The default rate among self-insured group trusts has produced an alarming level of assessments on small businesses throughout the country. Workers’ compensation boards in states like New York are increasingly deliberating “safety programs” that would lower workers’ compensation costs.
Certain critics—notably the insurance industry itself—have long argued that the injury benefits awarded by state workers’ compensation boards are overinflated, and do not accurately reflect the true costs of a given injury.
While cases of fraud and “presumptions” are significant factors, many claim that the inability of workers’ compensation boards to objectively assess and quantify disability is a much greater problem. For years, many WCBs have not had a working definition of levels of disability or percentage-based schedules of loss. These boards have used arbitrary and every-changing criteria to calculate hundreds of millions of dollars’ worth of permanent damages benefits. On top of this there have been the massive cost of trials and testimonies to calculate what WCBs claimed had no definition in the first place.
At the present moment, workers’ compensation boards across the nation are once again involved in debates over the creation and use of more standardized, objective guidelines to evaluate disability. Yet for generations, the workers compensation system has carried on profitably by not having such standards. In short, disputes have been resolved by an arrangement in which worker’s compensation attorneys and insurers must engage in expensive and inefficient disputes until both sides are worn down and settle for a number around 50%, giving the misleading impression of a fair and reasonable outcome.
According to Seattle Workers’ Compensation Attorney Theodore Ronca, this state of affairs has come about through the unique history of workers comp boards. In New York State, for example, the board has employed a medical advisor since its very first days. The initial advisors established guidelines that were widely accepted and implemented, until they eventually came to be considered obsolete in the 1950s. After that point, the New York State workers’ compensation board had no working guidelines, and attempts to create new criteria came to a state of deadlock through stubborn opposition on all sides.
The New York Workers’ Compensation Board continued to operate (unofficially) with the older guidelines, and then later with no criteria at all for the next forty years. Responding to pressure in the 1990s, it produced new written guideline for workers’ compensation benefits, but failed to make these binding. In practice, they were generally ignored when negotiating workers’ compensation claims.
This, of course, raises the question as to whether guidelines would automatically solve anything. As Ronca points out, “unless the guideline can be tested to determine if it can measure what it purports to measure it remains a blank yardstick masquerading as a set of calipers.” Calculations of workers’ compensation disability, ultimately, result in the final settlements of injury claims, some that currently stand above $200,000 (and rising). Whether these numbers are too high or too low is a question for which many workers’ compensation boards still have no satisfactory answer.