TorteDeForm

Cyrus Dugger

International Law Meets the Workers’ Compensation System

In researching some workers’ compensation stories I gained access to a petition by some New York organizations and individuals who have filed a petition to Mexico to force US compliance with the North American Agreement on Labor Cooperation.

This petition argues that the U.S. is in material breach of its obligations under this international treaty.

As I think that international law is an area which more Americans should know a lot more about, I encourage you to read the legal arguments these organizations put forward (link to petition).

In short, the petition demands the following rather reasonable changes to workers’ compensation system which it states will bring it into compliance with the United State’s international treaty obligations:

VII. Action Requested Compliance with the U.S. responsibilities under the NAALC requires that the Board (i) render final decisions on all claims within 3 months of filing, (ii) provide immediate interim living expenses within one week of the filing of a claim and ensure that the minimum benefits level is equal to the minimum weekly wage under state and federal law, (iii) provide translation services at each compensation hearing, (iv) report regularly to the legislature and the public on its compliance with the preceding time requirements, (v) undertake a widespread public education program in the State of New York to inform workers of their right to receive Workers' Compensation in an expedient manner, and (vi) recruit injured workers, community members, lawyers, elected officials, and doctors for participation in its decision-making and to monitor implementation of the aforementioned actions.

Seems pretty reasonable.

However, for the immediate purposes of this post, the document provides an excellent overview of all that is wrong with the workers’compensation system.

As has been discussed on Tort Deform many times, the workers’ compensation system is really the posterchild for the negative effects of the legislative successes of the tort “reform” movement.

For anybody who really wants to have a comprehensive understanding of these issues, but only wants to have to read a few pages, the excerpted sections of this petition will very much meet your needs. (footnotes are at the end of full document)


The excerpted comprehensive critique of the current workers’ compensation system is below. (link to full petition)

B. Summary of Case When a worker suffers an injury or illness in the course of her employment, she submits a claim to the State of New York Workers' Compensation Board, an agency of the executive branch of the state government of New York (the "Board"), in accordance with New York State Workers' Compensation Law(5) and the rules and regulations promulgated under such law. These claims are subject to a quasi-judicial process, in which administrative law judges employed by the Board determine whether a worker presents a valid claim, the extent to which a worker has been injured or made ill due to their employment, and the amount and configuration of compensation payments for such injury or illness. This system is the exclusive remedy for workers with occupational injuries and illnesses in New York, replacing the common law tort action,(6) and is an important component of the occupational health and safety regime in the United States.(7) New York courts have recognized that the provision of a "swift and sure" source of benefits is the central purpose of the Workers' Compensation laws.(8) The North American Agreement on Labor Cooperation (the "NAALC")(9) reflects commitments by the signatory nations to provide compensation to workers or their dependents in cases of occupational injuries and illnesses(10) without unwarranted delays.(11) Delays occur in the Workers' Compensation system because administrative law judges routinely postpone cases, on their own initiative or on the request of insurance companies and employers. A significant number of employers in New York pay insurance premiums to private insurance companies on a per-employee basis so that they are indemnified against liability for occupational injuries and illnesses; some employers self-insure; and others are covered by the State Insurance Fund, an entity created by the State of New York to cover smaller businesses. Thus, workers' claims are usually opposed by the lawyers of insurance companies (who assume liability for compensation claims) and certain employers (who self-insure). These entities earn interest on unpaid compensation through various investment vehicles and force workers to accept low monetary settlements of their claims out of sheer desperation. Insurers and employers routinely request to delay proceedings; the Board routinely grants those requests, and fails to block such tactics and award compensation in a timely manner.

Specifically, this submission challenges a pattern and practice of the United States which subjects workers to unwarranted delays, as they attempt to gain compensation for occupational injuries and illnesses. Workers have little recourse when the Board demands that they make multiple appearances before administrative law judges, produce evidence and testimony for their cases over multiple hearings, and repeatedly submit themselves to medical examinations by doctors hired by opposing parties. Workers have little recourse when administrative law judges make procedural and factual errors that add many years to the pendency of their claims. The individual petitioners(12) have had up to 20 hearings over as much as 10 years as they have navigated the adjudication process administered by the Board.

This submission also concerns the prevention of injuries and illnesses, because the Workers' Compensation system is an integral element of a legal regime in which insurers penalize employers with multiple injured workers by imposing higher insurance premiums.(13) The threat of higher monthly insurance premiums for employers whose employees frequently report injuries and apply for Workers' Compensation is supposed to create an incentive for employers to prevent illnesses and injuries. However, because claims are delayed, forcibly settled at low amounts, or dismissed by the Board, the incentive structure is rendered ineffective and workplaces remain unsafe.

