July marks the 50th anniversary of the National Commission on State Workmen’s Compensation laws. The system we have in place wasn’t always so. Even after the passage of protections for workers, it took years to develop today’s standards.
In 1972, a federal panel released a comprehensive review of state Workmen’s Compensation (as it was then called) laws and guidelines. As Alan explains, several states had to readjust their systems. Our current system is a complex and delicate balance of federal and state oversight, adequate protections, and employer insurance costs.
Fifty years after the initial report, is it time to review Workers’ Compensation? The workplace has changed, the shift to gig working may be leaving many behind in the “new economy.”
On July 11, the U.S. Department of Labor hosts a public roundtable on the topic featuring Alan Pierce.You can register to join online as stakeholders across the workplace safety and protection community discuss the future of Workers’ Compensation.
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Judd Pierce: Before we begin today’s episode, we would like to thank our sponsors: Posh Virtual Receptionists and MerusCase.
Intro: Workers Comp Matters, the podcast dedicated to the laws, the landmark cases and the people that make up the diverse world of workers compensation. Here are your hosts, Judd and Alan Pierce.
Judd Pierce: Hello and welcome to another edition of Workers Comp Matters. My name is Judd Pierce coming to you from lovely Salem Mass. I hope you’re all doing well today. I am just with our co-host, Alan Pierce, to talk about the 50th anniversary of the report entitled ‘The National Commission on State Workmen’s Compensation Laws.’ This was a report that was given to then President Nixon and it is to address the laws in the different states and how and if they are adequate. It is 50 years old and we’re celebrating its anniversary in July of this year. Alan, you are very instrumental in commemorating that anniversary with some other folks. Welcome to your program. Welcome to Workers Comp Matters today. And could you tell us a little bit about your activities with the anniversary?
Alan Pierce: Yeah. Thank you, Judd. Many of our listeners are probably aware and probably many are not aware that there was a commission formed back in 1970 as part of the legislation that created OSHA, the Occupational Safety and Health Administration, the OSHA Act, not only dealt with worker and workplace safety, but there was a provision in that Act that required the federal government to undertake a comprehensive study as to the adequacy of benefits and the delivery of those benefits in the various states, the 50 states of the United States. Because frankly, in 1970 and before, there were significant concerns about whether workman’s compensation as it was then called was adequately meeting its mandate of replacing wages and paying for medical bills and expenses in a fair and expeditious manner.
And as a result, Nixon and Congress, President Nixon and Congress created this commission and they had about 18 months to do a study of workers compensation generally and come up with a report. And that report was a consensus report from approximately maybe eight, 15 or 18 members of the commission and the commission chair was Professor John Burton, professor of economics and labor relations, and he put together a group of approximately 15 or 18 individuals and they issued their report and was delivered to Congress and President Nixon on July 31, 1972. And the importance of that report was that it identified 80 areas of improvement but 19 of which were deemed essential in order to make workers compensation more fair for everybody involved.
Judd Pierce: How many states interpreted it and actually changed their laws to fit what the recommendations were? Were all the states doing that?
Alan Pierce: Yes, and it wasn’t immediate. For example, in Massachusetts, our comprehensive change in our workers comp statute actually took place in 1985 so it took about 13 years for Massachusetts to bring our workers compensation statute up to par if you will. And pretty much every state in the country over the course of time in the mid-70s through the 1980s did make changes that adopted most of the recommendations of the commission keeping in mind that Massachusetts for example at the time of the commission was already meeting perhaps six or eight of those recommendations and ultimately ended up adopting perhaps 14 of the 18 essential recommendation.
So it varied from state to state but generally speaking, the first 20 years or so after 1972 would be generally speaking a period of workers compensation reform that benefited injured workers in terms of bringing their benefit levels up to standards that would be considered livable and also caused the different agencies in these states, the Departments of Industrial Accidents or Workers Comp Commissions to make their processes quicker in terms of resolving any disputes.
