Adding Insult to Injury
Riordan, Teresa
Adding Insult to Injury by Teresa Riordan In 1978 a fraternal organization of about 250 Florida lawyers sat down in a Miami country club to dine, to the accompaniment of a 12-piece...
...In a survey of 100 compensation cases several years ago, the Baltimore Sun found that 80 percent of the claimants went to one of just two physicians, Allan H. Macht and Eli M. Lippman...
...In addition, most states have arbitrary statutes of limitation that stipulate a worker must file for compensation within two years of exposure to a hazardous substance, in effect precluding awards for occupational diseases like asbestosis or silicosis, which have latency periods of up to 30 years...
...So the insurance company—not the Social Security Administration—decreased its payments to Turner by $24.27...
...because to Continue his lifestyle of velvet-]tried offices and satin-lined suits, Bells can onIi al Hid to take on cases he knows...
...But these benefits aren't overly generous to begin with (generally two-thirds of the salary at time of injury, though this is tax-free) on the assumption that we don't want him to get too comfortable being on the dole...
...Let's look first at the black lung program, which was passed in 1969 as a temporary measure to care for coal workers with pneumoconiosis who were being left out of workers' compensation coverage...
...Lump-sum settlements are based on the wellmeaning theory that even after the worker recovers from an injury, he may sustain a permanent disability for which he should be monetarily compensated...
...The carrier sends a claimant to an incredibly conservative doctor...
...Lawyers—workers' compensation lawyers to be exact...
...insurance industry isn't bearing the costs it.should becomes obvious when you compare it to the automobile insurance industry...
...Seven years later in 1973 his widow applied for benefits because, she stated, her husband had suffered from "shortness of breath" and had worked 12 years as a miner...
...His lump-sum settlement is based on an awards "schedule:' which assigns a dollar amount to each body part or type of impairment...
...That the compensation...
...when an insurer contests a case he isn't obligated to pay the worker anything until the claim is resolved...
...As long as those 99 card-carrying, voting members are satisfied, the union leader has little impetus or time to explore ways to take care of the guy who's really in trouble and who, incidentally, probably no longer has voting privileges...
...When it looked around a few years later, it discovered that the two programs overlapped each other...
...Rubenstein and Schmittinger, as you might have guessed, make their living from workers' compensation cases:The pair did good work—the bill was defeated in June 1982—but they didn't do it all alone...
...In exchange, workers would give up their right to sue employers for negligence...
...It comes as no surprise that claims have more than tripled since 1972 and cost $263 million last year...
...According to 1975 Labor Department figures (again, the most recent national figure available because nobody bothers to keep track) the average total compensation for a worker who had been permanently disabled by an accident was only $23,352...
...It ranks 11th in the nation in the level of benefits paid to disabled workers, but 39th in the cost of the insurance to business...
...But the problem with the Miller bill is the problem of limiting reform to, say, state-legislated wage-loss programs like that of Florida: it's simply not comprehensive...
...Many such disabled workers drift into the fourth dimension: They can't collect workers' comp.because their claims are in limbo...
...safer cars and for such safety movements as airbags and better bumpers...
...Both, however, have mushroomed far beyond their original intent because of amendments passed over the years...
...The doctors are selected not for whether they know an BT...
...That's right, most claims are contested after, it would seem, the system has met its obligation to the injured worker...
...he can winI or the extent of a worker's injury or his need for compensation...
...Kelvin Bells, the preeminent personal injury lawyer (once called Cite King of forts be Life magazines, offer, vet another reason for the explosion ill the number of product liability suits: "In common court you can Let a lot more money than in workers' compensation," he says...
...Aren't they pushing for reform...
...recommendations...
...In some states, a carrier maybe forbidden to take on further compensation business, but.this also is rare...
...Insurance companies, doctors, and unscrupulous workers with trivial injuries have forged the system into a highly profitable industry—highly profitable, that is, for everybody but the seriously injured worker, the party that compensation was designed to protect...
...Worse, the General Accounting Office projects a $9.5 billion debt by 1995...
...And a mother on welfare may not be able to afford to feed her children adequately because she happens to live in Mississippi rather than California, where welfare checks are five times as high...
...maybe unable to work again for years or perhaps the rest of his Iifea costly...
...In other .words, they fight hardest the cases' in which the worker needs compensation the most...
...They simply don't understand the issue...
...That's right, Ashcraft & Gerel...
...It eliminated lump-sum payments for permanent partial disabilities, which had covered a wide range of injuries, including relatively minor ones...
...One reason lump-sum settlements have proliferated in the past 30 years is that without them, without lots of them, few lawyers would find the compensation business lucrative enough to pursue...
