The Grand Compromise - Is the System falling apart?

Workers' Compensation has been called the grand compromise due to the necessary accommodations that needed to be made in in the early part of the 20th century in order to institute a program that both protected workers and the businesses that employed them. To be sure, protecting workers’ medical and financial needs whilst not strangling legitimate business needs was, and still is difficult. The injured worker had to give up the right to sue in tort while the employer was required to absolve his employee of negligence which may have led to the injury and to guarantee timely provision of appropriate benefits mandated by statute. Properly considered most workers' compensation systems are the progeny of these early efforts. Changes to the various systems, made through legislative and administrative modifications reflect not only priorities but also realities. Witness the exodus of business from California to other states and consider if the workers compensation doesn't have a very real effect on you, your business, your employees and your political realities.
Recently, attorney John Stahl, wrote a thought provoking article entitled "Many Work-related Disabilities Go Uncompensated: Compromising "The Great Compromise." The article can be found at http://www.lexisnexis.com/community/workerscompensationlaw/blogs/workerscompensationlawblog/archive/2012/06/18/many-work-related-disabilities-go-uncompensated-compromising-the-great-compromise.aspx.  This article, published in the LexisNexis Workers' Compensation Law Community and on the Workers Compensation Law Blog, argues as the title suggests that many injured workers are not receiving payments under their states' workers compensation systems and the calls for reform necessitated by this failure. Apparently, Mr. Stahl's article and the OSHA study that prompted it, is that the number of workers "who sustained a work related harm greatly exceeded the population of those workers who pursued workers' compensation benefits." In support of this proposition, Mr. Stahl states "research revealed that many employees who experienced arguably compensable harm did not pursue workers' compensation benefits." Quoting from an article written in the June 2012 edition of the American Journal of Industrial Medicine entitled "The Lack of Correspondence Between the Work-Related Disability and Receipt of Workers' Compensation Benefits" by Emily A. Spieler, JD and John F. Burton, LLB, PHD (which can be found at http://onlinelibrary.wiley.com/doi/10.1002/ajim.21034/pdf  ) the authors state that "studies consistently demonstrate that workers' compensation claims actually filed are substantially lower than the number of legitimate claims that [sic] would have been expected." Leaving aside what methodology might have been used to divine the number of claims that "would have been expected" might not the explanation lie in a slower economy with less people working?

The Industrial Medicine Article states:

The number of claims for workers’ compensation has

            been declining. The decline in the frequency of temporary
            total disability claims mirrors the drop in reported frequency
            of injuries in the BLS data ... The capture–recapture studies cited above,
            as well as the recent GAO study that focused on underreporting of
            OSHA data [GAO, 2009], suggest, however, that there
            may be substantial underreporting in all of these systems.

The Industrial Medicine Article goes on to discuss reasons why workers don't always receive workers' compensation benefits including:

• Exclusions from WC programs based on the status of the worker (i.e. there are some occupations that are not covered)
• Many workers who might be eligible for benefits do not file claim
• Barriers to benefits in Claims that are filed including
• Proof of causation including pre-existing conditions and occupational diseases
• Procedural Hurdles

It is within this context that Mr. Stahl suggests that the Grand Compromise is unraveling.  He states, “in simpler term, even fewer workers than predicted exert their workers compensation rights.”  Mr. Stahl suggests that the reasons for not reporting compensable harm include:

        ·        Unawarenss of workers’ compensation rights

      ·        Wish to avoid perceived complexity of the workers compensation system

·        Fear of employment termination, deportation or other retaliation

What is striking from both the article from the Journal of Industrial Medicine and from Mr. Stahl’s use of that article is that perception is piled on top of supposition, both of which are premised on the assumption of a particular number of claims that “would have been expected." If the call for systemic reforms made by Mr. Stahl are warranted perhaps we should expect more than supposition about the number of claims that would be expected to have been levied.    Addressing his points in order:

·        Knowledge (awareness) of workers’ compensation rights – anyone who has missed work and stayed home with a case of the flu or for other reasons has seen the ubiquity of commercial advertisements for attorneys and medical providers offering to rescue the beleaguered injured worker from the clutches of the Insurance Company who after all has legions of attorneys to advise them.  After the promise of cash settlements, the primary selling point for these vendors, especially the attorneys, is the knowledge of the system that they can bring to bear on behalf of the injured worker.  With easy access to industry knowledge from a simple google search, a wealth of information is available to the injured worker with a smartphone, an internet connection or television.  Are there that many individuals lacking knowledge of the system?  Yes.  Are there individuals without access to the means to gain that knowledge? The answer to this question is certainly less than clear.  Does this present evidence that the entire system is beyond repair, hardly.

·        Wish to avoid the perceived complexity of the workers compensation system – Is the workers compensation system complex? Undoubtedly.  For that matter, so is internet banking, email and any number of modern conveniences with which a user can become familiar by experience.  The problem presented in the workers’ compensation context is that most workers, most businesses go about their daily lives never needing to know about the WC system in which they exist.  Except for the frequent filer, the system is complex and opaque.  This fact applies to both the injured worker and their employer.  Most advocates for the injured worker present the Employer/Insurer as a monolithic enterprise girded for battle against the beleaguered worker when the truth is closer to the fact that the Employer generally has no more knowledge of what to do with an injured worker than does the injured worker himself.  Thus it has always been and thus it will likely forever be.  However, the easy availability of online information  for answers to such questions should tend to level the playing field over time.  To the extent though that the employer fails in its duty to shepherd its employees through the complex system, it is the attorney for the injured worker who picks up the slack, often to the detriment of that employer.  The result is a better educated employee (by and through the instruction of his attorney) and employer (by virtue of the adage that “experience is what you get,  when you don’t get what you want.”)  Does then, the perceived complexity of the system require dramatic reforms, not in my experience. 

