There has been no shortage of events from various sources this year observing the 50th anniversary of the Report of the National Commission on State Workmen’s Compensation Laws. It remains elevated among the many reports on state workers’ compensation systems that have been issued by the federal government and other public and private sources in the years subsequent to its publication. Perhaps this is in large part due to lack of clarity of what workers’ compensation is supposed to be in the 21st century and where it fits within an increasingly complex employment, healthcare and technology environment.
It is simply not enough to call workers’ compensation a social benefit program of enduring duration. Workers’ compensation is a multibillion-dollar “industry” where those who provide innovation, services, and support have as much say on public policy (and operational) decisions as the so-called true stakeholders in the system. But, particularly over the past decade, there has been little policy discussion about the way in which benefits are delivered. Instead, we are locked into the eternal conflict of how much, when and who gets to decide.
Nearly 45 years after the report was delivered, the U.S. Department of Labor (DOL) issued its own report: Does the Workers’ Compensation System Fulfill its Obligations to Injured Workers? (2016). As you might imagine from the title, the answer was “no”:
“The political focus on reducing costs for employers grew, and, by the early 1990s, benefits came under attack. Various new legislative changes were championed as ‘reforms.’ It was a race to the bottom: as each state compared its statute with those of neighboring states, found areas of greater generosity and moved to change those provisions of its law. The political conversation shifted, and the ability of workers and their allies to hold back this tide waned as union membership and strength declined.
"The resulting legislation has, in many states, diminished this already weak safety net for workers. Changes have focused on worker behavior and ‘fraud,’ rules governing eligibility that result in exclusion of claims from the programs, restrictions on provision of medical care and substantial limitations on benefits for injured workers. Although not every state has followed each trend, the trend lines are clear: The number of states that cut access to benefits significantly outnumbers those that have increased or maintained benefit availability in the period 2002 to 2014.” (p. 13)
This assessment was echoed in a number of publications during the same period. (See Rutgers University Law Review, Volume 69, Spring 2017, Issue 3. See also the American Public Health Association, The Critical Need to Reform Workers' Compensation.) The DOL report builds on a prior DOL report from the Occupational Safety and Health Administration (OSHA): Adding inequality to injury: The costs of failing to protect workers on the job (2015).
On July 11 of this year, the DOL hosted a panel discussion titled, “50 Years after the National Commission: Is the Workers’ Compensation System Serving Injured Workers?” The department said the event was an opportunity to highlight the question of whether the workers’ compensation system is actually providing economic security for injured workers and their families, especially for the most vulnerable workers.
In response to the question, Office of Workers’ Compensation Programs Director Chris Godfrey stated:
“In the 50 years after the National Commission, we’ve seen a period of initial expansion, then a race to the bottom in most state workers’ compensation systems, [ … ] Millions of working people injured in the workplace are at great risk of falling into poverty because of the failure of state workers’ compensation systems to provide them with adequate benefits.”
Things Have Changed
However, these assessments miss the mark. A more important examination would be to integrate these comments with the work being done by researchers and payers of other disability and healthcare systems. It would also help if people would begin to appreciate how the workers’ compensation system responds based on type of injury and the size of the employer.
We are indeed living in a tale of multiple systems. Making broad-based conclusions without regard to reducing barriers to allow employers to manage workers’ compensation liabilities as part of an integrated employee benefit program, including Employee Retirement Income Security Act of 1974 (ERISA) and voluntary benefit plans, sticks stakeholders in a 1970s paradigm from which they cannot emerge. In other words, how does workers’ compensation fit in a broader employer benefit structure?
This is not a question that could have been answered in the early 20th century. It is a question that perhaps was worth raising in 1972, but the report predates ERISA.
This is also not a question about “opt-out” plans. The point is coordinating plans, not replacing one with another. The DOL has, however, continued its invectives against these proposals, effectively helping to isolate that alleged vehicle for the race to the bottom to a parking lot in Texas. As noted in their 2016 polemic:
“Some state legislatures continue to attempt to reduce workers’ compensation costs, and proposals for statutory amendments that restrict workers’ benefits or access have become increasingly bold. Notably, there have been legislative efforts to restrict benefits and increase employer control over benefits and claim processing, most dramatically exemplified by the opt-out legislation enacted, and recently struck down by the state supreme court, in Oklahoma and considered in Tennessee and South Carolina, among other states.”