...Even so, after two unsuccessful claims, the widow was given a cash award of $12,240 and a weekly allowance of $232...
...The history of the longshoremen's program, which was started in 1927, resembles that of black lung...
...Why is the compensation insurance industry, with apparently little resistance, shelling out thousands of dollars in dubious lump-sum settlements...
...So whom do they rely on for their information...
...But each year they were soundly defeated, mostly because of pressure from the insurance industry, which has an economic stake in preserving the status quo...
...Another reason insurance companies are mak...
...So liberal that almost every coal miner who retires or quits mining files a claim...
...He had lost his arm in a mill accident 20 years earlier...
...Now the program covers hundreds of thousands of workers, many of whom—pleasure boat builders and campsite employees, for example—rarely stray near water's edge during the course of a day...
...Then an advance of $2,000 in Social Security disability pay to Turner (which he got instead of weekly payments for the first five months) was labeled an "overpayment" by the insurance company, which deducted another $5 a week from his check...
...Congress realized the folly of this in 1981 and changed the rule—but only so no new states could begin to reduce their benefits...
...In 14 states, the insurance companies are the ones who get to lower their benefit payments...
...typically end in lump-sum-settlements...
...Two lawyers by the names of Harry Rubenstein and John Schmittinger were lobbying heavily against the bill...
...But Congress wasn't content to tinker with the black lung program in 1972, so it decided to tack several amendments onto the longshoremen's program...
...In Illinois, for example, only roughly 4 percent of all fatal and serious cases involve a pension...
...Shaffer is a paid adviser to the AFL-CIO on the Longshoremen's Act (a federal version of workers' compensation...
...face...
...These programs pay out almost $3 billion—about five times what workers' compensation does—to severely disabled workers who should be provided for by workers' compensation...
...These are cases of severe disability, where the worker...
...Turner's maximum disability benefits were set at $112.52, two-thirds of his former pay...
...And in its infinite wisdom, the government decided to reduce a worker's benefits if he was getting money from both programs...
...Then, in most states, the employer's insurer and the worker must come to an agreement, which must be made before payment begins, on what should be paid...
...For every 66 cents claimants get in productliability setlements, lawyers haul in 77 cents (remember there are lawyers' fees on both sides...
...No state's procedure is the same, but, typically, this is how it was intended to work: First, the worker gives notice of injury to his employer, who files a report with the state compensation commission...
...Medicare will pay all the hospital bills for an advertising account executive who is dying of heart disease...
...Why such lethargic progress...
...But another reason is that lump-sum settlements are a type of insurance for the insurance industry— insurance that the worker won't come back later for more medical expenses and disability pay...
...Since they have no ether option, they sue...
...Lawyers aren't the only unintended beneficiaries of the workers' compensation system...
...in addition, flagrant violators should face vigorous criminal prosecution...
...This is because the Social Security Act used to provide that if a state elected to reduce its benefits, Social Security benefits could not be reduced...
...Even if the claim is challenged, the worker can pick his own doctor to verify his injuries...
...Nonserious cases are frequently disputed, but only after the worker has been taken care of while injured and, usually, is ready to go back to work...
...weekly disability pay: because the insurance carrier can contest the disability wages up to the appellate court, that route can mean two to three times as much work for the attorney, for the same 20 percent settlement cut...
...A better way would be to impose industrial taxes—the worse the record of injuries, the higher the assessment...
...Besides money paid to people who genuinely fit the loose qualifications, $1.5 million in benefits had been paid by 1983 to 453 ineligible coal miners and their families...
...After all, the debate is about one thing only: what "impairment rating"—meaning percentage of "permanent partial disability' should be assigned to the claimant...
...Before these "hearings;' the compensation lawyer and the insurance representative will usually haggle in the hall, trying to reach a lastminute agreement...
...So the percentage that trickles in weekly from disability pay is just lunch money...
...That right, remember, is usually signed away in exchange for a lump-sum...
...however, a backdoor way to sue when workers are injured on the job...
...The big bankrolls, of course, come from lump-sum settlements...
...Until the turn of the century, the only way an injured worker could make his employer pay his medical expenses and wages while out of work was to drag him into court and charge that he was to blame for the accident...
...Well, they're not eating much prime rib these days...
...To them, their origin of suffering makes little difference...
...takes four years to settle the typical compensation dispute...
...The bill also would have limited fees for lawyers to only what the lawyer got the client over and above his wage and medical benefits...
...They get $1,200 to $1,500 to testify at a compensation hearing and from $200 to $700—depending, as one compensation lawyer puts it, "on how greedy the doctor is"—for giving a deposition...
