Audit: Insurers have upper hand in worker's comp cases

Posted: Wednesday, March 08, 2000

ANCHORAGE (AP) -- Insurance companies have an upper hand in dealing with injured people seeking benefits under the state's workers' compensation program, according to a legislative audit.

The audit of the workers' comp system also found that policing of uninsured employers and of frivolous denial of injury claims is ineffective, and that the disputed-claim process is overly complicated.

A dozen recommendations were made to improve the program, many of them focusing on perceived shortcomings in how the Division of Workers' Compensation and Division of Insurance are run.

The state Department of Labor, which oversees workers' compensation, disputes the audit's conclusions. The audit doesn't take into account law changes or the budget cuts the division has endured the past 12 years, commissioner Ed Flanagan told the auditors.

In 1988, the workers' compensation laws were overhauled to reduce the rising costs of insurance, said Mano Frey, president of Alaska AFL-CIO. The system, which heavily favored the injured worker before 1988, was changed to heavily favor insurance companies, he said.

The changes did accomplish the goal of reducing insurance premiums, said Paul Grossi, director of the Division of Workers' Compensation. Premiums have dropped by 40 percent in the past 12 years, he said.

The law was expected to be adjusted to bring the system back to a balance after a few years, but that didn't happen, he said.

Two bills are pending in the Legislature. One addresses funding of the workers' compensation system, setting up a sliding scale of fees under which companies creating more claims would pay more in premiums.

The second bill would boost weekly compensation payouts and the permanent injury payout. The rates have not increased since the laws were changed in 1988.

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