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Trends in workers' compensation.

Changes in state workers' compensation systems from 1991 to 1996 reaped $3.6 billion in savings nationwide, but the savings are at the expense of injured workers.

On September 19, 1996, Terry Lee Hogan highjacked a taxi at gunpoint and drove to a defense law firm in West Palm Beach, Florida. He was looking or Anne H. Ford, the attorney who represented his employer's insurance carrier in the denial of his workers' compensation case.

Unable to find her, he seized two other defense attorneys as hostages. He killed one, wounded the other, and then shot and killed himself. After the shooting, a note was found at his apartment that read "I cannot bear to watch people suffer at the hands of workers' compensation anymore. I must try to lash out."(1)

At first glance, this appears to be an violated incident. It is not. Two other examples are from Virginia and Ohio.

In Virginia, 29-year-old Ben Stone injured his back at work. After the accident, his condition initially improved, then worsened. When he could no longer work because of his injury, his employer, Formex, Inc.? a steel product manufacturer, refused to pay his workers' compensation benefits.

The ensuing emotional and financial hardship pushed Stone over the edge. On September 22, 1993, he barricaded himself inside his mother's home, put a shotgun to his chest, and pulled the trigger. On the day of his suicide, Stone was complaining of severe pain and was despondent because his employer had refused to pay for medication that could have relieved his pain and depression.(2)

Around the same time that Ben Stone was injured, James Dailey, a welder, hurt his back in Ohio. After two years, Dailey finally started receiving disability benefits. However, his benefits were terminated in March 1996 because the Ohio Industrial Commission found that he had not engaged in a good faith job search.

Dailey, who had enrolled in evening drafting classes and sought employment at local businesses, snapped. On November 13, he walked into the building that houses the commission and held three men hostage for more than seven hours. He was eventually overpowered by one hostage and taken into custody. Dailey, who had no prior criminal record, no income, and no benefits was held in custody with a bailbond set at $1.5 million.(3)

The common thread in these stories is that they took place in states where workers' compensation laws have been passed denying injured workers the minimum financial sustenance they need to get healthy and go back to work. The laws are part of a nationwide attempt by the insurance industry and big business to gut individual state workers' compensation systems.

While the "reform" has been disastrous for injured workers, employers and insurers have benefited. Changes in state workers' compensation systems from 1991 to 1996 reaped $3.6 billion in savings nationwide, according to the National Council on Compensation Insurance, Inc.

These savings are at the expense of injured workers, many of whom are no longer eligible for benefits and are put on welfare rolls. For example, in Terry Hogan's state of Florida, "reform" measures instituted in 1994 included reducing temporary total disability benefits from six to two years.(4)

Because Hogan had already received two years of temporary total disability bene its, he was notified that he would be eligible for only 26 more weeks of benefits at half the rate he was then receiving. It was within one week after receiving this information that he killed himself.

The Florida"reform" enactments also condoned ex parse contact between he claimant's doctor and the insurance carrier's attorney. In notes written by Ho San and found after the shooting, he expressed bitterness over medical appointments canceled by his company's attorney, Anne Ford.(5)

Florida Gov. Lawton Chiles (D) blamed Hogan's benefit cuts on a national trend. After the shootings, he said, "What we did was something that a number of states were doing. The theory was that if you tell somebody that you have to be off the system at a certain time, they will do what needs to be done to move ahead. Is the theory sound? I don't know the answer to that."(6)

Ohio recently adopted legislation that cuts off or drastically limits benefits once an injured worker reaches maximum medical improvement. (See sidebar on page 54.) The problem: An injured worker can reach his or her maximum medical improvement and still be 100 percent disabled and left without meaningful retraining or education.

Dailey's benefits stopped after he reached maximum medical improvement and a determination was made that he had not engaged in a good faith job search. Despite his efforts at self-improvement, he was still penalized by the system and ended up without retraining or other benefits to sustain him.(7)

Workers' compensation and employment laws in Virginia generally have favored business and insurance companies. in addition to its at-will doctrine and "right to work" status, Virginia is a mecca for new employers because of its low workers' compensation costs and its thriving economy.(8) On average, employers in Virginia pay $2.21 for every $100 of payroll for workers' comp.(9) The national average for workers' compensation coverage is $5.13. Hawaii has the highest rate, with employers paying $9.08 per $100 of payroll.