...There aren't supposed to be any lawyers...
...So if the mill is located in, say, Minnesota, the millworker will be awarded $78,300, or 100 percent of the scheduled award...
...For example, according to Hunter,-the compensation insurance industry earned a.35 to 40 percent return on net worth after taxes in 1981...
...Now Bass collects Social Security disability instead...
...So year after year state AFL-CIO units lobby for higher scheduled benefits (upon which lump-sum settlements are based), or simply higher benefits across the board, instead of reform of the system...
...It would also, some would argue, eliminate the only incentive industry has to clean up the workplace...
...The bill was patterned after a "wage-loss" system that had recently been implemented in Florida, a state that, you will recall, had been plagued by all the typical problems of compensation...
...A bill was introduced there in 1982 to reform workers' compensation by eliminating most lump-sum settlements, except in the case of amputation and severe disfigurement...
...But the stories of-Linie...
...With OSHA now"' offering on iv a silhouette of protection, this is a frightening prospect...
...Today all states have such statutes, which covered about 79 million workers and paid out $15 billion in benefits to workers in 1981 (the most recent figure available...
...Yes, but the workers' compensation system was designed to eliminate litigation...
...They knew I had a big family to take care of and they knew I couldn't do it on what money I was getting...
...Or, if the worker lies and says he can work, to 'collect unemployment, the lie will come back to haunt him in the compensation hearing...
...If their number comes up they can reap thousands, even millions...
...employers, through private insurance, would pay injured workers' medical expenses and lost wages regardless of fault...
...The worse the injury, the lancer the settlement sought, and the longer the insurance lawyers drag out the case...
...But back to the cold weather in Delaware...
...When a claim is "contested:' which means the claimant files a claim with the commission, the parties can reach an agreement at any point of the process...
...It often merely socializes human costs of production rather than assigning them to a particular industry, where they belong...
...Burlington transferred her all right—two years later...
...They are the keystone of the industry that lawyers and insurance companies and doctors and workers have constructed on the foundation laid by workers' compensation...
...Why do insurance companies pay out so little...
...There was no place else to go in the plane,' she says...
...Comp & Circumstance Unions and compensation lawyers have been much more amenable to reform that would aid occupational disease victims...
...Lumpsum settlements dropped from more than $25 million in 1978 to less than $5 million in 1982...
...possibility for the insurance carrier...
...It's all a game;' Tom Woodruff, a member of the Florida House Insurance Committee and a practicing compensation lawyer, told the Miami Herald in 1979...
...After the worker's...
...Rate-Crashers So it would seem that workers' compensation isn't such a great deal for the insurance companies after all...
...Today the big push is behind a bill in Congress to aid asbestos victims, which was written by Representative George Miller of California...
...You could replace [the Office of Workers' Compensation Programs] with a post office box!' according to one civil servant...
...There is...
...The answer is that we should...
...What about compensation lawyers in Florida...
...They just fall through the cracks, many times because they don't know they're eligible for aid...
...You hate to ask the obvious, you say, but what about unions...
...And, third, if the insurance company is real lucky, the claimant may just kick the bucket before it ever pays a cent...
...Interestingly enough, the insurance industry, which initially had been cheerleading for the bill, lost its enthusiasm when the state senate added an amendment mandating a 26 percent cut in premiums that would take account of investment income...
...Both reap windfalls from investment income that they fail .to pass along in the form of lower rates...
...So if the worker is smart, he will take a lumpsum and then collect Social Security disability...
...Yet it is but one dramatic example of a much bigger failing: our society takes care of its individuals not according to fact of need but according to circumstance of need...
...Total...
...The industries that impose these human costs are not always made to bear them, as the system assumes they do...
...An example: if a millworker cuts his arm off in a high-speed saw, his arm is indisputably 100 percent impaired...
...he wasn't receiving workers' compensation for lost wages because he had been given a lump-sum settlement soon after the accident...
...The judge comes down somewhere in the middle' In this game, the compensation arbiter serves no longer as a seeker of the truth but, rather, as an umpire who determines how much you should get for landing on Free Parking...
...But if so, it's a lottery ticket...
...But subsequent amendments, the first in 1972, took a cap off death benefits, extended coverage to a host of new dependents, eradicated the waiting period for benefits, and radically liberalized qualifications...
...according to a study commissioned by the...
...First, it earns interest on the money it would be paying out...
...A workers' compensation judge in Daytona Beach, Florida, ruled in 1979 that Turner should get $80 a week for life as well as medical coverage...
...In part because the practice has become routine...
...Indeed, it would seem that the best they can do is minimize their losses...
