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Oregon’s workers’ compensation history

Early history

The 1913 Oregon Legislative Assembly gave Oregon its first workers’ compensation law; it became effective July 1, 1914. The law set up the State Industrial Accident Commission, consisting of three trustees, to oversee the Industrial Accident Fund. Employers in hazardous occupations had to decide whether to be part of the fund. Contributors to the fund could not be sued; instead, suits were brought against the commission. Employers who did not contribute had no common-law defenses, and the Employer Liability Act made them vulnerable to unlimited damages for worker injuries or illnesses. Employers in nonhazardous occupations also could contribute to the fund and get the benefits.

In 1965, the Legislature overhauled the law. Most employers came under the Workmen’s Compensation Law, effective Jan. 1, 1966. Two years later, all employers that employed subject workers came under this law. Employers could buy the commission’s insurance, self-insure, or insure with private companies. The State Industrial Accident Commission was renamed the Workmen’s Compensation Board, and its insurance function was given to the State Compensation Department, the forerunner of SAIF Corporation.

The federal Occupational Safety and Health Act of 1970 gave rise to the Oregon Safe Employment Act in 1973. Its purpose was to ensure safe and healthful working conditions and to reduce the burden — in terms of lost production, lost wages, medical expenses, disability compensation payments, and human suffering — caused by occupational injury and disease.

The 1977 Legislature created the Workers’ Compensation Department, which took on the administrative functions previously under the Workmen’s Compensation Board. The board continued supervising the Hearings Division, functioning as an appellate body. Today, the Workers’ Compensation Division is part of the Department of Consumer and Business Services. The department also contains other divisions involved in workers’ compensation and workplace safety: Oregon OSHA, the Division of Financial Regulation, the Ombudsman for Injured Workers, and the Small Business Ombudsman. The Workers’ Compensation Board is an independent agency that relies on DCBS for administrative support.

Period of major reform: 1987-1995

In 1986, Oregon ranked sixth highest in the nation in the average workers’ compensation premium rates paid by employers. It also had one of the nation’s highest occupational injury and illness incidence rates. To improve the system, the 1987 Legislature enacted House Bill 2900. This bill expanded the requirements for safety and health loss-prevention programs, increased penalties against employers who violate the state’s safety and health act, created the Preferred Worker Program while limiting other vocational assistance, increased benefits, limited the authority of the Workers’ Compensation Board, and created the office of the Ombudsman for Injured Workers. A companion bill, HB 2271, limited mental stress claims and placed on the worker the burden of proving that a claim is compensable.

Three years later, workers’ compensation costs remained high, and SAIF Corporation had canceled many small employers’ policies. These conditions provided the impetus for further reforms. During a May 1990 special session, the Legislature passed Senate Bill 1197 and other legislation. SB 1197 expanded requirements for safety committees, required that the department’s disability standards be used at claim closure and for all subsequent litigation, required that the department create a workers’ compensation claims examiner program, limited attending physicians and palliative care, allowed the use of managed care organizations, modified the Preferred Worker Program, increased benefits, created claim disposition agreements, expanded the department’s dispute resolution processes, increased Oregon OSHA staffing, created the Small Business Ombudsman, and established the Management-Labor Advisory Committee. To allow insurers more time to investigate claims, the bill increased the period for claim acceptance or denial from 60 days to 90 days. It also redefined compensability by stating that the injury must be the major contributing cause of the need for treatment. In addition, it stated that a claim was compensable only as long as the compensable condition remained the major contributing cause of the need for treatment.

Following the passage of SB 1197, workers’ compensation premium rates fell rapidly. Rates declined by more than 10 percent each year for three years after the special session. In 1994, Oregon had the 32nd highest premium rate ranking in the country.

The 1993 legislative session made minor changes to the Oregon workers’ compensation system. These included HB 2282, which addressed the regulation of employee leasing companies, and HB 2285, which dealt with Oregon’s 24-hour health plan, a pilot project that combined group health coverage and workers’ compensation medical coverage. HB 3069 amended the public records law to restrict access to claims history information in certain circumstances when the information could be used to discriminate against injured workers.

