This month we report on a disturbing trend in workers’ comp legislation that gives employers control over the claims process and violates injured and ill workers’ rights to due process. We also bring you news on a groundbreaking decision declaring Oklahoma’s opt-out law unconstitutional and updates on the national conversation developing around workers’ comp standards, how big corporations pressure states to cut benefits, and how inadequate wage replacement impacts household finances for injured workers and their families.
– Jim Ellenberger
Employers seizing control of the workers’ comp claims process
Of all the attacks on workers’ comp that business lobbies are pushing in state legislatures, a new initiative to privatize the claims process is perhaps the most dangerous. In a sign of where things may be headed across the country, Texas and Oklahoma employers are being given increasing control over how evidence is gathered and used in determining workers’ comp benefits. This strips workers of their right to due process and gives enormous power to employers, who have a direct financial incentive to delegitimize workers’ claims and minimize the medical care and income supports that injured workers receive.
We’ve reported before that Oklahoma and Texas allow employers to opt out of the public workers’ comp system. Opt-outs not only allow employers to design their own benefit plan, but also gives them control over how claims are contested and who oversees adjudication. With little to no government oversight and minimal standards for benefits, opt-out employers have the power to deny claims or force settlements without being held accountable.
In Texas, unlike most states, injured workers are supposed to retain their right to file a civil lawsuit for personal injury, but companies that opt out to create their own compensation plans can make employees sign away this right when they are hired. Employers often make pre-injury waivers a condition of employment, preventing workers from accessing the court system if they are injured or made ill on the job. If an injured worker doesn’t receive the compensation they need through their company’s benefit plan, they must appeal through binding arbitration, an employer-controlled process for resolving disputes outside of the public workers’ comp system and outside of public courts. Unlike courts, arbitration allows parties to choose who will review the evidence and decide the case, making it easier for employers to influence the outcome of the case. In Texas, 75% of opt-out employers either know or directly employ the arbitrator reviewing their workers’ comp claims. And if an injured worker is denied benefits in arbitration, the decision is binding, meaning it is enforceable in court and there is limited right to appeal.
In Oklahoma, where an opt-out law passed almost three years ago, the situation is even more dire. In fact, the 2013 Employee Injury Benefit Act has caused such grave violations of workers’ human rights that, in a groundbreaking decision last Friday, the state Workers’ Compensation Commission declared it unconstitutional. Under the law, workers’ comp remains the exclusive remedy for occupational injury, meaning that injured workers at opt-out companies are entirely at the mercy of the benefit plan designed by their employer. A private, internal committee reviews all claims and appeals, throwing any semblance of impartiality out the window.
An employer can also present a settlement agreement as few as ten business days after an injury is reported, much too soon for either party to know the full extent of the injury or the cost of treating it. An injured worker may “easily sign away all rights before becoming aware of the magnitude of an injury and have limited access to judicial review thereafter.”
Yet those pushing for opt-out laws stress that alternate benefit plans are still regulated by the federal Employee Retirement Income Security Act (ERISA), which supposedly ensures that injured workers have adequate benefits and a “fair review” of their workers’ comp claim. If an injured worker doesn’t sign a post-injury waiver or settlement deal and has exhausted the internal appeals process, the worker can make a second appeal to the State Workers’ Compensation Commission. However, review by this commission is limited to the factual record presented during the internal appeals process, which is shaped primarily by employer-appointed doctors and fact-finders. Moreover, the court cannot hold the case against any broader, objective standard to determine whether benefits are adequate. It can only rule whether the employer followed its own rules in determining benefits.
“Procedure is a tool of power and can negate substantive rights,” notes legal scholar Thomas Main. In the case of opt-outs, employers hold the power to both write the rules and administer them. When they exploit this power to cut costs, they do so at the expense of workers’ lives and livelihoods, violating their basic human rights to health and economic security.