...Even though the "maximum" clause was eliminated in 1978—a full year before Bass saw her first compensation check—it technically applied to her because she started getting ,sick in 1974...
...Insurance premiums of al/ kinds serve as interest-free loans to the insurance industry, but in the case of compensation insurance there is, in effect, more income to invest because it takes so long-to settle claims...
...Going for Baroque If the lawyers and insurance companies are guilty of constructing the baroque system of workers' compensation we now have, the government is guilty of buttressing it...
...A doctor's statement reported that the man's lungs had been clear...
...But Turner qualified for $56.79 in Social Security disability payments, which, along with the $80 in compensation, put him over the limit...
...Which means that the human costs of production, much like unchecked pollution, don't always show up accurately on industries' cost-benefit analysis, thereby giving the industries little incentive (through threat of higher compensation premiums) to make the workplace safer...
...Each side usually gets to choose its own doctor to examine the claimant and assign an impairment rating...
...Both programs were enacted to meet genuine needs...
...But the growth of workers' compensation has been a cancerous one—one that is but a symptom of the broader malaise gripping America's social programs today...
...Teresa Riordan is on the staff of The Washington Monthly...
...Although, as we have seen, insurance companies pay a lot of unnecessary lump-sums for insignificant injuries, they often get away without paying for claims brought by seriously injured workers—the expensive claims...
...The reason can be found in what are called, in comp-culture parlance, lump-sum settlements...
...The wage-loss formula was designed to compensate workers for actual wages lost due to injuries...
...Only 15 percent of the estimated 410,000 workers severely disabled by injury receive long-term compensation, according to a Labor Department study released in 1980 (the most recent national figures available...
...Not so, as we've already seen, in compensation insurance...
...After all, she needed the money...
...If he does, the government reduces its payments so the worker gets just 80 percent...
...They knew sooner or later I would press for a settlement because of what they were giving me!' Sometimes disabled workers don't know they're eligible for workers' compensation...
...Or, for that matter, why shouldn't we provide for his nextdoor neighbor who is out of work, not because of injury but because the economy is depressed and he's been laid off and can't find another job...
...Instead , of addressing the problems of workers' compensation as a whole, or even the problems of occupational disease as a whole, it focuses mainly on asbestosis...
...in benefits?Insurance companies rarely contest partial permanent, disability claims, those primarily minor claims' that...
...This is where the doctors come in...
...Business and insurance lobbyists are carrying the fact that the trial bar is profiting disproportionately trout produer-liability cafes as a banner under which they hope to pass sweeping reforms...
...The Counter-Reformation If workers'.compensation is such a quagmire, why doesn't anybody try to clean it up...
...In some states, in fact, the only fee lawyers can collect is for what they get over and above wage and medical benefits...
...I his is certainly true not just for the injured worker...
...The average total compensation for the occupational disease victim with permanent total disability was even lower: $9,676...
...it won't pay for nursing-home care for a librarian because he happens to be dying of, say, multiple sclerosis...
...ing such 'a killing off compensation is investment income...
...The workers' compensation system is a case study in the folly of trying to tailor a different relief for every kind of need...
...Tort law has evolved in such cases into a system of "Crier liability," which means the injured party hits to prove only a product or warning defect, rather than negligence...
...How liberal are the qualifications...
...But the auto insurance industry has a vested interest in reducing auto accidents—because fewer claims means less money paid out—and therefore lobbies for...
...If a fellow worker had caused the injury, or there were multiple causes, or the unexpected had happened despite all precautions, the worker had to provide for himself—quite an impossible feat for, say, a laborer whose only source of capital was his now-broken body...
...It was often tough to win a case even when the worker could document negligence because few workers could prevail against the legal horsepower their employers could afford to hire...
...I was better off without it because with that little bit of money I couldn't draw my government pension:' Turner told the Miami Herald...
...In creating federal disability pay, within the folds of the Social Security Administration, Washington ignored the existence of workers' compensation...
...If you're going to lose a thumb on the job, for example, try to do it in Iowa, where it's worth $29,940, rather than across the border in Missouri, where it will fetch only $6,821...
...They can't apply for unemployment...
...fee "the poor man's ticket to the courtroom...
...Why...
...The schedules vary widely, because they are legislated by each state...
...The doctor told her to apply again...
...The big compensation insurance carriers have yet to be seen conferring with Ralph Nader on how to make the workplace safer...
...It -also looks good to his attorney, who would rather get one big check today than dribs and drabs every week for the next seven years...
...I just went back to my old job"—back to the cotton dust...
...The costs of all workrelated injuries were to be allocated to the employer—through higher premiums to an insurance company, which would pay actual benefits...
