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U. S. DEPARTMENT OF LABOR
JAMES J . DAVIS, Secretary

BUREAU OF LABOR STATISTICS




ETHELBERT STEWART, Commissioner

WASHINGTON
GOVERNMENT PRINTING OFFICE

1922




CONTENTS.
Page.

Purpose of the investigation__________________________________________
3
Scope and method__ :___ ,-------------------------------1,2
Description and size of funds________________________________________ 2, 3
General comparison of State funds with private insurance______________ 3-21
Problems peculiarto competitive system___________________________ X 4
State’s assumption of liability____________________________________
4
5
Politics______________________ ,---------------------------------------------------Inadequate appropriations and salaries___________________________
5
Cost_____________________________________________________________ 5-10
Cost to State________________________________________________ 5-8
Cost to workman____________________________________________
8
Cost to employer____________________________________________ 8-10
Service___________________________________________________________10-18
Promptness of payments________________________________ «------10-13
Adequacy or liberality of payments____________________________ 13-17
Accident prevention__________________________________________ 18
Security__________________________________________________________18-20
Stock companies____________________________________________ 18,19
* Mutual companies___________________________________________ 19
State funds__________________________________________________ 19, 20
Self-insurers_________________________________________________ 20
Summary conclusions___________________________________________
21
Administrative functions, personnel, and expenses of commissions and
funds______________________________________________________________21-26
Functions and work of commissions______________________________ 22,23
Personnel and expenses__________________________________________ 23-25
Salaries of commissioners and employees__________________________ 25, 26
Methods of accident reporting and claim procedure_____________________ 26-51
What employers are required to report accidents---------------------------- 27
W hat accidents are required to be reported________________________ 27-29
What data are required on accident report forms___________________ 29-33
37
How soon accidents are reported__________________________________ 34—
What reports are required and from whom________________________ 37-44
Employer’s first report_______________________________________ 38, 39
39
Attending physician’s first report____________________________
Workman’s claim or agreement_______________________________ 39-42
Supplemental and final reports and receipts___________________ 42-44
Numbering, indexing, and filing___________________________________ 44-48
Employee’s index_____________________________________________44, 45
Employer’s index____________________________________________
45
Numerical index____ :________________________________________ 45
Numbering of accidents and claims____________________________ 45-48
Summary conclusion______________________________________________48-51
Solvency of State funds______________________________________________ 51-56
Classifications___________________________________________________ 52
R ates_________________________________________________________ — 52, 53
Merit rating____________________________________________________
53
Reserves and surplus__________________________________________ — 53-55
Claim reserves_______________________________________________ 54, 55
Catastrophe reserves________________________________________
55
Dividends__________________________________________________ — — 55
Collection of premiums__________________________________________
55
Auditing pay rolls____________________________________
56
Expenses, premium income, surplus, and dividends of State funds___
56




h

i

rv

CONTENTS,

Page.
Administration of medical service_____________________________________ 57
Accident and compensation statistics__________________________________ 57-64
Colorado________________________________________________________ 59
Indiana_________________________________________________________ 60
W ashington___ /__________________________________________________60, 61
Oregon__________________________________________________________ 61, 62
W isconsin_____________________________________________ 1------------ 62
Nevada___________________________________
62
M assachusetts_______________________________________________ !— 62,63
California_______________________________________________________ 63, 64
Self-insurance_______________________________________________________ 64,65
Effect of weekly maximum in reducing compensation benefits-------------------66-71
Methods of computing wages in workmen’s compensation practice________ 71-88
Computations on full-time basis___________________________________ 73-75
Computation of wages at the time of injury________________________ 75-77
Computations on part-time basis----------------------------------------------------77-79
Seasonal occupations_________________________________________
79,80
Concurrent employments----------------------------------------Minors and learners______________________________________________ 83, 84
W hat is included in the term “ wages ”----------------------------------------- 84-88
Description of claim procedure in each State__________________________ 88-194
Exclusive State funds_________________________ I ----------------------- 88-125
British Columbia_____________________________________________ 88-93
Nevada______________________________________________________ 93-95
North Dakota________________________________________________ 95-97
Ohio________________________________________________________97-104
O ntario____________________________________________________ 104-107
Oregon_____ ________________________________________________107-113
W ashington________________________________________________113-120
West V irginia_____________________________________________ *120-125
Competitive State funds________________________________________ 125-152
California--------------125-129
Colorado___________________________________________________129-132
Idaho_____________________________________________________ 132-135
M aryland__________________________________________________ 135-137
Michigan--------------------138-140
M ontana____________________________________________
140
New Y ork__________
140-146
Pennsylvania_______ *--------------------------------------------------, — 146-148
U tah_______________________________________________________149-152
Industrial commissions________
152-194
California Industrial Accident Commission----------------------------152-158
Colorado Industrial Commission____________________________ 158-160
Idaho Industrial Accident Board-------------------------------------------160-163
Illinois Industrial Commission--------------------------------------------163,164
Indiana Industrial Board---------------------------------------------- '— 164-167
Maryland Industrial Accident Commission-----------167-169
Massachusetts Industrial Accident Board____________________ 169-174
Michigan Industrial Accident Board------------------------------------- 174—
177
Montana Industrial Accident Board------------177-182
New York Industrial Commission___________________________ 182-186
Pennsylvania Workmen’s Compensation Bureau and Board___ 186-190
Utah Industrial Commission-------------------------------------------------190,191
Wisconsin Industrial Commission----------------------------------------- 191-194




81,82

BULLETIN OF THE
U. S. BUREAU OF LABOR STATISTICS.
no.

WASHINGTON

301

a p r il ,

1922

COMPARISON OF WORKMEN’S COMPENSATION INSUR­
ANCE AND ADMINISTRATION.
PURPOSE OF THE INVESTIGATION.

For the past three or four years the Bureau of Labor Statistics
has received numerous requests from State legislators and others for
information regarding the relative merits of different types of insur­
ance under workmen’s compensation. Heretofore the bureau has been
unable to furnish such information. In 1919 the bureau began an in­
vestigation of compensation insurance systems, the field work of
which was completed in August, 1920. The points upon which infor­
mation was particularly sought were the relative costs, security, and
service of the various types of insurance carriers. The question of
costs included both the cost of insurance and the cost of administra­
tion. The question of security covered security both to employers
and to injured workmen. As regards service, three tests were taken
into consideration, viz, (1) promptness of compensation payments,
(2) adequacy or liberality of payments, including liberality of inter­
pretation of the laws, and (3) accident-prevention work. In addi­
tion, a study was made of the administrative procedure of State
industrial commissions and funds, especially as regards methods of
accident reporting and claim procedure. A description of the claim
procedure methods of each State is given on pages 88 to 194.
SCOPE AND METHOD.
The investigation covered 20 States and 2 Canadian Provinces, as
follows:

Exclusive S tate funds .—British Columbia, Nevada, North Dakota, Ohio, On­
tario, Oregon, Washington, West Virginia, and Wyoming.
Com petitive State funds.—California, Colorado, Idaho, Maryland, Michigan,
Montana, New York, Pennsylvania, and Utah.
States having no State funds. —Illinois, Indiana, Massachusetts, and Wis­
consin.

The industrial commission of each of the above States and Prov­
inces was visited. The records and procedure in each State were
examined and studied first hand. Particular attention was given to
1




2

COMPARISON OF WORKMEN^ COMPENSATION INSURANCE.

the following subjects: Accident reporting; claim procedure and
method of compensation payments; method of handling permanent
partial disabilities; formulation of insurance rates; auditing of pay
rolls; computation of reserves; merit rating; and declaration of divi­
dends. A few of the States had made special studies or had tabulated
data, and these were utilized to some extent by the bureau in its in­
vestigation. The Illinois, Michigan, and Pennsylvania commissions
had made studies relative to the promptness with which compensation
payments had been made by the different insurance carriers. * In New
York the Connor investigation1 furnished pertinent information.
Most of the information, however, was obtained directly from the
books and records of the commissions, to which access was freely
given. The bureau, however, made no actuarial audit with respect to
the solvency of the State funds, accepting the financial statements as
furnished by the funds or as found in their published reports.
DESCRIPTION AND SIZE OF FUNDS.
State funds are of two general types, exclusive and competitive.
Nine exclusive State funds were studied. These vary somewhat
among themselves. Ontario, British Columbia, and Washington are
of the same type. In these both compensation and insurance are
compulsory. No private insurance or self-insurance is permitted.
Nevada and Oregon differ somewhat in that compensation is not
compulsory but elective. However, if the employers in these States
elect compensation, they must insure with the State fund. Neither
private companies nor self-insurers are permitted. Ohio and West
Virginia permit self-insurers to do business, but private companies
are excluded. In the exclusive-fund States the funds are adminis­
tered by the industrial accident boards or commissions as a part of
the administration of the compensation act.
Nine competitive funds were studied. Of these, six are under the
supervision and jurisdiction of industrial commissions which admin­
ister the funds. In some of the competitive States—for example, in
Montana—the fund is an integral part of the commission; in other
States the fund is practically independent, as it is in California.
In States in the latter class the commission formulates the general
policies of the fund and then appoints the manager and grants him
practically complete control of the fund; in the former the commis­
sion retains greater administrative control over the fund. Two
State funds (Idaho and Michigan) are under the jurisdiction of
insurance departments. The Pennsylvania State fund is under a
specially created board, which appoints the manager and has charge
of the fund.

During the year 1919 the stock companies in general wrote $91,000,000 in premiums,2the mutual companies $27,000,000,3 and the State
funds $33,000,000. The stock companies therefore wrote 60 per cent
of the total workmen’s compensation business in the United States,

1 Report of investigation by J. F. Connor as commissioner under section 8 of the execu­
tive law in relation to the Nov. 17, 1919. and affairs of the State industrial commission,
submitted to the governor, management
2 Data furnished by Mr. A. W. Whitney, general manager of the National Workmen's
Compensation Service Bureau. This amount does not include the premiums written by
several minor stock companies.
3 Data Companies.
Casualty furnished by Mr. E. S. Coggswell, manager, National Association of Mutual




COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

3

the mutuals, 18 per cent, and the State funds, taking them as a whole,
competitive and exclusive, 22 per cent. On the basis of the stock
company rates the premium income of the State funds would be
greater than the amount stated, because their premium rates are
usually lower than those of stock companies.
The amqunt of business written by the competitive State fund
varies in the different States. It ranged in 1919 from 4 per cent in
Michigan to about 49 per cent in Montana. The average for all the
competitive State funds was 13.2 per cent, i. e., they wrote 13.2 per
cent of the insurance business in the competitive States. California
wrote about 36 per cent, while Pennsylvania and New York, two of
the three largest competitive funds, wrote about 12 per cent each.
These figures are only approximate, but are sufficiently accurate for
present purposes of comparison.4
Several of the State funds have considerably increased their pre­
mium income since their establishment. The California fund has
grown very much and so has the Montana fund. The New York and
Pennsylvania funds have increased somewhat, whereas some of the
others have remained about stationary. The fact that some of these
write very little of the compensation business is due to various causes.
One reason is that they have not sufficient employees to go out and
get business. Among some State funds it is the policy of those in
charge not to solicit business, but simply to take whatever comes to
them. They would have the State fund function as a regulator of
insurance rates.
GENERAL COMPARISON OF STATE FUNDS WITH PRIVATE
INSURANCE.

Before taking up a detailed comparison of the different insurance
systems as to cost, service, and security it may be advisable to make a
general comparison between State funds and private carriers. But
in order that the comparisons between different State funds and
between different types of insurance may be accurate, it is neces­
sary to take into account several factors. Among the more important
of these are the following: Variations in the provisions in the various
laws, methods of procedure, methods of wage payments in the dif­
ferent localities, the size or area of the State, and the nature of the
industries.
Moreover, it is practically impossible to compare State funds as
a whole with stock companies or mutual companies or self-insurers
as a whole, for the reason that there are such great variations within
each type of insurance. Some of the State funds are more efficiently
managed and give better service than other types of insurance car­
rier. On the other hand, some of the State funds are badly managed
and give poorer service than other types of insurance. Similar
variations, however, exist within the private companies. Some stock
companies perform very good service while others do not. The same
may be said of the mutuals and the self-insurers. There are selfinsurers who pay full wages, even giving more than the law specifies,
whereas others adopt a technical, niggardly, and dilatory attitude.
Consequently, it is difficult to compare one type with another. How-

4 For the latest available data as regards premiums, surplus, and expenses of State
funds, see Table 16, p. 56.




4

COMPARISON OF WORKMEN T COMPENSATION INSURANCE.
S

ever, taking each type as a whole, or the the best example as rep­
resentative of the type, the records show that the State funds (1)
do business 25 to 30 per cent cheaper than stock companies; (2) are
financially sound and have adequate reserves and surplus; (3) pay
compensation as promptly as private carriers or self-insurers; (4)
are more liberal in settling claims and appeal fewer cases to the com­
missions or courts; and (5) perform little safety and inspection
work in comparison with private companies.
PROBLEMS PECULIAR TO COMPETITIVE SYSTEM.

Certain problems confront commissions in competitive insurance
States which do not exist under an exclusive State fund system. In
the last analysis a comparison of different types of insurance carriers
resolves itself into a comparison of exclusive with competitive sys­
tems. From an administrative standpoint a competitive State fund
is not greatly unlike a private insurance company.
Under an exclusive fund system the commission ascertains the
facts from reports and investigations and then awards compensation.
In a competitive State the commission, instead of administering the
insurance, supervises, follows up, and checks up the insurance car­
riers or self-insurers who are required to make the payments.
Under the exclusive State fund rates can be increased or decreased
to meet contingencies as they arise and no one is seriously affected.
As an illustration, Oregon in 1920 increased its benefits 30 per cent.
This was a flat increase, retroactive, and applied to all persons receiv­
ing compensation benefits at the time. The additional cost was met
out of the surplus of the fund. But had there been no surplus the
commission might have increased its rates. This could not have been
done under a competitive system, because the premiums were col­
lected and contracts entered into on the basis of the former benefits.
Again, under the competitive plan there exists a dual system of
administration. In an exclusive-fund State, accidents are reported to
the commission only; under a competitive system, accidents are re­
ported by the employer to the insurance company and also to the
commission. Furthermore, under the latter system both the in­
surance company and the commission must receive and investigate
compensation claims, which results in unnecessary duplication of
effort. These difficulties of administration do not exist under an
exclusive State fund system.
STATE’S ASSUMPTION OF LIABILITY.

Another fact worthy of note is that in some of the exclusive-fund
States, especially the Canadian Provinces and Washington, the
State assumes responsibility for compensation payments in case of
accident. If an accident occurs within the industry covered by the
law, the State pays. It obtains its premium later, or in advance.
The workman does not suffer because the employer has not paid
his premium. Of course, in most States, if the employer has not
insured, the employees can bring suit for damages, but in many
cases a judgment is valueless.




COMPARISON OP STATE FUNDS WITH PRIVATE INSURANCE.

5

POLITICS.

One of the factors which militates against efficiency of administra­
tion in industrial commissions is the system of partisan political
appointments. The personnel of many commissions is constantly
changing with the change of political administration. In one State,
for example., there have been 17 commissioners since the creation of
the commission in 1911. This continual change in personnel prevents
a continuity of policy. Commissioners frequently hesitate to under­
take important and constructive policies when their probable tenure
of office is only three or four years. Furthermore, this change in
personnel affects not merely the commissioners themselves but the
entire staff of the commission.
INADEQUATE APPROPRIATIONS AND SALARIES.

Probably the greatest handicap suffered by State funds and indus­
trial commissions is inadequate appropriations and salaries. An in­
dustrial commission can not perform its functions properly nor fur­
nish adequate service if it does not have sufficient appropriation to
carry on its work and if the salaries provided are so low that highgrade employees can not be retained. In fact most of the State
commissions serve as recruiting ground for private employers and
especially the private insurance companies. Great credit is due those
employees who, because of their interest in the successful and efficient
administration of the fund or commission, remain in the public
service although able to command double their salary in private em­
ployment.5
COST.

As. already noted, State funds as well as private insurance com­
panies vary greatly among themselves as regards efficiency in man­
agement. However, certain legitimate comparisons can be made
between the two types of insurance. The question of cost will be
considered first—cost to the State, to the employee, and to the em­
ployer. In order to obtain accurate comparisons, however, it is neces­
sary to distinguish between the accident cost, on the one hand, and
the compensation cost of those accidents, on the other. One must also
distinguish between cost of administration, cost of insurance, and cost
of compensation benefits.
COST TO STATE.

The total cost to the State depends on two factors—the amount of
the benefits and the cost of administration, i. e., how much it costs
to put those benefits into effect. Ordinarily, when speaking of cost
to the State, administrative cost is meant. In comparing the ad­
ministrative cost of one State with that of another, one must, of
course, take into account the number and variety of functions per­
formed, since some State commissions are engaged in more activities
than others. It is also necessary to have all the items of expense
included. For example, in some 'States the reported administrative
expenses include rent; in others, they do not. Then, too, a valid
comparison of the total administrative expense of one State with 6
shows the salaries paid various officers

6 T a b le 9 (p . 2 5 )
c o m m is s io n s a n d fu n d s .




a n d e m p lo ye e s o f S ta te

6

COMPARISON OF WORKM EN^ COMPENSATION INSURANCE.

that of another must take into account the administrative expenses
of insurance carriers, including the State funds. Suppose, for illus­
tration, one wishes to compare the administrative cost of the ex­
clusive State funds of Ohio, Ontario, or Oregon with the adminis­
trative cost of competitive systems of, say, Pennsylvania or Cali­
fornia. In the first group of States the total cost will be shown
by the expenses of the commission; but in the second group the
total expenses of administering the compensation act will be the
administrative expenses of the commission, plus the administrative
expenses of the State fund, plus the expenses of the insurance com­
panies, to say nothing of the expenses of the self-insurers. The dif­
ference between the two totals represents the difference in the total
administrative costs under exclusive and competitive systems.

The difference in the cost of administering a compensation act
under the two systems is brought out in the following table, which
shows for specified States the administrative expenses of the several
types of insurance. The purpose of column 2, showing approxi­
mately the number of employees subject to the compensation acts,
is to indicate the volume of business performed in each State. Col­
umn 3 shows the actual expenses of the commission for administer­
ing the compensation law; column 4 shows the actual administrative
expenses of the State funds; column 5 shows approximately the
administrative cost to the stock insurance companies. The stock
company figures were obtained by applying an average expense ratio
of 37^ per cent to the earned premiums as reported by the National
Workmen’s Compensation Service Bureau® for the year 1919. Al­
though the stock expense ratio varies in the several States, ranging
from 35 to 40 per cent, the application of a flat 37| per cent will
give results sufficiently accurate for the present purpose. In fact,
for the total expenses of all private insurance carriers these figures
are an understatement, since they do not include the expenses of
mutual and reciprocal companies, which were not available, nor do
they include the expenses incurred by self-insured employers. The
administrative expenses for the commissions and State funds are all
for the year 1919 except for the Ohio and Pennsylvania commissions,
which are for 1918.
T able

1 .— E X P E N S E S O F C O M P E N S A T IO N A D M IN IS T R A T IO N I N S P E C IF IE D S T A T E S .1

State.

E stim a te d
num ber of
employees
subject to
act.

Com m ission.2

F u n d .8

1

2

3

4

Stock com ­
panies.8
5

T o ta l.
6

E x clu sive -fu n d States:
W a s h in g to n ............................
$172,816.93
191,458
$172,816.93
138,902.31
O regon......................................
138,902.31
98,910
24,746
32,778.66
N e v a d a ....................................
32,778.66
279,596. 00
1,008,813
279,596.00
O h io .............................. ...........
W est Virginia.......................
212, 812
80,422.64
80,422.64
110,000
B ritis h C o lu m b ia ..................
70,705.53
70,705.53
167,844.75
500,000
167,844.75
O n ta rio ....................................
1 A d m in is tra tiv e expense figures fo r th e la te st periods a va ila b le are fo u nd in T a b le 7, p . 24.
* Figures do n o t in c lu d e e xp enditures fo r accident p re ve n tio n , except N e w Y o rk , C a lifo rn ia , a n d Penn­
s y lv a n ia S tate fu n ds.
* Figures in clu d e e xpenditures fo r accident p re ve n tio n and taxes. In sp e ctio n expenses a b o ut 2 per
cent o f earned p re m iu m s and taxes a b o u t 3 p e r cent*

° T h e n a m e o f t h is o r g a n iz a tio n h a s r e c e n tly b ee n c h a n g e d to t h e “ N a t io n a l B u r e a u
o f C a s u a lty a n d S a fe ty U n d e r w r ite r s .”




COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.
T able 1 __ E X P E N S E S

O F C O M P E N S A T IO N A D M IN IS T R A T IO N I N S P E C IF IE D S T A T E S —
C oncluded.

State.

E stim a te d
nu m b e r of
employees
subject to
a ct.

1

2

C o m p e titive -fu n d States:
C a lifo rn ia ......................
Id a h o ............................ .
M o n ta n a ........................
C olorado........................
M ic h ig a n .......................
P e n n s y lv a n ia ............. .
N e w Y o r k ..................
M a ry la n d ......................
P riva te -in su ra n ce States:
M assachusetts............
In d ia n a .........................
Illin o is ...........................
W isc o n s in ....................

7

C om m ission.

Fund.

S tock com ­
panies.

T o ta l.

3

4

5

6

611,941
50,119
56,826
137,157
597,585
2,149, 867
2,503,020
188,433

$175,270.10 $319,125.11
15,542.06
28,714.92
4 27,000.00
4 56,598.19
29,936.60
61,550.94
239,587.95 277,984.00
422,447.07 213,800.40
4 63,914.99

1,109,134
502,729
871, 890
405,009

159,854.95
27,928.62
6119,296. 85
36, 855.11

$2,088,426.43
108,522.50
69,855.25
280,493.09
1,246,371. 32
4,384,702.17
8,750,610.47
753,168.21

$2, 582, 821.64
152, 779.48
96, 855. 25
337,091.28
1,337, 858. 86
4,902,274.12
9,386, 857.94
817,083.20

2,642,602.31
1,166,299.23
2,757,497.28
880, 825.02

2,802,457.26
1,194, 227. 85
2, 876,794.13
917,680.13

4 In clu de s expenses of State fu n d .
5 In clu de s expenses (a p p ro x im a te ly $10,000) for a d m in is te rin g th e co n cilia tio n an d a rb itra tio n act.

A glance at the foregoing table shows the enormous difference in
administrative costs between the exclusive and competitive insur­
ance systems. The former are stated in thousands of dollars, whereas
the latter in some cases run into millions. For example, compare
the administrative expenses in the exclusive-fund State of Ontario
($168,000) with those in the competitive-insurance State of Cali­
fornia ($2,582,000), or those in the exclusive-fund State of Ohio
($279,000) with those in the competitive-insurance State of Penn­
sylvania ($4,902,000) and in the private-insurance State of Illinois
($2,876,000).
A comparison of the number of State employees required to admin­
ister the compensation act under the different insurance systems may
also be of interest. The following tabular statement shows the num­
ber of employees in specified exclusive-fund States, competitive-fund
States, and States having no State funds. The figures are for the
year 1920, except for Pennsylvania (1921) and Illinois (1919).
T able 2 .— N U M B E R

O F S T A T E E M P L O Y E E S E N G A G E D I N A D M IN IS T R A T IO N O F COM ­
P E N S A T IO N A C T S I N S P E C IF IE D S T A T E S .

State.

C om m is­
sion em­
ployees.

F u n d em­
ployees.

E xclu sive -fu n d States:
O hio...................................................................................................................
214
Oregon..............................................................................................................
119
W a s h in g to n ....................................................... „ ..........................................
89
42
W est V irg in ia ................................................................................................
C o m p e titive -fu n d States:
67
C a lifo rn ia .........................................................................................................
159
P e n n s y lv a n ia ...............
........................................................................
28
.........
M ic h ig a n .............................................................................................. N ew Y o rk ........................................................................................................
263
P rivate-insurance States:
57
Illin o is ............................................................................................................
83
M assachusetts................................................................................................
22
W isco nsin ........................................................................................................




T o ta l.

214
119
89
42
237
85
16
173

304
211
44
436
57
83
22

8

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

It will be seen that the number of employees in States having exclu­
sive State funds is relatively smaller than in the competitive-fund
States. This is the logical thing to expect, because the former States
do not have a dual system of administration. Furthermore, it re­
quires nearly as many employees to administer the compensation act
in States having no State funds whatever, if the work is to be done
adequately, as it does in the exclusive-fund States.
COST TO WORKMAN.

In considering the question of cost to the injured workman, distinc­
tion should be made between the accident cost and the compensation
cost. By accident cost is meant the wage loss resulting from the
accident. How much of this accident cost does the employee bear
and how much does the industry or the employer bear? Most of
the laws provide that the compensation shall equal a certain per­
centage of the employee’s wage received at the time of the injury.
This percentage ranges from 50 to 66§. But because of the operation
of the weekly maximum and other limitations the injured workman,
instead of receiving 50 or 66f per cent of his wages, receives actually
only 20 to 35 per cent.6
As regards compensation cost as distinguished from accident cost,
Oregon is the only State in which the workman is required to pay a
portion of the compensation. In this State he is required by law
to pay 1 cent for each working day, which amounts to about 9 or 10
per cent of the total compensation costs. In all of the other States
the employer at least pays the compensation provided in the law.
However, in many of the Western States the employer has been able
under the contract hospital system to place a large part of his com­
pensation cost upon the workman. Under this contract system the
employer enters into an agreement with a contract hospital whereby
the latter is to take care of his accident cases. The workman is
usually charged a dollar a month or more, which is deducted from
his wages and turned over to the hospital. This dollar a month
frequently pays for the entire cost of the medical service. Thus the
employer is relieved of a part of his burden, which is placed upon
the workman. Another burden which the employee must bear is the
payment of attorney’s fees.
COST TO EMPLOYER.

A comparison of compensation costs to the employers under dif­
ferent insurance systems and in different jurisdictions is difficult of
determination. There are two ways of approaching the problem:
(1) By comparing insurance rates and (2) by comparing expense
ratios. A comparison of rates is practically impossible because of
the difficulties involved. There are too many complicating factors
T^hich affect the comparability of the result.
First. There is the difference in benefits. No reliable factor has
yet been produced which will measure accurately the difference in
benefits.
Second. Variations in classifications. One may say that a coal
mine is a coal mine whether located in Pennsylvania, Ohio, or
® A d e ta ile d d is c u s s io n o f t h is s u b je c t is g iv e n o n p p . 66 to 71.




COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

9

Washington. But a comparison of the manuals in the various
States will disclose the fact that even a coal-mine classification does
not mean the same thing in every State. In addition, the problem
of interpretation and application of the classification must still be
dealt with.
Third. Identical industries or classifications vary considerably as
to hazard in different States.
Fourth. Because of the operation of merit-rating schemes in vogue
in most States the manual rates are not the rates actually charged.
Fifth. Even if the foregoing difficulties have been solved and
comparable rates obtained, one does not know whether the insurance
companies are actually writing business at those rates unless the
State keeps strict supervision over rates. In half of the States no
supervision is exercised.
Sixth. The policy of State funds and other insurance carriers
differs as to dividends and reserves. Among some it is the practice
to set the rates high enough to allow the return of dividends and to
build up a comfortable reserve and surplus. Among others the rates
are barely adequate to cover the cost of the current accidents.
Therefore, a comparison of manual rates in one State with the
manual rates in another State does not get one very far.
The other method of comparing costs to employers is by means of
the expense ratios of the insurance carriers. Final compensation
insurance rates are the product of two factors: (1) The pure premium
factor, which represents the actual loss cost, and (2) the expense
loading factor, which represents the carrier’s administrative expense
for putting the benefits into effect. Here one can arrive at certain
definite facts. The pure premium factor, i. e., the actual cost of
accidents per $100 of pay roll for each industrial classification, is, of
course, the same for all carriers for rate-making purposes. The
expense factor, however, varies with the type of insurance and
reflects the difference in cost of insurance administration. The
difference in the expense ratios of stock companies, mutuals, and
State funds, therefore, represents the relative cost' of compensation
insurance to the ’employer under the different insurance systems.
For the employer a comparison of costs under a stock company, a
mutual, or a State fund becomes then a simple mathematical calcu­
lation.
The expense ratios of stock companies vary from 35 to 40 per cent,
the average being about 38; i. e., for every dollar of premiums col­
lected by stock insurance companies 38 cents goes for expenses and
profits. The expense ratio of the mutuals ranges from 15 to 20 per
cent; that of the competitive funds averages about 10.6 per cent,
ranging from 6 and 7 to about 15 per cent; that of the exclusive State
funds ranges from 3 per cent—less than 3 in Ohio—to about 7 or 8
per cent. Using one figure only, the average expense ratios are as
follows: Stock companies, 38 per cent; mutual companies, 20 per
cent; competitive State funds, 10.6 per cent; and exclusive State
funds, 4 per cent.® By applying these percentages to the premium
income a comparison of the cost to the employer is obtained. Such
a computation shows that had every compensation State possessed
an exclusive State fund and had ali employers carrying compensa­
tion insurance insured therein, it would have saved these employers*
* For actual expense ratios see Table 16, p. 56.



10 COMPARISON OF w o r k m e n ’s COMPENSATION INSURANCE.
in the year 1919 at least $30,000,000. In other words, it costs the
insured employers of the United States an extra $30,000,000 to in­
sure in stock and mutual companies. These figures are obtained
simply by applying the difference in expense ratios to the total
premium income, as shown on page 2. Of course, it has been assumed
that each type of insurance has furnished the same kind of service,
SERVICE.

A second factor in the comparison of compensation insurance sys­
tems is service. However, it is difficult to measure service because
it does not easily lend itself to statistical proof. Three tests, howeve^ may be applied: (1) Promptness of payment; (2) adequacy
or liberality of payments, including liberality in interpreting the
laws; and (3) accident prevention.
PROMPTNESS OF PAYMENTS.

As regards promptness of payment the bureau has been able to
obtain definite statistical data based upon actual cases taken from
the files of various industrial commissions. These cases covered the
years 1917, 1918, and 1919, being distributed as evenly as possible
among the three years. The information recorded included date of
the accident, date of receipt of accident report by commission or fund,
date of doctor’s report and workman’s claim, and date such reports
were received, date of agreement or award, and date of first payment.
The results were tabulated and comparisons made by State and type
of insurance. In some of the States the bureau was unable to obtain the
date of first payment because the commissions kept no record thereof.
In such States the date of the compensation agreement or the date
of the commission’s award was obtained, if possible. However, in
most States the date of first payment was available.

In order that accurate comparisons may be drawn from the data
it will be necessary to take certain factors into consideration.
(1) The length of the waiting period must be taken into account.
No payment is due until one week after the expiration of the waiting
period. It is not fair, however, to subtract the entire waiting period
from the average time between the date of accident and date of first
payment, as shown in the subsequent tables. No payments can be
made until the necessary reports of the accident have been filed with
the commission or insurance carrier, and this takes a certain length
of time. In fact, a study of the promptness with which accidents
are reported in the several States shows that the length of the wait­
ing period seems to be a negligible factor. For example, in Massa­
chusetts, which has a 10-day period, accidents are reported more
promptly than in any other State.7
(2) A second factor to be taken into account is the practice in the
several States as regards frequency of wage payments. In the Far
West it is customary among many employers to pay monthly; in the
Middle West, biweekly ; and in the East, weekly. Since compensa­
tion is supposed to be in lieu of wages, the first payment ordinarily
is not made until the next regular pay day. Thus the frequency of
wage payments will, to a certain extent, affect the promptness of
compensation payments as shown in the table.
7F o r

a d is c u s s io n o f th e p r o b le m o f p r o m p tn e ss in a c c id e n t r e p o r tin g s e e p p . 3 4 t o 3 7 .




COMPARISON OF COMPENSATION INSURANCE SYSTEMS AS TO PROMPTNESS IN CLAIM PAYMENTS AND PROCEDURE.
STATES HAVING COMPETITIVE STATE FUNDS.

STATES HAYING EXCLUSIVE STATE FUNDS.

British Wash­
Oregon. Nevada. Colum­ ington.
bia.

West Wyo­
Ohio. Virginia. ming.1

lto 7 days......................
8 to 14 days......................

Interval
between
date of
accident
andap­
of date
proval of
award.*

Interval
between
date of
accident
andap­
of date
proval of
award.*

Interval
between
date of
accident
and date
, check
mailed.

204
cases.

118
cases.

308
cases.

1,000
cases.

184
cases.

Perct.

Perct.

Per et.

Perct.

Perct.

1.2
13.4
1A A
An
1*9.
1.7

183 days and over..............
Total........................

99.9

Median (in days)...............

28

Claims paid or settlements

9 weeks........................
Claims unpaid or settlements not made at end
of—

Perct.

7ft 7
«i. i
87.1
91.6
95.3

2.0
17 A
21 1
1A 7
9.8
30
94
2.0

3.4
100.0

36

0.8
5
21.2
16.9
22.9
49
59
3.4
1.7
A
9
3.4

1.7

99.8
•41

49
4.9
14.0
15.9
12.3
11.7
8.1
5.8 |
4.5
3.6 V
i9
7.8
1.9
1.9

1.3
99.8
49

ct.
Per a . Per ft. A Perct.
?' 0

19 3
9p 9
51.0
67.7
77.5
86.3
90.2

6.7
15.2
36.4
53.3
76.2
80.4
86.3

Colorado.

Utah.

Maryland.

Interval
between
Interval between ter­ Interval between date accident Interval between date
datoof
accident date
mination ofdisability
accident and
Interval Interval Interval Interval and date ofpayment.1 of first payment.date and date of receipt ofand pay­
of
first
of
between between between between
ment.
of
date of
date of date of date of accident
v-xicher.*
accident accident accident
date
andfirst and date and date andfirst
date
of
of
pay­
pay­ of hear­ of
ment. ing.* voucher. * ment.
Fund. Stock. Self. Fund. Stock. Self. Fund. Fund. Private. Self.

403
cases.

Period.

Montana.

4.2
9.1
23.1
39.0
51.3
63.0
71.1

11
7.0
13. i
13.3
10.2
9.3
7.5
12.8 /\
7.9 \/
10.1
4.1
1.5
2.1
100.0

ft 5

7.1
11.4
9.2
7.6
8,7
6.0
6.5
10.3
8.2
3.3
10.3
6.5
3.8
.5
99.9

55

59

Perct.

Perct.

1.1
8.1
21.2
31.5
44.7
54.0
61.5

0.5
7.6
19.0
28.2
35.8
44.5
50.5

Interval
between
date of
accident Interval between date Interval between date
andfirst of award. and date of first payment.date
date of accident
of accident and
at
pay­
ment.

Pennsylvania.*
*

New York.

Massachu­ Indiana.
setts.

Michigan.

Interval
between
date of
of accident and
accident Interval between date Interval between date agreement.5 date erfapproval of
accident
and date of hea'ing. and date
of first of
pay­
ment.

Interval
between
date of
date of acci­ of accident and re­
accident Interval betweenagreement re­ Interval between date
andfirst ceived.* date
date dent and
ceipt of first pay­
of
ment.*
pay­
ment.

Interval
between
date of
accident
and date
agree­
ment re­
ceived.

Interval
between
date of
accident
and date
receipt
made
out.

30
29 212 138 160 16 187 153
41
211 137 294 355 207 701
82
172
15 90
12 125 18 4.093 3,587 478 840 335 334 414
21
37 176 446 $0
404
49
100
cases. cases. cases. cases. cases. cases. eases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. capes. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases. cases.

186
cases.

90
cases.

ct.
c t.
Per ct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. Perct. P trd . P a d . P a d . P a d . P trd . Per ct. Per ct. Per ct. Per ct. Perct. P a ct. Perct. Per ct. Perct. Per0.5 P a 0.7 Per ct. P a ct. Perct. P a d .
1.2
0.5 0.7
X 7 \ 0.6 XI 1X8
36.5 13.9 50.4 1 1.1 0.5 1.3 /......
0.2 / ......
0.1
0.1 0.3
\ 0.2
2.9 6.7
3.2
\ 25.2
11.4
21.3 13.1 16.7 1.7
10.9 9.2
/ 1.8 1.3 2.9 1.3 3.0 0.9
A
.2
13.7 7.5 3.6 9.4
11.6 6.7 X3
12.3 3.3
Z 8 1X3 tl.l
7.8
19.0
1.9 3.8 l 14.3 4.8 X7 4.9
5.7 6.3 3.6

Pad.

P a d.

6.6
5 1.0
3 2.4
8 2.8
4 1.9
11 2.4
7
11 1.0
.5
6 1.0
3 1.4
16 1.9
9
7
.5
10
100.0 100.2
12

85

4.8
5.1 5.4 6.5 4.3
5.3
8.8 5.4 25.1 10.0
4.1
7.3 2.0 21.7
10.2 1.0
9.0
6.6 1.0 9.9 7.7
5.1
2.2 1.4 9.0 9.2
4.4 1.4 6.5 10.6
.3 2.8 5.8
.7
1.1 4.8
2.2
1.1 5.3
2.9
.7 3.9 1X1
2.2
.7
.3 2.0 3.9
.7
.6 1.4
3.6
L7 8.7
99.9 100.0 100.1 100l5
34

8

46

65

8.2
14.3
18.6
13.9
1L9
5.8
6.5
3.7
2.0
1.4
4.4
1.7
1.0
1.3
99.8

18.4 11.3
9.5
1X2 11.S
18.4
XI 14.3
XO
xo 23.8
8.1 4.8
2.0 4.8
4.8
6.1
4.8

45

38

4.1
99,8

Per ct. Per ct. Perct. Per ct. Perct. Perct. Perct. Perct.

5
8
16
20
31

57.8
76.8
83.4
84.4
86.8
89.6
91.5
93.9

21.8
37.9
43.0
51.8
59.1
69.3
75.9
81.0
V

67.1
76.3
81.7
87.1
91.2
93.2
91.2
95.2

1.1
3.1
7.9
11.1
39.5
61.2
71.1
80.1

0.5
2.1
6.7
12.0
22.0
31.0
38.7
17.9

1.3
5.1
13.3
27.6
46.2
6&1
7X0
77.8

4.1
18.4
36.8
49.0
67.4
75.5
7X5
77.5

Fund. Fund. Private. Self. Fund. Private. Sfelf. Fund. Fund. Private. Self.

X 5 4.9
1X2 1X0
1X2 19.5
49
14.6 1X0
6.1 7.3
10.0 1X2
41 X4
3.7
X 7 4.9
4.9
6.1 14.6
7.3 4.9
1.2
100.2 100.3 100.5

2x 8
1x 8
9.3
9.3
5.2
7.0
3.5

.6
1.7
2.3
5.2
1.7
1.2
1.7
99. S

11.1 X 7
2X7 29.7
20.0 27.0
1X6 16.2
5.6 2.7
X2
6.7 2.7
2.7
X2 2.7
1- 1 Z 7
X2 Z 7
1.1 Z 7
1.1 2.7
10X0 99.9 99.9

54

35

31

49

54

Perct. Perct. Perct.

4.8
19.1
28.6
4X9
4X9
57.2
57.2

X7
12.2
24.4
36.6
51.2
57.3
67.3

49
9.8
19.8
247
44.2
54.2
61.5

3X3
20.0
1X3
1X3
6.7

40

40

14.5 1X4
3X3 46.7
51.1 6X7
6X4 8X0
6X7 9X3
749 9X3
81.9 10X0

X3
14 4
41.1
61.1
77.7
8X3
8X5

First Second
All in­ All
largest largest
sur­
ance self-in­ Fund. stock stock
com­ com­
car­ surers.
pany. pany.
riers.

1.1
XI
X8
X5
XI
9.1
X8
3.4
X2
6.2
1X3
XI
X8
X8
99.7

1X0 1X3
1X6
1X0 1X6
X8
X7 7.4
7.4 X 8
X4 3.2
4.9
XO X6
.5
1.8 .5
XI
.5
r. 4
X4 X6
1.8 XI
XO .5
.5
99.9 99.8

5.6 12.6 11.0 12.8
7.0 6.0 9.0
21.5
1X9 X 3 2.4
12.8 15.5 13.4
4.5
X9 1X7 X 8 5.6 12.5 13.8 14.4
X9
5.4 X 3 8.0 5.6 11.3 11.0 10.9
X 2 9.2 6.5
16.7 8.8
X2 16.7 14.4 11.1 7.2 6.2 5.9
1.7 16.7 10.4 3X9 4 8 5.5 4.6
.2
4.1 3.5 2.9
1.7 16.7 9.6
XO
3.2 2.9 4.6
.5
13.6 22.2 1 12.3 12.0 10.9
X7
}
.2
1.6
5.6 5.6 J 2.0 2.0 1.3
1.0
4.0 5.6
.2
99.6 100.1 100.0 100.2 100 0 100.0 100.1

80

41

26

36

Perct. Perct. Perct. Per a . Perct. P a d . Perd.
2.7
0.6 XI 1X8
X9 6.7

X 4 X4
4.5
3X1 1X4
6X1 9.6
7X3 21.9
81.0 3X0
81.0 39.1

1X4 17.9
2X4 54.2
41.0 9X8
54.0 81.0
7X6
6X7 M.8
7X1 9X0
7X5

63

73

74

59

60

55

Third
largest
stock
com­
pany.

X3 9.6
11.8 9.0 11.7
9.0
1X3 1X2 16.2
11.4
10.0 13.1 10.5
7.5
8.6 6.0 7.8
7.7 9.3 48
5.6 5.1 4.8
4.4 4.5
2.9 5.7 42
12.7 143 1X6
1.8 2.4 X9
99.9 100.2 100.2

59

64

63

Largest
mutual Fund. Fund. Stock. Mutual. Self. Fund. Stock. Self.
com­
pany.

10.0
15.5
13.3
21.0
13.3
17.6
13.3
15.9 ..............
7.5
3.3
5.1
6.7
X4
3.3
2.4
1.7
( 16.7
48 { 10.0
1.0 l...................
6.7
99.9
99.9

1X3
19.8
9.4
9.0
5.7
5.2
2.4
3.8
1.9
1.4
47
2.8
3.8
99.4 100.0

13.0
14.5
15.2
9.4
12.3
5.1
5.1
4.3
2.9
1.4
43
.7
2.2
3.6

20.0
12.5

99.7

50

49

43

48

17.2
6.9
10.3
3.4
3.4
3.4
6.9
13.7
X4
10.3
X4
3.4

35

99.5

25.0
12.5
12.5
99.8

24.6 1X3
1X6 19.6
13.9 6.5
7.5 11.1
48 4.6
1.6 9.8
5.9 3.3
2.1 3.3
.5
1.1 3.3
1.3
2.1 2.0
.5 2.6
3.2 2.6
10X4 10X1

35

84

34

13.7
8.1
8.7
3.7
3.7
3.1
3.1
3.1
2.5
1.2
1.2
1.2

6.2
12.5
1X7
6.2
6.2

34

et.
ct.
Perct.
P a d . P a d . P a d. P a ct. Per ct. Per ct. Per ct. Perct. Per0.3 P a d . P a0.2 P a c t. ___ Per ct. Perct. P a c t. P a d . P a ct. P a d .
X1

11.4
36.6
5X1
69.0
77.9
8X8
89.2
91.4

-

8.3
XXc
33.3
50.0

2.4
7.2
1X0
24.0
3X4

5.6
5.6
5.6
11.2
16.8
16.8

0.2
2.0
9.0
21.6
34.4
46.9
5X2
66.4

0.1
1.4
7.4
18.4
33.9
47.7
5X7
67.9

0.1
2.9 1.4
9.7
11.9, 21.5
24.7
348
39.1 46.2
52.5 56.2
63.4 648
69.9

3.3
9.0
1X6
27.6
39.8
5X9
6X2

0.9
7.2
1X9
27.9
441
546
6X1

.4
46
19.5
40.5
68. 0
74 i
81. &

3.3
3.3
1X3
2X6
39.9
5X2
53.2
5X5

1X7
30.9
37.8
4X1
5l. 5
549
5X3

3.3 5.7
10.8 1X7
3X1 33.2
49.9
59.3 4X4
6X3 57.8
74 0 70.1
79.2 75.2

4.3
1.7
33.7
46.2
59.9
6X0
76.7
80.4

6.2
1X7
37.4
37.4

3.7
16.0
40.6
57.2
71.1
7X6
8X4
85.0

40
11.8
30.1
49.7
56.2
67.3
77.1
81.7

0.5
2.7
17 7
27.4
23.1
5.9
48
6.5
2.2
2.2
.5
.5
.5
X7
.5
1.1
1.1
99.9

1.1
14A
12 2
e.7
6.7

10.0
7.8
4.4
4.4
3.3
2.2
2.2
3.3
2.2
3.3
99.8

29

35

Pad.

Pad.

3.2
2X9
4X3
71.4
77.3
8X1
8X6
9X8

3X0
442
5X4
5X8
6X6

1X6
1X7
17.5
19.5
24.4

X7
X2
X7
7.2
9.8

41
4.6
6.3
X5
8.2

3X4 17.1 11.3 10.8 XI 50.0 5.8 7.2
50.0
33.4 14.3 14 0 12.2 14 5 16.7 1X5 7.5
5.4
24.8 33.4 17.5 16.9 16.8 17.4 2X4 2X7 5.8
3X4 2X5 1X7 1X2 9.2 56.2 6.9 8.5
5.9
16.7 32.8 33.4 21.6 20.4 19.7 21.8 2X9 25.5 9.9
15.1
33.4 20.5 14 6 19.4 12.3 62.4 7.4 11.8
6.4
1X7 52. 8 72.3 26.4 2X9 24.3 27.4 3X0 m s 13.3
42.4
36.7 342 20.8 245 19.1 6X4 9.5 15.1
15.4
6.9
33.4 61. (i 83.4 33.6 32.1 30.2 35.1 3X0 3X1 18.4
4X4 41.1 1X4
15.4 1X4
50.1
9.1
* Data compiled by State Industrial commission.
'
*Check mailed 2 days later. These 2 days have t«en added to the median.
* The periods are 1 day less than those given in the margin. For example, 1 to 14 days should read 1 to 13 days; 15 to 21 days should read 14 to 20 days, etc.

Period.

1 to
8 to 7 days.
15to21 14 days.
days.
22to28 days.
29to35 days.
36 to 42 days.
43 56 days.
50toto 40 days.
57 to 63 days.
64 to 77 days.
71 to 70 days.
78 to 84 days.
85 to 91 days.
92to 121 days.
122 to 151 days.
152to 182 days.
183 days and over.
Total.
Median (in days).

5.6
31.1
4X3
50.0
56.7
66.7
74 5
7X9

Claimspaid orsettlement
madeweeks.
2 within—
3 weeks.
4 weeks.
5 weeks.
6 weeks.
7 weeks.
8 weeks.
9 weeks.

X8
11.0
1X2
16.6
2X9

Claims unpaid or settle­
ments not made at mid
of—.
13 weeks.
12 weeks.
11 weeks.
10 weeks.
9 weeks.

'

5.1
2.4
X6 146 1X5
XG
8.4
34
21.1
42 3.4 9.4 1.7 8.2 26.1 9.8
44 X 1
12.9
1X2 144 1X5 1X5
17.8
17
1X1
24.4
25.7
45 4.8 11.6 1.7 9.6 31.4 1L8
A5 1X5
1X2 19.2 2X2 24.4
4.4
7.6
14.8
2.2
1X2 4X0 26.9 2XS
1X8
51 5.3 12.3 2.0 10.7 42.0 15.5
X5 1X8
25.7
32.6
36.2
8.4
18.4
4.4
2.7
13.5
20.3
144
62
42.9
22.9
7.7
38.5
6.4
10.1
3.9
17.9
2X3 4X0 3X0 39.0
14.4 1X2
49.4
69 6.3 16.7 3.4 20.0 52.6 22.0
18.9 1.8
1X9
13.5
28.7
38.5
9 weeks......................
4.6
9.3
J__________________________________
i Wyoming has a hybrid system. Compensation award* are determined by judges of the district courts and paid by the State treasurer from premiums collected from the employer*.
* Includes only
«uf« under 4 weeks’disability in which s single payment was made covering the entire period ef disability.
74832*—22. (Face p. 11.)




Califor­
nia.

Idaho.

PRIVATE INSURANCE STATES.