Relevant United States Law and Policy

"Workers' compensation is rare among the major social insurance programs in that it was from the beginning legislated at the state level with no federal involvement and has remained a state responsibility ever since."(14) The New York State Workers' Compensation Law was enacted in 1914 "to provide a swift and sure source of benefits to the injured employee or to the dependents of the deceased employee." O'Rourke v. Long, 41 N.Y.2d 219, 222 (1976). The system was designed to compensate injured workers regardless of fault and to return them to employment without risking their health or welfare. Workers and employers are required to participate in the workers' compensation system, which is an exclusive remedy for workplace injuries and illnesses, replacing the common law tort action. Employers may self-insure, contract with private insurance carriers, or join the state-run insurance fund.

A. New York State Workers' Compensation System

The Board is the state agency responsible for the administration of the Workers' Compensation system in New York, which includes the processing and adjudication of individual claims. The Board is composed of 13 Commissioners, all of whom are appointed by the Governor of the State of New York and confirmed by the New York State Senate for terms of seven years. The agency is currently chaired by Robert Snashall. Workers' compensation hearings are conducted before administrative law judges (the "Judges") who are appointed by the Chair of the Board through a Civil Service competitive process. Hearings are held before an administrative law judge but do not follow Anglo-American common law, statutory rules of evidence, or formal rules of procedure.(15) A Judge's decision is deemed the decision of the Board unless the Board modifies or rescinds such decision. Reviews or appeals of their decisions are held before a panel of three members of the Board. Decisions of the Board may only be appealed to a particular intermediate appeals court in New York State: the Appellate Division, Third Department.(16)

In 2000, the Board indexed and scheduled for review 171, 397 cases. 2000 New York State Workers Compensation Board Annual Report (hereinafter 2000 Annual Report) at App. III. Overall, the district offices held a total of 475,964 "hearings". 2000 Annual Report, at App. V. Of the claims filed in 2000, 26,492 were controverted, or contested by insurers/employers. Id. at App. IV.

B. Recent Reforms Limit Access to Medical and Cash Benefits

Throughout the 1990's, legislatures in various states, under the pressure of national insurance carrier corporations and business interests, enacted numerous reform laws that lowered premiums for employers and raised profits for insurance carriers. In 1996 alone, 37 states (including the State of New York) enacted comprehensive reforms in their respective workers compensation systems.(17) The Consumers' Union, a respected nonpartisan research foundation, recently examined workers' compensation systems nationwide and concluded that the recent reforms had "clamped down on benefits, raised eligibility requirements, and put medical treatment mainly in the hands of insurance companies, which can delay or deny medical care or income payments." Workers Comp: Falling Down on the Job. 65 Consumer Rep. 2, 28 (Feb. 2000). The Consumers' Union report outlined the costly, methodical campaign promulgated by insurance carriers to justify cuts in workers compensation benefits.(18)

In the State of New York, Governor George Pataki has followed the national trend and focused his reform efforts on reducing the costs of workers' compensation to employers and insurance companies. In a May 14, 1999 press release, Governor Pataki proposed to cap benefits for workers with permanent partial disabilities at 700 weeks (approximately 13.5 years). For business, the costs of permanent partial disabilities are the most expensive component of the workers' compensation system. By enacting the 700 week cap on benefits which are currently paid for life, the Governor advocates the shift of the costs of workplace injuries from employers to Social Security Disability or some other form of taxpayer-funded assistance. Pataki's goal, as stated in his press release, is to cut employers' insurance rates by 24 percent. During the last four years, those rates have fallen 38 percent, while insurance companies in New York State remain amongst the most profitable in the United States. Further, Governor Pataki has pushed to keep the minimum weekly compensation at a level amongst the lowest in the nation, $40.00 per week,(19) providing insurers and employers with further incentive to earn interest on unpaid compensation rather than completing adjudication.

In a series of decisions, New York courts have endorsed the policy of treating workers' compensation as an exclusive remedy for damages due to workplace injuries and illnesses. The executive, legislative, and judicial branches of New York State government have firmly closed the door on the possibility that damages due to workplace injuries and illnesses may be recovered through any means other than the Workers' Compensation system. While costs to employers and insurance companies have been a primary focus of recent reform efforts, workers continue to suffer unreasonable delays in the adjudication of their claims, without any recourse.
IV. The State of New York and the Workers' Compensation Board violate Articles 3 and 5 of the NAALC
The NAALC requires that each signatory nation "effectively enforce its labor law."(20) The NAALC also includes certain procedural guarantees with regard to the administration and enforcement of each party's labor law. According to the NAALC, "[e]ach party shall ensure that its administrative, quasi-judicial, judicial and labor tribunal proceedings for the enforcement of its labor law are fair, equitable and transparent and. . .such proceedings are not unnecessarily complicated and do not entail unreasonable charges or time limits or unwarranted delays."(21) The NAALC goes on to require that "[e]ach party shall provide that final decisions on the merits of the case in such proceedings are. . .made available without undue delay to the parties to the proceedings and, consistent with its law, to the public."(22) Workers' Compensation proceedings in New York State entail unwarranted delays and there is undue delay in the availability of final decisions on the merits of cases.