...Only a few cases (almost all of them the serious—i.e., expensive—cases, but more on that later) are contested when the report of injury is initially filed...
...from a blood sample but for whether they have a reputation for having a soft heart for injured workers or a profound respect for the insurance industry—i.e., whether they give high or low disability ratings to the claimants they examine...
...Linie Mae Bass, for example, a spooler for a Burlington Industries cotton mill in Irwin, North Carolina, first experienced trouble breathing in 1971...
...And in other insurance specialities—for instance, auto insurance—income investment reserves are at least somewhat constricted by competition...
...So along came Progressive Era reformers who began pushing for a "no-fault" compensation system...
...workers compensation claims for nonserious injuries, there is probably just one seriously disabled worker...
...Senator Bob Kasten, the white knight of the business lobby, has - introduced a bill, which now has full administration hacking, that would set federal standards of liability, limiting punitive damases, forbidding ~nits by people damaged by capital goods more than 25 years old, and lightening the tcrnn of liability...
...Ben Holmes Mining the Federal Treasury The Black Lung Benefits Act and the Longshore and Harbor Workers' Compensation Act came about because workers' compensation failed to take care of disabled coal miners and longshoremen...
...Where there is -a big...
...Take the case of a municipal worker in Grandville, Michigan, who was awarded more than $20,000 in a lump sum after injuring his knee in a softball game...
...So the only reason they're in the compensation business is what they make off lump-sum settlements...
...After all, for every '100 union members who file...
...There are hundreds of possible points of contention, so this "agreement system" constitutes the chink that lawyers have used to wedge themselves firmly into the compensation process...
...You've got five or six different interest groups that live off this system!' Although every administration has displayed a profound disinterest in compensation reform, the Reagan administration, .in its quest to dismantle OSHA, has been more vigorously disinterested than usual...
...The study concludes that as much as $1.8 billion a year in insurance premiums could be saved if a more competitive rate-making system...
...Ben Holmes assisted in the research of this article...
...Her new job was as a cloth inspector, which involved running up and down steps from one floor to another and proved too much of a challenge to her damaged lungs...
...Lump-sums for minor injuries are ubiquitous...
...I he burden of proof, and the accompanying increase in litigation costs, would shift to the injured claimants...
...This is over and above his medical expenses and the wages he received while out of work...
...Those who do don't get much...
...What happens to the disabled workers who don't get workers' compensation...
...Who funds the NCC1...
...Take the case of Elbert Turner, a 46-year-old father of eight whose spine was so fragile that one doctor warned he could become paralyzed if he stepped off a curb the wrong way...
...Take, for example, Mark Shaffer, a partner with the firm of Ashcraft & Gerel in Washington, D.C., which has been in the compensation business for 30 years (perhaps those in the Washington, D.C., area have caught their TV ad, starring John Riggins of the Redskins...
...many states...
...Most union leaders, some observers assert, aren't as scheming as all that...
...Main N Morrison...
...At one point, death benefits were being paid out to 23 "spouses" of one miner...
...In Congress, Senators Harrison Williams and Jacob Javits, every year from 1971 to 1978, did introduce bills requiring that those . essential recommendations be instituted...
...It fails only for a small minority...
...The Occupational Safety and Health Act of 1970 established the National Commission on State Workmen's Compensation Laws, which issued a report identifying 19 recommendations that are "essential to . a modern workers' compensation!' The states were supposed to comply voluntarily but the commission suggested that if the states hadn't cleaned up their act in .five years, the recommendations should be made mandatory...
...But the point is, as we've seen, that the present system doesn't do a very good job of providing this incentive either...
...It's supposed to be like small claims court...
...And because he's out of work, he's probably not even paying union dues any more...
...Why should it...
...Even so, 280,000 workers—a high percentage of them women and minorities—don't get any sort of financial assistance at all, according to a Labor Department estimate...
...Indeed, the insurance industry seems to have mastered the art of paying as little as possible to permanently disabled workers...
...The rest of us are standing on dry land—or, in the case of the compensation lawyers and insurance companies, harvesting a bountiful crop from the swamp...
...I send him to a very liberal doctor...
...Since it passed in 1979, the cost of insurance premiums to business has gone down almost 50 percent, because unnecessary lump-sums have been eliminated...
...So what, you say, lots of lawyers make money...
...It's a hornet's nest!' says Peter S. Barth, the executive director of the commission in 1971 and '72 and now a professor at the University of Connecticut...
...She was denied again...
...This, it turns out, is quite a subjective number—to the financial gain of many a doctor...
...which means the worker doesn't have to pay his lawyer anything unless he wins the suit...
...But this system would go far beyond providing for injured workers...
