Mythbuster Series: The Failure of Workers’ Compensation (vol. 8)
The Failure of Workers' Compensation
When a worker is hurt, workers’ compensation is the exclusive remedy against an employer. Lawsuits against employers are not allowed, so the worker has no access to the court or right to jury trial.1
The workers’ compensation program has been rife with problems almost since its inception. It is a bureaucratic, adversarial system that shortchanges injured workers, even while employers sometimes struggle with rising workers’ compensation insurance rates.
* Chipping away at already meager compensation. Over the years and in most states, state legislatures have chipped away at workers’ benefits, stiffening eligibility requirements for recovery, and putting medical treatment decisions in the hands of insurance companies.
o Data consistently shows that a worker injured at the workplace earns significantly less than before the injury, even after returning to work.
o In general, workers’ compensation systems allow no compensation for lost “quality of life” despite the devastating impact of some injuries.
o In many states, workers must now go through a restrictive, longer, less efficient, and ultimately less successful process to make claims and receive compensation.
o Contrary to its original “no-fault” principle, the system has become heavily adversarial, often requiring workers to prove – essentially “litigate” – their claims. Yet these workers are stripped of the legal protections that accompany the court system.2
* The fraud of worker fraud. In the early 1990’s, insurers and businesses began a misleading media campaign focusing on employee fraud, even though only a tiny percentage of workers – one to two percent – engaged in it. Despite its lack of substance, the campaign caused rights and benefits to be cut in many states, and created an unfair stigma for injured workers.
* System costs. Workers’ compensation is extremely costly, and cuts in benefits have not alleviated this. Workers’ compensation insurance is subject to the same cyclical insurance patterns as the entire property-casualty insurance industry.
* Safety. Because the system is not designed to reflect the full costs of accidents, it does not effectively encourage safety improvements.
For more information, see Center for Justice & Democracy, Workers Compensation - A Cautionary Tale (September 20, 2006) http://centerjd.org/Workers'Comp(National).pdf
1 A court can only review the workers’ compensation board’s decision on questions of law, not on factual grounds about determination of type of injury or duration of benefits.
2 Examples of specific ways the “no-fault” standard has been diluted in some states are: requirement that work be more than 50 percent of the cause of injury or illness; requirement that work be a “substantial contributing cause” or “major contributing cause” of injury; requirement that occupational injury or disease is “clearly work-related” and “a substantial factor in the cause of” the resulting disability; and raising the standard of causation where there are pre-existing conditions. (link)