Workers' compensation problems

A report from the Office of the Legislative Auditor finds that Minnesota’s workers’ compensation system works well overall, but still has room for improvement.

Legislative Auditor James Nobles presented the report, “Oversight of Workers’ Compensation,” to members of the House Bioscience and Workforce Development Policy and Oversight Division March 4. No action was taken.

Deborah Parker Junod, who managed the audit, outlined the report’s major findings, which indicate shortcomings in several areas, including:

• staff cuts have harmed the Department of Labor and Industry’s ability to enforce workers’ compensation laws;

• the department does an inadequate job of tracking reimbursements from uninsured employers; and

• the state’s dispute resolution process is overly complex.

The report found that the department does an inadequate job of recovering state expenses. In cases where employers without workers’ compensation insurance were ordered to reimburse the state for paying benefits to injured workers, the department was only able to recover about 19 percent of the total penalties assessed for employers.

A number of concerning trends are also identified in the report. Among them, workers’ compensation insurers are underpaying benefits at an increasing rate. Also, the proportion of claims in which workers and insurers have disputes has been rising.

To fix many of the issues identified in the report, the office recommends improved information technology systems, more aggressive pursuit of reimbursements from uninsured employers and establishment by the Legislature of an ombudsman for workers’ compensation, among other changes.

Labor and Industry Commissioner Steve Sviggum, whose agency manages the state’s workers’ compensation system, said the department is in “complete harmony” with the OLA findings, and will work to implement the recommended changes.