By the end of 1994, several court decisions had interpreted some of the legislative provisions. Then, in February 1995, the Oregon Supreme Court ruled in Errand v. Cascade Steel Rolling Mills that the exclusive remedy provision of workers’ compensation law applied only to compensable claims, not to denied claims. The exclusive remedy provision states that an employee injured on the job is entitled to workers’ compensation benefits but may not sue the employer for damages. Partly in response to these decisions, the 1995 Legislature passed SB 369. This bill emerged as an 80-page reform of the workers’ compensation system. It restated the legislative intent of SB 1197 by revising the definitions of compensability, disabling claims, and objective findings. It stated that the exclusive remedy provisions applied to all claims. In addition, the bill created the Worksite Redesign Program and expanded the Employer-at-Injury Program.

Several years later, the Legislature allocated funds for a study of the effects of changes in the compensability language in SB 1197 and SB 369. Legislators were interested in learning the extent to which these reforms affected the costs of the workers’ compensation system and the benefits paid to injured workers. A team of leading workers’ compensation researchers conducted the study and released their report, Final Report, Oregon Major Contributing Cause Study, in October 2000. The researchers concluded that the effects of the changes in the compensability definition could not be isolated but that the overall provisions of SB 1197 and SB 369 resulted in benefit reductions of at least 13 percent. This savings was due to the decline in the number of claims.

Reform since 1995

The most significant changes to Oregon’s workers’ compensation system since 1995 were the reforms to the PPD award system in 2003-2007. Although there have been many other important court decisions and legislative changes, the effect has been one of overall system stability. The major legislation and court decisions, including the PPD reform bills are described below.

The changes made by the 1997 and 1999 legislatures limited the department’s functions and expanded insurers’ responsibilities. The 1997 Legislature eliminated the State Advisory Council on Occupational Safety and Health. In 1999, the Legislature passed HB 2830, which required Oregon OSHA to revise its method for scheduling workplace inspections and to notify certain employers of an increased likelihood of inspection. The legislature also eliminated the department’s claims-examiner program and the department’s responsibility to establish medical utilization and treatment standards. Both of these responsibilities had been added by SB 1197. The 1999 Legislature also transferred all claim-closure responsibility from the department to insurers and self-insured employers.

For budgetary reasons, the 2001 Legislature further limited the department’s oversight. The numbers of health and safety inspectors and consultants and re-employment assistance consultants were reduced. Also, funding for the Workplace Redesign Program was eliminated. Policymakers decided the functions were not needed because of the decline in disabling claims and the availability of private-sector vocational programs.

The 2001 legislative session also saw the passage of SB 485. The bill was created partly in response to another court decision. In May 2001, the Oregon Supreme Court ruled in Smothers v. Gresham Transfer, Inc., that some of the exclusive-remedy provisions in SB 369 were unconstitutional. Workers whose claims were denied because their injuries were not the major contributing cause of the disability or need for treatment were permitted to pursue civil action against their employers. SB 485 created a process for these suits. It also revised the definitions of pre-existing conditions and stated that the employer has the burden of proof in showing that the compensable condition is not the major contributing cause of the need for treatment. Although the Legislature was concerned that the Smothers decision would have a significant impact on the costs of the system, the impact of the Smothers decision has been negligible. There have been no known cases in which workers have prevailed at trial. In 2016, the Supreme court overruled its decision in Smothers v. Gresham Transfer, Inc.

SB 485 and companion bills included other important changes. To address worker concerns, SB 485 expanded the calculation of temporary disability benefits to include the wages lost from multiple jobs, added the right of workers to submit depositions during the reconsideration process, and added provisions for some workers to request medical exams during the claim-denial appeal process. To lessen the uncertainty of the claims process, the bill clarified time limits in the claims process, reduced the time an insurer has to accept or deny a claim from 90 days to 60 days, and added the responsibility for insurers to pay for some medical services before a claim denial.