11
(3) A third factor is the size or area of the States compared. In
the East the States are small, the1population compact, and communi­
cation easy and rapid; whereas in the Far West the States are large
and the population sparse. Other things being equal, one would
expect more prompt payments in Massachusetts or Ohio than in
California, Nevada, or British Columbia.
(4) A fourth factor to be considered is the nature of the industry.
In the East, where manufacturing predominates, the industries are
usually large, compact, and within easy reach of postal and telephone
communication. In the Far West, again, many of the industries,
such as lumbering or mining, are located in out-of-the-way places
where communication is difficult.
The number of cases upon which the averages were based should
also be taken into consideration. In some of the States 1,000 or more
were examined, while in others the number was less than 100. The
number of cases taken depended upon the accessibility of the records
and also upon the type of State. In the competitive-fund States a
large number of cases was necessary in order to compare the differ­
ent types of insurance in the State. In the exclusive-fund States such
comparison was not necessary and consequently the number of cases
was smaller. The averages of States in which the number of cases is
under 100 should be used cautiously; deductions drawn therefrom
are by no means conclusive, but are indicative in the light of other
information.
Bearing in mind the foregoing factors, let us see how the several
insurance systems in various States compare.
Table 3 shows the promptness of compensation payments by dif­
ferent‘insurance carriers in certain States arranged in ascending
order. This table is a summary of a detailed table (facing this page)
and includes only those States'in which data as to first payments were
obtainable, whereas the detailed table contains also the States in
which data regarding promptness of awards and agreements alone
were available. Column 2 shows the number of cases examined.
Column 3 shows the waiting period for each State as of the* year
1919. Column 4 shows the average (median) number of days
elapsing between the date of accident and date of first payment.8
That is, in one-half of the cases the first payment was made before
the number of days specified and in the other half of the cases the
first payment was made after that date. Columns 5 and 6 show
the percentage of cases in which the first payment was made within
4 weeks and 7 weeks, respectively, from the date of the accident.
Columns 7 and 8 show the percentage of cases in which no payment
had been made at the end of 11 and 13 weeks, respectively, after the
accident. In the case of Illinois and Michigan, the commissions had
each made an independent investigation, and the results of these in­
vestigations are incorporated in the table. In all other cases the
figures are based upon records found in the files of the commissions.*
5
1
COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

8 F o r in te r v a ls b e tw e e n d a te o f re c e ip ts o f r e p o rts a n d d a te o f f ir s t p a y m e n t see T a b le
15, p. 50.




12

COMPARISON OF W ORKM EN^ COMPENSATION INSURANCE.

T able 3.—PROMPTNESS OF COMPENSATION PAYMENTS BY DIFFERENT INSURANCE
CARRIERS IN CERTAIN STATES, ARRANGED IN ASCENDING ORDER.

State and insurance carrier.

1

P er cent of
P er cent o f
Average
cases in w h ich cases in w h ich
in te rv a l
firs t p a y m e n t
no paym ents
(m edian)
was m ade
ha d been m ade
N u m ­ W a it­ between
w ith in —
a t end of—
ber in g
date of
of
accident
SSk
cases. (days). an d date 4 weeks 7 weeks
11
13
of firs t
a fte r
a fte r
weeks weeks
p a ym e n t
acci­
acci­
a fte r
a fte r
(days).
d e n t.
de n t.
acci­
acci­
d e n t.
dent.
5
6
2
8
7

3

C a liforn ia (S tate fu n d ).............................................
Id a h o (self-insurers).................................................
Oregon (S tate fu n d ) .................................................
M ichigan (stock com panies) i ................................
M ichig a n (self-insurers)1 ........................................

404
190
403
187
153

M a ry la n d (S tate fu n d )................... ........................
In d ia n a (insurance com panies)............................
N evada (State fu n d ).................................................
U ta h (S tate fu n d ).....................................................
B ritis h C olum bia (S tate fu n d )..............................

172
90
204
49
118

Id a h o (insurance com panies)................................
Illin o is (stock com panies)2....................................
M on ta n a (self-insurers)...........................................
M o n ta n a (S tate fu n d ) ..............................................
M ichig a n (S tate fu n d ) .............................................

446

W a shin g ton (S tate fu n d ) .......................................
Colorado (insurance com panies)...........................
Illin o is (m u tu a l co m p a nie s)2................................
Illin o is (in te rin s u re rs )2...........................................
Colorado (self-insurers)............................................

704
355
30
308
82
41

Illin o is (self-insurers)2.............................................
21
C olorado (S tate fu n d )...............................................
O hio (S tate fu n d )...................................................... 1,000
W e st V irg in ia (S tate fu n d ) .................................... 184
M o n ta n a (stock com panies)................................... 207
Id a h o (S tate fu n d )....................................................
M ichig a n (S tate f u n d ) 1..................................... .
W y o m in g 8...................................................................

176
16
100

4

7
7

26
26
28
34
34

0
7

7
7
7

14
3
3

7
7

14
14

7
7
10
7
7
10
7
10
7
7
14

7
7

10

•

58.1
54.2
54.1
40.6
30.1

83.8
81.0
87.1
78.6
67.3

6.3
6.7
2.7
7.4
11.8

4.1
5.7
1.7
5.8

35
35
36
38
41

38.3
43.3
29.9
36.8
15.2

69.7
66.7
77.5
75.5
76.2

13.8
13.2
4.4
12.2
8.4

9.6
8.8
3.4
10.2
5.1

41
44
45
46
48

28.4

62.7

17.5

12.6

13.3
7.9
13.3

60.1
61.2
53.2

11.8
10.6
33.4

8.4
8.2
33.4

49
49
51
52
54

9.1
12.2

51.3
51.2

17.4
23.2

12.9
14.6

7.2

9.8

44.2

24.4

19.5

54
54
55
59
65

19.1
8.1
7.6
6.7

42.9
44.7
35.8
31.0

19J2
25/7
32.6
36.2

9.6
17.8
21.1
26.1

80
84
85

0.0
0.0

4.5

24.9
18.7
16.0

50.4
56.2
51.0

38.0
50.0
42.0

1 Computation based upon investigation by Michigan Industrial Accident Board.
* Arithmetic average. Includes all cases for 1919. Computations made by Illinois Industrial Com­
mission.
* The State treasurer pays the awards when and as determined by the district courts.

An examination of the above table shows that as regards prompt­
ness in paying compensation the records of the State funds vary
widely. Second, it also shows great variations in each type of in­
surance carrier. Third, it shows that self-insurers, whom one would
naturally expect to pay promptly, are' just as slow in paying com­
pensation as the casualty companies or State funds. Fourth, it shows
long delay on the part of all carriers. Fifth, it furnishes a com­
parison as to whether private insurance companies are more prompt
m making compensation payments than the State funds.
Of the six exclusive-fund States, three (Oregon, Nevada, and
British Columbia) have a better record as regards promptness of
payment than the average private insurance company. In the other
three States (Ohio, Washington, and West Virginia) the reverse is
true. In most of the competitive-fund States payments are made
and claims handled more promptly by the State fund than by other
insurance carriers. Moreover, it should be noted that the two com­
petitive funds having the poorest records are not under the jurisdic­



13
tion of compensation commissions, but are under the supervision of
insurance departments.
It is of interest to bring into comparison the State funds and
private carriers having the most favorable records as to promptness
of compensation payments. For this purpose the competitive fund
of California, the exclusive State fund of Oregon, and the Liberty
Mutual Co. of Massachusetts are considered. It should be borne in
mind that the area of Massachusetts is small and the industries com­
pact. Both California and Oregon are large States, and in each
State lumbering is one of the principal industries. It takes a longer
time to obtain reports and to make payments. The percentage of
cases in which the first payment had not been made within 6 weeks 9
are as follows: Liberty Mutual, 20 per cent; Oregon State fund, 18.9
per cent; California State fund, 22.1 per cent. Oregon, in spite of
its large area, had a better record and California almost as good as
the Liberty Mutual. The percentages of cases in which the first
payment had not been made within 10 weeks are as follows: The
Liberty Mutual, 6.3 per cent; the Oregon fund, 3.9 per cent; the
California fund, 6.5 per cent. Again Oregon has a much better
record and California equally as good as the Liberty.
Long delay in making payments is due, at least so far as the
State funds are concerned, to a number of causes. In the first place
employers and physicians are not always prompt in reporting acci­
dents. It is more difficult still to get the workmen to report the
cases. In fact, much of the delay is the direct result of the failure
of the workmen to make claims. Then, too, the commissions must
partially share the blame because they have inadequate follow-up
methods' or because their procedure is too complicated. Further­
more, several of the funds make no attempt to pay compensation
promptly. Many of the commissions and funds are also handicapped
in that they have an insufficient force to handle the claims properly
and to mate the necessary investigations.10
COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

ADEQUACY OIL LIBERALITY OF PAYMENTS.

A second test of service is the adequacy or liberality of compen­
sation payments, including liberality of interpretation of the acts.
Are the benefits as provided in the laws actually being paid or is
there a tendency among employers and insurance carriers to fight
compensation claims, to resort to technicalities, to make settlements
for less than the law provides, to make understatements as to the
severity of injuries, or to make no offer of payment, hoping the in­
jured workman will neglect to press his claim? These questions do
not readily lend themselves to statistical proof. The most reliable
method of approaching the problem would be to make a study of
a certain number of actual cases in each State and ascertain just
what was done. Because of limited means such a study was not
made by the bureau. Several States, however, have made such
investigations. Among these are the Connor investigation in New
York (already referred to) and a study of insurance companies
made by the Industrial Commission of Illinois.
®
of the Liberty Mutual 40
10In case discussion of promptness indays should be substituted for 6 weeks. procedure
For a
accident reporting and methods of claim




14 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.
First as to State funds: In most of the State-fund States it is
the policy of the commission to be liberal in making awards to
claimants. Where the State fund is under the jurisdiction and
supervision of the industrial commission, the latter seldom allows a
State fund to appeal from the decision of the commission to the
courts, whereas self-insurers and private insurance companies of
course have such right of appeal. Again, the commissions are in­
clined to disregard legal technicalities and even to resort to extralegal means to award compensation in meritorious cases—practices
which are estopped when the insurance carrier is a party in the case.
Tables 4 and 5, compiled from the latest annual reports of the
California Industrial Accident Commission, show the practices of
the several types of insurance as regards appealing cases and liber­
ality of payments. Table 4 shows that the State fund appeals
fewer cases to the commission than other insurance carriers, having
a frequency rate of less than one-half of the others. Table 5 shows
the average compensation per case for each type of insurance and
reflects the liberality of the insurer in the matter of claim payments.
T able 4 .—C ASES

A P P E A L E D B Y IN S U R A N C E C A R R IE R S T O T H E C A L IF O R N IA IN D U S ­
T R I A L A C C ID E N T C O M M IS S IO N , J U L Y 1,1917, T O D E C . 31,1918, B Y T Y P E O F IN S U R E R .
Cases appealed.
T y p e of in s u re r.

P re m iu m incom e, 1918.

N um ber of
appeals
per
P er ce n t o f $1,000,000
to ta l w r it ­
o f pre­
te n b y
m iu m .
each ty p e .

N u m b e r.

P er ce n t
each ty p e
is o f to ta l.

A m o u n t.

S tate f u n d .............................................................
A ll o th er c a rrie rs..................................................

213
1,277

14
86

$2,459,086
6,110,819

29
71

87
209

T o ta l.............................................................

1,490

100

8,569,905

100

174

T able 5.—N U M B E R

O F C O M P E N S A B L E IN J U R IE S A N D A V E R A G E IN C U R R E D C O M P E N ­
S A T IO N C O ST I N C A L IF O R N IA F O R T H E Y E A R 1919, B Y T Y P E O F IN S U R E R A N D
D E G R E E O F D IS A B IL IT Y .
N u m b e r of com pensable in ju rie s .

T y p e o f in s u re r.

P erm a­
nent
T o ta l. D eaths. disa­
b ili­
ties.

In d e ­
­
te rm i­ pT e mry
o ra
n a te
disa­
disa­
b ili­
b ili­
ties.
tie s.

Average in c u rre d com pensation pe r case.
In d e ­
P erm a­ te rm i­ Tem ­
nent
o ra ry
n a te pdisa­
T o ta l. D eaths. disa­
disa­
b ili­
b ili­
b ili­
ties.
ties.
ties.

S tate fu n d ................... 5,756
P riv a te c a rrie rs......... 12,102
S elf-insurers................ 7,896

93
158
189

401
737
576

275
266
154

4,987
10,941
6,977

$253.8
188.3
238.9

$2,603
2,273
2,551

$1,015
930
1,121

$1,882
1,904
1,979

$59.0
65.1
66.6.

T o t a l . . . .......... 25,754

440

1,714

695

22,905

218.4

2,462

1,014

1,912

64.2

Not all of the State funds, however, have adopted the policy of
liberal interpretation. In Washington the commission in rendering
decisions against the workman has been repeatedly overruled by the
courts. Moreover, in this State the procedure relative to claim pay­
ments is so hedged about with formalities that the injured workmen
suffer as a consequence. In West Virginia, of 183 cases selected at
random 19 per cent received only the weekly minimum of $5, 28



15
per cent received less than $7, 40 per cent received less than $9, and
only 32 per cent received the maximum of $12. Most of these cases
represented coal miners and were for the year 1919. These low
weekly compensation amounts were due to two causes: (1) The in­
terpretation the commissioner has placed upon the weekly wage
provision of the law, and (2) the fact that in many cases no thorough
attempt was made to obtain the actual wages of the worker. The
commissioner determines the weekly wages by dividing the actual
earnings for stated periods of 2, 4, 6, or 12 months by the number of
weeks actually worked in those periods. For example, if an employee
worked only five days in a two months’ period his earnings for these
five days would be considered his earnings for two months. Only
wages earned from employers in the same or similar industries are
taken into account. The commissioner requests the last employer to
furnish the workman’s wages from other employers, stating in his
form request that unless such wage data are received the workman
will be given the minimum compensation. In Michigan the State
fund is under the supervision of the insurance department and of a
board of directors representing the policyholders of the fund. The
fund is exceedingly slow in making compensation payments.
As to private insurance carriers: Two important investigations—*
one in New York and one in Illinois-r-have brought out certain facts
regarding the practices of insurance companies in these States. In
New York, at the request of the governor, Mr. J. F. Connor in 1919
made an exhaustive investigation into the management and affairs of
the New York Industrial Commission. This investigation made
public several highly significant facts. Among the most important
of these was the large number of underpayments of compensation
claims on the part of the employers and insurance carriers, par­
ticularly self-insurers and stock companies. Of 1,000 unselected
cases of direct settlements 114 were found to have been underpaid.
This Underpayment amounted to $52,279.84, or $459 per case. The
total underpayments on the basis of the 1,000 cases would amount to
$1,400,000 annually. An analysis of the 114 cases shows that the
private stock companies and the self-insured employers were
especially guilty of this “ short-changing ” practice. The follow­
ing table shows the average amount originally paid by direct settle­
ment in New York and the additional amount awarded after investi­
gation and rehearing, classified by type of insurance:
COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

T able

6 .—A V E R A G E A M O U N T O R IG IN A L L Y P A ID B Y D IR E C T S E T T L E M E N T I N 114
C O M P E N S A T IO N C ASES I N N E W Y O R K A N D A V E R A G E A D D I T I O N A L C O M P E N S A ­
T IO N A W A R D E D O N R E H E A R IN G .

T y p e of insurance.

Num ber
of u n d er­
p a id cases.

Average
Average
am ount
a d d itio n a l
o rig in a lly
com pen­
p a id b y
sation'
d irect
aw arded on
settlem ent. rehearing.

Stock insurance com panies...............................................................................
M u tu a l insurance com panies............................................................................
Self-insurers...........................................................................................................

79
6
29

$114
29
157

$383
61
747

T o ta l.............................................................................................................

114

120

459




16

COMPARISON OF WORKMEN 7S COMPENSATION INSURANCE.

The Illinois Industrial Commission has legal authority to examine
into the operation of casualty insurance companies doing business in
the State. Under this authority the commission has investigated
six companies. Of these, four companies were found guilty of ineffi­
cient and culpable practices. One of these companies was a recip­
rocal, one was a mutual, and two were stock companies. The follow­
ing is a summary of the reports of the commission’s investigator.
Permission to make use of these reports, which are in typewritten
form, was granted to the bureau by the industrial commission.
Reciprocal com pany .—The commission found that the total work­
ing staff of one reciprocal company consisted of an attorney in fact
and one part-time female employee. The books had not been posted
for six months. The company had a deficit of $19,578. Lump-sum
settlements had been made without the approval of the industrial
commission. The rates charged were too low for safety. No acci­
dent-prevention work had been done. Of 27 unpaid claims, 12 were
overdue three months and some six or eight months. The investi­
gator found 110 cases of underpayment, the maximum underpayment
being $102.50. One -hundred and eighty-one cases needed investiga­
tion; most of these were either permanent partial disability or inde­
terminate temporary disability cases. Nothing had been paid in most
of these 181 cases.
Stock Company A .—After examining into the conditions of this
company the investigator reported to the commission as follows:

I find that where compensation has been paid injured employees there has
been no picayunish shaving of the amount provided by the workmen’s compensa­
tion act, but there have been numerous cases where compensation was due and
not paid. * * * You will note in most of them a disposition not to play fair
with the injured employee and to take advantage of technicalities and avoid
payment on the flimsiest of excuses.
In justice to the present claim manager it should be stated that since July 1,
when he assumed charge of claim settlements, there has been a decided improve­
ment in the handling of these matters, but his predecessor seemed to think that
it was all right to avoid paying compensation if he could “ get away with it.”
The home office of the company was aware of this state of affairs and in some
cases complimented him for his ingenuity in avoiding payment.
In several cases settlement contracts have been drawn up and signed by the
injured employees and payment made in a lump sum without any order from
the commission and without filing the settlement contract with this office. The
usual excuse given in these cases to the home office was that the local claim
manager knew that the commission would not approve such a settlement. The
home office acquiesced in the handling of such cases, and not once did they
advise the claim agent that such a procedure was wrong, both from the legal
and moral viewpoint.

The following cases were taken from the investigator’s report as
exemplifying the practice of this company as regards its settlement
of claims:

Case No. 1. A boy had lost four fingers by amputation. "T he only reason
given for not paying compensation was that no written claim was made within
six months.”
Case No. 2. “ Della H------was employed by the D-------Lunch Co. Dr. W-------,
in his report to the insurance company, states that this employee has lost the
use of the first phalange £nd offers the gratuitous advice that after she goes
back to work she would forget all about the compensation for loss of use, and,
further, he believed that the industrial commission would undoubtedly award
her for such loss of use if the case was brought before it.” Therefore nothing
was paid her except for temporary total disability.




COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

17

Case No. 3. The claim agent of the insurance company had required the in­
jured employee to .sign a receipt for $120 but paid him only $100, “ and advised
the home office that he saved the expense of an arbitration and in addition $20
by not going before the commission with this settlement.”

Stock Company B .—With respect to this company the commission’s
investigator reports that the local adjuster was overzealous to serve
the company’s interests. The investigator discovered 64 cases of un­
derpayment, the maximum underpayment being $330. The insur­
ance company had not been reporting its accidents or filing compen­
sation receipts. The following two cases were taken from the inves­
tigator’s report:

Case No. 1. An injured employee had lost an eye on which a cataract had
formed. The local adjuster wrote to the home office as follows: “ I will en­
deavor to dispose of it in the best manner possible without letting it go to the
industrial board if we can arrange to keep it from doing so.” The home office
replied as follows: “ I note that the injury probably had a small percentage of
vision before this accident. This may be a dangerous case to permit to go to
the board.”
Case No. 2. The following letter was sent by the adjuster to the home office:
“For your information would state that this injured did not return to work for
the assured, and we are not tracing him up to gee if he is working at the present
time, as we do not wish to stir up a claim.”

M utual com pany .—In its investigation of one mutual company the
commission reports that said company was unduly technical in the
settlement of claims, and furthermore that the company sought the
assistance of its assured employers in hushing up cases. Average
wages were found to be incorrectly determined. There were found
17 cases of underpayment, the maximum underpayment being $21.
Twenty-six cases were questionable and needed investigation. In
many of these 26 cases the company denied liability. In one case
involving concussion of the brain the insurance company doctor
wrote to the company as follows: “ I would again suggest that if it
were possible for B-----& Co. to discharge him after he had worked
awhile I am sure it would be advisable.”
Regarding conditions in other States, the chairman of one of the in
dustrial commissions stated that many of the insurance adjusters were
irresponsible young men who objected to “ going all over the State to
get an agreement signed.” The same commission found evidence of
collusion between an insurance carrier and the assured employer as
regards accident reporting. After the commission had called the
insurer’s attention to the fact that the facts as set forth in the agree­
ment between the insurer and injured employee and the facts as
stated in the employer’s accident report did not agree, the insurer
wrote to the insured employer requesting him to alter the acci­
dent report. Another insurer requested its injured claimants not to
answer any of the commission’s communications until the claimant
had first taken the matter up with the insurer. The commission
further stated that it was a common occurrence for insurance com­
panies not to forward accident reports sent to them by their insured
employers. This complaint was also made by a number of other in­
dustrial commissions.




18

COMPARISON- OF WORKMEN *S COMPENSATION INSURANCE.
ACCIDENT PREVENTION.

The third test of service is the quantity and quality of effective
accident prevention work performed by the different types of in­
surance carriers. In this department of compensation administra­
tion both industrial commissions and State funds are weak. Most
of the compensation commissions are not authorized by law to do
safety work. Moreover, unfortunately, many commissioners take
no interest in accident prevention, holding that their functions are
primarily judicial. As regards competitive State funds California,
New York, and Pennsylvania are the only States in which one of the
regular functions of the fund is accident prevention and inspection.
In California excellent safety work is performed by the industrial
accident commission apart from the State fund. In some of the
exclusive State funds the industrial commissions have undertaken
comprehensive safety campaigns. In most of the compensation
States, however, the accident prevention work—such as it is—is
done by other State departments, usually the factory inspection
department.
On the other hand, many of the private insurance companies have
well-organized safety departments and are doing excellent safety
work. However, it is difficult to measure the effectiveness of the
safety work actually performed because there are few reliable statis­
tical data showing reduction in accident severity rates. Frequently
the inspection work of the insurance companies is done for competi­
tive purposes. That is, much of their inspection is done to get or
keep business, irrespective of whether or not it results in actual re­
duction of accidents.
SECURITY.

The third test for comparing compensation insurance systems is
security—security to both employer and employee. When an em­
ployer in good faith insures his risk in a responsible authorized in­
surance company he should be protected against further liability.
But, on the other hand, the employee should not be deprived of his
compensation benefits through or because of the insolvency of the
employer or the insurance carrier. It would seem, however, that the
employees’ interests are of primary importance and should be given
first consideration.
STOCK COMPANIES.

The security or solvency of private stock companies depends first
upon adequate insurance rates and second upon sufficient reserves.
Both should be under the strict supervision and regulation of the
State. No company can long maintain its solvency with inade­
quate rates. Under stress of competition the temptation to reduce
rates below the safety level becomes too great to resist. State regu­
lation is necessary to maintain the solvency of the insurance carrier
and to protect the compensation rights of injured employees. But
notwithstanding these obvious facts nearly one-half of the compen­
sation States make no provision for rate regulation. Small wonder
then that such a state of affairs has resulted in several disastrous
failures during the past three or four years. The failure of such



COMPARISON OF STATE FUNDS WITH PRIVATE INSURANCE.

19

companies as the Guardian Casualty & Guaranty Co. of Utah, the
Casualty Co. of America, and the Commonwealth Bonding & In­
surance Co. of Texas resulted in thousands of dollars of unpaid com­
pensation claims. In those States in which the law held both the
employer and insurer individually liable these losses had to be met
by the employers. In other States, in which employers are relieved of
further liability when insured, the injured claimants were the suf­
ferers. The Legislature of California appropriated between $60,000
and $70,000 of public money to pay in full the larger claims of injured
employees because of the bankruptcy of the Commonwealth Bonding
& Insurance Co. of Texas. Many smaller claims have not yet been
taken care of. Whether the State should, as maintained bjr some,
either guarantee the solvency of insurance companies authorized to
do business or make good the losses directly out of the State treasury
where such insolvency is due to lax insurance laws or their adminis­
tration is not here discussed.
MUTUAL COMPANIES.

The provisions as to the adequacy of rates and reserves for stock
companies should apply also to mutuals. In certain States, however,
mutual companies, because of their lower expense ratio, are allowed
to issue rates lower than those demanded of stock companies. As to
the advisability of this practice insurance actuaries differ. Em­
ployers insured in mutual companies, however, are subject to assess­
ment in the event that the losses exceed the premiums. The mutual
plan, therefore, seems to offer a greater degree of security to the
employee and a less degree to the employer than stock companies.
STATE FUNDS.

A detailed discussion of the solvency of State funds is given on
pages 51 to 56 of this report. The bureau did not make an actuarial
audit of the various funds, but accepted the data given in the finan­
cial statements of the funds which were furnished the bureau or
taken from their published reports. As in the case of private com­
panies the rates charged by State funds should be adequate to meet
all incurred losses and outstanding obligations and to maintain a
sufficient catastrophe reserve and working surplus. The sufficiency
of reserves depends upon the method of computation used. It would
be desirable to require an annual audit of each State fund by some
competent, impartial agency. It would also be desirable to have the
methods for computing reserves prescribed by law. However, the
financial statements of the funds show, despite the fact that the rates
charged are considerably lower than those of private insurance car­
riers, that many of the funds have declared annual dividends in ad­
dition to the accumulation of a comfortable surplus.. In fact, some
of the funds have a surplus far in excess of the needed requirements
to guarantee or maintain the solvency of the fund.
As a matter of fact, no injured employee has as yet suffered the loss
of his compensation through the financial failure or insolvency of
State funds, either competitive or exclusive. The nearest approach



20 COMPARISON OP WORKMEN’S COMPENSATION INSURANCE.
to this condition was in Washington in the case of a powder ex­
plosion the first year the act became operative. One large powder
manufacturer questioned the constitutionality of the act and refused
to pay its premiums into the fund. Until the constitutional question
was decided this one classification was temporarily insolvent, with
the result that the dependents of the workmen killed in the explosion
suffered delay in receiving their compensation benefits. The West
Virginia fund also suffered two severe coal-mine disasters during the
first two years’ operation of the act. As a result of these two catas­
trophes and the inadequate rates charged the coal-mine classification
has been insolvent up to the present time. However, since the West
Virginia fund is an indivisible one, the coal-mine losses have been
paid from the general premium income and surplus of the fund.
The question of failure or insolvency is more of an academic than
a practical question as far as the exclusive State funds are concerned.
If the premium income is insufficient to meet the year’s losses it is
only necessary to increase the rates. This is also true as regards the
funds in some of the competitive-fund States. In other competitivefund States, New York for example, the employer when insured in
the fund is relieved of all further liability. The fund therefore be­
comes the employee’s sole protection. Nor does any State having
such a fund assume liability in case of the fund’s insolvency. On the
contrary, some of the States specifically disclaim liability beyond the
amount of the fund. Since no State fund has as yet become in­
solvent the policy of the State as regards compensation claims in the
event of the fund’s insolvency can not be ascertained. However, its
probable attitude may be seen from the experience in California
where, as already noted, the legislature of the State appropriated
over $60,000 to pay claims resulting from the bankruptcy of a private
stock insurance company.
Some of the competitive funds are not required to and do not
report their experience to the State insurance department as private
companies must. It is maintained, moreover, that because their right
to reject undesirable risks is circumscribed by law, State funds
should have greater freedom than private insurance companies with
respect to rates. It is further contended that the power of super­
vision over rates, if exercised by a hostile insurance department,
could hamper a State fund, if not actually put it out of business.
SELF-INSURERS.

Practically all of the compensation States except those having
strictly exclusive State funds permit employers to carry their own
risk subject to such safeguards as the law may prescribe. A discus­
sion of the subject of self-insurance is given on pages 64 and 65.
In 15 of the 21 States reporting experience as to self-insurance
no self-insured employer has failed or gone into the hands of a
receiver; 3 States reported one failure each and 1 State reported
two failures, but in all these cases the compensation claims were paid
either by the receiver or through security which had been deposited.
Only two States reported failures—one small concern in each State—
which resulted in several claims being unpaid.




FUNCTIONS AND WORK OF COMMISSIONS.

21

SUMMARY CONCLUSIONS.

Cost .—The cost of compensation insurance to employers under dif­
ferent insurance systems may be indicated by their expense ratios.
The average expense ratio of stock companies is approximately 38
per cent; of mutual companies, about 20 per cent; of competitive State
funds, about 10.6 per cent; and of exclusive State funds, about 4
per cent. Under an exclusive State fund, therefore, the cost to em­
ployers would be 30 per cent less than under stock insurance and 16
per cent less than under mutual insurance. The total saving to insured
employers of the United States, if all were insured in exclusive State
funds, would be over $30,000,000 annually.
Service .—As regards service comparisons are difficult because of
the great variations among different insurance systems. As to
promptness of payments there is little to choose among the different
types of insurance carriers. Some of the State funds pay promptly
wfiile some do not. The same thing may be said with respect to
stock and mutual companies. However, a comparison of one of
the best-managed 'State funds in this respect with one of the bestmanaged private companies shows that the State fund is more prompt
in its payments than the private company. A significant fact de­
veloped by the investigation is that self-insured employers, whom
one would expect to pay promptly, are no more prompt in this respect
than either State funds, or private carriers. As regards liberality
of payment most of the State funds are more liberal in this respect
than either stock or mutual companies. As regards accident pre­
vention some of the private companies are doing excellent safety
work, whereas few of the State funds have done any effective safety
work.
Security .—Thus far no injured workman has lost his compensa­
tion because of the insolvency of State insurance funds, nor has
any large mutual company become insolvent. On the other hand,
there have been several disastrous failures of private stock companies
during the last three or four years. These failures have resulted in
hundreds of thousands of dollars in unpaid claims. As regards self
insurance, the experience of 21 States has been reported to the United
States Bureau of Labor Statistics. In 15 of these States no selfinsured employer has failed or gone into the hands of a receiver.

ADMINISTRATIVE FUNCTIONS, PERSONNEL, AND EX­
PENSES OF COMMISSIONS AND FUNDS.12

Compensation laws are administered by industrial accident com­
missions or boards composed usually of three or five members and a
staff of employees. A few of the laws are administered by a single
commissioner, while in Massachusetts the board consists of six mem­
bers. In most of the States the functions of the commission are
limited to the administration of the compensation act proper. In
some States the commission also has charge of the accident preven­
tion work and in a few States the commission enforces all the labor

12 S in ce th e in v e s tig a tio n u p o n w h ic h t h is r e p o r t is based was; m a d e f o u r S ta te s h e re in
c o n s id e re d ( C a lifo r n ia , M ic h ig a n , N e w Y o r k , a n d W a s h in g to n ) h a v e m a d e im p o r t a n t
ch a n g e s in th e o r g a n iz a tio n o f th e c o m p e n s a tio n co m m is s io n s . I n C a lifo r n ia , M ic h ig a n ,
a n d W a s h in g to n th e c o m m is s io n s h a v e been c o m b in e d w it h o th e r la b o r - la w e n fo r c in g
a g e n c ie s ; w h ile in N e w Y o r k th e fo r m e r in d u s t r ia l c o m m is s io n o f fiv e m e m b e rs h a s been
s u p e rs e d e d b y a s in g le a d m in is t r a t iv e he a d.




22 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.
laws, including those. relating to safety, woman and child labor,
factory inspection, conciliation, etc. In most of the States having
State insurance funds the commission is also charged with the ad­
ministration of the fund.
FUNCTIONS AND WORK OF COMMISSIONS.

The actual duties and work performed by the commissioners them­
selves vary greatly in the several States. These variations are the
result not only of the differences in the laws but of the relative im-.
portance attached by the commissions to the several functions and
of the development of administrative organization within the State.
In some of the States, particularly Massachusetts and Pennsylvania,
the commissioners devote practically all their time to the hearing
of cases. In practice they exercise quasi-judicial rather than ad­
ministrative functions. In other States, including practically all of
the exclusive State funds, very little time is consumed in holding
hearings. In fact formal hearings are the exception rather than the
rule. Some of the commissions have found it desirable to allocate
the work of the commission among its several members. In Cali­
fornia, for example, one commissioner has charge of the accidentprevention work of the commission while another has supervision
over compensation matters. In Oregon one commissioner has charge
of financial matters, one of rehabilitation, and one of safety. Simi­
lar allocation of functions exists in British Columbia, New York,
Utah, and Wisconsin. A more detailed description of the work and
functions of each commission may be found on pages 152 to 194.
Of the 20 States here considered the functions of 1013 commissions
are limited to the administration of the compensation law proper.
Of these Illinois also administers the conciliation and arbitration
act, while Colorado administers the minimum wage law and is also
charged with the enforcement of the safety act, but this latter func­
tion is exercised by the bureau of labor statistics. Four compensa­
tion commissions14 administer the safety laws as well as the com­
pensation act. Six commissions 15 administer the entire body of labor
laws. Pennsylvania has two agencies concerned with the adminis­
tration of the compensation act. One, the workmen’s compensation
board, composed, of three members, is a judicial body which decides
disputed cases arising under the act. The other agency is the
department of labor and industry which administers all the labor
laws. The department also administers the compensation act, ex­
cept that disputed cases involving formal hearings go to the work­
men’s compensation board for adjudication. In the exclusive-fund
States the functions of the commission include the administration
of the insurance provisions, i. e., the formulation of insurance rates,
collection of premiums, payment of claims, etc.
In six16 of the nine States having competitive State insurance
funds the commission also has supervision over the fund. The im­
mediate administration is intrusted to a manager appointed by the
commission. The amount of power and authority exercised by these
13 C o lo ra d o , Id a h o , I llin o is , M a r y la n d , M a s s a c h u s e tts , M ic h ig a n ,
W a s h in g to n , a n d W e s t V ir g in ia .
14 B r it is h C o lu m b ia , C a lifo r n ia , M o n ta n a , a n d O re g o n .
15 In d ia n a , N e w Y o rk , O h io , P e n n s y lv a n ia , U ta h , a n d W is c o n s in .
16 C a lifo r n ia , C o lo ra d o , M a r y la n d , M o n ta n a , N e w Y o r k , a n d U ta h .




N evada,,

O n ta rio ,

FUNCTIONS AND WORK OF COMMISSIONS.

23

State fund managers varies. In California the manager has practi­
cally entire control over the affairs of the fund, whereas in Montana
the fund is an integral part of the commission. Of the other three
competitive funds those of Idaho and Michigan are under the juris­
diction of the State insurance departments, while the Pennsylvania
fund is under the control of a specially created board which appoints
the fund manager. On the whole, funds under the jurisdiction and
supervision of compensation commissions have been found to be bet­
ter administered than those administered by insurance departments.
PERSONNEL AND EXPENSES.

The number of employees and the expenses of the several commis­
sions naturally vary greatly. They are dependent upon the size
of the State, the functions performed by the commissions and the
thoroughness with which the work is performed. As a rule those com­
missions which have relatively the most employees and show the
largest administrative expenses also perform the best service. In
fact an efficient administration requires an adequate administrative
force. But the total administrative expenses of the commissions when
compared with the total premium income are almost negligible, aver­
aging less than 2 per cent.

Table 7 shows the administrative expenses and number of em­
ployees of the commissions and funds in the 20 States investigated.
Column 2 Shows the number of commissioners, and column 3, their
tenure of office. Columns 4 and 5 show the number of employees in
each commission and fund. Columns 6 and 7 show the annual ad­
ministrative expenses for each commission and fund. These expenses
have not been audited by the bureau but were accepted as reported
by commission or fund. In some of the States the commission is
located in the State Capitol and a fair rental value must be added to
the expenses to make them comparable with- those of commissions
located in rented buildings. The reported expenditures are for the
administration of the compensation law only and do not include ex­
penditures for accident prevention work except in the case of the Cali­
fornia, New York, and Pennsylvania State funds. Column 8 gives
the estimated number of employees covered by the several compen­
sation acts and is included in the table to indicate roughly the volume
of business transacted in each State. The administration expenses
given, in the case of State funds (exclusive and competitive), are
all for the year 1920 except the following: West Virginia (1919), and
Montana (1919). The expenses for the commissions are all for 1919
except those for Pennsylvania, which are for 1920-21. The number
of employees are for the year 1920 except in the case of the Ohio,
Ontario, and Wisconsin commissions, and the Pennsylvania fund,
which are for 1919, and the Pennsylvania commission, which is for
1921.




24
T able

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
7 .—A N N U A L A D M IN IS T R A T IV E E X P E N S E S A N D N U M B E R O F E M P L O Y E E S O F
I N D U S T R IA L C O M M IS S IO N S I N S P E C IF IE D S T A T E S .

State.

Num ­
ber of
com ­
m is­
sioners.

1

2

E xclu sive -fu n d States:
B ritis h C o lu m b ia ...............................
N e va d a ................................................
O h io ........................................................ •
O n ta rio ..................................................
O regon.............................................
W a s h in g to n ...... ................................
W e s t V irg in ia ......................................
C o m p e titive -fu n d States:
C a liforn ia ...............................................
................................................
Colorado
Id a h o .................
M a ry la n d ..............................................
M ic h ig a n ...............................................
M on ta n a ................................................
N ew Y o r k .............................................
P e n n s ylv a n ia .......................................
U ta h .......................................................
P rivate-insurance States:
Illin o is . . . ^.........................................
In d ia n a ..................................................
M assachusetts.....................................
.............................................s in
W isc o n

N u m b e r of em­ A n n u a l a d m in is tra ­
T e rm of
ployees.
tiv e expenses.^
office of
com ­
m is­
sioners Com­
Comm is­ F u n d .
(years). m ission F u n d .
sion.
3

5

4

3
83
3
3
3
3
1

10
4
6
L ife .
4
6
6

46
8
214
72
119
89
42

3
3
3
3
3
83
5
3
3

4
6
6
6
6
4
6
5
6

77
18
5
21
28
5
263
159
10

5
5
6
3

4

57
13
83
22

4
5

6

6

7

$81,806
34,061
443,148
207,052
202,208
203,595
80,423
237
9
15
8
16
3
173
85
9

175,270
4 56, 598
15,542
4 63,915
61,551
4 27,000
422,447
334,063
6 25,000
6 119,297
27,929
159,855
36,855

E stim a te d
n u m b e r of
employees
covered b y
compensa­
tio n act.2
8

110,000
24,746
1,008,813
500,000
98,910
191,458
212,812
$511,357
6 17,800
34,392
26.000

336,103
17,412

611,941
137,157
50,119
188,433
597,585
56,826
2,503,020
2,149,867
60,396
871,890
502,729
1,109,134
405,009

1 Figures do n o t in clu d e e xpenditures fo r accident p re ve n tio n , except C alifornia, N e w Y o rk , and P enn­
s y lv a n ia State funds. I n th e fo llo w in g States th e offices of th e com m ission and fu n d are located in the
State C a p ito l th e re n ta l va lu e o f w h ic h m u s t be added to th e given expenses in order to m ake th e m com ­
parable w ith ithose o f th e o th er States: Colorado, Id a ho , In d ia n a , Massachusetts, M ontana, N evada,
Oregon, U ta h , W a shin g ton , W e st V irg in ia , and W isconsin.
a E s tim a te based on Federal census of occupations fo r 1910.
8 T w o are ex-officio m em bers.
4 In clu d e s expensesof State fu n d.
6 A p p ro x im a te ly .
6 In clu de s expenses fo r a d m in is te rin g th e co n cilia tio n an d a rb itra tio n act (a p p ro xim a te ly $H),000).

The source from which administrative expenses of the State in­
surance funds and compensation commissions are paid are shown in
Table 8. It will be noted that the administrative expenses of all of
the exclusive State funds except Ohio and Washington are paid
out of the premiums. However, in some of these States, a part of
the expenses are borne by the State. For example, in British
Columbia and West Virginia the salaries of the commissioners are
paid by State appropriation and not from the premiums, while in
Ontario the expenses are paid out of the consolidated revenue fund
to the extent of $100,000 annually.
Of the nine competitive State funds the administrative expenses
of all but two (Colorado and Montana) are paid out of the premium
income. In three of these States, however (California, Pennsylva­
nia, and Utah), the legislature appropriated certain amounts to as­
sist the funds in organizing and meeting their initial expenses.
Of the 13 industrial commissions here considered, the administra­
tive expenses of all but 2 (Maryland and New York) are paid from
State appropriations. In the two excepted States the expenses are
paid through a tax levied on the insurance companies and self-in­
surers of the State.




FUNCTIONS AND WORK OF COMMISSIONS.

25

T able 8.—SOURCE FROM WHICH ADMINISTRATIVE EXPENSES OF STATE INSUR­

ANCE FUNDS AND COMPENSATION COMMISSIONS ARE PAID.
How paid.
State.
Exclusive State funds:
British Columbia..
Premiums, except salaries of commissioners, which are paid
from appropriations.
Premiums, except printing.
Nevada...................
North Dakota.......
Premiums (maximum $50,000).
Ohio........................
State appropriation.
Ontario...................
$100,000 annually appropriated; rest from premiums.
Premiums (maximum 10 per cent of premium income); State
Oregon....................
pays into fund one-seventh of amount contributed by em­
ployers and employees.
State appropriation.
Washington...............
West Virginia...........
Premiums, except salary of commissioner, which is paid from
appropriations.
Competitive State funds:
California...................
Premiums, except that State originally appropriated $100,000.
Colorado.....................
State appropriation.
Idaho..........................
Premiums.
Maryland...................
Do.
Do.
Michigan....................
Montana.....................
State appropriation.
Premiums.
New York..................
Pennsylvania............
Premiums since July 1, 1919; prior from State appropriations.
Utah............................
Premiums, except that State originally appropriated $40,000.
Industrial commissions:
State appropriation and rehabilitation fund.
California...................
State appropriation.
Colorado.....................
Idaho..........................
State appropriation and special death fund.
Illinois........................
State appropriation.
Do.
Indiana......................
Maryland...................
Tax on insurance carriers and self-insurers (maximum $60.,000).
Massachusetts...........
State appropriation.
Do.
Michigan....................
Do.
Montana.....................
Tax on insurance carriers and self-insurers.
New York...................
State appropriation.
Pennsylvania............
Do.
Utah...........................
Do.
Wisconsin..................

SALARIES OF COMMISSIONERS AND EMPLOYEES.

Table 9 shows the annual salaries of commissioners and principal
officers and employees of commissions and funds in specified States.

T able 9.—ANNUAL SALARIES OF COMMISSIONERS AND PRINCIPAL OFFICERS AND

EMPLOYEES OF COMMISSIONS AND FUNDS IN SPECIFIED STATES.
Com­
C h ie f
mis­ Com­ Fund Secre­ Claims a ctu ­ Statis­
Stenog­
sion m is­ man­ ta ry . man­ a ry or tician. Clerk.
State.
rapher.
chair­ sioner. ager.
ager. a u d i­
man.
to r.
$4,200 $ 2,200 $2,200 $1,260 $840-$l, 080
British Columbia......... $6,500 $5,000
$1,080
3,150 3,150
3,000 1.080- 1,320 $1,200-1,500
California commission. 5,000 5,000
$ 10,000 3,600 2,400 *2*466' 1,800 720- 960
California fund.............
900-1,140
1,800
1,200
1,200
Colorado......................... 4.000 4,000 3,000 3,000 3,000
1,680
1,020
1,380
Idaho commission........ 3.000 3,000
1,200
3,600 1,920 1,500 1,800
900- 1,200
Idaho fund....................
1,200
3,300 3,300
Illinois............................ 5.000 5.000
2,500 900- 1,440
1,200
2.500
1.080- 1,200
1,500
Indiana........................... 4.000 4.000
Maryland....................... 5.000 5.000 3,000 3,000 2,200 1,900
960- 1,200 960-1,200
4.500
2,500 780- 900
Massachusetts............... 5.500 5.000
2.500
1, 000- 1,200 1, 000- 1,200
Michigan commission.. 3.500 3,500
2.400 2,200
3,300
1,000
1,100
Michigan fund...............
1,200
2,100 2,100 1,500
1,200
1,200
Montana......................... 6,000
1,800 3,000
1,500
4.000
1,500
Nevada...........................
6,000 16,000
4,000
New York commission. 8.000 8,000
3.000 7.000 3,500
8,000
836
1,020
New York fund............
3,000 2.400 4.000
Ohio................................ 5,000 5.000
4,490 4,490
600- 900 600- 900
3,900
Ontario........................... 10,000 7,500
2,268 2,400 2,100 840- 1,200 780-1,140
Oregon........................... 3,600 3,600
Pennsylvania commis­
5,000 i 4,500 5.000 1,800
1,200
1,020
sion .............................. 27,500 7.000
3.000 3.000 3,000
1.500
7,500
1,050
Pennsylvania fund---1,680
1,500 1,020- 1,140
1,200
Utah commission......... Iwo' 4,000
1,800 2,100
1.500
3,000
1,080
Utah fund......................
3,000 2,100 2,400 2,400 840- 1,200 960-1,200
Washington.................. 4,200 4,200
1,200- 1,680 1,080-1,200
3,600 2,400 3,900
West Virginia............... 6,000
3 666
1,020
3,750 3,650
1,200
Wisconsin...................... 5,000 5,666
1 Director of bureau of workmen’s compensation.
2 This is the salary of the chairman of the workmen’s compensation board. The salary of the commis­
sioner of labor and industry is $10,000.



*3*666'

*

*

'

26

COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.

The salaries for each of the several employees are not strictly
comparable, because .their duties and functions are not always identi­
cal. In some States, for illustration, the secretary also has charge
of the claims department or the actuarial and statistical work. In
others the chief actuary is also the chief statistician, the employee
bearing the title of statistician being merely a statistical clerk.
Then, too, because of the great difference in importance and functions
similar positions in, say, New York and in Idaho, would hardly be
comparable.
In four18 of the States the chairman receives a larger salary than
the other members of the commission. The salaries of State fund
managers show the greatest variation, ranging from $10,000 in Cali­
fornia to $2,100 in Montana. The manager of the California State
fund receives a higher salary not only than any other manager but
than any compensation commissioner with the single exception of
the chairman of the Ontario board. In fact, the California State
fund manager is paid twice the salary received by the members of
the commission, by whom he is appointed and who fix his remuner­
ation. This is the only instance in which a subordinate officer re­
ceives a higher salary than members of the commission.
METHODS OF ACCIDENT REPORTING AND CLAIM
PROCEDURE.

Compensation laws were enacted for the purpose of indemnifying
injured workmen or their dependents for loss of wages resulting
from industrial injuries or deaths. To insure the prompt payment
of the statutory benefits in accordance with the law, administrative
procedure was provided and commissions created. Several types of
procedure have been provided. Ordinarily the adjudication of all
undisputed compensation claims is based primarily upon written
reports. In disputed cases either the questions at issue are person­
ally investigated or the parties come before the commission for a
formal hearing. In practice only about 5 to 25 per cent of the com­
pensable injury cases are heard formally by the commission, the
other 75 to 95 per cent being adjudicated from written reports. In
New York, however, the commission holds a hearing in every com­
pensable case.
The number and kind of reports required in a given State depend
upon the functions of the commission and upon the type of procedure
provided. For example, the functions and procedure of a commission
which administers an exclusive State insurance fund differ materially
from those of a commission having merely supervisory or judicial
powers.
In this section is presented a comparative discussion of the accident
reporting and claim procedure methods in use in the 20 States investi­
gated.19 The following subjects are discussed: What employers are
required to report accidents; what accidents are required to be re­
18 B r it i s h C o lu m b ia , M a s s a c h u s e tts , O n ta rio , a n d P e n n s y lv a n ia .
19 S in ce th e in v e s tig a tio n u p o n w h ic h t h is r e p o r t is based w a s m a d e f o u r S ta te s h e re in
c o n s id e re d ( C a lifo r n ia , M ic h ig a n , N e w Y o rk , a n d W a s h in g to n ) h a v e m a d e im p o r t a n t
a d m in is t r a t iv e ch a n g e s. I n C a lifo r n ia , M ic h ig a n , a n d W a s h in g to n th e c o m p e n s a tio n
c o m m is s io n s h a v e been co m b in e d w it h o th e r la b o r-la w -e n fo r c in g a g e n c ie s , w h ile in N e w
Y o r k a s in g le a d m in is t r a t iv e h e a d h a s re p la c e d th e fo r m e r in d u s t r ia l c o m m is s io n o f fiv e
m e m b e rs. S u c h a d m in is tr a tiv e c o n s o lid a tio n s , h o w e v e r, w o u ld h a v e l i t t l e e ffe c t u p o n th e
d e ta ile d p ro c e d u re re s p e c tin g th e h a n d lin g o f a c c id e n t r e p o rts a n d c la im s .




