Governor John Kitzhaber

June 11, 1996

I want to thank all of you for your willingness to participate in this. I would like to take a few minutes and give you a little background on how I see this working: what I think my role is, what your role is, and some suggestions about some areas to focus.

As you know, the workers' compensation system was designed to be a contract between employers and employees. Employers would be free from countless lawsuits that would arise from charges of negligence for the illnesses and injuries associated with things that happen on the job. By the same token, employees gained the right to be compensated on a no-fault basis. This system created an essentially win/win contract between employers and employees.

Over the years I've been in the Legislature and since, the workers' compensation system has increasingly become an adversarial system marked by power politics and "zero sum" thinking in terms of premiums and benefits and protracted litigation. It has really eroded the spirit if not the letter of the win/win contract as it was originally conceived. At one point last session I felt compelled to characterize the workers' compensation system as the "Bosnia" of Oregon politics. This climate has created a landscape littered with employee corpses along the way. The people who have suffered from the process have been the employees the people who are supposed to benefit from the system.

The function of the Management Labor Advisory Committee is to provide a forum to explore issues related to the workers' compensation system. But most importantly, its function is to provide an opportunity for business, management, and labor to come together to recognize each other's legitimate interests and try to formulate consensus on how to proceed in a way that is mutually beneficial. It's based on a model that has worked very well in other states, particularly in Wisconsin. It's important we recognize that this committee is probably the last chance for this kind of forum to work here in Oregon.

If you look around the room today at our seating arrangement, this didn't happen by accident. This is how I think the system needs to work: Where you are not in separate camps or separate caucuses dealing behind closed doors but sitting with each other engaged in dialog and discussion about the real issues that are confronting the system and how best to resolve them.

No one has ever called me a "Pollyanna." This is how the system ought to work, and this is how I believe the system can work. This is a very good in concept. The question is, will it work in reality?

My experience in public life has taught me it's unlikely that people are going to agree on anything unless they can begin by agreeing to a basic set of values that guides the larger discussions. If you can agree on a set of principles, you can usually find a way to resolve issues within the context of those principles.

One example, on which I've had a great deal of experience, is the Oregon Health Plan. It was really designed by getting people to agree to seven or eight large principles, with tremendous room to argue self-interest within the concepts of those principles and values. One of the problems I see is that we've sort of wandered away from the basic values and objectives of the system, and begun to focus much more narrowly which is where I think a lot of the politics have come in.

Beginning to develop some common values and understanding of what you think the workers' compensation system ought to be is going to build the kind of collaborative process in which we can realize that the interests labor and management have in common are far greater than the areas of conflict that we have been focused on in the last few legislative sessions.

I think we all recognize that everybody is going to benefit from a system that is cost-effective, stable, reliable, and has minimal litigation, fair benefit levels, and low premiums. Without starting by coming to some kind of consensus on our foundation, it's going to be very, very difficult to pull this off.

As several of you indicated during your confirmation hearings, this committee has met with relatively little success in the past with regard to forging a consensus on workers' compensation issues.

If you, as the new committee, are unable to come to agreement and consensus, the only alternative for this system is to continue a process of power politics where a majority sometimes a slight majority of people on one side or the other make major structural changes in the system that shift dramatically from one legislative session to another. That will erode the long-term stability of Oregon's workers' compensation system, and no one will benefit.

Changes in a system such as this should have more than a two-year horizon. This is something that should have stability beyond partisan changes of control in my office or the Legislature.

Let me take a couple of minutes to tell you what I think my role is. I want to provide very visible and sustained support for the work of this committee. Toward that end, I've assigned the Department of Consumer and Business Services the role of staffing and otherwise supporting your work. I've instructed the director, Kerry Barnett, and the WCD administrator, Mary Neidig, to make themselves available to you in any reasonable capacity to support the work of your committee. And finally, my policy advisor on labor issues, Mark Gibson, will be at your disposal to stay in close touch with you and make sure I get involved whenever appropriate or whenever you feel it's necessary.

