Workers Comp 20/20: Will Congress overhaul workers compensation?

Woodstock, VT (CompNewsNetwork) - The workers compensation system as we know it is an amalgam of state-run mini-systems, plus a small handful of federally run compensation programs.  Federal interference in the state systems has been extremely limited, in part because hardly anyone in Washington has had an appetite for changing this arrangement which pre-dates the New Deal.

Next year, which can be called the 100th anniversary of state workers compensation systems, Washington's isolation may change, loudly and disruptively – but only if the Democrats retain control of the House of Representatives.

For there is a nascent movement among some members of Congress, encouraged by the claimant bar community and unions, to investigate the fairness of the state workers compensation systems, notably in the area of occupational disease claims.

If the Republications take control of the House, the chairmanships of committees revert to Republicans, including the Committee on Education and Labor, which held hearings on a closely related topic in 2008.

To appreciate why Congress may undertake to investigate and probably threaten to start trying to call the shots on state systems, it is useful to note that Washington, in the 1970s, actually threatened to regulate state systems.   This occurred during the Nixon Administration, when a task force was created on the heels of passage of OSHA to assess the adequacy of state systems. The task force found much to criticize, for many states had not substantially updated their laws on workers compensation since their respective systems were created in the 1910s and 1920s.   The implied threat of federal reforms led to many state-level reforms.

Much more recently, Congress enacted healthcare reform, The Patient Protection and Affordable Care Act.  The constitutionality of that act is being challenged.  Yet it is intellectually easy for a politician who supports that act, which reorders healthcare insurance, to assert that Congress can also go about doing the same thing for workers compensation.

Under-counting and under-claiming

Two public policy issues intertwine on the matter of federal take-over.

The issue that is more widely discussed is the concern that employers are under-counting their work related injuries for the purposes of OSHA reporting.   OSHA has guidelines for record keeping on injuries that apply to all but the smallest private sector employers.   Many employers want to keep their “recordables” down, and they try minimize their entries but stay in compliance with the guidelines.  But many also appear to grossly under-record.  Such is the testimony, at the 2008 hearings of the nation's association of occupational medicine physicians, as well a numerous union activists.  

OSHA itself undertook a special program between September 2009 and September 2010 to investigate these allegations. The results of its study are not yet made public.

A related, but separate public policy issue is concern that injured workers fail to file workers compensation claims.

Failure to file claims for legitimate injuries and illnesses could be the result of ignorance, employer pressure, or simply worker choice. And for diseases, the state system may simply not cover them.

Over the past 15 years, many research studies and state public health agency reviews have concluded that there are high under-counts of injuries per OHSA guidelines and extensive failure to file claims.    Sometimes an injury may be accounted for in one of these domains, and not in the other. Sometimes an injury may not appear in both.

State regulators of workers compensation have generally not made much of an effort to investigate the so-called non-claiming issue.  Their failure to investigate this issue is especially irksome to those advocating federal investigation of the issue, yet to take place.

Among a wide range of workers compensation professionals and researchers, including defense bar, an implicit consensus exists that many occupational diseases do not enter in OSHA logs of employers and do not result in a workers compensation claim.   OSHA's illness recording rules are limited, and the agency acknowledges that many illnesses are not recorded.   As for workers compensation claims, many states limit coverage for diseases.  And, some of the worst diseases take years, even decades to mature into symptoms and impairment or death.

One example of such a disease is asbestosis, which arises mostly from occupational exposure to asbestos. The Massachusetts Department of Public Health studied asbestosis –related hospitalizations and found that among 3,344 hospitalizations, only 15 were paid for by workers compensation insurers.  Other studies of healthcare insurance records of asthma cases have found that a large number of cases accepted by the health insurers were very likely occupational in origin.

 These kinds of studies strongly suggest that not workers compensation, but other health insurance plans, are paying for occupational diseases. One University of California researcher has estimated that between $8 and $23 billion is spent annually by private health plans, Medicare, Medicaid, the VA and other health support systems for occupational diseases.

What does this mean?

Advocates for federal take over of workers compensation, such as Jon Gelman, a noted New Jersey based claimant attorney, are typically selective in the shots they shoot at the state systems, which they call programmatically bankrupt. These advocates focus mainly on occupational diseases.  They contend that these diseases should be paid for by Medicare, and taken out of state oversight.

One citation in their argument is the case of nuclear weapon manufacturing workers. These workers were exposed to serious occupational diseases.  Due to lax safety oversight, worker monitoring was poor or non-existent.  When these workers, who were employed by private firms under contract to the federal government, filed worker compensation claims, they were either rebuffed outright by workers compensation insurers or their cases lingered interminably in workers compensation courts.  Finally, in 2000 Congress in a bi-partisan decision passed an act which placed this claims into federal jurisdiction.  They have been processed by the Department of Labor with federal funds.

If the Democrats retain control of the House, expect that in 2011 or perhaps 2012 Congress will begin to take action on the non-claiming issue, most likely by launching a highly visible investigation of occupational diseases and how state systems manage, or mismanage these conditions.

About the author:

Peter Rousmaniere has been involved in workers compensation as a consultant, entrepreneur, and journalist for 25 years. He resides in Woodstock Vt. He can be reached at pfr@rousmaniere.com
His website is at www.rousmaniere.com

About the Workers' Comp 20/20 Series:
This series asks the basic question, “What will the workers' compensation industry look like in 10 years, in the year 2020?” Numerous professionals and well known industry experts have agreed to contribute to this series, which is designed to evoke discussion within the industry. To that end, your comments below are encouraged and welcomed. Please tell us what you think!

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