Highlights from the 1972 Commision on Workers' Compensation

In 1970, Congress created the Occupational Safety and Health Act. This created the Occupational Safety and Health Administration, commonly known as OSHA. Much has changed in America in the last 46 years. Part of the Act created a special commission to study various perceptions and complaints regarding American state workers' compensation programs.

In 1972, the Commission issued its report, following a year of meetings across the country, and hundreds of individuals testifying. There were 15 appointed Commissioners, and then five more from the federal government. Some perceived the Commission as thus tilted towards the academic (3) and the federal government (5). Four state regulators were involved, as well as three medical professionals. Two insurance carriers and two employers. Organized labor was represented by the AFL-CIO.

Following the Commission's incredible efforts, travels, and schedule, the 1972 Commission Report was issued. The following material (in italics to denote that it is all direct quotation and not my writing) was included in the Report. Note that the term "workmen" is repeated often; that was the term-of-the-age 44 years ago. It is certainly not appropriate, though it was accepted then. However, I have elected not to make any editorial effort, but instead have quoted directly from the Report.

We recommend that workmen's compensation be compulsory rather than elective. (See R2.1)

We recommend that employers not be exempted from workmen's compensation because of the number of their employees. (See R2.2)

As of July 1, 1973, coverage should be extended to agricultural employees whose employer's annual payroll exceeds $1,000. By July 1, 1975, coverage should be extended to fam1workers on the same basis as all other employees. (See R2.4)

We recommend that by July 1, 1975, household workers and all casual workers be covered under workmen's compensation at least to the extent they are covered by Social Security. (See R2.5)

We recommend that workmen's compensation coverage be mandatory for all government employees. (See R2.6)

We recommend that the employee be given the choice of filing a claim for workmen's compensation in any State where he was hired, or where his employment was principally localized, or where he was injured. (See R2.1l)

We recommend that the "accident" requirement be dropped as a test for compensability. (See R2.l2)

We recommend that all States provide full coverage of work-related diseases. (See R2.13)

We recommend that the waiting period be no more than 3 days and that the retroactive period be no more than 14 days. (See R3.5)

We recommend progressive increases in the maximum weekly wage benefit, according to a time schedule stipulated in Chapter 3, so that by 1981 the maximum in each State would be at least 200 percent of the State's average weekly wage. (See R3.8 and R3.9)

We recommend that cash benefits for temporary total disability be at least two-thirds of the worker's gross weekly wage. The two-thirds formulation should be used only on a transitional basis until the State adopts a provision making payments at least 80 percent of the worker's spendable weekly earnings. (See R3.6 and R3.7)

We recommend that our permanent total benefit proposals be applicable only in those cases which meet the test of permanent total disability used in most States. (See R3.11)

We recommend that permanent total benefits be paid for the duration of the worker's disability without limitations as to dollar amount or time. (See R3.17)

We recommend that the Social Security benefits for permanent and total disability be reduced in the presence of workmen's compensation benefits. (See R3.18)

We recommend that death benefits be at least 66 2/3 percent of the worker's gross weekly wage. The two-thirds formulation should be used only on a transitional basis until the State adopts a provision making payments at least 80 percent of the spendable earnings of the worker. (See R3.20 and R3.21)

We recommend that the minimum weekly benefit for death cases be at least 50 percent of the average weekly wage in the State. (See R3.26)

In death cases, we recommend that the State's maximum weekly benefit be increased until, by 1981, the maximum represents 200 percent of the State's average weekly wage. (See R3.23 and R3.24)

We recommend that benefits in death cases be paid to a widow or widower for life or until remarriage, and in the event of remarriage we recommend that two years' benefits be paid in a lump sum to the widow or widower. We also recommend that benefits for a dependent child be continued until the child reaches 18, or beyond such age if actually dependent, or at least until age 25 if enrolled as a full-time student in any accredited educational institution. (See R3.25)

We recommend that workmen's compensation benefits be reduced by the amount of any payments received from Social Security by the deceased worker's family. (See R3.27)

