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Charlotte Amalie
Friday, December 9, 2022
HomeNewsArchivesUndercurrents: Waiting for the Dough

Undercurrents: Waiting for the Dough

A regular Source feature, Undercurrents slips below the surface of Virgin Islands daily routines and assumptions to explore in greater depth the beauty, the mystery, the murky and the disregarded familiar. It is our bid to get to know the community more deeply.

Back in March, “Mary’s” husband had an accident on his job. He needed surgery and was unable to work for months. The couple contacted the Workman’s Compensation office at the Labor Department and got good news. After a review of the case, they were told that the husband’s medical bills would be paid and he also would receive a check covering some lost wages.

The people at Workman’s Comp were very nice, Mary said. But many weeks passed and there was no check. So she called the woman she had spoken with earlier.

“She said, ‘Yes, yes we have the check, but there’s no money in the account.’ I said, ‘You must be joking.’”

But it’s not a joke. It’s become standard operating procedure and something the staff at Workman’s Comp has had to deal with for a long time. They review and certify claims, send a request for money to pay them, and then wait for notification that the government has enough money in the fund to actually make the payments.

The delay can be days or weeks, depending on the current cash flow situation of the government, according to Finance Commissioner Angel Dawson. But people do eventually get paid. (Mary’s husband did.)

Workman’s Comp is insurance. Employers – including the local government – pay into the fund. Employees injured on the job make claims that are paid from the fund.

So it’s a revolving fund.

“Well, technically it is,” Dawson said, adding that the reality is, “We’re paying out more than we’re taking in.”

He said the government collects a little more than $7 million a year into the fund, but processes claims that total $10 to $12 million annually.

It’s been falling behind for years, Dawson said, and now the cumulative deficit in Workman’s Comp stands at $21.8 million, or about two years’ worth of normal claims.

One reason for the gap is that the system is grossly underfunded.

Employers pay in on a sliding scale according to what employees earn, so the amount varies from person to person and company to company. But the base is set on an average yearly salary of just $8,424, about half the minimum wage. The rate hasn’t been increased since sometime in the 1980s, Dawson said.

Compounding the shortfall is the fact that some employers don’t pay into the fund, said Budget Director Debra Gottlieb. “It’s the law,” she said, but sometimes the government doesn’t catch delinquencies until an employee applies for compensation which prompts a review of the records.

“There’s no such thing as a free benefit. These things have to be paid for,” Gottlieb said. “It’s part of the cost of doing business.”

The government itself is current in its contributions, according to Dawson. Gottlieb conceded that “It’s been a problem in the past,” but said the government’s record is better than the private sector’s.

Gottlieb and Dawson cited a third factor straining the fund: abuse of the system by people collecting benefits when they are actually perfectly fit to be working.

Assistant Labor Commissioner Richard Evangelista, who has oversight for Workman’s Comp, said such fraud does occur occasionally, but that “it’s not a major problem.” It’s still something we really need to work on curbing, he added.

The government already addresses the problem of businesses that fail to pay into the system until an employee reports an injury to Workman’s Comp. Evangelista said such employers are required to pay the bill for the benefits and are accessed an additional 30 percent as a penalty.

As for amending the rate at which premiums are calculated, Evangelista said, “We have been preparing legislation to address that.” His recommendation is to increase it from $8,424 to $15,000 so it will be in line with the minimum wage rate of $7.25 per hour.

Meanwhile Labor has been working with healthcare providers for discounts. Currently medical payments are capped at $75,000, Evangelista said, with the exception being for cases in which the required medical services are not available in the territory and the patient must travel off-island for care. In such cases, benefits are capped at $200,000.

Evangelista said sometimes claimants think his office has control over how much money they receive. He stressed that it doesn’t make medical decisions; it just processes claims.

“We’ve known for a while the (Workman’s Comp) program needs restructuring,” Gottlieb said. The effort is under way and involves multiple government agencies.

“It has to be a comprehensive approach,” Dawson said.

The system impacts all taxpayers indirectly, and about 1,000 residents directly. Of course the number of beneficiaries varies, but Evangelista cited last fiscal year’s figure as representative when there were 1,127 job-related injury reports.

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