Excerpt
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.
Dennis Whedbee’s crew was rushing to prepare an oil well for pumping on the Sweet Grass Woman lease site, a speck of dusty plains rich with crude in Mandaree, North Dakota.
It was getting late that September afternoon in 2012. Whedbee, a 50-year-old derrickhand, was helping another worker remove a pipe fitting on top of the well when it suddenly blew.
Oil and sludge pressurized at more than 700 pounds per square inch tore into Whedbee’s body, ripping his left arm off just below the elbow. Coworkers jerry-rigged a tourniquet from a sweatshirt and a ratchet strap to stanch his bleeding and got his wife on the phone.
“Babe,’’ he said, “tell everyone I love them.”
It was exactly the sort of accident that workers’ compensation was designed for. 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.
Two-and-a-half years after he lost his arm, Whedbee is still fighting with North Dakota’s insurance agency for the prosthesis that his doctor says would give him a semblance of his former life.
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. After John Coffell hurt his back at an Oklahoma tire plant last year, his wages dropped so dramatically that he and his family were evicted from their home.
- 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. Joel Ramirez, who was paralyzed in a warehouse accident, had his home health aide taken away, leaving him to sit in his own feces for up to eight hours.
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.
The cuts have gone so deep in some states that judges who hear workers’ comp cases, top defense attorneys for companies and even the father of the modern workers’ comp system say they are inhumane.
Presented with ProPublica and NPR’s findings, Sen. Bob Casey, D-Pa., one of the leading worker advocates in Congress, said the changes undermine the basic protections for injured workers.
The rollback “would be bad if it were happening in one state,” he said. “But the fact that a number of states have moved in this direction is disturbing and it should be unacceptable to people in both political parties.”
“They call them reforms,” Casey added. “That’s a real insult to workers.”
Legislators who pushed through cuts in their states, however, insist they are necessary to keep and attract business.
“That was always the No. 1 issue,” said state Sen. Brian Bingman, the Republican president protem of the Oklahoma Senate. “Your workers’ comp rates are way too high.”
The state’s 2013 reform law provided tremendous cost savings, he said, and its supporters proudly acknowledge it was written primarily by a young lawyer at a drilling company and a lobbyist for the state chamber of commerce.
While the vast majority of injured workers need only minor medical care and experience little friction in getting it, the changes often affect those who need the system the most.
After Whedbee lost his arm, his doctor said he’d be an ideal candidate for a modern prosthesis with a movable hand.
But North Dakota’s workers’ comp insurer sent him to another doctor — not in North Dakota or his home state of Pennsylvania — but in Minnesota. After seeing him once, that doctor recommended a cheaper prosthesis with a metal hook.
“I lost a hand,” Whedbee pleaded with the insurer to no avail. “I didn’t lose a hook.”
The Industrial Revolution and the Nixon Commission
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.
“As the work is done for the employer, and therefore ultimately for the public,” President Theodore Roosevelt said in 1907, “it is a bitter injustice that it should be the wage-worker himself and his wife and children who bear the whole penalty.”
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 systems differed in their particulars but aimed to answer the same questions: Is an injury work-related? What’s the appropriate medical care? How much compensation should injured workers receive and for how long? Each decision affected employers’ costs as well as workers’ solvency and well-being.
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.
The U.S. Labor Department used to keep track of how states complied with the presidential commission’s recommendations, but stopped after budget cuts in 2004.
A ProPublica analysis of state laws done in consultation with Burton found that only seven states now follow at least 15 of the recommendations made during the Nixon administration. Four states comply with less than half of them.
The recent changes are “unprecedented in the history of workers’ comp,” Burton said in an interview. “I think we’re in a pretty vicious period right now of racing to the bottom.”
Saving Companies Money, Forcing Workers Into Poverty
Sitting at a table on the 10th floor of a Tulsa office building, Mark Schell, senior vice president and general counsel of the Unit Corporation drilling company, argued that Oklahoma’s old workers’ comp system was bad for employers and workers alike.