In an effort to attract new business, other states try to model their systems after Virginia's archaic compensation laws, which leave injured workers wanting if they are disabled as a result of cumulative trauma, stress, carpal tunnel syndrome, hearing loss, or aggravation of a disease by exposure or cumulative trauma at work. A watered down carpal tunnel and hearing loss bill became law July 1, 1997, only covering workers who prove their case by "clear and convincing evidence, to a reasonable medical certainty."(10)

In recent years, Kentucky, Oregon, and Texas(11) have also undergone major changes, to the detriment of injured workers. Oklahoma is currently poised for similar changes.(12)

Insurance industry objectives

Considering that insurers realized $3.6 billion in profit over the past five years, one would think the industry would start plowing some of the savings back into the system to fill the cracks many injured workers have been falling through. But that will not likely happen without a fight. The American Insurance Association (AIA) is already lobbying for additional "reforms" in Alabama, Georgia, Hawaii, Illinois, Michigan, Missouri, New York, and Tennessee.(13)

The AIA has identified the following objectives:

* Limiting or abolishing claims for nonscheduled soft-tissue-type injuries, including carpal tunnel and repetitive motion injuries, and stress-related injuries.

* Eliminating benefits for injuries related to preexisting conditions or nonwork environments, and most occupational disease claims.

* Pushing for the mandatory use of the American Medical Association (AMA) Guides.

* Pushing for ironclad exclusive remedy provisions.

* Legislating attorneys out of the system to eliminate litigation costs in favor of alternative dispute resolution.(14)

Why is the insurance industry so optimistic? Probably because it enjoys the support of many conservative politicians and big business.

In Oregon, major "reform" took place in 1990. Pushed through committee by the governor, the proposed bill showed defense attorney involvement and produced the most extensive restructuring of workers' compensation in 25 years.

The Oregon AFL-CIO endorsed the committee's proposed bill without having seen it. Rank-and-file union members were slow to complain about the executive board's actions. By the time more than a dozen unions representing a majority of organized labor had condemned the bill and the executive board's actions, it was only two days before the special session. Trial lawyers' belated complaints were dismissed as lawyers protecting their own special interests, as were the protests of union members. Reminded that most union members opposed the bill, legislators said that they did not know what labor wanted.(15)

In Virginia, organized labor helped use its influence to kill harmful workers' compensation legislation and gain limited coverage for carpal tunnel syndrome and hearing loss. However, labor agreed not to oppose the appointment of a veteran insurance industry defense attorney to the Workers' Compensation Commission.

This appointment is controversial because it is contrary to Virginia law, which prohibits more than one commissioner with a background in representing employers. According to Jack Crouse, president of Virginians to Improve Workers' Compensation and editor of Workers' Rights Magazine, the balance between labor and management envisioned by the statute has now been upset.

Crouse points out that "now that two of the three full commissioners have defense backgrounds, it will be difficult for injured workers to prevail when they appeal a case to the full commission because it takes a 2-1 majority to win at that level."

The full commission in Virginia is powerful, because it is the final arbiter on all questions of fact, including most medical issues.

Consumer countermeasures

Is there a way to counter these "reforms"? The following strategy may give injured workers a chance to reverse their plight. Workers, unions, and attorneys should band together to--

* Launch a massive drive for new legislation on workplace safety and better workers' compensation benefits, including rehabilitation, retraining, and job placement assistance.

* Institute a campaign to reeducate legislators and the public about the harm that current legislative efforts pose to injured workers, pointing out, among other things, that any attempt to narrow the definition of a compensable injury amounts to nothing more than cost-shifting when injured workers go on welfare rolls.

* Demand a new focus on premium fraud committed by employers, who, according to at least one state study, are twice as likely to commit workers' comp fraud as are their employees.(16) Emphasize that honest employers are subsidizing dishonest employers who lie about their payroll and the type of work they do.