27
ported; what data are required on the report forms; how soon acci­
dents are reported; what reports are required and from whom, i. e.,
employers’ reports, physicians’ reports, workmen’s claims, voluntary
agreements, supplemental reports and receipts; indexing, numbering,
and filing systems. A detailed description of the claim procedure of
each State may be found on pages 88 to 194.
FUNCTIONS AND WORK OF COMMISSIONS.

WHAT EMPLOYERS ARE REQUIRED TO REPORT ACCIDENTS.

The scope of laws relative to the reporting of accidents is not
necessarily synonymous with the scope of the compensation pro­
visions. Most of the compensation laws require all employers to
report their accidents to compensation commissions, whereas in no
State are all employers subject to the compensation act. As a matter
of practice, however, many commissions require only employers under
the compensation act to report accidents. Of the 20 States and Prov­
inces here considered, the laws of all but two (Illinois and Nevada)
require accident reports from all employers, irrespective of whether
they are under the compensation act. In Illinois and Nevada only
employers subject to the compensation provisions are required by
law to report their accidents to the industrial commission. However,
in 1120 of the other 18 States the commissions in actual practice re­
quire only employers under the compensation act to report accidents.
But even of those States which require all employers to report acci­
dents, few commissions tabulate all the accidents reported. Oregon
and Wisconsin exclude from their tabulations all noncompensable
accidents. In fact, California and Massachusetts are practically the
only States which have tabulated all industrial accidents.
WHAT ACCIDENTS ARE REQUIRED TO BE REPORTED.

The committee on statistics and compensation insurance cost of the
International Association of Industrial Accident Boards and Com­
missions has recommended that reportable accidents should include
“ all tabulatable accidents, diseases, and injuries and all nontabulatable
accidents, diseases, and injuries which require any medical expendi­
ture.” The committee further defines a tabulatable injury as “ an
accident or disease which arises out of the employment and results in
death, permanent disability, or in the loss of time other than the re­
mainder of the day, shift, or turn on which the injury occurred.”
There is a tendency among the several States to follow the recom­
mendations of the committee, although there still exists considerable
diversity as to what accidents should be reported. Some commissions
require the reporting of all accidents, no matter how trivial, whereas
other commissions require the reporting of compensable accidents
only, i. e., those in which the length of disability exceeds the waiting
period.
In the seven exclusive-fund States21 it is of course necessary for
the commission to receive reports of all injuries requiring medical aid,
because the cost of medical attendance as well as the compensation
benefits must be paid by the commission. In these States, therefore,
20 B r itis h . C o lu m b ia , Id a h o , In d ia n a , M a r y la n d , M ic h ig a n , M o n ta n a , N e w Y o rk , O h io ,
U ta h , W a s h in g to n , a n d W e s t V ir g in ia .
21 B r it is h C o lu m b ia , N e va d a , O h io , O n ta rio , O re g o n , W a s h in g to n , a n d W e s t V ir g in ia .




28

COMPARISON OF W ORKMEN^ COMPENSATION INSURANCE.

practically all tabulatable accidents must' of necessity be reported,
since such accidents almost always reqiyre some medical aid.
In the other 13 States the practice varies. Four State commis­
sions 22 require every accident, whether or not resulting in any disa­
bility, to be reported. Two commissions (Illinois and Wisconsin) re­
quire reports of compensable accidents only. Pennsylvania requires
the reporting of accidents of two days’ disability or over. The other
States require all disability accidents, or those requiring medical
attendance, to be reported.
Whether it is desirable to have all accidents reported may be a
debatable question. As already noted, in a few States this is the
practice. It is maintained that a certain percentage of trivial acci­
dents later develop into serious injuries and, consequently, it is well
to have a complete record on file. Such a record, it is further main­
tained, would on the one hand help the injured employee to prove a
bona nde claim, and on the other hand help to prevent fraudulent
claims. It is contended also that if employers are required to report
only tabulatable accidents, they will be less thorough in reporting
and, consequently, many tabulatable and even compensable accidents
will not be reported; whereas if all accidents are required to be
reported, not only the nontabulatable but also a larger proportion of
the tabulatable accidents will be reported. On the other hand, the
arguments against the practice of reporting every trivial accident
point out, in the first place, that the work of reporting, recording,
and filing accident reports would be practically doubled. The Massa­
chusetts experience shows that over 50 per cent of the accidents
reported to the industrial accident board are nontabulatable. In
fact, during the year 1918-19, 178,084 accident reports were received
by the board, of which only 67,240 were tabulatable. And inasmuch
as most of the compensation commissions are handicapped by an
inadequate clerical force, it is maintained that better results could
be obtained by concentrating their attention upon the more serious
accidents.
Some hold that it would be sufficient for the employer merely to
keep a list of these nontabulatable accidents without making a formal
report thereof to the commission; that such a record would protect
both the employer and the employee in the event of a subsequent
claim arising out of a trivial accident. The argument that in order
to obtain a complete list of all tabulatable accidents it is necessary
to require all accidents to be reported is not well taken. MassachusettSj for instance, requires all accidents to be reported, whereas Cali­
fornia requires only those involving time loss or medical aid; yet
there are relatively more tabulatable accidents of under one week
reported in California than in Massachusetts. The completeness
with which accidents are reported depends not so much upon what
accidents are required to be reported as it' does upon the thorough­
ness of the follow-up work of the commission.
However, the question as to whether it is necessary or desirable to
report noncompensable accidents still remains. As already noted,
Illinois and Wisconsin receive only reports of compensable accidents.
In both of these States accidents whose disability is less than the wait­
ing period (one week in both States) are not required to^be reported.
^ C o lo r a d o , Id a h o , M a s s a c h u s e tts , a n d M ic h ig a n .




29
Tt is maintained by the commissions that with the limited force at
their disposal, it is better to neglect the noncompensable accidents
altogether and devote more time to the investigation, supervision, and
analysis of compensable accidents. On the other hand, several rea­
sons are advanced why all tabulatable accidents (noncompensable as
well as compensable) should be reported: 1. If employers are required
to report only compensable accidents, a considerable number of such
accidents will probably not be reported, either through oversight or
otherwise. 2. A complete record of the cost of the medical service
would not be available. 3. A record of all disability accidents is
necessary in order (a) to determine the increased cost resulting from
a reduction of the waiting period, and (b) to compute accurate acci­
dent frequency and severity rates. A compromise solution would be
to require that all tabulatable accidents be reported, but' to limit the
tabulation to compensable cases, unless the commission has a sufficient
clerical force to tabulate all the accidents. Several States (British
Columbia, Michigan, Ontario, and Ohio) have separate report blanks
for compensable and noncompensable accidents. The noncompen­
sable report forms are simple and call for only a few fundamental
facts. In Michigan the noncompensable reports are filed in a sepa­
rate file apart from the compensable cases. No further action is
taken with respect to th6m.
FUNCTIONS AND WORK OF COMMISSIONS.

WHAT DATA ARE REQUIRED ON ACCIDENT REPORT FORMS.

The formulation of a standard uniform accident report blank has
received a great deal of attention from the committee on statistics of
the International Association of Industrial Accident Boards and Com­
missions and from other organizations. As early as 1911 a committee
of the American Association for Labor Legislation worked out a
standard report form. This form, which was revised by the commit­
tee on statistics in 1915 and again in 1920, has served as a model for
most of the States. The primary purpose of the committee was to
obtain data for the compilation of accurate and comparable accident
statistics. It aimed, therefore, to limit the items called for on the
report blank to data which are both essential and obtainable. Most
of the Staftes, however, found it necessary to include many items in
their report forms not found in the committee’s schedule. • These
items were essential for administrative purposes. In fact, from the
commission’s standpoint, the kind and amount of data on the accident
report form are dependent primarily upon the requirements of the
claims department; and these requirements depend upon the com­
pensation provisions of the several acts, which vary from State to
State. Furthermore, exclusive State fund commissions require more
detailed information than other commissions. The former, intrusted
with the duty of paying compensation claims, require, for example,
detailed information relative to the occurrence of the accident—
whether or not it arose out of and in the course of the employment,
etc. These data are of no particular importance to the nonfund com­
missions except in disputed cases, nor are they necessary for statisti­
cal purposes.
However, some of the questions found on the report forms of a
number of States could be eliminated, since the data called for are
74832°—22-----3




30

COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.

of little or no importance, or if important are not obtainable. If
employers are required to answer unnecessary or unreasonable ques­
tions it is likely to create dissatisfaction with the entire report form
and thus impair the accuracy of answers which are of primary im­
portance.
As already noted, the number of items on the first report form
varies considerably among the several States, ranging from 24 in
California and 27 in Illinois, to 51 in Nevada and 02 in Oregon. The
number on the original standard form of the committee on statistics
was 32, whereas the number on the latest revision is 30. Following
is a reproduction of the standard form as revised in 1920:
STANDARD FORM FOR ACCIDENT REPORTS.
F irst R ep o rt of A cciden t to E m ployee.

[To be filled out and sent in within 48 hours of the accident.]*
1

1.
Employer.

а . Employer’s name________________________________.____ xб . Office address: Street and No___ ; city or village_________
c. Business (goods produced, work done, or kind of trade or
transportation)__________ ,___________________________
d. Location of plant or place of work where accident occurred,

if not at office address: Street and No_______ ; city or
village — -------------------------------------------------------------e. Name of insurance carrier______________________________

а . Date on which accident occurred_1---------------------------- —
б . Working hours per day----- ; c. Working days per week—__
d. Piece or time worker______ ; e. Wages or average earnings
per day_______ ; per week------------2.
f.
Injured person. g. Name_______________________ ; address_________________
Sex_______ ; h. Age________

3.
Cause of injury.

4.
Nature and extent of injury,
5.

Medical care.
Date of report.




i. Occupation when injured_____________ ; In what departmen or branch of work?_____________ ; was this regular
occupation?_____ ; if not, state regular occupation______
a. Describe in full how accident occurred.
b. Name of machine, tool, or appliance in connection with
which accident occurred_______ ; by what kind of power
driven?----------------------- ; hand feed or mechanical feed?
_________ ; part on which accident occurred___________
a. State exactly part of person injured and nature of injury_
b. Did injury cause loss of any member or part of a member?
If so, describe exactly________________________________
c. Has injured person returned to work________ ; if so, give
date and hour______________ _________________________
d. Date disability began___________________________________
a. Attending physician; name and address
b. Hospital; name and address___________
; made out by

31
In order that the contents of the accident report forms of the more
important industrial States may become available for all the States,
it has been deemed advisable to prepare a composite table. This
table (Table 10) shows all of the items found on the report forms of
the 20 States investigated and also notes what items are called for on
the report of each State. It will be noted that although the number
of items for each State ranges from 24 to 52, the total number for the
combined 20 States is 116. However, of these 116 items, 23 are found
in the form of only one State, 17 in the forms of only two States, and
16 in those of only three States.
FUNCTIONS AND WORK OF COMMISSIONS,

T able 10.—QUESTIONS CONTAINED IN THE FIRST ACCIDENT REPORT FORM IN

Item.

Standard (original). ||
Standard (revised). ||
British Columbia. ||
California (com.). ||
California (fund). ||
Colorado.
Idaho.
Illinois.
j|
Indiana.
||
; Maryland.
||
[ Massachusetts.
||
1 Michigan.
Montana.
||
Nevada.
||
I New York.
|j
I North Dakota.
||
1 Ohio.
II
Ontario.
((
| Oregon.
Pennsylvania.
1 Utah.
1!
1 Washington.
| West Virginia.
||
i Wisconsin.
1
1

SPECIFIED STATES-

EMPLOYER.

1. Employer’s name and address..................... X
2. Location of plant............................................. X
3. Business__*..................................................... X
4. Engaged in construction, operation, or re­
pair .................................................................
5. Mining methods...............................................
6. Was employee employed direct or by sub­
contractor ......................................................
7. Did accident occur o n work for a public
corporation....................................................
8. Name of superintendent................................
9. Number of employees engaged in said
business.........................................................
10. Has employer (or employee) elected com­
pensation act..............................................
11. Name of insurance carrier...........................
12. Was employee engaged in interstate com­
merce............................................................

XXXXXXXX XXX XXXXXXXXXXXX
XXX XXXXXXX XXXXXV
XX
X X X X X X X X X X X X X X X X X X X X XX X
y!
X
X
I"
X
X
X
•
X
|
X

X
X

X

X

X

V

1

X

X
X XX

'x
I X

X X X

X

X

1

EMPLOYEE.

13. Name and address.........................................
14. Work number................................................ X X
15. Sex................................................................... X
16. Age................................................................... X X
17. Married or single............................................ X
18. If married, living with (and supporting) X
wife.............................................................
19. Number of children under (and over)—
years of age..................................................
20. Name, age, relationship, and address of
children or dependents.............................
21. Relation of employer to employee.............
22. Employment certificate of minors on file..
23. Place of birth..................................................
24. American or foreign bom.............................
25. American or foreign; if foreign giver na­
tionality.............................. .......................
26. Nationality..................... ...............................
27. Nationality and race.....................................
28. Allegiance (or citizen of what country)...
29. American citizen...........................................
30. Color.................................................................
31. Speak English................................................ V
32. Speak English; if not, what language.......
33. Occupation of employee...............................
34. Occupation when injured............................ X X
35. Was it his regular occupation...................... X X
36. If not, state regular occupation.................. X X
37. Department or branch of work................... X X
38. How long had employee worked at occu­
pation at which injured........................... X
39. How long had employee been in employ­
er’s service...................................................




X X X X X X X X X X X X X X X X X X X XX X
X ..
XXXXXXXXXVVXXXXXXXXXXX
X X X X X X X X X XX X X X X X X X X X X X
XXXXX
XXX
XXXXX XX
1
X ..
X
X
1

T

x1

X

X
XX

1

-- X

X
X

X

XX

X

X
X

X -•
X
X XX
X
X XX
X X X XX
X X X X XX X
XX XXX XXX X
X
XX X
XXX
X
XX
X
X X
X X X X X
X
X
X
X
X X x!
XX

1

X

x;

XXX
X

.. X

X

X

X

XXX
X
X
X
X

X

X

X X

X
x

XX

X
X

XXXX
X X
XX XX
X

XX

32

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

T able 10.—QUESTIONS CONTAINED IN THE FIRST ACCIDENT REPORT FORM IN
S tandard (re v is e d ).
! B ritis h C o lu m b ia .
C a lifo rn ia (com .).
C a lifo rn ia (fu n d ).
f Colorado.
| Id a h o .
| Illin o is .
I In d ia n a .
M a ryla n d .
1 Massachusetts.
I M ichig a n.
M on ta n a .
1 N evada.
•
I N e w Y o rk .
[N o r t h D a ko ta .
I O hio.
| O n ta rio .
I Oregon.
i P en n sylva n ia .
U ta h .
W ashington.
W est V irg in ia .

||
||
||
||
||
||
||
||
1
1
||
1
1
j|
||
||
||
||
||
||
||
II
||
||

SPECIFIED STATES—Continued.

*C
0
•a
uO
fl

Ite m .

1
0Q

t§
i

INJURY.

Date.
40.
41.
42.
43;
44;

D a te o f accident.................................................
H o u r o f a cc id e n t................................................
D a te d is a b ility began (o r ceased w o r k ) . . .
H o u r d is a b ility began......................................
H o u r em ployee began w o rk (o r n u m b e r
o f hours w o rke d ) before in ju r y ..................
45. D a y o f week accident occurred I ...................

Notice.

X X X X X X X X X X X X X X X »X X X X X X X X X
X X X XX X X X X X XX XX XX X X X X XX
XX XX X X XX X X
X X X XX X X X
X
x
X
X
X x
xx
x
x
X

xx

x

x

X

46. W as em p lo ye r n o tifie d o f a ccident; w h e n .
47. D id e m p lo ye r h a v e k n ow led ge of in j u r y . .

In course of employment.
48. D id a ccid e n t ha p pe n in course of em p lo y m e n t (o r w as w o rk m a n in ju re d in
e m p lo ye r’s business......................................
49. D id ‘ a ccid e n t h a p pe n o n e m p lo ye r’s
prem ises............................................................
50. W h e re d id accident h a p p e n ...........................
51. D id in ju r y occur a b o v V o r b e lo w surface
(m in in g a ccid e n ts)........................................
52. D id in ju r y occur on b o a rd s h ip ; o ff or on
. shore d u t y ........................................................

X

XXX

x

X

X

xx

x

X

Arising out of employment.
63. W as accident due to em ployee’s m iscon­
d u c t, la c k of care, v io la tio n o f la w , e tc ..
54. W a s a n y fe llo w em ployee to b la m e .............
55. W a s in ju r y caused h y a n o th e r person........
56. W as em ployee on d u ty a t tim e o f in j u r y . ..
57. W h o in s tru c te d em ployee to d o w o rk a t
w h ic h he was in ju re d ....................................
58. W a s in ju re d em p lo ye r, em ployee, p a tro n ,
o r passenger.....................................................

X
X

x XX
xx

x
x

xx
x

xx xXxx
X
xxxx xx
x
XXx x x x x X X x
x
x

x

x
x
x

xxx
Xx

Describe h o w accident h a p pe n e d ................
N a m e of m achine o r to o l.................................
K in d of p o w e r d riv e n ......................................
H a n d or m ech a nica lfee d ................................
P a rt on w h ic h accident occurred..................
W ere safeguards p ro v id e d ; w as accident
caused b y re m o v a l o f safeguards..............
65. Suggest p re v e n tio n o f a ccid e n t.....................
66. W h a t o th e r causes o r co n d itio n s helped
to cause a cc id e n t............................................

xx
x
x

x

Cause.
59.
60.
61.
62.
63.
64.

*

x

XXX X XX XXX XXXXXXXX XXX XXX
XX
XXXXXX X XXX X X
Xx
X
xx
X - lx X X
X
X
X X --'X X X X X
XXXX
XXX
1 x xx
x
xxxX
X
X
XXX
X X XX
X

XXX
xx
XX

x

X
X
X
X
X

WAGES OR EARNINGS.
67.
68.
69.
70.
71.
72.
73.
74.

W o rk in g hours p er d a y ....................................
W o rk in g days (o r h o u rs) per w eek..............
W age ra te p e r h o u r...........................................
W age o r earnings p e r d a y ...............................
W age o r earnings p e r w e e k............................
W age o r earnings p e r m o n th ..........................
Piece o r tim e w o rk e r........................................
H o w lo n g h a d em ployee received earn­

in g s stated

............. ...........................

75. Does em ployee w o rk o n S u n d a y........ ........
76. Does em ployee w o rk d a y o r n ig h t.
__
77. T o ta l earnings d u rin g p rio r ye a r (o r o th e r

)

period worked
...........................................
w o rk ..........................................................................

78. H o w m u c h , if a n y , o ft h is t im e d id h e n o t

«

(

79. O th e r e m ployers fo r w h o m em ployee
w o rke d d u rin g p rio r h a lf year or o th er
p e rio d )...............................................................




xx

Xx X
XXX
XX
XX

x

x
x

x
xx

xx
xx

xx xx
xx xX
x
x
XXX X XXXXX
X xxxxxx
x
X
x
x
X XX XX
XX
xx x
x

l
1..

Xx
xx x
XXX XXX
xx xx
x
X X ..

x

XX

x
x

X
x

x

33

FUNCTIONS AND WORK OF COMMISSIONS.

10— QUESTIONS CONTAINED IN THE FIRST ACCIDENT REPORT FORM IN
SPECIFIED STATES—Concluded.

Item.

1 Standard (original).
| Standard (revised).
1British Columbia.
1California (com.).
| California (fund).
1 Colorado.
1 Idaho.
1Illinois.
1Indiana.
Maryland.
1Massachusetts.
1 Michigan.
I Montana.
1 Nevada.
I New York.
I North Dakota.
1 Ohio.
[ Ontario.
Pennsylvania.
Utah.
|
Washington.
! West Virginia.
Wisconsin.
1

table

WAGES OR EARNINGS—concluded.
Cause and duration of each loss of time.......
What are average weekly earnings of ordi­
nary workman for year at same work___
82. Was employee paid any (or full) wages
for day of injury.........................................
83. Was employee paid wages during disa­
bility............................................................
84. Did employee work any after first laying
off; give dates.............................................
80.
81.

1
5

x
x
x
X

X X

x
x
Xx
X
x

X
x

NATURE AND EXTENT OP DISABILITY.
85. State part of person injured and nature of
injury......................................................... X X X X X X X X X X X X X X X X X X X X X X X X
86. Did injury cause loss of any member or
part thereof................................................ X X x X
XX
X X
X
X
87. Did injury result in serious disfigurement.
X
88. Has injured person returned to work........ X X X X X
X X
X X X X X X X X X ..
89. When; date and hour................................... X X X X
X X X .. X X X X X
X X
x x x*
90. Probable length of disability......................
Xx Xx x x x XXx x X
91. Will employee be disabled more than one
x
X
92. Did workman return jto work as soon as
injury would permit'................................ .
x
93. How many days a week is workman em­
ployed (after the injury)......................... .
x
94. At what occupation was workman reem­
X
ployed .
95. At wha wages was he reemployed...........
Vt what
X
X x
96. Had employee any prior physical defect..
x
x
97. If injury was fatal, give date of death__
X
98. Was injury fatal; give name, age, rela­
tionship, and address of dependents__
xx
Xx
x
X
99. WTiat compensation and medical pay­
ments have been made.............................
X
X
100. Does employee’s report form contain
chart of nuinan form................................
X x xx
x
MEDICAL CARE.
101. Name and address of physician........... X X X X X X X X X X X X X X X X X X X X X X X X
102. Name and address of hospital.............. X X X X X X X X X X X X X X X X X X X X X X X
X X X X -* X
X -•
X
103. Where is injured employee now ...............
X
-- X
104. Was medical attendance furnished by
employer...................................................
xx x
x
X
X
xx X
105. How soon after accident............................
Is employer still providing medical care..
xx
106.
X
XX
X
107. Who selected the physician.......................
108. How soon after accident was physician
selected.....................................................
X
109. Did employee refuse medical attend­
ance; why..................................................
X
110. Was ambulance used; name of ambu­
lance company.........................................
x
XX
111. Does employer operate under medical
plan or nospital contract........................
x
xx
x
X
112. Does employee pay hospital dues; how
much..........................................................
x
x
x xx
x
xxx xx
113. Names of witnesses of accident................
114. Date report made out................................. X X X X X X X X X X X X X X X X X X X X X X X X
x x Xx x x Xx x x x x x x x x x
Signature required......................................
115.
x x
x X Xx x x x x x
xxx
116. Official title required..................................
32 30 47 24 33 40 38 27 29 38 34 31 45 51 40 4232 46 52 423743 37 30
Total number of items




34

COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.

HOW SOON ACCIDENTS ARE REPORTED.

Practically all of the industrial commissions require a first report
of the accident, from the employer. Some States also require a re­
port from the attending physician and some, including almost all of
the State funds, require the injured workman to file a claim. This
matter, however, will be discussed in greater detail later.

The dispatch in claim procedure and the promptness with which
compensation payments are made depend largely upon how soon
accidents are reported to the commission. This again depends
somewhat upon the length of the waiting period, but mostly upon
the policy and practices of the commission, which, of course, are de­
pendent to some extent upon the statutory requirements relative to
the reporting of accidents. Of the 20 States studied, about one-half,
including nearly all of the exclusive State funds, require accidents to
be reported to the commission at once. In Illinois employers need
report but monthly. In the other States the practice varies between
these two extremes, except that the California commission does not
require the employer’s report to be sent in until the end of 35 days.
In this State, however, the employers’ reports are used merely for
statistical purposes, the basic report for administrative purposes
being that of the attending physician.
Exclusive State fund commissions must furnish medical service as
well as pay compensation, and it is important, therefore, that reports
of accidents should be received as soon as possible. The Ohio State
fund, however, is the one exception to this rule; the first report of
the accident in this State need not be transmitted to the commission
until the end of two weeks. This explains in part the delay in mak­
ing compensation payments in Ohio. In the nonexclusive-fund
States the functions of the commission are primarily supervisory
and adjudicatory. The commissions must see to it that claims are
paid by the employers or insurance carriers. It is the compensable
injuries, therefore, in which they are chiefly interested. Conse­
quently their requirements as to promptness in accident reporting
depend somewhat more upon the waiting period. The first thing a
commission usually desires to know about an industrial accident is
its severity. Is the injury compensable and does the disability ex­
tend beyond the waiting period ? This fact is, as a rule, not known
at the time of the injury. If, then, a report of the accident is made
out immediately after its occurrence, it will be necessary in nearly
every case to make out a supplemental report at the expiration of the
disability period. This increases clerical work of both the employer
and the commission. However, if the making out of the first report
of the accident is postponed until the end of the waiting period, or
until the expiration of the disability period if the injured employee
returned to work within the waiting period, it is necessary to make
out only one report. This not only greatly reduces the number of
reports but obviates the necessity of a great deal of follow-up work
on the part of the commission. The desirability of this practice,
however, depends upon the waiting periods being of reasonable
length. For example, in case of a 3 or 7 day period, it would prob­
ably be expedient not to require the first report until the end of these
periods, whereas in case of a 10 or 14 day waiting period such prac­
tice would perhaps not be advisable. All fatal or serious injuries—



FUNCTIONS AND WORK OF COMMISSIONS.

35

those in which the disability would probably continue for at least
four weeks—should be reported at once. The practice of the Mich­
igan Industrial Accident Board should be noted in this respect.
The Michigan waiting period is one week. The first report of the
accident is made on the eighth day, at which time it is definitely
known whether the injury is compensable. If the injury is noncompensable—lasting seven days or under—a simple abbreviated report
form is used, whereas if it is compensable the standard form is used.
Table 11 shows the promptness with which the employers’ first
reports of accidents are made in specific States, arranged in ascend­
ing order. Column 2 shows the number of cases examined. Column
3 shows the waiting period for each State, as of 1919. Column 4
shows the average (median) number of days elapsing between the
date of the accident and the receipt of the report by the commission.
Columns 5 and 6 show the per cent of accident reports received with­
in one and two weeks, respectively, from the date of the accident.
Columns 7 and 8 show the per cent of cases in which no report had
been received within four and eight weeks, respectively, after the
accident. For California the records of both physicians’ and em­
ployers’ reports are given. In this State the report of the physician
rather than that of the employer is used as the basic report for admin­
istrative purposes.
T able ll.-PR O M PTNESS WITH WHICH EMPLOYERS’ FIRST REPORTS OF ACCIDENTS

ARE REPORTED IN SPECIFIED STATES, ARRANGED IN ASCENDING ORDER.

Average
Per cent of Per cent of cases
interval
reported
(median) cases reported not end of— at
within—
Wait­ between
Num­ ing date of acci­
ber of period dent and
State.
cases. (days). date report
2
4
8
received by
commission week. weeks. weeks. weeks.
(days).
6
7
5
8
2
3
4
1
180
4 70.6 90.6
Massachusetts................................................
2.4
1.2
10
California fund...............................................
51
7
5 64.7 80.4 10.0
4.0
48
4.2
7
16 72.9 85.4
California commission (physician’s report)
0.0
185
West Virginia................................................
7 52.4 74.6 12.9
7
3.7
93
Michigan fund................................................
7
8 46.2 79.5
9.8
5.4
Utah fund.......................................................
49
3
8 47.0 71.5 14.1
10.1
Idaho commission......................................... 331
7
9 41.4 68.0 13.2
3.0
Oregon............................................................. 404
0
9 41.1 66.8 12.3
2.1
133
14
Maryland commission..................................
9 44.4 64.7 17.4
1.6
12 19.8 60.3 23.4
Indiana................................... :.................... 111
7
10.8
Washington....................... %
.......................... 259
7
13 26.3 58.7 17.4
6.6
14
13 22.2 56.3 20.8
New York commission (New York City).. 126
4.0
13 31.4 52.6 17.6
British Columbia........................................... 118
3
4.9
* 14 14.4 52.0 14.6
7
Ohio................................................................. 982
3.0
134 16.1 21.2 - 63.5
7
22.0
California commission (employer’s report). 118
i The California commission requires a physician’s report of every accident, and this report, instead of that
of the employer, is used as the basic report.
* Ohio does not require a report of the accident from the employer. Instead, the injured workman files a
first notice of injury and preliminary application,” followed by a supplemental application. The figures
here noted are those of the first notice filed by workman.

The foregoing table shows some interesting facts. In practice,
the length of the waiting period has little effect upon the promptness
with which accidents are reported. For example, in Massachusetts,
with a 10-day waiting period, accidents are reported more promptly
than in any other State, the average interval between date of acci­
dent and date of receipt of the report by the board being 4 days.
The thoroughness of the commission’s follow-up methods seems to




36

COMPARISON OF WORKMEN^ COMPENSATION INSURANCE.

be the determining factor in securing promptness in accident report­
ing. However, employers’ reports should not be the sole basis of
comparison as to promptness in reporting. The reporting of em­
ployers should Jbe compared with that of physicians and with the
workmen’s claims. This is especially true with respect to State funds.
In some States promptness on the part of employers exists side by
side with long delay on the part of physicians, or workmen, or vice
versa.
Table 12 shows the promptness with which accidents are reported
by physicians in specified States.
T able 12. — P R O M P T N E S S W I T H

W H IC H P H Y S IC IA N S ’ F IR S T R E P O R T S O F A C C ID E N T S
A R E R E P O R T E D I N S P E C IF IE D S T A T E S , A R R A N G E D I N A S C E N D IN G O R D E R .
Average
P er cent of
P er cent o f
in te rv a l
cases n o t
(m e d ia n ) cases reported rep o rte d a t end
w ith in —
of—
W a it­ •be tw e en
date o f
N um ­
in g
ber o f period accident
cases. (days). a nd receipt
of ph y­
4
2
8
sicia n ’s 1 week. weeks. weeks.
weeks.
re p o rt
(days).

State.

C alifornia co m m issio n ......................................
B ritis h C o lu m b ia ...............................................
O regon...................................................................
C a liforn ia fu n d ....................................................
U ta h fu n d ............................................................

•M aryland c o m m issio n ...................._.......................
W e s t V irg in ia ................................................................

48
109
405
40
48
137
182

7
3
0
7
3
14
7

6
7
7
8
14
27
36

72.9
53.2
51.6
45.0
25.0
8.0
2.2

85.4
78.9
71.4
67.5
50.0
16.0
9.3

4.2
8.2
9.3
19.0
18.8
45.3
60.2

0.0
1.8
2.6
7.5
10.5
13.2
30.0

It will be noted that the average interval between date of accident
and date of receipt of physician’s report by the commission varies
widely among the several States, ranging from 6 days in California
to 36 days in West Virginia.
Table 13 shows the promptness with which workmen’s claims are
reported in specified States:
T a b l e 13 .— P R O M P T N E S S W I T H W H IC H W O R K M E N ’ S C L A IM S A R E R E P O R T E D IN
S P E C IF IE D S T A T E S , A R R A N G E D I N A S C E N D IN G O R D E R .
Average
in te rv a l

S tate.

O h io ...................................................
O regon................................................
B r itis h C o lu m b ia ............................
C a lifo rn ia fu n d ................................
N e va d a ...............................................
O h io .....................................................
M a ry la n d com m ission..................
U ta n fu n d .........................................
N e w Y o rk com m ission.................
W est V irg in ia ..................................

P er cent of cases
reported w ith in —

P er ce n t o f cases n o t
reported a t end
of—

between
N u m ­ W agit­
date o f
in
ber of period accident
cases. (days).
a nd
1
receipt of
2
4
3
6
8
w o rkm e n ’s week. weeks. weeks. weeks. weeks. weeks.
cla im
(days).
982
404
117
50
204
1,013
144
49
135
184

7
0
3
7
7
7
14
3
14
7

1 14
17
18
20
22
3 25
26
30
35
46

14.4
16.1
17.9

U .2

5.5
2.1
1.5

52.0
43.3
41.0
16.0
34.3
26.1
8.3
12. 2
3.7
3.8

75.8
65.3
58.6
56. 0
47.5
44.4
32.6
28. 5
20.0
14.1

14.6
19.1
21.6
26.0
34.9
45.8
42.4
53. 0
66.6
71.3

6.7
6.2
9.6
22.0
14.8
29.9
17.5
26. 5
41.4
52.8

3.0
3.0
6.1
12 0
8.9
19.3
11.2
20. 4
22.9
38.6

1 T h is is th e average in te rv a l between th e date of accident a n d filin g of “ firs t notice o f in ju r y an d pre­
lim in a ry a p p lica tio n .” A su p p le m e n tary a p p lica tio n m u s t be file d b y th e w o rkm a n before tlie cla im is
a cted u p o n. T h e figure show n w it h footnote 2 is th e average in te rv a l between th e filin g of firs t notice and
filin g of su p p le m e n tary a p p lica tio n . I n order to m ake th e O hio figures com parable w ith th e oth er States
th e in te rv a l between date of accident and filin g of w o rkm e n ’ s cla im w o u ld be a p p ro x im a te ly 14 p lu s 25
days.
a Average in te rv a l between filin g of firs t notice and filin g o f su p p le m e n tary a p p lic a tio n . F o r e xp lan a tion
see footnote 1.




37
Again it will be noted that there is little relationship between the
waiting period and the promptness of workmen in filing claims. The
average time elapsing between date of accident and receipt of the
workman’s claim ranges from 17 days in Oregon to 46 days in West
Virginia. This long delay on the part of workmen in making claims
is due in part to their disability, in part to their unfamiliarity with
the requirements of the law, and in part to an inadequate follow-up
system on the part of the commission. The delay by the employers,
physicians, and workmen in reporting accidents is therefore largely
responsible for the delay in making compensation payments.
As between employer, physician, and workman, the employer is
more prompt in reporting accidents than either of the other two;
then comes the physician, and lastly the workman. This is brought
out in the following tabular statement in which the averages of the
three types of reports for certain States are brought together.
FUNCTIONS AND WORK OF COMMISSIONS.

T a b l e 1 4 .—C O M P A R IS O N A S T O P R O M P T N E S S I N

R E P O R T IN G A C C ID E N T S B Y E M ­
P L O Y E R , P H Y S IC IA N , A N D W O R K M A N IN C E R T A IN S T A T E S .
Average in te rv a l (m edian) between date of
accident and receipt of—
State.
E m p lo ye r’ s
report.

C a lifo rn ia fu n d ...............................................................................
W est V irg in ia .................................................................................
U ta h fu n d ......................................................................- ...............
O regon..............................................................................................
M a ry la n d ..........................................................................................
B ritis h C o lu m b ia ...........................................................................

P hysicia n ’s
report.

W o rk m a n ’s
report.

Days.

Days.

Days.

'

7
8
9
9
13

8
36
14
7
27
7

20
46
30
17
26
18

WHAT REPORTS ARE REQUIRED AND FROM WHOM.

The requirements and practices as to accident reporting and claim
procedure of State funds and commissions23 differ widSy, and are
consequently incapable of accurate comparison. The chief function
of a fund is the payment of compensation claims, whereas the chief
function of a commission is to see to it that such claims are paid by
others. The funds usually require reports from physicians and work­
men and other detailed information and records not required by com­
missions. Many of the commissions, however, require the insurance
carriers to furnish receipts of compensation payments, which, of
course, are not necessary in the case of funds. The following are the
basic reports used in claim procedure: First report of accident by the
employer and physician; claim for compensation by the workman;
compensation agreement entered into by workman and employer or
insurer; employer’s supplemental and final report of accident;
physician’s supplemental and final report of accident ; surgeon’s
special report; periodical and final receipts showing compensation
payments.*
4

23 To avoid confusion the competitive State funds and the exclusive State fund com­
missions will in this section he designated as “ funds,” whereas the industrial commis­
sions, whether in competitive-fund States or in no-fund States, will be designated
4i commissions.”




3*8

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
EMPLOYERS’ FIRST REPORT.

Of the 20 States here considered, a report of the accident by the
employer is required in every State except Idaho and Ohio. In these
two States the employer, instead of making a report himself, signs
the application or report of the injured workman, thereby merely
certifying that the workman was in his employ at the time of the
injury. In Washington the employer and workman have the option
of either making out separate reports or reporting on a combined
form, the employer filling out the obverse side of the report blank and
the workman the reverse side. About four-fifths of the accidents are
reported on the combined form. Four States (British Columbia,
Michigan, Ohio, and Ontario) have separate reports for compensable
and noncompensable accidents, the latter being a simple and abbre­
viated form. Mne States,24 of which all but three (California, Colo­
rado, and Pennsylvania) have exclusive State funds, require the
names of eyewitnesses to the accident.
From the standpoint of efficiency in administration the agency
through which the employer’s report is transmitted to the commis­
sion becomes an important matter. In four States (Massachusetts,
Michigan, Utah, and Wisconsin) the employer himself transmits the
report direct to the commission.- In the other States it is the practice
to have the employer’s report of the accident transmitted to the
commission by the insurance carriers. In some of these States prac­
tically all reports are sent in by insurance companies while in other
States some employers report direct. The practice of transmitting
reports by insurance carriers is defended on the ground that (1) it
relieves the employer of sending reports to two different agencies
and (2) that it insures a more complete report since the insurance
companies, because of their experience, are in a better position to
answer the questions asked for on the report blank. (Several objec­
tions, however, are made to this practice. It is pointed out that the
commission should have a prompt, accurate, impartial, and confi­
dential report of the accident, and this can best be furnished by the
employer. Transmittal of these reports by the insurance companies
not only delays their receipt by the commission but offers the insurer
an opportunity to alter the report as initially made out by the em­
ployer. In some States, and among some insurers, it is the practice of
the carrier to transmit the original, or at least an exact copy of the
employer’s report, to the commission. Among others, however, it
is the practice to make a new report in the insurance agent’s office
from the data furnished by the employer and to transmit this to
the commission in lieu of the original report of the employer. This
practice opens the door for fraud and collusion, instances being on
record where insurance carriers have requested their assured to
change the original report, particularly as regards the weekly wages
of the injured workman. It is also responsible to some extent for
the long delay in reporting accidents, shown in Table 11. Again,
if all of the reports (first report of accident, voluntary agreement,
final reports, and receipts) are furnished by the same agency, the
commission will be unable to check these reports, one against the
other, or determine their accuracy.
24 B r it i s h C o lu m b ia , C a lif o r n ia ( f u n d ) , C o lo ra d o , N e v a d a , O n ta rio , O re g o n , P e n n s y l­
v a n ia , W a s h in g to n , a n d W e s t V ir g in ia .




FUNCTIONS AND WORK OF COMMISSIONS.

39

On the other hand if the commission receives reports from two
independent sources it will be in a better position to ascertain the
facts by checking the reports from one source against those from
the other. For example, if a confidential report of the accident is
received from the employer, as is the case in Massachusetts and
Wisconsin, the commission can compare this report with the facts
as reported by the insurance carrier.
ATTENDING PHYSICIAN’S FIRST REPORT.

The practice relative to the reporting of accidents by the attend­
ing physician differs widely among the several States. Some com­
missions maintain that physicians’ reports are unnecessary or worth­
less unless made by impartial or disinterested physicians, whereas
others state that an intelligent adjudication of a claim would be
impossible without a report of the injury by the attending physician.
All of the State funds require a first report of the accident by the
attending physician or surgeon. In Ohio the physician’s report
must be signed by the injured workman, while in West Virginia
the employer is required to transmit this report. In Pennsylvania
all compensable cases are also investigated by the fund’s claim
adjuster.
Of the 13 commissions, 3 25 do not require first reports from attend­
ing physicians, whereas 1026 do require such reports. Some of
the latter, however, limit physicians’ reports to serious cases, while
in others the reporting by physicians is done haphazardly. The Wis­
consin commission requires such reports only in case of permanent
disabilities or temporary disabilities over three weeks. In New York
physicians’ reports are not essential, since the commission holds
hearings in every case and the claimants are examined by the com­
mission’s medical advisers. Pennsylvania and Colorado require
physicians’ reports, but an examination of the files showed that
these reports were not regularly received.
WORKMAN’S CLAIM OR AGREEMENT.

Can a commission or fund pass upon the merits of a compensation
claim fairly and impartially without some report of the injury from
the workman himself ? If not, what kind of reports are necessary ?
These are questions about which there is no unanimity either as
regards opinion or practice. Some of the States, especially those
having State funds, require the workman to file a claim; others
require the workman and employer or insurer to sign an agreement
setting forth the essential facts as to wages and nature of injury,
which is subject to the approval of the commission; in still other
States all reports are made by the employer or insurance carrier,
no report being required from the workman.
It is maintained by some that it is desirable to have the workman
make a claim or file a report of the injury in order that both he
and the fund may be protected. To determine the merits of a case
merely upon the reports of the employer or the insurance carrier is
25 I llin o is ,, M a s s a c h u s e tts , a n d M ic h ig a n .
26 C a lifo r n ia , C o lo ra d o , Id a h o , In d ia n a , M a r y la n d , M o n ta n a , N e w Y o rk , P e n n s y lv a n ia ,
U ta h , a n d W is c o n s in .




40 COMPARISON OF WORKMEN ’S COMPENSATION INSURANCE.
held to be unjust to the workman, since it would not grant him his
44day in court.” On the other hand, the following objections are
made to this practice. In the first place to postpone Consideration of
the case until a claim has been filed by the workman would delay the
payment of compensation. Second, to require an injured workman to
make out a detailed report and to have same acknowledged before a
notary, as is done in several States, is to place upon him an unneces­
sary burden. Again, it is argued that the chief object in requiring the
filing of a claim, viz, to obtain an independent and confidential report
from the workman himself, is not attained. A large proportion of
injured workers can not read or write the English language. Others
are not in a position to answer accurately all the questions on the
report form. Moreover, those severely injured are physically
incapable of making out a report at the time of the accident. The
usual procedure for the workman when injured is to enlist the
services of his employer in making out a claim. In fact, in Wash­
ington, as already noted, the workman and employer may fill out a
combined report form, and a majority of the injuries are reported
in this way.
Another method of adjusting compensation claims is by means of
44voluntary agreements ” or 44direct settlements.” Under this sys­
tem the procedure is as follows: A first report of the accident is
made to the commission by thfe employer or insurance carrier at the
time of the injury. At the expiration of the waiting period an
agreement is drawn up between the workman and employer (or
employer’s insurer) in which the essential facts are set forth. These
include the average weekly wages, nature of injury and extent of
disability, compensation rate, period covered, etc. This agreement,
or direct settlement as it is called in some States, must, however,
accord with the statutory provisions and is not valid until approved
by the commission. Moreover, it is usually reviewable in case of
error, fraud, or changed conditions. Upon receipt of the agreement
it is examined by the commission, compared with the original report
of the accident, and, if in accordance with the facts and statutory
provisions, is approved. If the agreement does not coincide with
the facts as stated in the accident report, the matter is investigated
by the commission and a new agreement requested. In case of
dispute between the parties, a formal claim or petition is filed with
the commission and the case is set for a hearing. The execution of
the agreement, i. e., the payment of benefits in accordance with
its provisions, is attested by subsequent compensation receipts and
by the employer’s and physician’s supplemental reports.
The voluntary agreement system has been both commended and
criticized. On the one hand, it is maintained that it furnishes a con­
venient and expeditious method of adjusting the large majority of
accident cases in which there is no dispute as to facts involved; that
it gives the workman his44day in court ” and therefore the adjudica­
tion of the claim upon ex parte evidence is obviated; and that, on the
whole, it has proved satisfactory and insured substantial justice to
both employer and workman. On the other hand, several objections
have been raised against the agreement system. It is contended that
it delays the payment of compensation. Frequently, injured work­
men will not sign the agreement because they are suspicious of the



FUNCTIONS AND WORK OF COMMISSIONS.

41

insurance adjuster and have no confidence in his integrity. They
will hesitate to sign any paper for fear of prejudicing their compen­
sation rights. Then, too, the fact that these agreements must be
approved by the commission before they become valid delays the com­
pensation payments still further. The average time elapsing be­
tween the date of the accident and date of approval of the agreement
ranges from five to nine weeks, while some insurance carriers begin
compensation payments as soon as they are assured that a claim is
legitimate; others make no payments until they have been formally
notified of the approval of the agreement by the commission. The
result is long and unnecessary delay.
Another criticism of the agreement system is that it does not insure
the workman his “ day in court.” It is maintained that the agree­
ment is a one-sided anair in which the workman signs whatever is
placed before him; that the injured worker, frequently illiterate or
unable to understand and speak the English language and unfamiliar
with his rights under the law, is no match for the experienced insur­
ance adjuster. In case of self-insured employers there is introduced
also the element of intimidation. Employees will often hesitate to
dispute the correctness of a report or agreement for fear of antago­
nizing their employer and thus jeopardizing their jobs. This latent
power of intimidation effectively inhibits the workman from making
a protest. Agreements made under duress are neither voluntary nor
give assurance that the facts as stated therein are true or that they
are satisfactory to the workman. Moreover, when all reports are
made and transmitted by one party, as is the practice in some States
and is true with self-insurers in every case, the commission is in no
position to determine the accuracy of an agreement by comparing it
with a first report of the accident.
The third system of claim procedure is based merely upon reports
from the employer and insurance company. No claim, agreement, or
any other report is received from the injured workman. The first
report, showing date of accident, weekly wages, etc., is followed by
supplementary and final reports and receipts which show the extent
of disability, the employee’s return to work, and the amount of com­
pensation due and paid. The one feature which commends this sys­
tem of procedure is its simplicity. There is nothing to prevent the
employer or insurer from making payments as soon as they are satis­
fied that the injury is a compensable one. It is maintained that
claims and voluntary agreements merely complicate matters and
delay compensation payments without adding anything of value in
expediting the settlement of the case.
The chief criticism made against this system is that the commission
bases its findings of fact and renders its decision upon ex parte evi­
dence. All the reports and data are submitted by one party, the
commission receiving no evidence whatever from the workman show­
ing his side of the case. A further objection offered is that, unless
independent reports are required from both the employer and in­
surance carrier, the commission can not check the accuracy of the
reports received. And in the case of self-insured employers, or when
the insurance carrier transmits the accident reports of its assured,
all reports are of necessity submitted by one party. The Wisconsin
and Massachusetts commissions require the first report of the acci­



42 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
dent to be made by the employer, while the agreements, supple­
mental reports, and receipts are made by the insurance carrier.
This makes possible a comparison by means of which inconsistencies
and inaccuracies may be discovered and corrected. There is, how­
ever, possibility of collusion between an employer and his insurer.
Instances of such collusion have been discovered in some States.
However, as already stated, there is no way of verifying the reports
of self-insured employers by comparison with other data.
AH of the exclusive funds and all except three27 of the competitive
funds require the injured workman to file a claim. In Colorado,
Michigan, and Pennsylvania the voluntary agreement system is used.
This applies to the State funds in common with other insurance
carriers. In four States28 the workman’s claim must be acknowl­
edged or sworn to, while in the other nine States29 such acknowledg­
ment is not necessary. The policy of compelling workmen to have
their claims sworn to is not approved even in those States in which
this practice is required by law, and consequently the commissioners
do not insist upon a rigid enforcement of this provision. It is main­
tained that this practice serves no useful purpose and places an
annoying and unnecessary burden upon the injured workman.
Of the 13 commissions, 3 30 require the workman to make a claim,
2 of which (Maryland and New York) require the claim to be
acknowledged; 731 have the voluntary agreement system; while
5 32 receive reports only from employers and insurance carriers. It
will be noted that the New York procedure includes both claims and
voluntary agreements. These reports are not essential, however,
because in all compensable accident cases the injured workman is
required to be present at a hearing of the commission for examina­
tion and to testify.
SUPPLEMENTAL AND FINAL REPORTS AND RECEIPTS.

