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Workers’ comp: It’s complicated

January 1, 2011

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Senior associate editor Kyle W. Morrison covers the Washington beat and offers his viewpoints.

When a worker is injured on the job, how should he or she be compensated?

It’s a simple question, but the answer and issues it brings forth are incredibly complicated, as several witnesses asserted during a Nov. 17 hearing before the House Education and Labor Committee’s Workforce Protections Subcommittee.

Overseen by subcommittee Chair Lynn Woolsey (D-WA), the hearing examined state-run workers’ compensation programs and their effect on injured workers. The federal government typically does not conduct many hearings on workers’ comp, as such programs are under the purview of the states.

Every state has some sort of workers’ comp program, and every state can have its own set of rules. And the rules and parameters the individual states follow can be confusing.

Much of the testimony during the hearing focused on the relationship between costs shifting from the state to federal programs, and controversy surrounding a set of newly updated guidelines from the Chicago-based American Medical Association.

“No fault” compensation systems were introduced in the early 1900s. Under these systems, workers receive compensation instead of being able to sue employers, regardless of who was to blame for the injury.

In the mid-20th century, benefits to workers began to decline, according to testimony from John Burton (.pdf file), a professor emeritus at Rutgers and Cornell universities. As part of the Occupational Safety and Health Act, a commission was formed to look into states’ workers’ comp programs. The commission’s 1972 analysis was followed by states improving their comp systems until the 1990s, when states enacted stricter benefit eligibility requirements that made it harder to be compensated for a workplace injury.

“If people are not going to get the benefits they’re entitled to, and have previously been entitled to under state workers’ compensation laws, they will turn to an alternate system,” Iowa Workers’ Compensation Commissioner Christopher Godfrey said (.pdf file) at the hearing.

The right guide

“Alternate systems” include taxpayer funds, such as Medicare and Social Security Disability Insurance. Woolsey said she and Education and Labor Committee Chairman George Miller (D-CA) would request the Government Accountability Office to examine the trend; however, part of the reason for such a shift in costs has been blamed on AMA’s “Guides to the Evaluation of Permanent Impairment.”

The guides are used to help determine the level of lost impairment – or loss of medical functionality – to an injured worker, according to W. Frederick Uehlein, an attorney and chairman of Insurance Recovery Group, a Framingham, MA-based cost containment company in the insurance industry.

What the guides do not rate, Uehlein stressed (.pdf file), is disability – the loss of an employee’s earning capacity. For example, an accountant with a broken arm may have a severe impairment but not a disability. On the other hand, a carpenter with the same injury would be impaired and disabled.

“The guides are a tool for doctors,” Uehlein said. “Legislatures have not completed the job of deciding what is adequate [compensation] rates, and how we’re going to go from medical functionality to the determination of the rates. It’s not a problem with the guides, it’s the problem with deciding in individual states how we’re going to get there.”

Emily Spieler, dean of the Northeastern University School of Law in Boston, took issue (.pdf file) with Uehlein’s contention, noting that physicians do not need to quantify impairments – it only is necessary for compensation claims. And the rating numbers, she claimed, do not correlate with anything. “They’re simply numbers that some small group of physicians invented,” Spieler said.

Other witnesses said that although the guides do, in fact, state they only are used for rating impairments and not disabilities, they have a much broader impact. “The reality is that most states use the AMA guides as if they were rating disability,” Burton said.

This leads to one of the main concerns several of the witnesses had with the guides. The latest edition, the sixth, reduced many of the impairment ratings for various injuries – some by half. This could result in an injured employee not receiving benefits despite being disabled.

So it is a complex issue when a worker is denied full compensation for a legitimate injury, and the answer to how much that employee should receive is, according to the current system, far from clear. The states may be over-reliant on AMA’s guides for determining disability, the guides’ authors fail to recognize the far-reaching effect their publications have, and the federal government has not done an effective job overseeing all of this.

Among the suggestions floated at the hearing was for NIOSH, the Institute of Medicine, or both, to create their own guidelines for state compensation programs to follow, removing AMA from the equation. Spieler suggested the federal government develop minimum standards for state programs.

As Woolsey noted, not all of the answers to the questions have been given. But it’s a start.

The opinions expressed in “Washington Update” do not necessarily reflect those of the National Safety Council or affiliated local Chapters.

This article originally was published in the January 2011 issue of Safety+Health magazine.

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