In an overwhelming victory for business, the D.C. City Council voted 10 to 2 last night to approve a bill that would substantially cut benefits for workers with job-related injuries, and thereby reduce insurance costs to their employers.
The vote last night was preliminary, with final action scheduled within two weeks. The clear majority last night indicated the legislation would have no difficulty in the final vote.
The only nay votes recorded on the bill offered by council member Willie J. Hardy (D-Ward 7) were cast by Hilda Mason (Statehood-At Large) and Wilhelmina Rolark (D-Ward 8).
John Ray (D-At Large) abstained from voting.
Mayor Marion Barry endorsed the bill Monday after Hardy accepted 34 amendments the mayor had proposed. All of the amendments passed last night.
In little more than a year's time, workers compensation has emerged as the No. 1, high stakes business issue in the city, even surpassing the acrimonious struggle over a proposed tax on gross business receipt in 1976.
The bill passed would:
Roll back the maximum payment to an injured worker to $396 a week from $426, and freeze it there for about five years.
Limit any benefit to 80 percent of an injured worker's "net spendable income" to provide an incentive to return to work.
Shift the burden of proof that an injury occurred. This would give business greater opportunity to challenge suspected unwarranted claims.
Limit the annual cost-of-living adjustment of benefits to 5 percent, well below recent inflation rates and a laborbacked ceiling of 9 percent.
Council members swept aside, in a series of 10-to-3 and 9-to-4 votes, amendments that would have lessened the impact of the Hardy bill.
"We were railroaded," said attorney Joseph H. Koonz, who has been retained by the Greater Washington Central Labor Council to challenge the bill.
"The City Council was shown a callous disregard for the workers of the District of Columbia," said Robert E. Petersen, labor council president. He said his council would challenge the law as enacted in court and in Congress until the City Council "sees the error of its ways."
Speaking for the Greater Washington Board of Trade, whose lobbyists drafted much of Hardy's original proposal, Roger L. Blunt said he was "heartened" by the council action.
"This is a recognition that the city must come to grips with severe problems that threaten to tear it apart," Blunt said.
Security for the 8 p.m. session was tighter than it has been in recent memory. More than 60 D.C. policemen were stationed in and around the District Building to cope with more than 500 union workers and businessmen who made a showing. There were no disturbances.
Since 1928, D.C. businesses have been required by law to carry private insurance against worker injuries. Premiums paid by District of Columbia employers have far outrun those in all but one state -- Alaska. The premium bill to D.C. businesses is projected at $140 million this year, up 700 percent since 1972 when the bill was about $20 million.
The reasons for this explosion in insurance costs -- which are passed on to consumers in the cost of goods and services -- are varied. The greater single factor appears to be the Congress which liberalized benefits in 1972 and adjusted them to rise with inflation.
The maximum disability payment in 1972 was two-thirds of salary -- just as it is today -- but in practice, no payment was greater than a statutory ceiling of $70 a week. Congress changed the ceiling to an amount equal to double the national average weekly wage. This year that amount is $426 a week.
More troublesome to businessmen has been the fact that insurance rates in neighboring Maryland and Virginia often are two to three times lower than those in Washington, putting pressure on companies to relocate in order to be more competitive with suburban firms.
Out-of-control costs in the system cannot all be laid to Congress. Experts have pointed out that inflation in hospital costs, drugs and physicians' fees have contributed to bigger bills for injury claims.
(The number of injuries has remained steady.)
Moreover, insurances rates are tied directly to the size of payrolls so that, as wages increase, insurance bills go up -- regardless of injuries.
The primary complaint from organized labor forces bitterly opposing Hardy's bill has been that no thorough and impartial study has been conducted to determine whether insurance companies have charged equitable rates. The mayor reportedly has countered that his insurance commissioner, James R. Montgomery, has analyzed the rates and found the costs to be in line.
The tension leading up to last night's vote was fierce. Late Sunday night, metropolitan police set up an around-the-clock detail at Hardy's home on Benning Road SE "because of a very controversial bill introduced by her involving workmen's compensation," a confidential report said. Police public information officials denied any special detail was set up and would say only that a foot patrol was extended to pass by Hardy's home occasionally.
A key obstacle to the District of Columbia wresting control of workers' compensation from the U.S. Department of Labor has been this question: can City Council effectively repeal an act of Congress that placed control with federal officials in 1928?
The solicitor of the U.S. Labor Department says "No" and James E. Lemert, acting deputy corporation counsel, gave the same answer in a February opinion. Now his boss, Corporation Counsel Judith Rogers, reportedly has made a narrow finding that the D.C. government can proceed with its own system.