By Manuel Valdes

The Associated Press

OLYMPIA — The state Senate approved a measure Saturday that would drastically change Washington’s workers compensation system by establishing an option for lump sum settlements.

The 34-15 vote in the Senate was a significant win for the business lobby, which has been trying to move the state away from prolonged payment benefits and pensions for injured workers.

The bill now goes to the House for consideration there.

Legislation must pass both the House and Senate before it can be signed into law by Gov. Chris Gregoire.

Organized labor has steadfastly opposed settlements and will take their fight to the House, where support for business may not be as robust as in the Senate.

Meanwhile, the state House approved a package of bills that address everything from shutting down companies during investigations to streamlining appeals for cited companies, — but none included a settlement option.

The votes set up a political fight among familiar lines for the rest of the session.

Rebecca Johnson, of the Washington Labor Council, said labor is against a settlement option “because it turns a reliable safety net into a lottery” where access to lawyers plays a key role.

Most of the bills approved by the House on Saturday were approved with Republican support, including a Senate bill creating a network of medical providers for injured workers.

The medical providers bill now heads to Gregoire’s desk.

House lawmakers also approved a proposal that subsidizes 50 percent of a recovering worker’s wages for more than two months to encourage a return to the job — a similar proposal was a provision in the Senate bill.

‘Improve efficiency’

Other bills approved by the House included stricter accident prevention rules and new oversight measures for employers.

House leadership argued that the changes in their package will save money to the system by getting workers healthier faster and helping bring down premiums.

“None of these pieces reduce benefits,” said Rep. Cary Condotta, R-East Wenatchee. “They simply improve efficiency of system. What we’re trying to do is get people back to work.”

This year, workers compensation has taken a central role in the legislative session because the system is bleeding money.

Gregoire, the head of the state Department of Labor and Industries, and the state auditor have said the system was headed toward bankruptcy.

The auditor’s office said in December that the state’s fund for workers compensation had a 95 percent chance of becoming insolvent in the next five years.

The system had about $499 million in reserves as of Dec. 31.

That figure represents the medical fund of the system, which stands at nearly $709 million; the liability fund that is in the red for $275 million; and the pension fund that currently stands at $65 million.

Workers compensation is a state-provided insurance system in which businesses pay premiums.

Businesses, usually bigger companies, can opt to self-insure.

If a worker is injured on the job, they can file claims for workers compensation and receive money while they heal.

The state funds the system from the payroll taxes that businesses pay and investments handled by the state.

The system tanked, the auditor’s report said, because of less money coming from businesses due to the recession and the drop in returns from investments, also because of the economic downturn.

Opponents of the Senate bill argued that as the stock market rebounds, so will the reserves of the system.

“We have no projections. No predictions of savings,” said Sen. Karen Keiser, D-Kent.

“We need to slow down. There’s no solvency crisis. We need to consider what we’re turning on its head.”

Opponents of the measure also raised concerns about the cost of the proposed bill and medical privacy.

The major expenses of the system came from only 8 percent of all claims, which involve workers who are receiving benefits for a prolonged period of time or have lifetime pensions.

That section of workers represents 85 percent of the compensation costs, according to the state labor department that manages workers compensation.

Businesses have long argued that the premiums they pay to the system are too high.

“We need to take this step to bring sustainability to our workers comp system,” said Janea Holmquist Newbry of Moses Lake, one of the Senate GOP’s key negotiators.

The measure approved Saturday was a deal worked out between Senate Republicans and Democrats, amending the governor’s bill to include the option of a voluntary settlement in case of an injury at the workplace.

Supporters said most states have such an option.

Gregoire’s proposal initially had a settlement option that would only apply for workers over 55 years of age.

Under the proposal, an injured worker who chooses a settlement can do so with a lawyer, or be consulted by a state settlement officer.

There’s a 30-day period after settlement negotiation when a worker can change their decision.

“This is a balanced bill that is good for workers and employers alike,” said Association of Washington Business President Don Brunell in a statement.

“Costs continue to go up, yet injured worker claims are actually down, and our workers’ compensation system is on the verge of collapse.”

Not included in the Senate bill were any provisions narrowing the definition of occupational diseases, which were also part of their priority list this session.