The adjudication of claims for compensation by compensation
commissions in industrial injury cases is based almost entirely upon
written reports. In disputed or other exceptional cases the commis­
sion may make a personal investigation of the facts or set the case
for a hearing at which all interested parties are requested to testify.
But in the large majority of cases the commissions obtain their in­
formation from written reports submitted by the employer, insurer,
physician, or injured workman. There are, however, several excep­
tions to this general rule. In New York every compensable accident
case must be heard by the commission before an award can be made
and the case closed. In Pennsylvania all of the compensable acci­
dent cases of the State fund are personally investigated by one of the
fund’s claim adjusters. In California practically all permanent dis­
ability cases are examined by the commission’s medical advisers.
Similarly in some of the other States, especially in those having ex­
clusive State funds, many of the injured workmen are examined by
the medical staff of the commission. But in from 75 to 95 per cent of
27 C o lo ra d o , M ic h ig a n , a n d P e n n s y lv a n ia .
28 M a r y la n d , M o n ta n a , N e w Y o rk , a n d O h io .
29 B r it i s h C o lu m b ia , C a lifo r n ia , Id a h o , N e v a d a , O n ta rio , O re g o n , U ta h , W a s h in g to n , a n d
W e s t V ir g in ia .
80 Id a h o , M a r y la n d , a n d N e w Y o rk .
31 C o lo ra d o , In d ia n a , M a s s a c h u s e tts , M ic h ig a n ^ M in n e s o ta , N e w Y o rk , a n d P e n n s y lv a n ia .
32 C a lifo r n ia , I llin o is , M o n ta n a , U ta h , a n d W is c o n s in .




FUNCTIONS AND WORK OF COMMISSIONS.

43

the eases t'he only knowledge the commission has of the accident is
obtained from written reports.
The requirements and procedure relative to first reports of the
accident have already been discussed. This first report, except in
minor disabilities, is usually incomplete. Obviously it can not give
the extent of the disability, since this is not known when the first
report is transmitted. This information is obtained from supple­
mental reports transmitted by the employer or physician or both.
The supplemental report of the physician has to do with the physical
condition of the workman, i. e., the nature of the injury, the extent
of disability, and the probable date he will be able to return to work.
The supplemental or final report of the employer certifies whether
and when the employee returned to work and in some States the
amount of compensation paid.
The foregoing reports constitute the basis upon which the commis­
sions administer the compensation act. These reports should show
whether the injury arose out of the employment, whether it was
compensable, the nature of the injury, and the extent of disability,
the weekly wages of the injured workman, and the amount of the
benefits to which he is entitled. They do not show, however, whether
these benefits have actually been received by the workman. This can
be ascertained positively only by means of receipts.
In the case of the exclusive State funds and the competitive funds
administered by industrial commissions, the commission itself makes
the payments and consequently receipts for the employee’s protec­
tion are unnecessary. In the other States most of the commissions
require the employer or insurance carrier to furnish signed receipts
from the injured workman showing compensation payments. Some
commissions require both periodical (weekly or monthly) and final
receipts, while others require final receipts only. Several commis­
sions do not require actual receipts but in lieu thereof require that
the final report of the employer or insurance carrier contain a state­
ment of the amount of compensation paid.
The administrative problem connected with the handling of com­
pensation receipts has become a serious one to the commissions. The
mere recording and filing of these receipts takes a good deal of time.
Moreover, these receipts are not always received promptly. Fre­
quently the insurance carrier finds it impossible to obtain a receipt
from the workman for payments made. It is necessary, therefore,
for the commission to devise a follow-up system through which re­
ceipts may be checked. This involves a large amount of correspond­
ence. Many commissions are also handicapped by an insufficient
clerical force and as a result this part of their administrative work is
neglected. Other commissions believe that the filing of receipts is not
essential. They maintain that it can be safely assumed that, unless
complaint is made to the contrary, the workman regularly receives
the payments to which he is entitled. Such an assumption, however,
is hardly justifiable. It has already been shown that employers and
insurance carriers do not always make prompt payments. It is also
true that many do not pay regularly. Payments are often stopped
after the first payment or before the termination of the disability.
The injured workman, not being familiar with his rights, frequently
makes no complaint. As a result the workman, if not deprived of his



44

COMPARISON OF WORKMEN;S COMPENSATION INSURANCE.

compensation benefits altogether, at least is subjected to a long aiid
unjustifiable delay. Experience in workmen’s compensation admin­
istration has demonstrated that it is unsafe to assume (1) that em­
ployers and insurance carriers can be depended upon to meet their
compensation obligations promptly without strict supervision by the
commission, and (2) that the injured workmen are familiar with their
rights and will make immediate complaint to the commission if they
are not receiving the benefits to which they are entitled under the law.
Receipts or data of some sort are necessary to insure certainty thait
the workman has received his compensation, and that he has not
suffered unnecessary delay. But,, as already noted, receipts can not
always be obtained from the injured by the insurance carrier. Fur­
thermore, to require a formal receipt for every payment made not
only adds geatly to the administrative work but clutters up the files
of the commission. As a satisfactory compromise it has been sug­
gested that from each self-insured employer and insurance carrier a
monthly statement be required showing the date, amount, and check
number of each payment. To be sure, such a statement is not an abso­
lute guaranty that the injured workman has actually received the
benefits stated, but employers or insurers will hesitate to make a false
statement in writing, especially if a heavy penalty is provided. Such
a plan would relieve the insurance carrier of the necessity of obtain­
ing receipts, would lessen the administrative work of the commission,
and would insure reasonable certainty that the payments specified
had actually been made.
NUMBERING, INDEXING, AND FILING.

Efficiency in the handling of accident reports and compensation
claims depends largely upon the administrative methods employed,
particularly the system of indexing, numbering, and filing. No
efficient follow-up work can be done with an inadequate or slipshod
filing system. The claim department of the commission should know
whether and when the required reports have been received, whether
the facts have been reported accurately, and whether the beneficiaries
have received their compensation promptly. This data can not be
had without proper records and follow-up methods. A detailed de­
scription of the claim procedure methods is not here attempted.
Such detailed accounts may be found in the account of the adminis­
trative procedure of the various States (pages 88 to 194).
Accidents may be indexed by name of employee, by name of em­
ployer, or by accident number. Some States use the first method,
some the second, and some have adopted two or all three methods.
EMPLOYEE’S INDEX.

All of the 16 State funds keep an index of accidents by name of
employee arranged in alphabetical order. Eleven33 funds keep these
records on cards, whereas the other 5 34 keep them in books prepared
for the purpose. Of the 13 commissions 1035*keep an employee^
83 C a lifo r n ia , C o lo ra d o , Id a h o , M a r y la n d , M o n ta n a , N e v a d a , N e w Y o r k , O re g o n , P e n n ­
s y lv a n ia , U ta h , a n d W e s t V ir g in ia .
84 B r it i s h C o lu m b ia , M ic h ig a n , O h io , O n ta rio , a n d W a s h in g to n .
35 C a lifo r n ia , C o lo ra d o , Id a h o , M a r y la n d , M a s s a c h u s e tts , M ic h ig a n , M o n ta n a , N e w
Y o r k , U ta h , a n d W is c o n s in .




45
index record, all but New York keeping such records on cards.
However, 3 of these commissions (California, Michigan, and New
York) keep no index record of noncompensable accidents, while 336
commissions keep no index of accidents at all by name of employee.
The employee’s index record usually contains the name of employee
and employer, the date and number of the accident, and sometimes
the nature of the injury. The chief purpose of an employee’s index
is to enable the commission readily to locate an accident report where
only the workman’s name is known, to prevent duplication and fraud
in claims, and to have an accident record of each injured workman.
There is a difference of opinion as to whether the card index or book
system is the better method. Most of the States seem to prefer the
card system. However, British Columbia changed from the card to
the book system. The board maintains that the card method in­
volves more work and that the cards are frequently misplaced in the
files and therefore lost; whereas the book method insures greater
accuracy and accessibility. Oregon, on the other hand, changed from
the book to the card system because the latter was found to be more
satisfactory.
FUNCTIONS AND WORK OF COMMISSIONS.

EMPLOYER’S INDEX.

Of the 16 State funds, 1237 keep a claim record of each accident
by the name or number of the employer. Four funds38 keep no
record by employers in the claim department, but in most of these
the accident experience record of each employer is kept in the ac­
tuarial department. Of the 13 commissions 1139 keep an accident
record by name or number of the employer while 240 commissions
do not.
NUMERICAL INDEX.
In addition to the employee’s and employer’s indexes some States
also keep a numerical index, in which the accidents are recorded in
numerical order by accident or claim number. Ten funds41 and
seven commissions42 maintain such numerical indexes.
NUMBERING OF ACCIDENTS AND CLAIMS.

It is essential that the various accident reports be readily acces­
sible when needed. This requires that they be filed in some methodi­
cal order. The customary practice is to place all the papers con­
nected with an accident claim in one folder, which is called the “ file,”
“ folder,” “ jacket,” “ case,” or “ claim.” This folder usually contains
the first reports of the employer, physician, and workman, supple­
mental reports, agreements, receipts, and correspondence. Each
folder is given a number which is identical with that assigned to the
first report of the accident. In fact all papers in the case bear this
number. These numbers run consecutively, and the folders are filed
80 I llin o is , In d ia n a , a n d P e n n s y lv a n ia .
87 B r it is h C o lu m b ia , C a lifo r n ia , C o lo ra d o , M a r y la n d , N e va d a , N e w Y o rk , O n ta rio ,
O reg o n , P e n n s y lv a n ia , U ta h , W a s h in g to n , a n d W e s t V ir g in ia .
38 Id a h o , M o n ta n a , M ic h ig a n , a n d O h io .
89 C o lo ra d o , Id a h o , I llin o is , In d ia n a , M a s s a c h u s e tts , M ic h ig a n , M o n ta n a , N e w Y o rk ,
P e n n s y lv a n ia , U ta h , a n d W is c o n s in .
40 C a lifo r n ia a n d M a r y la n d .
41 C a lifo r n ia , C o lo ra d o , M a r y la n d , M ic h ig a n , M o n ta n a , N e va d a , O h io , O n ta rio , W ash*
illg t o n , a n d W e s t V ir g in ia .
42 C o lo ra d o , Id a h o , In d ia n a , M a r y la n d , M ic h ig a n , M o n ta n a , a n d N e w Y o rk .

74832°—22----- 4




46 COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.
in numerical order. This is the usual practice, although there are
several exceptions which are noted hereafter. When a given case is
desired the number of the folder containing the data is obtained from
the employee’s or employer’s index record.
With the exception or West Virginia, all of the State funds num­
ber their accidents in one consecutive series and file them in numeri­
cal order. In British Columbia, however, the noncompensable acci­
dents (those under three days and involving no medical costs) are
filed in alphabetical order by name of workman, each month’s acci­
dents being kept separate. West Virginia has a unique system of
accident designation. A basic number is given to all accidents occur­
ring on a given date, this number being the number of days which
have elapsed since the act went into effect. Each accident is then
given a secondary number, numbered consecutively in the order in
which it is received by the commission.
For example, the number 2206-88 means that the accident occurred
on the 2,206th day after the act went into effect and that of the ac­
cidents which occurred on this date, it was the 83d reported to the
commission. Under this system all of the accidents will automati­
cally be filed in chronological order and each number will show the
date of the accident and the promptness with which it was reported.
The practices among the commissions show greater variation than
the funds. Eight43 of the 13 commissions number their accidents in
a consecutive numerical series. Of these, Colorado has separate series
for accidents and claims, which are kept in separate files. Indiana
has three separate series, one each for accidents, agreements, and
claims (adjudicated cases). Maryland has a separate series of
numbers for employers’ reports, physicians’ reports, and workmen’s
claims, each type of report being kept in a separate file. Michigan
numbers compensable accidents only, the noncompensable accidents
of each month being filed in alphabetical order by name of employer.
Montana has a separate numerical series for each insurance plan—
i. e., all State fund accidents are in one series, all self-insurers in
another, and all insured employers in a third. Pennsylvania numbers
all accidents in one series, but maintains separate files for (1) non­
compensable accidents, (2) deaths, (3) permanent disabilities, and
(4) temporary disabilities.
The other five44 commissions have not adopted the consecutive
numerical system of notation. California does not number its
accidents at all, the reports being filed in alphabetical order by name
of employer.
In Illinois each employer reporting accidents is given a number.
This number is assigned to every accident reported by said employer,
and the reports are filed under the employer’s number in alphabetical
order by name of employee. Each employer has two files, one for
open cases and, one for closed cases.
In New York for purposes of compensation administration, the
State is divided into five districts, viz., New York, Albany, Syracuse,
Rochester, and Buffalo. The accidents received in the New York
City district are divided among groups or units, each unit having
supervision over the accidents of claimants whose names begin with

48 C o lo ra d o , Id a h o , I n d ia n a , M a r y la n d , M a s s a c h u s e tts , M ic h ig a n , M o n ta n a , a n d P e n n ­
s y lv a n ia .
44 C a lifo r n ia , I llin o is , N e w Y ork , U ta h , a n d W is c o n s in .




47
certain letters of the alphabet. For example, the accidents of all
injured employees whose names begin with E, F, and G are handled
by one unit. The accident reports are then separated by each unit
into two groups, (1) compensable and (2) noncompensable. The
noncompensable accidents are not numbered, each month’s accidents
being filed in alphabetical order by name of employee. The compen­
sable accidents are numbered, each number designating the district,
the year, the unit, and the number of the accident received by that
unit during the year. For example, the number 1-9-3-3604 indicates
the following facts: “ 1” indicates the district of the State (in this
case New York City); “ 9 ” indicates year (1919); “ 3 ” indicates the
unit (E F G ); and “ 3604 ” indicates the number of the accident.
In other words, it is the 3,604th accident received by unit 3 in the
New York City district during the year 1919.
In Utah the insurance carrier is the basis of notation. Each
insurer is given a number, the State fund being number 1. The
employers insured by each carrier are arranged in alphabetical order
and are numbered Al, A2, Bl, B2, etc. Each employer’s accidents
are numbered consecutively. For example, an accident bearing the
number 1M5-27 means that it is a State fund case, that the employ­
er’s name begins with M, being the fifth employer in that alphabet,
and that it is the employer’s twenty-seventh accident.
In Wisconsin the accident reports are first filed in alphabetical
order by name of employer. Each employer’s accidents are num­
bered consecutively and filed in numerical order and under the
employer’s name.
Which of the foregoing methods of numbering and filing accident
reports is the most efficient is difficult to determine. The type of
system most suitable in a given State would depend somewhat upon
the functions of the commission and upon the number of accidents
handled. The method found satisfactory in Nevada would not neces­
sarily be suited for New York. Among the 16 funds and 13 commis­
sions, three general types of accident designation may be distin­
guished. The merits and demerits of each type may be briefly sum­
marized as follows:
1. The consecutive numerical system, in which all accidents are
numbered in one consecutive series. A large majority of the States
have adopted the numerical system. The advantage of this method
lies in its simplicity and facility in filing. Its chief disadvantage lies
in the lack of grouping or classification of accidents by employer or
insurance carrier. Each employer’s accident reports are widely
scattered throughout the files.
2. The Wisconsin system, in which each employer’s accidents are
kept together, the employers being*arranged either in alphabetical or
numerical order, in the latter case each employer being given a
number. Under this system each employer is treated as a unit, the
chief advantage being that the complete accident record of every
employer under the accident act is immediately available.
3. The West Virginia system, in which all the accidents of a given
date form the unit. Each day is numbered consecutively and all
the accidents sustained on this day are filed together in the order in
which they are received. The number of each accident will there­
fore show the date on which it occurred and the promptness with
FUNCTIONS AND WORK OF COMMISSIONS.




48

COMPARISON Of

w o r k m e n ’s c o m p e n s a t io n in s u r a n c e .

which it is reported. The disadvantage of this method of designa­
tion is the same as the consecutive numerical system, i. e., each
employer’s accident reports are scattered promiscuously throughout
the files.
SUMMARY CONCLUSION.

Four systems of claim procedure are in use in the various compensa­
tion States. These are: (1) Claim system, (2) voluntary-agreement
or direct-settlement system, (3) adjudication of cases on basis of em­
ployer’s and insurer’s reports only, and (4) hearing system.
An accurate appraisal of the foregoing systems is difficult to make*
A true evaluation can be determined only from a comparison of
results. One must know whether all compensable accidents have been
reported, whether the required data have been reported correctly, how
promptly the reports are received, and whether and when compem
sation payments are made. These facts must be known before the
merits of the various systems of claim procedure can be determined.
However, methods of claim procedure are not the only factors enter­
ing into the results. The policy of the commission, the adequacy
and efficiency of the administrative personnel, the number of acci­
dents handled, the size and area of the State, the character of the
industries, the type of insurance, etc., are all contributory factors.
The following is a brief summarization of the four methods.
(1) The claim system is used in nearly all of the State funds and
by two or three commissions. Under this system reports of the acci­
dent are required from the employer, the attending physician, and the
injured workman. The claim is adjudicated on the basis of these
reports. The chief merit of this method is that all parties interested,
and particularly the workman, may present their side of the case.
Its principal drawback is delay. Workmen are not prompt in filing
their claims, which causes delay in making compensation payments,
since customarily no payment is made until the workman’s claim is
received.
(2) A greem ent system s are found in a majority of the commis­
sions and in several funds. Under this system the employer or
insurer and the injured workman sign,an agreement which sets forth
the amount of compensation receivable, together with the main facts
connected with the injury. No other report is required from the
workman although some commissions require reports from the attend­
ing physician. These agreements do not become valid, however, until
approved by the commission. The execution of the agreement is
usually attested by supplemental reports and receipts submitted to the
commission by the employer or insurer. The chief criticism directed
against the agreement system is that it unnecessarily delays the pay­
ment of compensation. Agreements are not always promptly sub­
mitted by the insurance carriers. Moreover, it is the policy of some
carriers not to begin payments until notice of approval has been sent
them by the commission. The chief merit of the agreement is that
the employer or insurer thereby acknowledges his liability and agrees
to make the payments specified. Also the signature of the workman
is prima facie evidence that the facts as stated are correct. However,
frequently the employee is not familiar with his rights under the law,
and in the case of self-insured employers would be disinclined to



49
refuse to sign the agreement because of fear of losing his job. Fur­
thermore, if both the first report and the agreement are submitted
by the same party the commission is in no position to verify one
report by comparing it with the other.
(3) A djudication of claims on the basis of employer's and insurer's
reports only is found in several States. Under this system the com­
mission receives no report from the injured workman. Only the em­
ployer or insurer, and in some States the attending physician, are
required to make a report to the commission. As in the case of the
agreement system, the execution of the compensation provision is
attested by supplemental reports and receipts. The merits of this
system lie in its simplicity. Compensation payments may be made
immediately and need not be delayed until a formal claim or agree­
ment has been submitted to and approved by the commission. The
principal defect of this system is that the whole case is settled on an
ex parte basis. The injured workman is not given an opportunity to
present his side of the case. If the employer and insurance carrier
submit independent reports: the commission, of course, can check one
report against the other. But even this is not possible in case of
self-insured employers or when the insurance carrier is permitted to
transmit the accident report of his assured. In the latter case the
commission has no way of determining whether the facts as sub­
mitted are correct unless the employee makes a complaint, arid this
he frequently fails or refuses to do.
(4) The heajring system . —In the exclusive-fund States formal
hearings are practically nonexistent. In the other States, New York
excepted, hearings are held only in disputed cases. But in New York
the commission holds a formal hearing on every compensable acci­
dent case. The one great advantage claimed for this system is that
the commission actually sees the injured workman and knows the
exact nature of the injury and extent of disability; consequently, the
possibility of underpayment is greatly reduced. The most important
criticism made against this system is the long delay before the case is
placed upon the calendar for a hearing. The average interval be­
tween the date of the accident and the date of the first hearing was
found to be 72 days. Therefore, unless insurance carriers begin pay­
ments before the hearing is held, which some of them do not, the
injured workman must wait over 10 weeks before he receives his first
payment. Another weakness mentioned is the great amount of time
consumed. In most of these hearings the claimant and frequently
friends and relatives of the claimant appear in person. Frequently
such attendance is accompanied by considerable expense and loss of
wages inasmuch as many claimants are working at the time of the
hearing. They have to lose a day’s wage or part of a day’s wage to
attend the hearing, often only to be told that no more compensation is
due or that the case has been disallowed for one reason or another.
Moreover, hearings are often postponed because of the failure of wit­
nesses to attend. Many times hearings are postponed two or three or
even more times because it has been impossible to secure the attend­
ance of the necessary physician or because the insurance company’s
adjuster or doctor was on his vacation or otherwise occupied.
Table 15 indicates the promptness of certain specified States in
accident reporting and claim procedure. It shows how promptly the
several kinds of reports are received and how soon after the receipt
of these reports the first payment is made or the claim is adjudicated
FUNCTIONS AND WORK OF COMMISSIONS.




50

COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.

T a b l e 1 5 .— P R O M P T N E S S W IT H W H IC H R E P O R T S O F A C C ID E N T A R E R E C E IV E D O R

C L A IM S P A ID IN S P E C IF IE D S T A T E S .

A verage in te r v a l (m ed ian ) b etw een —

State.

Massachusetts............................................
California fund...........................................
West Virginia............................................
Michigan fund............................................
Utah fund..................................................
Idaho commission......................................
Oregon.....................................................
Maryland commission................................
Indiana..............................................................
Washington...............................................
New York commission, New York City__
British Columbia......................................
Ohio...........................................................
California commission................................
Nevada......................................................

Date of accident and receipt of—

Date of Receipt of
latest
accident report and
and first
Employer’s Physician’s Workman’s payment. first
report. report.
claim.
payment.
Days.

4
5
7
8
8
9
9
9
12
13
13
13
14
34

Days.

8
36
14
7
27

Days.

7
6

Days.

129
20
26
46
59
848 and 84
30
38
17
28
26
4 38
49
35
672
18
41
839
55
22
36

Days.

213
2
8
2
5
510
24
732
12
7
99

1 In te r v a l b etw een th e d ate of accident and d ate agreem ent received.
a In te r v a l b etw een d ate agreem ent received an d d ate agreem ent approved.
* T w o averages based u p on tw o sets of d ata.
4 In te r v a l b etw een d ate o f accid en t an d d ate of com m ission ’s aw ard.
6 In te r v a l b etw een receip t of la te st report and d ate of com m ission ’s aw ard.
6 In te r v a l b etw een d ate of accid en t a n d d ate of hearing.
7 In te r v a l b etw een receipt of claim and d ate of first hearing.
8 A p p roxim ately.
9 In terva l b etw een receipt of w orkm an’s claim an d d ate of first p a y m en t.

Certain questions relating to possible improvements in methods of
procedure have arisen in connection with the experience of the differ­
ent funds and commissions. No special investigation has been made
along this line, but in view of the general interest in the subject the
following points are submitted as summarizing the more efficient and
adequate methods found in the several States.
1„ What accidents should be reported?—All accidents which cause
time loss or require medical aid.
2. What accidents should be tabulated?—All “ tabulatable ” accidents,
i. e., those causing time loss other than the day on which the injury
occurred, if the commission has a sufficient clerical force to do the
work properly; otherwise, compensable accidents only. In any case,
a separate tabulation of the compensable and noncompensable acci­
dents. As to method, the recommendations of the committee on sta­
tistics of the International Association of Industrial Accident Boards
and Commissions should be followed as closely as possible.
3. What data should be called for on the employer’s first report of acci­
dent?—The questions on the employer’s first report of accident to
be limited to data which are (1) important and necessary, and (2)
which are obtainable.
4. How soon should accidents be reported ?-^-The more promptly an ac­
cident is reported the sooner positive action can be taken by the
claim department. Usually, however, no action is possible until the
commission knows whether the injury is a compensable one. In
case of serious accidents this information is known at the time
of the injury and such accidents should be reported immediately.
The compensability of minor accidents, however, is not known until



51
die expiration of the waiting period. If reported before that time,
i supplemental report must also be made in each case showing when
the employee returned to work. It would seem sufficient and de­
sirable, therefore, assuming the statutory waiting period to be rea­
sonably short, to report noncompensable minor accidents at the
termination of disability and compensable minor accidents im­
mediately after the expiration of the waiting period. This practice
is not suggested for State funds. Where medical service must be
furnished by the commission it is desirable that accidents be reported
as soon as possible.
5. What reports should be required?— {a) Em ployer's report .—An
employer’s report in every accident case, to be transmitted to the com­
mission directly by the employer and not through the insurance car­
rier or any other intermediary.
(b) Physician's report .—A physician’s report, at least in all per­
manent disability and in all serious temporary disability cases.
( c) Em ployee's report.—It is extremely desirable that the com­
mission receive some statement from the injured workman himself
in order that the facts as reported by the employer, insurer, or
physician may be verified. In the case of State funds, this is
effected through the workman’s claim. The voluntary agreement
system also answers the purpose to a limited extent. The merits
and demerits of these systems have already been discussed. If neither
method is adopted, the commission, before final approval of the
settlement of the claim, should request the injured workman to
verify the essential facts as reported by the employer.
(d) Physician's final report. —In all case&of permanent disability
and serious temporary disability a final report from the attending
physician, stating the nature of the injury, degree of impairment, and
the date the injured employee is able to return to work.
(e ) Em ployer's final report .—A final report from the employer
stating when the employee actually returned to work, and in case of
permanent disability, his subsequent occupation and wages.
(/) Insurance carrier's final report .—A final report from the insur­
ance carrier and the self-insured employer, stating the amount of
compensation and medical benefits paid in each case.
(g) R eceipts .—A monthly statement from the insurance carrier
and the self-insured employer showing each compensation payment
made during the month, giving the amount, date, and check number
of each payment.
6. Follow-up system.—The several methods of indexing, numbering,
and filing reports have been discussed in the preceding pages in
which the advantages and disadvantages of each system were pointed
out. Each commission should have an adequate follow-up system
by means of which it may keep itself constantly informed of the his­
tory of each accident.
SOLVENCY OF STATE FUNDS.

SOLVENCY OF STATE FUNDS.

The data herewith presented relative to the solvency of State
funds, including premium income, reserves, surplus, dividends, etc.,
were not obtained through an actuarial audit of the several funds
but were furnished the bureau by the several commissions or were
taken from their financial statements as found in their published



52

COMPARISON OF WORKMEN ?S COMPENSATION INSURANCE.

reports. The actuarial solvency of a State fund depends, first, upon
adequate insurance rates and, second, upon sufficient reserves. The
policy of the various State funds differs materially as regards rates,
reserves, and dividends. In some of the States (British Columbia,
Montana, Ontario, and Washington) it is the policy of the com­
mission to charge rates sufficient only to meet the costs of their cur­
rent accidents, including, however, reserves for .deferred payments
in fatal and permanent disability cases. The commissions in these
States do not aim to carry a large surplus. If the rates charged
produce a surplus beyond the requirements of the accidents occur­
ring during the year, the rates or assessments are reduced accord­
ingly. On the other hand, if the rates are found to be inadequate
the assessments are increased the following year.
A majority of the funds, however, have adopted the policy of
charging rates sufficient not only to meet the incurred cost of all acci­
dents but also to build up an adequate catastrophe reserve and
surplus. When this surplus becomes more than sufficient to meet
all outstanding obligations the excess over and above the amount
necessary to maintain the solvency of the fund and the stability of
the rates is returned to the employers as dividends.
CLASSIFICATIONS.

In 5 45 States the industrial classifications are formulated in the
compensation law. The commissions, however, have authority to
modify and increase or decrease these classifications, which has been
done in all of these States.
In the other States the commissions have either adopted the man­
ual classifications of the National Workmen’s Compensation Service
Bureau in whole or in part or have built up classifications of their
own. The number of classifications vary considerably among the
several States, ranging from 7 classes and 46 subclasses in Nevada
to several hundred in Ohio and New York.
RATES.

In three46 States the basic rates for the various classifications are
enumerated in the compensation act. These rates, however, may be
modified either by changing the classifications or by changing the
number of assessments. The basic rates are supposed to oe suffi­
cient to meet the losses of the respective classifications. As a rule,
however, basic rates have been found to be more than adequate to
meet the compensation losses. It is the practice, therefore, in a
number of States47 to levy monthly or quarterly assessments just
sufficient to meet the losses as they occur. As a result, in most of
the classifications the full basic rates are seldom charged. The num­
ber of assessments is determined by the condition of the fund of each
class. In Washington the commission has gone to the extreme of
making no assessments in successive years in several classifications
because, since there had been no severe losses in those classes, each
class still showed a sufficient surplus. Some of the classes for which
only a few assessments have been made include such extremely
45 B roitis hn aC, oO regboia ,,
46 M n ta lu m n

M o n ta n a , O n ta rio * O re g o n , a n d W a s h in g to n .
a n d W a s h in g to n .
" B r i t i s h C o lu m b ia , M o n ta n a , O ntario), a n d W a s h in g to n .




SOLVENCY OF STATE FUNDS.

53

hazardous classifications as powder and fireworks manufacturing.
Catastrophe losses in these classifications occur infrequently, but
when they do occur the losses are severe. Instead of charging a
rate which will reflect the natural hazard of this classification, the
commission collects annually only a sufficient amount to cover the
losses during the year. When, therefore, a catastrophe does occur the
fund for this class will be inadequate to meet the losses and conse­
quently the fund of this class will be temporarily insolvent and its
losses must be borne by the other classes.
In the other States the rates charged by the fund are intended to
reflect the hazard of the classification in the long run. No assess­
ments are m^de by these State funds. In all of the competitive
State funds, except California, the rates charged are lower than those
charged by private stock companies. These rates range from 10 per
cent less in Colorado and Pennsylvania to 15 per cent less in New
York; 15 to 25 per cent less in Idaho; 20 per cent less in Utah; and
25 to 30 per cent less in Michigan. The rates in Maryland and
Montana are also somewhat less than those of the stock companies.
The California fund charges the same rates as those of private com­
panies.
In the exclusive State funds the relationship between the rates
charged and those of private insurance carriers is not known inas­
much as there exists no basis of comparison. Furthermore, because
of the many complex factors involved, as already explained, it is
practically impossible to compare the rates of one State with those
of another.
In most of the States the rates charged by the State funds are not
subject to supervision and regulation by State insurance departments.
It is maintained that because the right of the funds to reject un­
desirable risks is circumscribed by law, they should have greater
freedom than private insurance companies with respect to rates. It
is further contended that the power of supervision over rates if exer­
cised by a hostile insurance department would hamper a State fund,
if not actually put it out of business.
MERIT RATING.

All of the State funds, both exclusive and competitive, with the
exception of Montana, have put into effect some form of merit rating.
Idaho, Maryland, Ohio, Oregon, and West Virginia have adopted
an experience rating system, whereas the other State funds have
either a schedule rating system or a combination of schedule and
experience rating. The general effect of merit rating has been to
reduce the basic rates.
RESERVES AND SURPLUS.

The actuarial solvency of a fund means that at any given time the
assets of the fund are sufficient to meet all outstanding liabilities and
obligations. This would include adequate reserves covering all out­
standing claims or deferred payments, unreported accidents, re­
opened claims, future administrative expenses, and any other con­
tingent liability. ’I n addition it is also desirable to have a catastrophe
reserte to take care of the catastrophe hazard and an additional sur­



54 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.
plus to meet exceptional and fluctuating losses. The adequacy of the
reserves and surplus as shown in the financial statements of the funds
depends upon whether proper actuarial methods were used in com­
puting the reserves. The bureau, as already noted, did not make an
actuarial audit of the funds, and consequently can not vouch for the
accuracy and adequacy of the reserves and surpluses contained
therein. Several State funds have been audited by insurance depart­
ments or by independent actuaries and accountants, and in each case
the funds were shown to have been exceptionally sound financially.
It would be desirable to have an impartial audit made of each fund
annually by some outside competent body. The New York, Ohio,
Oregon, Pennsylvania, and Montana funds have recently been
audited by independent actuaries. The Washington fund is exam­
ined and audited annually by the insurance department, which com­
putes the fund’s reserves. California and Utah are subject to the
State reserve law (a percentage of the premiums), as are other in­
surance carriers. Idaho, Maryland, and North Dakota funds have
engaged as consulting actuary the actuary of the Ohio State fund,
who determines the rates and computes the reserves.
CLAIM RESERVES.

In California and Utah the reserves for claims are determined in
accordance with the State insurance laws. In California 70 per cent
of the premiums are required to be set aside for reserves, while in
Utah the fund sets aside 85 per cent of its premium income as
reserves. In the other State funds the claim reserves are computed
upon the case system, i. e., each claim is valued at the time of the
award and a reserve covering the probable incurred cost of each claim
is set aside. In death cases it is the general practice to compute the
reserve in accordance with the experience of the American Mortality
Table or some modification thereof. Some funds take into account
the remarriage factor in computing death reserves, while others do
not, but turn back into the accident fund the unused reserve at the
time of the remarriage of the widow. The West Virginia fund, in
case of death or permanent total disability, sets aside as a reserve
a flat amount in each case irrespective of the number of dependents
or liability involved in that particular case.
In permanent total disability cases it is the usual practice to com­
pute the reserves in accordance with the experience of the American
Mortality Table, except that West Virginia, as already noted, sets
aside a flat amount.
In permanent partial disability cases it is the usual practice to set
aside the total award as a reserve, except that in some States the
mortality factor is taken into account.
As regards temporary disabilities, two methods have been adopted
for the computation of reserves: (1) The reserve is based upon an
estimate of the probable disability in such claims as are still open at
the end of the fiscal year, or at the time that the financial statement is
made; this probable disability is usually estimated bv the claims
adjuster, the estimate being based upon the opinion of the medical
adviser; (2) the reserves are computed in accordance with a table
of values which shows the probable disability of temporary disability
cases. It has been found from experience that the future disability



SOLVENCY OF STATE FUNDS.

55

of injuries of a temporary or indeterminate nature varies directly
with the past disability of such cases. In other words, the longer
the man is disabled the less chance he has of recovering, and injuries
which have disabled a workman for two years will probably result
in permanent total disability.
CATASTROPHE RESERVES.

The catastrophe reserve has a twofold purpose: (1) To protect
the solvency of the fund against exceptional catastrophe losses; and
(2) to equalize the rates between the classifications. Generally speak­
ing, a catastrophe is a sudden exceptional and unforeseen disaster
which can not be anticipated and is liable to strike anywhere,
although some classifications, such as coal mining and powder manu­
facturing, are naturally more subject to a catastrophe hazard than
others. The theory is that the losses due to such a disaster should be
borne, either in whole or in part, by industry as a whole and not
by the classification in which the catastrophe happens to occur.
Most of the compensation laws provide that the State funds shall
set aside 10 per cent of their annual premium income as a catastrophe
reserve until such reserve shall equal $100,000 and 5 per cent there­
after until in the judgment of the fund the reserve is sufficient to
cover the catastrophe hazard of all the subscribers to the fund and to
guarantee the solvency of the fund. Some of the funds make no
distinction between the. catastrophe surplus and the general surplus
of the fund. The Washington fund does not provide a catastrophe
reserve.
Table 16 (p. 56) shows the catastrophe reserve and total surplus
of each of the funds. An examination of this table shows that many
of the funds already have more than an adequate surplus, while
others are rapidly approaching the adequacy stage.
DIVIDENDS.

The policy of the State funds as regards dividends differs. In
some of the funds (British Columbia, Ontario, Montana, Washing­
ton, and Utah) it is the policy to collect only sufficient premiums to
meet the cost of the accidents as they occur, and consequently no
dividends have been declared by these funds. Most of the other
funds have, declared annual dividends ranging from 5 to 46 per cent.
Many of the funds, despite the fact that the rates charged have been
considerably lower than those of private stock companies, have de­
clared annual dividends in addition to having accumulated a com­
fortable surplus.
COLLECTION OF PREMIUMS.

Some of the State funds have experienced difficulties in collecting
premiums and are behind in their premium collections. This has
been due in most part to an insufficient clerical force. In several
of the States, however, the insurance policies are automatically can­
celed if the premiums are not paid within a specified period. Prac­
tically all of the State funds have a certain amount of uncollectible
premiums on their books, but such uncollectible debts probably do
not exceed those of the ordinary private business enterprise.



56

COMPARISON OP WORKMEN’S COMPENSATION INSURANCE.

AUDITING PAY ROLLS.

Most of the State funds have' an insufficient force of pay-roll
auditors, and consequently many risks, especially the minor ones,
are never audited, while others are audited irregularly. Moreover,
it is the policy of some of the State funds (Washington, for ex­
ample) not to audit employers’ pay rolls except in special cases or
upon request. The inadequate auditing of pay rolls is a serious
problem to the State funds, and thousands of dollars of premiums
are lost because these pay rolls are not audited regularly, if at all.
EXPENSES, PREMIUM INCOME, SURPLUS, AND DIVIDENDS OF
STATE FUNDS.

Table 16 shows the annual administrative expenses, premium in­
come, surplus, and dividends of State funds. The expenses and
premiums are all for the year 1920, except those for West Virginia,
which are for 1919. The surplus and dividends are as of 1920, except
for the following, which are as of 1919: West Virginia and Montana.
None of these data was obtained as a result of an actuarial audit, but
was furnished by the funds or taken from their published financial
statements. In some of the States the fund is located in the State
Capitol, and a fair rental value must be added to the reported
expenses tp make them comparable with the expenses of funds
located in rented buildings (see Table 7, p. 24).
T able

16.—EXPENSES, PREMIUM INCOME, SURPLUS, AND DIVIDENDS OF STATE
FUNDS.
S tate.

E x c lu siv e funds:
B ritish C olu m b ia..................
N ev a d a ___ . . ............................
O h io.............................................
O ntario.........- ...........................
O regon........................................
W a sh in g ton .............................
W est V irg in ia .........................
T o ta l........................................
C om p etitive funds:
C alifornia..................................
C olorado.....................................
Id a h o ...........................................
M aryland...................................
M ich igan ...................................
M on tan a....................................
N ew Y ork .................................
P en n sylv a n ia ..........................
U ta h ..........................................
T o t a l.....................................
G rand to ta l..........................

Surplus.
A nn u al
adm in is­ pA nn u al Catastro­ T otal sur­ T ota l d iv i­ R ein ­ pEx­
rem ium
sur­
en se
tra tive
p lu s,in clu d ­ d en d s
exp enses.1* in com e. p h e sur­ in g catas­ declared. ance. ratio.1
8
7
6
p lu s.
trophe.
$81,806 *$1,766,879 $49,431
338,184
34,061
86,740
443,148 16,005,454 2,208,625
207,052 5,475, 273 151,639
202,208 4 2,931,770
95,192
203, 595 2,590, 758
<*)
80,423 2, 410, 238 330, 894
1,252, 293 31,518, 556 2,922,521

N on e.
$131,671
3,350,000
N on e.
506,616
N on e.
N on e.
3,988,287

N o ....
N o ....
N o ....
N o ....
N o ....
N o ....
N o ....

4.6
10.1
2.8
3 .8
6 .9
7 .9
3.3
4.0

511, 357 4,360,397
51,997,660 2,060, 291
460,116
6 17, 800
262,383
146,447
34,392
354,196
86,294
246,400
N on e.
211,682
26,000
352, 465 25% in 1920
68, 775
42,986
402,685 148,623
148,623 10% y ea r ly
6 9,000
225,508 254,026
254,026
N on e.
385,665 3,573,047 802,424 1,608,063 1,946,516
336,103 3,186,668 509,340 7 3,266,145
389,537
17,412
209,010
8 134, 407
32,815
1,380, 715 12,983,309 1,869, 482 8, 270,172 4,575,606
2,633,008 44,501,865 4,792,003 13,800,579 8,563,893

N o ....
N o ....
Y e s .. .
Y e s .. .
N o ....
N o ....
N o ....
Y e s .. .
N o ....

11.7
3 .9
9 .7
12.3
10.7
4 .0
10.8
10.5
8 .3
10.6
5~9

* $49,431
198,686
3,742,764
* 151,639
648,261
(»)
539,626
5,530,407

=

1 Actual expenses.
some States interest . No account has been taken of differences in service rendered or of the fact that in
*Includes rent is furnished by State.
*It is on account of the fund not to maintain a general surplus over and above the present and future lia­
bilities the policy of past accidents. amounting to $198,689.
*
6Includes employees’ contributions
$100,000
«Includes $500,000 originally appropriated for expenses.
Approximately. originally appropriated.
7Includes
8 Includes $40,000 originally appropriated for expenses.



ACCIDENT AND COMPENSATION STATISTICS.

57

ADMINISTRATION OF MEDICAL SERVICE.

It is the duty of industrial commissions not only to supervise the
payment of compensation but also to see that proper medical and
hospital service is furnished to injured employees under the com­
pensation act. The State funds, however, both exclusive and com­
petitive, must actually furnish medical and hospital service to the
injured employee of the employer insured in the fund. An excep­
tion to this may be found in the far western States, where the con­
tract hospital system prevails. Under such a system the employer
enters into a contract with a commercial hospital whereby the latter
agrees to furnish proper medical and hospital service to the em­
ployer’s workmen. Under the contract hospital system the employer
receives a reduction on his premium rate and the fund is relieved
from the duty of providing the medical and hospital service.
In New York the medical treatment for a large proportion of the
State fund’s New York City cases is handled by a special private
medical service. This service has a central office in New York, con­
ducts a physiotherapy hospital, and has about 60 doctors in Greater
New York. In case of an accident the workman is referred to the
nearest doctor for attention. A fund investigator investigates the
case. The injured workman is called in and examined by the medical
adviser of the fund. He is then referred to the service or to other
physicians or specialists. The service makes periodic reports to the
fund as to the progress of the case.

The Industrial Accident Commission of Oregon has established
two physiotherapy laboratories, one located at Salem and the other
at Portland. Each of these laboratories is in charge of a skilled
surgeon and several nurses who administer physiotherapy treatments
to the claimants.

Inasmuch as many of the injuries sustained by workmen under
compensation acts involve difficult medical questions, a large majority
of the funds and some commissions have found it desirable to employ
medical advisers. All of the exclusive funds have such medical ad­
visers, except that in Nevada, North Dakota, Oregon, and West Vir­
ginia the adviser devotes only part of his time to the work of the
commission. . Of the nine competitive funds, five48 have regular
salaried medical advisers, while four49 have not. Of the 13 indus­
trial commissions here considered six50 have medical advisers while
seven have not.
It is the duty of the medical adviser to examine claimants, make
medical reports on cases, select impartial physicians for examination
olfclaimants, pass upon the reasonableness of medical and hospital
fees, and particularly to rate permanent disabilities.
ACCIDENT AND COMPENSATION STATISTICS.®
For a number of years the United States Bureau of Labor Sta­
tistics and the committee on statistics of the International Associa-

48 California, Idaho (part time), Maryland (part time), New York, and Utah (part
time).
48 Colorado, Michigan, Montana, and Pennsylvania.
50 California,, Illinois, Maryland (part, time), Massachusetts, New York, and Penn­
sylvania have have not.advisers; Colorado, Idaho, Indiana, Michigan, Montana, Utah,
and Wisconsin medical
° This vol. 7, was 2, of the proceedings of the society.
lished in section part prepared by the author for the Casualty Actuarial Society and pub­



58 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.
tion of Industrial Accident Boards and Commissions have endeavored
to promote the standardization of industrial accident and compensa­
tion statistics in the several States. With this end in view the com­
mittee has formulated standards in accident reporting, classification
of industries and causes, and methods of presentation. Though every
year finds the statistical reports of industrial commissions more
accurate and reliable there is still need (1) for greater completeness
and adequacy of data and (2) for harmony in methods of pre­
sentation.
No State commission has a record of all the industrial accidents
occurring within the State? The nearest approach to complete re­
porting perhaps is found in California and Massachusetts. In most
of the States only employers under the compensation act are required
to report accidents. Some States require all accidents to be reported,
some require only tabulatable accidents,51 and others require only
compensable accidents. Again, in some Statesl the published sta­
tistics include those accidents the reports of which were received
during a given period irrespective of the date of their occurrence; in
some they include the accidents occurring within the period covered
irrespective of when they were reported; while in other States they
include only cases which were closed or settled or adjudicated during
the period regardless of when the accident occurred or when the
reports were received. Several States attempt to give the total com­
pensation and medical costs incurred within the year, but most of
the commissions, in so far as they give any data as to cost at all, give
only the compensation losses paid during the year or the amount
awarded on closed cases, and practically none gives the total medical
costs either paid or incurred. So much for the data. As regards
methods of presentation similar lack of uniformity exists. The
various and varying classifications of industries and causes of acci­
dents in the several States have made futile any attempt at com­
parison. As a consequence most of the State accident statistics have
been neither reliable nor comparable. As a matter of fact, most of
the industrial commissions, immersed in details of administrative
and judicial procedure, have had little time for statistics. The
increasing demand, however, for exact information as to the preva­
lence, cause, and cost of industrial accidents in the United States has
induced the commissions to devote more attention to statistical work.
The fact that the accident reporting provisions of the compensa­
tion acts in many States apply to all employers, whereas the com­
pensation provisions do not, makes the compilation of complete and
comparable accident statistics difficult. The California commission,
in presenting cost data, uses only compensable injuries, but in its
c^use and industry classifications all tabulatable injuries are included.
In the following pages an analysis and evaluation of the accident
statistics as published in a number of recent State compensation com­
mission reports are attempted. In order to obtain a clearer concep­
tion of the adequacy or inadequacy of these statistics there is here
51 A ta b u la ta b le a c c id e n t i s o n e in w h ic h t h e d is a b ilit y e x t e n d s b e y o n d t h e d a y , tu r n ,
o r s h if t o n w h ic h t h e a c c id e n t o cc u rr e d .




ACCIDENT AND COMPENSATION STATISTICS.

59

presented what may be considered the minimum requirements in the
way of statistical presentation of accident and compensation data:
1. All accident statistics should be given by year of occurrence,
preferably the calendar year; i. e., the number, severity, and cost
of all accidents which occurred within a given period should be
treated as a unit. This is essential if accurate comparisons are to.be
made. If the cases closed, adjudicated, or reported within the year
are taken as the unit, as they are in most States, it will impair the
comparison of one year with another and will make it impossible to
compute reliable accident rates.
2. The total annual number of industrial accidents in the State
classified by extent of disability. By extent of disability is meant
the number of deaths, with and without dependents, the number of
permanent total disabilities, of permanent partial disabilities, sepa­
rated into dismemberments and loss of use, and of temporary total
disabilities classified by period of disability.
3. The total incurred compensation and medical costs classified by
extent of disability.
4. The annual number of accidents in each industry classified by
extent of disability.
5. The classification of accidents by cause and extent of disability.
The foregoing requirements may be regarded as the minimum. In
addition it is desirable that the medical and compensation costs for
each industry be shown. It is also essential to show accident fre­
quency and severity rates by industry in order (1) to ascertain the
relative hazards in the various industries, and (2) to show the trend
of the hazard. In other words, it is extremely desirable to measure
and evaluate the effect of workmen’s compensation laws and the
efficacy of safety work in preventing accidents.
To what extent the State accident reports measure up to the above
requirements may be seen from the following analyses. An analysis
of all the States has not been attempted. Bather, typical States are
taken, ranging from Colorado, which has practically no accident
statistics, to California, Massachusetts, and Nevada, whose statistical
tabulations probably approximate more closely to the recommenda­
tions of the committee on statistics than those of any other States.
Unfortunately two of the largest industrial States (New York and
Ohio) have published no accident statistics whatever for a number
of years.
COLORADO.
The latest report of the Colorado Industrial Commission devotes
111 pages to workmen’s compensation, but 88 of these pages are
taken up with a description of the compensation awards, which con­
tains the claim number, the name of the parties in interest, the dis­
ability involved, and the amount of the award. The report contains
a single table showing the total number of accidents received, the
number of claims, awards, compensation agreements, types of in­
juries, average weekly wages, etc. There is no table showing the
total number of accidents classified by extent of disability or the
cost of such accidents; neither is there any table showing the classifi­
cation of accidents by industry or cause.



60

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

INDIANA.