* Influence the coming legislative battle over regulating managed care. Tell your legislators that managed care means directing injured workers to physicians who are on insurance company panels for the purpose of rendering minimal care and returning the injured employee to work as quickly as possible.

* Form coalitions among state trial lawyer associations, workers' compensation attorneys, injured workers' groups, and state AFL-CIOs to fight the insurance industry's legislative agenda. Attorneys have a number of resources for helping them in this battle. For example, the Workplace Injury Litigation Group (WILG), formed in the spring of 1995, is one of the fastest growing ATLA litigation groups.(17) WILG brings together claimants' attorneys from around the nation to educate the public and other attorneys about workers' compensation and the "reforms" proposed by the insurance industry.

Already, the strategy outlined above has produced a glimmer of hope. For example, a coalition of unions, injured workers, and attorneys in Ohio has joined together and has gathered some 400,000 signatures on a petition--twice as many as were needed to place a referendum on the fall ballot. This will allow voters the opportunity to repeal the bills that were jammed through the Senate and House, drastically changing the face of workers' compensation in Ohio.(18)

After the Florida workers' compensation murders, both the governor--who pushed for the reform--and the attorney general agreed that the changes in the state's compensation system should be reexamined. Governor Chiles said that the recent tragedy "may well hasten the reevaluation of the Florida compensation reforms, given the widely expressed view that the system has moved too far in the direction of cutting benefits to accomplish premium reduction."(19)

Attorneys' role

Similarly, workers' compensation legislation in Oklahoma was tempered by input from organized labor. Ross J. Williams, president of the Oklahoma AFL-CIO, which opposed the original legislation, said that the bill that passed was "nothing like that which was introduced.

"I'm happy with it, especially when you consider whet could have happened," said Williams.(20)

As trial attorneys, we are on the front lines of the battle to preserve workers' compensation benefits for our clients. If we drop our guard, we could very well join our clients on the casualty list.

In Texas, workers' compensation "reform" drastically limited benefits and virtually removed lawyers from the system. As Margaret Maisel, former chairperson of the Texas Workers' Compensation Commission, put it, `We went home from the legislature on Friday thinking the reform bill was dead and by Monday they had completely destroyed workers' compensation in Texas. It's worse now than we ever thought possible."(21)

Through heightened awareness and activism, we have a chance to repair the safety net of workers' compensation that has been taken away by an industry that has subordinated the interests of injured workers to bottom-line profits.


(1.) Special Report: A Workers' Compensation Murder, LARSON'S WORKERS' COMP. NEWS, Oct. 1996, at 9.

(2.) Stone v. Formex, Inc., VWC No. 165-25-59 (Va. Workers' Comp. Comm'n May 15,1996).

(3.) Developments: Ohio Hostage Taking Ends Peacefully, LARSON'S WORKERS' COMP. NEWS, Dec. 1996, at 3.

(4.) Greg Tarpinian, Pre-empting the Final Attack on Workers' Compensation, Address to the Workplace Injury Litigation Croup, Chicago, Ill. (Apr. 26, 1997).

(5.) Special Report, supra note 1.

(6.) Id.

(7.) Developments, supra note 3.

(8.) Comp Clips: Virginia's Growth Expected to Outpace National Economy through 2000, 85 Workers' Comp. Bus. Mgmt. Guide (CCH) 247 (Apr. 1997).

(9.) State Laws: Oklahoma Poised for Widespread Reform as 1997 Legislative Session Draws Near, 81 Workers' Comp. Bus. Mgmt. Guide (CCH) 211 (Feb.1997).

(10.) VA. CODE ANN. [sections] 65.2-401.1 (Michie 1997).

