Workers' Compensation, Reprised

A reader has requested that I give my thoughts on workers' compensation.  I had written about this soon after I began to blog back in 2005.  (I probably only had about five or ten readers back then.)  I am reprising that post for those who did not see it when it was first published here:

Workers' compensation was one of the first entitlement programs.  It materialized because of tragic circumstances that developed when a family's breadwinner was killed or severely impaired due to traumatic industrial accidents.  It was devised as a no-fault system. 

Some would question why trial lawyers have an interest (in workers' compensation) if the system is no-fault.   Typically they intervene to advocate for certain benefits before the Industrial Commission; to assist claimants in contesting decisions made by employers and insurers; and to negotiate upward financial settlements.

I have had ample experience dealing with workers' compensation.  As an occupational medicine specialist, I have been involved in the evaluation and treatment of alleged work injuries since I began practicing in 1989.  I also act as a utilization review consultant for a large workers' compensation insurer based here in the Triad to evaluate selected cases...

There are several problems with the system as it currently operates, however.  First, there are many cases in which fraud, psychological issues, personal life circumstances and motivational states interfere with an individual's returning to work.   Effective administrative and medical management can help, but these dynamics  still create  major problems throughout the state.

Second, the incentives to access the system are enticing on the surface (although ultimately are a bad deal for most).  The injured employee sometimes sees the prospect of receiving nearly 2/3 of wages, tax-free, when out of work, and a financial settlement at the end of the rainbow.  It often is the only form of disability insurance the employee "owns", and therefore he feels enormous incentive to access it when he confronts a medical predicament.   In addition, it pays all the medical bills-- no copays, no deductibles.  A mercifully small subset of employees is  militant with respect to taking advantage of  workers' compensation benefits.

Third, a large number of claims consist of "soft tissue" complaints alleged to be associated with such activities as lifting or repetitive motion.  These complaints usually involve the spine or the upper extremities.  The problem is that many of these cases represent normal conditions of life that are not necessarily attributable to work.  Dr. Nortin Hadler, a professor of medicine at the UNC-Chapel Hill School of Medicine, has done some yeoman work in this area.  The workers' compensation system was not designed to accommodate these circumstances, but rather was initially structured to deal with discrete, objective trauma.   Coverage of these conditions increases the load to the system by large numbers. 

Fourth, the state Industrial Commission chairman, Buck Lattimore, has stated that the Commission operates under the presumption that NC law requires the Commission to err on the side of the claimant whenever doubt or uncertainty exists.   Employers have often related to me that they do not feel they have a fair shake at contesting questionable cases before the Commission, although this apparently is somewhat dependent on the judge to which the case is assigned.

Of course, employees who perceive they have been injured have their own set of objections to the current system, even in spite of all of the above.

North Carolina has lost many industrial jobs over the last five years.  Nearly every position is theoretically at risk of being exported to a foreign country.  Recruiting for new employers has become more difficult and competitive. Employers no longer perceive our state as more business-friendly than others in our region from the standpoint of traditional indicators such as taxes, labor costs, regulatory environment and cost of land.  One of the powerful, but unrecognized, factors that prospective employers evaluate is the state's workers' compensation environment.  It can have a profound impact on a company's viability and profitability.

North Carolina needs to take a serious look at its current system.  It needs to reevaluate its statutory guidance to the Industrial Commission as to the threshold for determining what constitutes a compensable claim.  It should assure that normal conditions of life are not regarded as compensable, and that the system reverts back to one that emphasizes treatment for discrete, objectively verifiable trauma.   Some more creative proposals floated nationally have suggested uncoupling the medical and disability components of the workers' compensation system, and employing creative techniques to manage both. 

The absurdity of maintaining the system as it currently exists, however, ignores the harsh realities of competing for jobs in a global marketplace.

Comments

[Jeff]

Thanks for reposting this, Joe.

Your last sentence says it all; it would also be much easier for many employers to provide more/better employee health benefits if they weren't required to shell out huge premium dollars to support our dysfunctional WC system.

[Stormy]

As Barack Obama famously said and Bruce Springsteen sang about the jobs that are leaving America:

"Then came the shutdowns
And our whole world went black
Man said, "These jobs are goin' boys
And they ain't comin' back."

[Joe Guarino]

Jeff, thanks for the comment. At this point, it is also a matter of keeping American jobs in America. Every unnecessary cost government levies against employers places American jobs at risk (as Stormy seems to suggest).

One of the things this discussion reveals is the extent to which people leave themselves underinsured with respect to disability insurance. That is one of the reasons workers' compensation becomes the big deal it is.

[Stormy]

Cap and tax and ObamaCare will ensure that those jobs are goin' boys and they ain't comin' back. American capitalism is being destroyed before us in less than one year.

But, many Americans just can't see it, or do not want to see it. Look at the letters to the editor in the N&R today, and you will see how pitifully Americans are uninformed about what will result from Obama's programs and policies.

[Felix Chesterfield]

Does anybody have any experience with these North Carolina Lawyers ?