NC legislators seek clean slate for embattled Industrial Commission

mlocke@newsobserver.comFebruary 9, 2013 

  • N.C. Industrial Commission

    Commission members earn about $119,000 a year and work full-time administering and hearing about 65,000 workers’ compensation claims each year. Each member below was appointed by a Democratic governor; either Jim Hunt, Mike Easley or Bev Perdue.

    Bernadine Ballance: a former school teacher and attorney

    Linda Cheatham: former telecommunications executive

    Danny McDonald: former federal elections commission member

    Staci Meyer: former counsel for several state agencies

    Tammy Nance: former workers compensation attorney for both plaintiffs and employers

    Pam Young: former deputy commissioner and former counsel to state agencies

  • Remaking state commissions

    A bill to remake some agencies won approval from the Senate this week. It now heads to the House. Here’s what it would do:

    Coastal Resources Commission: Reduce size from 15 to 11. Appointments, now all by the governor, would change to seven for the governor and four by the General Assembly. Ends terms of current members.

    Coastal Resources Advisory Council: Reduce from 45 to 20 members. Eliminates appointments currently made by state department heads and others, and gives that authority to the Coastal Resources Commission. Ends terms of current members.

    Environmental Management Commission: Reduce from 19 to 13 members. Seven would be appointed by the governor (currently 13), and six by the General Assembly (same as current law). Ends terms of current members.

    Industrial Commission: Size remains the same (six members). Reduces terms from six to four years, staggers terms. Appointed by governor (as current law). Ends terms of current members.

    Utilities Commission: Size remains the same (seven members). Creates staggered, six-year terms. Appointed by governor (as current law). Ends terms of current members.

    Wildlife Resources Commission: Increases the number of General Assembly appointments by two, and reduces the governor’s appointments by that amount. All terms would now be two years.

    N.C. Turnpike Authority: Eliminate the Turnpike Authority board and turn over operation of the Authority to the Department of Transportation.

    Superior Court: Eliminate 12 special Superior Court positions.

    N.C. Lottery Commission: Reduce terms from five to two years. End terms of current members.

    Board of Education: Governor appoints chairman from among the members. Currently, members choose the chairman.

    State Board of Elections: Limits appointments to three four-year terms.

— By spring, six arbitrators who handle the claims of injured workers will likely be kicked to the curb, courtesy of a Republican-controlled General Assembly eager to put its stamp on every layer of government.

The North Carolina Industrial Commission is an agency with immense power. It weighs the credibility of workers’ claims of injury, often deciding whether one doctor’s diagnosis is more accurate than another’s. It authorizes payouts up to $1 million to citizens wronged by state officials. Commissioners dispense checks to wrongly convicted inmates for the years wasted in prison.

Despite its importance, the commission has been plagued with inefficiencies and a history of poor management. In the last year, the agency has been in the spotlight for failing to bring into compliance tens of thousands of businesses skirting their responsibility to carry workers’ compensation insurance. The commission operated in a silo, failing to coordinate with other agencies that could have helped detect problem businesses.

While the replacement of the commission’s current leadership was expected as a new governor stepped into power, the prospect of all six commissioners being fired caught many by surprise.

“It’s just breathtaking,” said Leonard Jernigan, a veteran plaintiffs attorney who teaches workers compensation law. “It’s not just about fresh faces. There’s a huge learning curve, and we could see long delays in cases.”

So far, commissioners are moving ahead as usual with pending cases. A spokeswoman for Gov. Pat McCrory, who would be in charge of appointing new commissioners, said the General Assembly’s bill was not his idea and he has not yet identified new commissioners. Legislators say McCrory deserves the chance to put in place people who believe in making government more efficient and cost-effective.

The Industrial Commission is but one of many agencies in which leaders are on the chopping block as Republicans flex muscle won by control of the General Assembly and the Governor’s office. Senators this week approved a bill that would clear out Democratic appointees of the state Utilities Commission and the Coastal Resources Commission, as well as 12 special superior court judges, eliminating more than 100 appointments made by former Gov. Mike Easley and Bev Perdue, both Democrats. Senate Republicans dismissed Democrat objections to the bill, saying their party was only doing what Democratic power brokers before them had done when they secured power in Raleigh.