The report of the Indiana Industrial Board contains numerous
detailed tables classifying accidents by industry and cause, but
owing to the unsatisfactory character of the classifications prac­
tically no use can be made of these tables. The so-called industry
classification embraces 273 separate classifications arranged in alpha­
betical order. ^Apparently no attempt has been made to separate
classifications into broad industrial groups, nor is it possible in
many cases to determine whether the item refers to manufacturing,
trade, or personal service. Industries and occupations are run to­
gether—e. g., the industry classification includes airplanes, dentists
and dental supplies, dairy products, physicians, fireproof articles,
hardware, newspapers, and musical instruments. It is impossible to
know whether the items “ airplanes ” or “ musical instruments ” mean
their manufacture, sale, or operation. Furthermore in a large num­
ber of classifications (e. g., boots and shoes and lumber) manufac­
turing and dealers are combined in a single classification. Again,
many synonymous industries such as “ iron and steel ” and wsteel and
wire,” and “ newspapers ” and “ printing and publishing,” are given
as separate classifications.
The cause classification table is divided into 10 main classifica­
tions which represent the manner of occurrence rather than the cause.
The item “ belts ” is found seven times, but no total for belts is given,
nor does the table contain subtotals for any of the main classifications.
The report also contains tables showing classifications of accidents
by nature and location of injury, wage, and age, but no totals are
given in any of these tables. In order to obtain the number of frac­
tures, for example, one must add all the individual items.
Another table shows the duration of disability by days, but in over
50 per cent of these accidents the period of disability is not given.
This is due to the fact that the accident report is coded and punched
when received, and if the disability has not terminated when the re­
port is received the disability period is not punched. This practi­
cally means that only the short-term disability accidents are included
in the classified table and the results consequently are not only in­
accurate but misleading.
Both the industry and cause classifications give merely the total(
number of accidents for each classification. All the tables show dis­
tribution of accidents by months—a detail that is unnecessary.
The report contains no table showing the total number of accidents
classified by extent of disability, nor does it contain any data as to
incurred compensation and medical costs. It does show, however,
the amount paid out on closed cases during the year.
WASHINGTON.

The latest report of the Washington Industrial Commission con­
tains numerous tables showing costs and classification of accidents
by industry and cause. Three financial statements are given, one
each for the reserve fund, accident fund, and medical aid fund. In
each statement the experience by industrial classes is given. The
statement for the reserve fund shows the amount of compensation
paid and reserves set up for each class, while that for the accident



ACCIDENT AND COMPENSATION STATISTICS.

61

fund shows the amount of claims paid and premiums received during:
the year. The report of the medical aid fund, showing the amount
of medical benefits paid and medical premiums received, is kept
separate from that of the compensation fund. None of these tables
shows the amount of earned premium or incurred losses for any given
period. They merely show the amount of premiums collected and
compensation losses paid during the year.
Another series of tables shows the number of accidents and the
amount of compensation incurred, classified by nature and location
of the injury, but the tables do not show what period is covered.
Another table classifies the total accidents by cause and industry.
There is no particular value in such a classification, especially if the
accidents are not classified by extent of disability. A further table
shows the wage loss by industry. There is nothing to show, however,,
whether or not the waiting period has been included or whether the
wage loss given covers temporary total accidents only or also includes
permanent partial disability accidents, nor is the amount of com­
pensation given in order that this might be compared with the wage
loss.
The best table in the report shows the cost and severity of injuries
by cause. This table is in two parts, part one dealing with injuries
due to mechanical causes and part two dealing with injuries due to
nonmechanical causes.
The Washington report does not contain the following informa­
tion: (1) The total number of accidents occurring during the year
classified by severity; (2) the incurred losses during the year for
each industry (only the amount paid out and reserves set up on
claims adjudicated during the year are given) ; (3) the earned pre­
miums during the year for each industry (only the premiums
collected during the year irrespective of the period for which they
were earned are given, it being impossible, therefore, to correlate
the earned premiums with the incurred losses) ; (4) classifications
of accidents by cause and severity; (5) adequate headings or captions
to the several tables to denote just what accidents are included and
what period is covered.
OREGON.
The accident and compensation statistics contained in the latest
report of the Oregon Industrial Commission are exemplary from
the standpoint of method, but deficient from the standpoint of data,
included. A basic compensation table shows for each industrial
classification the pay roll, total number of days worked, premiums
received, premium rate, claims paid and awarded, administrative
expenses, pure premium per $100 pay roll, and pure premium per
workday. The table is deficient in that it does not show the earned
premiums or the incurred losses for a given period. It merely shows:
the premiums collected and the compensation losses awarded and
paid during the year. As in the case of Washington, it is impossible,,
therefore, to correlate earned premiums with incurred losses.
The report contains a number of accident tables showing the classi­
fication of accidents by cause and extent of disability. All of these
classifications, however, are based upon cases closed during the year
and not upon the accidents happening during the year. It is im­
possible accurately to compare one year with another. The Oregon
74832°—22-----5




62

COMPARISON OF WORKM EN^ COMPENSATION INSURANCE.

commission is one of two commissions (that of Nevada being the
other) which has computed accident frequency and severity rates
tfor each industry classification. Unfortunately^ however, these rates
are based upon closed cases and consequently it is impossible to
compare one year with another. Other tables show the compensaItion and medical*eosts by extent of disability; duration of temporary
total disability in permanent partial disability cases; causes of acci­
dents by extent of disability; number of remarriages of widows of
those receiving fatal injuries.
WISCONSIN.

The accident and compensation statistics published by the Indus­
trial Commission of Wisconsin, as in the case of Oregon, are excel­
lent as regards the form and method of presentation, but they are
based upon closed cases rather than upon the accidents occurring
within a given period. Moreover, in Wisconsin only compensable
accidents (those lasting over 7 days) are reported, the commission
having no record of noneompensable accidents. In this respect Wis­
consin differs from all of the other (States here considered.
The:basic compensation table shows the distribution of accidents
by extent of disability and the compensation and medical costs for
each; type of injury. The medical cost, however, does not include the
cost of noneompensable accidents. As already noted, these data, as
well as the tables which follow, are based upon closed cases. Other
tables published by the commission include the following: Classifica­
tion of accidents by cause and extent of disability; classification of
accidents by industry and extent of disability; classification of per­
manent disabilities, not dismemberments, by degree of disability,
showing the number and the amount of compensation and medical
aid paid in each case; number of dependents in fatal cases, and wages.
NEVADA.

The Nevada Industrial Commission was one of the first to publish
accurate and useable accident and compensation statistics. It was the
first State to undertake the computation of accident rates by indus­
try. The basic compensation table shows for each industrial class
and subclass the number of full-time workers, pay roll, earned pre­
miums, incurred compensation losses in the case of death, permanent
disability and temporary disability, the average compensation in­
curred,per case, and the pure premium per $100 of pay roll. This,
table, however, does not show the medical cost, that being presented
in another table, because of the provision in the law which created a
separate medical aid fund. Other tables show the accident frequency
and severity rates by industry. These rates are stated both in terms
of full-time workers and pay roll. The Nevada commission has pub­
lished no classification of accidents by cause.
MASSACHUSETTS.

The Massachusetts Industrial Accident Board is one df the few
compensation commissions which from the beginning have jfiven
serious consideration to the question of accident statistics. While
some of the statistical tables and classifications in the earlier reports
are subject to criticism the latest report follows closely the recom­
mendations of the committee on statistics. The board itself compiles



ACCIDENT AND COMPENSATION STATISTICS.

63

jno data -as to compensation costs. It does, however, publish an an­
nual statement, based upon returns made by insurance companies to
the board, showing the amount of compensation and medical losses
paid and outstanding on injuries reported during theifiseal year.
All employers in Massachusetts, whether or not under the compen­
sation act, must report all accidents to the industrial accident board.
The various tables showing classification of injuries by industry,
cause, etc., therefore include all tabulatable accidents reported and
are not limited to those under *the compensation act. The following
accident tables and classifications are given in the report: Number
of accidents classified by industry and extent of disability ; number
of days lost on account of accidents, classified by industry and extent
of disability; classification of accidents by location and nature of
injury; classification by location, nature, and extent of disability;
classification by cause and extent of disability; sex and age classified
by type of injury; wages classified by industry; and conjugal con­
dition and dependency in fatal cases classified by industry.
The present tables show for each industry the number of tem­
porary total disabilities of from 1 to 3 days, 4 to 7 days, -8 to 10 days,
11 to 14 days, 2 to 4 weeks, 4 to 8 weeks, 8 to 43 weeks, 13 to 26
weeks, 26 to 52 weeks, and over 1 year. It would seem sufficient, as
recommended by the committee on statistics, to reduce these 10
groups to 3, as follows: One week and under, over 1 to 2 weeks, and
over 2 weeks. No particular value is gained by showing for each
industry such a minute distribution of temporary disabilities. On
the other hand, it would be desirable to show the distribution of
temporary total disabilities as a whole by days up to 14: days and
then by weeks up to ,26 weeks. It would be of advantage also to
ascertain the number of employees in each industry, in order that
accurate accident frequency and severity rates may be computed.
CALIFORNIA.

The C a l if o r n i a Industrial Accident Commission, in its latest re­
port, follows the recommendations of the committee on statistics as
regards the classifications and tabulation of accidents more closely
perhaps than any other State. Two tables as to compensation costs
are given. One shows the amount of compensation incurred on
account of compensable injuries occurring during the calendar year
classified by extent of disability. The other shows for each insur­
ance carrier the amount of incurred compensation on .account of
compensable injuries by extent of disability. Neither table, however,
shows medical losses. In fact these data are not shown anywhere
in the report. In the tables showing classification of injuries by
industry and cause all tabulatable accidents are used. The tabula­
tions include the following: Classification of accidents by industry
and extent of disability; classification by cause and extent of dis­
ability ;glassification by location and nature of injury; permanent
partial disabilities classified by degree of disability and temporary
total disabilities by day and week periods; fatal cases classified by
age and dependency. Frequency and severity rates are not given.
A particularly useful feature of the California report is the inclu­
sion of explanatory notes which show what data are included in the
tables and the period covered.



64 COMPARISON OF W ORKM ENS COMPENSATION INSURANCE.
An examination of the accident and compensation statistics in the
foregoing State reports shows the greatest needs to be the following:
1. Adequate headings or explanatory notes which show just what
is included in the various statistical tables and what period they
cover.
2. In the presentation of accident and compensation statistics the
unit should be the year of occurrence; i. e., all the accidents which
occurred within a given period, irrespective of the date of reporting
or adjudication, should be treated as a unit. In no other way can
accurate comparison be made of one year’s experience with another.
If necessary the disability period or outstanding losses in open cases
should be estimated.
3. In presenting compensation costs the total incurred losses (paid
and outstanding) shouldbe given. Merely to show the amount paid
out during or for a given period is of little practical value, and in
addition is likely to be misleading. Showing compensation costs of
closed cases only prevents accurate comparison of one year with an­
other. Compensation and medical losses should be shown separately.
4. In presenting compensation costs only compensable accidents
should be used, but in other tabulations all tabulatable accidents
should be included.
5. A distribution table of all accidents occurring within the year
by extent of disability should be given.
6. In tabulating accidents by industry and cause it is essential that
they should be classified by extent of disability, i. e., the number of
deaths, permanent partial disabilities, temporary total disabilities,
etc., for each industry or cause should be given. Merely to show the
total number of accidents occurring in each industry, without taking
into account the question of severity, is misleading and of little value.
7. The standard classifications and tables formulated by the com­
mittee on statistics of the International Association of Industrial
Accident Boards and Commissions should be followed. The reports
of the committee on statistics containing these tables and classifica­
tions are published in Bulletin 276 of the. United States Bureau of
Labor Statistics, a copy of which may be had upon request.
SELF-INSURANCE.
Most of the comparisons made heretofore have been principally
between private casualty companies and State funds. The following
is a brief discussion of self-insurers, i. e., those employers who under
certain conditions are permitted to carry their own risks. The selfinsurance privilege is usually limited to the larger employers. Prac­
tically all of the compensation States except those having strictly
exclusive State funds permit employers to carry their own risk sub­
ject to such safeguards as the law may prescribe. About one-half
of the compensation laws require self-insured employers either to
furnish proof of solvency or to deposit such security as is required
by the compensation commission or insurance department. In other
States they must deposit security in addition to furnishing proof of
solvency. Few of the State commissions, however, require deposit of
security in every case. They hold that it is not necessary in the case
of large companies with unquestioned assets. The filing of mere
financial statements, however, showing the assets and liabilities, is an



SELE-INSUKANCE.

65

insufficient guaranty of ability to meet long-continuing payments or
to withstand a catastrophe successfully. The financial statement
of a Wisconsin self-insurer showed net assets of $5,000,000, yet the
concern shortly afterwards went into the hands of a receiver.
Experience as to self-insurance has been reported to the bureau
by the compensation commissions of 21 States. In 15 of these
States no self-insured employer has failed or gone into the hands
of a receiver; 3 States reported one failure each and 1 State reported
two failures, but in all these cases the compensation claims were paid
either by the receiver or through security which had been deposited.
Only two States reported failures—one small conern in each State—
which resulted in several claims being unpaid.
While the security record of self-insurers has been excellent, this
favorable experience may be due in part to good fortune or pure
chance. It is also quite possible that compensation commissions are
not always cognizant of every failure of self-insured employers,
because such failures may not be reported to therm This was
actually the case in Illinois. In such cases the injured claimant
usually consults an attorney, who takes the matter before a bank­
ruptcy court and the commission remains in ignorance of the facts.
Probably the greatest social benefit derivable from self-insurance
is the impetus it gives to accident prevention. Self-insured employ­
ers at least have a strong incentive to prevent accidents, because there
exists a more direct relationship between their accidents and com­
pensation costs. They are also in a position to pay compensation
promptly, but, strange as it may seem, their record in this respect is
no better than either the State funds or private companies.

One important objection to self-insurance is that it introduces
the incentive to deny or pare compensation claims, since the total
accident cost to the employer is dependent not only upon the number
and severity of his accidents but also upon the cost of those accidents.
Consequently, if he can evade payment or reduce the amount he will
thereby reduce his total accident cost. Many self-insured employers
do not resort to such practices. They not only pay what the law
specifies, but some even pay full wages during disability and furnish
unlimited medical service. However, a number of industrial com­
missions have stated that many self-insured employers take advan­
tage of their peculiar position under the law to evade their just
compensation obligations. Some of these employers will make a
great show of generosity as regards temporary disabilities, but
suddenly develop a niggardly or technical spirit in case of major
permanent disabilities or other costly injuries.
Probably the most important objection to self-insurance is that
it makes the employer practically the final arbiter in the settlement
of compensation cases. The unwillingness of the employees to
antagonize their employer through fear of losing their jobs will
many times prevent them from appealing to the industrial commis­
sion. This latent power of intimidation possessed by self-insured
employers, though they may be entirely just, effectively inhibits
injured workmen from seeking redress from the commission. The
commission, moreover, since it obtains its information from the acci­
dent reports of the employer, is not in a position to judge of the
merits of the case unless the injured employee brings the matter to
its attention.



06

COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.

EFFECT OF WEEKLY MAXIMUM IN REDUCING COMPEN­
SATION BENEFITS.

Most of the compensation laws provide that the compensation
shall equal a certain percentage of the employee’s wage received at
the time of the injury. This percentage ranges from 50 to 66§.
However, practically all of the States, in addition to the percentages,
Vave weekly maximums beyond which the amount of compensation
h
can not go. This not only limits the amount of compensation still
further but virtually vitiates and nullifies the percentages. For
example, it is misleading to speak of a State paying 66| per cent of
wages, as is the case in New Jersey, when the same law also provides
a weekly maximum of $12. Therefore, instead of receiving 60, 65,
or 66| per cent the injured workman may actually receive only 20,
25^30, or 35 per cent of his wages.
.
.

The adverse effect of the weekly maximum and other limitations
in reducing the compensation benefits to injured employees was
brought out in a paper read before the seventh annual meeting of the
International Association of Industrial Accident Boards and Com­
missions at San Francisco in 1920, by Mr. E. H. Downey, actuary of
the Pennsylvania Insurance Department. He said:

The bold fact is that on any reasonable estimate of wage loss the benefits
payable under the Pennsylvania compensation act of 1019 will amount to not more
than .20 per cent of the economic cost of industrial accidents, to say nothing of
occupational diseases. The individual wage earner and his family in Pennsyl­
vania still bears, not one-half but four-fifths of the wage loss incident to
industrial injuries.

The effect of these limitations is further shown in Table 17, the
data in which were prepared by the Pennsylvania Hating and Inspec­
tion Bureau. This table shows the percentage the compensation re­
ceived was of the wage loss in 1,579 temporary disability accidents in
Pennsylvania in 1920.

T able

17.—PERCENTAGE COMPENSATION WAS OF WAGES IN 1920,1 TEMPORARY DIS­
4,579
ABILITY ACCIDENTS IN PENNSYLVANIA IN
Percentage compensation was of wages.

Temporary disa­
bility accident

Number. Per- cent.
1 undunder Spereent..
5 and under 10 per cent.,
IQ and under 15 per cent.
15 and under 20 per cent.
20and under 25 per cent.
25 and under 30 per cent.
30 and under 35 per cent.
35 and under 40.per cent.
40 and under 45 per cent.
?45and under 50 per pent.
60-aod under 55 per cent...
.55and under 60 per cent__
60 and under65 per cent__
65 and imder70percent_
70 and under 75 per cent__
75and.under 80 per cent...
80and under 85 per cent__
Total (22.7 per cent)1

1Data prepared by the Pennsylvania Rating and Inspection Bureau.



85
385

538
663

692

693
452
442
-.294
197

105
21
8
1
1
1
1
4,579

1.9

8.4

11.8

14.5
15.1
15.1

6.4

4.3

2.3

.5
.3

m o

EFFECT OF WEEKLY MAXIMUM IN REDUCING BENEFITS.

67

It will be noted that the number of cases in which the injured
workman received 60 per cent (60 being the statutory percentage in
Pennsylvania) or more was only 0.3 of 1 per cent. The number of
cases in which the workman received 50 per cent or more was only
3.1 per cent. Taking the 4,579 cases as a whole, the compensation
was 22.7 per cent of the wage loss.
The following series of four tables show, for several specified
occupations, the effect of the weekly maximum in reducing the
statutory percentages in the several compensation States.
Table 18 shows the weekly maximum for each of the more im­
portant industrial States. It also shows the standard union wages,
as of May 15, 1920, received in the following occupations: Brick­
layers, carpenters, machinists, molclers, painters, plasterers, sheetmetal workers, and structural-iron workers. These weekly wages
were computed from the union wage scales as published by the
Bureau of Labor Statistics. Most of these occupations are in the
building trades. Moreover, the figures show wage rates rather than
earnings. The actual earnings have not been obtainable. The weekly
figures given were derived by multiplying the standard minimum
hourly rates by the minimum hours per week. It has been assumed
that the workers were employed on full time the whole year, which
of course is not true for the building trades. On the other hand,
the actual hours worked per week and the actual wage rates were
probably greater than the minimums upon which the computed
weekly wages were based.

T a ble

COMPARISON OF STATUTORY WEEKLY MAXIMUM COMPENSATION AND
STANDARD WAGES RECEIVED IN 1920, BY SPECIFIED OCCUPATIONS.
Standard wages received in 1920.
-Statu­
Ma­
tory
chin­
Struc­
weakly Brick­ Car­ ists, Mold- Paint­ Plas­ Sheet- turalState and eity.
maxi­ layers. pen­ manu­ ers, ers. terers. metal iron
work­ work­
ters. factur­ iron.
mum.
ers. ers.
ing
shops.

18 .—

S12.00
Alabama (Birmingham)................ /\ 12 15.00 j$44.00 $33.00 $37.68 $38.40
California (San Francisco)............. 20. 83 J 55. 00 46.77 39.60 38.72
Colorado (Denver)........................... 10.00 55.00 49.50 34. 56 38.40
Connecticut (New Haven)............. 11. 00 44.00 44.00 38.40 (3)
112.00
Illinois (Chicago)............................. /\ 2 1 5 . 0 0 } 55.00 55.00 44.00 50.40
Indiana (Indianapolis)...... ............ 13.20 55.00 45.00 36. 00 43.20
Kentucky (Louisville).................... 15.00 50.60 35. 20 (*) 39.84
Louisiana (New Orleans).............- 18.00 44.00 36.00 38.40 38.40
Maryland (Baltimore).................... 18.00 56. 25 39.60 36.00 45.02
Massachusetts (Boston)................. 16.00 44.00 40.00 43.20 43.20
Michigan (Detroit).......................... 14.00 55.00 44.00 52. 80 48.00
15.00 55.00 44.00 39.60 47.25
Minnesota (Minneapolis)...............
15.00 55.00 49.50 40.80 40. 80
Nebraska (Omaha).........................
New Hampshire (Manchester)___ 10.00 49. 50 49.50 24.00 34.80
New Jersey (Newark)..................... 12.00 .1 55.00 44.00 36.00 42.24
New York (New York).................. 20.00 55.00 49. 50 43.20 42.24
15.00 55.00 55.00 37.50 43.20
Ohio (Cleveland).............................
113.49
Oregon (Portland)........................... /t 222.50 } 55.00 44.00 38.72 41. 27
Pennsylvania (Pittsburgh)........... 12.00 } 49.50 39.60 (3) 45.02
Rhode Island (Providence)........... 14.00 50.60 44.00 (3) (3)
Tennessee (Memphis)...................... 11.00 55.00 44.00 48.00 44.28
Texas (Dallas).................................. 15.00 49.50 44.00 38.40 (3)
Utah (Salt Lake City)................... 16.00 55.00 49. 50 42. 00 42.00
Virginia (Richmond)...................... 12.00 45.00 34.08. 36.00 38.40
Washington (Seattle)...................... /\ 216.92 } 55.00 44.00 38.72 38.72
12.12
Wisconsin (Milwaukee).................. 14.63 } 55.00 37.40 36.00 (3)
1 With no dependents.
*Maximum with dependents.



$38.50 $33.00 $44.00 $44.00
46.77 50.00 49.50 ; 49.50
55.00 55.00 44.00 44.00
38.50 44.00 38.50 46.77
55.00 55.00 55.00 55.00
40.00 38.50 44.00 55.00
33.00 44.00 35.20 44.00
33.00 45.00 44.00 44.00
39.60 49. 50 35.20 55.00
40.00 40.00 44.00 .44.00
55.00 55.00 55.00 55.00
44. 00 49.50 44.00 -88. 50
44. 00 49.50 44.00 50.60
35. 20 49.50 20.99 44.00
44.00 55.00 44.00 49. 50
45.00 52.27 49. 50 49. 50
49. 50 55.00 55.00 55.00
.44.00 49. 50 44.00 49. 50
49. 50 50.60 39.60 44.00
39.60 40.00 44.00 44.00
44.00 44.00 44.00 44.00
44.00 49. 41 44. 00 44.00
44.00 55. 00 44.00 49. 50
31.20 33.00 42. 24 44.00
40.00 50. 00 44.00 49.50
37.40 38.50 32.40 44.00
3 No scale given.

68

COMPARISON OF WORKMEN^ COMPENSATION INSURANCE.

In Table 19 is shown a comparison of the statutory and actual per­
centages of wages received for 1920 in the occupations enumerated
above.
T able

19.—COMPARISON OF STATUTORY AND ACTUAL PERCENTAGES OF WAGES
RECEIVED AS COMPENSATION, FOR 1920, BY SPECIFIED OCCUPATIONS.
Actual percentage weekly maximum compensation is of
wages.
State and city.

Alabama (Birmingham)................ /t
California (San Francisco).............
Colorado (Denver)...........................
Connecticut (New Haven).............
Illinois (Chicago)............................. /\
Indiana (Indianapolis)...................
Kentucky (Louisville)....................
Louisiana (New Orleans)..............
Maryland (Baltimore)....................
Massachusetts (Boston)..................
Michigan (Detroit)..........................
Minnesota (Minneapolis)...............
Nebraska (Omaha).........................
New Hampshire (Manchester)___
New Jersey (Newark).....................
New York (New York)..................
Ohio (Cleveland).............................
Oregon (Portland)...........................
Pennsylvania (Pittsburgh)...........
Rhode Island (Providence)...........
Tennessee (Memphis).....................
Texas (Dallas)..................................
Utah (Salt Lake City)....................
Virginia (Richmond)......................
Washington (Seattle)................
Wisconsin (Milwaukee)..................

Statu­
tory
percent­
Car­
age. Brick­ pen­
layers. ters.
150.0
2 60.0
65.0
50.0
50.0
1 50.0
2 65.0
55.0
65.0
60.0
66.7
66.7
60.0
66.7
66.7
50.0
66.7
66.7
66.7
(4)
60.0
50.0
50.0
60.0
60.0
50.0
(4)
65.0

1 With no dependents.
2 Maximum with dependents.

127.3
37.9
18.2
31.8
121.8
227.3
24.0
29.6
40.9
32.0
36.4
25.5
27.3
27.3
234.1

20.2
21.8

36.3
27.3
/ 1 24. 5
\ 2 40.9
24.2
27.7
20.0

30.3
29.1
26.7
/ 112.6
\ 2 22.0
26.6

136.4
2 45.5
44.5
20.2
31.8
121.8
2 27.3
29.3
42.6
50.0
45.5
40.0
31.8
34.1
30.3
20.2
27.3
40.4
27.3
*30.7
251.1
30.3
31.8
25.0
34.1
32.3
35.2
*15.7
2 27.5
39.1

Ma­
chin­
ists, Mold- Paint­ Plas­ Sheetman­ ers, ers. terers. metal
work­
ufac­ iron.
ers.
turing
shops.
131.8
2 39.8
52.6
28.9
36.5
127.3
2 34.1
36.7
(3)
46.9
50.0
37.0
26.5
37.9
36.8
41.7
33.3
46.3
40.0
*34.8
2 58.1
(3)
(3)
22.9
39.1
38.1
33.3
117.8
2 31.0
40.6

131.2
2 39.1
53.8
26.0
(3)
123.8
2 29.8
30.5
37.6
46.9
40.0
37.0
29.2
31.7
36.8
28.7
28.4
47.3
34.7
132.7
2 54.5
26.7
(3)
24.8
(3)
38.1
31.3
*17.8
2 31.0
(3)

131.2
2 39.0
44. 5.
18.2
36.4
121.8
2 27.3
33.0
45.5
54.5
45.5
40.0
25.5
34.1
34.1
28.4
27.3
44.4
30.3
130.7
2 51.1
24.2
35.4
25.0
34.1
36.4
38.5
*17.3
2 30.3
39.1

136.4
2 45.5
41.7
18.2
31.8
121.8
2 27.3
34.3
34.1
40.0
36.4
40.0
25.5
30.3
30.3

20.2
21.8

38.3
27.3
127.3
2 45.5
23.7
35.0
25.0
30.4
29.1
36.4
*13.8
2 24.2
38.0

127.3
2 34.1
42.1
22.7
36.4
121.8
2 27.3
30.0
42.6
40.9
51.1
36.4
25.5
34.1
34.1
47.6
27.3
40.4
27.3
*30.7
2 51.1
30.2
31.8
25.0
34.1
36.4
28.4
1 15.7
2 27.5
45.1

Struc­
turaliron
work­
ers.
127.3
2 34.1
42.1
22.7
29.9
121.8
2 27.3
24.0
34.1
40.9
32.7
36.4
25.5
39.0
29.6
22.7
24.2
40.4
27.3
127.3
2 45.5
27.3
31.8
25.0
34.1
32.3
27.3
* 14.0
2 24.5
33.3

3 No scale given.
4 A flat monthly pension not based on wages.

In Table 20 is shown a comparison of statutory and actual percent­
ages of wages received by structural-iron workers for specified years.
It shows the increase, if any, in the weekly maximum from 1916 to
1920, and the increase, if any, in the statutory percentage between
1916 and 1920. It also shows, after applying the weekly maximum,
the percentage of wages actually received as compensation in the
years 1916, 1917, 1919, and 1920.




EFFECT OF W EEKLY M AXIM UM IK REDUCING BENEFITS.

69

T able 2 0 — COMPARISON OF STATUTORY AND ACTUAL PERCENTAGES OF WAGES

RECEIVED AS COMPENSATION BY STRUCTURAL-IRON WORKERS FOR SPECIFIED
YEARS.
State and city.

Statutory per­
Weekly maximum centage of com­ Per cent of wages actually re­
compensation.
ceived as compensation.
pensation.
1916

Alabama (Birmingham)...............
California (San Francisco).............
Colorado (Denver)..........................
Connecticut (New Haven)............
Illinois (Chicago)............................
Indiana (Indianapolis)..................
Kentucky (Louisville)...................
Louisiana (New Orleans)..............
Maryland (Baltimore)...................
Massachusetts (Boston)................
Michigan (Detroit).........................
Minnesota (Minneapolis)..............
Nebraska (Omaha).........................
New Hampshire (Manchester). ..
New Jersey (Newark)....................
New York (New York).................
Ohio (Cleveland).............................
Oregon (Portland).......................... /\
Pennsylvania (Pittsburgh)...........
Rhode Island (Providence)..........
Tennessee (Memphis)....................
Texas (Dallas)................................
Utah (Salt Lake City)...................
Virginia (Richmond).....................
Washington (Seattle)..................... /\
Wisconsin (Milwaukee).................

1920

1916

1920

0)
$20. 83
8.00
10.00
12.00
13.20
12.00
10. 00
12. 00
10.00
10.00
11.00
10.00
10.00
10.00
15.00
12.00
210.38
3 17.31
10.00
10.00

/ 2 $12.00
\ 3 15.00
20.83
10.00
14.00
/ 212.00
\ 3 15.00
13.20
15.00
18.00
18.00
16.00
14.00
15.00
15.00
10.00
12.00
20.00
15.00
213.49
8 22. 50
12.00
14.00
11.00
15.00
16.00
12.00
26.92
8 12.12
14.63

} (1)
65.0
50.0
50.0
} 50.0
55.0
65.0
: 5o.o
50.0
66.7
50.0
50.0
50.0
50.0
50.0
66.7
66.7
} (5)
50.0
50.0
G)
60.0
G)
G).
} (5)
65.0

/ 2 50.0
\ 3 60.0
1 65.0
50.0
50.0
/ 2 50.0
\ 365.0
55.0
65.0
60.0
66.7
66.7
60.0
66.7
66.7
50.0
66.7
66.7
66.7
(5)
60.0
50.0
50.0
60.0
-60.0
50.0
(5)
65.0

G)
15.00

0)
G)
2 6.92
3 12.12
9. 75

1 No law.
2 With no dependents.
8 Maximum with dependents.

1916

1917

1919

} (1)
63.1
29.1
36.4
} 40.1
42.9
54.5
36.4
43.6
36.4
35.0
40.0
35.0
G)
33.0
51.4
39.0
/ 237.7
\ 8 60.0
36.4
36.4

G)

2 27.3
G) /\ 3 34.1

63.1
25.9
50.0
/ 239. 5
\ 8 49. 4
40.0
45.5
36.4
43.6
46.3
35.0
43.6
39.6
0
31.3
49.6
34.1
•2 33.7
3 56.2
32.5
33.0

G)
50.5 G)
50.5
39.6
G)
/ 2G) 2G)
25.2 21.0
\ 3 44.1 3 36.7
35.5 35.5

47.3
26.0
34.4
2 31.2
339.0
35.3
34.1
54.5
27.3
45.4
35.4
39.0
37.9
G)
31.2
39.0
34.1
2 23.6
3 39.3
27.3
34.4
28.6
45.5
36.4
24.6
2 15.7
3 27.5
41.6

1920
42.1
22.7
29.9
2 21.8
3 27.3
24.0
34.1
40.9
32.7
36.4
25.5
39.0
29.6
22.7
24.2
40.4
27.3
2 27.3
345.5
27.3
31.8
25.0
34.1
32.3
27.3
*14.0
*24.5
33.3

4 No scale given.
5 A flat monthly pension not based on wages.

In Table 21 is shown a comparison of statutory and actual percent­
ages of wages received under each compensation act in 1920 for
weekly earnings of $25, $30, $35, and $40.
T able 21.—COMPARISON OF STATUTORY AND ACTUAL PERCENTAGES OF WAGES RE­

CEIVED AS COMPENSATION UNDER STATE COMPENSATION ACTS FOR SPECIFIED
WEEKLY EARNINGS IN 1920.
State.

Per cent
pro­
vided for
inlaw.

Per cent actually received by man
earning per week—
$25

$30

' . $35

140.0
Alabama............................................................................ \f 12 650.0 2148.0 3 50.0 134.3
60.0
2 42.6
0 .0
Alaska................................................................................
50.0
50.0
50.0
50.0
Arizona..............................................................................
50.0
50.0
50.0
50.0
California.............................................................................
65.0
65.0
65.0
59.5
50.0
40.0
Colorado..............................................................................
28.6
33.3
50.0
Connecticut........................................................................
50.0
46.7
40.0
50.0
50.0
50.0
Delaware.............................................................................
42.6
50.0
48.0
40.0
Georgia.................................................................................
34.3
60.0
60.0
Hawaii.................................................................................
60.0
51.4
48.0
40.0
55.0
Idaho....................................................................................
34.3
1 With no dependents.
2 Maximum with dependents.




$40
130.0
2 37.5
50.0
50.0
* 52.1
25.0
35.0
37.5
30.0
45.0
30.0

JO

<X>MDARISQN OF W O R K M E N ^ COM PENSATION INSURANCE,

TarMB21— -COMPARISON OF STATUTORY AND ACTUAL PERCENTAGES OF WAGES RE­
CEIVED AS COMPENSATION UNDER STATE COMPENSATION ACTS FOR SPECIFIED
WEEKLY1 EARNINGS IN 1920—Concluded.
State.

Illinois..........

Indiana...........
Iowa...............
Kansas...........
Kentucky-----

.Louisiana.’..-..
Maine.............

Maryland.......
Massachusetts
Michigan........
Minnesota---Missouri.........
Montana.........
Nebraska- .....
N evada.......
New Hampshire.
New Jersey.........
New Mexico— .
New York...........
North Dakota. -.
Ohio.....................
Oklahoma...........
Oregon.................
Pennsylvania...,
Porto Rico..........

Rhode Island—
South ;Dakota. ...

Tennessee...........
Texas..................
Utah....................
Vermont.............
Virginia..............
Washington----West Virginia . Wisconsin...........
Wyoming............
United States---British.Columbia.
Ontario.................
1 With no dependents.
* Maximum with dependents.

Per cent
pro­
v i u e u XUX
in law.

per cent actually received by man
earning per week—
$25

$30

$35

$40

/ 150.0
1 2 65.0
55.0
60.0
60.0
65.0
60.0
60.0
' 66.7
66.7
60.0
66.7
66.7
50.0
66.7
fin n /\
DU# U
50.0
66.7
50.0
66.7
68.7
66.7
50.0
/ax
\r) \/
60.0
50.0
50.0
55.0
50.0
60.0
60.0
50.0
50.0
/3\ /
\
50.0
65.0
\*) \/
66.7
55; 0
66.7

148.0
2 60.0
52.8
60.0
60.0
60.0
60.0
60.0
66.7
64.0
56.0
60.0
60.0
50.0
60.0
160.0

140.0
2 50.0
44.0
50.0
50.0
50.0
60.0
50.0
.60.0
53.3
46.7
50.0
50.0
41.7
50.0
1 55.4
2 63.1
33.3
,40.0
40.0
66.7
66.7
50.0
50.0
145.0
2 75.0
40.0
23.3
46.7
40.0
36.7
50.0
53.3
41.7
40.0
123.1
2 40.4
40.0
48.8
126.9
2 46.2
51.3
55.0
66.7

134.3
2 42,6
37.7
42.6
42.6
42.9
51.4
42.6
51.4
45.7
40.0
42.6
42.6
35.7
42.6
* 47.5
254.1
28.6
34.3
34.3
57.1
57.1
42.6
50.0
138.6
*64.3
34.3

130.0
33.0
37.5
37.5
87.5
. 45.,0
37.5
45.0
40.0
35.0
37.5
37.5
31.3
37.5
, 141.6
*47.3
25.0
30.0
30.0
50.0
50.0
37.5
45.0
1 33.7
« 56.3
30.0
17.5
35.0
30.0
27.5
37.5
40.0
31.3
30.0
1 17.3
2 30.3
.30.0
36.6

2 7 5 .7

40.0
48.0
48.0
66.7
66.7
60.0
50.0
154.0
2 7 3 .0
48.0
28.0
50.0
48.0
44.0
60.0
60.0
50.0
48.0
127.7
248.5
48.0
58.5
132.3
2 5 5 .4
61.5
55.0
66.7

2 0 .0

40.0
34.3
31.4
42.6
45.7
35.7
34.3
1 19.8
*34,6
34.3
41.8
123.1
2 39.6
43.9
55.0
66.7

2 3 7 .5

1 2 0 .2

2 34.6
38.5
55.0
66.7

3 A flat monthly pension not based on wages.

An analysis of these tables shows to what extent the weekly maximums nullify the statutory percentages. Probably no other factor
has been more instrumental in vitiating the beneficent purpose of
workmen’s compensation laws than this weekly maximum. In New
Jersey, for example, a workman is supposed to receive 66§ per cent
of his wage in ease of injury. As a matter of fact, however, because of
the operation of the $12 weekly maximum, instead of receiving 66§
per cent a bricklayer and a plasterer receive only 21.8 per cent; a
structural-iron worker receives 24.2 per cent; a carpenter, a painter,
and a sheet-metal worker receive‘27.3 per cent ; a molder, 28.4 per
cent; and a machinist 33,3 per cent. The .effect of the weekly maxi­
mum in the other States can be obtained by referring to the tables



METHODS OF COMPUTING AVERAGE WAGES.

71

Table 20 brings out the significant fact that although the weekly
maximum and the statutory percentage have been increased in most
of the States, yet because of the greater increase in wages the relative
amount of compensation received in 1920 is less than it was in 1916.
The weekly maximum in New Jersey was increased from $10 to $12
and the percentage of wages was increased from 50 to 66§, yet the
actual percentage received by structural-iron workers in 1916 in
New Jersey was 33 per cent, whereas the actual percentage received
in 1920 was only 24.2 per centr.
Furthermore, the percentages in the tables relate to temporary
total disability accidents only. In cases of permanent partial disa­
bility or in death cases the percentages would be still smaller.
Again, in computing the percentages the waiting periods were left
out of consideration. It was assumed that compensation was paid
from the date of the accident. The wage loss suffered by the injured
workmen therefore is even greater than the percentages indicate. In
order to show the effect of the waiting periods upon wage loss, the
given wage percentages should be decreased by the following per­
centages: A 3-day waiting period by 2.8 per cent; a 7-clay waiting
period by 9.4 per cent; a 10-day waiting period by 14.4 per cent; a
14-day waiting period by 20.7 per cent.
METHODS OF COMPUTING WAGES IN WORKMEN'S COM­
PENSATION PRACTICE.52
Among the numerous problems which come up for settlement
before the boards and commissions administering workmen’s com­
pensation laws is the problem of arriving at an equitable method of
computing the average earnings which form the basis upon which
compensation awards are to be paid. Many of the administrative
bodies are allowed broad discretionary powers in making such de­
terminations, while others are restricted by more or less detailed
provisions outlined in the laws. Under practically every workmen’s
compensation law awards of compensation are based upon the amount
of wages earned. (The only States which do not pay compensation
on the basis of wages earned are Oregon, Washington, and Wyo­
ming.) The questions immediately arise: What method shall be
employed to determine the average earnings? and What shall be
regarded as constituting wages? These questions have received
very little attention by writers upon compensation subjects in the
past, a fact that was casually commented upon by some members of
the International Association of Industrial Accident Boards and
Commissions at its convention in San Francisco in 1920. In an
effort to discover the methods in use in this branch of workmen’s
compensation legislation and administration this survey was under­
taken. A comparison is here made of the legal provisions, com­
mission rulings, and court and commission decisions which outline
the various methods of computing the average weekly wages now in
use in the United States and Canada, with the purpose of showing
what items are regarded as constituting wages or earnings.
An examination of the provisions of the various laws shows that
two States (Washington and Wyoming) make no provisions what­
ever for computing average wages. This is due to the fact that in
52 This section was prepared and written by Martin C. Frincke, jr.



72

COMPARISON OF W O R K M E N ^ COMPENSATION INSURANCE.

those States compensation payments are fixed sums prescribed by
the statutes and are not based on the wages of the injured employee.
The laws of Alaska, Maryland, Nevada, and Yukon Territory are
also silent with regard to the method of computing the average
weekly wages except that the law of Maryland requires that “ full­
time” wages be used. All the laws of the remaining States (this
word will hereafter be "regarded as including the States and Terri­
tories of the United States, the United States, and the Provinces
of Canada) make some reference to' the average wages. Twentyeight laws53 outline very definite methods of computing the average
wages of an employee working on a full-time basis, while the re-.
mainder either outline only the method of compensation when an
employee has not worked on a full-time basis or state over what
period of time the wages to be used in the computations must have
been earned, or merely declare that the compensation is to be paid
on the basis of a certain percentage of the average wages. All these
laws are susceptible of various interpretations in their practical appli­
cation to specific cases.
Almost all the laws containing specific rules for the computation
of average earnings prescribe different methods for computing wages
when the employee is working full time and when he is working part
time, and also when the period of time worked prior to the injury has
been so short as not to form an adequate basis for computation of
earnings. Many laws also outline vthe methods of computing the
earnings of minors, learners, and apprentices. The reason why there
are several methods of computing the average weekly wage in each
State is that provision may be made for all the various situations and
circumstances which may arise. Whether provisions for computing
wages are found in the law or made by the administrative Body it
seems that at least two situations must always at some time or other
be met; these are when an employee has worked continuously for a
period of one year, or six months, on a full-time basis, and when he
has worked only a short time or irregularly. The States whose laws
prescribe the method of computing weekly wages may be divided
roughly into seven groups or classes, according to the following dif­
ferent-situations which determine the method of computation: (1)
When the workman has been employed on a full-time basis; (2) when
the average wage earned at the time of the injury is to be taken; (3)
when the workman has not worked on a full-time basis for the pre­
scribed period; (4) when he has worked only a very short time pre­
ceding tne injury; (5) when he has beernworking at a seasonal em­
ployment ; (6) when the workman was earning money at two or more
concurrent jobs when he was injured; (7) when the injured person
is a minor, apprentice, or learner. According to the laws of 10
States54 no provision is made for computing the average weekly
wages on a full-time basis, but the method to be used is left to the
discretion of the commission. A comparison of the laws prescribing
the method of computing the wages for a workman who has been en­
gaged in work on a full-time basis will first be considered.*
4
6
53 Alabama,. California, Colorado*, Connecticut, Delaware, Georgia, Illinois, Indiana,
Iowa, Kansas, Maine, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New
Mexico, New York, Oklahoma, Oregon, Pennsylvania, Quebec, Rhode Island, South Dakota,
Tennessee, Texas, Virginia, and Wisconsin.
64 Alberta, Alaska, Hawaii, Idaho, Manitoba, Maryland, New Hampshire, North Dakota,
Oregon, and Yukon Territory.



METHODS OF COM PUTING AVERAGE WAGES.

73

COMPUTATIONS ON FULL-TIME BASIS.

The laws contemplate that employment will be on a full-time
basis. A man has been employed on full time if he has worked regu­
larly and continuously for a certain minimum period, usually one
year or six months, at the same kind of work for the same or differ­
ent employers. Various minimum periods (from 7 days to 2 weeks)
are stipulated during which a workman may be absent from work
and still be regarded as working “ full time,” the rule being that
when a man has worked on a full-time basis, average earnings are
always computed, if possible, upon that basis. If for some reason
they can not be computed on a full-time basis, other methods in the
nature of exceptions or alternatives are used.
The various provisions of the law prescribing the method of com­
puting the average earnings of an employee who has been engaged
at work on a full-time basis indicate four distinct methods of mak­
ing the computation, as follows: (1) Divide the earnings for the year
preceding the injury by 52; (2) multiply the average daily wage
at the time of the injury by 300 and divide by 52; (3) divide the
earnings for the 6 months preceding the injury by 26; (4) multiply
the average daily wage for the 6 months preceding the injury by 5^,
6, 6|, or 7, according to the number of days in the employee’s
customary week. There are 13 States55 that compute the average
weekly, wages by the first method, taking the actual full-time earn­
ings of the employee for one year immediately preceding the injury
and dividing by 52, but this method of computation may not be em­
ployed in Kansas if the workman loses any time at all; in Alabama,
South Dakota, and Virginia when the workman has been absent
from work for 7 consecutive days; in Indiana, New Mexico, and
Tennessee when absent 7 or more days; and in Massachusetts when
absent 2 weeks. In cases where the absence from work is greater
than the prescribed period it becomes necessary to employ some one
of the methods prescribed for computing the wages on a part-time
basis. In all of the States in this group except Iowa, Nevada, New
York, Ohio, and Ontario this method is specifically prescribed in the
law. In Iowa and Nevada this method was adopted by rules of the
administrative commissions. In Nevada compensation is paid on
a monthly basis and therefore, instead of dividing the year’s earn­
ings by 52, they are divided by 12; the principle, however, is the same.
This method is not the one prescribed in the law of New York, but
in the case of Remo v. Skenandoa Cotton Co.56 it was declared that
this method must be used where an employee regularly worked but
five days per week. The State of Ohio was brought within this
group by a decision of the industrial commission.57 The law of this
State simply declared that the average weekly wage at the time of
the injury should be used, leaving it to the commission to determine
how it was to be used. This method of computing the average
weekly wages of the employee was upheld in a case58 which came
before the Ohio courts, where it was said: “ There is no statutory
provision by which the caverage weekly (wages ’ may be determined,
55 Alabama, Indiana, Iowa, Kansas, M assachusetts, Nevada, New Mexico, New York,
Ohio, Ontario, South Dakota, Tennessee, and Virginia.
56 179 N. Y. Supp. 46.
57 In re King, Bulletin of the Ohio Industrial Commission, No. 7 (1913), p. 37.
58 Ware v . Industrial Commission, 8 Ohio App. 460.



74

COMPARISON OF W O R K M EN ’S COM PENSATION INSURANCE.

but some force should be given to the word 4average.’” The board
of Ontario has adopted a slight variation of this method. In this
Province the wages are computed by this method, and the mean be­
tween the result so obtained and the weekly wages at the time of
the injury is used as the average weekly wage. Tn each case where
the method of dividing the total full-time earnings for the year
preceding the injury by 52 is used to find the average weekly wage
it is required that the employee must have been continuously en­
gaged during said preceding year in the same grade of work, or in
the same employment, or for the same employer. Although the law
of Massachusetts does not state that the earnings during the year
preceding the injury must have been earned in the same employment,
a recent decision of the courts has ruled to this effect.59
There are 10 States 60*that compute the average weekly earnings of
employees who have been employed on a full-time basis by the second
method. This method is to multiply the average daily wage at the
time of the injury by 300 and divide the product by 52. Included in
this group are four States (Illinois, Iowa, South Dakota, and
Georgia) whose laws prescribe that the average daily wage be multi­
plied by 300 and divided by the number of installment periods. Just
what this was intended to mean is difficult to determine. Of these
four States, Iowa and Illinois, by rules of the industrial commission,
have adopted'the method of dividing by 52; South Dakota provides
two systems of computing the wages but the method here considered
is used; while Georgia has but recently enacted its law and it is
not known how this provision will be interpreted. Of the main group
of States that employ this method of computing wages, Utah adopted
it in the rules of its commission. In Maine the court decided91 that
in arriving at the daily wage, which is to be multiplied by 300, the
last week’s wages should govern, and that this should be divided
by 6 regardless of the fact that the employee may have had a half
holiday on Saturday. A few cases of interest have come before the
New York courts for interpretation of the application of this method,
which is the one outlined in the law of that State and most commonly
used. Thus in one case,62 where an employee had worked but 274
days previous to his injury, it was ordered that this method should
be used the same as if he had worked the whole year previous
to the injury. In another case63 the court decided that where the
injured employee had been regularly employed T days per week
his daily wage should be multiplied by 332 instead of 300 to find the
annual earnings. Wisconsin has been classed in this group because
the principle involved in the method employed by this State is very
similar to that here involved. Instead of dividing i he annual earnings by 52, however, the Wisconsin law requires that they be divided
by 50. This method is more liberal than that of other States of this
group and is regarded as more scientific in application in that it
makes some provision for lost time and holidays. A Michigan
court64 refused to compute the wages of an injured employee by
®
{.Mass.), 117 N. E. 321.
60 Georgia, Illinois, Iowa, Maine, New York, Oklahoma, Sonth Dakota, Texas, Utah,
and Wisconsin.
« Hight -v. York Mfg. Go. (M e.), 100 Atl. 9.
62 Lesman v. Drew Bros., New York Department of Labor, Special Bnlletia 95, p. 145.
63 Prentice ,v. New York State Rys., 181 App. Div. 144.
w Robbins rv Oriental Gas Engine Co. <Mteb.), 157 N. W. 437.




METHODS OF COM PUTING AVERAGE WAGES.