Backed by Wal-Mart, Lowes, and other big corporations, the Association for Responsible Alternatives to Workers’ Compensation (ARAWC) is pursuing a national agenda, currently pushing for opt-out laws in South Carolina and Tennessee. Meanwhile, New York, Illinois, and Wisconsin are facing aggressive campaigns from corporate interests to introduce laws that further diminish benefits and curtail injured workers’ right to due process. These anti-worker reforms could pave the way for opt-out laws and the privatization of the claims process in many more states unless workers manage to shift the balance of power.
Constitutional challenges in Oklahoma and Florida
In a landmark decision, the Oklahoma State Workers’ Compensation Commission has ruled the state’s 2013 opt-out law unconstitutional. Dillard’s employee Jonnie Vasquez was the first injured worker whose case reached the commission after appealing her employer’s denial of benefits. Vasquez and her attorney argued that her company’s self-designed benefit plan violated her rights to equal protection, due process, and open access to the courts. “The opt-out plans put all power in the hands of the employer, with no independent review ever of the employer’s decision,” explained Vasquez’s attorney Bob Burke, “If the worker does not accept the settlement [offered by their employer], all benefits are terminated.” The Commission agreed with Vasquez, stating that the alternative benefit plans written by opt-out employers create a “dual system under which injured workers are not treated equally.” The decision stressed the fact that opt-out employers have the power to define what is and is not a compensable injury, allowing them to cut off access to benefits for many injured and ill workers.
The case will likely go to the state Supreme Court, which is also considering a case brought by injured worker Damian Smith, who has challenged the constitutionality of Oklahoma’s opt-out law because it prevents a judge from reviewing all medical evidence in determining benefits and defers disability payments for every week worked, essentially punishing workers for returning to work early. Both cases hold great importance for injured workers’ rights and will have a significant effect on the future of opt-out laws in Oklahoma.
Meanwhile, the Florida Supreme Court has refused to hear the case that last year ruled the state’s workers’ comp system unconstitutional because its benefits were so inadequate that it did not constitute a reasonable alternative to a civil lawsuit. The case was thrown out on a technicality, but the Supreme Court will hear another case this spring that challenges the law’s constitutionality on similar grounds.
After years of state workers’ comp deforms that have curtailed injured workers’ rights, calls for national action appear to finally be growing. Following ProPublica’s investigative series last year, the National Conference of Insurance Legislators, an association of lawmakers with considerable influence over insurance-related bills in their respective states, has launched an inquiry. And in January Senator Bernie Sanders and nine other Democratic lawmakers penned a letter to the U.S. Secretary of Labor calling for renewed federal oversight of state workers’ comp legislation in order to ensure protection of injured and ill workers’ rights.
The last time the federal government took an interest in workers’ comp was in 1972, when Nixon’s National Commission on State Workmen’s Compensation Laws found that, across the board, states failed to meet workers’ needs. The Commission made over 30 recommendations to states, including increasing the maximum weekly wage replacement and removing any limitations on length of time or amount of coverage for medical treatment. Fear of federally mandated standards spurred most states to take some action, but many of the Commission’s recommendations were never taken up, and in the past three decades pro-business reforms have further eroded these protections. While the need for consistent standards that hold states accountable is clear, some argue that a new Federal Commission wouldn’t be the answer in the current political climate. Professor John Burton, a workers’ comp expert who chaired the 1972 Commission, instead suggests that third-party organizations with “an established record of objective studies in the field” lead the way.
Meanwhile, the workers’ comp industry has echoed lawmakers’ call for a national conversation, scheduling a summit for early May. Robert Wilson, who is set to moderate the meeting, says it will focus on deep and open discussion of the problems facing the industry. Yet the summit’s participants appear to be largely industry insiders, allowing workers and worker advocates no more than token representation.
A new coalition of unions, injured workers, workers’ centers, law firms, and community-based organizations has launched in New York State to advocate for policy changes in Albany that protect the rights of injured workers. The coalition is organizing opposition to proposals made in Governor Andrew Cuomo’s state budget that would further erode injured workers’ rights to health care, adequate income and due process. As reported by the New York Workers’ Compensation Alliance, the proposals include reducing insurance companies’ accountability for paying claims; changing calculations of workers’ wages in a way that would further reduce already inadequate payments for many workers, especially hourly workers; prohibiting workers from seeing a doctor of their own choosing for 120 days; and pushing workers out of in-person hearings with the same judge into video hearings with far-flung judges. Many of the proposals come directly from the Business Council’s 2016 Legislative and Regulatory Agenda. See our “Take Action” section in the sidebar to get involved in the Coalition’s advocacy efforts.