I think it's vital that the other important players also recognize the importance of your role. This includes legislators, insurance providers, and the various interest groups that are part of the workers' compensation system . It's a short and potent list. And I've had the conversation with both Irv Fletcher and Mr. Buttrick that I am willing to veto, regardless of who controls the Legislature (including my own party), any piece of legislation that makes major changes to the workers' compensation system that doesn't have sign-off from this committee.

This committee is a much better forum to resolve conflicts than the legislative assembly. There is probably, around this room, more understanding of the workers' compensation system than exists in the Oregon Legislature. It took me a decade in the Legislature before I really got a sense of what this system is about. This committee is the best place to resolve conflicts. That's my expectation, and certainly my desire.

I want to make it clear that I'm not asking you to review every little piece of workers' compensation legislation that comes through. I'm talking about reviewing the ones that have a likelihood of passing, and the ones that clearly make some fundamental changes in the system, either from the benefits side, or premium side, or structural philosophical changes in how the system works.

In terms of this committee, it's important that each of you approach the work here with energy, patience, an open mind, and a true good-faith effort to try to understand if not necessarily agree with the views of the people on the other side of the table (or in this case, sitting next to you).

You need to establish some kind of internal problem solving process that will allow you to resolve the conflicts that will inevitably come up. There is real value in establishing some protocols that require you to sit around the table and talk to each other as opposed to going off and having a caucus and coming back with a position. In my experience, that really doesn't facilitate investment, ownership, and the common pride necessary to reach consensus.

Finally, it's very important that you try to come into this with, a broad, system-wide perspective. If each of you approaches this committee as strictly representing your own, narrow interest, (without suggesting that it's not important), it's going to be hard to reach consensus. The real value here is to focus on the broad policy issues that effect the workers' compensation system rather than the technical adjustments to the system.

I know a lot of time was spent by the previous committee looking at a lot of little, technical issues. I think those are appropriately worked out through the committee process in the Legislature … not here.

Let me conclude with the areas that I believe will be most fruitful for you to focus on:

First and foremost, establish a common set of values to guide your deliberations and develop a shared vision of what you think the workers' compensation system is supposed to be. To make sure you have adequate time to do that, don't attempt to evaluate every piece of workers' compensation legislation that gets submitted, because as you know, there are a great many. Restrict yourselves to those that have a real chance of passing, and those that significantly alter the system from one perspective or another.

Second, as you know, there are several functions for the committee laid out in Chapter 656 of the Oregon Code. These include periodic review of the standards for evaluation of permanent disability, advising the director of any changes needed in the operation of programs that are funded by the workers' benefit fund, and other findings and recommendations that you deem appropriate, including the adequacy of benefits that effect system costs, and the adequacy of assessments for appropriations of administrative costs.

Third, I think you need to explore all aspects of the current workers' compensation system that are scheduled to sunset. You should set out to evaluate these issues and develop formal recommendations well before the 1999 legislative session. It seems a long way away, but those of you who have "been in the trenches" on this issue know the worst time to evaluate something is during the legislative session. Resolving these sunset issues must be your highest priority far more than minor adjustments to the current law. We need your position and recommendations sometime in the next year or two. I urge you to begin your work on this project promptly.

Fourth, it would be very fruitful to have a discussion concerning ways that future conflicts over workers' compensation can be avoided. For example, I would be interested in any recommendations you might have for a process of automatically adjusting benefit levels over time that avoids a "zero sum game" discussion of premiums versus benefits. I don't have an easy answer to that, but this is a controversial issue that needs a better approach.

And finally, I ask you to review and make recommendations on all workers' compensation legislation that reaches my desk before I make any decisions to sign or veto it.

After the next session starts, I will give you my list of issues and legislation, from which you can certainly add or subtract. But those are the issues I feel need review by this group.

I know this a pretty challenging set of tasks but I can think of few issues in the 14 years I was in the Legislature that were more divisive than this. And it has pitted against one another people who basically agree on a wide range of things in a way that has been very destructive. And so, I think we have an opportunity here. An opportunity to start over. I pledge to do all I can to work with you, invest in this to make it work, and give you the support you deserve.