Lawmakers say they will reverse course on worker comp law

jfrank@newsobserver.comNovember 28, 2012 

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Representative Nelson Dollar poses a question during the joint legislative committee on workers' compensation insurance and fraud prevention at Legislative Office Building Wednesday, November 28, 2012.

TAKAAKI IWABU — tiwabu@newsobserver.com

The same state lawmakers who passed a law making it impossible for workers to find out whether their employers carry workers’ compensation insurance are now promising to reverse course.

State Rep. Dale Folwell, the No. 2 ranking Republican in the House, said Wednesday he didn’t know the provision he tucked into a last-minute budget bill earlier this year would block employee access to the records.

At a packed legislative committee meeting, he pointed the finger at the N.C. Industrial Commission and the N.C. Rate Bureau, cross-examining leaders of the two state entities about the language they gave him to put into the bill.

“The legislature shouldn’t seal information from employees,” said Folwell, a lame-duck lawmaker who lost a bid for lieutenant governor.

The News & Observer used the data in April to reveal that as many as 30,000 North Carolina employers failed to carry the required workers’ compensation insurance, leaving their employees at risk if they were hurt on the job.

But in July, lawmakers made much of the data the newspaper used confidential at the request of the Rate Bureau, a state-created organization that works for the insurance industry.

Ray Evans, the bureau’s general manager, said he is a “fan of sunshine and transparency” but later said his agency asked to make most the data private to protect insurance companies from facing competition on their rates.

Mark Prak, a lawyer for the N.C. Press Association, which also represents The N&O, countered by saying the public has a right to know the information.

“The larger policy question is what information needs to be capable of being seen by people … looking for a job wanting to make sure there is coverage or whatever their motivation or reason for looking at public information,” he said.

Senate GOP leader Harry Brown said he expects lawmakers to change the law in the coming legislative session. At the same time, he isn’t sure where to draw the line on what should be available to the public and worried about how the information may be used.

“I think the public should know but … we just need to be careful that we do it right,” said Brown, a Jacksonville business owner.

The joint Senate-House panel on worker’s compensation insurance and fraud prevention also confronted so-called ghost policies, policies that are supposed to cover a single “future” worker who might go to work for the employer at some time. The coverage purchased by some business owners sometimes leaves injured workers vulnerable and fighting for needed medical care.

The topic is one lawmakers didn’t tackle a year ago when they sought to reform the state’s workers’ compensation system. It is still plagued by regulators’ inability to track and stop businesses that misclassify employees as contractors to avoid paying taxes and buying workers’ compensation insurance.

The problem is particularly acute in the construction industry but it is also spreading to other sectors. A main sticking point lawmakers debated is what to do in the case of a general contractor at a construction site who is responsible for providing coverage to all workers. The contractor often employs individual subcontractors, such as painters or masons, who buy ghost policies that don’t cover their own job site injuries.

“The potential for misunderstanding … is just tremendously increased with those ghost policies,” said Stuart Powell, a vice president at the Independent Insurance Agents of North Carolina.

The question of who is covered by whom and who is responsible when an injury occurs is a thorny issue, a half dozen experts told lawmakers. And what to do to fix it remains equally uncertain.

Mike Carpenter, an executive vice president for the N.C. Home Builders Association, said the ghost policies – formally known as minimum premium policies – serve a purpose in case the subcontractors hire other workers. He said the problem is more abuse of the system and lawmakers need to understand that some business owners don’t have the money to pay for insurance for themselves.

Leonard Jernigan, a workers’ compensation attorney who represents laborers, said the state should consider creating an uninsured employee fund for those who fall through the cracks while others pushed for more investigators to crack down on fraud.

More recommendations are expected from a task force convened by Gov. Bev Perdue in response to The N&O’s reporting. Its report is due to the legislature in February.

At the end of the meeting, Brown, a committee chairman, said he expects to craft legislative to fix the problems.

“There’s some tweaking that needs to be done,” he said.

Frank: 919-829-4698

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