Court Issues Decision With Supreme Impact

Decision had the potential to increase workers’ compensation rates by over 40%

A recent Connecticut Supreme Court decision upended three decades of precedent in the state’s worker’s compensation system. This decision had the potential to significantly increase costs for towns and cities.

The issue is complex. In general, the ruling in Gardner v. DMHAS afforded an administrative law judge (ALJ) broader discretion to continue awarding temporary partial disability (TPD) benefits for up to 520 weeks (10 years) before transitioning the individual to permanent partial disability (PPD) benefits. Long-standing practice was to transition an injured employed to PPD benefits when they reached their maximum medical improvement (MMI).

What this means? Simply, this would have allowed for richer benefits for longer periods of time. In the specific Gardner case, which involved an injured nurse with an 8% disability rating to her wrist, the award would increase from approximately $20,000 to $619,320! This decision reinstated certain benefits to levels nearly equivalent to those before the 1993 workers’ compensation reforms.

This significant increase was not been accounted for in any premium pricing. In addition, for self-insured municipalities, this would have drastically impacted reserve scenarios.

The National Council on Compensation Insurance (NCCI) noted that the court ruling could have increased workers’ compensation costs by 41%. While NCCI data does not include municipal claims, it offers a good estimation on its impact – and it is staggering. In particular, their report noted that the decision would not only impact existing claims, but could also impact those claims eligible for reopening. Therefore, “an unfunded liability may exist due to the potential for retroactive implications related to additional costs for such claims that were not contemplated in the premiums charged for policies written prior to this court decision.”

The decision unravels decades of progress and disrupts the balance that has been achieved since the 1993 reforms.

In addition to increasing workers’ compensation benefits, the decision subsequently impacts municipalities with greater significance than private businesses. This is because of CGS 31-284b which requires towns and cities to continue providing group health coverage –for the employee and any dependents - when providing TPD benefits. Private businesses do not need to provide these benefits.

In response to the decision, CCM worked tirelessly with the insurance industry and business partners to educate the legislature on the impact of the decision and encouraging them to modify the law accordingly. It was not easy. However, a compromise was reached amongst the employer groups, the Connecticut Trial Lawyers Association and organized labor representatives– who have been the most vocal group in support of the decision.

Through lengthy negotiations, the compromise was codified into law in HB 6863. The bill passed both the House and Senate, and among other things, ensures that injured employees transition to permanent disability benefits once they reach MMI. Without this change, workers could have remained on costly temporary benefits for up to ten years.

HB 6863 also enhances benefits for injured workers by adding new body parts to the compensation schedule, allowing parents of deceased employees with no dependents to collect benefits, providing additional 31308a benefits, and creating a working group to discuss vocational rehabilitation.

While it is not perfect, it is better than the alternative of letting the decision to stand.