After a Century, Is Work Comp Obsolete?

Avoiding the ever-growing early 20^th century fear of the growth of socialism in the U.S., fueled by author Upton Sinclair’s The Jungle, the federal government was eager to shift the passionate, muckraker sentiment for a Marxist-designed social insurance system (aka workers comp) to the states -- only federal and certain interstate commerce employees are covered by federal statutes. Workers' comp relinquished an employee’s right to sue an employer for tort negligence and provided, in return, medical benefits and a wage replacement benefit. Dubbed “the grand bargain,” in the early 1900s, this tradeoff scheme has resulted in an ever-changing seesaw struggle between employers and employees that has wide disparity from state to state. The uneven playing field of each state and the District of Columbia has resulted in a pendulum effect fueled by work comp reform measures and case law that tends to only widen disparities among states as special interests battle for changes in state laws. Meanwhile, the insidious growth of work comp fraud fuels the call for additional reform measures, and some feel they have gone too far. Yesterday, ProPublica published with NPR a major article making just that case. Some facts from the article: In the past 10 years, 33 states have passed workers' comp laws that restrict or reduce benefits or benefit eligibility. Severely injured workers are the most likely to experience diminished benefits, as states like Florida have cut such benefits by 65% or more during the past 20 years. In California, insurers are able to re-open old cases and deny medical care based upon physicians who have never seen the patient. The percentage of workers' comp premium or self-insured dollars destined for injured workers has gradually diminished to where the majority of costs go to medical providers, drug companies and attorneys. Keep in mind: Workers' comp was touted and designed as a no-fault, lawyerless system. Workers' comp administrative law judges in California used to called “referees.” In August, a Florida circuit judge ruled that the state’s workers' comp law is unconstitutional, saying that benefits had been “decimated” and that the law “fails miserably” as to health, safety, welfare and morals. If the ruling is upheld, it is quite possible that workers in Florida may be able to sue their employers to force the legislature to enact new workers' comp laws. These issues have drawn the attention of Sen. Bob Casey, D-PA, who introduced the Payroll Fraud Prevention Act, aimed at reducing employee workers' comp misclassifications ,and is now working to have Congress make laws for basic protections for injured workers. Adding more fuel to the fire, the states of Texas and Oklahoma have workers' comp "opt-out" provisions for employers, with Tennessee and other state pondering this option, as well. Is this abandonment of the 1911 workers' comp model a sign that disruption is a likely outcome for this century old system? The burning question is whether the U.S. workers' comp system should be rebuilt from scratch. Should Medicare and workers' comp be woven into a federal system of benefits that doesn’t distinguish between injured workers from one jurisdiction to another? Is federalization of workers' comp an inevitable outcome of these events? Join the conversation…