If the litmus test for a compromise is it makes no one happy, then it’s mission accomplished for a bill to restructure Maine’s workers’ compensation laws recently signed by Gov. Paul LePage.

Labor advocates don’t like it, arguing the bill will hurt injured workers and only benefit insurance companies. And many in the business community don’t like it because the measures do not go far enough.

The new law does several things, most notably setting a 10-year cap on benefits for partially injured, permanently impaired workers. Previously, the threshold was established by a two-year review of cases that allowed 25 percent of all partial injury claims to be guaranteed lifetime benefits, while the remaining 75 percent were subject to a 10-year cap.

Paul Sighinolfi, executive director of the Maine Workers’ Compensation Board, says the previous system created too much uncertainty for businesses, since in some years injured workers would be eligible for lifetime benefits, even though they might not need them.

“In some years, 25 percent may not need lifetime benefits, but they would be entitled to them nonetheless. In other years, maybe there’s greater than 25 percent who need lifetime benefits given the severity of the injuries,” says Sighinolfi, who drafted LD 1913. “So, this arbitrary cap did not make sense to me.”

The new law establishes a process where injured workers with 18 percent impairment can continue to receive benefits beyond the 10-year period, provided they can only earn less than 65 percent of their pre-injury wages in 12 months of the preceding two years of losing benefits. Also, the employee’s actual earnings must be in line with that employee’s earning potential, as determined by an independent medical examiner — a rule that Sighinolfi says encourages people to re-enter the work force and encourages vocational rehabilitation.

“Under the old Section 213, there was no incentive to return to work,” he says. “We have incentivized returning to work … That’s a significant change, quite frankly. I think it’s good for injured workers to get back into the work force,” he says.

But Karen Bilodeau, a workers’ comp lawyer at Topsham-based McTeague Higbee who represents injured workers, says the new rules will further hurt injured workers.

“At this point, I think it’s going to have a very negative effect” on injured workers, she says. “The major impact is going to be on individuals who have suffered significant injuries but may not qualify for lifetime benefits, and their benefits will be capped essentially at 10 years.”

While benefits may be extended under certain circumstances, Bilodeau says provisions that require an independent determination about an employee’s earning potential will be difficult to ascertain. Some back injuries, for example, may only be considered a 5 percent or 10 percent impairment, she says, but can significantly affect a person’s ability to work.

Bilodeau says she expects the law will only increase litigation since it re-establishes the Appellate Division of the workers’ comp board, giving injured workers an appeal-by-right rather than making appeals through the state Law Court. Sighinolfi says the Law Court only hears about 5 percent of all workers’ comp appeals.

Bilodeau says the law is “a one-sided change for the insurance companies’ benefit.” An employer’s attorney fees are paid by insurers, who will likely appeal any ruling in the worker’s favor, she says, noting that employees must pay for their own lawyers. The new law also allows insurance companies to discontinue benefits during an appeal process.

“That’s going to have a devastating effect financially on injured workers who are already suffering,” says Bilodeau. “I think it’s definitely going to increase the costs for businesses.”

Peter Gore, vice president of government relations for the Maine State Chamber of Commerce, says that is not true. However, Gore stopped short of celebrating the law, saying business leaders are disappointed, but for different reasons.

The original bill had a higher threshold for an injured worker to be eligible for continued benefits after 10 years, as well as a lower percentage for the pre-injury wage. Gore says legislators changed the injury threshold from 25 percent of bodily impairment to 18 percent, and increased the income threshold from 50 percent of pre-injury salary to 65 percent in order to pass the bill.

“While it does make some changes to the law, I think there’s a disappointment on behalf of the business community that what the Legislature ultimately passed didn’t really go as far as we hoped,” says Gore, who was part of a stakeholder group that examined this issue over the fall and winter. “It was frustrating … an opportunity lost.”

The bill also increases the maximum benefit from 90 percent to 100 percent of the state’s average weekly wage, which varies, or $441 — whichever is higher — for injuries that occur after Jan. 1, 2013. It also changes the benefit calculation for total incapacity from 80 percent of an employee’s net earnings to two-thirds of an employee’s gross wages, provided it doesn’t exceed the maximum benefit. The law also reduces the amount of time an employee has to report a workplace injury from 90 days to 30 days. It also sets a two-year statute of limitations from the date of the injury.

Gore, however, does credit the law for creating more certainty for businesses and making Maine less of an outlier in terms of workers’ comp. Before the law passed, Maine was the only state that doled out lifetime benefits based on an arbitrary 25 percent threshold, he says.

Gore says it’s unclear what impact the bill, which takes effect on Jan. 1, 2013, will have on business costs. Sighinolfi says the bill is cost neutral, but Bilodeau says it will actually increase costs.

Laura Backus Hall, the northeast state relations executive for the National Council on Compensation Insurance, which manages the largest database of workers’ compensation information and recommends rates, says NCCI is reviewing the new law and will present its 2013 rate recommendation on Oct. 26 at the Portland Club in Falmouth.

Randy Billings, Mainebiz senior writer, can be reached at rbillings@mainebiz.biz.