A. The Delays in Claim Adjudication for Occupational Injuries and Illnesses are Extreme and Widespread

Labor and immigrant advocates(23) report that members await final adjudication of their claims for up to 20 years, with an average case open for approximately six years, during which time Workers' Compensation payments and medical reimbursements are suspended.(24) Individual petitioners, who are representative of thousands of other injured workers in New York, have had up to 20 hearings in their cases over a period of up to 10 years.(25)
Judges frequently adjourn hearings in order to allow insurer/employers to acquire a medical report or because of the nonappearance of insurer/employers' counsel or witnesses.(26) The duration of many hearings is less than fifteen minutes and only a single procedural issue is dealt with by the judge in those hearings.(27) Identical issues are discussed repeatedly in multiple hearings.(28) The gaps of time between hearings are often as long as one year, during which time injured workers must survive without a job or Workers' Compensation benefits.(29) Injured workers are required to answer the same questions at hearings spread out over many years. Further, many immigrant workers are unable to comprehend the hearings due to the lack or inadequacy of translation services.(30) Judges summarily adjourn hearings and dismiss cases because of their procedural errors.(31) Decisions by judges in favor of workers are most likely to be appealed to the Board by insurer/employers, thus extending the period of time during which Workers' Compensation payments and medical reimbursements are suspended.(32)

Following up on a 1988 report which studied administrative hearing effectiveness, the New York State Bar Association's Task Force on Administrative Adjudication issued a second study in 1999 to determine whether sufficient safeguards are now in place to ensure the integrity of agency hearings at five state agencies, including the Workers' Compensation Board.(33) Focusing on the Workers' Compensation system in New York, the task force stated: It is clear that the review delays described in the 1988 Task Force Report are still occurring. Moreover, those delays are being used by insurance carriers and employers to obtain unfair advantage over claimants. Workers' Compensation attorneys report that the dilatory review process is used by attorneys for employers and carriers to "cower" claimants' attorneys. The threat of a long contested claim proceeding followed by a long review process is potent enough to force many claimants to settle for less than they might otherwise be entitled to receive, especially in light of the automatic stay of benefits pending the outcome of an administrative review.(34)
The State Bar Association report highlights the endemic problem of delays in adjudication, while also unearthing the profit motive underlying the deprivation of due process. While the attention of the state bar has been much-needed, the delays in adjudication and the suffering of injured workers and their families has only worsened since 1999.

B. Delays in Claim Adjudication Lowers Compensation for Workers

The Board cuts off benefits well before a final decision is rendered in a case, usually on the motion of the insurer/employer and often without substantial evidence.(35) Thus, many adjournments occur at a time when workers are not receiving any benefits, for living expenses or medical care.(36) Further, the Board often dismisses cases after years of minimal factual development at trial or upon appeal, leaving workers relying upon the possibility of benefits in even more difficult straits than when they lost their job due to injury or illness.(37) Finally, workers suffering from workplace injuries and illnesses do not file for Workers' Compensation because of the procedural dysfunction of the system.(38) Faced with the choice of continuing to work in a hard-earned job with an injury or illness or with falling out of the labor market on the promise of Workers' Compensation benefits that are never granted or that are granted after many years of minimal factual development and/or appeals, workers opt to continue in their job, often with a great deal of pain and resulting in recurring injuries and illnesses.(39)
Because workers are partly or wholly disabled from participating in the market for labor, the delays in adjudication and consequent lack of Workers' Compensation benefits impose heavy costs, with formerly productive workers suffering from pain, poverty, hunger, and homelessness. Workers are unable to support their families in the United States and in their countries of origin. Family resources are drastically diminished by medical and living expenses. Healthy family members are forced into the work force, while injured workers suffer from physical and mental ailments and are unable to provide necessary care for spouses, children, and elders. Moreover, some workers eligible for Workers' Compensation are ineligible for other governmental benefits for various reasons, including immigration status.(40) Even when injured workers are awarded weekly benefits, some receive as low as $40.00 per week. The Board has arbitrarily slashed weekly benefits in a number of cases to well below $100.00.