Judd Pierce: Would you say that the recommendations had a carrot and a stick? In other words, if the states didn’t do x, y, or z then the federal government could do this to them.
Was there any type of leverage that the federal government really had to have the states follow what they recommended?
Alan Pierce: Yes, indeed there was. And of course, this sort of put into place the distinction between what is the role of federal government as opposed to the individual states because workers compensation is devised statutorily and administratively to the states.
So, the idea was that the federal government suggested that if the states or some states lagged behind the very basic necessities of a fair and equitable workers compensation system then the federal government could look at alternatives such as perhaps, but hopefully not, in federalizing workers comp and making it a system for example within Social Security, the way Social Security Disability is or in making it federalized. And I don’t think anybody wanted that. That was perhaps as you put it the stick to make the carrot a little more appealable. And it worked. I mean, workers comp benefits are primarily delivered by private insurers who try to premium. Obviously they are profit-making entities and some suggested that a system such as workers comp should not be done with insurance involved and then profit motive behind it.
So the idea was to really seek a balance. Allow the insurers to make a fair return on their premiums and on their investments and deliver those benefits in a fair and timely fashion. And it worked. The states, one way or another, did make the necessary changes. However, that’s only two thirds or 40% of the story of the last 50 years. The first 20 years were the implementation of most of the recommendations and the last 30 years, which perhaps might be your next question Judd, what happened beginning in the 90s?
Judd Pierce: What happened beginning in the 1990s for our listeners who probably are familiar with the laws? Things have changed in the last 30 years that were different than the 20 years after the commission’s report. What are those changes that have developed around the country and put it into proper perspective for our audiences to why that might have happened?
Alan Pierce: Sure. Obviously, once these individual states started to amend their workers comp statutes to make the wage replacement benefits more fair and adequate for example the commission called for the base rate to be two-thirds of the injured worker’s average weekly wage. Some states were already there, some states were paying less than that. And also, identifying things such as how long somebody should be allowed to collect temporary total disability benefits, temporary partial disability benefits, et cetera as the adequacy of benefits to the injured workers increased.
Coincidentally at the same time in the 1970s and 1980s, independent of the national commission, we saw a spike in medical health insurance generally and the cost of medical treatment. So the added costs of enhanced benefits to injured workers and enhanced medical payments which were beyond the control of the injured workers led to an increase in costs to the employers. And keeping in mind, the entire system of workers compensation is one which seeks to be a balance between the providing of adequate equitable and expeditious benefits to injured workers on the one hand and keeping it relatively affordable to employers who pay the premiums on the other hand.
And when it gets out of sync and if you can think of this being perhaps the scales of justice or seesaw, once the balance before 1972 was down for injured workers and once it improved then we saw in the course of the first 15 or 20 years that it became unaffordable for many employers. As a result, legislators across the country and governors across the country addressed those concerns by in effect passing workers compensation remedial legislation to cut benefits where they could do to change benefits to put different controls in which was one of the goals was to reduce the cost or the affordability of these benefits.
So as Professor Burton has pointed out, it was a balance between adequacies of benefit system versus the affordability of those benefits.
And in my view and many other commentators’ view over the last 30 years, those scales have tipped the other way. The efforts to bring workers comp costs more in line with affordable premiums has achieved for the most part it’s goal. And the question now is, now 50 years later or the last 30 years beginning in the 1990s, the retraction to these benefits, is it time to revisit the balance between adequacy and affordability and focus, not in the entire system as the 1972 commission report did, but look at those particular areas in individual states where by just tweaking or adjusting benefit levels or taking a look at the adequacy of benefits versus the affordability, are there ways of improving the system?