The shift at the Industrial Commission means more than just new appointments for Republicans. It will likely bring a mind-shift in workers’ compensation cases. Conservatives have long complained that commissioners coddle injured workers, liberally awarding compensation at the expense of businesses and their insurers.

“As a business owner, I feel the commission is a little tough on businesses,” said Sen. Harry Brown (R-Jacksonville), a car dealership owner and one of the bill’s sponsors. “We need to swing them back to the middle.”

Workers’ compensation cases are largely formulaic. Compensation for time off work is calculated based on the worker’s wages. Lost limbs and specific disabilities all have specific dollar values assigned to them. The commissioners’ power is in their assessments of who is telling the truth and who might be exaggerating. They judge workers’ credibility, deciding whether his complaints of back pain really do make him unable to return to work. And, when doctors offer different opinions, commissioners must determine which doctor’s prognosis is most reliable. Who commissioners choose to believe can mean the difference between an absolute denial of a claim and tens of thousands of dollars in treatments and lost wages.

Never followed up

The News & Observer reported last April that 30,000 or more businesses in this state are breaking the law by not carrying insurance to protect injured workers. The news brought unprecedented pressure on the Commission. Former Gov. Perdue demanded the problem be fixed; legislators convened a committee to examine the problem.

Staff at the Industrial Commission have long known some employers broke the law by failing to buy workers’ compensation insurance. Each year, hundreds of workers injured on the job while working for an uninsured employer file claims with the Industrial Commission.

While the commission had the authority - and some say responsibility - to find these uninsured businesses and bring them into compliance, it hasn’t. And, though commissioners have the power to fine or urge prosecution of businesses without insurance, they rarely have.

After the N&O report, the commission resurrected hundreds of old cases involving uninsured employers. For years, they had awarded payouts to the workers but never followed up to ensure the claim had been paid. Over the last nine months, commissioners and their deputies have threatened wayward employers with jail time if they didn’t settle up. Some workers received their first ever reimbursements; others still wait. No employer was sent to jail.

The Commission’s handling of the uninsured problem did not engender confidence at the General Assembly, so it’s not surprising the Industrial Commission landed on the list of agencies to be overhauled.

Higher hopes

Former Rep. Dale Folwell, a Winston-Salem Republican, said failing to bring those not carrying insurance in line was putting a burden on businesses that did comply. And, it left some workers vulnerable. He has higher hopes for new commissioners.

“From top to bottom, I hope we have people who don’t just have their mind and their (paycheck) involved but also their hearts,” said Folwell.

Folwell first began examining the workers’ comp system a few years ago in an effort to reduce payouts to workers. Though he shepherded a bill early last year to cut rates, Folwell never encountered leaders of the Industrial Commission.

He first met Pam Young, an Easley-appointed chairwoman of the Industrial Commission, last summer when she came to his office to ask that he make private data about businesses and their insurance carriers. Folwell agreed, figuring the measure wasn’t controversial.

The data had formed the basis for the N&O’s reports on the uninsured problem. Folwell spent much of his last few months in office trying to undo the privacy measure.

Folwell encountered Young a handful of times after that at committee meetings to examine workers’ compensation fraud.

“Often times, I left those meetings thinking I must not have asked the question in the right way because I didn’t get a clear answer,” Folwell said.

Young is married to Reuben Young, a former Easley aide who served under Perdue as head of the Department of Public Safety. Reuben Young is also a target in the legislature’s reorganization of state agencies. Perdue appointed him as a special superior court judge before leaving office in January; legislators want to eliminate all 12 special judges, though the measure has raised legal questions.

Pam Young resigned her chairmanship in January so Gov. Pat McCrory could select a leader of his choice. Young wants to stay on the commission through the end of her term in summer 2014.

“I’ve worked really hard addressing issues before the commission,” said Young. “Challenges arise and we work to address them and to be sensitive to the needs of all stakeholders.”

So far, McCrory has not tapped any other commissioner to become chairman after Young’s resignation. A spokeswoman for the governor said this week that he’ll soon appoint one of the commissioners to take charge.

Last month after Young stepped down, all of the commissioners except her came to the last of the legislative committee meetings set up to examine workers’ compensation fraud. No one called on them, and some legislators said after the meeting that they hadn’t realized they were there.

Locke: 919-829-8927

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