In 2003, the Legislature significantly changed the permanent partial disability award structure for workers injured after Jan. 1, 2005. The new structure in SB 757 simplified the rating system and provided larger awards to injured workers who are unable to return to work. The benefit award structure was designed to avoid increased total costs to the workers’ compensation system; this resulted in lowering the benefits to some workers who do return to work.

The Legislature revised SB 757 by enacting HB 2408 in 2005. This bill provided that when a worker is ready to return to regular work, the worker receives only impairment benefits, not work disability benefits. The law applies to claims with dates of injury on or after Jan. 1, 2006. These changes were made permanent in 2007.

SB 386, also effective Jan. 1, 2006, modified the standard for establishing or rescinding permanent total disability benefits. The bill set an earnings threshold to determine what constitutes gainful employment that is linked to the federal poverty guidelines. The bill also allows workers to appeal any notice of closure that reverses their permanent total disability benefits; workers’ benefits continue while notices of closure are appealed.

The 2005 Legislature also addressed the process for insurer-requested independent medical examinations. SB 311 required insurers to select an independent medical examination provider from a list developed by the department.

The 2007 Legislature passed HB 2756, which expanded the authority of chiropractors, podiatrists, naturopaths, and physician assistants to act as attending physicians and authorize temporary disability and manage the worker’s return to work for up to 30 days.

A streamlining measure, SB 559 (effective July 1, 2009) simplified proof of coverage for insurers and employers. It removed the requirement for guaranty contract filing, instead requiring the insurer to provide policy information to the department as proof of coverage.

Also in 2007, SB 404 allowed for payment of appeal-related costs to injured workers, and also allowed attorneys to file liens for fees out of additional compensation when the worker had signed a fee agreement and the attorney was instrumental in obtaining the outcome of the claim. SB 835 mandated an interim study of death benefits and a report to the 2009 Legislative Assembly. The result of that report was SB 110, passed in 2009, that expanded death benefits in the workers’ compensation system.

Several bills that affected health and safety also passed through the 2007 Legislature. HB 2022 mandated data collection on assaults to health care employees. HB 2222 removed specific safety committee requirements from statute that exempted certain employers and gave the director authority to write rules to require all employers to have a safety committee or hold safety meetings. HB 2259 increased the time in which a worker can file a retaliation complaint with the Oregon Bureau of Labor and Industries from 30 days to 90 days.

The 2009 Legislature passed HB 2420, which added 12 conditions, including a variety of cancers, to the existing presumption for employment-caused occupational diseases of non-volunteer firefighters who have completed five or more years of employment. Denial of the claim for any condition or impairment must be on the basis of clear and convincing medical evidence that the condition was not caused or contributed to by the firefighter’s employment. The first diagnoses by a physician must occur after July 1, 2009.

HB 2815 created the Interagency Compliance Network, charging state agencies with working to establish consistency in agency determinations relating to the classification of workers, including the classification of workers as independent contractors. Agencies sharing information should ensure that workers and employers comply with laws relating to taxation or employment, including workers’ compensation law. HB 2197 clarified the period that the medical service provider who is not qualified to be an attending physician may provide compensable medical service to an injured worker, and restored chiropractors’ ability to make impairment findings if they are serving as the attending physician at the time of claim closure.

SB 110 improved the benefits to beneficiaries when a worker is killed on the job or dies while permanently and totally disabled from a work injury. If a worker dies before his or her permanent partial disability award is fully paid, the insurer must pay the full remainder of the permanent disability benefit to the worker’s estate.