(11.) Developments--Kentucky: Special Legislative Session Makes Sweeping Changes in Workers' Compensation Law, LARSON'S WORKERS' COMP. NEWS, Jan.1997, at 3; David A. Hytowitz & Robert C A. Moore, State Workers' Compensation Systems Under Attack, TRIAL, Sept.1990, at 44. Similar antiworker legislation was recently introduced and passed in Kentucky. There, the definition of injury was narrowed to exclude the natural effects of he aging process as well as communicable diseases and psychological or stress-related claims. Attorney fees are limited to the lesser of $2,000 or 20 percent of the eventual award, and if a case is appealed the fees cannot exceed $10,000. The state's Special Fund was been abolished, and a new procedure for medical review has been instituted in which injured workers are examined by a special panel of physicians at he state's two medical schools and evaluated according to AMA guidelines.

(12.) State Laws, supra note 9. Recently, Oklahoma Lieutenant Gov. Mary Fallin called for widespread reform in preparation for the state's 1997 legislative sessions. She characterized the system s a "kind of casino in which workers are encourage to `step right up and try your luck at a big cash prize.'" Among the changes being considered are a statewide mediation system available to employees at any time during the workers' compensation process and a revision of the "soft-tissue" classification to place a stronger burden of proof on the worker and doctor.

(13.) Tarpinian, supra note 4, at 3.

(14.) Id. at 4.

(15.) Hytowitz & Moore, supra note 11.

(16.) L. Wayne Hicks, Surprise Workers' Comp Study: Business the Villain in Many Fraud Cases, DENVER BUS. J., Mar.20, 1992, at 1.

(17.) For more information on WILG, contact Litigation Group Coordinator Sandra Kim at (800) 427-2725, ext. 306.

(18.) Gregory E. Williams, Ohio Coalition Files Referendum to Repeal Senate Bill 45, NAT'L WORKPLACE INJ. LITIGATOR, Jan./Apr.1997, at 1.

(19.) Special Report, supra note 1, at 11.

(20.) Legislature Passes Measure Highlighted by Increase in Death Benefits, 8 Workers' Comp. Rep. (BNA) 300,300 (June 9,1997).

(21.) WAKE UP! BEFORE INJURED WORKERS' RIGHTS ARE DESTROYED (ATLA Workplace Injury Litig. Group, pamphlet, 1997).

Geoffrey R. McDonald and Laura Ann McDonald practice law in Richmor I, Newport News, and Norfolk, Virginia.

RELATED ARTICLE: Ohio `reforms' undermine workers' rights

Ohio is a poster child for the race to the bottom in workers' compensation standards. Surrounded by states that have recently enacted their own workers' comp "reforms," Ohio adopted a 159-page workers comp reform bill in April that undermines workers rights.

Ohio is not new to the workers comp reform game. The state has witnessed three prior reforms in the 1990s. But none could match the 1997 package crafted by Ohio business interests--led by LTV and Timken Steel Co.--in league with a Republican-controlled legislature and a Republican governor.

The severity of the 199 i reform however. has generated an aggressive response from an enlarging coalition of organized labor women s groups workers' compensation attorneys and various other citizen organizations. The coalition has a good chance of rolling back the `reform' package. To do so would transform the political climate in the state--and perhaps set an example for other states.

The 1997 bill is a direct outgrowth of the 1996 state elections which resulted in a strong conservative majority in both houses of the state legislature. Quickly finishing with their first order of business--a far-reaching "tort reform" bill--the legislature proceeded to assail workers' comp. The complicated bill was introduced in the state senate on February 13 with the standard claims that it would reduce waste fraud and delay. On April 22 Gov. George Voinovich (R) signed it.

Included in the bill are provisions to:

* Prevent consideration of a person's education or past work experience in the determination of permanent and total disability awards. Some have estimated that this change alone will drop the annual number of permanent and total cases from 2,000 to about 150. standard for coverage

* Change the standard for coverage of occupational diseases so that, for diseases to which the public is exposed outside the employment context, workers must show a disease is characteristic of, or peculiar, a particular industrial process, trade or occupation "to obtain worker's compensation. Thus, workers contracting workplace-related cancer would be saddled with the heavy burden of showing their cancer is unique and exclusive to their particular job or industry.

Specifically excluded from coverage are diseases or conditions caused primarily by the natural deterioration of the tissue, organs or other parts of the body."