75

this’method where it appeared that he had lost seven weeks’ work
during the year.
In the two foregoing methods of computing wages on a full-time
basis the laws of the respective States require that the injured em­
ployee must have been continuously employed for one year previous
to his injury. In the consideration of the other two methods in this
group the laws of the States included require only six months’ con­
tinuous employment prior to the injury. The first of these two
methods is to divide the actual earnings for the six months prior to
the injury by 26. The States that compute the average weekly
wages in this manner are Colorado, Connecticut, and Rhode Island,
the last two States permitting only such wages to be used as were
earned from the employer for whom the employee was working
when injured. The commissioners of Connecticut have even gone so
far as to hold65 that this method- of computing the wages must be
employed when the employee has been employed on a part-time
basis. The second of these two methods is to take the average daily
wage over a period of 6 months and multiply by the number of days
in the workman’s normal week, whether 5f, 6 or 6|, or 7.' The States
computing the average weekly wages by this plan are Delaware,
Nebraska, New Jersey, and Pennsylvania. In connection with Dela­
ware it is to be noted that the law arbitrarily states that the average
daily wage is to be multiplied by 5J in all cases. The application
of this method as laid down in the rules and decisions of the Pennsyl­
vania Workmen’s Compensation Board66 is as follows:
In ascertaining the weekly wage of an employee for compensation purposes,
from the total number of working days during the preceding 6 months should
be deducted all (1) Sundays, (2) legal holidays, (3) half-holidays, (4) and
days employee was absent through no fault of his own, including days when
the plant or mine was idle because of a strike, and the number thus obtained
should be divided into the total earnings for the six months’ period. The
average daily wage thus obtained shall then be multiplied by 5£, 6, 61 or 7.

COMPUTATION OF WAGES AT THE TIME OF INJURY.

The second class or group includes those States that follow a
method of computing the weekly wages of an injured employee by
which little or no regard is had to the previous earnings of such
employee. “Average weekly wages” as determined by such a
method have no reference to an actual average of the employee’s
past earnings but are merely the result of an arbitrary computation,
the figure arrived at having the appearance of an average. By this
method the wages the employee was earning at the time of his in­
jury are taken as the basis and are either multiplied by the number
of days in the employee’s customary working week or are multi­
plied by 300 and divided by 52. The laws of nine States67 require
the use of the former process. Nevada, New Jersey, and Oregon
have adopted it by rules of the administrative commissions, while
in Indiana this plan has been adopted by decision of the courts, it
being held in one case68 that the average weekly wage of a laborer
65 Silveria v. Connecticut Quarries Co., Connecticut Workmen’s Compensation Cases
Digest, vol. 1, p. 509.
66 Sicheri v. Allegheny River Mining Co., Pennsylvania Workmen’s Compensation Board
Decisions, vol. 4, p. 274.
67 California, Louisiana, Michigan, Minnesota, Montana, Ohio, Porto Rico,, West Vir­
ginia, and the United States.
68 Interstate Iron & Steel Co. v. Szot, 115 N. E. 599.



76

COMPARISON OP W ORKM EN rS COMPENSATION INSURANCE.

whose regular compensation was 20 cents an hour and who was
injured while temporarily doing the work of a fireman at $3 a day,
was correctly computed at $3 multiplied by 6, or $18 a week. It
will be noted that this method will sometimes result in an advan­
tage to the employee, while on the other hand, if working for a lower
than usual wage when injured it will be a distinct disadvantage.
According to the rules of the Montana board69 an exception is made
in the case of an employee doing piecework, in which case the earn­
ings for the previous 90 days are used. In two cases coming before
the Louisiana courts70 it was decided that the wage used should be
“ the daily rate of pay under the contract of hire in force at the time
of the accident.” The law of West Virginia declares that the wage
at the time of the injury must be used, but goes on to amplify this
by saying: “ The time of injury, within the meaning of this section,
shall be such reasonable length of time immediately preceding the
date of injury as shall enable the commissioner to make a fair and
just award.” On the face of this provision it is ideal for it makes
it possible to accord an equitable settlement in every case, but in
actual practice it has been found by investigation that in computing
the average weekly wages the commissioner of West Virginia has
adopted the practice71 of cutting up the period preceding thq em­
ployee’s accident into groups of one year, six months, four months,
and two months, and then permitting the employee to select the
period by which he wishes to be governed. The period thus selected
is then divided by the number of weeks therein contained to find the
average weekly wage. Thus if an employee, by reason of strikes,
illness, or industrial depression, is able to work only 5 days in a
two-month period his earnings for these five days would be divided
by the number of weeks in the two-month period and the result
would be his “ average ” weekly wage, upon which basis he would
be compensated. Of course the employee might choose one of the
other periods but in any case such period would include the twomonth period in which only five days were worked. The law de­
clares that the wages earned im m ediately preceding the injury must
be used in such a way as to arrive at a “ fair and just award,” but
the use of the arbitrary periods adopted in this State does not give
the wages immediately preceding the injury.
The method of computing the average weekly wages by using the
daily wage at the time of the injury, multiplying it by 300 and then
dividing by 52, has been applied in six States.72 Many of these
States, it will be noted, have been classified in the previously out­
lined groups. Their inclusion in this group in most instances has
been brought about by judicial interpretations of the provisions of
the respective laws in their application to cases under consideration.
Thus in a case before the! Iowa commission,73 where a man had
shortly before his injury been transferred to a higher grade of work,
it was held that the average daily wage to be multiplied by 300
could not be found by considering preceding lower grade wages; so
it was ordered that the daily wages at the time of the injury were to
69 First Animal Report, Montana Industrial Accident Board (1915-16), p. 232.
to McGuirt v. Gillespie, 75 South. 419 ; Behan v. John B. Honor Co., 78 South. 589.
71 See p. 15.
72 Iowa, Kentucky, New York, Utah, Ohio, and South Dakota.
73Winburn v. Des Moines Saw M ill Co., Iowa Workmen’s Compensation Commission,
Legal Opinions (1916), p. 54.



77
be used and multiplied by 300 and then divided by 52. In Kentucky,74
where the nature of the injured man’s employment is such that he
does not work the full year his daily wage at the time of his injury
is multiplied by the customary working days for his occupation and
divided by 52. This method, although justified, is not as liberal as
that of Iowa. In a case75 decided by a New York court, where a
workman was employed in a brickyard as a laborer at $1.40 a day
for 5 months a year and as a molder at $2.65 a day for 7 months a
year and was injured while working as a molder, it was held that
the wages earned at the time of the injury ($2.65 a day) should be
used. This method was also applied in a case76 which came before
the Utah courts.
In addition to the above-mentioned States there are 10 States77
whose laws permit the use of the wages that are being earned at
the time of the injury when the circumstances are such as to make
it impossible or unfair to compute the wages in the usual manner.
The laws of Hawaii, Kentucky, North Dakota, and Vermont also
contain a provision that if at the time of the injury the employee was
earning higher wages for a higher grade of work than he had been
earning previously during the period preceding his injury, t^en only
such higher wages can be considered in the computation of the aver­
age weekly wage.
METHODS OF COMPUTING AVERAGE WAGES.

COMPUTATIONS ON PART-TIME BASIS.

The methods of computing the average weekly wages on the full­
time basis are comparatively simple and without any great difficulty
as to application. The real problems arise when an injured workman
has worked only a part of the time stipulated in the law previous to
the time of the accident. Owing to the requirements in many of the
laws that full-time methods may only be used when the employee has
been employed continuously for the requisite period in the same
grade, in the same employment, or for the same employer, the alter­
native part-time methods are more widely applied in determining the
average weekly wages. Three general situations which should con­
trol the determination of the average weekly wage are recognized by
the various laws. The first of these is where the employee has been
employed continuously a considerable length of time but has not been
so employed for the full stipulated period; the second is where the
employee has been employed only a very short length of time, such
as a few hours, and there is no adequate basis of his own earnings on
which to compute his average weekly wages, and the third is where'
the employee has been injured while engaged in a seasonal occupa­
tion. These various situations will be taken up in their order.
Where the law of a State requires that the injured employee must
have been employed a full period of one year or six months prior to
the injury, and the employee has not been employed for such full
period but has nevertheless been employed sufficiently long for his
earnings to form a basis for computing his average earnings, then
74 Lodge v. Virginia Iron, Coal & Coke Co., Leading Decisions of the Kentucky Work­
men’s Compensation Board (1917-1919), p. 25.
75 By low v. St. Regis Paper Co. (N. Y.), 179 App. Div. 555.
76 Uintah Power & Light Co. v. Industrial Commission (U tah), 189 Pac. 875.
,7 Colorado, Hawaii, Idaho, North ^Dakota, Vermont, British Columbia, Manitoba, N e w
Brunswick, Nova Scotia, and Ontario.

74832°—22-----6




78

COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.

the wages actually earned during such shorter period are divided by
the number of weeks in that period. In other words, when the full­
time method can not be used, the actual wages divided by the actual
number of weeks required to earn them are used as the average
weekly wages. In 14 States78 this method is employed because
required by law; in Nevada and Ontario it has been incorporated in the
rules of the administrative bodies ; and in Maryland, Ohio, and Penn­
sylvania it has been actually applied by the commissions in eases
which came before them for hearing. In Connecticut, judging from
the decisions of the commissioners, it seems that two weeks’ employ­
ment is sufficient to establish a basis upon which to compute the aver­
age weekly wages. Thus in employing this method a Connecticut
commissioner held79 that where an employee had worked only 18
days in a four-week period his wages for that period must be divided
by four, and another more equitable method could not be used because
the employee had worked two full weeks previous to his injury.
The law of the State of Maryland leaves the computation of the
average weekly wages to the discretion of the commission. In its
exercise of this discretion the commission of this State, in a number
of cases, which came before it for decision, adopted this method of
computing the average wages, dividing the actual earnings for the
period worked by the number of weeks in such period.
When the employee has worked only a very short time previous
to the injury, so that no adequate basis of previous earnings exists
for computing the average weekly wage, the wages of other persons
who have worked under the same circumstances but for the required
period are used. Nearly every statute that makes any effort to des­
ignate the methods for computing the average weekly wages pre­
scribes this method as a last resort where by reason of the shortness
of the time of service or other circumstances the aforementioned
methods can not equitably Ibe applied. This provision is so nearly
alike in each of the various laws that it can best be stated by
quoting from one of the acts. In the Idaho law this provision is as
follows :80
Where by reason of the shortness of the time during which the workman
has been in the employment, or the casual nature of the employment, it is
impracticable to compute the rate of remuneration, regard may be had to the
average weekly earnings, which, during the twelve months (or six months)
previous to the injury, were being earned by a person in the same grade,
employed at the same work by the employer of the injured workman, or if
there is no person so employed, by a person in the same grade employed in
the same class of work in the same district.

The laws of 28 States81 contain this provision. The Kentucky
and Nevada commissions have incorporated it in their rules, and the
Ohio82 commission has adopted it by actual application to cases
coming before it, In a case83 coming before the California com­
78 Alabama, Arizona, •Connecticut, Delaware, Indiana, Massachusetts, Nebraska, New
Hampshire, New Jersey, Rhode Island, South Dakota, Tennessee,, Vermont, and Virginia.
TOCheski ». Connecticut Mills Co., Connecticut Workmen’s Compensation Cases Digest,

voL X, p. 21
80 Alabama, Alberta, California, Connecticut, Georgia, Hawaii, Idaho, Illinois, Indiana,
81 Idaho Acts of 1917, ch. 81, sec. 24.
Iova, Maine, Manitoba, Massachusetts, Michigan, New Mexico, New York, North Dakota,

Oklahoma, Ontario, Pennsylvania, Quebec, Rhode Island, South Dakota, Tennessee, Texas,
Vermont, Virginia, and Wisconsin.
82 In re Williams, Bulletin of Ohio Industrial Commission, vol. 1, No. 7, p. 31.
^ M itchell v. Langley & Livingston, Decisions Gallfornia Industrial Accident Com­
mission, vol. 6, p. 188.




METHODS OE COMPUTING AVERAGE WAGES,.

7:9

mission this method was resorted to to find the average daily wage,
after which the usual method employed under the California law
was applied to feud the average weekly wage. In contrast to this
’procedure as the action of a Coimecticut commissioner 84 who de­
cided from the evidence in the ease before him that $9 was the proper
weekly rate of earnings, and arbitrarily applied that lamount in the
determination of the compensation. The Workmen’s Compensation
Board of Kentucky in applying this method 85 uses it not to find the
wage itself , but to find the usual period of time per year men are
regularly employed at the particular occupation, and taking this
period multiplies it by the daily wage at the time of the injury, thus
ascertaining the annual wages, which are then divided by .52 to find
the average weekly wage. It will be noted in the quoted extract
of the Idaho law that the wages of a fellow employee must first be
resorted to, if possible, before the wages of employees of other em­
ployers can be used. This point came up for decision before a Maine
court,86 where it was held that where am insurance company has pre­
sented evidence of the mages of a fellow employee of the same grade,
resort can not be had to the wages of employees of other employers.
In applying this method of ascertaining an average weekly wage the
Industrial Accident Board of Massachusetts *7 has adopted the cus­
tom of securing testimony from various persons engaged in the par­
ticular occupation as to what in their opinion or experience may be
regarded as a fair weekly wage, and from this testimony the board
makes its own deductions. The New York commission, in the case88
of an injured printer coming before it, resorted to the union rate of
wages and took the mean between that and his ractual wage at the
time of the injury. A case89 came before the Wisconsin courts of
a plumber who was injured while temporarily acting as a policeman
at the behest of the town marshal, and it was held that his average
wages would have to be determined by the usual wages of a police­
man who devoted his entire time to that occupation, and not by his
mages as a plumber.
SEASONAL OCCUPATIONS.

Seasonal occupations, as the name implies, are occupations which
do not provide employment throughout the entire year. Usually
workers when they are thrown out of work by the expiration of a
season will take up other occupations that may oilier a means of liveli­
hood. When a workman engaged in a seasonal occupation is injured
and becomes entitled to compensation, it is often a difficult matter to
determine how his -average weekly wages are to be computed.
Some .States will permit the aggregate of all his earnings at :all occu­
pations during the year to enter into the computation .of the average
weekly wages, while other States confine the computation strictly to
the wages earned in the occupation in which the workman was in84 Brady v, Grove, Connecticut Workmen’s Compensation Cases Digest,, vol. 1, p. 240.
^Leading Decisions of -the Kentucky Workmen’s Compensation -Board (19T7-19), pp.
73, 82.
86 Thiebault’s CaseIndustrial l lAccident Board, Workmen’s Compensation -Cases, vol. 2,
87 M assachusetts (Me.), I Atl. 491.
pp. 179, 558, 704.
88 Adams v. Bo arum & Pease (N. Y.), 179 App. Div. 412.
89 Village of West Salem v. Industrial Commission of Wisconsin, <9 .Negligence & Com­
pensation Cases Ann. 541.



80 COMPARISON OF W ORKM EN^ COMPENSATION INSURANCE.
jured. It must, of course, be understood that the question of seasonal
employment does not always have to be recognized in States where
the wages at the time of the injury are used to compute the average
weekly wages. The laws of the States of California, Delaware, Ne­
braska, and Pennsylvania provide that the aggregate of all the earn­
ings from all occupations are to be used, while in Massachusetts and
Oklahoma this rule has been adopted by decisions in cases bringing up
this point. The law of California limits this provision by declaring
that the wages earned in other occupations must not be considered at
a higher rate than the rate earned in the occupation in which injured.
In Delaware, Nebraska, and Pennsylvania after the aggregate annual
earnings have been determined, the total is divided by 50 to find the
average weekly wage. Since in performing seasonal labor the work­
man is required to shift from job to job, it is inevitable that he will
lose some time between jobs, and this seems to be the theory under­
lying the method of dividing the annual earnings by 50 instead of
the usual 52 weeks. The courts of Massachusetts have decided in a
case90 involving a longshoreman that the aggregate of all the earn­
ings of the employee during the year should enter into the computa­
tion of \his average weekly wages. The Oklahoma Industrial Com­
mission, In a case91 which came before it for hearing came to the
same conclusion, but, unlike the above States, it divided the aggre­
gate annual earnings by 52 to find the average weekly wage. Accord­
ing to the rules adopted by the Kentucky board, the aggregate an­
nual earnings are permitted to be used, but they also are divided by
52 to get the weekly wage.
In Georgia, Illinois, Iowa, and South Dakota, as fixed by statute,
the method of computing the average weekly wages of an employee
who has been injured while engaged in a seasonal employment is to
determine the number of days during which such seasonal occupation
offers employment, not less than 200, and multiply such number of
days by the average daily wage and divide this by 52 to arrive at the
weekly wage. A decision92 of the New York courts declared that the
44annual earning capacity of the injured employee in the employment
is the proper basis of compensation,” and further stated that in deter­
mining the average weekly earnings regard should be had 6 to the
4
known and recognized incidents of the employment, including the
element of discontinuousness.” In Utah it was decided in a case93
coming before the courts that where work is seasonal or intermittent
the aggregate earnings in the employment should be divided by the
number of weeks employed. On the face of this decision it appears
to be very equitable, but in fact it worked a great hardship on the
employee concerned. This employee was a farmer and had been em­
ployed to drag the roads after the rains. From the nature of this
work he could have only intermittent employment at road dragging
and seldom for a full week, so that when the court in computing his
wages divided his aggregate earnings as a road dragger by the num­
ber of weeks in the period during which he was employed, the result
was only a small sum. The earnings of the employee as a farmer
were not permitted to be taken into consideration.
90 Gillen v. Ocean Accident & Guarantee Co., 215 Mass. 96, 102 N. E. 346.
91 Ryan v. Maud Ginning Co., Oklahoma Industrial Commission Decisions, vol. 2, p. 116.
92 Matter of Littler v. Fuller Co., 223 N. Y. 369, 119 N. E. 554.
93 State Road Commission v. Industrial Commission of Utah, 190 Pac. 544.



METHODS OF COMPUTING AVERAGE WAGES.

81

CONCURRENT EMPLOYMENTS.

The sixth group includes those States in which provisions are made
with regard to employees who at the time of their injury are employed
in two or more concurrent employments, each employment contribut­
ing separately to the workman’s wages. There are two methods of
computing the wages of such employees—one, by taking into con­
sideration the combined wages of the employee from all his em­
ployers; and the other, by taking into consideration only such wages
as the workman earned from the employer in whose service he was
actually engaged when injured. Twelve States94 have adopted the
first of these methods, five of them (Kansas, Maine, Pennsylvania,
Alberta, and Manitoba) by statute and the remainder by rules or
decisions of the commissions or courts. In California, where a news­
boy was engaged in selling newspapers for two publishers, one pub­
lishing a morning paper and the other an afternoon paper, the in­
dustrial accident commission held95 that his total earnings from all
sales should enter into the computation of his average weekly earn­
ings. In another case decided by this commission96 it was held that
where a typist who worked five and one-half days per week for one
employer and Saturday afternoons and Sunday evening^ for another
was injured while in the employ of the latter, her entire earnings
from both employers must be considered in determining her average
weekly wage. Decisions of the same nature were arrived at in Ken­
tucky97 in the case of a miner who part of the time worked for a
utility company; in Indiana98 in the case of a janitor engaged under
separate contracts to wash windows for several employees; in Mary­
land 99 in the case of a market errand boy who was part of the time
employed in operating a meat-cutting machine; in Minnesota1 in
the case of%a lineman engaged part of his time in other capacities;
and in Ohio2 in the case of a mine check weighman who was at the
same time in the employ bf both the mine owner and the miners’
union. In Manitoba the board, by a rule adopted by it, computes the
average weekly wages of employees engaged at concurrent jobs by
taking the average in the different employments if in the same grade
of work.
There are six States3 whose laws or practices grant compensation
based only on the earnings from the employer in whose service the
injury was received. Of these jurisdictions the Provinces of Mani­
toba and Ontario are the only ones that have followed this plan by
reason of the requirements of its law. It should be noted in connec­
tion with these Provinces, however, that this method is qualified by
the provision that the employee’s earnings “ shall be computed on the
basis of what he would probably have been earning if he had been
employed solely in the employment of the employer for whom he
. 04 Alberta, California, Kansas, Kentucky, Indiana, Iowa, Maine, Manitoba, Maryland,
Minnesota, Ohio, and Pennsylvania.
95 Sewel v. Chronicle Publishing Co., Decisions of Industrial Accident Commission of
California, vol. 6, p. 23.
96 O’Connel v. Blums Advertising Agency, Decisions of Industrial Accident Commission
of California, vol. 6, p. 225.
97 Cloutz v. Kentucky U tilities Co., Leading Decisions Workmen’s Compensation Board,
1917-1919, p. 129.
98 In re Howard (Ind.), 125 N. E. 215.
99 Smith v. Kaiser, Maryland Workmen’s Compensation Cases, vol. 1, p. 148.
1 Klietz v. Village of North St. Paul, Minnesota Department oif Labor and Industries,
Bui. No. 16, p. 57.
2 In re Nielson, Bulletin of Ohio Industrial Commission, vol. 4, No. 5, p. 134.
3 Connecticut, Idaho, M assachusetts, Minnesota, Ontario, and Wisconsin.



S2

COMPAJKJBOIN OF T O £ M E S ’ ,S COMFEN SAITOH INSURANCE.

was working at the time of the accident.^ Manitoba has also been
classed in the group employing the first method because of the
actual practice adopted by the board of that Province in its interpre­
tation of the law. Minnesota, likewise, has also been classed in the
first group of these States because of the decision of its department
of labor and industries in the Klietz1 case, hut it seems that according
to the .usual practice of this State the compensation is “ based only
on earnings from employer in whose service injury was received.”
The commission of Idaho, which has adopted this method, employs
ft only to the extent that it uses the daily wage of the workman at
the time of the injury. In the application of this method a Connec­
ticut court held,**m the case of a man who was employed during the
4
*
day as an insurance agent and at night as a newspaper reporter and
who was injured while performing duties in the latter occupation,
that only his wages as a reporter oould be computed in determining
his a verage weekly wage. Likewise, in Massachusetts a court held8
that where a printer worked during the week for one publisher at $28
per week and on Saturdays for another publisher for $9.20 and was
killed while working on the latter job, his dependents could recover
compensation based only on the earnings on such job ($9.20). In this
case the court said:
The amount earned by an employee in a particular employment should gov­
ern in all cases in computing the compensation to be paid under the workmen’s
Compensation act unless the computation becomes impracticable:; and the
wages which determine the compensation are the wages earned in the employ­
ment where the injury -happens.

The reason for considering (the earnings in all the employments
when the various concurrent employments are in the same occupa­
tions and such as are usually carried on at the same time is not hard
to find, but the reasoning underlying the contention that where the
concurrent employments are in two or more distinct occupations only
the earnings in that employment in which the accident occurred
should be considered is harder to understand. It is said that equity
requires that the responsibility of an industry should be limited to
those earnings which may reasonably be deemed to fall within the
contemplation of the employer when he enters into the contract of
rempioyment. It is contended, on the other hand, that this reasoning
fails entirely to fake into account the fact that the workmen’s com­
pensation laws are remedial acts, and that for the privileges derived
from these acts an employee must surrender his common-law rights
under which, in the estimation of an injured man’s damages, his
wages merely form one of the ^elements” going to make up his
total damages. It is further maintained that the better plan for the
computation of wages where a workman has been employed at con­
current employments would be to take only the wage earned in the
employment in which the injured man was working at the time of
the accident and compute it on a full-time basis as if the workman
had devoted his entire time to the occupation in which he was in­
jured; by this method the -employee’s rate of wages would be used, as
distinguished from his “ earnings” in the particular employment,
1 Klietz v. Village of North St. Paul, Minnesota Department of Labor and Industries,
Bui. No. 1*6, p. ;57.
4 Kinsmen -v. Hartford Oourant '(Conn.), 1;08 Atl. 562.
e King’s Case (M ass.), 125 N. E. 153.




METHODS OF COMPUTING AVERAGE WAGES.

83

MINORS AND LEARNERS.

The seventh and last group includes those States whose laws or
commissions have made some specific provision or ruling for the
computation of the future earnings of minors or learners who
become injured in the course of their employment. At common law
in a suit for damages for injuries to minors it was permitted to take
into consideration the probable future earnings of such minor in
arriving at the damage sustained by him as a result of such injuries.
This principle of making allowance for the probable future increase
in the earnings of minors and learners has been recognized by 15
States6 in the provisions of the workmen’s compensation lawT In
s.
Nevada, according to the custom of the commission, a minor is
allowed the maximum compensation. There are two general methods
of arriving at a minor’s or learner’s average weekly wage. These are:
(1) To compute the minor’s wage upon what his earnings probably
would have been had, he worked until he became 21 years of age;
and (2) to compute the minor’s or learner’s wage on the basis of wages
received by adults, or experienced persons. Eight States,7 employ
the first of these two methods. In California the minor’s injuries
must, be permanent before he can be given special consideration, and
if it should develop that his probable future earnings can not be
determined with any degree of accuracy the law fixes a minimum
earning capacity of $3 per day for a six-day week. In interpreting
the statute of California the courts have ruled8 that the probable
wages of a minor when he arrives “ at ” the age of 21 must be used,
and that it was, not justifiable! to compute the wages: of such minor
“ within a reasonable period after attaining the age of 21 years.”
In contrast to this decision is one rendered by the Maryland com­
mission, in which it was held 9 that the wages of a young man in
his twenty-first year, who was; temporarily employed in a lumber
plant at $48 a month preparatory to* his becoming a salesman at
$75 a month, and who was killed while working in the plant, should
be computed on the basis of the increased earnings. In Manitoba
and Ontario the boards, have limited the provisions of the laws, so
that they are made to apply only to permanent disabilities.
The States of Georgia, Illinois, Iowa, and South Dakota, according
to the provisions of the statutes, employ the method of computing
minor’s or learner’s wages by using as a basis the wages of an adult
or experienced person in the same occupations. California, Massa­
chusetts, and New York have also adopted this method in actual cases
involving injuries to learners. Thus in California the commission
held 10 that the wages of a student motorman of a street railway who
was injured while learning should be computed on the basis of what
they would have been after he had completed his apprenticeship.
The method employed in Connecticut is quite distinct from either
of the foregoing methods except in the case of learners, where the
6 British Columbia, California, Colorado, Connecticut, Georgia, Illinois, Iowa, Manitoba,
Maryland, M assachusetts, New York, Oklahoma, Ontario, South Dakota, and Wisconsin.
7 British Columbia, California, Manitoba, Maryland, M assachusetts, New York, Okla­
homa, and Wisconsin.
8 Dean v. Western Pacific R. Co., 57 Cal. Dee. 500.
9 Chambers v. Kendall Lumber Co., Maryland Workmen’s Compensation Cases, voi. j,
p. 32.
10 Boyce v. Pacific Gas & Electric Co., California Industrial Accident Decisions, y o I. 6 .
p. 147.



84 COMPARISON OE WORKMEN ’s COMPENSATION INSURANCE.
wage is that of an experienced person in the same occupation. In the
case of minors, however, the average weekly wages are computed in
the usual manner, by dividing the previous six months’ earnings by
26 and adding to the result so obtained an arbitrary amount equal
to 50 per cent of such average weekly wage.
The law of Colorado provides for the computation of a minor’s
average weekly wage on the basis of what his earnings would have
been had he not been injured, but qualifies this by stating that the
probable increase in earnings can be computed only over such period
as compensation payments are being made. This rule was also
adopted by a New York court in a case involving a temporary dis­
ability. The minor had injured the tips of his fingers, resulting in a
temporary disability, and the commission in awarding him compen­
sation computed his wages on the basis of what they would have
been when he arrived at the age of 21 years. The court held 11 that
as the boy would become well again before he became of age, this
method was not proper; “ however, any probable increase of earning
capacity under normal conditions during the period of such disability
might doubtless properly have been taken into account.”
# H A T IS INCLUDED IN THE TERM “ WAGES.”

In addition to the problems involved in the computation of the
average weekly wages, the bodies administering the workmen’s com­
pensation laws are also required to pass upon what items shall be
permitted to constitute a part of the wages. Besides the regular
wages paid to an employee there are a number of other items of value
paid to him by his employer* or which come to him from the nature
of his employment, which go to make up his total earnings on a
particular job. These extra or additional items of income may be
grouped into six classes, namely, overtime earnings, board and lodg­
ing, etc., tips, gratuities, supplies, and tools, etc., and special expenses
incurred by the nature of the employment. Each of these classes
will be briefly discussed in the order named, and the attitude of the
respective States as to their inclusion or exclusion will be indicated.
Of the 23 States whose laws, rulings, or decisions have dealt with
the question of the inclusion or exclusion of overtime earnings in
computing the average weekly wages 1112 States require that such
earnings shall be included and 1213 require that they shall be ex­
cluded. Of the States that include overtime earnings in the com­
putation of the average weekly wages only one, California, is re­
quired to do so by statutory provision. Connecticut has included
such earnings in an actual case14 coming, before one of the commis­
sioners, while all the remaining States have included such earnings
by interpretations of the respective commissions. Four of the States
that have excluded overtime earnings from the’computation of aver­
age weekly wages, Idaho, Maryland, New Jersey, and Oregon, have
done so by rulings of the administrative-commissions, while the re­
mainder of these States are required to exclude such earnings by the
11 Ide v. Faul & Timmins (New York), 179 App. Div. 567.
12 California, Connecticut, Manitoba, M assachusetts, Michigan, Minnesota, Nevada,,
, Ontario, Vermont, Virginia, and Wisconsin.
13 Delaware, Georgia, Idaho, Illinois, Iowa, Maryland, Montana, Nebraska, New Jersey,
Oregon,, South Dakota, and United States.
u Caron v. Shartenberg & Robinson Co., Connecticut Workmen’s Compensation Cases
Digest, vol. 2, p. 32.



85
provisions of the statutes. In connection with the rulings in Mary­
land, New Jersey, and Oregon, it is to be noted that if overtime
earnings predominate or are paid so frequently as to become a regular
part of the earnings, then they are to be regarded as a part of the
regular wages. Although Montana does not permit the inclusion of
overtime earnings in the computation of the average weekly wages
for the purpose of determining the compensation, its law specifically
requires such earnings to be included in the employer’s pay-roll totals
upon which his insurance premiums are based. It may also be
pointed out that many of the States that exclude overtime earnings
from consideration take absences from work into account in deter­
mining the basis for computing earnings.
The theory upon which overtime earnings are excluded seems to
be simply that they are not “ regular ” but are of the nature of addi­
tional income and ca*n not therefore be properly included in arriving
at an “ average” wage. Yet, as will be seen later, some of these
States which have excluded overtime earnings are in the habit of
including tips, board and lodging, and gratuities or bonuses. Some
hold that the better reasoning would be that overtime earnings
should be included as being properly a part of the employee’s wages.
It is also pointed out that as the time of labor increases, the fatigue
occasioned by such labor also increases and workers are inclined to
become less attentive to the observation of safety rules and thus in­
crease the hazard to which they are exposed. Also when working
overtime they are exposed to the hazards of the occupation for a
greater period of time, and therefore the earnings during such
overtime period should be regarded as a proper part of the em­
ployee’s total earnings.
It is pretty generally accepted that board, lodging, fuel, housing,
rent, and the like are proper items to be included in the computation
of the average weekly wages, and all of the 33 States15 which have
legislated or ruled on this subject have required or permitted the
inclusion of such items. In Connecticut, Maryland, Massachusetts,
and Minnesota16 this inclusion was effected by decisions of the
courts or commissions in actual cases, in Illinois, Iowa, Kentucky,
Manitoba, Michigan, Montana, Nevada, and Ontario by rulings of the
administrative bodies, and in the remainder of the States by legisla­
tive enactment. In most cases the board, lodging, etc., is reckoned
at its reasonable or market value, but in Delaware, Maryland,17 and
Nebraska such items are excluded unless their money value has been
fixed at the time of the hiring of the employee. The law of New
Jersey states that board and lodging shall be considered as part of
the wages if included in the contract of hiring, and where such con­
tract fails to name the value of such advantages the law fixes their
value at $15 a week, but in Pennsylvania the law permits these
advantages to be included in the wages at only 50 cents a day for
lodging or $1 a day for board and lodging. Notwithstanding this
limitation in the law, the Pennsylvania board held in one case 18 that
METHODS OF COMPUTING AVERAGE WAGES.

15 Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Manitoba, Maryland, Massachusetts, Michigan, Minne­
sota, Montana, Nebraska, Nevada, New Jersey, North Dakota, Oklahoma, Ontario, Oregon,
Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Virginia, Wisconsin, and United
States.
16 State v. Sibley County District Court, 128 Minn. 486, 151 N. W. 182.
17 Picanardi v. Emerson Hotel Co. (Md.), 108 Atl. 483.
18 Kelly v . Silverman, Pennsylvania Workmen’s Compensation Board Decisions, vol. 4 ,
p. 269.



Sts

COMPARISON OF WORKMEN S COMPENSATION INSURANCE.

where at the time of hiring it was agreed that the workman should
receive $10 a week in cash, and room, with three meals a day, amount­
ing to the value of an additional $10 a week, his wages should be
computed on the basis of $20 weekly earnings. In Massachusetts it
was held192that where a man was hired for $5 a week and meals it
1
0
was not improper to value his meals at $8 a week.
With regard to the matter of the inclusion or exclusion of tips,
only two States have enacted legislation; one of these, Kansas,
has a drastic antitipping law which accounts for its attitude on this
point; the other, Nebraska, includes tips only when it is understood
between the employer and employee that they shall form a part of
the wages. In addition to these two States, eight others 2^ have by
commission rulings refused to regard tips as a part of a workman’s
wages. In 13 States 23xthe commissions have ruled that tips may
properly be included in the wages. The California courts22 have
held that tips may properly be included as a part of the wages as
being u other advantages ” allowed by law to be included. The ques­
tion of the inclusion or exclusion of tips has come before the courts
of New York a number of times. In some cases the tips were allowed
to be included, but in others they were excluded. Thus the court in
the case of a wagon driver23 who received tips for hanging up the
meat he delivered refused to permit such tips to be regarded as a
part of his wages, because his employer had not been aware that he
had been receiving tips for such services and because the granting
of tips was not a customary thing in such employment. On the other
hand, these courts have included tips as part of the wages of a
summer-hotel waitress,24 of a taxicab chauffeur,25 and of a Pullman
porter. In the latter case the court said:26 “ The tips received by a
Pullman-car porter are understood by the porter and the company
to be a part of his 1 wages ’ and can be considered as such in de­
termining the compensation to which he is entitled for his injuries.”
From these cases two controlling principles have been developed
which have been made the basis for including or excluding tips.
These are (1) In order that tips may be included as part of the wages
the employer must know of them and recognize the fact that the
employee receives them; and (2) The tips must be a usual thing in
the business of the employee.
Gratuities as distinguished from tips partake more of the nature
of gifts or bonuses from employers to their workmen and are usually
granted as a reward for long and faithful service or for increased
efficiency and output. In the States of Colorado, Delaware, Kansas,
Nebraska, and Pennsylvania the law specifically prohibits the con­
sideration of gratuities as a part of the wages, although in Pennsyl­
vania this has been held not to apply to bonuses. In addition to
these States, eight others27 have by rulings of the administrative
19 Driscol^ v. London Guarantee and Accident Co., M assachusetts Industrial Accident
Board Cases, voL 2, p. 570.
20 Iowa, Minnesota, Montana, New Jersey, Ohio, Pennsylvania,, South Dakota, and
Vermont.
21 California, Connecticut, Idaho, Illinois, Manitoba, Maryland, Massachusetts, Michigan,
Nevada, New York, Ontario, Virginia, and Wisconsin.
22 Hartford Indemnity Co. v . Industrial Accident Commission <Calif.), 183 Pac. 234.
23 Begendorf v. Sw ift & Co.,, 183 N. Y. Supp. $17.
24
Department of Labor
25 Perils v. Lederer, New York Co., 221 N. Y. 491. Special Bulletin No. 95, p. 150.
Sloate v. Rocnester Taxicab
26 Bryant v. Pullman Co., 177 N. Y. Supp. 488.
27 Connecticut, Idaho, Iowa, M assachusetts, Minnesota, Montana, Nevada,, and New
Jersey.



87
-commissions excluded .gratuities from consideration as wages. In
Connecticut as in Pennsylvania the commissioners have ruled that
this exclusion does not extend to bonuses. Ten States28 have by the
rulings of their commissions included gratuities in the computations
of wages of injured workmen, In Oregon such gratuities must be in
the mature of “ regular bonuses ” to be included, and in Maryland,
Virginia, and Wisconsin gratuities will be included only when they
are understood by the -employer and employee to be a part of the
earnings; but in New York it has been held 29 that bonuses are wages
whether or not paid regularly. It has also been held 30 in New York
that the racing winnings of an automobile driver should be included
as a part of his wages.
It is the custom in some States, especially where the mining
industry is carried on to any extent, for employers to deduct from
the wages of their employees their union dues and the value of tools,
supplies, materials, repairs, and labor furnished to them by the
employer. When a man becomes injured and entitled to compensa­
tion it is often necessary to determine whether his gross earnings or
his net earnings after deducting the above items are to form the
basis of such compensation. In two States, Colorado and Delaware,
these items are required by law to be excluded from the wages and
in nine 31 others these items are excluded by rulings of the adminis­
trative commissions. Eight States32 permit these items to be com­
puted as part of the wages. In a case where it was sought to deduct
from the wages of a miner the value of union dues, powder, carbide,
and other items paid for or supplied by the employer to the miner,
the Supreme Court of Illinois has held 33 that such items could not
be deducted, and that the word “ .earnings” could not be held to
mean “ net earnings5’ unless such qualification appeared in the
statute. A similar decision 34 was rendered by the Pennsylvania
^courts, which held that these items can not be deducted from the
wages unless there is an express contract between the employer and
employee permitting such deductions.
By “ special expenses incurred by the nature of the employment55
is meant such allowances as are made to traveling salesmen, field
agents, and the like, who are paid an allowance to cover the cost of
their transportation and other incidental expenses. As a rule these
expenses are paid in addition to salaries, or the salaries are increased
sufficiently to cover them. With the exception of the States of Mary­
land , Michigan, Montana, and Virginia all the compensation States
have excluded such items as these from the computation of the wages,
and even in Maryland and Virginia their inclusion is permitted
only where the contract of hire expressly calls therefor. In Mani­
toba such items axe also excluded except such portions as are ex­
pended for board, Eighteen States35 effect this exclusion by specific
METHODS OF COMPUTING AVEEAGE WAGES.

28 Illinois,, Manitoba, Maryland, Massachusetts, Michigan, New York, Ontario, Oregon,
Virginia, and Wisconsin.
29 Ciarla v. Solvay Process Co. (N. Y.), 184 App. Div. 629.
30 Dearborn v: Pengeot Auto Import Co. (N. Y.), 175 App. Div. 959.
81 California, Idaho, Iowa, Manitoba, Maryland, Minnesota, Nevada,, Ontario, and
Vermont.
82 Illinois, Massachusetts, Michigan, Montana, Pennsylvania, South Dakota, Virginia,
and Wisconsin.
33Springfield Coal Mining Co. v. m dustrial Commission (111.), 126 N. E. 183.
84 Keitmeyer v. Coxe Bros. .& Co. (Pa.), 107 At!. 739.
35 Alberta, California, Georgia, Hawaii,, Idaho, Illinois, Iowa, Kansas, Maine, Manitoba,
Nebraska, New Jersey, Ontario, Pennsylvania, Bhode Island, South Dakota, Texas, and
Vermont.



'88

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

provisions in the laws, while four36 have done so by commission
ruling.
From this survey it is apparent that there are a large number of
different methods for computing the average weekly wages in the
various States, some established in the laws, some laid down in the
rules of the administrative commissions, and others the outgrowth
of custom and practice in actual cases. The application of these
methods to actual cases has not always been consistent. Even where
the provisions of the laws in different States are identical their
actual application to specific cases is often very different in effect.
This suggests the desirability of a standardization of methods along
as simple lines as possible, covering each particular class of cases.
Many States have already attempted this, some with a good degree
of success, but the wide variety of methods disclosed suggests the
need of simplification and uniformity in order to secure to injured
workers and their dependents a prompt and full settlement of their
claims.
DESCRIPTION OF C L A IM PROCEDURE IN EACH STATE.
EXCLUSIVE STATE FUNDS.
BRITISH COLUMBIA.

The British Columbia workmen’s compensation law is compulsory
both as to compensation and insurance. Only enumerated hazardous
employments are covered by the act. All employers must contribute
to the State accident fund, which is administered by a workmen’s
compensation board of three members. The members of the board
are appointed by the lieutenant governor for a term of 10 years.
The board is authorized to appoint its own officers and employees
and to fix their salaries. The tenure of office of such employees is
subject to the pleasure of the board. The administrative expenses
of the board are paid out of the premiums contributed by the em­
ployers except the salaries of the board members which are paid out
of the consolidated revenue fund of the Province. These expenses
are prorated among the several industry classes according to the
amount of premiums collected and losses paid. In addition to
administering the compensation provisions and the accident fund
the board is charged with the enforcement of the safety laws. The
board, however, has no safety inspectors of its own, the main in­
spection work being performed by the inspectors of other Govern­
ment departments, who are responsible to the board. The board has
final jurisdiction over all compensation matters, no appeal to the
courts being permitted. Compensation claims are adjudicated on
the basis of written reports from employer, attending physician,
and workman, supplemented by examinations and investigations.
CLAIM PROCEDURE.

Accident reporting .—Only employers subject to the act are re­
quired to report accidents, but all their* accidents are required to be
reported. The statutory waiting period is three days. Noncom& M assachusetts, Minnesota, Nevada, and Wisconsin.



89
pensable accidents (those lasting less than three days) are reported
on a different and shorter blank than that for compensable accidents.
When the report of an accident is received it is indexed in a book
in alphabetical order by name of employee. (Originally a card sys­
tem was used but it was abolished because it was too cumbersome.)
The report is then given a claim number, or if it has already been
reported, the claim number previously assigned. The employee’s
index register contains: Date first report received, claim number,
name of workman, part injured, name of employer, and date and
place of accident, and a notation as to which forms have been received.
The report is also indexed in an employers’ register, in alphabeti­
cal order by name of employer. This register contains: Claim num­
ber, date of accident, name of workman, and part injured. The pur­
pose of this register is to check double names, and to note whether
the workman was previously injured and the number of accidents
by firms. Each report is acknowledged by card. A summary sheet
containing a synopsis of the essential facts is then made out.
Missing reports are requested. If the accident occurred over seven
days before receipt of first report the missing reports are requested
immediately. If less than seven days have elapsed the, import is
placed in a monthly follow-up file under the day of the month upon
which it was received. Two follow-up requests are made at 10-day
intervals. Before a claim can be acted upon it must have four
reports—employer’s report, workman’s claim, physician’s first re­
port, and physician’s progress report. If the missing reports have
not been received at the end of 30 days the claim is put into a special
correspondence file which is divided into three sections: (1) Claims
awaiting physician’s progress reports; (2) those having no work­
man’s claim; and (3) all others. The follow-up system for these
claims is by cards. After two further requests the claims are turned
over to a claim agent, who determines what further action to take.
If the claim is incomplete because the workman has made no applica­
tion the case is placed in a suspended file for one year, after which
it is outlawed.
The noncompensable accidents, those of under three days and in­
volving no medical costs, are filed in alphabetical order by name of
workman by month.
When the claim is complete it leaves the assembling department
and goes to the adjuster, who classifies the accident, i. e., assigns it
to the proper industry classification, examines the reports, and com­
putes the amount of compensation.
The claim then goes from the adjuster to the medical adviser, who
examines the claim from the medical viewpoint—time between acci­
dent and consulting physician, length of disability, degree of perma­
nent partial disability, quality of service furnished, medical bills.
From the medical adviser the claim is transmitted to the secretary
who checks the classification. The secretary has supervision over
permanent partial disability ratings. He determines the degree of
disability from a permanent disability schedule based upon the rec­
ommendation of the medical adviser.
From the secretary the claim goes to the accounting department
where the compensation checks are drawn. Before the checks are
sent the employer is notified of the award. Formerly the check
EXCLUSIVE STATE FUNDS----BRITISH COLUMBIA.




90 COMPARISON OF W ORKMEN^ COMPENSATION INSURANCE.
was held five days to allow the employer to protest the award, hut
this practice was abolished in 1920. The claim then goes to the
statistical department. "The list of claims is sent to the board for
approval and then to the claim agent for Anal review, especially as
to the legality of the claim. .Payments on a claim are usually made
every 30 days, but in some cases more frequently.
The board sees only the claims which need special consideration.
Each member examines them separately but the decision is made by
fee board as a whole. Claims are paid if a single member favors
claimant.
P^ermarvewb disability ratin gs *
—Unlike most of the American laws
the British Columbia compensation act does not provide a definite
schedule in case of permanent partial disabilities. The law merely
•states that the compensation shall be equal in amount to 55 per cent
of the difference between the average earnings of the workman before
the accident and the average amount which he is earning or is
able to earn in some suitable employment after the accident, and
that the compensation shall be payable during the lifetime of the
workman. Under authority of this provision the board has formu­
lated a permanent partial disability schedule. The amount of com­
pensation is based upon loss of earning capacity, which is expressed
in percentages of-total disability. In arriving at this percentage
of disability two factors are taken into consideration, (1) age, and
(2) wage. According to the British Columbia schedule compensa­
tion increases with age, on the assumption that the workman’s
ability to adapt himself to changed conditions after the injury de­
creases with age. On the other hand, compensation decreases with
wage on the theory that the greater the wage the greater the men­
tality of the worker and consequently the greater his adaptability
to meet changed conditions. The amount of compensation-for per­
manent partial disabilities is computed as follows: The monthly
compensation rate for total disability is first obtained by multiply­
ing the average wages by 55 per cent. This rate is then multiplied
by the percentage of disability as shown by the partial disability'
schedule, which gives the monthly compensation rate for the par­
ticular injury under consideration. This rate is then multiplied by
the life expectancy at the age at the time of the injury. The same
rate is also multiplied by the life expectancy at the age of 40. Onehalf of the sum of these two products is the amount awarded. If
the percentage of disability is less than 10 per cent the amount is
paid outright in a lump sum; if more than 10 per cent the award is
paid in monthly installments. Compensation is also allowed for
temporary total disability during the healing period, in addition to
the amount provided for the permanent disability. Functional dis­
ability only is taken into account in determining the degree of dis­
ability. This is based upon the recommendations of the board’s
medical adviser.
M s M g&I s e rv ic e . —Full medical attention is provided for under the
act. This service may be furnished by the board or by the employer
through the contract hospital system. All employees of employers
not under hospital contract are required to contribute one cent a
day for medical aid. These contributions are deducted from the
employee’s wages and transmitted to the board by the employer.



91
The amount thus contributed fails to defray the whole medical costs
by about $25,000. The remainder is borne by the accident fund.
The board does not favor the hospital contract system, and has
gradually reduced the number of such hospitals by withholding
approval. Contract hospitals, as a rule, furnish inferior service.
The injured workman is granted the privilege of selecting his own
physician, but the board reserves the right to order a change of
physicians if such action is deemed necessary.
The medical department of the board consists of two medical
referees and several clerks. It is the duty of the medical referees
to examine the claimants; to estimate the probable extent of dis­
ability ; to determine the degree of permanent partial disability; and
to pass upon the quality of the medical service furnished and the
reasonableness of medical bills.
EXCLUSIVE STATE FUFTBS— BRITISH COLUMBIA.

ACTUARIAL AND AUDITING DEPARTMENT.

