Tennessee Governor Has Sights Set on Workers’ Comp Reform Bill

Looking to move Tennessee down on a list it doesn’t necessarily want to be number two on, Tennessee Gov. Phil Bredesen (D) has been championing the need to reform workers’ compensation in the Volunteer State.

Recently, the Tennessee General Assembly gave final approval to workers’ comp legislation that seeks to address rising costs. SB 3424, introduced at the request of the governor, represents long-needed reform in a number of areas.

As we work our way through 2004, Tennessee sat second only to Texas in medical costs according to the Workers Compensation Research Institute (WCRI). Tennessee has been one of the few (8) remaining states without a medical fee schedule for workers’ comp. SB 3424 requires, among other things, that the state form a medical fee schedule for all medical services, although it leaves all issues regarding design to the regulatory process.

Bredesen took time out late last month to discuss workers’ comp reform and other business issues impacting the state during a phone interview with Insurance Journal Southeast.

Insurance Journal: Tell me your thoughts on the workers’ comp situation and how we got to where we are today?

Gov. Bredesen: The concern that was expressed to me really during my campaign and in the first months in the governor’s office was that we had a situation in Tennessee in which we were not competitive with states surrounding us in terms of our workers’ comp costs. It was potentially costing us jobs and the opportunity for investment and so on. We have completed that process and passed a workers’ comp reform package, which I think will help. I certainly expect results from it and am hoping and expecting that the insurance companies will react to this with some more attractive rates. I’m anxiously waiting to see what will happen in that market. The bullets I guess of what was in it: reduction of the PPD multiplier as we have it down to 1.5; we have a medical fee schedule that will be put in place; we have mandatory benefit review conferences now to reduce the number of litigated claims and increase the uniformity of the process; we’ve dealt with the dueling docs issue by having a provision for an independent medical examiner; we also have a provision for judicial training so that when we get to the courts, we have some better consistency. All those things taken together, the people advising us were saying that they should make a significant difference in the costs for self-insurers and the insurance rates for those who purchase insurance. I will sign it and it will shortly be the law here.

IJ: Were you getting feedback that maybe some companies were either leaving the state or hesitant to come in as a result of workers’ comp concerns prior to this?

Bredesen: I was certainly getting feedback that some companies were reducing their employment in the state and putting it in other places because of these costs. When I looked at it, it seemed particularly acute in the manufacturing field and of course we’re a state that has a substantial economic base in manufacturing like a lot of southeastern states. There were a lot of northeastern and midwestern manufacturing companies that have located down here over the last generation or so. We’re very sensitive to that as a lot of them are in some of our more rural areas. When one of them leaves a small town, it is hard to replace. When you have an opportunity to compete for a plant, usually a location specialist has looked at maybe 10 places and cut it down to three or four, which they then get in and work actively with the state. My concern was we were getting knocked out and never even getting on that short list.

IJ: Were you concerned with the different groups out there, like the insurance industry and trial lawyers, that everyone was going to want their own thing?

Bredesen: I took the approach I always have in politics that you figure out what is the right thing to do and incorporate the compromises on the front end. I think we always knew it would be a difficult fight, but in the end, I think we were successful and I think the reason we were successful is that we didn’t let it become an issue of big business versus workers. It is really about jobs. We are not trying to say what we think the ethically right level of compensation is for somebody, we’re just saying we need to be fair, obviously, but we also need to be competitive. In the end, I think people responded to that. It really was about jobs as opposed to coming down on the side of insurance companies or trial lawyers.

IJ: Talk a little about the role insurance companies and independent agents play in keeping the Tennessee economy going.

Bredesen: I always thought insurance companies and their agents were an essential part of the business infrastructure here in our state. Insurance is something you need to have access to whether you’re a small or larger business. We have a good, healthy competitive insurance marketplace here and I think it helps us to keep rates under control and make sure they’re competitive. Independent agents are in so many communities, they’re almost the ‘backbone’ of the community. They’re one of those groups that are out there and know a lot of people.

IJ: How important is it for you and your staff to get out in the state and meet the people?

Bredesen: Oh I think that is very important. I’ve told my commissioners and they’ve done a good job of it of getting out of the office and being with people. Whenever you get in one of these jobs, be it governor or commissioner it is inherently an isolating job. There are a lot of doors between you and the members of the public who are not involved in government. I try really hard to get out and hear directly from people in different communities about what their needs are. Frankly, this need for workers’ comp reform really grew out of that and has much more currency and is much more persuasive when the message you here over and over again is from people who are running factories in small towns around the state as opposed to interest groups that come into your office to lobby you.

IJ: How much do you work with Insurance Commissioner (Paula) Flower’s office?

Bredesen: We work with them a lot and Commissioner Flowers is an excellent commissioner and I really depend on her for a lot of the accurate technical information about what is going on.

IJ: We’ve seen some storms recently come through the state. Are you comfortable with the way the state responds to people in their time of need?

Bredesen: I’m pretty comfortable with that. We have an excellent emergency management agency. I use to be mayor of Nashville and was mayor at the time we had a major tornado hit the area, so I understand that when something immediately happens, the first responders in the community just end up with a lot of the pressure on their backs and we tried to support them in every way we could. Once that first day or two are beyond you and you’re in that rebuilding phase, we’ve been very aggressive about having people go in and prepare requests for Presidential declarations and do everything we can do to get people and businesses back on their feet.

IJ: What do you see as major goals for the remainder of the year?

Bredesen: I’m working on the whole TennCare issue and trying to get that program going. It is a Medicaid program that is one of the largest and most aggressive programs in the country and a very troubled one. I’m working very hard to get it back to the middle of the road into something we can afford. I’m also continuing to work on the jobs issue. Our economy has been kind of flat like the rest of the country, but I do think we’re poised for a recovery right now and I want to make sure we’re in the strongest position to take advantage of that, should it, as I hope it will, come along. My number one priority continues to be education. We put significant new money in our budget this year for education and I’ll be continuing to work with K-12 and higher education to do everything I can to support them.

IJ: When you came into this position to where you are today, has this job been all you thought it would be?

Bredesen: I love the job, it is the best job I’ve ever had. It is both fun to do and gives you a great sense of accomplishment. I’m from the business world and in a time in Tennessee’s history when things like budgets and TennCare were these overwhelming issues, I think we’ve made some great accomplishments.

To learn more about Gov. Bredesen, visit www.state.tn.us/governor/.