...Those with occupational diseases (where the disability occurs over time after repeated exposure to, say, a chemical) have an even slimmer chance of getting compensation...
...It's another patch for the quilt of assorted programs we already have, a quilt with lot of gaps, overlaps, and wasteful embellishment (see sidebar on page 21 on the Black Lung Benefits Act and the Longshore and Harbor Workers' Compensation Act...
...As a result, only 5 percent of those severely disabled from an occupational disease receive workers' compensation benefits...
...Instead, the taxpayer pays $3 billion a year to provide for injured or .disabled workers...
...That's how long, it took before compensation payments startedfOr Robert T. Rigby, a worker in Baltimore suffering from burns, .open sores, and disfigurement of- his fingers...
...In one case, an 82-year-old man died in 1966 of a heart attack, 38 years after he'd seen the inside of a mine...
...Sometimes they enter the lottery of third-party lawsuits—a sort of backdoor way to sue for negligence, a privilege workers supposedly gave up for guaranteed disability payments (see sidebar, page 16...
...but for Belli, too...
...Even if the insurance carrier doesn't get a lump-sum settlement, it always comes out ahead if it stalls, for three reasons...
...Compplots Compensation was supposed to be simple, free of lawyers and courts...
...Raymond Donovan, the secretary of labor, received a letter from the six leading compensation insurance companies asking him to "halt the release" of it...
...Eventually, Burlington sent Linie Mae Bass to another doctor in Chapel Hill, who told her that her lungs were in such bad shape that she was permanently disabled...
...If the worker couldn't prove this—that the employer was negligent—he and his family had to foot the bill themselves...
...Not really...
...workers collect thousands of dollars for twisted ankles, strained backs, and other afflictions where the lost-future-income argument is a little tough to buy...
...In some states, the percentage of those receiving benefits doesn't even approach the 15 percent average...
...That's right...
...And they had collected almost $20 million in legal fees for representing claimants in workers' compensation cases during that year...
...How, the insurance...
...These cases generally are contested and so, at the very least, are argued at informal commission hearings...
...because it requires an active.search for work, and they can't work because they're disabled...
...The company doctor in Irwin met with Bass and told her, "The good news is that you don't have brown lung!' He also told her to apply for Social Security disability—not a word about workers' compensation...
...Bass's weekly compensation checks stopped last year...
...Most suits are brought on a "contingency basis...
...Compare this to the Social Security benefit system, where 95cents of each dollar-goes into benefits, Or look at, for example, Ohio, which has a state-operated fund...
...In exchange, the bill would have increased the maximum weekly wage compensation from twothirds of the average state wage to two-thirds of 125 percent of the average state wage, thereby increasing aid to severely injured workers...
...This particular group called itself the "Friends of 440:' after the chapter number of a Florida law that permitted them to make a reasonable living in their line of work...
...And today...
...The compensation system "works" for the majority of workers...
...Initially it covered only a specialized class of maritime employees for injuries that occurred while in navigable waters...
...Second, inflation will have appreciably lowered the worth of the worker's pay by the time the award is made, because benefits are determined by the amount the worker was earning the day of the accident...
...But they do contest—six times more, frequently, in fact—total permanent disability cases...
...The original law limited coverage to those "totally disabled" by black lung...
...Though only a piecemeal solution to the national problem, the Florida reform has been a success so far...
...Most often they couldn't...
...Adding Insult to Injury by Teresa Riordan In 1978 a fraternal organization of about 250 Florida lawyers sat down in a Miami country club to dine, to the accompaniment of a 12-piece orchestra, on prime rib and baked Alaska in celebration of yet another very good year...
...She applied for Social Security disability and was denied it (she's not sure why...
...And less than 60 percent of the money private insurers take in on premiums is paid out in benefits...
...Bells, in an interview with the San Francisco Chronicle, called this contigenc...
...He and his firm also give free workshops to local unions on how to collect compensation...
...No, they weren't regulatory specialists or even tax lawyers...
...Instead, they belonged to the burgeoning bar of workers' compensation, the program designed to provide for workers injured on the job...
...Mae Bass and Elbert Turner are not nearly as important as the fact that there are a. lot of Linie Mae Basses and Elbert Turners—and that they are being compensated, not by insurance companies, but by society as a whole...
...Best of all, if the injury is ruled "permanent" a worker keeps receiving benefits even after he goes back to work...
...When the issue of compensation reform came up in the District of Columbia recently, guess who was whispering in the ears of the area union leaders...
...NCCI gets away with murder" Some states don't'even have an actuary or an insurance commissioner...