A look at national meatpacking giant Tyson provides a troubling picture of the control that big corporations exert over workers’ comp policy. Tyson, which operates in over 20 states, uses its influence with lawmakers to push legislative changes that increase employer control over medical care, limit which injuries are compensable, and raise workers’ burden of proof. Its tactics include creating new legal arguments for reducing benefits, using its economic leverage to pressure lawmakers, and even convincing officials to appoint or remove workers’ comp judges. This level of corporate meddling destroys all notions of fairness, leaving injured workers trapped and powerless in the system that is meant to protect them.
American International Group (AIG), one of the biggest workers’ comp insurers, has made a major investment in a company that manufactures trackable technology, planning to eventually use wearable tracking devices to monitor employee movement. While the new technology is touted as a health and safety innovation, AIG and other insurance agencies say their main hope for the product is to “boost profits and cut costs.” This means that information gathered from the devices – including location and health data – would be used in much the same way as drug tests, private investigators, and other invasive surveillance practices aimed at discrediting injured workers and undermining their claims. While the reality is still a ways off, wearable tech would represent a disconcerting step in surveillance of employees and would pose a serious affront to workers’ rights to dignity and privacy.
A new report by workers’ comp columnist Peter Rousmaniere finds that even in the best of circumstances, workers’ comp benefits are too meager to protect injured workers against financial instability or disaster. The report analyzes the “shortfall” in income created by benefit caps and uncompensated days of missed work, showing how this income gap affects household finances. The conclusions are disturbing: a household where both spouses earn average or above salaries would quickly lose its financial cushion, while a family in which one spouse works only part-time or has a low-paying job would be unable to afford even a modest household budget. As claimants’ attorney Doug Graoul testifies, injured workers who must rely on wage replacement benefits for an extended time often experience devastating losses, including loss of home or vehicles, bankruptcy, and divorce. As the article points out, the workers’ comp system was originally designed to pay for itself. It is clear that it no longer does so, leaving injured workers and their families to shoulder the burden.
Workers’ Memorial Week
Workers’ Memorial Week (April 23-30) is an opportunity to remember those who have suffered and died on the job and to renew the fight for safe jobs. For information on local events, how to plan an event, and for more resources, click here.
New York Workers’ Protection Coalition
If your New York organization, union or firm would like to join the Coalition or nominate a New York injured worker to be part of the Coalition’s “speakers bureau,” email the Coalition. Speakers will be coached on telling their stories and connected with journalists to do interviews.
Financial impact of workers’ comp
This report by workers’ comp columnist Peter Rousmaniere breaks down how inadequate wage replacement affects injured workers’ household finances.
Tyson Foods: “carving up” workers’ comp
ProPublica investigates meat processing giant Tyson Foods’ campaign to influence workers comp law and cut costs at the expense of injured workers.
Insurance industry extravagance
In this report, ProPublica reveals the hypocrisy of the workers’ comp insurance industry, which splurges on extravagant festivities at their conferences while lobbying to cut benefits for injured workers
Universal healthcare and workers comp The Labor Campaign for Single Payer Healthcare has published a briefing paper on how a universal, single payer healthcare system would provide more dependable and timely care for injured workers.
Workers rights under threat in New York
The Workers’ Compensation Alliance and the New York Committee for Occupational Safety and Health have released a report on how New York’s 2007 Workers’ Comp reforms have impacted injured workers.
This white paper, also by the Workers’ Compensation Alliance, looks at how the workers’ comp revisions proposed in Governor Cuomo’s Budget Bill would hurt New York’s injured workers by reducing benefits and attacking due process rights.
ERISA and opt-outs NPR has released another report in its “Insult to Injury” series, explaining why the Employee Retirement Income Security Act (ERISA) fails to protect injured workers whose employers have opted out of the state workers’ comp system.