A new report by the U.S. Department of Labor (DOL) highlights the ways in which monetary compensation and medical care for workers harmed in workplace accidents has been undermined in recent decades, and could signal a willingness to change its traditional “hands off” approach to these systems in the next administration. The U.S. Bureau of Labor Statistics estimates that, on an annual basis, nearly 3 million serious occupational injuries and illnesses occur, and approximately 4,500 workers are killed on the job.
Workers’ compensation systems were created, in some cases, nearly a century ago, to provide the injured or ill worker with all lost wages, medical care, and rehabilitation costs under the principle that workers would receive timely benefits that would replace their lost wages in exchange for giving up the right to sue employers for their injury. It is typically a “no fault” system, meaning that a worker’s own negligence in causing the injury is rarely a basis for disqualification from benefits (with narrow exceptions, such as impairment by alcohol or illegal drugs, or being the aggressor in a workplace violence situation).
Each state runs its own workers’ compensation system, usually the laws are enacted by state legislatures, and employers are required to be insured in most states (although the size threshold that triggers this requirement can vary wildly). Many of the workers’ compensation laws also include anti-discrimination provisions, protecting workers from retaliation, or blacklisting because they file or have a history of workers’ compensation claims. These state law protections can dovetail with the protections of Section 11(c) of the Occupational Safety & Health Act of 1970, the newly codified provisions in 29 CFR 1904.36 (the new anti-retaliation protections for injured workers included in the OSHA e-recordkeeping rule that takes effect November 1, 2016), and even the Americans with Disabilities Act.
COVERING THE COST
A 2015 study by federal OSHA found that current workers’ compensation programs, on average, cover only about 20 percent of the total cost of workplace injuries. The injured worker, his/her family, and private insurance pick up as much as 63 percent of actual costs, with the remainder covered by taxpayer-funded programs such as Social Security Disability Insurance.
The DOL report was initially triggered by investigative reports that questioned whether state workers’ compensation programs adequately protect injured and sickened workers, followed by an official letter from 10 Democratic members of Congress seeking action.
The Congressional letter, dated October 20, 2015, observed (in part):
Since 2003, legislators in 33 states have enacted changes to workers’ compensation laws that either reduce benefits or make it more difficult for workers to qualify for them. . . . The race to the bottom now appears to be nearly bottomless, as some states are adopting “opt-out” laws which enable employers to set up their own ERISA-based workers’ compensation programs where employers can establish certain exclusions, heightened thresholds for causality, and abbreviated time periods for employees to report an injury. Where injured employees want to appeal an employer’s decision, opt-out plans permit an employer-controlled appeals process and injured employees could lose access to state courts or workers’ compensation commissions.
One problem, identified by both the DOL and Congress, is Federal court review of private ERISA plans, which is constrained because courts cannot evaluate the adequacy of a plan’s benefits. Review is limited to a determination of whether the employer’s conduct was arbitrary and capricious in interpreting their plan.
From a federal perspective, there is concern over the shifting of workers’ compensation actual costs. Programs covering the benefits gap include Social Security Disability Insurance, Medicare and Medicaid, and food stamps, which combined can cover the lost wages and medical costs that are no longer being adequately provided by workers’ compensation due to declining awards and benefits. It is estimated that these cost-shift amount to up to $12 billion per year, from the employer/workers’ compensation insurance carrier to the US taxpayer.
The October 2016 DOL report describes factors that have undercut financial protections and medical benefits for injured workers including:
- Exclusionary standards that result in an increased rejection of claims
- Procedural and evidentiary rules that create barriers for injured workers who file claims
- Restrictions on types and duration of medical care for injured workers
- Elimination of special funds to cover injured workers, such as situations where an employer failed to purchase workers’ compensation insurance
In the end, DOL concludes: “As the costs of work injury and illness are shifted, high hazard employers have fewer incentives to eliminate workplace hazards and actually prevent injuries and illnesses from occurring. Under these conditions, injured workers, their families, and other benefit programs effectively subsidize high hazard employers … The current situation warrants significant change in approach and action at the national, state, and private sector level.”
IMPROVING THE SYSTEM
In response to the DOL report, one of the Congressional authors of the 2015 letter, Sen. Sherrod Brown (D-OH), indicated he will sponsor legislation in the next session of Congress to address the problems identified by DOL. The next Secretary of Labor will no doubt be called upon to use this report as a guide to improving workers’ compensation systems, to the extent that the federal government has the power currently, or is granted additional authority in the future by Congress.
Labor Secretary Thomas Perez stressed, in response to the report: “A nation built on the dignity of work must provide for workers’ safety, as well as take care of them if they get hurt on the job. When workers are hurt, a robust workers’ compensation program can make the difference between poverty and recovery. It is time that we look at whether this basic bargain is fraying and how we fortify this critical lifeline for millions of working families.”
The full DOL report is published at: www.dol.gov/asp/WorkersCompensationSystem/WorkersCompensationSystemReport.pdf ■
About the Author: Adele L. Abrams, Esq., CMSP, is an attorney and safety professional who is president of the Law Office of Adele L. Abrams PC, a nine-attorney firm that represents employees in OSHA and MSHA matters nationwide. The firm also provides occupational safety and health consultation, training, and auditing services. For more information, visit www.safety-law.com.
Modern Contractor Solutions – October 2016
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