The bill to reform the Retrospective Rating Plan is back — this time for a hearing in the House Commerce and Labor Committee. Read our previous coverage here. Read the bill here.

Sponsor, Sen. Jeanne Kohl-Welles, started out her testimony by saying she’s a strong supporter of retro programs because they work to increase safety. But, she said, the bill is needed so that small businesses paying into a retro fund will know where their money is going.

Kohl-Welles also responded to claims that the bill is unconstitutional. Some opponents of the bill have said the bill is aimed at limiting Retro groups’ free speech rights — which they have exercised by spending retro rebate money on political ads. Kohl-Welles said there is nothing in the bill to limit political ads, and that the Legislature made the program through statute and can amend it similarly.

Two business owners were first up to testify. The first belonged to the retro program, the other did not. The first said they were in favor of the bill because he had long fought to understand what his retro refund was based on. The second, Laura Feshback, said she’s never belonged to a retro program, which means she’s never had a refund on the money she’s paid in. She said that, because retro programs have received tens of millions of overpayments in the past 15 years, that means her business has been supplementing retro groups.

Next up: Con testimony.

Mark Shaffer, who owns Mark’s Drywall and is part of a retro group, said there is transparency — members sign a contract and get periodic statements about their contributions and refunds.

And Audrey Borders, who belongs to the BIAW retro program, said it’s her choice to belong to the group. She signs up every year, she said, and “it states right on the form how much the BIAW will receive.”

Tags: retro

After an hour or so of debate (some of which is excerpted in the post below, but you really should watch it at tvw.org), the Senate passed the Retro Reform bill. It now heads to the House.

And, as you might have noticed, it is very near 5 p.m., which is the official cut-off for bills coming from each chamber. The last bill for the day: Popular vote for presidents. Stay tuned.

Meanwhile, the House is taking up a bill to reform education. Stay tuned.

Tags: education, funding, presidential election, retro

The Senate is now debating the “retro” bill and its amendments. What is retro? Find out here.

(In short: Retro is an industrial insurance program that allows alike employees to band together and for L&I purposes. If they substantially increase safety and pay in premiums more than they use in benefits, they receive a refund. If they do not, they owe more.)

Why is the Retro program at issue? L&I mistakenly refunded some $100 to $150 million over the last 10 years in Retro rebates. This bill would require five years of actuarial reviews of the L&I program. It would also require retro groups — of which Building Industry Association of Washington is the largest — to disburse retro refunds to their members and detail where their money goes.

Sen. Jeanne Kohl-Welles said the bill would create accountability in the system. She said the overpaid rebates resulted in higher premiums for everyone else, which is unfair. And, she said, the portion that will require rebates to be disbursed is a way to ensure that small businesses know where their money is going.

But Sen. Janea Holmquist said the bill is a way to quash the voice of groups like BIAW. She also is opposed to the rebate records kept by the retro groups being made a public record.

“The Retro program was key to my management,” said Sen. Chris Marr, who formerly ran a company. He said he did not sign onto the original bill, but he supports this version because it shines sunlight on retro refunds.

“Let’s be honest about what this is. This is an attack on effective organizations,” said Sen. Don Benton. He said it’s not far off that government would be telling people what to do with their own personal bank accounts.

Tags: retro

One thing I was curious about: If L&I pays out some $1.6 billion in retro refunds per year to the dozens of retro pools available, what’s the largest retro refund ever issued? What’s the smallest?

According to Bob Malooly, who runs the program for L&I, the largest annual refunds are in the neighborhood of “tens of millions of dollars.” An exact number wasn’t given.

The smallest: “A few dollars.”

Also: Can you get booted or rejected for membership from a retro group for an abhorrent safety record? Yes.

But having a less-than-stellar safety record could also make you attractive to retro groups, Malooly said. “Some organizations say, we’re not going to let you in, but we’ll work with you,” he said. If the retro pool, through its safety training, can get the business to change their dangerous ways and subsequently join the group, the pool stands to benefit — as do the workers and the employer. (Though it’s no reason to aim for a poor safety record.)

Tags: retro

I just talked to Steve Pierce and Bob Malooly, communication manager and assistant director for insurance services at the Department of Labor and Industries, respectively.

My question: If employees pay 25 percent of industrial insurance, why don’t they get 25 percent of the payback their employers get from retro.

If that last part makes no sense, please read this. In short, retro is a voluntary industrial insurance program through L&I that lets you pool with other similar employers, increase workplace safety and, if your premiums exceed your claims, get a refund. (If your plan backfires and your premiums exceed your claims, you owe more. More on that later.)

So, why don’t employees get a share of the refund? (more…)

Tags: retro

The first hearing on the Retro bill was yesterday. It will continue tomorrow. That gives us just enough time to sort through 1) What the retrospective rating program is and 2) What this bill would do to change it.

