Tennessee Aims to Change How Workers’ Compensation Disputes Are Settled

Tennessee lawmakers have advanced a workers’ compensation reform bill that could change how injured workers’ claims disputes are handled.

Governor Bill Haslam has been looking to reform the state’s workers compensation system for two years as part of his plan to turn Tennessee into the state with the lowest taxes on small businesses in the country.

Now, supported by a solid Republican majority in the Tennessee legislature, Haslam’s goal appears to be well in sight as his workers’ compensation reform bill is making steady progress toward a final vote.

Central to those reforms is replacing the state’s civil judges with a new Court of Workers’ Compensation Claims.

Tennessee currently has a hybrid method of resolving workers’ compensation disputes that involves both the Division of Workers’ Compensation and the civil courts.

Under current law, injured workers must first file a request for assistance with the division where a workers’ compensation specialist reviews the claims and either denies it or orders benefits. An injured worker or employer can appeal the decision, which is then subject to an administrative review. Once those efforts are exhausted, the parties may file a dispute with the state’s civil courts.

The Tennessee Supreme Court said this has led to a “race to the courthouse” as attorneys try to find the court out of the state’s 31 districts where the judges might be most sympathetic to their case. For example, in one district out of 1,172 non-jury trials only six cases dealt with workers’ compensation. By comparison, in another jurisdiction that had 509 non-jury trials, 66 cases revolved around workers’ compensation disputes.

Trey Gillespie, workers’ compensation director for the insurer trade group, the Property Casualty Insurers Association, said that the industry is supporting the switch to an administrative system because of the variations in judges’ decisions and the differences in their expertise in workers’ compensation law.

“Fundamentally, the industry opposes a court system,” said Gillespie. “Judges are generally not experts in workers’ compensation or more effective than an administrative process.”

Critics of the current system also claim that the law is not applied equally and judges tend to favor injured workers. For example, a judge can set an injured worker’s benefits at up to six times the impairment rating, thus significantly increasing the benefits. Insurers say this has created an environment whereby injured workers have little or no incentive to resolve their disputes.

“Basically it encourages workers to stay out or work or settle to get the maximum settlement from the judge,” said Gillespie,

Haslam’s plan does have its critics. Those who advocate for injured workers say that the number of lawsuits has dropped significantly since 2005 when the state last reformed the system.

In 2006, there were 285 actual trials to resolve workers’ compensation cases, a number that dropped to 73 in 2011. In the same time period, the number of lawsuits filed that were settled before trial dropped from 2,509 to 724.

Bryan Capps, president of the Tennessee Association of Justice, representing trial attorneys, said that given the small number of cases that involve a civil court it makes no sense to create a new state bureaucracy at the expense of taxpayers.

Capps also said he fears it will grant the state an unfair advantage when it comes to resolving disputes.

“It raises serious concerns about due process because the bill gives an enormous amount of power to workers’ compensation administrators,” said Capps. “They get