Tuesday, June 10, 2014

Iowa Highlights Grand Bargain

Iowa is not a big work comp state.

In fact, I don't believe WorkCompCentral even has any Iowa subscribers, and only a half dozen people from the state even get our newsletter.

But the Iowa Supreme Court is making the state recognizable in the work comp world by putting accountability into Gov. Terry Branstad's office for making work comp the political scape goat it seems to be in most other states by finding that the governor and five senior aides could be found personally liable for damages claimed by former Workers’ Compensation Commissioner Christopher Godfrey.

Godfrey was appointed to a six-year term as Workers’ Compensation Commissioner in 2009 by Democratic Gov. Chet Culver. After Branstad was elected the following year, he asked Godfrey’ to resign.

Godfrey alleges that Branstad’s senior staff members threatened to cut his salary if he didn’t quit. When Godfrey refused, the governor cut his salary from $112,000 to $73,000. 

Branstad said he sought to remove Godfrey because he was an ineffective commissioner who was costing business in the state money, a charge Godfrey has denied.

Iowa Gov. Terry Branstad
Iowa’s average workers’ compensation premium was $1.90 per $100 of payroll in 2012, according to a study by the Oregon Department of Consumer and Business Services. That was slightly above the national median of $1.88. Iowa ranked 25th among the states in average premium in 2012, up from 36th in 2010.

Godfrey, who is openly gay, claims that its wasn’t his performance, but his sexual orientation that motivated Branstad and the other defendants. He alleges sex discrimination, extortion and violation of his contract rights.

Perhaps Godfrey is right about the discrimination charges, but maybe there's more to the story than homophobia. My read on the bigger story is that Branstad would rather fill various government offices with cronies he can better control for his own political gain.

In March of this year it was reported that more than $282,000 in secret settlements were made with six former employees of the state, all Democratic appointees of former administrations. All of these settlements had confidentiality agreements. There were two other settlement attempts but those employees refused to sign a confidentiality clause.

In the meantime, further investigation has uncovered even more settlements with other Iowa state agency employees involving confidentiality agreements. Branstad has refused thus far to relent to Democratic demands to appoint a special counsel to investigate the use of confidentiality agreements in settlement of employment discrimination law suits.

But so far Branstad has used over $500,000 in Iowa taxpayer money to defend against Godfrey's lawsuit.

My guess is the Iowa Supreme Court's ruling will encourage a more prompt settlement now that there is the potential for personal liability.

But the reality is that this Iowa situation is just exemplary of the state of workers' compensation in general - a political football used by politicians to get what they want.

This is played out time after time after time, in state after state after state - from California to New York,  from Texas to Alaska, and nearly every state in between.

It's often said that workers' compensation is a creature of statute and that is why some common law principals don't apply (e.g. equity for example) because what the legislature granteth, the legislature may taketh away.

There are some constitutional protections in the scheme, but these are still state constitutional claims. The Big Paper, i.e. the U.S. Constitution, has very little, if any, to do or say about workers' compensation.

Because it is a creature of statute, that means that laws need to be drafted and passed which means that pretty much everything in work comp is up for trade.

There's a reason it's called the Grand Bargain - because it is not just a compromise of interests, it is a bargaining chip used in bigger political games.

It's no big secret that SB 863 in California was in big part the genesis of big business (which is why the bulk of that bill really dealt with liberalizing self insurance), and Governor Jerry Brown would not sign SB 863 without big business behind his taxation and state organizational plan.

Give me this, and I'll give you that.

That's how politics works, all the way down to the very dirtiest of political dealmaking.

Workers' compensation has nothing to do with protecting employers from financial ruin or providing workers with immediate, non-controverted medical care.

Work comp has everything to do with The Trade - it is used as a token like in a Middle Ages bazaar.

I get asked all of the time what needs to be done to make workers' compensation "work" and the answer is, blow the whistle and take the ball out of the game.

Since that will never happen though, the next best thing is to purchase your politician.

And I'm only partially facetious with that cynical comment.

1 comment:

  1. You are correct David. It is this way it is now and how it has always been. As long as there is money to be made off our tax and spend system, it is how it will always be. Your blog so reminds me of when I made a trip to lovely Sacramento with some colleagues of mine from PHIRA - with the intent of influencing the politicians to reform the workers compensation laws (this was at least 10 yrs before SB863). First of all no one would even talk to us until we threw them a cocktail party! After that - they listened apathetically to our speeches and our flawless logic while checking their watches to make sure they threw us out of their offices on time.It was just pathetic. But it taught me a lesson - that's how our government and our businesses are run. Most of the representatives are clueless unless our issues are a bargaining chip to get something they want. Sadly, that's what drives business out of this state - the cost of doing business here makes it impossible to make a decent profit.