Abusing Workers’ Compensation
Wednesday - April 20, 2005
Most people don’t know or care about the workers’ compensation law until they get injured on the job.
Every state has its own theory about how to protect workers when they are injured. This means determining their injury, having them repaired and returned to work as soon as possible.
There are many classifications in the world of workers’ compensation. Next to death, the most serious is permanent disability, which means the worker who cannot return to the job consequently receives payments from the employer for the rest of his or her life. The next category is temporary partial disability. This means the employee may be able to return to work someday when they receive clearance from their doctor or therapist. Before that happens, they must be paid a percentage of their regular wage. There are many other classifications, but understanding just two of them will shed a little light of understanding on this misunderstood benefit plan.
In Hawaii, the law says anyone with more than 100 employees has to have a certificate of coverage for workers’ compensation insurance before they can do business here. It is a cost of doing business, it must be paid in advance and there are no refunds. This means if the company experiences no injuries and files no claims and has a spotless record, it cannot recoup the insurance payment.
The rift over workers’ compensation is not new; it goes back to the beginning of Hawaii’s Territorial history. The original law was introduced by a Republican senator who thought it was the responsibility of the employer to compensate the family of a worker who is killed on the job. It was the practice to pay a one-time lump sum as compensation. A death on the job used to cost an employer under $30,000. Today, it is well over $100,000.
Mind you, Hawaii is not a dangerous place to work. When compared to other states, Hawaii has a good safety record. That’s why it’s tough to figure out why our rates are so high and why our temporary partial disability numbers are so high.
The reason is simple. Filing for workers’ compensation has become the smart thing to do. It can be a very lucrative “gravy train” for all involved, except the employer who is paying the bill.
How did Hawaii end up with such a one-sided law favoring the workers? Hawaii law is based on what’s known as a presumption clause. This means, “lacking substantial evidence to the contrary, the administrative judge must side with the plaintiff.”
Why would anyone agree to such a seemingly one-sided law? Because all the unions had to do was agree to forego the process of establishing fault based on negligence in the accident and thereby giving up the right to sue for damages.
All nine attempts by the administration to reform the law were killed in this session of the Legislature. One of the key bills was to have consulting physicians called in on controversial cases. In workers’ compensation cases, the doctors rule.
It’s worth mentioning that every workers’ compensation law since statehood has been written by a union member. And one of the best win-loss records in the state belongs to union lawyers who take contested cases to the state Supreme Court. In that judicial arena, the loser pays all expenses. The problem is compounded by the fact that a Supreme Court ruling has the impact of precedent.
The cost of workers’ compensation generates an unbelievable amount of money for the medical industry. It would be conservative to estimate it at $500 million a year.
If government officials are serious about reforming the law, they should try to give up the presumption clause and be willing to go to court for negligence in safety procedures in the workplace. The problem is one lawsuit could wipe out a small business in an instant. If they are not willingly to do that or something like it, all this rhetoric is just annoying.
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