Belgrade residents David and Sherry Nadeau believe they are victims of a cruel and unfair workers’ compensation system in Maine that has added insult to injury by causing their family to suffer financially.

In 2003, David Nadeau was permanently disabled after his boss accidentally slammed into him with a truck at the concrete yard where he worked. His wife, Sherry, said the $500 a week her husband was awarded as compensation for his crippling injury has not increased by a single penny over the past 16 years.

“The cost of living has increased 26 percent in the last decade,” she said. “Things we buy cost 26 percent more, but we’re supposed to make ends meet on the same amount of income for an injury that was of no fault of his own.”

Sherry Nadeau is among a group of injured workers and their families who have testified recently in hearings before a legislative committee, arguing that the workers’ compensation system in Maine has caused them undue hardship and frustration. Backers of a sweeping overhaul of the system have submitted more than two dozen bills for consideration in the Legislature, arguing that past reforms designed to lower insurance costs have created an unfair system for injured workers in the state.

But their opponents, which include business and insurance industry groups, say the current system was created out of necessity to avert an impending collapse of Maine’s workers’ compensation system in the early 1990s. They fear the proposed reforms would cause that crisis to return.

The flurry of bills, championed by labor and lawyer groups, comes more than 25 years after Maine revised its laws to alleviate a situation in which the state’s workers’ comp insurance had become the most expensive in the nation and insurers were leaving the state in droves. Since the reforms of 1992, workers’ compensation costs in Maine have fallen toward the middle of the pack – to No. 12 by one measure and No. 19 by another – and the total annual cost to insurers of workers’ comp claims has decreased by 60 percent.

The bills currently under consideration would reverse several of the 1992 reforms and force a number of changes such as:

— removing caps and restrictions on benefits,

— increasing the allowable time for workers to apply,

— lowering the burden of proof to claim mental health injuries, and

— adding annual cost-of-living adjustments to payments.

Matt Schlobohm, executive director of the Maine AFL-CIO labor organization, said the workers’ compensation system is the product of a decades-old “grand bargain” between labor and management, under which employers agreed to cover their injured employees’ medical costs and lost wages in exchange for taking away workers’ right to sue employers for damages in the wake of an on-the-job injury.

But subsequent legislation, including the 1992 reforms and more recent changes under Gov. Paul LePage, have inserted various limits and restrictions into the system that inhibit the ability of injured workers to receive fair compensation, he said.

“Workers’ rights have been significantly eroded and undermined,” Schlobohm said.

CRISIS 25 YEARS AGO

Business leaders in Maine say they are worried that the special interests behind the proposed reforms seek to drag Maine back to the early-’90s crisis period.

David Clough, Maine state director for the National Federation of Independent Business, which represents small businesses, said the comprehensive reforms passed in 1992 were triggered by a total breakdown of Maine’s workers’ compensation system that drove insurance prices sky high and all but one insurer out of the state. The lone remaining insurer also was threatening to leave, Clough said, which would have made it impossible for Maine businesses to comply with state law requiring them to have workers’ comp insurance.

In 1988, the annual average per-employee cost of workers’ comp insurance in Maine was $718 – about 2.5 times the national average of $282. Figures for 2018 were not available, but experts said Maine’s average cost is now much closer to the national one.

Democratic lawmakers were strong-armed into accepting the 1992 reforms by then-Gov. John McKernan Jr., a Republican who prompted a state government shutdown in 1991 when he insisted that the contentious state budget negotiations be tied to workers’ compensation reform.

Facing pressure from multiple sources, including a series of stories and editorials in the Portland Press Herald, McKernan appointed a bipartisan commission to develop a detailed blueprint for lowering workers’ comp insurance costs in Maine, which ultimately passed by an up-or-down vote in the Legislature with no amendments allowed. The reforms ended the crisis, and workers’ comp insurance premiums have fallen significantly since then.

“To those who remember the crisis days of the late ’80s and early ’90s, this is kind of horrifying,” Clough said about the spate of new bills.

FAIRNESS OR INSTABILITY?

John Rohde, executive director and longtime employee of the Maine Workers’ Compensation Board, said his organization is in the process of assessing what sort of impact the proposed reforms would have on insurance costs in the state.

The board hopes to provide an analysis to lawmakers within the next two weeks that would help them deliberate on the many bills, Rohde said. He added that a preliminary analysis indicates the proposed changes would not raise insurance premiums dramatically.

“It will have some impact, but so far the impact wouldn’t be great,” Rohde said.

Schlobohm said the arguments coming from opponents of reform are unjustifiably alarmist. Maine workplaces are much safer now than they were at the time of the crisis, he said, with far fewer on-the-job injuries and deaths occurring each year. Consequently, the costs borne by workers’ comp insurers have steadily decreased.

“I don’t buy it – I mean the system can be rebalanced without going back to the pre-’93 era,” Schlobohm said. “It’s completely disingenuous and dishonest to say that we can’t make improvements to this system for working-class people who are injured on the job in a way that maintains the overall cost integrity of the system. We can do both things.”

Such reassurances aren’t likely to convince small-business operators like Brian Souers, president of Lincoln-based forest products company Treeline Inc., which employs about 90 workers.

Souers said Maine’s workers’ comp insurance rates are already relatively high even without the barrage of reforms being proposed. He said if all of the more than 25 proposed bills were to pass as written, it would likely destabilize the insurance market, causing premiums to skyrocket within the first two years.