...That $78,300 is awarded, in theory, because without the use of his arm the millworker won't be able to make as much money in the future...
...attorney will- ask, can you collect unemployment if you're disabled...
...This was not because of any presumption that the employer was to blame for every individual injury, but because the inherent hazards of employment should be considered a cost of production...
...Then in late 1974, Bass's health deteriorated so much that she lost a lot of weight and could "barely keep my head up!' Still, she went to work every day, six days a week...
...Small wonder that this fund, which was originally going to tap only $40 million from general revenues, is now $1.9 billion in debt to the U.S...
...In some cases, insurance companies "starve out" a worker by delaying the processing of his claim...
...The lawyers and insurance companies might not do better under a greatly simplified system...
...A state commission or regulatory agency, acting under the authority of Congress's great gift to the insurance industry, the McCarran-Ferguson Act, sets the rates for premiums just as the legislature sets the schedule of benefits for permanent-partial disability...
...It's easy for a worker to get comfortable on disability benefits, which can be as much as $456 week and are fully indexed for inflation and tax-free...
...A trip around to the other side, where they earn their money, lends a whole new perspective...
...Generally there are no fines for, non-payment unless an appeals court imposes a contempt of court penalty...
...This included a multitude of double payments and payments to the dead...
...After a drawn-out battle with Burlington's insurance company, Liberty Mutual, Bass received her first compensation check in 1979...
...All this smacks of cartel and governmentsanctioned .price-fixing...
...Melvin's World In exchange for workers' compensation, workers gay e up the right to sue their employers for negligence...
...Then, after Turner was given a 5 percent cost-of-living increase—which amounted to $16 a week—in his disability payments, the insurance company, again, lowered its compensation payments, which are not adjusted for inflation...
...backlog of cases, it...
...There is one kind of payment the government doesn't offset: lump-sums...
...Workers' compensation, the first social insurance in America, started out as a good idea— as a way to minimize the human tragedy of workers injured on the job...
...the lawyer has an added incentive for making a lump-sum set-' tlement instead of fighting for...
...Often the worker is better off than he was before his injury...
...Sometimes, the insurance company doesn't pay even after 'a weekly disability pay benefit has been agreed upon and approved by the...
...been without money and jobless long enough, the insurance company can offer him a lump-sum settlement of, say...
...This is because a worker must prove that his injury arose "during the course of and out of" his employment, which is hard to do when a condition develops over time...
...After all, if we are going to help the worker who contracted asbestosis on the job, why shouldn't we provide for his wife who contracts asbestosis from washing the white fibers out of his clothes every evening or who, say, gets cancer for no other apparent reason other than that some people simply get cancer...
...In other words, Uncle Sam gets to play the sucker every time...
...For a better look at how the relationship between unions and compensation lawyers has stalled out reform efforts, let's look at the state of Delaware...
...But it only seems that way when you're looking at the structure from the front...
...They sue not their employer hut a third party, often the manufacturer of equipment or materials they used at the workplace...
...20,000, an irresistible amount to a desperate person...
...The way to care for our needy is not to add a few more swatches of fabric to the quilt of social programs, but to weave one cohesive federal program—one that provides medical care and adequate income to those who are disabled, or out of work, regardless of the reason...
...More than 20,00(1 arch suits have been filed hr workers exposed to asbestos...
...But if they don't, they go first to an informal hearing, then to a formal hearing, and, if necessary, all the way to the appellate level of district court...
...Belli sins several settlements of more than $I million a year, one-forth to one-third of which Ire keeps for himself, from injured workers' cases...
...Testimony is taken, evidence is given, and the whole affair begins to resemble a typical courtroom proceeding, which is exactly what workers' compensation was supposed to eliminate...
...But the millworker isn't the only one getting lump-sum settlements these days...
...Of those, the average pension is just 30 percent of previous wages...
...It wasn't until sometime in 1976 that she learned—from the Brown Lung Association—that she could file for workers' compensation and that she did indeed have brown lung...
...which some states already . use, were adopted nationwide: The- study, by the way,- was not published . after...
...Workers' compensation has turned out to be a failure...
...either intentionally or because of administrative backlog...
...They were instrumental, for example, in the passage of the Black Lung Benefits Act of 1969...
...Such a system would eliminate the farcical lengths to which workers have to go to collect claims...
...North Carolina law stipulated that the maximum amount of money she was allowed to receive from compensation was $32,000...
...Another mason is that Snits are now easier to win...
...Basically, insurance companies who pay a fee to belong to the council and agree to charge premiums--inaccordance with, its fixed schedule...
...So the irony of Kasten's crusade hat his hill would be a relief measure for those who have added the most to the high cost of litigation in the first place the insurance industry and in manufactuers who profit from unsafe product, while it would relax the safety inducements of present is t law...
