Workers' comp costs business?

Companies looking for reform bill

By Mark Watson
April 6, 2004

Memphis's Coors Brewing Co. could close in five years if workers' compensation reform doesn't substantially reduce costs.

Plant manager Carolyn Hardy made that point at Monday's workers' compensation reform meeting, organized by the Memphis Regional Chamber.

The Memphis plant's 420 employees produce about 3 million barrels a year, but costs in Memphis are much higher than costs at Coors' plant in Shenandoah, Va., she said.

"I don't anticipate my plant growing any time soon, unless I can get costs down," Hardy told an audience that included Matt Kisber, state commissioner of Economic and Community Development, and James G. Neely, commissioner of Labor and Work Force Development.

"I won't tell you how much workers' compensation costs contribute to my expenses, but I know it down to the penny. Those premiums are keeping me from getting business here in Memphis. . . .

"I've got to tell you, I'm not going to be in business five years from now."

Workers' compensation reform has become a big issue among Tennessee lawmakers.

An ad hoc committee of the General Assembly has been taking testimony on the issue and may produce a bill. Gov. Phil Bredesen places a high priority on workers' compensation reform, but he has yet to submit a bill to accomplish it.

Forty-one states have caps on medicine and service fees for workers' compensation, but not Tennessee, Neely said.

All states except Tennessee and Alabama have workers' compensation systems that are based in an administrative agency, rather than the courts.

"The workers' compensation system in Tennessee is benefit-rich, and it's costing us jobs, and we can't afford that." Marc Jordan, Memphis Regional Chamber president, said Monday.

Kisber and Neely agreed on the need for reform.

Kisber said that the Dana Corp. decided to create about 1,000 new jobs in its Kentucky plant, but none in Tennessee, because of the difference in workers' compensation rates.

"There is no partisan debate about this," Kisber said.

"It's not an ideological debate. It's a debate about jobs. The goal is to make Tennessee competitive, so we can fulfill the dream we have, so we can have good jobs."

Neely said the workers' compensation premium at the Bridgestone tire plant in Tennessee costs about seven times that of its Aiken, S.C., plant, Neely said.

"They told me that if they expanded, it would be in Aiken, South Carolina," he said.

Not everyone agrees on the sort of reform needed in Tennessee.

John Summers, former executive director of the Tennessee Trial Lawyers Association, said workers compensation needs reform, but not that advocated by business interests such as the Tennessee Chamber of Commerce and Industry, which would cut benefits to employees.

Rather, what is needed is a way to expedite payments to workers, because Tennessee is among the worst in the nation, Summers said.

As a percentage of $100 of payroll, Tennessee's workers' compensation costs rank 29th nationwide and right in the middle, compared with its eight contiguous states, he said.

State Sen. Mark Norris, R-Collierville, said he is "guardedly optimistic" that workers' compensation reform will pass this year.

Norris said Lauderdale County, which he represents, lost out on a big plant to Arkansas partly because of Arkansas's lower workers' compensation premiums.