they'd tell you that it has been an unmitigated failure that just added complexity, paperwork and expense to claims.

So it is interesting that the Washington Department of Labor and Industries (L&I) will launch in May a program intended to improve return-to-work performance by subsidizing 50% of wages paid to disabled workers brought back to light or modified duty along with other incentives to both the employer and injured worker.

Washington can do a lot of programs that other states can't do because of its monopolistic nature - there is only one "carrier", the state, and consequently execution and enforcement are much easier.

The Washington Department of Commerce projects the stay-at-work program will lead to savings of $111 million from fiscal year 2012 through 2015. That projection is amorphous though and depends upon whether both sides of the equation buy into the incentives.

Like many such programs, the array of factors and qualifications are complicated, and that may itself inhibit success.

The final rules based on House Bill 2123 provide that starting May 21 Washington Department of Labor and Industries (L&I) will subsidize 50% of gross wages paid to an injured employee assigned to transitional work for up to 66 days worked in a two-year period, capped at $10,000.

L&I will also reimburse employers up to $1,000 per claim for training expenses, including the purchase of books or payment of tuition or fees to an outside party. The department will not reimburse employers for the value of in-house training.

L&I will pay up to $400 if special clothing is needed for the modified position and the employer doesn’t normally provide clothing to workers.

Finally, the department will pay up to $2,500 per claim if an employer needs to purchase tools and equipment for a modified position.

To qualify, a business must be the employer at the time of the injury and the injured worker must be eligible for temporary total disability or temporary partial disability benefits. A treating physician has to have restricted the work activities of the employee and released the worker to perform the light duty or transitional work.

Employers have to file reimbursement requests, including payroll records or time cards and itemized receipts, within one year of the date the work was performed. L&I will not reimburse for stay-at-work expenses incurred before June 15, 2011, the date HB 2123 was signed into law by Gov. Christine Gregoire.

My personal opinion is that these financial incentives basically won't work for most situations and that cottage industries will take advantage of the economic opportunities generating costs with no measurable success.

Washington is no different than other states in that there are a couple of large employers with the resources and capabilities of taking advantage of these incentives, but the majority of the employer base are small employers that lack the resources, skills or capacity to use these RTW/SAW provisions. The Washington RTW/SAW program was a part of a larger workers' compensation overhaul from last year in which the state's big employers (Boeing and Microsoft) had a big voice so it's easy to see how these provisions made law.

In addition, studies have shown, almost universally, that financial incentives basically don't work in RTW/SAW on the employee side. The motivation isn't usually financial. The motivation is more fundamental than that - it comes down to whether the employee wants to work for that employer - the single biggest factor affecting disability status is job satisfaction.

Several months ago I told the story of a young lady who was looking for advice in the face of a cessation of her disability benefits. The issue wasn't whether she could do some work. The issue was whether she was motivated to do THAT work for THAT employer.

This is the third tier in the Talmage Triage which is "tolerance" - the sole subjective component of the Triage: how much pain an individual is willing to tolerate depends on many (sometimes conflicting) psychosocial factors and the benefits available for doing the job (or any activity).

L&I will have a better handle on the progress of the success of the program than other states simply because it is a single point of contact, rather than a couple hundred independent carriers like its neighbors to the south. In that regard the state can monitor its success much more directly.

I wish L&I unbridled success in this program and that the state actually can measure a net savings of $111 million by 2015. I don't see that happening though. Tolerance isn't addressed in the law.


  1. I agree with you comments on California, which puts the fun in dysfunction for attorneys and others living off the inefficiencies in the system.

    However, I am more optimistic about the Washington experiment in creating financial incentives for employers to bring employee back to work. This legislation is a copy of that which has been in effect for years in Oregon, and the results speak for themselves in terms of timeloss days and any other metric you want to look at. Either a system is about work and productivity, or it encourgages a mindset of disability and entitlement, as Washington does.

    Certainly the larger employers in Oregon are for the most part experts at using the Employer At Injury Program, but our RTW consultants educated and encourage all employers to make use of this program to bring workers back to work, purchase tools and equipment that will make work safer for other employers, and of course use the wage subsidy.

    Lets see what happens in a few years, after these programs have time to take hold.

  2. Thanks for the comment chalter87 - I hope it works. As I mentioned, one thing that WA has in its favor is that it is a monopolistic state so it has more control - that may make a big difference.