The last decade of the 20th century saw dramatic changes in the American workers' compensation system. These changes resulted from a coordinated campaign by the business and insurance community to roll back workers' only remedy for workplace injury by manufacturing a perception that the system was out of control. State after state fell victim, in domino-like fashion, to legislative "reforms" consisting of draconian benefit reductions driven by allegations of "crises" in the state systems. With hindsight, it has now become patently clear that many of these purported "crises" - such as claimant fraud - were concocted, or at least greatly fueled by misinformation generated by the business and insurance community. The ultimate example of a concocted crisis was the experience of Ohio in 1997.

Despite having a state fund with assets of $18 billion, a surplus of $2.9 billion, and employer premium reductions of 6% the prior year, Ohio business and its chamber of commerce raised enough ruckus about "problems" in workers' comp to convince the legislature to pass a particularly egregious bill ostensibly saving employers an additional $200 million a year. The price of the bill was major benefit reductions for workers and elimination of coverage for certain conditions. When labor, injured workers and trial lawyers marshaled over 400,000 signatures to put the measure to a referendum, and then defeated business in the ensuing election, the governor of Ohio simply carried out a likely preconceived plan to rebate $1.3 billion in comp premiums to Ohio employers. That amount equaled 75% of the annual premiums paid by employers into the fund! What "crisis"?. . .

Returning to our history of the decade: Emboldened by early successes in eviscerating the comp systems of Oregon (1990) and Texas (1991), the business and insurance folks found allies in the print and television news media that allowed them to go on a tear in late 1991 and early 1992 with seemingly endless negative pieces about worker fraud and abuse. Although based on mostly apocryphal statistics - which have subsequently collapsed when subjected to investigation - this disinformation campaign was remarkably successful: it has effectively stigmatized the worker who files a comp claim in the eye of the American public (read "poisoned jury pool"), and it has pitted workers against themselves within the comp system. The standard refrain many workers' comp practitioners now hear from clients is: "I'm not like those other cheats and malingerers - my case is legitimate!" Recent research also shows that this campaign has substantially achieved what must be its ultimate goal - eliminating claims at their outset. In increasing numbers, workers are refraining from filing unquestionably valid claims out of fear of disparate treatment by their employers and because of their perception that workers' comp cases receive "second class" medical treatment.

As state "reforms" slashed benefits and constricted coverage under comp in the 90's (benefits decreased 23% from 1992, according to the National Academy of Social Insurance), and as the number of claims precipitously fell, employers and insurers reaped huge windfalls. Employer premium costs decreased nearly $6 billion in the last third of the decade, and over the entire decade, workers' compensation became one of the most profitable lines of insurance in the property/casualty field. A raging bull market for the insurers' portfolios meant that in some areas comp insurance could nearly be given away, relative to its price in the 1980's. Beware of halcyon times for employers and insurers in workers' comp, however, for they may only beget yet another "crisis".

From the general standpoint of the American worker, things are looking better. Late last year, the Bureau of Labor Statistics reported that the rate of occupational injury/illness was at 6.7 workers per every 100 in 1998, the lowest rate in 25 years. It was the sixth consecutive year of declines, according to Labor Secretary Alexis Herman. Of the 5.9 million affected workers, fewer than half lost time from work, and workplace deaths declined to a record low of 6,026. But on the workers' comp insurance front, the news is not so rosy.

According to BNA's recently published Comp Outlook 2000, the compensation insurance market is turning. The combined ratio - the ratio of insurer costs to premiums collected - was around 125 for 1998, and projected at 130 for 1999. By comparison, the ratio was 122 for the "crisis" year of 1990. The problem now is insurer profitability. That problem cannot be attributed to system costs which are dramatically less than ten years ago. But now the decline of claims frequency has flattened out, the savings from managed care have worn off, and medical inflation is back, all of which require insurers to readjust the pricing structure of comp insurance from earlier "giveaway" rates.

Insurers are also rattling a new "crisis" saber - the potential impact of federal legislation and regulations in the area of workplace ergonomics and in comp programs for federal contract workers exposed to radiation and beryllium. While the price of comp insurance rose only about 1.5% in 1999, and is projected to increase only 3 to 3.5% in 2000 and 2001, look for these modest increases to transmogrify into new "crises" for workers' comp in your state via the historically unrelenting pressure of the business and insurance lobby.

And make no mistake-- the other side has a unified theory, mission and game plan when it visits your state capitol. The American Insurance Association proudly announces on its web site: "AIA has provided leadership in efforts to achieve reforms in workers' compensation programs in 30 states since 1992. While AIA is encouraged by the recent improvement . . . in the workers' compensation line, we recognize the need for ongoing involvement in workers' compensation reform and system administration. AIA is working to resist efforts to undermine reforms through legislative proposals or ballot initiatives"

How is that mission accomplished? Jim Ellenberger of the AFL-CIO's Department of Occupational Safety & Health nicely summed up the common denominators of any "reform" campaign in a recent article in WorkingUSA:

1) Gain control over choice of physician (the "gatekeepers" of the system);

2) Gain control over how impairments are rated (reliance on the American Medical Association's Guides to the Evaluation of Permanent Impairment);

3) Gain control over what constitutes a compensable condition (restrictions on stress, repetitive strain injuries, and "pre-existing conditions");

4) Gain control over the legal process (the burden of proof becomes "clear and convincing" or "a preponderance");

5) Gain control by denying workers legal representation (restrictions on attorney fees); and

6) Gain control over the amount and duration of benefits (low benefits "encourage" return to work).