Sometimes, however, employers and workers may actually benefit from disrupting the workers’ compensation status quo. Consider laws in Alabama and Colorado that have labor and management support to address the issues of cancer and heart disease among firefighters. In the case of Colorado, it comes with the tacit acknowledgement that the device of choice – presumptions – to force more claims into the workers’ compensation system was not worth the friction it created:
“Nine years of experience has shown that the rebuttable presumption established by House Bill 07-1008 has produced no demonstrable benefit to firefighters but has led to significantly greater costs to employers of firefighters.” Colorado Legislature, Senate Bill 214 (2017)
The result of this legislation was the establishment of the Colorado Firefighter Heart and Cancer Benefits Trust. As noted by the Internal Association of Firefighters (IAFF):
“The Trust was established with input from the CPFF (Colorado Professional Fire Fighters), the Colorado State Fire Chiefs and the Colorado State Division of Insurance and representatives from local state and special district fire agencies. Each entity, including the CPFF, has a representative on a board of directors managing the Trust, which is funded by contributions by state and local employers. However, fire fighters who choose to join the Trust are no longer part of the state workers’ compensation program.
"CPFF President Mike Frainier, who sits on the Trust’s board, says the Trust has been hugely successful and popular among Colorado fire fighters, providing essential benefits in a more efficient manner than with the state’s cumbersome workers’ compensation process.”
As noted by the Trust:
“In 2007, statutory changes in Colorado presumed cancer to be a workers’ compensation issue for firefighters. The intent was to ensure quality care for the state’s fire service professionals. But for firefighters affected by cancer, this often meant long legal battles and invasive medical inquiries to obtain benefits.”
Yes, it is an “alternative” program. No, it is not one of the vehicles participating in the “race to the bottom.”
In California, so-called alternative dispute resolution (ADR) programs can allow labor and management to, “… negotiate any aspect of the delivery of medical benefits and the delivery of disability compensation to employees of the employer or group of employers that are eligible for group health benefits and nonoccupational disability benefits through their employer.” [Labor Code § 3201.7(b)(2)]
Should not the DOL and others encourage this type of behavior and not continue a decades-long diatribe that has as its essence trying to figure out how workers’ compensation can alleviate financial stress on Medicare, Social Security and healthcare plans under the Affordable Care Act?
See also: The Future Isn’t What It Used to Be
Return to Work
The report also predates, by almost two decades, the Americans With Disabilities Act (ADA) (1990) and was published over 30 years prior to the Americans with Disabilities Act Amendments Act of 2008 (ADAAA). These subsequent acts could reasonably call into question the report’s unqualified endorsement of second injury funds – or, as it is known in California, the Subsequent Injury Benefits Trust Fund (SIBTF).
Then there are the various initiatives trying to place more people in the workforce. Per the DOL – the same DOL characterizing workers’ compensation reforms over the past few decades as being a “race to the bottom” – the most recent of this was when:
"The Workforce Innovation and Opportunity Act (WIOA) was signed into law on July 22, 2014. WIOA is designed to help job seekers access employment, education, training and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy. Congress passed the Act with a wide bipartisan majority; it is the first legislative reform of the public workforce system since 1998.”
Why is it that state workers’ compensation systems too often fail to link the reemployment needs of injured workers to broader programs intended to give people the opportunity to reenter the workforce? This is not about accommodating disabled workers; it is about workers’ compensation systems taking so long to resolve cases that employers cannot always afford to retain workers – a problem particularly acute for small employers.
Are we really saying, citing California as an example, that the $73 million spent on the Supplemental Job Displacement Benefit (SJDB) is money well spent? And in deference to the authors of the report, while vocational rehabilitation is very important in an effective workers’ compensation system, it is an obligation that needs to be recast, not reinstated. California’s experience culminating in Assembly Bill 227 (Vargas) in 2003 suggests that, when left to its own devices, rehabilitation becomes something less than an optimal part of the Grand Bargain, at least for employers and workers.
There are billions of dollars of public and private capital devoted to lessening the economic burden of those who have suffered a disabling injury. Some of that capital is consigned to occupational injury or illness (workers’ compensation). Some of it is used for public programs such as Social Security Disability Income (SSDI). And more is also devoted to employer-sponsored and voluntary ERISA plans covering short- and long-term disability, supplemental health care, cancer payments and other programs where money is provided directly to individuals. Then there is health insurance.
Each of these programs is administered differently, financed differently and regulated differently. In the case of workers’ compensation, this benefit program is unique because it imposes a non-transferable obligation on the employer at injury for lifetime benefits.
So, before talking about a “race to the bottom.” maybe we should create an environment where each of these benefit vehicles can at least run on the same course.