So, our goal in 2022 is to acquaint the workers compensation community with why there was a commission, what the commission did, what were the effects of those commission of the commission recommendations. And now a half a century later in a wholly different workforce, we now have people that are not covered on workers comp. And one of the very first recommendations of the commission was expanding coverage so that people that are working for a living are covered by workers comp. And typically, that has been employees of employers. It doesn’t reach two independent contractors, it doesn’t reach the self-employed people unless they choose to cover themselves and it isn’t reaching the larger section of our workforce today which I guess you would call the new economy, the new workforce, the gig workers, the people that are employed but not in the traditional employer and employee relationship that would be covered under workers comp.
So there have been so many changes that have taken place over the last half-century that I and others thought it would be a good idea to use 2022 as the 50th anniversary to revisit and acquaint people with the underlying concept of workers comp, where it’s failing, where it needs to be improved and perhaps areas that weren’t envisioned by the 72 commission that need to be addressed such as occupational disease which was mentioned and talked about in the commission but COVID has taught us that things unexpected like a pandemic or other types of occupational diseases that are being uncovered in various states are not adequately treated by their workers compensation programs.
Judd Pierce: Why don’t we take a quick break?
Alan Pierce: Right. After a brief break, we will be right back with the second half of Workers Comp Matters.
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And we’re back with another edition of Workers Comp Matters. Alan, is there another example of a big report like this coming out with national urgency and then having it many, many decades later a revisiting to that report in a new report. In other words, I guess this is a two-part question. Do you have any precedent for having a new commission and has there been a request of congress or the federal government to do a new report?
Alan Pierce: Good question. That subject has come up. I don’t think we are in the type of crisis that would call for a new commission, burden himself and we interviewed John Burton on this podcast maybe I think in 2018 and he doesn’t feel first of all that a new commission is necessarily necessary, if I can use that term, nor does he think it would be feasible in today’s political climate. Instead I think there is a role for the federal government without a new commission to at least oversee or look at and perhaps have a study, maybe something a little less formal and a little less comprehensive than a full-scale national commission and a report.
The national commission held hearings all over the country for a year and a half taking testimony on issues. I think that so much of the recommendations of national commission, that work has already been done. I think what we ought to do is perhaps look at and study without a commission areas in which the states can do a better job with maybe some federal prodding of looking at their own statute and identifying areas that would be improved upon. So no, I don’t think a commission has awful lot of widespread appeal or is practical in today’s political environment.
Judd Pierce: Yeah. I mean reading this report and just hearing your history of it, nothing can be as more topical as states’ rights versus federal rights as what we’re seeing our Supreme Court doing recently in their decisions really putting a lot of onus on the states to change their laws and leaving it up to the states to do that. So it would seem like a very topical time to really adjust the statutes and making them a little bit more equitable again.
Alan Pierce: Again, it’s the idea of workers comp should not be so overly generous that it defeats its purpose by the same token. It should provide an adequate level of benefits that families and individuals are not forced into poverty, bankruptcy, lose their homes or have to have their kids withdraw from school or college. I’m not saying that workers comp benefits — you know, certainly something like 60, two thirds of the worker’s average weekly wage for a period of time when they are unable to work is there. The duration of that, one of the things, the areas that the national commission did not reach consensus on and is a problem today, and I’m not sure how it can be addressed, is the issue of permanent partial disability.
A worker who has a permanent impairment to his or her earning capacity in virtually every state is limited to either to a one-time payment for a scheduled loss or they are limited to a defined period of eligibility for temporary partial disability benefits. So that is one area I think that needs to be looked at as well as occupational disease as well as expanding coverage to individuals who are not covered. There are a lot of farm workers and agricultural workers who are outside of workers comp. There are a lot of employment areas that have been carved out of workers comp. Certain people like cab drivers for example or other types of workers in specific employments may not be covered under workers comp.
Judd Pierce: Alan, what is coming up on July 11 down in Washington, D.C.?