All employers coming within the industries enumerated in the
act must contribute to the accident fund. Only hazardous occupa­
tions in the enumerated hazardous industries are covered, but hazard­
ous occupations; in nonhazardous industries are also included if
covered by the act.
Classifications and rates .—The industry classifications are provided
for in the act, subject to modification by the board, but the insurance
rates were determined by the board from the experience of other
States and Provinces. At present there are 19 industry classes,
having 259 subclasses. For psychological reasons the rates were pur­
posely placed higher than was thought necessary to carry the hazard.
Employers are better pleased if the cost is less than anticipated.
Assessments are levied quarterly. The number of assessments
actually called for is determined at the close of the year and is based
upon the condition of the fund for each class and the accident losses
during the year. As a rule, only about two quarterly assessments
are made annually. Consequently, the actual rates are one-half of
the basic rate. Each class carries its own losses. The whole fund,
however, is available in case a class is temporarily insolvent or over­
drawn. Each class is divided into subclasses based upon their hazard
as related to the hazard of the class. It is the aim of the board to
keep a substantial balance in each class. No record of incurred
losses by year of occurrence is kept. Consequently, it is impossible
to correlate the losses and premiums for a given period. Whether
the amount in the current fund is sufficient to take care of all acci­
dents to date is not absolutely known, though the fund is probably
more than adequate. The premium income for the year 1920 vT
as
$1,766,879.
Reserves .—Reserves are set aside in death and permanent dis­
ability cases but no account is taken of the outstanding and open
claims. Reserves in death cases are based upon a combined mor­
tality and remarriage table, the present worth being discounted at
five per cent. The reserve table for children takes into account the
J
A
ermanent total disabilities the
Fifteen thousand dollars has
been set aside each year for a catastrophe fund. A catastrophe, how­
ever, is defined as an act of God and not due to the hazard of the



92

COMPARISON o p w o r k m e n ’s c o m p e n s a t i o n i n s u r a n c e .

employment. The total catastrophe surplus as of December 31,1920,
was $49,431.
D ividends.—No dividends are declared by the fund. It is the
policy of the board to collect only sufficient premiums to meet cost
of accidents as they occur.
Assessments. —Employers, when first coming under the act or at
the beginning of the year, are required to submit an estimated pay
. roll for one year. Assessment for one-fourth of the amount is levied
at the basic rate for the classification. Thereafter quarterly assess­
ments are levied when needed. The number of assessments are de­
termined by the condition of the fund and the accident experience
during the year. At the close of the year a pay-roll audit is made
by the board’s auditors and the necessary adjustments made.
Collections .—The board allows 30 days in which to pay assess­
ments. If they are not paid within 30 days a 5 per cent penalty is
added; if not paid within another 30 days, a statement of indebted­
ness is filed in court, which acts as a judgment against the property
of the employer and has precedence over all debts except taxes.
During; the three years 1917 to 1919, the uncollectible premiums
amounted to only $308.47.
F irm record cards.—Separate record cards (one for premiums and
one for losses) are kept for each firm. The premiums are posted on
these cards from the assessment slips and are again entered when
paid. Adjustments are entered at the end of the year. The losses
are entered on loss cards from the transmittal sheet.
Class ledger.—Payments on claims are listed on the transmittal
sheet by classes and kind of payment (whether for partial disability,
fatality, etc.); assessment receipts are also listed by classes, the totals
in each case being posted to the class ledger. These sheets also serve
as a preliminary cash book, and totals are posted to the permanent
cash book.
Pension lists .—Separate pension cards are kept for fatalities, per­
manent total disabilities, and permanent partial disabilities. Pen­
sions are paid monthly, half of them being paid on one date and half
on another.
S T A T IS T IC A L D E P A R T M E N T .
One statistical clerk does all the statistical work. Only closed
compensable cases are tabulated. These cases are tabulated by the
year in which the case is closed, regardless of the date of occurrence
of the accident. In fatal and permanent partial disability cases the
date of the award is the date the case is closed. The data^on the
reports are recorded on cards—a separate card for each fatal, per­
manent partial disability, and temporary disability accident. From
these cards the statistical tables are constructed.
SAFETY W ORK.

The safety work of the Province is under the supervision of the
workmen’s compensation board. One member of the board devotes
all his time to safety matters. The board has issued safety stand­
ards and rules governing a number of industries. The board has no
inspectors of its own, except that one commissioner makes inspection
trips. The main inspection work is done by the Government inspec­
tors (mines, factory, boilers and machinery, electric energy, and rail­
way) who cooperate with the board. The inspectors send their



EXCLUSIVE STATE FUNDS----NEVADA.

93

reports and orders to the board, and the employers must report to the
board when the inspector’s orders have been complied with. If they
do not the board has power, which it exercises, to prevent operation
of the dangerous machinery, etc. One member of the board gives
personal attention to all eye injury cases, permanent partial dis­
abilities, and certain other injuries, which are examined from the
standpoint of accident prevention.
NEVADA.

The workmen’s compensation law of Nevada is elective as to com­
pensation and compulsory as to insurance. All industries except
farm labor and domestic service are covered. Electing employers
must insure with the State fund, neither private casualty companies
nor self-insurance being permitted. The compensation act, including
the State fund? is administered by an industrial commission of three
members appointed by a board composed of the governor, attorney
general, and inspector of mines for a term of four years. The com­
mission is authorized to appoint its own employees subject to the
approval of the governor. The administrative expenses of the com­
mission, except rent and printing, are paid out of the premiums of
the fund. The commission performs no safety work, this being a
function of the labor commissioner and mining inspectors.
The commission adjudicates compensation claims primarily upon
written reports from the employer, physician, and injured workman.
Appeal may be had from the commission’s decision to the courts, but
a jury trial is permitted.
A C C ID E N T R E P O S T I N G A N D C L A IM S .

Accident reporting .—Only employers electing to come under the
act are required to report accidents, but all their tabulatable acci­
dents are reported. The statutory waiting period is one week. Four
reports are necessary to complete a case—employer’s first report,
workman’s claim, physician’s first report, and physician’s supple­
mental report. If the first report received is the workman’s claim
the other reports are requested; otherwise, the first report is placed
in a monthly follow-up file and the other reports are requested every
two weeks until received.
The commission keeps five card-index records as follows: (1) Em­
ployer’s index, filed by firm number, which shows all the accidents
for each firm; (2) employee’s accident record, filed by name of em­
ployee, each accident being given a number; (3) physician’s report
index, filed by name of physician, which shows all the accidents for
each physician; (4) employee’s claim record (compensable accidents),
filed by name of employee, each claim being given a number; (5) acci­
dent and claim record, filed by claim number. A summary sheet
containing a synopsis of the case is made for each claim.
Lists of cases for payments are prepared twice a week. Payments
on a claim are made monthly. The checks are signed by two com­
missioners and countersigned by the actuary. AH reports (em­
ployer’s, physician’s, and workman’s) must be received before pay­
ment is made, except in severe cases. A notice is sent to the work­
man with the check stating that he must, at the end of 30 days or
at the termination of disability, furnish the commission with a
74832°—22-----7




94 (COMPARISON OF WORKMEN^ COMPENSATION INSURANCES
physician’s statement of his condition. If no report has been re-]
ceived on the date due* another request is made.
There have been four cases of. overpayment. The commission was
reimbursed in three of these. The commission pays compensation!
directly to the workman in all cases. Compensation is not denied if ,
the employer pays full wages during disability.
H earings .—The commission adjudicates compensation cases upon
the basis of written reports and the opinion of its medical adviser.
Either party may appeal from the commission’s decision to the
courts. Jury trial is allowed. There have been four appeals by the
injured workmen* but none by employers.
M edical service .—The commission has a medical adviser who de­
votes only part of his time to the work of the commission. Medical
treatment must be furnished by the employer unless it is expressly
stated that the commission shall furnish the same* in which event
additional premiums are charged.
Many employers maintain their own medical and hospital service
or contract with the hospital associations. The commission has
supervision over such service and may order change of physician.
The commission has in use a fee schedule which has been approved
by the State medical society.
Perm anent 'partial disabilities .—In permanent partial disability
cases compensation is paid for temporary total disability during the
healing period in, addition to the amounts provided in the statutory
schedule. The degree of disability in cases involving partial loss of
use of a member is determined by the commission from the reports of
the attending surgeon and the commission’s medical adviser. The ex­
tent of permanent partial disability other than dismemberment is
determined in from three to six months after the termination of
temporary total disability.
A C T U A R IA L A N 1> A U D IT I N G D E P A R T M E N T .

R ates and classifications .-*^The rates are not provided for in the
law but are determined from the Nevada experience as far as pos­
sible. The National Workmen’s Compensation Service Bureau’s
manual rates are used for minor classifications. Mining and ore re­
duction account for approximately 75 per cent of the premium in­
come. There are 7 classes and 46 subclasses. The rates, however,
do not cover medical benefits
If the employer wishes to have the commission pay medical benefits
he must so elect* in which case an additional premium is demanded.
The medical rate depends upon the class, for mining it being threefourths of the compensation rate* and for nonhazardous classes onefourth of the compensation rate. The compensation and medical
funds are kept separately.
P a y roll and prem ium s .—The pay roll is estimated for a six weeks’
period and premiums based thereon are paid in advance. At the end
of each month the actual pay roll is reported and the premium
thereon sent in. The estimated six weeks’ premium serves as a con­
tinuing advance deposit. Default on premium payment automati­
cally terminates the insurance. Claims are not paid by the fund if
the employer is in default on the premium at the time of the accident.
The commission charges no minimum premium.



EXCLUSIVE STATE FUNDS'— NORTH DAKOTA*

95

The commission has one traveling auditor, whose main duty is
educational in character. The employer’s pay roll is not audited as
a rule. The commission accepts the employer’s statement of pay roll
and classification. The total premium income for the year 1920 was
$338-,184.
Catastrophe surplus and reserves .—The total surplus of the fund as
of June 30, 1920, -amounted to $198,686-, of which $86,740 constituted
the catastrophe reserve.
D ividends .—A dividend of $131,670.80 has been declared, covering
the first five years’ operation of the act* The dividend percentage is
based upon and varies with the experience of the class, varying from
0 in class 2 (mining) to 46 in class 5 (public utilities). All members
of the class receive the same percentage of dividend.
Accounting .— (a) Premiums: A.separate account is kept for each
firm of compensation premiums and of medical premiums. This
account shows the amount of premiums paid, the amount due, and
the balance to the credit of the employer. The amount due at the end
of the fiscal period is estimated. The class ledger shows the pay roll
by classes and the rate, from which the premiums may be determined.
(&)» Losses: A list of claims is made out semiweekly on a sheet,
which with the claims is approved by the commission, then posted to
the voucher record, and from the voucher record posted to the firm
loss ledger. The voucher record shows disbursements by class and by
type of injury (death, permanent partial, permanent total). A card
showing the losses paid and incurred for each claim is kept in the
claim department.
Pensions .—Pensions for fatal and permanent total disability cases
are recorded in a book, which shows the amount of award and
monthly payments to date. Pension payments are made monthly.
Affidavits from dependents showing change in status are required
every six months.
S T A T IS T IC S .
A statistical card showing all accidents and compensation data is
made out when the first payment is made. These cards are filed by
claim number. At the end of the fiscal period they are divided into
classes. An estimate is then made of the outstanding claims. In
its statistical tabulations the commission follows the recommendations
of the committee on statistics of the International Association of
Industrial Accident Boards and Commissions.
S E L F -IN S U R A N C E .

Self-insurance is not permitted; all employers accepting the com­
pensation act must insure in the State fund.
SAFETY W ORK.

The commission performs no safety work, this being a function of
the labor commissioner and mining inspectors.
NORTH DAKOTA.

The North Dakota workmen’s compensation law is compulsory as
to both compensation and insurance. All industries except agricul­
ture and domestic service are covered. All employers must insure



96 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
with the State accident fund, neither private insurance carriers nor
self-insurance being permitted. The act is administered by the work­
men’s compensation bureau of the department of agriculture and
labor. The bureau is composed of the commissioner of agriculture
and labor, the commissioner of insurance, and three workmen’s com­
pensation commissioners who are appointed by the governor for a
term of five years. The commissioner of agriculture and labor and
the commissioner of insurance are ex officio members, the former
being head of the bureau. The bureau is authorized to appoint its
own employees, subject to existing laws regulating the selection,
grading, and compensation of departmental clerks.
Administrative expenses of the bureau are paid out of the work­
men’s compensation fund, but the total expenses shall not exceed
$50,000 per year.
In addition to administering the compensation act the bureau is
authorized to perform accident prevention work and to administer
the State minimum wage law.
The adjudication of compensation claims is based primarily upon
written reports from employers, physicians, and the injured work­
man. Appeal may be had from the bureau’s decision to the court.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

Accident reporting .—All employers in the State must report all
disability accidents. The statutory waiting period is one week, but
in case the disability exceeds one week, compensation is paid from
the date of injury. The claim procedure and actuarial methods are
based, upon those of the Ohio fund, the Ohio actuary being also the
consulting actuary for the North Dakota fund. In case of injury
the employee must file a notice of injury and a preliminary applica­
tion, and if the injury is a compensable one he must also file a sup­
plemental application. These reports must be acknowledged before
a notary. A report from the attending physician is also required.
The applications received are examined by the bureau’s medical
director and if found correct a payment covering one week’s com­
pensation is sent. Subsequent payments cover two weeks. No pay­
ments are made until the attending physician makes a report on the
case. Postal cards are sent to the attending physician every two
weeks for a report, upon receipt of which payments are made.
H earings .—Claims are adjudicated upon the basis of written re- ,
ports from the interested parties. Appeal to the courts may be had
from the decision of the bureau.
Perm anent partial disabilities. —In case of permanent partial dis­
abilities the law provides 5.2 weeks’ compensation for each per cent
of disability. The bureau is authorized to formulate a schedule and
to determine for each permanent injury the degree of disability.
The schedule established b;y the bureau provides a greater amount
of benefits than is provided in any other State in the Union.
M edical service.—The bureau provides unlimited medical service
to injured employees. The bureau has a part-time medical adviser,
who examines claims and assists the commission in the solution of
medical problems connected with the administration of the act.




EXCLUSIVE STATE FUNDS----OHIO.

97

C L A S S IF IC A T IO N S A N D K A T E S .

The bureau is authorized to classify the industries-according to
hazard and to formulate rates therefor.
The present rates were established by the bureau’s consulting actu­
ary and are based upon the experience of other States. No merit­
rating system has been put into effect as yet.
S E L F -IN S U K A N C E .

Self-insurance is not permitted. All employers under the act
must insure with the 'State fund.
SAFETY W OKK.

There is no safety or factory inspection law in the State, but the
bureau is authorized to administer all laws and regulations requiring
places of employment to be safe and to issue safety regulations
whenever necessary. The bureau has ordered the installation of
safeguards in some instances.
OHIO.

The Ohio workmen’s compensation law is compulsory as to both
compensation and insurance. All employments except those having
less than five employees are covered by the act. All employers must
insure in the State fund or provide seif-insurance. Private casualty
companies are not permitted to write compensation insurance busi­
ness. The act is administered by an industrial commission of three
members appointed by the governor for a term of six years. The
commission is authorized to appoint its own employees, subject to
the approval of the governor and the civil-service laws. The admin­
istrative expenses of the commission are paid out of the State
treasury from moneys regularly appropriated.
In addition to administering the compensation act and insurance
fund the commission is charged with the enforcement of all the labor
laws of the State, including factory inspection, safety, woman and
child labor, etc.
The claim procedure in State-fund cases is different from that in
the case of self-insured employers, the claims being handled by
different departments of the commission. The adjudication of the
State-fund claims is based primarily upon written reports from the
employee and attending physician and upon investigations and ex­
aminations made by the commission. In the case of self-insured
employers compensable accidents are usually settled by voluntary
agreements which must be approved by the commission. In disputed
cases either party may file an application for a hearing with the
commission. In both State-fund and self-insured cases appeal may
be had from the commission’s decision to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

The accidents and claims of employers insured in the State fund
are handled differently from those of self-insurers. Each is admin­
istered by a different department of the commission. The following
account describes the claim procedure of the State fund:
Accident reporting (State fund ).—Only employers subject to the
act are required to report accidents, but all their compensable acci­



98

COMPARISON OP WORKMEN ?S COMPENSATION INSURANCE.

dents and accidents requiring medical aid must be reported. The
statutory waiting period is one week. The following primary reports
are required by the commission: (1) First notice of injury and appli­
cation for medical expenses in noncompensable eases; (2) first notice
of injury and preliminary application; (3) supplemental applica­
tion with supplemental report of injury ; (i) attending physician’s
report; (5) supplemental report of physician.
When the first reports of a compensable accident are received, they
are arranged by the mailing department in alphabetical order by
name of employer. The risk number is assigned to each report from
the card index of employers, after which the report is sent to the
actuarial department to have the manual number assigned. It is
then returned to the claims division, where a claim number is as­
signed. It is examined as to completeness, and indexed in an em­
ployees’ index book in alphabetical order by name of employee. The
index shows name of employee, risk and claim number, and date of
accident. The report is then recorded in a docket book which shows
the name of the claimant, the name and business of the employer,
the date of filing, and the date of the first notice. It is then trans­
mitted to a clerk, who requests the missing, reports including the
supplemental application of the claimant and the physician’s report.'
A card acknowledgment is sent to the employer, which also requests
him to report any irregularities in the claim.
The report is again sent to the actuarial department where it is
coded and a card punched as to risk number, manual number, and
claim number. From the actuarial department it goes to the filing
division of the claims department where the cases are filed in nu­
merical order by claim number. The filing department receives the
supplemental reports and prepares the cases for the examiners. In­
complete cases are gone over once a month and follow-up letters
sent out requesting missing reports. After 90 days, if no applica­
tion is received, the case is sent to the 6 disposed of” file. Doctors’
6
bills are allowed after 90 days if no application has been received.
The case then goes to the medical department and is passed upon
by the medical adviser from the medical standpoint only and re­
turned to the docket clerk. Noncompensable cases do not go to the
medical department but are transmitted directly to the examiner.
The docket clerk completes the docket, entering in the docket book
the date the supplemental application was filed and the date of the
physician’s report. The docket clerk then transmits the case to the
examiners, who examine it as to wages, coverage, nature of injury,
etc., after which it is sent to the claim-sheet writer, who makes a
record of proceedings, or summary of the case; then to checkers
who check the work of the examiners and the record of proceedings;
then to a clerk who arranges the cases in numerical order by the
claim number and who approves each case in the name of the com­
mission by attaching a commissioner’s and the secretary’s signatures.
This form of approval is called the 64hearing ” by the commission.
The case itself now goes to the files and the summary claim sheet
or record of proceedings to the auditing department where payments
are made, but only for the period stated by the medical department,
after which the case is reexamined and the same procedure as out­
lined above followed. .



99
The compensation cheeks which are drawn upon the State treas­
urer are written in the auditing department. The State treasurer
notifies the commission when the checks are cashed. The claim sheet
is then transmitted again to the actuarial department and the
amounts paid out as shown by the claim sheet are recorded on Hol­
lerith cards. The employer is notified of each payment made.
Accident reporting (self-insurers).—The handling of accident
reports and claims with respect to self-insurers is under the super­
vision of a separate department of the commission and the -procedure
is entirely different from that in State-fund cases. In permanent
disability and fatal cases the injured workman, instead of making
a claim, enters into an agreement with his employer. In temporary
disability cases the employer reports monthly as to the amount of
compensation paid.
The following reports are required in completing the different
classes of claims under the self-insurance system:
Injuries causing disability of seven days or under are reported
directly to the actuarial department, whereas injuries causing dis­
ability of over seven days are reported to the claims department.
In temporary total disability cases the necessary forms for filing
such a claim are: First notice of injury; monthly report, to be filed
each month in cases in which the temporary total disability exceeds
one month’s duration, showing the amount of compensation paid;
and final report, to be filed upon completion of payment of compen­
sation for temporary total disability.
In cases involving both temporary total and permanent partial
disability the required forms are: First notice of injury; monthly
report, to be filed each month in cases in which the temporary total
disability exceeds one month’s duration; agreement as to compensa­
tion for permanent disability, to be filed upon completion of pay­
ment of compensation for temporary total disability; final report,
to be filed with the agreement. No monthly report is required dur­
ing the payment of compensation covering a permanent partial dis­
ability award.
In cases of death the forms are: First notice of death; agreement
as to compensation on account of death; and final report. Monthly
reports are not required during the payment of compensation cover­
ing a death award.
When reports are received by the mailing division the mailing
clerk separates them into first notices, agreements, and final reports.
The first notice is sent to the auditing department for examination
as to coverage; then returned, arranged in alphabetical order by
name of employee, numbered, indexed, and docketed. Card notices,
giving claim number, are sent to the employer and the report is
filed in a pending file. Upon receipt of the card notice the employer
sends in a supplemental report. The first report, is taken out of
the pending file upon receipt of the first monthly payment report
(in temporary disability cases) or upon receipt of agreement (in
permanent disability and death cases). In temporary disability
cases the reports are placed in a continuing file. When the final
receipt in temporary disability cases or the agreement in permanent
disability or death cases is received the case is turned over to the
State-fund examiners to be examined:.



EXCLUSIVE STATE FUNDS----OHIO.

100

COMPARISON OP WORKMEN’S COMPENSATION INSURANCE.

If the agreement is not in accord with the provisions of the law
the matter is taken up with the employer by correspondence and
in the meantime the case is placed in a continuing file until further
facts are obtained. If it is in accord with the law the agreement
is approved and placed in the “ disposed of ” file. When the final
receipt is received the case is taken out of the “ disposed of ” file and
examined. If noj supplemental reports are received, form letters are
sent to the employer and to the claimant one month after receipt of
the first notice. The continuing file is examined every three months
and absence of th^ monthly report noted and requested.
In disputed casies the employer or claimant files application with
the commission for a hearing. Ten days are allowed for answer by
the other party, and another week for the first party to reply. Upon
receipt of all the necessary forms the case is examined and prepared
for hearing by the reviewer of the legal department of the commis­
sion, who makes a!, recommendation as to the disposition of the case.
The case may be set for a hearing before the commission or given to
a referee (there are three in the State) if circumstances demand the
taking of evidence.
H earings .—The adjudication of the State-fund claims is based
primarily upon the written reports from the employee and attending
physician and upon investigations and examinations made by the
commission. In the case of self-insured employers compensable
accidents are usually settled by voluntary agreements which must
be approved by the commission. In disputed cases either party may
file an application for a hearing with the commission. In both Statefund and self-insujred cases appeal to the courts may be had from
the commission’s decision.
Perm anent 'partial disabilities .—In permanent partial disability
injuries compensation is paid for temporary total disability during
the healing period in addition to the schedule amounts provided for
permanent disability. Permanent partial disabilities resulting in
the partial loss of use of a member are compensated on the basis of
the subsequent wage loss.
M edical departm ent. —The. commission has a medical department
consisting of the chief medical adviser and seven assistant medical
advisers. It is thej function of the medical department to examine
claims and to pass upon the reasonableness of medical bills. The
medical advisers travel about the State examining claimants.
A C T U A R IA L A N D A U D IT I N G D E P A R T M E N T .

Classification and rates '.—The commission has authority to classify
the industries according to* their hazard and to fix the rates of
premiums. These rates have been sufficiently high to build up an
adequate surplus.
The commission !uses the old liability classification as a base.
Originally there were about 1,500 classifications in use. These were
reduced to 900 on January 1, 1920, but it is the intention of the
commission to reduce this number still further, to about 400. Some
additional classifications have been added under pressure from
employers. Eates, as far as possible, are determined upon Ohio ex­
perience. On the smaller classifications, however, the rates are
determined with reference to the pure premium developed in other



EXCLUSIVE STATE FUNDS----OHIO.

101

States. An experience-rating system has been adopted by the
commission.
Prem ium s and pay roll .—Premiums are paid in advance for a six
months’ period upon the employer’s estimated pay roll. Upon re­
quest by an employer for an insurance application, an application
blank is forwarded to him by the actuarial department. This blank
when filled out is returned by the employer to the auditing depart­
ment. The auditing department investigates his previous insurance
records, coverage, etc., and notes whether it is a new application or
a reinstatement. The application is then forwarded to the classifica­
tion section for assignment to classification and for initial rating.
A premium advice is then prepared in triplicate. This premium
advice contains' classification of risk, rate, and amount of the
premium. The third copy is kept in the actuarial department with
the application. Copies one and two are sent to the auditing depart­
ment for completion of pay-in order, which is made in duplicate.
The second copy remains in the auditing department until the
premium is paid; the original premium advice with the original payin order is forwarded to the employer, and a copy of the pay-in
order is forwarded to the State treasurer. The employer returns the
original premium advice, attaches a check to the pay-in order which
is forwarded to the State treasurer, who mails a receipt direct to the
employer and forwards the acknowledged pay-in order to the audit­
ing department, showing the date of the premium payment. The
auditing department then prepares a certificate of premium and for­
wards the same to the employer, together with accident report forms.
The auditing department withdraws a copy of the premium advice,
applies the risk number to the same, and completes the card inde-x
and ledger records. T]je original pay-in order is forwarded to the
actuarial department, wdiere it is checked with the original applica­
tion, and after card indexes have been prepared the application and
all attached papers are filed. The employer is now insured for a
six months’ period.
In the meantime, accident reports are received as noted under
“Accident reporting and claims” (p. 97). The first report of the
accident is transmitted to the actuarial department for assignment
of manual classification number and then returned to the claims de­
partment. It is later again sent to the actuarial department, at
which time a pending card is made which contains risk number,
manual number, claim number, and date of accident. The accident
report is again returned to the claims department and the pending
card is filed, awaiting action of the commission on the claim. Later
the claim sheet is forwarded to the actuarial department and the
amount of the award, the doctor’s fees, etc., as determined at each
hearing, is recorded on the pending card which had previously been
made out. The claim sheet is then returned to the claim department.
Two weeks before the expiration of the insurance period the
auditing department sends out a blank pay-roll report, on which the
employer reports his actual pay roll for the current insurance period.
The same is returned to the auditing department by the employer
and recorded. The pay-roll report then goes to the actuarial de­
partment for merit rating, which is based upon the employer’s indi­
vidual accident experience. The auditing department is advised of



1 0 2 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
the amount o f any credit premium or debit charge applicable to the
risk as determined by the accident experience of the employer. The
pay-roll report is forwarded to the auditing department, which
makes an adjustment of the actual premium, found due as compared
with the estimate o f the premium at the beginning o f the period. A
settlement sheet statement is made out which sets forth the earned
premium on the actual pay roll and the estimated premium o f the
subsequent insurance period, and the total premium due the fund to
cover the adjustment o f the insurance period just closed and the
estimated premium for the subsequent six months. ■The pay-in order
is prepared and forwarded to the employer with the original settle­
ment sheet, and a copy of the pay-in order is sent to the State
treasurer, who notifies the auditing department when the premium
covering the same is received. A copy of the settlement sheet is for­
warded to the actuarial department, and another copy of the settle­
ment sheet together with the original pay-roll report is filed in the
files o f the auditing department, and a copy of the pay-roll report
submitted by the employer is forwarded to the commission’s traveling
auditor in the proper district for auditing purposes.
Pay-roll auditing .— A field manager, with 22 agents, has charge o f
pay-roll auditing, investigation of fatal special claims, lump sums,
rating,, and nonpayment of premiums or failure to report pay roll.
Each agent has a regular specified district. The fund aims to audit
pay rolls once a year. However, many risks, especially the small ones
or those irregularly located, have not been audited for several years.
The fund has found difficulties in auditing contracting risks. Each
pay-roll period audit usually results in additional pay roll o f about
$ 1,000,000. Much of this under-reporting of pay roll is due to a mis­
understanding of the law, failure to include executives, traveling
salesmen^ etc.
Record of: awards .— Separate record cards are kept for deaths, per­
manent total disabilities, and indeterminates. Pending cards are
filed by risk number. First awards (except for death and permanent
total disabilities) as shown by claim sheet are punched on pending
cards. Supplemental awards are punched on supplemental cards.
Monthly recapitulation cards are made which contain amounts
awarded on account of all accidents (except deaths and permanent
total disabilities) for each risk during the month. These cards (in
four colors— one for monthly cards, one for individual accidents, and
one each for deaths and permanent total disabilities, which do not
contain the compensation amounts, these being shown on the sepa­
rate cards previously mentioned) are filed in numerical order by risk
number and show the losses awarded since the beginning of the act.
The total losses are obtained by adding to the awards shown on these
cards the awards for deaths and permanent total disabilities and the
outstanding claims from the indeterminates and from the open tempo­
rary cases on file in the claim department.
Record of 'premium income .—The pay-roll and premium income are
punched on cards from the settlement sheets from the auditing de­
partment. These cards are arranged in numerical order by risk num­
ber. For rate-making purposes the risks are grouped under the
proper classifications and totaled^ losses are similarly classified and
totaled. Classification: pay. rolls and losses are then correlated*




EXCLUSIVE STATE FUNDS----OHIO.

103

Em ployer's individual prem ium account.— Each employer’s finan­
cial record is kept in a ledger, which shows by insurance period the
amount of pay roll, premium, credit or debit charges, and the dates
paid.
Paym ent of w arrants Compensation checks are sent out the day
following the receipt of claim sheets from the claims division. The
claim sheet is checked against the premium payment record in order
to ascertain whether premium payments of the employer are up to
date, after which the checks are typewritten from the claim sheet.
These checks, which are numbered in rotation, are recorded upon
sheets containing the risk number, employee’s name, amount, and
check number, and then mailed. The State treasurer daily transmits
to the commission a statement of checks cashed, which are recorded on
the record sheet.
Pension awards.— Pension awards (in death and permanent dis­
ability cases) are kept in a special book. A ll pension cases are paid
biweekly on Monday.
Reserves. — Claim reserves for outstanding losses are computed as
follow s: In case of death the present worth of the award is set aside,
no reduction being made for mortality. In case of permanent total
disability the present worth is based upon life expectancy. In case
o f permanent partial disability the full award is set aside, no reduc­
tion being made for mortality. The outstanding claims in case of
temporary total disability are determined according to a reserve table
formulated by the commission. The commission has also formulated
a table for computing reserves for unreported and reopened claims.
The commission is also required to maintain a surplus o f at least
$100,000. The present surplus is over $1,000,000.

.—

S T A T IS T IC A L D E P A R T M E N T .

The accident statistical work of the commission is done in the ac­
tuarial department. No accident statistics have been published by
the commission for several years.
SA FETY W ORK.

The industrial commission is charged with the enforcement of the
safety laws of the State, the work being performed by the division of
workshops and factories of the commission.
S E L F -IN S U R A N C E .

Self-insurers are required to furnish a financial statement and to
deposit security in every case except those exempted by law (banks
and public utilities). The minimum deposit must, equal the semi­
annual premium of the risk but be not less than $15,000. The finan­
cial question only is taken into account in granting the self-insurance
privilege. Questions of safety, hospital facilities, claim settlements,
and so on are not considered. Injuries to public employees are paid
out o f a public fund contributed by the State and counties. Each
county is responsible for its own accidents.
Employers carrying their own risk must contribute their propor­
tionate share to the State-fund surplus.
Self-insurers are not permitted to reinsure their catastrophe hazard.
This practice, if allowed, would increase the number of self-insurers
and thus militate against the State fund.



104

COMPARISON OP WORKMEN’S COMPENSATION INSURANCE.

There were 919 self-insurers as of December 31, 1919, of which
about 250 were bona fide self-insurers; the remainder were reinsured
in casualty companies under the former regime. The records of the
bona fide and reinsured self-insurers have not been kept separately.
A few employers have been denied the self-insurance privilege.
Quite a number have had the privileges revoked because o f failure
to furnish bond, pay premiums, or furnish pay rolls, etc.
There have been no failurea of self-insurers up to the present time.

ONTARIO.
The Ontario workmen’s compensation law is compulsory, both as
to compensation and insurance. Only enumerated hazardous em­
ployments are covered by the act. All employers except those in
schedule 2 (municipalities and railroad, express, telephone, telegraph,
and navigation companies) must contribute to the State accident
fund. Employers under schedule 2 are individually liable, thoughthey must deposit funds with the board, which pays the compensation
direct to the injured employee. The compensation act, together with
the fund, is administered by a workmen’s compensation board o f
three members, who are appointed by the lieutenant governor in coun­
cil and hold office during good behavior, subject, however, to retire­
ment at the age o f 75. The board may appoint its own officers and
employees and fix their salaries, subject to the approval o f the lieuten­
ant governor in council. The tenure of office of all employees is
subject to the pleasure o f the board. The administrative expenses of
the board are paid out of the consolidated revenue fund of the Prov­
ince to the extent of $100,000. I f the expenses exceed this amount,
such excess is paid out o f the premiums.
The board is not charged with accident-prevention work, this being
performed by other provincial departments and by employers’ asso­
ciations authorized by the compensation act. The board has final
jurisdiction over all compensation matters, no appeals to the courts
being permitted. Compensation claims are adjudicated on the basis
of written reports from employer, attending physician, and work­
man, supplemented by examinations and investigations.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

A ll disabling accidents or those requiring medical aid are re­
quired to be reported to the board by all employers within three
days. Accidents of seven days o f over duration are compensable.
An abbreviated report form is used in reporting noncompensable
accidents (those of under seven days).
When report or notice of accident is received, the index book and
the employer’s index card are searched to see whether the accident
has been previously reported. A claim number and the employer’s
firm number are assigned to the report. It is then indexed in alpha­
betical order by name o f workman. The index book contains the
firm number and the claim number, in addition to the name and
address of the workman. The report is also indexed on the em­
ployer’s index card. The necessary forms are requested to complete
the case, including, in compensable accidents, the workman’s claim
and the surgeon’s first report. Both these forms are sent to the




EXCLUSIVE STATE FUNDS----ONTARIO.

105

workman, with an addressed envelope for return. In noncompensable cases an employer’s abbreviated report is usually all that is re­
quired in addition to the doctor’s account.
A card is made for each case for which forms have been requested.
These cards contain the claim number, the name of the workman and
the employer, and the number of the forms requested. Cards are
filed in numerical order by the claim number. The folder containing
the reports which have been received is also filed in numerical order
by claim number. As the requested forms come in they are checked
off on the card, and when all are received the card and folder are ex­
tracted from the files. I f the forms are not received within a reason­
able time— depending on the time necessary for mail to go and come—
a second request is sent, and if no report from the workman is re­
ceived the case is put in the closed file until such time as the work­
man makes a claim. Medical aid is paid if the accident is under
the act.
A summary claim sheet is then made out, a shorter form being used
for cases with medical aid only, and the date the employer’s pay
roll was received is entered on the summary claim sheet.
The case is then sent to the medical department for estimate of the
period o f disability. Only temporary disability is first considered.
Determination of permanent disability is taken up later— at the end
o f the temporary disability period. The medical officer certifies on
the summary sheet how many weeks’ disability can be allowed accord­
ing to the information on file.
The case then goes to the computer, who computes the amount of
compensation from the facts given. I f there is doubt as to the wages
earned, a provisional rate is taken and later the amount of compen­
sation is corrected in the light of subsequent facts. From the com­
puter the case goes to the checker and then to the claims officer for
examination and approval; then to the board for final approval.
Ordinary cases are examined and approved by individual commis­
sioners, more important cases by the chairman of the board, and per­
manent disability cases and, others involving mooted questions by the
whole board.
The cases ready for payment are then listed, with necessary par­
ticulars, on a large order sheet, which is signed by the chairman, and
which goes to the finance department where the checks are made out.
This order sheet is the authority to the finance department to issue
and dispatch the checks. There is an individual record card for each
firm which contains the assessment paid and the amount paid out for
accidents. These cards are arranged according to the industrial
classifications. The check number is entered on the summary claim
sheet.
The case then goes to the medical aid division for approval of
medical fees, after which the case folder is returned to the claims
division and put in the “ final ” file if final payment has been made,
and in the “ d a y ” file if a continuing case (see later description),
while the order-for-payment sheet goes to the bookkeeping division.
Here assessment and accident costs are kept by classifications, the
totals o f which should correspond with the totals o f the individual
employer’s records in the finance department.
’ For the pension cases (death or permanent disability) a special
card is used (in different colors), which is filed in a separate case.



106- COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

Eaeli payment is entered upon the card. Payments’are made monthly
and cheeks are made out each day for those coming due- All pension
cases are also recorded in books—a separate book for deaths and for
permanent disability cases,
^D ay ” -file.—The continuing cases are placed in the 44day ” fife—
divided into six groups corresponding to the six days of the week.
For example, each Monday the cases in the 4 Monday ” group (acci­
4
dents happening on Monday) are examined!. Those which indicate
that the period of disability as previously estimated'by the medical
officer is still unexhausted are computed and go through for pay­
ment, Others: are turned over to the medical: department for further
consideration. Continuing cases are paid fortnightly if warranted.
“A djustm ent ” file .—Those eases which are being investigated or
which are awaiting additional or supplementary reports are kept in
a separate fife called the 44adjustment ” fife. They are fifed by claim
number (cards are not used for cases in 4 adjustment ”).
4
The fatal eases are handled separately from the general claims- by
the claims department. Statutory declarations are required from
both the employer and the widow. A surgeon’s report is alsd re­
quired. Inquiries are sent to the employer,, the friends of the de­
ceased, the boarding house or the former place of residence to locate
dependents.
H earin gs—ISo formal hearings are held by the board. All cases
are adjudicated upon written reports from the parties interested,
and upon examination and investigation made by the board. The
board'has final jurisdiction over all compensation matters, no appeal
to the courts being permitted.
Perm anent disabilities .—A permanent disability is not considered
until the temporary disability has terminated. The ease is then
given to the medical department for report on functional disability.
After reports are obtained from the doctor, workman, and employer,
and special examination is made by the medical referee or the medi­
cal officers of the board, it is placed in the 4 ready ” file and then goes
4
to the statistical department for permanent disability rating. If the
case needs further investigation or examination the folder is tem­
porarily placed in the 4 inquiry ” file.
4
The board has adopted a schedule for the rating of permanent dis­
abilities. This schedule is used chiefly as a guide, the actual rating
depending upon the particular circumstances surrounding each case.
The compensation rate is paid during life, a modified; American ex­
perience table being used. Compensation for less than 10 per cent
disability is paid in a lump sum," all other is paid monthly. Final
approval is by the board.
M edical division .—The board has a medical department consisting:
of a chief medical officer and several assistants. The medical division
passes upon: medical questions, and claimants are examined' by them
or by medical referees where considered desirable. Workmen’s trav­
eling expenses are paid. Specialists are appointed to examine claim­
ants in difficult cases.
Selection of physicians is made1through mutual agreement of em­
ployer and workman; certain physicians who have proved incom­
petent are not recognized by the board. The bills of such physicians
are not honored.



EXCLUSIVE STATE FUNDS----OREGON.

107

Medical aid division .— The medical aid division passes upon medi­
cal fees and looks after artificial appliance^. A fee schedule has been
adopted in conjunction with the provincial medical society. Fees
are uniform throughout the Province and somewhat below regular
fees. Claimants or board’s own physicians attend the ^patient in the
hospital and are paid therefor.
S T A T IS T IC A L D IV I S I O N .

The statistical division rates permanent disabilities and tabulates
statistics. Accident files do not reach the statistical division until
they have passed through the claims and finance departments.
gregcm.

The Oregon workmen’s compensation law is elective as to compen­
sation and compulsory as to insurance. Only enumerated hazardous
industries are covered by the act. Fleeting employers must insure
with the State fund, neither private casualty companies nor selfinsurance being permitted. The act is administered by an industrial
accident commission of three members appointed by the governor for
a term of four years. The governor may at any time remove any
commissioner appointed by him. The commission is authorized to
appoint its own employees. The cost of compensation is borne by the
employers, the workmen, and the State. The workmen are required
to pay 1 cent for each working day, which is collected and
remitted by the employer in addition to the employer’s premiums.
The State pays (out o f the appropriation fund) one-seventh of the
combined contributions of employers and workmen. This provision
has been eliminated for the two-year period ending June 30, 1921.
The expenses of administration, however, since 1917, have been paid
out of the accident fund but are limited to 10 per cent of the pre­
miums. The State’s contribution approximately equals the annual
administration expense. Prior to 1917 the administration expenses
w
rere appropriated by the State but limited to $25,000 for salaries.
In addition to administering the compensation provisions and the
State insurance fund the commission performs rehabilitation work
and is also charged, in conjunction with the bureau of labor, with the
enforcement o f the safety laws.
The commission adjudicates its compensation claims upon written
reports from the employer, physician, and workman, supplemented
by examinations and investigations. No formal hearings are held by
the commission. Appeal may be had from the commission’s decision
to the court, but a jury trial is permitted.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

Accident reparting .— A ll employers are required to report all acci­
dents, but only those o f employers under the act are recorded and
tabulated. There is no waiting period, all time loss accidents being
compensable.
The following three reports are necessary before a claim is com­
plete: Employer’s report, workman’s claim, and physician’s report.
The physician’s report or the employees report is usually received
first. Upon receipt o f the first report, two sets of index cards are



108

COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.

made. The employee’s card contains the name and address of the
employee, the claim number, the date and nature o f injury, the firm
name and number. These cards are filed in alphabetical ordef
by name of employee (a book register was formerly kept but was
discarded because too cumbersome). The employer’s card contains
the name and address of employer, the firm number, the claim num­
ber, the date, and the nature of the injury. When a report or claim
is first received the employee’s index is searched to see if the accident
has been previously reported. I f not, it is indexed and the claim
number assigned. The reports are then turned over to the assembly
department.
Assembly department .— The assembly department requests the
missing reports o f claims to which claim numbers have been assigned.
A jacket is made and the incomplete claim is put in the monthly fol­
low-up file, awaiting the receipt o f the missing reports; i f not re­
ceived at the end of five days another request is made; then two more
requests at 10-day intervals. Those still remaining incomplete are
taken out and turned over to the correspondence clerk, by whom
requests are again made. A t the end of 60 days the incomplete cases
are placed in the suspense file, where they are kept until outlawed.
The assembly department also makes out a summary sheet. Only
the workman’s claim is acknowledged. The injured workman is also
sent a return card, on which he reports whether the accident caused
time loss, and i f so, the date he returned to work. The assembly
department also has on file the signatures of the employer’s agents
who are authorized to sign accident reports, thus preventing fraudu­
lent reports being sent in by workmen. While the claim is in the
assembly department information is obtained from the accounting
department as to whether the claimant and the employer are covered
by the act.
Computers and claim agent.— From the assembly department the
claims go to the computers or claim examiners. The chief computer
checks the facts as per inside cover o f the claim jacket, on the basis
o f which the computers determine the amount of compensation, etc.,
which is entered upon the summary sheet. The claim then goes to
the checker who reexamines the claims and checks the computations.
The amount of compensation and the period covered are placed on
the summary sheet. Continuing payments are made monthly, ex­
cept that for serious cases (those in which the attending physician
estimates the disability at two or three months) payment for one
month is made immediately; if the report shows that disability will
last three weeks, payment covering two weeks’ compensation is made
in advance. Ordinary claims are not examined by the commission’s
medical adviser. After leaving the computers the claims are divided.
The “ commission” claims (permanent partial disability awards, re­
jections, partial payments going through for the first time, fatal
cases, reopened cases, and others involving over $100 award) go to
the claim agent for final examination, then to the classifier for classi­
fication, and then to the listing clerk. A ll other claims go directly
to the listing clerk after classification.
Classifier.— From the computers and claim agent the completed
claim goes to the classifier in the statistical department, who assigns
the accident to the proper classification,




EXCLUSIVE STATE FUNDS— OREGON.

109

L isting clerk .—As the claims are received from the statistical de­
partment they are listed on a sheet by type of claim. These sheets
go to the commission for approval and form the minutes of the com­
mission’s action. The commission claims go to the listing clerk once
a day; other claims, every one and one-half hours, or five times a
day.
Commission .—Only those claims enumerated above are examined
personally by the commission each morning in the presence of the
claim agent and the medical adviser. Permanent partial disabilities
are rated at this time.
Transm ittal sheets .—All claims involving payments are then trans­
mitted to a special clerk, where a transmittal sheet is made in quad­
ruplicate (one each to the cashier, the secretary of state, the com­
mission for approval, and the bookkeeper). The commission signs
the original sheet. Employers are notified of each award.
Cashier .—The cashier draws the checks which are signed by one
commissioner. Checks are mailed the same day the transmittal sheet
is made out. Checks for pensions (called warrants) are made out
by the secretary of state but are mailed by the commission.
P artial paym ents .—Partial payment claims (continuing temporary
disabilities) are kept in a separate file in numerical order. Two
cards are made of each claim showing the name of the workman,
the claim number, and the date of the accident. One of these is filed
in alphabetical order, the other in the follow-up file. About 10 days
before the next payment falls due (payments are made monthly) a
progress report is sent to the attending physician, who reports as to
the condition of the injured workman. If he will still be disabled for
a considerable period the monthly payment is sent when due. (The
claim again goes to the computer and takes its regular course.) If
the claimant has resumed work or will be able to by the end of the next
payment a certificate of condition is sent to the employer, who re­
ports whether the workman has resumed work. The attending phy­
sician’s statement as to length of disability is accepted. The case
is not reviewed by the commission’s medical adviser.
M edical service .—The commission has a part-time medical adviser
who examines the claimants and advises the commission with respect
to the medical questions arising under the act, including the determi­
nation of the degree of disability in permanent disability cases. The
commission furnishes the medical service unless the employer oper­
ates under a hospital contract system. The commission has estab­
lished two physiotherapy laboratories, one located at Salem and the
other at Portland. Each of these laboratories is in charge of a skilled
surgeon and has several nurses who administer physiotherapy treat­
ment to the claimants.
According to the commission the contract hospitals are giving un­
satisfactory treatment. It is stated that patients are discharged from
the hospital before they are ready. Under the contract hospital
system the commission remits to the employer the 1 cent a day col­
lected from the workman. This amount is then deducted from the
employees’ monthly dues for the contract hospital services, which are
also collected by the employer for the hospital. Under this contract
hospital system, therefore, the employer’s compensation costs are
74832°—22-----8




110 COMPARISON OP W ORKM EN^ COMPENSATION INSURANCE.
reduced by the amount of medical cost. Consequently, he opposes
the elimination of the contract hospital, because through the com­
mission’s merit-rating system he receives a credit on his premiums if
his total accident cost is less than a certain per cent.
Perm anent partial disabilities .—In case of permanent partial dis­
abilities compensation is paid for temporary total disability during
the healing period in addition to the statutory amounts in the schedule.
The degree of disability in case of loss of use of a member is de­
termined by the commission, being based upon the opinion of the
medical adviser of the commission.
F atal eases .—Fatal cases are reported on the employer’s regular
report form. These cases do not go to the assembly department but
direct to the correspondence division. Relatives, the coroner, and the
dependents are communicated with. In special cases an investigator
is sent to obtain the facts, particularly as regards dependency.

Hearings .— The hearings o f the commission are merely informal
conferences, most o f which are held in Portland. One commissioner
and the medical adviser spend one day each week in Portland to
examine claimants and to hear permanent partial disability cases.
Claimants may appeal from the decision of* the commission to the
courts. There have been 25 appeals since the beginning o f the act, 9
o f which were decided against the commission. Upon appeal to
the court the claimant is allowed a jury trial. According to the
commission the jury frequently grants compensation when the facts
do not warrant it.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications and rates .—The original compensation act divided
the industries into classes according to hazard, but provided for only
two rates— 3 per cent for the more hazardous and 1^ per cent for the
less hazardous; the workman to contribute one-half o f 1 per cent
and one-fourth o f 1 per cent, respectively. In 1915 an amendment
provided for a revision o f classes and rates. This, however, was not
found practicable. The commission, therefore, gradually revised and
increased the classifications until at present about 300 are in effect.
The rates enumerated in the law, however, could not be increased or
decreased. The new classes were put in the statutory classes which
best reflected the hazard o f the class, as shown by' experience in
Oregon and other States. The commission, however, could make
monthly exemptions o f premium payments, which was done. The
commission also was authorized to allow deductions o f 10 per cent if
the losses o f a risk did not exceed 50 per cent o f the annual premiums.
These reductions applied on the next year’s premiums. I f the second
year also showed a loss ratio not exceeding 50 per cent, a 20 per cent
reduction was allowed. Exemptions applied to all classes except
firms which had not had six successive monthly pay rolls immediately
preceding.
Since 1919 the commission has been authorized to change the
statutory rates. The practice o f monthly exemptions has been elimi­
nated, although the experience reductions are still in effect.

The workman contributes 1 cent a working day, which is collected
and remitted by the employer. Some employers voluntarily pay the
workman’s share. The State pays (out of the appropriation funds)




EXCLUSIVE STATE FUNDS----OREGON.