C. Many Workplace Injuries and Illnesses Occur in Trade-Related Industries Characterized by Long Hours and Low Pay

Petitioner Zhi Hua Qian moved bundles of linen at a large hotel in New York City owned by the multinational Marriott Corp. He was forced to work without breaks for less hours than others, but to complete as much work as they were assigned. His intense work schedule, as well as the difficult work of picking up and transporting large, heavy bundles of linen, led to numerous repetitive stress injuries all over Mr. Qian's body. The pace at which his bosses drove him, along with the severe dysfunction of the Workers' Compensation system in New York, has led to a complete physical and now mental breakdown for Mr. Qian.
Petitioners Aleksandra Baran served as a home health care attendant in the New York area, caring for elderly clients at extremely low wages. She worked for well under the minimum wage with no overtime. Ms. Baran worked 24 hour shifts caring for clients through her early years in the industry. She earned $5.00 per hour for the first five years in her job and then made $7.00 per hour with no overtime pay.
Petitioners NMASS and CSWA echo and expose the stories of these workers' lives. According to organizers at NMASS, for garment factory workers, a 40-hour per week schedule is considered part-time by factory bosses.(41) The members of these organizational petitioners work upwards of 70 to 100 hours per week often at minimum wage or less.(42) According to The Overworked American by Harvard Professor of Economics Juliet Schorr, on average, employed mothers work more than 80 hours each week, including housework, childcare, and paid work.(43) Overtime hours have jumped 48 percent since 1991 and immigrant workers are commonly forced to work 80 to 90 hours per week.(44) The United States leads the world in the number of hours worked per year and that rate is rising while it falls in other industrialized nations.(45)

D. Statement of Violations of the NAALC

The Workers' Compensation Board in New York State delays the adjudication of claims for workplace injuries and illnesses and does not provide compensation to many injured and ill workers. The systematic failure to provide fair, equitable, and transparent proceedings for injured and ill workers and to implement standards for the prevention of workplace injuries and illnesses constitutes a violation by the United States of its obligations pursuant to Articles 3 and 5 of the NAALC.
Injured and ill workers suffer for many years without financial support and medical care due to unwarranted delays, in direct contravention of the U.S. obligations to provide compensation to injured and ill workers and to prescribe and implement standards that minimize the causes of occupational injuries and illnesses.

E. The Continuing and Extreme Delays in Adjudication of Workers' Compensation Claims in the State of New York

Demonstrate a Persistent Failure by the United States to Enforce its Labor Standards Effectively
The Board, either on its own initiative or at the behest of insurers and employers, delays the adjudication of Workers' Compensation cases for many years, sometimes as much as a decade or more. During the long pendency of these cases, workers are left without income for living expenses or medical treatment. Many are compelled to attempt to return to work, worsening their injuries. Others watch family members add hours and jobs in an effort to support injured workers. Insurers and employers are permitted to appeal cases repeatedly, searching for any reason to delay payments to injured workers. Additionally, insurers and employer sometime deny payments to doctors, who in turn refuse to provide treatment to injured workers.(46) Many workers who have sustained injuries or developed occupational diseases have their claims dismissed without just cause, after many years of delay.(47)
In 1999, close to 6 million people reported work-related health problems in the United States.(48) More than 600,000 workers had serious injuries due to overexertion and repeated motions - almost one-third of all serious job-related injuries.(49) Sixty thousand people in the U.S. died from work-related illnesses in 1998.(50) The actual number of workers suffering from occupational diseases and injuries is much higher, as many workers do not report such problems, recognizing that there is no remedy or that it is part of the nature of low-wage work.(51) Long hours lead to chronic stress and anxiety, sleep deprivation, depression, high-blood pressure, cardiac problems, and digestive problems.(52) Workers are highly susceptible to accidents and injuries as a result of exhaustion from long hours. The pace and intensity has also escalated, forcing many workers to labor faster and produce more in a shorter length

(link to full petition)

For more information read.

Workers Compensation: A Cautionary Tale
, The Center for Justice and Democcracy
Workers’ Compensation in New York State: An Issue of Human Rights, National Economic and Social Rights Initiative

If you or your organization is interested in learning more about or working on these types of civil justice issues, please feel free to contact me at cdugger@drummajorinstitute.org.

Cyrus Dugger
Senior Fellow in Civil Justice
Drum Major Institute for Public Policy

Cyrus Dugger: Author Bio | Other Posts
Posted at 3:29 PM, Oct 06, 2006 in The Political Economy of the Tort "Reform" movement | Workers' Compensation | reports and research
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