Retro is a program through the Department of Labor & Industries, or L&I. The industrial insurance program lets your business join with other “substantially similar” employers in a group.

Why? The larger group assumes the risk and responsibility. In return, the group must seek to improve the safety practices — and performance — of its members. If the group’s premiums exceed their actual claims for the year by a certain amount, they receive a refund. (On the flip side, if their claims exceed what they paid — again, by a certain margin — they owe more.) If a retro group receives a refund, the employers who paid into it will also get a refund. There are dozens of types and sizes of retro associations, and each one decides how, when and to whom they give refunds.

So, what does this bill do?

First, it requires an annual actuarial review of the retro program between 2010 and 2015. That means that each year, an independent reviewer would look at how L&I decides things like who gets refunds, how much and how that affects the number of accidents. (more…)

Tags: retro

Steven Seeger, safety and health manager: “As a longtime member as the agency retro committee … I see the benefits and help shape the direction of how this program is run. We quite frankly don’t need the protection from our organizations that this bill provides.” He said the safety training benefits the workers, employers and the state. He said the bill could lead to decreased refunds for businesses “and quite frankly, 2009 is not the time to pass this bill.”

Bill Zimmerman, farmer from Vancouver: “(Membership has) been a win-win situation: A win for us, a win for the state and win for the worker, too. We joined the program for opportunities for a refund but we’ve stayed enrolled…” He said the Farm Bureau, which he is a member of, puts out numerous safety manuals that help his family business run safely.

Nancy Deikus, regional manager for a management services company: “We’ve had a Retro program for 25 years … (The bill is) premature and you need to let the process continue.” The process she’s referring to is a study commissioned by the Legislature last year to study the program. That’s what resulted in the finding that possibly tens of millions of dollars were mistakenly refunded to Retro groups. That was due to a coding error not caught by the internal auditor. The report is due in July. “I think it would be irresponsible for a bill to be introduced when a study is being done on the current status of Retro.”

Don Stoltz, owner of four grocery stores in the Puget Sound area: “It’s important to note, though, that when I look through this bill … the essence of what brought this to your attention was the error by Labor & Industries. I don’t see anything in this bill that would have changed that.”

The hearing is adjourned because they’ve run out of time. They’ll continue the public hearing on Thursday.

Tags: retro

Note: The panels are being called up in alternating order. Those who are testifying state their names, but in the interest of getting the testimony out in a timely fashion, I’m taking a best guess at the spelling until I can verify. Thanks! If any of these people are you, e-mail nikis@tvw.org with corrected info.

Also: Please refresh your browser from time to time, as I’ll be updating posts with each bit of testimony.

Tags: retro

Matt Lerner, who works for a small software company: “I was alarmed to find out the amount of the overpayment each year,” he said. “It’s clear that we need more oversight if it took us 15 years to find this problem that was costing $10 to $15 million a year.”

Sue Matthews, President of a general contracting company: “The common-sense reforms of this bill should have been adopted years ago in my opinion … As an employer in the construction industry, I know how much I’m required to pay … last year, 2008, I paid $23,688.67 to L&I. We are a small company, right now there’s only 15 employees … so that’s kind of a large chunk of money. We’ve had no claims of any sort in the last couple of years. I didn’t realize we could get money back … I’m very confused about how this program works, I don’t know why I should join a group and pay them for them to pay me money back.”

Rick D. (Didn’t catch his last name): “The Retro program is desperate for serious reform… this program is completely lacking in rigorous … accounting.” He said he participated in the BIAW Retro pool for some time. He would receive refunds, but never knew why or what it was based on. When he found out the BIAW was using some of the refund money to buy political ads, he protested. He says he was kicked out of the program for questioning it.

Sen. Karen Keiser asked Rick if he ever received any safety information from his retro program. Yes, he said. He attended training that was “invaluable.”

Sen. Janea Holmquist said she was having a “hard time believing” that Rick didn’t know where the money was spent. She asked if he was on the board of the program. He said yes, for one meeting.

“I just want to highlight that this is a voluntary program,” Holmquist said. You belong to the Retro pool voluntarily and give them your money voluntarily.

Tags: retro

Here’s the bill.

Retrospective rating allows employers to group together, claim L&I losses as a single entity, and receive refunds if their claim losses are less than the premium they paid.

The program made headlines during campaign season because at least one group used refund money to pay for campaign ads. In the last few weeks, a review of the program found that money had been mistakenly refunded through the Retro program in the last decade.

Among other provisions, the bill requires an actuarial review of the program and requires that “responsible entities” must refund any money they get within 90 days of its receipt, minus administrative costs.

Check back, as I’ll be blogging testimony as it happens.

Tags: retro