...But the problem with product-liability suits is the problem that spurred enactment of workers' keys' compensateen in the first place tort lass is inefficient and arbitrary...
...The problem is that the parties often don't agree...
...Those who truly need the system would...
...Workers' compensation hasn't gone completely untouched by reform efforts...
...Tlre result would be a disincentive for manufacturer, to do the research necessary for de.-eloping safe products, because if they don's know that their product is unsafe, they won't he liable...
...Most often, though, they end up being supported by the taxpayer through welfare and the near-bankrupt Social Security and Medicare programs...
...The issue is so complicated that no administration wants to touch it...
...For their talents, compensation doctors can make a handsome living, especially if they do a bulk business...
...By 1920 all but six states had passed a workers' compensation statute...
...At last count, ten years later, the states had taken only baby steps toward change: compliance with the 19 "essential" recommendations had increased from an average of eight per state to only 11 and a half...
...The insurance commissioners who decide the claims now expect to give the claimant some kind of lump-sum settlement regardless of how inconsequential the injury...
...In most states, in exchange for the lump sum the claimant often agrees not to return to the insurance company for more benefits should complications from the injury arise in the future...
...The claimant's attorney argued that because the city owned the ball field, the injury had taken place on company property...
...In most states, premiums are fixed: though insurance is carried through private companies, there is no competition...
...Their number has plummeted from 200 to about 10, according to one compensation lawyer...
...Treasury...
...To be sure, in some states the lawyer can, for all his filing and bargaining, get up to 25 percent of the disability wages the claimant collects while he's out of work...
...No clear sense of justice prevaiIs...
...When I got off work in the afternoons',' she says, "if I had to walk over a block to my car, I would be exhausted!' The company sent her to a doctor in Durham, who told her she had a "breathing problem" and that she would have to be transferred to a different part of the plant, away from the cotton dust...
...He gave up all rights to future payments or medical care, in exchange for a lump-sum settlement of $22,500...
...Besides...
...which occurs rarely...
...Turner ended up settling his case...
...The insurance company had whittled its weekly payments, which had started out at $80 a week, to just $34.73...
...State• regulators are just undergunneC he says...
...commission.- And:it won't pay until the court orders it to...
...It would be foolhardy for the insurance company to contest the size of the lump-sum settlement in such a black-and-white situation as the case of the millworker, so it will likely reach an agreement with the claimant's attorney without meeting before the commission again...
...and genitals caused .by chemicals he worked with...
...Labor Department in the early days of the Reagan' administration.' Most states follow the NCCI recommendations for premium rates because,, according to Robert Hunter of the National Insurance Consumer Organization and a coauthor of the Labor study, "20 or 30 actuaries c'ome charging 'down from NCCI in New-York" to argue for them...
...Her husband was earning only a meager income...
...The unmarried 23-year-old laid off after working less than a year may get the same unemployment benefits as the laid-off 38-year-old with four kids and an invalid spouse at home...
...Maybe...
...In addition, these disability claims are easy to qualify for because they're considered valid unless proved otherwise...
...logically enough, product liability- And if workers compensation is a scandal, according to Jcffrey O'Connell, a University of Virginia law professor and expert in no-fault insurance, then product-liability suits are "a scandal piled upon a scandal One reason for the recent proliferation of procduct-liability suits is that workers' compensation does not provide adequate coverage for occupational disease victims (whose symptoms, often don't appear until utter the statute of limitations has long since run out in workers' compensation...
...But even though investment income can be significant, it's not taken into account .when premiums are figured...
...This "offset" system stipulates that if an injured worker is getting both Social Security disability and workers' compensation, he can't collect more than 80 percent of his former salary from both...
...This is called "permanent partial disability" and is figured as a percentage of impairment...
...Mostly because the only, people sinking in it are the unorganized, powerless, injured workers, worried more about whether they can pay their medical bills and feed their kids than about how to phrase a letter to their legislators on the injustices of the compensation system...
...Although the state insurance commission has to approve rate increases or changes, it relies on a private corporation—the National Council on Compensation Income—for...
...If they don't, the hearing proceeds...
...The most the insurer risks is having to pay retroactive benefits...
...And $8,000 of that had gone to her lawyer, who admittedly played a substantial role in wrenching money for Bass from the insurance company...
...This category of third-parts suits is called...
...from the businesses- it insures in Washington, D.C...
...When ratesmetting t—ime comesp arouand, tnhe inisureances co' pretend -that this.enormous source of income does not even exist...
Vol. 16 • March 1984 • No. 2