The 2009 Legislature also passed bills that affected return-to-work assistance. HB 2195 replaced certification with a registry for vocational assistance provider organizations; allowed insurers or self-insured employers to voluntarily extend the payment of temporary disability compensation to 21 months; and modified the vocational assistance dispute resolution process. HB 2705 allowed insurers and self-insured employers to forego a vocational evaluation if the worker is released for regular work but has not returned to work. HB 2197 clarified the duration of premium assessment exemption for preferred workers.

Two bills passed the 2009 Legislature that affected disputes. HB 2197 allowed the parties to resolve medical fee disputes informally without requesting an administrative review by the director. HB 3345 provided attorney fees in circumstances in which workers’ attorneys were not compensated for services; increased statutory caps on claimant attorney fees and tied an annual increase in the caps to changes in the state average weekly wage; and allowed for penalties when an insurer or self-insured employer does not respond within 14 days to a claimant request for a claim reclassification.

During the 2011 legislative session, the Legislature passed two bills affecting the medical system. HB 2093 gave DCBS the ability to take administrative action against a person or company that is actively managing the care of workers when that person or company is not certified as a managed care organization. The department can address these violations by imposing civil penalties and issuing cease-and-desist orders. The bill also provides a process for the person or company to appeal the department’s action. The second bill, HB 2743, gave podiatric physicians and surgeons the ability to serve as attending physicians without limitation.

The legislature also passed two bills affecting the dispute process. HB 2094 allows a delay of the reconsideration process for up to 45 days when both parties are actively engaged in settlement negotiations and agree to delay the process. This gives the parties more time to reach an agreement, without limiting the department’s time to complete the reconsideration process if the negotiations are not successful. SB 173 allows a worker to agree to settle unpaid medical bills related to the claimed condition as part of the disputed claim settlement process. Providers who do not receive full reimbursement under the settlement may recover amounts owing directly from the worker up to the maximum allowable under the fee schedule. SB 173 requires medical providers to accept this as payment in full; providers cannot bill the worker for any charges that exceed the workers’ compensation medical fee schedule.

The 2011 legislature passed HB 3490. This bill clarified coverage responsibility in situations when a county requests the services of another county’s volunteers or the volunteers themselves offer their services in an emergency. The bill maintained the requirement for mandatory election of coverage for the otherwise non-subject volunteers, but clarified which county must provide the coverage.

In 2013, the Legislature extended to 180 days the authority for authorized nurse practitioners to treat and authorize time-loss (wage replacement) benefits. It also allowed an injured worker enrolled in a managed care organization (MCO) to be treated by a non MCO-paneled chiropractor under specified circumstances that focus on a current patient-provider relationship.

The 2013 Legislature also clarified that workers’ compensation exclusive remedy protections, which generally prohibit an employer from being sued for work-related injuries or illnesses, did not apply to limited liability corporation members that employed an injured worker because the statute did not explicitly include those entities. It also clarified that exclusive remedy can be negated when an employer’s negligence is a substantial factor in causing the injury or illness and occurs outside of the employer’s capacity.

In 2014, the Legislature provided a means for employers to make an orderly exit from group self-insurance, by requiring a one-time vote to exit such coverage and, in doing so, limiting the future joint and several liabilities of group members. The measure also imposes higher standards for self-insured groups that choose to continue to operate, and also expands regulatory authority over groups that have decertified or will do so in the future, to ensure that workers receive benefits to which they are entitled.

In 2015, the Legislature modified the attorney fees for workers’ compensation attorneys, who are compensated only when the statute allows for a fee. The Legislature expanded the circumstances and jurisdictions in which some existing fees are awarded. The law changes included a number of modifications to existing attorney fees, increased the cap on penalty-related attorney fees, and required the Workers’ Compensation Board to biennially review all attorney fee schedules.

The Legislature made several other corrections to the law, including clarification of what is considered a timely first payment of time-loss benefits, how health benefit plans and workers’ compensation coverage interact before a claim determination is made, allowing assessments of civil penalties against service companies in limited circumstances, and allowing beneficiaries of a deceased worker the time and ability to request reconsideration of a Notice of Closure.


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