Tuesday, June 18, 2019

Has Workers’ Compensation Ever Been Adequate?

In follow-up of Judge David Torrey’s kind review of my historical article on workers’ compensation adequacy (see two posts below this one on this blog), I note that workers’ compensation benefits were originally set at about 50% of the preinjury average weekly wage, with no provision for medical benefits beyond first aid for a number of days post-injury. The omission of ongoing medical benefits for work-related injuries was not broadly fixed until about 1930, and unlimited “reasonable and necessary” medical benefits were not uniformly available until about 1953. All of this is nicely chronicled in Somers and Somers, Workmen’s Compensation 83-87 (1954). But note the contemporary dissatisfaction of the same authors on the state of affairs by the mid-1950s (at page 191):

At present, even when a claimant litigates, the liability of the employer is, of course, limited to the benefits allowed under workmen’s compensation. Labor has been showing increasing restiveness with the “exclusive remedy” principle, which except in a few instances prevents the injured worker who is eligible for workmen’s compensation from suing, no matter how grave the employer’s negligence or how inadequate, or even non-existent, the compensation benefits.

This has been particularly distressing in States where permanent-total and death benefits are still rigidly limited, or in cases involving disfigurement or occupational diseases in some States, where workmen’s compensation coverage prevents common-law action without providing any corresponding benefit. The benefits of compensation recipients are now, in certain circumstances, so inadequate that they have clearly lost more than they gained by giving up the right of legal damage suit.

The authors go on to note (see Somers and Somers pages 191-193) that commentators of the day were proposing a kind of tort-workers’ compensation hybrid of a type I’ve heard proposed fairly recently.

Although, as Professor John Burton interpreting old NCCI data has explained, statutory benefits significantly increased in the 1960s, 1970s, and the first half of the 1980s, we also know that the very reason the OSH Act created the National Commission in 1970 (headed by Professor Burton) in the first place was that workers’ compensation benefits had become “inadequate” throughout the 1960s. According to the Congressional findings (see "transmittal letter" here at page 3):

[I]n recent years serious questions have been raised concerning the fairness and adequacy of present workmen's compensation laws in the light of the growth of the economy, the changing nature of the labor force, increases in medical knowledge, changes in the hazards associated with various types of employment, new technology creating new risks to health and safety, and increases in the general level of wages and the cost of living.

Perhaps to no one’s surprise, the Commission found, as stated on the cover letter of its report to the President and to Congress, “the protection furnished by workmen's compensation to American workers presently is, in general, inadequate and inequitable. Significant improvements in workmen's compensation are necessary if the program is to fulfill its potential.”

Many of the readers of this blog know the story from there: some improvements (as defined by the National Commission) on the national scene for a decade—probably under threat of feared federal intervention—followed by ongoing retrogradation. I think we have just knocked out a number of decades in which workers’ compensation might have been thought (by modern readers) to be adequate but was probably not. The Supreme Court has never defined adequacy, and I suspect readers of this post would have differing opinions as to what the concept even means. Perhaps we ought to get that straight first. The conversation has been going on for a long time.

I will note in passing that I have always doubted the possibility of federal intervention (whether judicial or legislative) as a guarantor of whatever political consensus of adequacy may develop among the states. More plausible, it seems to me, is a reworking of the current federal-state balance on employee benefits in which ERISA preemption will be substantially scaled back. The state “laboratories” that will emerge may be thought of as better or worse, though this writer has some clues as to where he (at any rate) might prefer to be a rat. Will the labs have any legal boundaries? That question continues to define my research agenda.

Michael C. Duff


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