Lawyers had clogged the workers’ comp courts while doctors approved costly, unnecessary medical care. Oklahoma cut benefits three times between 2005 and 2011, resulting in a 10 percent drop in employers’ insurance rates. But other states experienced even steeper drops in costs, leaving Oklahoma comparatively expensive, he said, especially against neighbors like Texas and Arkansas.
So, in 2012 and 2013, the state chamber of commerce and a group led by retailer Hobby Lobby and Unit Corp. spearheaded an effort to rebuild the workers’ comp system from scratch.
“I’m proud of what we did,” Schell said. Nodding to his firm’s associate general counsel, Drew Harding, across the table, he noted, “Drew was one of the main authors of the bill.”
Buried among a number of changes, from altering how disputes are heard to letting employers opt out of workers’ comp entirely, the reform cut the maximum wage-replacement benefits for injured workers from $801 a week to $561 a week. The new rate was the third lowest in the country.
The chamber’s lobbyist, Jonathan Buxton, rationalized the cuts as tough love for Oklahoma workers. “Getting them healed and back to work is the goal of our system, and it’s better incentivized now,” he said.
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.
Florida, New York and Tennessee have chopped compensation for workers with permanent partial disabilities — such as debilitating back injuries — by at least 20 percent.
In California, West Virginia, North Dakota and Oklahoma, lawmakers have placed time limits on wages for temporarily disabled workers, limiting such benefits to two years even for those who can’t go back to work or need more medical care.
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.
Recently, some judges have questioned whether states have cut too deeply in the name of saving employers money.
In August, a Florida circuit court judge ruled that the state’s workers’ comp law was unconstitutional, saying benefits had been “decimated” and the law “fails miserably” as to safety, health, welfare and morals. If the ruling is upheld, workers in Florida would be able to sue their employers, and the legislature would have to rewrite the law.
But in many states, few people — even the lawmakers who sponsored bills paring back benefits — seem to fully understand the bills’ impact on workers.
Before his injury, John Coffell, 30, was solidly part of the nation’s blue-collar rank and file.
He made $17.42 an hour as a tread booker at a Goodyear Tire & Rubber plant in Lawton, Oklahoma. With overtime and bonuses, he was earning close to $1,000 a week. It still wasn’t easy for a family with three kids, but he and his wife were managing.
Then, on a graveyard shift last July, Coffell was winding long strips of rubber compound onto heavy metal spools and loading them onto a truck when he felt a pinch and burning sensation in his lower back.
“As time went on throughout the night, it got worse and worse and worse,” he said. “It hurt when I walked. It hurt when I stood up. It hurt when I sat down.”
When the pain didn’t go away, he was prescribed physical therapy and placed on temporary disability.
If Coffell had been hurt a few months earlier, workers’ comp would have provided close to his take-home pay. But under the new law that took effect in early 2014, his disability check was capped at $561 a week — just above the poverty line for a family of five.
A high summer electricity bill and some unexpected fees from the credit union had already put the family behind. With less money coming in, things slid downhill quickly. The utilities went first, followed by Coffell’s truck, which was repossessed. Then the family received a letter from their landlord evicting them from their rental home.
Because none of their relatives had room for them all, the family had to split up.
Coffell’s wife, Justine, helped look after him. They alternated between his grandmother’s small home and her father’s camper. The kids, ages 5, 7 and 9, moved in with John’s mother 40 miles away.
John and Justine had only enough gas money to see them on weekends.
“I’m one of those families, we lived paycheck to paycheck,” John said. “I didn’t have all the bills caught up, but I had plans to get them caught up with being able to work and get overtime. My dominoes were stacked and they got knocked over — all for getting hurt.”
Since John went on workers’ comp, the Coffells have had to fill the gap by filing for food stamps. Such cost-shifting has become common. Dozens of injured workers said in interviews they’ve been forced to seek help from government programs because workers’ comp fell short.
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.
Bingman, the Oklahoma state senator who sponsored the 2013 workers’ comp cutbacks, said he couldn’t speak to the particulars of Coffell’s plight and wasn’t aware of similar complaints from other injured workers.
But if such hardships were “a pattern,” Bingman said, it would be “something we need to look at.”
Coffell, like most workers, had no idea his benefits were shrinking until he got hurt.
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