“Currently, many people in Maine are working hard to invite new business and industry to invest in Maine to replace industry that has shut down in recent years,” Souers said. “Our workers’ comp system has experienced two decades of stability. If we lose that stability, we risk losing a lot of existing jobs, as well as potential jobs.”

So far, nearly 20 workers’ compensation-related bills introduced this legislative session have been discussed over two days of public hearings before the Legislature’s Labor and Housing Committee, with more yet to come. Eventually, all of the bills will head to more in-depth work sessions where each may be sent on for a vote, combined with others, modified or discarded.

During the hearings, workers and their families have shared gut-wrenching accounts of the injuries they suffered on the job and how those injuries have hurt them physically, psychologically and financially.

Pictured at the Topsham offices of his attorneys, Dennis Crosen, a 71-year-old Vassalboro man who suffered injuries during his years as an automotive industry worker, says his workers’ compensation benefits were slashed when he started collecting Social Security in 2014. He is currently fighting to get those benefits reinstated. Gregory Rec/Staff Photographer

They include Vassalboro resident Dennis Crosen, a 71-year-old former automotive industry worker who suffered two major injuries during his career – one to his neck and the other to his back. Crosen said he was arbitrarily “presumed to have retired” at age 66 and his benefits were slashed even though he had no plans to retire at that age.

The current system allows insurers to cut benefits to injured workers with permanent disabilities when they start receiving Social Security benefits, he said, which takes money out of the pockets of people like him who worked through their pain for years and hands it over to the insurance companies.

“To me it seems completely arbitrary that 60 percent of my workers’ comp disability payment is reduced by a percentage of the retirement benefit to which I am entitled from work performed over my lifetime at a variety of other employers,” Crosen said.

WHY NOW?

Tony Payne is senior vice president of Maine Employers’ Mutual Insurance Co., or MEMIC, the state’s largest provider of workers’ comp insurance with about two-thirds of all Maine workers under its coverage. Created out of the 1992 reforms, MEMIC has been tremendously successful, helping to reduce serious on-the-job injuries by 50 percent since its formation in 1993, primarily through workplace safety initiatives.

The cost of workers’ comp insurance also has decreased since before the 1992 crisis, according to MEMIC. Maine employers paid about $2 in premiums for every $100 of employee compensation in 2014, down about 26 percent from $2.71 in 1991. There were roughly 15,000 workers’ comp claims processed in Maine in 2016, from a workforce that numbered slightly more than 600,000, reflecting a 50 percent drop in workplace injuries from the early ’90s.

Since the 1992 reforms were imposed, the total annual cost to insurers of workers’ comp claims, known as the “loss cost,” has decreased by 60 percent. The average loss cost per claim in 2018 was $24,400.

Payne said he is sympathetic to the plight of injured workers and believes more can be done to help the least protected among them, but he said many of the complaints about the current system are based on a misunderstanding of the intended role of workers’ compensation.

Workers’ comp was never intended to serve as a lifetime benefit like a pension, according to Payne. He said its function is to help injured workers deal with the lost wages and medical costs associated with an injury while they recover and figure out what sort of work they can do under their new circumstances.

Payne said the debate over workers’ compensation has been “hijacked” by attorneys who see an opportunity in re-litigating old claims, knowing that they will receive a significant cut of the payout. He said supporters of workers’ comp reform have chosen this year to push their agenda because they assume Maine’s new Democratic-controlled government will be receptive to pro-labor arguments that LePage’s administration would have rejected or ignored.

“For at least the last eight years, a lot of interests have been in the wilderness following the LePage administration, and so there’s a sense within special interests that having the House, the Senate and the governor’s office is going to make the likelihood of passing a variety of bills more likely,” Payne said.

Gov. Janet Mills’ spokeswoman Lindsay Crete said the governor has not taken a position for or against any of the workers’ comp reform bills.

“Governor Mills will continue to study these bills and expects the stakeholders to negotiate in good faith towards a package of legislation that ensures substantial protections for employees at an affordable cost to employers,” Crete said via email.

Carol Sanborn, a paralegal with Topsham law firm McTeague, Higbee, Case, Cohen, Whitney & Toker, represents several of the injured workers who have spoken out in favor of workers’ comp reform. She said supporters of the bills are not trying to derail the system, and that they only want common-sense changes to arbitrary caps and restrictions that hurt people like her clients.

For example, the current statute imposes a cap of about $830 a week, or $43,000 a year, on workers’ comp benefits, Sanborn said, even for fully disabled workers who were making six-figure salaries prior to their injury. Similarly, the families of workers who are killed on the job, no matter how young or old, are only allowed to receive death benefits for up to 500 weeks, which is about 9 1/2 years, she said.

“Where did 500 weeks come from?” Sanborn said. “It has a punitive effect on the family.”

Steve Hewins, president and CEO of HospitalityMaine, which represents the state’s hotels and restaurants, said he is maintaining a calm, objective approach to the proposed reforms. Hewins said the best way to resolve the debate would be for representatives of all the affected groups to sit down together and come up with a holistic approach to fixing problems if they exist, preferably backed by some hard research and analysis.

“I feel like if we’re going to take a look at the workers’ comp situation in the state, 25 one-off bills is not the way to do it,” he said.

J. Craig Anderson can be contacted at 791-6390 or at:

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