 

·        Fear of employment termination, deportation or other retaliation – any employer that terminates on the basis of a legitimate claim very soon finds itself at cross purposes with its carrier, the State Board of Workers’ Compensation or the Equal Employment Opportunity system.  There will always be fear of retaliation in the minds of an injured worker.  The relevant question is whether the Employer has done anything to foster that fear.  An employer that has, is likely a frequent consumer of the of the Workers’ Compensation system and one that may if they are not careful, develop a reputation not just among the trial lawyers bar but also with the State Board.   That is neither a happy nor comfortable place to be.   The employer though, that treats its obligations seriously, protects its workers from the effects of legitimate injuries can burnish its reputation by living up to its obligations, providing medical treatment and returning the employee to gainful employment as soon as is practicable.  The process though is adversarial, despite its original intention and design, and will inevitably produce disagreements.  As for the fear of deportation, the workers compensation system is ill-suited to resolve the emotional and politically charged issues with which our current political class is unable to contend.  Most workers’ compensation systems provide for the protection of the injured worker regardless of his status.  That worker who is injured and is discovered to be illegal/undocumented/not lawfully present, still receives (in most every system) necessary medical care for his injuries.  The treatment of wage replacement benefits will differ but, in Georgia at least, the State Board of Workers Compensation takes  a dim view of the Employer who knowingly hires illegals and then attempts to take the position that the worker should not be paid income benefits based on his status.  The Employer who operates with “clean hands” and who does not act deliberately to hire non-qualifying employees should not be penalized when they discover that the employee is illegal and cannot now be brought back to work because such an act would require violation of Federal immigration law, enforced or otherwise.  In short, the parties are capable of producing evidence to be used at trial to sort out the innocent employees and innocent employers from those trying to game the system to their own advantage.  As long as due process is the order of the day, this particular complaint does not present the abject need for fundamental reform. 

The one area in which Mr. Stahl presents viable reason for a decrease in instances of reporting is in relation to the current labor market.  He states:  “Retaliation is of particular concern because it reflects an employee’s generally subservient position in employment relationships. Further, especially in a tough job market, actual and anticipated retaliation has prevented many injured workers from pursuing workers’ compensation claims.”  In any relationship, the advantage may be inequitably distributed. In the current labor market, jobs are relatively more scarce than at times in the past.  Such a reality causes workers cling more closely to those positions than might be the case in times of full employment.   With a lower unemployment rate,  the worker may very well be in a “seller’s market” and can more freely choose his course of action.  Does recognition of this reality portend the end of the Grand Compromise? Not likely.   What Mr. Stahl and the authors of the Industrial Medicine Article are seeing is that there are some injuries which in times of full employment might be reported and treated but in times of scarcity result in a cost-benefit analysis as to whether a minor strain need be quietly nursed (suffered if you will) with the employee continuing at work.  The relevant inquiry here is not whether the employee on his own decides that the hassle of a claim is not worth the potential risk but whether the employer has taken action to dissuade its employees from filing claims.  As an attorney representing employers and insurers, I have seen numerous examples of good people, trying to run a business with no more idea of how to handle a workers compensation claim than the individuals they employ.  The mythical example of the evil employer, with Machiavellian efficiency and design, taking advantage of the unsuspecting employee is truly the exception and not the rule.  

After discussing the crisis in reporting rates, Mr. Stahl (as well as Ms. Spieler and Professor Burton)  turns to current trends in workers compensation and the difficulty that some injured workers experience in reporting and proving their claims.  Specifically, Mr. Stahl states: 

Even among claimants who sought benefits, higher costs of medical treatment have contributed to a 20-year trend toward restricting workers’ compensation coverage. Difficulty proving harm and/or causation are common reasons for that practice. Examples include:

·        Musculoskeletal injuries for which a claimant has not provided “objective medical evidence”

·        Persistent debilitating pain that was not easily medically documented

·        “Cancers and diseases that result from multiple causation or cannot be distinguished from” non-compensable harm

The issue of multiple causation related to the basic tenet that receiving workers’ compensation required that a claimant demonstrated that the relevant harm had an adequate nexus with an incident that “arose out of the course and scope” of that person’s employment.

If  the complaint here is the difficulty of proof?  If so, on behalf of the Defense bar, let me say, “welcome to our frustration. “  With each advance in diagnostic medical technology, the pain producing mechanisms in the human anatomy are better explained and, in time, better understood.  With advances in medical research, more is understood about the causes of “Cancers and Diseases” that Mr. Stahl, Ms. Spieler and  Professor Burton mention.   Is it, however, evidence that the system is unravelling simply because the measure of proof is uncertain?  Each litigant attempts to provide evidence convincing to the trier of fact and each litigant sometimes feels that the bench or the climate of the industry, is conspiring against them.  Each of us must produce evidence satisfying the Daubert standard for evidence which is generally accepted in the scientific community.  The answer to the conundrum, however, should not be found in the application of strict liability in which a close call goes to one side simply because that side is in need of the other’s money.  I will admit to my fair share of gripes about adverse decisions but such is the life of the advocate.  The system that we have, however imperfect it is probably the best that can be designed with fallible claimants, fallible employers and the various State Boards all grappling with difficult decisions.   Absolving, or even relaxing, one side of evidentiary burdens is not the answer. 

"Skedsvold & White
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