Sunday, January 23, 2022

Teaching Workers' Compensation and Scheduled Partial Benefits

As we enter 2022, the 50th Anniversary of the National Commission's 1972 Report on the structural inadequacy of workers' compensation, I've had the real privilege of teaching workers' compensation at three separate law schools in the last six months (Saint Louis University, Fall of '21; Washington University of St. Louis, January Intersession of '22; University of Wyoming, Spring of '22). Each time I teach the course I emphasize the irrationality of permanent partial scheduled benefits: loss of an arm equals 200 weeks times the total benefit rate, often paid out as a lump sum benefit. Why? From whence does the 200 weeks arise?  Oh, I can tell you that the first state to implement such partial scheduled benefits was New Jersey, during the second decade of the twentieth century. And I'm pretty sure it was some kind of concealed bait and switch: paying 200 weeks times two-thirds of the average weekly wage will always be cheaper than paying a substantial percentage (the original statutes provided 50%) of an employee's actual wage loss during the entire period of the disability. But no one can even tell me where "200 weeks" came from in the first place; even Arthur Larson did not know and adamantly emphasized that workers' compensation theory is predicated on the wage loss principle. I discuss this at length in a 30,000 word "cosmic" workers' compensation article, the draft of which I have just completed and which is being proofed at this very moment (I'll be submitting it to the law reviews in just over a week). From my draft:

The [1972] Commission’s report made clear that no consensus had been reached on essential recommendations pertaining to permanent partial disability benefits.[1] This statement does not seem entirely accurate. The report recommended the removal of schedules used to calculate permanent partial disability benefits from workers’ compensation statutes. This decision seems a concession that use of scheduled benefits did not deliver adequate benefits; an important finding given the predominance of scheduled permanent partial disability benefits in contemporary workers’ compensation systems:

Almost every workmen’s compensation statute contains a schedule which stipulates the benefits to be paid for the listed impairments. These schedules in some cases may provide a short-cut to the determination of the benefits to be paid, but that is not an adequate justification for their use. Present schedules include only a small proportion of all medically identifiable permanent impairments. Also, some schedules have not been revised for many years, despite considerable progress in the understanding of the relationship between specific injuries and extent of functional impairment.[2]

Although the report went on to say that the AMA Guides represented a more rational basis for determining impairment,[3] it offered no rationale for any use of physical impairment-based determinations of permanent partial disability. Seemingly to the contrary, the report soundly rejected calculation of partial benefits based solely on physical impairment:

 Some statutes incorporate a schedule of benefits for a specific list of impairments, and the benefits are paid whether or not there is a disability. Moreover, the benefits are the exclusive remedy for workers with these impairments (except, in most States, for the temporary total disability benefits paid during the healing period), even if the worker’s wage loss far exceeds the scheduled benefits . . . It could be argued that the main purpose of such a schedule is to provide benefits for disability, and that impairment is used as the basis for benefits because impairment and disability are closely related. The validity of this argument is questionable because there is no exact relationship between the degree of impairment and the extent of wage loss.[4]

[1] Report of the National Commission at 19-20.

[2] Id. at 69.

[3] Id.

[4] Id. at 68.

A consistent theme of my teaching is that whatever one thinks about the original quid pro quo (and I do not have fuzzy thoughts about it -- I am a deep critic) permanent partial benefit schedules do not even pass the straight face test - they represent a straight-up confiscation even under Grand Bargain theory. I will let you know when my long paper has been placed for publication.

Michael C. Duff

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