We recommend that the worker be permitted the initial selection of his physician, either from among all licensed physicians in the State or from a panel of physicians selected or approved by the State's workmen's compensation agency. (See R4.1)

We recommend there be no statutory limits on the length of time or dollar amount for medical care or physical rehabilitation services for any work-related impairment. (See R4.2)

We recommend that each workmen's compensation agency establish a medical rehabilitation division, with authority to effectively supervise medical care and rehabilitation services. (See R4.5)

We recommend that the medical-rehabilitation division within each State's workmen's compensation agency be given the specific responsibility of assuring that every worker who could benefit from vocational rehabilitation services be offered those services. (See R4.7)

We recommend that States establish a second injury fund with a broad coverage of pre-existing impairments. We recommend that the second injury fund be financed by charges against all carriers, State funds, and self-insuring employers in proportion to the benefits paid by each, or by general revenue, or by both sources. We urge State workmen's compensation agencies to interpret eligibility for second-injury funds liberally in order to encourage employment of the physically handicapped and to publicize the programs to employers and employees. (See R4.10, R4.11, and R4.12)

We recommend that, subject to sound actuarial standards, the experience rating principle be extended to as many employers as practicable. (See R5.3)

We recommend that insurance carriers be required to provide loss prevention services and that the workmen's compensation agency carefully audit these services. State-operated workmen's compensation funds should provide similar accident prevention services under independent audit procedures where practicable. Self-insurers should likewise be subject to audit with respect to the adequacy of their safety programs. (See R5.2)

We recommend that attorneys' fees for all parties be reported for each case, and that the fees be regulated under the rulemaking authority of the workmen's compensation administrator. (See R6.15)

We recommend that each State utilize a workmen's compensation agency to fulfill the administrative obligations of a modern workmen's compensation program. (See R6.1)

We recommend that, insofar as practical, all employees of the agency be full-time with no outside employment, with salaries commensurate with this full-time status. (See R6.5)

We recommend that the time limit for initiating a claim be three years after the date the claimant knows, or by exercise of reasonable diligence should have known, of the existence of the impairment and its possible relationship to his employment, or within three years after the employee first experiences a loss of wages which the employee knows or, by exercise of reasonable diligence, should have known was because of the work-related impairment. If benefits have previously been provided, the claim period should begin on the date benefits were last furnished. (See R6.13)

We recommend that States be free to continue their present insurance arrangements or, if the States wish, to permit private insurance, self- insurance, and State funds where any of these types of insurance now are absent. (See R6.20)

We recommend that procedures be established in each State to provide benefits to employees whose benefits are endangered because of an insolvent carrier or employer, or because an employer fails to comply with the law mandating the purchase of workmen's compensation insurance. (See R6.21)

The Report notes some conclusions:

Several reasons for the indifferent response to previous reform proposals are evident. The lack of interest in or understanding of workmen's compensation by State legislators and the general public is attributable in part to the complexity of the program. Various interest groups, including employers, unions, attorneys, and insurance carriers, have often allowed their specialized concerns to stand in the way of general reform. And State legislators and officials, even when they have been genuinely interested in reform, have too often been dissuaded by the irrational fear that the resulting increase in costs would induce employers to transfer business to States with less generous benefits and lower costs.

Although our recommendations will increase the costs of workmen's compensation for most States and many employers, we agree that employers and the States have the resources to meet such costs. The States have the distinct advantage of having personnel and procedures in place: a Federal takeover would substantially disrupt established administrative arrangements.

Moreover, we have seen no evidence that Federal administrative procedures are superior to those of the States. We reject the suggestion that Federal administration be substituted for State programs at this time.

All Commissioners believe the virtues of a decentralized, State-administered workmen's compensation program can be enhanced by creative Federal assistance.

We believe that the threat of or, if necessary, the enactment of Federal mandates will remove from each State the main barrier to effective workmen's compensation reform: the fear that compensation costs may drive employers to move away to markets where protection for disabled workers is inadequate but less expensive.