Insult to Injury: The Demolition of Workers’ Comp

Michael Grabell, ProPublica, Howard Berkes, NPR, Lena Groeger, ProPublica, Yue Qiu, ProPublica, and Sisi Wei, ProPublica, Insult to Injury: The Demolition of Workers’ Comp. ProPublica and NPR, 4 March 2016. “Over the past decade, states have slashed workers’ compensation benefits, denying injured workers help when they need it most and shifting the costs of workplace accidents to taxpayers.”

One of three winners of the 2016 IRE (Investigative Reporters & Editors) Award for Investigative Journalism. “Judges’ comments: This project masterfully details how states across the nation have dismantled their workers’ comp programs, cutting benefits and sticking taxpayers with a growing bill for injured workers. Tackling an often overlooked topic, the reporters built databases tracking legislative changes in each state over the past dozen years, obtained benefit plans from some of the country’s largest companies and combed through thousands of pages of depositions. They used heartbreaking stories and interactive tools to present complex material in an elegant way. Their work paid off in legislative changes in several states, investigations and a wider discussion about needed changes. We are awarding this project an IRE Medal for its wide impact and its fresh approach to showing how employers continue to benefit at the expense of workers.”

Until recently, America’s workers could rely on a compact struck at the dawn of the Industrial Age: They would give up their right to sue. In exchange, if they were injured on the job, their employers would pay their medical bills and enough of their wages to help them get by while they recovered.

No longer.

Over the past decade, state after state has been dismantling America’s workers’ comp system with disastrous consequences for many of the hundreds of thousands of people who suffer serious injuries at work each year, a ProPublica and NPR investigation has found….

The cutbacks have been so drastic in some places that they virtually guarantee injured workers will plummet into poverty. Workers often battle insurance companies for years to get the surgeries, prescriptions and basic help their doctors recommend….

The changes, often passed under the banner of “reform,” have been pushed by big businesses and insurance companies on the false premise that costs are out of control.

In fact, employers are paying the lowest rates for workers’ comp insurance since the 1970s. And in 2013, insurers had their most profitable year in over a decade, bringing in a hefty 18 percent return.

All the while, employers have found someone else to foot the bill for workplace accidents: American taxpayers, who shell out tens of billions of dollars a year through Social Security Disability Insurance, Medicare and Medicaid for lost wages and medical costs not covered by workers’ comp.

ProPublica analyzed reams of insurance industry data, studied arcane state laws and obtained often confidential medical and court records to provide an unprecedented look at the unwinding of workers’ comp laws across the country.

Among the findings:

  • Since 2003, legislators in 33 states have passed workers’ comp laws that reduce benefits or make it more difficult for those with certain injuries and diseases to qualify for them. Florida has cut benefits to its most severely disabled workers by 65 percent since 1994.
  • Where a worker gets hurt matters. Because each state has developed its own system, an amputated arm can literally be worth two or three times as much on one side of a state line than the other. The maximum compensation for the loss of an eye is $27,280 in Alabama, but $261,525 in Pennsylvania.
  • Many states have not only shrunk the payments to injured workers, they’ve also cut them off after an arbitrary time limit — even if workers haven’t recovered….
  • Employers and insurers increasingly control medical decisions, such as whether an injured worker needs surgery. In 37 states, workers can’t pick their own doctor or are restricted to a list provided by their employers.
  • In California, insurers can now reopen old cases and deny medical care based on the opinions of doctors who never see the patient and don’t even have to be licensed in the state….

The scope of the changes, and the extent to which taxpayers are paying the costs of workplace accidents, has attracted almost no national attention, in part because the federal government stopped monitoring state workers’ comp laws more than a decade ago….

Legislators who pushed through cuts in their states, however, insist they are necessary to deep and attract business….

Workers’ comp was born in the early 1900s as a “grand bargain” forged by business and labor as awareness grew about the grisly workplace accidents that came with industrialization….

In return for a measure of a security, workers gave up their right to sue their employers — even in cases of gross negligence — protecting businesses from lawsuit judgments that could bankrupt them. By 1920, nearly every state had enacted workers’ comp laws….

The first national assessment of workers’ comp protections came in the early 1970s when Congress established a commission to study state laws as part of the Occupational Safety and Health Act.

Convened by President Richard Nixon and led by John Burton, a Republican economist and law professor, the commission unanimously concluded that state laws were “inadequate and inequitable.”…

The commission made dozens of recommendations that laid the foundation for modern workers’ comp systems: Nearly every employee should be covered. Workers should be able to pick their own doctors. If employees couldn’t work, they should get two-thirds of their wages up to at least the state’s average wage. Compensation should last as long as the person is disabled, with no arbitrary caps. Spouses should receive death benefits until they remarry, children until they graduate college.

In 1972, the commission advised Congress to mandate 19 of these recommendations as minimum federal standards if states didn’t enact the provisions on their own. States quickly did. But over time the political winds shifted. A wave of cutbacks began in the 1990s, swelled in the mid-2000s and, after slowing during the recession, picked up again….

ProPublica’s review of workers’ comp changes nationwide found that many were steered by big business, aided by the recent Republican takeovers of state legislatures.

While rising medical expenses have long concerned insurers, the reforms were mostly driven by the recessions of 2001 and 2007-2009, which pitted states in a seemingly endless competition to lure business with lower costs. Even in states dominated by Democrats, worker advocates have been forced to make major concessions to achieve slight increases in benefits — sometimes just to keep up with inflation….

Few of the cuts were driven by concerns about fraud, which is estimated to account for only a small percentage of the $60 billion spent on workers’ comp each year. And studies show most of the money lost to fraud results not from workers making false claims but from employers misclassifying workers and underreporting payroll to get cheaper insurance rates….

A study by J. Paul Leigh, a health economist at the University of California, Davis, estimated that workers’ comp covered less than a third of injured workers’ medical costs and lost earnings in 2007 and that government programs like Social Security, Medicare and Medicaid had shelled out about $30 billion to fill part of the gap.

The rest came from regular health and disability insurance or out of workers’ pockets, Leigh said.

“We’re talking about taxpayers picking up the bill of something that should have been paid for by workers’ compensation insurers,” Leigh said….

On top of reducing benefits or capping the time injured workers can receive them, states have found another way to cut workers’ comp costs: shifting control over medical decisions from workers and their doctors to employers and their insurers.