Alan Pierce: Yes. The efforts to recognize, to celebrate if you will, and commemorate the important report of 50 years ago has reached the U.S. Department of Labor. And there is going to be a public gathering on July 11 from 10:00 a.m. to noon at the Department of Labor where John Burton, Professor Emily Spieler who is a well-known commentator and a researcher, an academic and law professor teaching labor relations and workers comp and myself will have a roundtable discussion moderated by Christopher Godfrey who is the federal director of the Office Workers Comp Programs to actually discuss what we’ve been discussing today to just acquaint the entire community of workers comp. Not just attorneys or claims folks but with managers, human resources folks, medical providers, vocational rehab providers, actuaries, accountants, policymakers, legislators, judges, et cetera. And to just kind of take a time to reflect and address the concerns that existed in 1972 and some of which still continue today.
In addition to what is going to be taking place on July 11 over the course of this year and coming up for the rest of 2022, about 18 or 20 different states have already run programs, panel discussions, seminars, conferences discussing this very topic. So I think what we’ve seen the goals of the planning committee I think have been met and that is simply to acquaint the entire world of workers comp however you define that word with a) the existence of the commission report, why it issued, how it affected our profession over the last 50 years and equally if not more importantly, how can we utilize all of that data knowledge information today in keeping to improving the system so that it is fair to all involved so that injured workers and their families get adequate benefits in a way that employers can afford to pay for them through premiums and for individual states to deliver them in a fair and efficient manner so that you don’t have to wait years to have your case heard at an industrial board.
Back in Massachusetts, it could take two or three years in the 60s and 70s to get a case for it. Today, a claim is filed and you could be before a judge in just early as three or four months and get an award of benefits subject to an appeal and an appeal hearing is generally — everything could be done within a year despite maybe some delays on particular cases where there are issues. But the process today is much more streamlined and much more efficient and we can continue to build on those gains going forward.
Judd Pierce: Absolutely. And Alan, I can’t thank you enough for what you’ve done, all the hard work and the many hours it’s taken to plan this anniversary year and I look forward to at least virtually joining you on the D.C. July 11 event from 10:00 a.m. to noon at the Department of Labor. For folks who want to register, it is a free event and if you’re not in D.C., you can register and watch it virtually. You can go to our website, we have a link to that. I guess it’s Eventbrite registration form. You just fill in your name and your email address and they’ll send you a link to click on it so that you can watch this discussion which will be a very informative one. And this is a great idea to have you on Alan to talk about it today and I think the segue into the permanent partial discussion will really lead well for our guests that were going to be hosting in later this month, someone who has studied that and has some thoughts on that element of states laws, the permanent partial question. Alan, was there anything else you wanted to add before we wrap up today?
Alan Pierce: Well, I would. I thank you for that comment about my role in this. My role was peripheral. The College of Workers Compensation Lawyers actually had the idea to figure out a way to commemorate the commission’s report in a committee chaired by fellow of the college, James (00:22:14), a defense attorney from St. Louis Missouri, would chair our planning committee. It consisted of Professor Burton and a dozen others and it was the hard work of that committee I think that got the word out to all of the states and all of the stakeholders and workers comp that this is something to look at again and do so with an eye towards improvement of the system and put away sort of partisan concerns of politics and injured worker versus employer. I think everybody has the same goal that there is an obligation to make sure that injured workers and their families are not driven into poverty because of the unfortunate happening of an accident but at the same time that the employers are able to and ensures are able to deliver a stream of benefits to folks when they need it, where they need it and get it in a rather conflict-free fashion.
Judd Pierce: I invite our listeners again to go to our website, ppnlaw.com for registration for the July event and hopefully link a copy of the report itself on our website. I know you can easily google it, download it, print it out. It’s 130, 140 pages with some appendices I guess butt it’s well worth at least skimming it and picking out thoughts and comments on the commission that are still resonant and relevant today.
Alan Pierce: Exactly.
Judd Pierce: So thank you Alan for being our co-host and our special speaker in this edition of Workers Comp Matters. I look forward to our next conversation. Until next time. Thank you for listening to us making a day that matters.
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