Last month as I was driving to work I heard snippets of an excellent three-part series on Morning Edition on National Public Radio about workers’ compensation. The first part of the series detailed how so-called “reforms” of the workers’ comp system had undermined the grand bargain reached back at the turn of the last century in which workers gave up their right to sue in exchange for guaranteed (but limited) medical and incapacity benefits while they recovered. Part two described how injured workers had fallen into poverty and were required to rely on government programs like food stamps and general assistance to stay afloat. The last part compared how two workers who were roughly the same age, suffered almost the exact same injury, and who lived 75 miles apart from one another but across the state line in Alabama and Georgia fared far differently under each state’s laws.
Back in the 1970s, a national commission appointed by President Nixon recommended reforms to the system which were widely adopted. Following the commission’s report, most states adopted laws extending coverage to almost all employees; allowed employees to choose their own doctors; and paid employees 2/3 of their average wage up to the state average weekly wage for so long as they could not work. But according to the NPR series, the “reforms” in virtually every state, including Maine, over the last 20 years have meant that insurers today are paying lower rates than they paid before the commission’s report.
What is the reason for these reforms? Much of the public seems to believe that there is a lot of fraud in the system. And the public is right-but not for the reasons you might think. Worker fraud is negligible-only 1-2% of all claims. The real fraud is being committed by certain employers, who scam the system by classifying workers as independent contractors to reduce labor costs, including avoiding having to provide workers’ compensation benefits.
You might think that having effectively ripped the workers’ comp safety net to shreds, employers would be satisfied. But no–you would be wrong. Very quietly, two dozen of our nation’s biggest employers -including Wal-mart, Safeway, Nordstrom, Macys, and Lowes-have set up a lobbying group that seeks to allow employers to opt out of the comp system altogether and make their own rules about when workers injured on the job are entitled to benefits, and for how long.
What would this mean for Maine workers? Right now in general (this is a simplification) Maine workers’ comp law guarantees workers 2/3 of their average weekly wage up to the state average weekly wage for a period of up to 10 years. If a worker suffers a more severe injury, he or she may be entitled to lifetime benefits. These benefits can also sometimes be topped up if the employee has taken out disability insurance. Ultimately, it is important to remember that there are different types of disability insurance out there such as disability insurance without medical exam. Consequently, employees are advised to research these different types of disability insurance to make sure that they have the necessary coverage. That being said, if employers are allowed to write their own rules, all this could change.
And already it is changing in other states. Two states, Texas and Oklahoma, already allow employers to opt out of the system and make up their own rules. And now these large employers are trying to write their own rules in a third state-Tennessee.
It’s probably no surprise that Wal-mart would attempt to game the system. But some of the other names on the list are generally regarded as good corporate citizens.
Working men and women are under attack by corporate America in many big and small ways. Already we’ve seen the spread of right-to-work laws which undermine unions and wages. Workers’ comp laws already have been severely undermined by “reform” efforts. How much worse can it get? Stay tuned for the next chapter.