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Will Tennessee “Privatize” Workers’ Compensation?

Having radically changed the state’s workers’ compensation rules two years ago, Tennessee legislators may go one step further and allow large employers to opt out of the system altogether. Under bills pending before both houses of the Tennessee General Assembly, a “qualified employer” could be “exempt from the Workers’ Compensation law” if it establishes its own private workers’ compensation plan and pays the state a token fee of $500. While proponents claim this opt-out scheme will lead to increased benefits for injured workers, it is unclear how the proposed changes would ultimately affect workers’ rights.

As proposed, Tennessee Senate Bill 721 and its counterpart, House Bill 997, would require employers opting out of the state’s workers’ compensation system to provide a specified level of “minimum benefits” through a privately funded plan. These benefits would include “[m]edical expense coverage for at least 156 weeks and $300,000 per employee,” as well as “temporary total disability benefits” covering “at least 70 percent of the employee’s average weekly wages up to 110 percent of the state average weekly wage” for the same 156-week (three-year) period.

While this might sound good for workers on the surface, the downside of opting out is that it enables employer to unilaterally rewrite the rules governing how and when injured workers may receive benefits. The magazine Mother Jones reported earlier this year on workers’ compensation in Texas and Oklahoma, the only two states that currently permit employers to opt-out in favor of private workers’ compensation plans. In Texas, for example, Mother Jones said one large employer’s private plan “allows the company to select the physician an employee sees and the arbitration company that hears disputes.” The company may also unilaterally deny benefits to any employee injured while protecting themselves from a workplace assault, unless they are defending company property.

The Memphis Commercial Appeal also noted the push for opt-out legislation in Tennessee is coming from a lobbying group representing large employers. One of the group’s members reportedly described opt-out as “privatization” of the workers’ compensation system, noting it allowed another large employer in Texas to “cut its workers’ compensation losses” by nearly 52 percent.

Of course, cutting costs does not mean reducing workplace injuries or fairly compensating workers. The Commercial Appeal noted the 2013 reform of Tennessee’s workers’ compensation law “cut disability benefits in some cases by more than 40 percent, raised the bar for proving injuries are work related and diverted claims to new administrative courts from state trial courts.” These changes benefited employers but not workers. Ultimately, the way employers cut workers’ compensation costs is by not paying for employees’ medical care.

Indeed, if Tennessee legislators follow the Texas example and privatize workers’ compensation, the result is likely to be an increase in the number of injured workers seeking publicly funded benefits, such as Medicaid or Social Security Disability insurance. The taxpayers will thus be subsidizing the medical costs for some of the biggest companies in Tennessee.

It is clear the lengths many employers will go to minimize their obligations under workers’ compensation. That is why if you have been injured on the job, it is imperative you seek advice from an experienced Tennessee workers’ compensation attorney. Contact the offices of Fox, Farley, Willis & Burnette, Attorneys at Law, in Knoxville or Clinton if you need to speak with someone right away.

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