* Classify repetitive motion injuries as occupational diseases and force workers suffering from carpal tunnel and other repetitive motion injuries to meet extraordinarily difficult `characteristic!' or "peculiarity" burdens of proof. The effect will be especially harsh for women since employers can be expected to cite evidence that women are physiologically prone to repetitive motion injuries outside of employment.

* Change the statute of limitations for occupational disease from two years after the disability due to the disease began to two years after the first diagnosis. No mention is made of notice of the diagnosis to the injured worker.

* Make confidential the injury disease and accident records maintained by the Division of Safety and Hygiene.

* Require hearing officers to rely solely on state Bureau of Workers' Compensation doctor estimates as to percentage of permanent disability--without regard to findings of a worker's physician.

* Restrict nonworking wage loss payments from 200 weeks to 26 weeks.

* Replace the term "disability" with "impairment " and permit compensation only for degree of impairment--a medical concept that ignores the effect a medical impairment may have on a person's ability to work.

* Require hearing officers to determine degree of impairment based on the American Medical Association's permanent impairment guidelines--even though the AMA has specified that use of the guidelines for workers' compensation disability assessment purposes is "unfair, arbitrary and unreasonable."

* Shrink the continuing jurisdiction of the Industrial Commission from 10 years to 5 years, with only limited exceptions. Continuing jurisdiction for compensation would only be extended with periods of total disability.

In passing such radical legislation Ohio legislators and big business have unexpectedly generated a potent citizen revolt, workers' compensation lawyers and labor unions organized an advertising letter-writing and citizen mobilization campaign against the bill immediately after its introduction, but their effort was doomed to failure.

The coalition of workers' compensation defenders persisted however. It succeeded in a petition drive to force a November referendum on the legislation--the first time Ohio voters have successfully petitioned for a referendum in more than half a century. The coalition submitted more than 400 000 signatures to the Secretary of State--twice the number required.

Ohio voters will decide on November 4 whether they want to plunge to the depths in the workers' compensation race or whether they will call a halt to a race that only employers can win.

Esther S. Weissman is an attorney in Cleveland, Ohio. Robert Weissman is an attorney with the Washington, D. C.-based Center for Study of Responsive Law and the editor of Multinational Monitor magazine.

RELATED ARTICLE: Workers' Compensation and Workplace Injury Section: keeping abreast of the issues

ATLA's Workers' Compensation and Workplace injury. Section aims to sharpen the skills of attorneys. The section offers continuing legal education programs and distributes helpful information to members.

The section provides a clearinghouse of information on new state legislation' insurance rate issues and data, and other research on trends and developments in workers' compensation.

Section chair Leonard Jernigan Jr. of Raleigh, North Carolina, says, "The section provides members with valuable information on what's happening and what's about to happen across the country and helps members network about issues that may affect their practices. ATLA is committed to helping section members understand and keep abreast of these issues."

At the association's Annual Convention in San Diego in July, the section sponsored an education program in conjunction with ATLA's National College of Advocacy. The program featured speakers on developing workers' compensation claims into viable third-party claims, using the AMA Guides, and understanding the proper role of the rehabilitation expert.

To promote the sharing of information. section leaders encourage members to submit pleadings, briefs, depositions. and memoranda on workplace law issues to ATLA's Exchange Deposition and Document Banks. The Exchange, which tracks litigation information on about 6,000 subjects, also offers members discounts on searches and documents. For more information, call the Exchange at (800) 344-3023.

Section officers for 1997-98 other than chair Jernigan are Steve Birnbaum of San Francisco, vice-chair; Todd O'Malley of Scranton, Pennsylvania, vice-chair; and Esther Weissman of Cleveland, vice-chair.

To learn more about the section, call (800) 424-2725, ext. 312. To join the section, call Membership at (800) 424-2727, ext. 611. Dues are $25 a year.
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Title Annotation:Worker Rights, Worker Safety; includes related articles detailing changes in the Ohio workers' compensation laws and describing the Assn of Trial Lawyers of America's Workers' Compensation and Workplace Injury Section
Author:McDonald, Laura Ann
Date:Oct 1, 1997
Previous Article:Experts in employment cases.
Next Article:Trial as theater.

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