An Ideal Workers Compensation System

William M. Zachry
in Workers Compensation

As Yogi Berra once said, “If you don’t know where you are going, you might wind up someplace else.”

There is a proposed bill in the U.S. Congress concerning the creation of a National Workers Compensation Commission. A thorough analysis of the workers compensation system has not really been done since the 1970’s. There are also several proposals for systemic changes in various states workers compensation systems.

I believe that the foundation of any analysis (or any attempt to reform the system) should begin with an agreement on what the system should look like.

Here is my proposal for an “An Ideal Workers Compensation System.”

This is a very high level description of what I would call the ideal system. Within this proposal, there is room for disagreement by any of the parties over issues such as what is the right level of the economic safety net, or what a reasonable timeline for finalizing the claims is.

Please share your comments or thoughts with me on what you would consider to be your ideal system.

The ideal workers compensation system:    

  1. The ideal workers compensation program should provide a prompt provision of fixed and fair benefits to the legitimately injured worker in a no fault system. The benefits should be fully provided and the claims closed without the need for legal intervention or representation.
  2. The ideal system should engage and mandate the participation and involvement of the injured workers in their medical treatment, benefit provision recovery and return to work.
  3. The ideal system should provide the necessary medical care for the injured worker to achieve an appropriate medical improvement, and a return to a reasonable and appropriate functionality.
  4. The ideal system should provide enough of an economic safety net for injured employees to meet their primary financial obligations while they are temporary disabled. The indemnity payments should also be at a level that provides incentive for the injured employee to return to work.
  5. The ideal system should economically reimburse the injured worker for permanent loss of a body part or the loss of its function. It will also provide consistent benefits; where like disabilities or impairments result in similar indemnity and disability payments.
  6. The ideal workers compensation system should provide appropriate civil legal immunity to the employer. The ideal system should have few exceptions to the exclusive remedy doctrine, and those exemptions should be carefully delineated.
  7. The ideal system should mandate and encourage a high attention to safety in the workplace by both the employee and the employer.
  8. The ideal workers compensation system should have the correct incentives in the appropriate places that will result in an efficient benefit provision and reduced costs. The incentives should encourage the employers to promptly report all injuries, and provide benefits. The incentives should include processes for the employee to participate in the system, maximize recovery, and return to work.
  9. The ideal workers compensation system recognizes that the two primary stakeholders are employers and employees. It is necessary to make sure that all other participants in the system are paid appropriately but they are not the stakeholders.
  10. To insure the integrity of the system, the States should have the appropriate responsibility for oversight and management of the system to insure the benefit provision and economic viability of the benefit providers.
  11. The ideal system should encourage and build in a systematic coordination of benefits between workers compensation benefits, and other benefits such as group health, LTD, STD, SSI, and Medicare. It will also help employers meet its other obligations such as FEHA, ADA. The coordination of these benefits should result in improved benefits to the injured worker without increased costs for the employer. The administration of the system should not result in any cost shifting from, or to, other benefit programs.
  12. The ideal system should have measurable goals and expectations for all participants, such as timeliness of the benefit provision, timeliness of reporting of the claims by the injured workers and employers, timeliness of the decision making by the Judges and outcomes by medical providers
  13. The ideal system must capture the necessary data and information from the participants, to determine cost trends, as well as the necessary information to measure the goals and expectations. These numbers should be regularly published, allowing all parties to recognize positive results as well as compete to improve results and outcomes.
  14. An ideal system should allow all claims to be fully finalized within a reasonable timeline.
  15. An ideal system should result in the employers of the State being economically competitive in local and world markets.
  16. An ideal system should have zero toleration for fraud, by employees, employers, claims administrators, or vendors.

The following is not the opinion of the State fund or of its Board of Directors. It is strictly the opinion of its Author.

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