A recent report from the U.S. Department of Labor (DOL) criticizes state workers compensation systems and suggests increased federal oversight may be necessary. The Big “I” opposes federal regulation of insurance, including federal regulation of state workers compensation systems.

The report contends that state workers compensation systems are failing to provide workers with adequate benefits. It further suggests a race to the bottom in state laws, citing recent legislative efforts in some states to restrict workers compensation benefits, including South Carolina’s and Tennessee’s consideration of opt-out laws.

The report says the “current situation warrants a significant change in approach” and “whether to increase the federal role in oversight of workers compensation programs, including the appointment of a new National Commission and the establishment of standards that would trigger increased federal oversight if workers compensation programs fail to meet those standards” deserves further consideration.  

The report is the DOL’s first effort in more than a decade, prompted by an October 2015 letter from 10 Democratic members of Congress. The letter questioned the adequacy of state workers compensation laws and urged the DOL to use its “expertise and authorities” to take a “renewed interest” in overseeing state workers compensation programs.

The 2015 letter also raised concerns about state workers compensation laws shifting the costs associated with occupational injuries and illnesses to social benefit systems such as Social Security and Medicaid. The DOL report agreed with this contention.

While the report suggests considering increased federal oversight, it does not outline any specific plans. However, Sen. Sherrod Brown (D-Ohio) told NPR that he will work with his colleagues on legislative options, such as possible minimum standards for workers compensation systems, to address the DOL’s findings in the next Congress.  

Jennifer Webb is Big “I” federal government affairs counsel.