The AMA Guides warrant special mention in this connection. While the 4th, and current, edition of the Guides specifically caveats that they should not be used to make financial awards or direct estimates of disabilities, as a practical matter the Guides are employed in just that fashion in many of the nearly 40 jurisdictions that mandate or recommend their use for rating impairment. Small differences in percentage ratings assigned by the Guides to particular impairments can affect compensation values by hundreds of millions of dollars each year across the system. Comp practitioners have seen the percentage ratings for certain impairments change -usually shrink - with each new edition of the Guides over the last two decades. Two years ago, after the AMA initiated the process for producing a 5th edition, and as a reported result of huge controversy among the participants as to the methodology and use of the Guides, the process was abruptly halted in the summer of 1998. Chapter editors were apparently sacked and replaced, although the AMA provided only minimal information to the public, stating only that process was being revised and the publication date for the 5th edition had been moved from the fall of 1998 to the spring of 2000. Thereafter, under a nearly complete veil of secrecy, the 5th edition has been produced (but is not available in print until later this year). Early information reflects that practitioners, and injured workers, will find continued "shrinkage" of percentage ratings assigned to various impairments in the new edition.

So is anything good happening, now that we have reached the end of a decade of almost constant setbacks for injured workers who depend on the comp systems of this country? Maybe. The national media, whose attention has been so long focused on the claimant "cheat", may be finally turning its spotlight on employer and provider fraud - a far more significant system cost. More importantly, the media now seems more willing to help demonstrate just how inadequate the comp remedy is under many systems. In February, Consumer Reports published an article called "Workers Comp: Falling Down on the Job" which detailed the abuses of, rather than by, injured workers in workers' compensation claims. The article was just the latest in a series of major pieces which have reached the national press in the past two years, and which may help to change the previously distorted public view of victims of occupational injury and illness.

With the help of labor and the workers' comp plaintiff bar, the media has also rediscovered the 1972 report of the bipartisan, Nixon-appointed National Commission on State Workers' Compensation Laws. That report unanimously concluded state workers' comp laws in general were inadequate and inequitable. It listed 19 essential recommendations for coverage and benefits which states were advise to incorporate in order to avoid the potential federalization of workers' compensation. Studies of comp systems reflect that average state compliance increased from a level of 6.8 out of 19 of these recommendations in 1972 to 12.1 in 1982, when the national trend leveled off. It helps to repeatedly call attention to the fact that, over a quarter of a century after the 1972 Commission report, the workers' comp remedy has not even reached, on national average, the recommended minimum baseline level.

Finally, it may be that the shrinkage of the comp remedy - the "exclusive" remedy for workers as a result of the so-called historic bargain between labor and management in the early 20th century - can only go so far. In Oregon, the 1990 "reforms" provided for exclusion of "pre-existing conditions". In 1994, a worker in that state filed a suit against his employer for negligence arising out of an exposure to chemicals which caused respiratory problems. His claim had been rejected by the Oregon Workers' Compensation Board for failure of proof of medical causation because of the "pre-existing conditions" proviso in the law. The theory of the worker's case was that, in the absence of a workers' comp remedy, he was not barred from suit by the "exclusive remedy" doctrine. In rejecting the theory, the Oregon Court of Appeals noted that the legislature had amended the law in 1995 to extend the concept of "exclusive remedy" to all injuries and conditions arising out of employment regardless of whether or not they are determined to be compensable under Oregon comp law. The case has now moved to the Oregon Supreme Court where plaintiff has asked for a ruling that the 1995 law is unconstitutional. Oregon's constitution - similar to many other states - guarantees that "every man shall have a remedy by due course of law for injury done him in his person, property or reputation." Following years of steady whittling away of any remedy for workplace injury and disease, the Oregon Supreme Court decision, expected later this year, has the potential for historic and massive changes in that remedy.

In 1995, under the umbrella of the Association of Trial Lawyers of America (ATLA), a small group of workers' comp attorney stalwarts founded the Workplace Injury Litigation Group (WILG), a non-profit association dedicated to preserving and advancing the workers' comp remedy for the approximate 6 million occupational injury and disease victims annually. It should be remembered that workers' comp lawyers founded ATLA -originally the National Association of Claimants' Compensation Attorneys - in 1946. Now grown to over 500 members, WILG has been an effective voice on behalf of injured workers for the last five years, through alliances, education, research and information gathering. WILG is increasingly looked to as "the" source for information and advice on state and national developments in workers' comp. Our organization looks forward to a steadily growing role in holding, and regaining, the ground in comp for injured workers in the 21st century.

For more information on WILG, visit our web site at: www.wilg.org/