Workers’ comp is healthy but not helping the state’s economy

A worker came to work drunk and dropped a 2,000 pound chunk of marble on his foot. He was employed by a small family business.

His employers found out he was entitled to workers’ comp benefits just as if he had not been drunk. Some time later, Mom got a notice from the insurance company that the business’s premiums were increasing.

Mom’s son was a brand-new, just elected state senator. That is how Sen. Jacob Candelaria (D-Albuquerque) became an advocate and sponsor of workers’ comp legislation to correct the imbalances that have crept into the law in recent years, mostly through decisions by the state’s higher courts.

Candelaria told his story recently at a meeting sponsored by New Mexico’s Association of Commerce and Industry (ACI).

“Everybody says we need to do something about the economy, but we have lacked the political courage to do what is needed,” Candelaria said. “Legal reform needs to be at the core of any economic development agenda for New Mexico.” We have a problem, he said, not primarily in the legislature but in the courts.

Other speakers echoed a similar theme: though New Mexico’s workers’ comp system is doing reasonably well when viewed in isolation, it is one element of a combative legal climate that discourages employers from locating here. Danny Jarrett, an attorney and current chairperson of ACI, said his office routinely fields inquiries from businesses in which this issue is raised.

The law itself says the purpose of workers’ comp is to provide the “quick and efficient delivery of medical and indemnity benefits to injured workers at a reasonable cost to employers” and that it is based on a “mutual renunciation of common-law rights and defenses by employers and employees alike.”

Functionally, speaker Jack Milarch of Builders Trust reminded the audience, for most cases, workers’ comp is designed to provide temporary, short-term benefits, incorporating financial incentives for injured workers to return to work and for employers to rehire them. Workers’ comp benefits are deliberately less than the worker’s pre-injury wage because if workers could make the same money staying home as going back to work, they would have no incentive to go back to work.

In that sense, workers’ comp is contradictory to what most people understand the legal system to be — a system in which an injured person tries to get maximum money from the person or organization responsible for the injury.

New Mexico is currently ranked number 32 of the 50 states for its legal environment, said Quinn Lopez, general counsel of New Mexico Mutual, the state’s largest workers’ comp insurer. That poor ranking is keeping businesses from wanting to locate here, he said.

Lopez said, and other speakers echoed, trial attorneys from Texas are coming across the state border, especially between El Paso and Las Cruces, attempting to find new legal arguments to move cases out of workers’ comp and into the more lucrative personal injury system. Apparently, he said, it is relatively easy for out-of-state attorneys to qualify for New Mexico law licenses.

State insurance superintendent John Franchini noted that the oil and gas industry, a critical piece of New Mexico’s economy, is coming back from recession but jobs in that industry will continue to decline, largely because of technology. As an example, he said remote online monitoring of oil wells has replaced large numbers of workers.

According to Franchini, the state is doing very well on providing safe workplaces and preventing injuries. New Mexico is about to have a 16 percent average decrease in insurance premiums. That is a huge decrease and ought to be enormously positive news for economic development, but nobody is optimistic.

Triple Spaced Again, © New Mexico News Services 2017

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