Sunday, May 15, 2016

The 2016 Summit

Last week some very experienced and intelligent people travelled to Dallas, Texas. They are answering a call for thoughts about America’s workers’ compensation system. They each have admirers and fans. Some even have critics and detractors. There were no receptions, sponsors, or speakers. This was a summit to which a broad sectrum of workers' compensation interest groups were invited for their expertise and advice. Some that were invited elected not to answer the call and instead apparently trust that their perspective will perhaps be voiced by others. On a personal level, I regret their decision not to attend, and hope that they and you know your input is still (always) welcome.

There are valid questions today about whether we need workers' compensation. It was developed and deployed in a time of great industrial activity in this country. We have seen that American industrial society yeild to an information and service economy that bears little resemblance to the turn of the 20th Century. Is workers' compensation relevant?

I have heard a great deal in the few months since this Summit process began in February. It started with questions about what is right with American workers’ compensation and what is wrong. There are some who are happy to criticize systems and laws.  Some from a comfortable (and perhaps "holier than thou") distance. Certainly, any system will produce some volume of examples about which one might be critical. No system is perfect, and expectations of perfect performance in every case are unrealistic. This system is dependent upon and serves humans, humans are simply not perfect. 

There was discussion in Dallas of many things in workers' compensation that work. Then there were examples provided of various failures. Is it logical (or rational) to judge any system or law based upon the outlier examples? The exceptions?

There is a great deal about workers’ compensation that is right. This is a system that provides a great measure of benefits to a large population of workers every day. It provides more and better health care in many instances that a person's group health plan might. Some believe that how and how much health care is available in one system or another may even influence the evidence and conclusions in a particular case. 

In the tort system, which workers' compensation has supplanted for most work injuries, there would be damages awarded to some injured workers. Those damages would likely require years for delivery instead of days. Those damages could perhaps be larger in scope, with civil tort systems affording damages for pain and suffering, loss of consortium, and in some circumstances even punitive damages. The potential amount of damages might be much larger in tort than in the workers' compensation system.

But in that tort system, the employee would have to prove her or his employer was negligent. And, any portion of fault attributable to the injured worker would potentially decrease the damages received, a tort concept called “comparative negligence,” or could eliminate all damages in states still using "contributory negligence." It would not be a "no fault" system. 

And, almost certainly, any tort damages received would take far longer to arrive. Although settlement of a tort case is certainly a viable outcome, such settlements would almost certainly come far later than normal benefit delivery in most workers’ compensation cases. 

There are those who lament the existence of “waiting periods” before workers’ compensation systems deliver the first “lost income,” commonly called “indemnity” benefits. Those waiting periods are measured in days however. It is not uncommon for tort claims to take years to work their way through the civil court systems, and some have to be tried, and perhaps appealed. It could be a long wait in tort, during which an injured worker and family might have little or nothing upon which to subsist. 

Workers’ compensation liability is something states have regulated more than tort systems. Employers are forced to carry workers’ compensation insurance in many instances. The financial health of the employer is therefore often irrelevant to the payment of workers’ compensation benefits, as an insurance carrier steps-in to make payment following an injury at work. Even an employer bankruptcy will not affect payments in that “insured employer” scenario. 

When employers "self-insure" the states require collateral to be in place to pay the damages in a work injury, in case the employer does not have sufficient cash on hand to provide the required benefits. While the employer has certain funds that it uses to do business, there are separate funds or assets held separately to pay for injuries and workers' compensation benefits, and they are monitored by the state. And often, even these large employers have a backstop, called "excess insurance" that will provide funds in cases that exceed certain parameters or severity.  

But what if the workers' compensation insurance company is bankrupt? Most states have created workers' compensation risk pools, which are funded by insurance companies, as a condition of their doing business in a state. These “insolvency funds” take over and make payments to injured workers, both lost-wage benefits and medical benefits, if the insurance carrier becomes insolvent (or "bankrupt"). Florida’s is called the Insurance Guaranty Association (or “FIGA”). For those employers that self-insure there are similar safety nets; Florida’s is called the Self-Insured Guaranty Association (or “FSIGA”). 

It is important to remember that in a tort system, a jury verdict might never be paid. After years of litigating against a company (employer) for damages, and obtaining a jury verdict for tort damages, that employer might declare bankruptcy. And unlike the workers' compensation system, there may be no one there, no insurance carrier or insolvency fund, to pay the damages. 

Workers are protected by the no-fault system that is workers' compensation. There may be some conditions. For example, employees might not receive full benefits if they fail or refuse to use a safety device (seat belts in a vehicle). Safety, they say, is everybody's business. In some states, employers are penalized for failing to provide these safety devices. Similarly, in some states, no benefits are paid when an employee uses drugs or alcohol, as that behavior is seen as causing or at least contributing to injury. So, "no fault" may or may not be without limitation. But for the majority of accidents, coverage is provided to the employee without regard to who caused or even contributed to the accident. 

Over recent weeks, I have tried to outline some of the complexities of workers’ compensation. Some of the “big” questions may be whether there is a need for greater consistency between states, how workers’ compensation benefits are calculated, how artificial legal constraints affect the process, and how permanent effects of injury are compensated. In the end, it is critical that everyone understands that we as consumers are the ultimate payers of workers' compensation. So express your opinions as to what it should be and how it should work. 

There will be many discussions ahead. Many great groups like NASI, SAWCA, NAPEO, NCSI, AAOS, NAWCJ, WCI, CWCL, ABA, WCRI, NCCI, Out Front Ideas, IAIABC, lawyers, doctors, employers, carriers, injured workers, unions, and more will host meetings, webinars and discussions. There will be blog posts by people like Mark Walls, Bob Wilson, David DePaolo and more. The 2016 conversation about workers' compensation has begun. It will persist. You can decide how and whether you will be a part of it. 

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