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Insurance Groups Accuse OSHA of Overstepping Its Boundaries

By Sky Barnhart

No one would call the Occupational Safety and Health Administration (OSHA) a wildly popular entity, but lately, it has been making its presence even more unwelcome. OSHA's recent proposed ergonomic standard is on the table in a series of public hearings in Washington, D.C.; Chicago; and Portland, Ore. The hearings, which commenced on March 13, are scheduled to stretch out over the next several weeks, involving the testimony of approximately 1,100 individuals.

OSHA's goal in setting the ergonomics standard would be to help American workers to prevent back injuries, carpal tunnel syndrome, and other work-related musculoskeletal disorders (MSDs). The standard would cover 27 million workers at 1.9 million general industry sites, potentially preventing an average of 300,000 injuries and generating $9 billion in savings each year, according to OSHA.

The insurance industry has a different view on the standards, which would obligate employers to pay for medical treatment and replace up to 100 percent of wages for an alleged work injury.

"Primarily we're opposed to the proposal because we feel that OSHA does not have the statutory authority to do what they're doing...they're usurping the work comp system," said Arlene Ryndak, workers' compensation specialist for the National Association of Independent Insurers (NAII). "The work comp systems have been around for almost 90 years, and there have been bumps along the road, but most states have addressed the problems [through] the reforms of the '90s, and they're trying to get their systems well balanced.

"What this would do would be to upset the balance that a lot of state legislatures have tried to keep in check. Basically, you are taking a worker who may or may not have an MSD and putting them into a separate class of workers. Those workers have to be sent to a healthcare professional who doesn't have to really examine causation...all of a sudden that worker could be out for six months with 100 percent pay."

MSDs are one of the most serious occupational health hazards in the U.S., costing the economy $45-$60 billion a year, according to Secretary of Labor Alexis M. Herman. OSHA states that one-third of all the workers' comp dollars paid out in the U.S.Ðroughly $15-$18 billion dollars a yearÐgo to pay the costs of workers hurt by MSDs.

Herman called the OSHA hearings "an opportunity for employers, workers and all who are concerned with the health and well-being of our nation's workforce to come forward and tell us how to make the standard we have proposed better and stronger."

The NAII claims the standard will increase costs by an untold amount. "It's common sense that it would increase the amount of claimsÐin a system where there aren't checks and balances, and there isn't a road map to show causation, there is going to be an increase in claims," Ryndak said. "We're not opposed to paying claims that are legitimate, but we're opposed to a system that just assumes that anything is work-related when it may not be."

The Independent Insurance Agents of America (IIAA) is in agreement. "IIAA is greatly troubled that OSHA's proposed medical care and wage placement requirements directly overlap existing state-based systems and present a significant and unwarranted intrusion into what has heretofore been a successful social insurance program," the group stated in its written comments submitted to OSHA. IIAA said the increase in costs for employers to implement the ergonomic standard could actually be as much as 10 times OSHA's $4.2-billion estimate.

Among those also filing comments in opposition were the Alliance of American Insurers, the American Insurance Association, American International Group and Liberty Mutual Insurance Group.

Other groups, such as the American Society of Safety Engineers (ASSE), support the need for such standards but describe OSHA's proposal as "cumbersome, confusing and unclear." ASSE President Frank H. Perry proposed in a letter to OSHA that the proposal shift its focus to the overall safety and health issue and not allow compliance with ergonomics to become "the primary driver."

"We have concerns about the apparent social engineering agenda contained in the current OSHA proposal which overshadows the prevention aspects of the standard," Perry stated.

Meanwhile, it seems OSHA can do some things right, even in the eyes of the NAII. OSHA's recent directive on the inspection of home offices instructs compliance personnel to only inspect home-based worksites when they receive a complaint that indicates a violation of health or safety standards that threatens physical harm.

Ryndak called the Directive a "common sense approach [that] will allow the evolution to continue without complicating the issue with oppressive safety and health regulations that could impact employers, workers and ultimately workers' compensation companies."

The proposed standard hearings will continue through May 12, at which point OSHA will evaluate all the comments and testimony, and come up with its case for a final proposal. Although no concrete timeline is in place, Ryndak said they expect a final version sometime between Fall 2000 and January 2001.

"The word on the street is that they're going to want to push something through before Clinton gets out of office," she said. "There's nothing at this point that would stop OSHA from finalizing and publishing a final regulation. The question isÐwhat will it look like? From our point of view, we want the whole medical management portion taken out, particularly the worker remover protection which says the employer has to pay for up to six months."

If these requests aren't met, Ryndak said the industry will seriously consider taking action. "There are several organizations who are planning to file suit once this is finalized," Ryndak said. "The battle will not be over just because it's a published regulation...Our point is that Congress never intended for OSHA to mess with the state work comp system."