James F. Mahoney, Attorney

July 2012

Affordable Healthcare, Trucking and Workers' Comp

What was once a worry for smaller transport businesses – that the new health care law would increase their costs – may actually turn out to be a vehicle for savings

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Regardless of which political team wins in November – the Blues or the Reds (not the Mets or the dreaded Yankees) – it is very probable that some form of ObamaCare or its predecessor, RomneyCare, will be with us in the upcoming years.

How will the law impact transportation services, particularly the trucking industry’s reliance on owner-operators? Will it favor utilizing more OO’s? What about increasing outsourcing services and the creation of business opportunities to leverage the changes?

Most of that heady talk is beyond my pay scale, but here’s my view of the impact of the Affordable Care Act (ACA) on our industry arising from the recent Supreme Court decision upholding its constitutionality. Then we can segue into a brief view of what the ACA will mean to your Workers’ Comp premiums and losses.

Potential Savings

What was once a worry for smaller transport businesses – that the new health care law would increase their costs – may actually turn out to be a vehicle for companies, large and small, to opt into a route that will save thousands of dollars each year.

By using more OO's rather than company drivers in their fleet, companies can stay under the 50-employee trigger. Larger companies may decide to divide and multiply into businesses with fewer than 50 employees, supplementing their operations with owner-operators.

But there is no action without that potential reaction.

Assuming there’s an increase in fostering the use of owner-operators, we can expect to see significantly stepped-up enforcement actions by the IRS and, perhaps, by state agencies empowered to enforce the new laws.

Worker misclassification reviews, which have increased recently, may become even more common, with the IRS looking to widen the net on tax (I mean, "penalty") revenues.

And what is your first line of defense to worker misclassification claims involving owner-operators? That’s right, a strong ICA and a business plan that follows the law on just who is an independent contractor and who is an employee.

Bear in mind, the ACA creates some new civil rights, which can be enforced by class action lawsuits.

Next, the ACA adds “whistleblower” protection for “employees” who report to their employer, the federal government or a state attorney general any violation (or act or omission that the employee reasonably believes to be a violation) of the ACA.

You have been warned.

ACA and Workers' Comp

A few thoughts on ACA affecting Workers’ Compensation in your business.

Empirical evidence of the effects of RomneyCare in Massachusetts since its implementation in 2006 shows the following:

  • a lower rate of recorded Comp injuries;

  • a 10% decline in the use of emergency rooms;

  • some tendency to avoid filing a Comp claim and instead having the treatment rendered through health insurance because of perceived negative job repercussions or perception that a questionable Comp injury might be disputed; and

  • healthcare expansion across the population providing a substitute for Workers’ Comp.

RomneyCare seems to have reduced Workers’ Comp costs in the Bay State. Anyone for universal healthcare?