Ill

one-seventh o f the combined contributions o f employers and work­
men. This provision has been eliminated for the two-year period
ending June 30, 1921. The expenses o f administration, however,
since 1917, have been paid out o f the accident fund, but are limited
to 10 per cent o f the premiums. The State’s contribution about equals
the annual administration expense. Prior to 1917 administration
expenses were appropriated by the State and limited to $25,000 for
salaries. The total contributions by employers and workmen for
the year 1920 amounted to $2,931,770.
Accounting department .— The Oregon act is elective. A t present
there are from 8,500 to 9,000 active accounts. About 10 per cent o f
these are nonhazardous employments which have come under the
act through voluntary acceptance. Or these 10 per cent about 70
cent are farmers. Hazardous occupations in nonhazardous industries
are not covered, nor are nonhazardous occupations in hazardous in­
dustries.
Pay rolls o f employers accepting the act are submitted monthly on
“ remittance blanks.” These blanks show the monthly pay roll and
number o f employees arranged by classes. Kemittance sheets go first
to the cashier, where they are acknowledged and totaled and de­
posited in bank. A check for the total amount is immediately drawn
on the bank and deposited with the State treasurer. The remittance
blanks then go to the bookkeeping department, where a list o f daily
receipts is made by firm number showing the amount contributed by
the employer and the workman, penalties, etc. The total amount is
then posted in the cash book. The remittance blank then goes to
the statistical department for classification, after which it is returned
to the bookkeeping department where the contributions and class
numbers are entered on the firm premium record card. A separate
record card is kept for each employer, showing whether the remit­
tance has been made and what subsequent action has been taken. The
remittance blank goes to the statistical department again for class
experience. The daily receipt list is checked with the daily totals
on the firm premium cards.
Losses paid as shown by warrant sheets are posted to the firm loss
card. In case o f death or permanent partial disability only awards
are entered. Subsequent monthly payments are shown on premium
cards. Warrant sheet totals are checked with firm loss card totals.
Funds .—The commission has five funds:
(1) Segregated fund or reserves for death, permanent total dis­
ability, and permanent partial disability awards (over 24 months) :
Out o f this fund the pensions are paid on warrants drawn by the
secretary of state from monthly lists furnished by the commission.
These warrants are drawn in favor of the commission, which indorses
them in favor o f the claimant. Stamped acknowledgment cards are
sent with the warrant; otherwise the commission has no further
record o f whether the warrant was received, since the cashed war­
rants are returned to the secretary o f state. In case o f remarriage
o f a widow, the remainder o f the reserve is put back into the general
accident fund.
(2) General accident fund: Out o f this fund are drawn the
moneys from which all other claims are paid. This fund includes
the administration fund.




112

COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.

(3) Emergency or revolving fund: This fund was created in
1919. Previously the secretary of state issued warrants for each
claim. In 1919 an emergency fund of $40,000 was created by taking
out of the general-accident fund $40,000 and placing it in a revolving
or emergency fund, which is deposited in the bank. The commission
now draws its own checks on this fund for nonpension payments.
At the same time a check for the total is drawn against the State
treasurer, who transfers the total amount called for from the general
accident fund to the emergency fund. This practice relieves the
secretary of state of making out warrants for each claim. No re­
ceipts are required by the commission from the claimants. Cashed
checks are checked against the warrant sheets. A list is kept of
those not cashed. Since the beginning of the act 497 uncashed war­
rants, aggregating $3,579.65, have been written off the books. In
addition 58 checks, aggregating $1,048.63, will probably not be cashed
but have not yet been canceled by the commission. These uncashed
checks, however, are carried as a liability against the fund.
(4) Catastrophe fund: One per cent is taken monthly out of the
general accident fund and placed in a catastrophe fund. Originally
(1917) $50,000 was set aside out of the accident fund for a catas­
trophe reserve. The total catastrophe reserve as of December 31,
1920, was $95,192. In addition the fund has a general surplus of
$553,069.
(5) Rehabilitation fund: Two and one-half per cent is taken
monthly out of the general accident fund and placed to the credit
of the rehabilitation fund, from which reeducation work in perma­
nent partial disability cases is paid. The commission believes, how­
ever, that 1 per cent of the premium income will be found adequate
to care for the work of vocational reeducation.
A u ditin g f a y rolls .—Pay rolls are audited whenever the auditors
are able to do it. It is the aim of the commission to audit the
pay rolls once a year. If the employer fails to pay his premium
his pay roll is audited immediately.
Collection of prem ium s .—Premiums must be paid before the 15th
of the next month after they become due. If not paid by the 30th a
1 per cent interest charge is made. After formal demand for pay­
ment is made by the commission a 10 per cent penalty applies, and if
payment is not made within a reasonable time suit is brought. The
commission is behind in its collections. There are between 8,500
and 9,000 accounts. About 1,200 letters are sent out monthly to de­
linquents. Each month 250 cases are turned over to the collection
department for action. There are 50 prosecutions each month by
the legal department. The uncollected premiums at the time of the
examination were $80,000, of which $60,000 were over 90 days
overdue*
Claim reserves .—Full reserves are set up by the commission in
death and permanent disability cases, no deductions being made for
remarriage or death of dependents. If the latter contingency occurs,
the excess reserves are transferred from the segregated fund to the
general accident fund. In temporary total disability cases the re­
serves are based upon the probable duration of disability.
D ividends .—The total dividends declared by the commission as
of December 31, 1920, amounted to $506,616.



EXCLUSIVE STATE FUNDS----WASHINGTON.

113

S T A T IS T IC A L D E P A R T M E N T .

Only closed cases are tabulated. The periods shown are those in
which the cases were closed. The cost tables show only premiums re­
ceived and amounts disbursed for the periods stated. Premiums and
losses do not apply to the same year.
The statistical department classifies both premiums and claims.
One clerk classifies the premiums (monthly statements), and another
classifies the claim losses. The premiums are obtained from monthly
remittances and adjusted when audited pay rolls are reported. The
losses are reported from transmittal sheets.
Accident statistics are recorded by hand on cards (one card each
for temporary total, permanent partial, and fatal cases). From these
cards the classifications are made. The commission is considering
putting into operation the Hollerith tabulating machine.
R E H A B IL IT A T IO N D E P A R T M E N T .

Since 1920 the commission has maintained a rehabilitation depart­
ment for the purpose o f educating and retraining those permanently
disabled. A t present rehabilitation is limited to those injured under
the compensation act and to those under 40 years of age, who
have sustained a loss o f 50 per cent o f function of a hand, arm, foot,
or leg. The commission pays the tuition of those taking training
and a monthly stipend is also paid, the amount o f which is rated
according to the number of dependents.
S E L F -IN S U R A N C E .

Self-insurance is not permitted under the Oregon compensation
law.
SAFETY W ORK.
Prior to 1920 the commission performed no safety work,
a function o f other State departments. In 1920, however,
enacted authorizing the industrial accident commission to
the work o f accident prevention in conjunction with the
labor.

this being
a law was
undertake
bureau of

WASHINGTON.37

The Washington workmen’s compensation act is compulsory both
as to compensation and insurance. Only enumerated hazardous in­
dustries are covered by the act. All employers must insure in the
State fund, neither private casualty companies nor self insurance
being permitted. The act is administered by an industrial insurance
department consisting of three commissioners, who are appointed
by the governor for a term of six years. The commission may
appoint its own employees. The administrative expenses of the
commission are paid out of the State treasury from moneys regu­
larly appropriated.
The commission is charged only with the administration of the
compensation act including the State fund. Accident-prevention
work is under the jurisdiction of the safety board and other State
departments. The administration of the medical service under the
compensation act is under the jurisdiction of a medical aid board.

37 The Washington Industrial Commission was combined with several other labor-law
enforcing agencies in 1921,




114

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

The commission adjudicates its compensation claims upon written
reports from the employer, the physician, and the workman, sup­
plemented by examinations and investigations. No formal hearings
are held by the commission. Appeal may be had from the commis­
sion’s decisions to the higher courts.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

A ccident reporting .—Only employers under the act are required
to report accidents, but all their accidents irrespective of time loss
or medical aid must be reported. The statutory waiting period is
seven days.
Both employer and workman are required to make report of an
accident to the commission at once, either on separate blanks or on
a combined blank—one side for the employer and the other side
for the workman. The workman’s report serves as a claim. About
four-fifths of all accidents are reported on combined blanks. The
employee’s claim is not made under oath. Each accident is given a
number and filed in alphabetical order.
Assem bly departm ent .—All reports are first received by the file
clerk, who stamps the date and transmits the accident reports to index
clerks, two in number, one indexing from A to L, the other from
M to Z. The attending physician’s reports are first transmitted by
the file clerk to the medical adviser, who initials them and forwards
them to the indexing clerks. The reports are then indexed in
alphabetical order by employee’s name. The index register contains
the name and address of the workman, the date of accident, the date
when received, and what reports have been received, i. e., whether
the employer’s, the workman’s, and the physician’s reports are on
file. The report is then given the next consecutive number. The
workman’s report is acknowledged by postal card upon which is
shown the accident number. The employer’s report is also acknowl­
edged by card, with the claim number thereon. One purpose of the
employer’s acknowledgment card is to allow the employer to protest
the claim and to prevent fraudulent claims on the part of the work­
man. This card is duplex in form. Upon the return half the
employer corroborates the workman’s claim and also states whether
the workman has returned to work. If no reply is received a second
card is sent to the employer, and if no reply to this is received it is
assumed the claim is legitimate.
Missing reports (from employer, workman, or doctor) are requested
by means of form letters. Missing doctor’s reports, however, are
requested from the local aid board having jurisdiction.
A summary and findings of fact is next made out by another clerk.
This summary goes to the auditing department. First, the firm or
risk number is placed on the summary. The names of all firms under
the act are kept in a firm register in alphabetical order, showing
firm number and class number. Then the summary sheet goes to
another division and the class number and the medical-aid class are
noted thereon, also whether the employer has a hospital contract.
Here all firms are listed on cards, which are filed in numerical order.
These cards show the manual class and the premiums paid. The
summary then goes to the assembly division for the other reports,
and then to the classifier who assigns the accident to the appropriate
pay roll and determines the subclass.



EXCLUSIVE STATE FUNDS----WASHINGTON.

115

The reports are then returned to the assembling department. A
jacket is made , for each claim (the jacket cover specifying what
reports have been requested). I f the jacket is incomplete it is placed
in the monthly file at the day upon which a follow-up letter will
be written. I f the missing reports are not received within five days a
first follow-up letter is sent, followed by a second after a 10-day
interval. No reports are kept in this follow-up file more than 30
days. A t the end of 30 days they go to a special follow-up division
through which all matters requiring further attention are handled.
In this special division the incomplete jackets are again placed in a
monthly file.
Claims division .—When the jackets are complete they to go the
claims adjuster. There are three such adjusters. These adjusters ex­
amine the cases as regards coverage, liability, computation of re­
serves, etc. Permanent partial disability cases are sent to the medical
division for rating; if the case requires additional information it is
sent to a field adjuster for investigation. The case then goes to the
claim agent, who finally reviews and passes upon every case.
The claim agent divides the cases into the following classes: (1)
Finals; (2) adjustments— those with vouchers attached signed by
claimants; (3) permanent partial disability finals; (4) fatals; (5)
reopen cases; (6) partial payments; (7) rejections; (8) suspensions;
(9) to close as paid; and (10) monthly payments.
Listing clerk .— The cases then go to the listing clerk by whom the
claims are listed on a sheet in the groups mentioned above. These
lists contain the name of the workman, the amount to be paid, and
the reason in case of the rejection of the claim. Four such lists are
made (one each for the listing clerk, auditor, claim agent, and the
statistician). Before the claimant is sent his check he must sign a
voucher, which must be returned to the commission. In case of
monthly payments this is not required, merely a card-showing the
amount o f the award being sent to the employer. The listing clerk
makes out vouchers for each claim in duplicate—one to the claimant
and one to the employer. Notice o f whatever action is taken by the
commission, i. e., w hether the claim is rejected or suspended, and the
7
reasons therefor, is sent to the employee by form letter and to the
employer by printed card.
The listing clerk does not make vouchers in fatal cases; these are
made by the claim agent.
The claims then go to the commission for formal approval, then to
the secretary’s office where the vouchers and lists are compared and
the vouchers are sent out. Claims then go to the audit department to
have the losses recorded on firm record cards, which are kept in nu­
merical order by firm number, then to the statistical department,
after which they are returned to the voucher and warrant clerk. The
monthly payment claims, however, go from the commission direct to
the claim agent, who has supervision over continuing claims, that is,
temporary total disabilities o f long duration. Once a month a cer­
tificate o f condition is sent to claimant which must be signed by the
T
employer or the physician.
Voucher and ivarrant clerk .—From the statistical department the
claims go to the voucher and warrant clerk. Here the claims are filed
awaiting the return o f vouchers from the claimants. When the




116 COMPARISON OF WORKMEN *-S COMPENSATION INSURANCE.

vouchers arrive the claims are withdrawn and warrant sheets are
made out in quadruplicate. The signatures on vouchers and original
accident reports are compared. The warrant sheet then goes to the
State auditor and warrants or checks are made out; the claims are
placed in another file awaiting the return of the warrants. When
warrants are received they are checked with the claim as to the claim­
ant’s name, the amount, and the warrant number; the warrants are
also checked with the warrant sheet as to name, amount, and number;
and the envelope is checked with the claim as to the name and address
of claimant. The original voucher is sent to the treasurer for com­
parison with the signature on the warrant. A duplicate voucher
goes to< the claimant.
H earings .—The commission adjudicates its compensation claims
upon written reports from the employer, physician, and workman,
supplemented by examinations and investigations. No formal hear­
ings are held by the commission. Appeal to the courts may be had
from the commission’s decision.
M edical departm ent and perm anent partial disabilities .—The com­
mission has a medical department consisting of a chief medical
adviser and assistants. All attending physicians’ reports go to the
medical adviser and are examined as to (1) name and character of
physician attending the case; (2) nature of injury and whether it
is presumably due to accident and whether it arose out of employ­
ment; (3) how soon after the accident the injured workman went to
a physician. The physicians’ reports are then returned to the claims
division.
The medical department rates all permanent partial disability in­
juries. In case additional information is desired the case is referred
to the district adjuster (at Spokane, Seattle, or Tacoma) for special
report. A record of each permanent partial disability case is filed in
the medical adviser’s office.
Each permanent partial disability (impairment) is rated on func­
tional loss only. The flexion and extension of a member are meas­
ured and the loss of motion determined in percentage of total loss
of that member. Total loss of each member is stated in degrees,
$25 being paid for each degree of total disability, 80 to 100 per cent
being the maximum. In eye injuries the Snelling test is used, the
fractions being translated into percentages of loss of vision. In case
of injury to one eye only, the per cent of loss of vision is computed
upon central vision only, lateral vision being disregarded. But in
case of injury to both eyes loss of lateral vision also is measured
and taken into account.
The medical department of the commission has to do only with
determining the degree of permanent disability and with the ability
of the injured workman to return to work—the actual treatment being
under supervision of a separate medical aid board. The medical
adviser may refer cases to specialists, of whom he keeps a list, or he
may have the injured workman called in for X-ray examination. All
fees and expenses are paid by the commission. The results of these
examinations and the recommendations of the medical adviser in
these cases are transmitted to the medical aid board for its informa­
tion. If deemed advisable the medical aid board may change
physicians.



EXCLUSIVE STATE FUNDS----WASHINGTON.

117

The medical department has X-ray machines and numerous testing
and measuring instruments. Many workmen on their own initiative
come into the office for examination. Temporary disability accidents
of long standing are particularly scrutinized. These are investigated
by an adjuster and if deemed advisable are examined by specialists.
Osteopaths, etc., are not recognized, and bills for treatment by them
are not paid unless such treatment has been recommended by a regular
surgeon. The injured workman selects the physician in nonhospitalcontract cases, but if treatment furnished is inadequate or inefficient
the commission may and does transfer the case to another physician.
The hospital-contract system is undesirable according to the commis­
sion. It is stated that such hospitals furnish poor service, some of
the hospitals being mere money-making schemes. Patients are said
to be discharged before they are healed.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classification and rates .—The basic rates and classifications are
stipulated in the compensation act. These rates, however, may be
increased or decreased by the commission in accordance with the ex­
perience developed. The commission may also change the classifi­
cations if experience warrants. Each class is divided into sub­
classes with varying rates (not more than basic rate) in accordance
with hazard. A merit-rating system is used by means of which in­
dividual employers within each class receive a credit or debit in ac­
cordance with their experience and the physical condition of their
plants. The merit rating is applied and the inspections are made by
the safety board, a separate State department.
Assessm ents .—An employer in making his application submits an
estimate of pay roll for the first three months’ operation, showing
pay roll, nature of work, and number of employees. A book of
instructions is then sent to him including blank forms for reporting
future pay rolls. A notice of assessment based on an estimated
three months’ pay roll is also mailed to him. An employer’s pre­
mium record card is made out at the time, and the assessment re­
corded. A duplicate assessment is sent to the cashier where-it is filed
in numerical order. When the remittance is received with the origi­
nal assessment, the duplicate is taken out of the file and the original
returned to the employer. The duplicate then goes to the bookkeeper
who combines the duplicates by classes and records totals to the
credit of the class. The cards are kept in numerical order. The
duplicate assessment slips then are marked as paid on the firm pre­
mium record card. The assessment checks are deposited in a bank,
upon which a check to the full amount is drawn and deposited with
the State treasurer.
Thereafter employers report their pay rolls three times a year
upon blanks; furnished by the commission. Assessments are made
whenever needed. In most classes no further assessment is made
until the end of the year, when the adjustment is made. In the others
assessments may be called for at any time or at the end of the job in
case of construction or small logging jobs. The action taken depends
upon the condition of the fund of the class. Employers beginning
in the middle of the year are charged the full basic rate unless
they continue for the next, year, in which case they receive the



118

COMPARISON OF WORKMEN ?S COMPENSATION INSURANCE.

adjusted rate. The total contributions for the year 1920 amounted
to $2,590,758.
Medical aid contributions are submitted with the pay ,roll. Com­
pensation insurance premiums, however, are not transmitted with the
pay roll, for the reason (1) that they may not be needed immediately,
and (2) because the employer usually makes mistakes in computing
the premiums. Medical aid contributions are computed on a per
capita basis.
Prem ium adjustm ent .—At the end of the year the number of
assessments to be made is determined and the adjustments are made.
The pay rolls for each employer are summarized (on summary
sheet), the classifications made or verified, and premiums computed.
The net assessment for the year (the initial assessment being de­
ducted) is sent to the, employer and recorded upon the firm card and
the class ledger card as in the) case of the initial assessments,. Debit
and credit adjustments of different classes are made by means of a
journal voucher on the class ledger. (The initial premium estimates
may not correspond with the pay-roll premiums! later reported,
necessitating the giving of appropriate credits and debits.)
Each class bears its own losses. Consequently there are as many
accident funds as classes. The number of assessments, as already
noted, varies with the class. ' Frequently classes have no funds avail­
able for the current losses. Each class lives from hand to mouth,
although the commission aims to have always a certain reserve on
hand. In case on© class is temporarily insolvent the other class
funds are drawn upon. No catastrophe or other reserves (except
claim pension reserves) are maintained.
A u diting pay roll .—Previous to June 7, 1917, employers did not
report pay roll except initial estimates. The pay rolls were later
obtained by the. commission’s traveling auditors. By an amendment
to the law in 1917 employers were required to report pay rolls direct
to the commission. The commission required reports monthly until
April, 1918; since then, three times a year, but separately for each
month by classes. These pay rolls and the classifications are ac­
cepted by. the commission as correct without verification. However,
pay rolls of large contractors reported in lump or with improper
classifications are audited at the end of the year or the end of the
job. Also, pay rolls of public contractors are audited because the
State or subdivision will not pay contractors, until they have received
a release from the commission showing all premiums paid. Occa­
sionally some other employers request a pay-roll audit by the com­
mission, which is done.
M edical ojid contributions .—The commission collects the medical
aid contributions for the medical aid board. These, contributions
are_ deposited with the State treasurer to the credit of the medical
aid board, which disburses the medical aid fund.
F irm record —prem ium s .—There is a premium record card for
each employer, which shows the amount assessed against each em­
ployer by classes and the amount actually paid. The assessment is
recorded on the card from the adjustment sheet before the assessment
sheets are sent out. When assessments are paid the amounts are
recorded on premium cards as actually paid. The firm cards are not



EXCLUSIVE STATE FUNDS----WASHINGTON.

119.

balanced with the class record cards. Medical contributions are also
recorded.
Firm record-losses .—Each employer also has a claims-paid record
card which shows the losses paid. After claims are approved by the
commission they are recorded on a firm-record card, except the
monthly payments which are recorded from the warrant sheets.
The amount of reserves is not recorded. Medical payments are also
recorded from the warrant sheet received from the medical aid board.
Class record.-—Only premiums actually paid are recorded. When
checks accompanying assessment slips are received, the latter are
transmitted by the cashier to the bookkeeper, who groups them into
classes and lists them on one sheet, from which they are transferred
to ledger cards by classes (they are not kept by subclasses). There
are several ledger cards for each class (premiums, refunds, claims
paid, expenses of claimants, reserve fund). The claims, etc., are
posted to the ledger card from the warrant sheets. The death re­
serves are kept by class on a separate card which contains the reserve
and the payments made against the amount of the reserve. Credits
and debits are made by the journal voucher. Each month a recapitu­
lation by classes is made on one sheet.
Reserves.—Pension reserves for the Washington fund are computed
by the State insurance department. These reserves are revalued an­
nually, and if they are found to exceed the necessary requirements
the excess is turned back into the accident fund. On the other hand,
if the reserves are found insufficient the needed amount is taken
from the accident fund. No catastrophe reserve is maintained by the
commission.
Dividends.—No dividends are declared by the commission. It is
the policy of the commission to collect only sufficient premiums to
meet the cost of accidents as they occur.
S T A T IS T IC A L D E P A R T M E N T .

A new system of accident statistics has just been introduced. Only
closed cases are tabulated. The accident cost to employers is to be
kept by calendar year. Claims are received from the claims division
as soon as closed and punched on Hollerith cards. Every firm is
given a number. The firm number is punched so that it will be
possible to assemble all accidents occurring in one firm. This gives
the accident cost per firm. The firm cost is given only when a special
request is made by the firm concerned. The State safety board
duplicates this information.
Claims are divided into two classes-—compensable and noncompensable. The chief information asked as to noncompensable claims
is (1) reasons for rejection and (2) time loss for accident of less
than seven days. No medical costs are tabulated. This is a function
of the medical aid board. Classification of causes of accident is to
be subordinated, since this is a function of the safety board. Here­
tofore emphasis on accident tabulation has been from the medical
standpoint, that is, for the use of the medical department. Here­
after the insurance costs are to be made the major subject of the
statistical department. The amount of the pay roll and the losses
paid are to be kept by subclasses. From these data the commission
will determine the number of assessments or calls for the year.



120

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
S E L F -IN S U R A N C E .

Self-insurance is not permitted under the Washington act. All
employers must contribute to the State fund.
SAFETY BOARD.

The industrial commission is not charged with accident-prevention
work. This is under the jurisdiction of the State safety board, a
separate department of the State. The safety board not only is
charged with the accident-prevention work but also administers the
merit-rating scheme. Under this merit-rating system employers
receive a credit or debit based both upon the physical condition of
their plants and upon their experience.
M E D IC A L A ID B O A R D .

The medical aid board has supervision of the medical service under
the compensation act, including the administration of the medicalaid fund, which is kept separate from the accident fund. Employers,
excepting those operating under a contract hospital system, must
contribute to the medical fund in accordance with the hazard of the
class to which they belong.
-WEST VIRGINIA.

The West Virginia workmen’s compensation law is elective as to
compensation and compulsory as to insurance. All regular employ­
ments, except farm labor, domestic service, and traveling salesmen
are covered by the act. Electing employers must either insure in
the State fund or provide self-insurance. Private casualty com­
panies are not permitted to operate. The act is administered by a
compensation commissioner appointed by the governor with the con­
sent of the senate for a term of six years. The commissioner is
authorized to select his own employees and to fix their salaries.
With the exception of the commissioner’s salary, which is paid out of
the State treasury from moneys regularly appropriated, the adminis­
trative expenses of the fund are paid out of the premiums, subject,
however, to a maximum annual expenditure of $140,000.
The compensation commissioner is charged only with the adminis­
tration of the compensation act, including the State fund. The com­
missioner is not charged with the enforcement of the safety laws,
except that he may require employers to adopt and post safety rules.
The accident prevention work is under the jurisdiction of other
State departments.
The commission adjudicates its compensation claims upon writ­
ten reports of the employer, physician, and workman, supplemented
by examinations and investigations. No formal hearings are held
by the commissioner. Appeal to the courts may be had from the
commissioner’s decision.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

Accident reporting \—Only employers subject to the act report
accidents, but all their accidents are reported. The statutory wait­
ing period is seven days. The following primary reports are re­



EXCLUSIVE STATE FUNDS----WEST VIRGINIA.

121

ceived: (1) Employer’s report; (2) workman’s claim, which must be
sworn to; (3) doctor’s report; in addition, periodical reports of the
attending physician on the condition of the claimant, and physician’s
fee bill.
When the employer’s report is received (usually it is received first)
it is given a number. West Virginia has a unique system of num­
bering accidents. One number is- given to all accidents occurring on
a given date, this number being the number of days elapsing since
the act went into effect. Then each accident is given another num­
ber, being numbered consecutively in the order in which it is received;
e. g., No. 2206-83 means that the accident occurred on the 2206th
day and was the 83d accident reported for that day.
After numbering a claim, a jacket is made, a different colored
jacket being used for the self-insurer. The risk or firm number is
placed on the jacket and on the accident report. The clerk who
assigns these numbers has on file a list of employers with the risk
numbers. The same clerk also makes out an employee’s index card,
containing the names of the employee and employer, the date of the
accident, the nature and cause of the injury, the claim number, the
risk number, and the date of filing. These are filed in alphabetical
order, by employee’s name, by three-month periods.
Another clerk indexes the accidents in an accident register book in
numerical order. This book contains the risk number, the employee’s
and employer’s names, the duration of disability, and also the fol­
lowing, wT are entered later: Receipt of subsequent reports, which
hich
are checked when received, and the dates when the case goes to the
medical department, the claim clerk, and the commissioner for
approval.
The missing reports (the workmen’s claim, and the physician’s
report and physician’s bill which must be signed by both employer
and employee) are then requested from the employer, blank forms
being sent to the employer, who is requested to get in touch with the
parties. Upon the blank forms are placed the claim number and
the date when sent; the latter is also put on the jacket.
The case then goes to the accounting department to ascertain if the
employer has paid his premiums; at the same time the class number
is assigned. If the employer is in default on his premium payments
he is automatically not under the *act and the State fund is not liable
for claim payment.
The case is then returned to the claim department and indexed in
the employer’s register by class number. The employers are divided
into general classes (A, mining, G5public utilities, etc.), and the em­
ployers under each class are numbered in numerical order. The ac­
cidents are then listed under the name of the employer in the order
in which they are received. The register contains the accident
number, the date of the accident, the location of the plant, the em­
ployee’s name, and whether the injury was fatal or nonfatal. The
case is then filed in numerical order awaiting developments.
The clerk who has charge of the accident register records the
reports as they are received. A list is made of completed cases, which
are then withdrawn from the files and sent to the medical department
for examination as to the duration of disability, the degree of partial
disability ^and the doctor’s bill. The medical adviser makes a report
on a special form. The case then goes to the claim clerk for exami­



1 2 2 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

nation^ at which time a synopsis sheet is; made amt; them again to the
accounting department for reehecking; them to the checker for final
examination and checking of computationsr etc,;, and then to the
commissioner for approval, after which it is countersigned by the
secretary. A list of all claims is made and sent to the u register ”
clerk for entry. Checks are then made out and sent to the State
auditor for signature.
Payments are made every two weeks and sent directly to the em­
ployer for distribution to the injured workmen. Compensation is
paid irrespective of whether the employer pays; full wages during
the disability.. The matter is left to the employer and employee—the
former receives the check in the first instance. In fatal and per­
manent partial disability cases the employer is notified of the amount
of the award and the check is sent directly to the employee.
Compensation payments in death cases are made twice a month.
With each voucher check the beneficiary is required to state whether
there has been a change in the nature of dependency, and twice a year
the beneficiary is required to submit a sworn statement regarding the
status of such dependency.. When a check is sent to a claimant a
physician’s supplemental report form is inclosed,, which must be
returned before another payment is made.
The register clerk examines the accident register three1 months
after the date of the accident and if missing forms have not been re­
ceived a second set is sent to the employer * if there is still no reply*
.a third set is sent to the workman.. After six months a claim is out­
lawed. Bequests for reports are sent only in those cases in which
the duration of disability was reported by the employer as over seven
days. If the claimant is still disabled when the physician’s report
is made, the supplemental, report is detached and sent in later when
the injured man returns to work. Final reports are received from
the physician,, but not from the employer.
Self-insurers’ accidents are handled exactly like those of the State
fund, except that after the commissioner passes upon a claim and
makes an award an order is drawn upon the employer to pay the
amount and a receipt for the same is filed with the commissioner.
The same reports are required (the workman’s claim, and the doctor’s
and employer’s reports) and the same procedure is followed.
Meavings.—The commission adjudicates its compensation claims
upon reports from the employer, physicians, and workman, supple­
mented by examinations and investigations. No formal hearings are
held by the commissioner. Appeal to the courts may be had from
the commissioner’s decision. There have been only about four or
five appeals to the courts annually.
Medical depm^tmejit.—The commission has a medical department
consisting of a medical adviser and one clerk The medical adviser
does not have his office in the commission and gives only part time to
this work. The ordinary minor and routine cases are examined by
the clerk, only the more important eases, including permanent dis­
abilities,. being examined by the medical adviser. The commission
also5refers cases to medical referees. A special surgical report is
required in certain cases. As to* medical feesy the commission is
guided by a fee schedule which is uniform: throughout the State. The
selection of the physician: is usually left with the employee, although
some employers have assumed the privilege of choosing the physician.



EXCLUSIVE STATE FUNDS-— WEST VIRGINIA.

128

A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classification and rates .— The West Virginia compensation law
provides for a classification o f industries according to the hazard,
hut the commissioner lias power to change the classifications enu­
merated in the act. The original statutory classifications have been
considerably increased and modified.
The early law limited the maximum rate to $1. This proved in­
sufficient to meet the losses from several of the hazardous industries,
especially coal mining. In addition there occurred two heavy catas­
trophes, one in 1914 and one in 1915. As a result of the low rate
plus the two catastrophes, the coal mining schedule has been insolvent
from practically the beginning o f the act. The coal mine rates were
increased to $2.10 the third year; the coal mining deficit has been
gradually reduced, and at the present time the coal mine class is
almost solvent.
The original rates adopted in West Virginia were based upon the
insurance manual. As experience developed these rates were modi­
fied. There has been no change in the basic rates since 1917.
Public employers must report their pay roll and premiums in the
same manner as is required o f private employers. They have the
same classifications, depending upon the nature o f the business, and
are charged the rates applicable to the classifications.
M erit rating. — West Virginia has adopted an experience rating
plan. Under this plan a debit or credit is given to each employer
depending upon his experience during the preceding year. Such
credits are not retroactive but apply upon the subsequent year. In
determining each employer’s loss experience, all fatalities, irrespec­
tive o f whether there are dependents, are valued at $1,200, and all
permanent totals are valued at $1,400. These debits and credits apply
only for one year. This plan has resulted in a general reduction in
rates o f about 10 per cent. Adjustments are not made at the end of
the year upon the previous year’s experience, but a new rate modified
in the light o f the employer’s loss experience is applied to the follow­
ing year’s pay roll.
C redit for hospital service. —No special reduction in rate is given
i f the employer maintains his own hospital service. However, by
so doing he reduces his loss cost and in this way is credited in the
application o f the merit-rating system.
P ay roll and premAwm receipts .—Each employer is required to keep
on deposit with the fund premiums for two previous pay-roll periods.
He must report pay roll monthly and remit premiums thereon under
oath. The employer makes the classification and applies the rate
which is furnished him. The fund computes the revised or merit
rate from the employer’s prior year’s experience. This rate is fur­
nished the employer, and5 he applies it to his next year’s pay roll.
The rate does not apply retroactively. Each employer is supplied
with his own experience by the monthly statements. Employers may
know therefore whether their rate is correct.
Employers must report before the 25th o f the succeeding month.
I f not, they are dropped at the end o f the next month, i. e., three
months from the beginning o f the first month for which no report
is received. Defaulting employers may be reinstated, however, with
no penalty, There are about 200 defaults a month. No legal action



124

COMPARISON OF WORKMEN ’s COMPENSATION INSURANCE.

has been taken to collect premiums if employers fail to remit. The
fund has two months’ advance deposit, however, so it loses only one
month’s premiums. The fund is liable for accidents occurring three
months after default or until the employer is suspended.
Each month a statement of each subscriber’s experience is made,
one copy of which is sent to the employer and one copy retained by
the auditing department and bound in book form. This statement
contains the claim number, the date of the accident, the name of the
employee, the losses (medical, funeral, temporary disability, perma­
nent total disability, and fatal) ; also the risk and class number. If
an employer has more than one class a separate statement is made
for each class. Losses include amounts awarded in fatal and per­
manent disability cases, but in temporary disability cases only the
amount paid during the month regardless of the date of accident.
Fatalities are figured at $1,200 and permanent total disabilities at
$1,400, but for merit-rating purposes only.
In the employer’s account book is kept a record of each firm’s
annual premium and losses. On one side of the page are posted the
premiums from the monthly pay-roll report, the class number, the
rate, the wages, the premiums, and the deposits being shown. The
accounts are examined once a month and the delinquent employers
notified. Employers must report their pay roll and send their remit­
tance before the 25th of the succeeding month.
On the reverse side of the page are posted the firm’s losses taken
from the monthly statement, showing the class, the date, and the
medical, funeral, temporary disability, permanent total disability,
and fatal losses for the month. The fatalities are estimated at $1,200
and the permanent total disabilities at $1,400. The fund also keeps
the annual experience of each employer, arranged by classes. In
computing the loss experience by classes the merit-rating estimate
for fatalities ($1,200) is converted into the class estimate of $1,875
and the permanent total disability estimate ($1,400) is converted into
a reserve based upon a life expectancy of 16 years. The total pre­
mium income for the year 1920 amounted to $2,410,238.
Reserves .—Reserves for outstanding losses are computed as fol­
lows:
In case of death or permanent total disability the present reserve
set aside is $1,875. The original reserve under the act was $1,200
for each fatality. This was increased to $1,500 in 1918, and later to
$1,875. This $1,875 is derived in the following way: Widows and
permanent total disability cases are presumed to live 16 years, the
compensation rate being applied for this length of time. The total
compensation thus obtained is divided by the combined number of
permanent total disabilities and deaths regardless of whether de­
pendency exists, and the quotient thus obtained is the $1,875 already
mentioned. Each classification having a death or permanent total
disability is charged with this amount irrespective of wages, com­
pensation rate, or number of dependents.
The reserve for permanent partial disability is the full amount
of the compensation award, discounted, however, at 4*per cent for
present worth. There is no reduction for mortality. In case of
lump-sum settlements, however, there is a 5 per cent discount for
present worth and an additional 5 per cent for mortality.



COMPETITIVE STATE FUNDS----CALIFORNIA.

125

The reserve for temporary disability is not based upon the case
method but determined from prior experience; that is, the commis­
sion has determined from the earlier year’s experience the actual
losses which were outstanding at the close of each year. This has
been about 10 or 11 per cent of the total losses.
C at astro phe reserve and surplus .—Originally 10 per cent of the
premiums was set aside for catastrophe hazards. This was reduced
to 5 per cent and then to the present 4 per cent. The catastrophe
reserve is merely a part of the surplus and it is not used to pay for
special catastrophe losses. Each classification must pay for its own
losses. The catastrophe reserve plus the surplus is merely a stabil­
izer of insurance rates. The total surplus of the fund as of June
30, 1919 amounted to $539,626, of which the catastrophe reserve con­
stituted $330,894.
D ividends .—No dividends have been paid. It is the policy of the
fund to charge low rates rather than to pay dividends.
S E L F -IN S U R A N C E .

Self-insurers are required to file a financial statement showing their
assets, liabilities, etc. In addition, each self-insurer is required to
deposit security. The minimum security required is $5,000. If more
than one employee will be affected by a single accident a $5,000 de­
posit is required for each employee. Thus far there have been no
failures. Self-insurers are also required to pay their share of the
administrative expenses of the commission, this being 5 per cent of
their premium. They are required to report their pay roll and
premium in the same way and manner as employers insured in the
State fund. Self-insurers do not contribute to the catastrophe fund
nor do they receive the benefit of the catastrophe reserve or fund.
SAFETY W ORK.

The compensation commissioner is not authorized to administer the
safety laws of the State except that he may require employers to
adopt and post safety rules. The accident prevention work is under
the jurisdiction of other State departments.
COMPETITIVE STATE FUND S.
CALIFORNIA STATE FUND.

The California State insurance fund is under the jurisdiction of
the industrial accident commission and is administered by a manager
appointed by the commission. The commission determines the gen­
eral policy of the fund but leaves to the manager the carrying out
of its policies. The fund is, therefore, practically independent of the
commission. The manager of the fund is authorized by the commis­
sion to appoint the employees of the fund, subject, however, to the civil
service laws of the State. The administrative expenses of the fund
are paid out of the premiums. This expense includes a 2 per cent tax
on the earned premiums. The fund has voluntarily assessed itself
this 2 per cent tax, which is required of the private casualty compa­
nies, in order to equalize competitive conditions. The amount of this
tax is turned over to the administrative fund of the commission.
74882°—22-----9




1 2 6 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.

When the State fund was created, the State legislature appropri­
ated $100,000 as a working capital for the fund and the commission,
having an additional sum available for preliminary expenses prior
io the date the fund began as a legal entity, contributed $5,000 as a
preliminary expense fund. The $100,000 appropriated by the legisla­
ture, however, has never been touched and is still carried as a lia­
bility against the fund.
The premium income of the funds increased from $547,161 in 1914
to $4,360,397 in 1920. During the first seven years of the act—
that is, up to December 31, 1920—the fund returned to its policy­
holders $2,060,291 in dividends. In addition to these dividends the
fund had on December 31, 1920, a surplus, over and above all in­
curred and outstanding obligations, amounting to $1,997,660 includ­
ing the $100,000 originally appropriated.
The fund adjudicates its compensation claims primarily upon
written reports of the employer, the physician, and the workman,
supplemented by examinations and investigations. In disputed cases
either party may appeal to the industrial accident commission for a
hearing. The number of appeals to the commission in the case of the
State fund is relatively much smaller than in the case of private in­
surance carriers. Although the fund has the right to appeal from the
decision of the commission to the courts, it is the policy of the mana­
ger of the fund not to appeal from the commission’s decisions.
ACCIDENT REPORTING AND CLAIMS DEPARTMENT.

Accident reports are required from the employer, the physician,
and the workman. All the mail is received in the general office and
from there it is distributed to the claims department and other divi­
sions. The medical division receives all the physicians’ reports; the
medical adviser examines these reports and notes,those he wishes to
reexamine, which are returned to the medical division in due time.
Certain large employers having their own medical service do not
report minor injuries (those receiving no compensation and no medi­
cal aid) on blank forms. In lieu thereof they send in periodical lists
from which statistical cards are punched.
Coverage division .—All accident reports are indexed on cards by
name of employer. A number is assigned to each accident. Acci­
dents are also indexed on cards by name of employee, and by claim
number in a book which contains the names of the employer and
workman and the policy number. Before listing the accident report
is examined as to coverage. A summary card and jacket are then
made out. A synopsis of the case (similar to the employee’s index
card) is sent to the branch office. The branch office gets in touch
with the employer and requests the missing reports.
Claim s division ,—The jacket with the accident report and the sum­
mary card is transmitted to the claims division. This division is
composed of four groups, each having entire supervision over the
accidents assigned to it. Of every 100 accidents, group 1 receives
those numbered from 1 to* 25; group 2, from 26 to 50; group 3, from
51 to 75; and group 4, from 76 to 100. Each group consists of nine
employees, as follows: Claim examiner, assistant claim examiner,
clerk, assistant clerk, messenger, post-office girl, stenographer, typist,



COMPETITIVE STATE FUNDS— CALIFOE^IA.

127

and cheek writer. The post-office girl distributes the mail to the
appropriate employees in the group.
The examiner receives the accident reports from the coverage
division. Missing reports (generally the workman’s; claim and the
employer’s report) are requested, the claim, number being assigned
to the blanks sent out. The estimated cost of the accident is noted
on the summary card, which is sent to the statistical department for
tabulation and then returned to the examiner and filed in the monthly
file as of the day missing reports are due or the day compensation
is to be made. Carbon copies of requests are sent to the. branch
offices.
Payments are made weekly in ordinary cases, biweekly in serious
cases, and monthly in death and permanent disability cases. One-half
of the amount is paid in advance. In serious; cases payments are
made- before the workman’s claim is received. Employers’ and
doctors’ reports, however, must have been received. Medical bills
are paid biweekly. Doctors’ supplemental reports are requested
through the workman. These blanks are usually submitted with the
compensation check.
Claims are examined and the amount of compensation computed
by the clerk and checked by the assistant examiner. The claim then
goes to the check writer, who writes the check; the check and case
are examined by the examiner and approved by the superintendent
or assistant superintendent of claims. Checks, are signed by the
manager, the secretary, or the assistant secretary, and countersigned
by the fund auditor. Checks are sent to the workman direct, in
9 out of 10 cases. Some employers want the checks sent to them.
If the employer pays- full wages while the employee is totally in­
capacitated, the check is drawn in favor of both the employer and
workman.
Closed cases, are extracted and filed in numerical order in the
closed file-. Closed summary cards are sent to the statistical depart­
ment for tabulation.
Four copies of the checks are made (one each for the workman, the
branch office, the jacket, and the audit department). The checks are
totaled daily.
H earings ,—The fund adjudicates its compensation claims prima­
rily upon written reports of the employer, the physician, and the work­
man, supplemented by examinations and investigations. In disputed
eases either party may appeal to the industrial accident commission
for a hearing. The number of appeals' to the commission in the case
of the State fund is relatively much smaller than in the case of
private insurance carriers. Although the fund has; the right to
appeal from the decision of the commission to the. courts, it is. the
policy of the manager of the fund not to appeal from the commis­
sion’s decision.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications and rates.—The State fund adopted the classifica­
tions and rates promulgated by the National Workmen’s Compen­
sation Service Bureau for the private casualty companies. The fund
has ever since charged the same rates that other insurance carriers
have charged, these being the minimum rates fixed by the State in­



128

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

surance commissioner, except that when the other carriers at the
beginning of 1918 increased their rates 5 per cent the fund did not
meet this increase. The private companies, however, abolished this
5 per cent increase in October, 1919. The rates charged by the fund
are sufficiently high to allow the building up of an adequate! surplus
and a return to the policyholder of an annual dividend of approxi­
mately 30 per cent.
P ay roll and prem ium s .—Risks are divided into three classes as
regards method of premium payments as follows: (1) Ordinary
small risks, the annual premium being based upon the estimated pay
roll and paid in advance. (2) Contracting risks, in which three
months’ advance premium on the estimated pay roll is required, the
initial premium acting as a deposit; the actual pay roll is then
reported and the premium thereon paid at the end of three months.
(3) Risks of large employers who report pay roll and pay premium
monthly. Pay rolls are audited yearly except that pay rolls of
small employers in outlying districts are not audited. The minimum
premium ranges from $5 to $20, depending upon the hazard of the
risk; ordinarily the minimum premium is $10. Premiums must be
paid within 10 days; if not so paid, the risk is automatically canceled.
The premium income of the fund has increased from $547,161 in
1914 to $4,360,397 in-1920, which was approximately 40 per cent of
the entire workmen’s compensation insurance business of the State.
Reserves, surplus yand dividends .—The loss reserves in workmen’s
compensation insurance in California are not computed upon the
basis of incurred losses but under the State insurance law are based
upon the earned premiums. The legislature of 1915 enacted a re­
serve law requiring insurance companies to retain, undistributed to
their stockholders, a certain percentage of their premiums intact for
three years before releasing them to their surplus account
The reserve law then in effect provided for setting aside for losses
a reserve of 75 per cent of 1914 earned premiums, less losses and loss
expenses paid, and as the estimated actual losses (using liberal esti­
mates for outstanding losses) were only approximately 39 per cent, a
considerable portion of the profit was tied up in reserves for the
average three and one-half year period by law. While this gave
the fund an excellent bulwark to windward, it also limited the
amount which could be immediately returned to policyholders. The
only amount available was the difference between 100 per cent of the
premiums earned plus interest and the reserve of 75 per cent plus
expenses other than claims. At the end of the year a flat dividend
of 15 per cent of earned premiums to all policyholders except those
having paid only the minimum premium was declared. When the
reserves for that year were released four years later, a second divi­
dend was paid in cash to these same policyholders, bringing the
total return to approximately 34 per cent. This arrangement for
initial and final dividends has been continued for subsequent years
until, for the year of 1919, the initial dividend declared was increased
to 17.5 per cent.
This legal loss reserve is now 70 per cent of earned premiums,
less losses and loss expenses paid. The total dividend returned to
the policyholders up to December 31, 1920, is $2,060,291. On De­
cember 31, 1920, the fund held a surplus, over and above legal re­
serves and all liabilities, of $1,997,660 including the $100,000 origi­



COMPETITIVE STATE FUNDS----COLORADO.

129

nally appropriated. For security to policyholders the fund, there­
fore, has the original appropriation of $100,000, full legal reserves,
a substantial additional surplus at all times, and the added protec­
tion of hidden profit contained in the excessive loss reserve.
All employers receive a minimum dividend of 10 per cent. Divi­
dends may be withheld, however, from employers who have allowed
premiums due to remain unpaid for a period of over 90 days.
Reinsurance .—The State fund was not able to obtain satisfactory
reinsurance and therefore restricted its writings to a considerable
extent the first year. Marine hazards, explosive manufacturing
establishments, and other risks containing an apparent element of
catastrophe possibilities were refused entirely. Underground mining
risks were accepted only for liability limited to $10,000 in any one
disaster. With the exception of explosive manufacturing, aviation,
and vessels with large crews, these restrictions were removed at the
end of the first year.
Solicitation .—The fund carries on considerable solicitation for
business by mail. It also does some personal solicitation through
its representatives but this is limited to the large industrial centers.
A C C ID E N T P R E V E N T I O N A N D IN S P E C T IO N .

In addition to the accident prevention work carried on by the in­
dustrial accident commission, the fund maintains its own safety in­
spection department. Aside from assistance rendered its insured em­
ployers through inspection, to the end that maximum credits under
the merit-rate* system may be obtained for physical safeguards, the
inspectors of the fund also give attention to unsafe conditions not
subject to merit rating. The inspection department has also assisted
in the organization of a number of safety campaigns in various in­
dustrial plants.
COLORADO STATE FUND.

The Colorado State insurance fund is administered by the indus­
trial commission but is under the immediate supervision of a manager
who is appointed by the commission. In Colorado the commission
exercises a greater supervision and control of the affairs of the fund
than is the case in California. The offices of the fund are combined
with those of the commission and some of its employees are common
to both the fund and the commission.
The administrative expenses of the fund are not paid out of the
premiums, but are paid from the administrative fund of the indus­
trial commission, which are regularly appropriated by the State.
The premium income of the fund increased from $134,371 in
1916 to $460,116 in 1920. During the first five years’ operation of the
fund, that is, up to December 1, 1920, the fund returned to its policy­
holders in dividends the amount of $146,447.49 of which $89,992.73
applied to private employers and $56,454.76 applied to public em­
ployers. In addition to these dividends, the fund had on December 1,
1920, a net surplus, over and above all outstanding obligations,
amounting to $262,382.85.
In compensable accident cases the State fund signs a compensation
agreement with the injured employee which must be approved by the
industrial commission. In fact, the fund follows the same procedure
that is required of other insurance carriers.



130

c o m p a r is o n o p w o r k m e n ’s c o m p e n s a t io n in s u r a n c e .
A C C ID E N T R E P O R T IN G A N D C L A IM S .

The State fund has the same system of indexing as the commission
as regards (1) the employee’s index record, (2) the employer’s rec­
ord, and (3) the compensation record showing date and amounts
paid. In addition a duplicate compensation claim record is kept in a
book by claim number, showing the amount of compensation and the
medical benefits paid in each case. Two claim index records are also
kept—one being used as a follow-up system. Payments are made
biweekly in temporary disability cases, monthly in death and perma­
nent partial cases. If the physician’s report shows that the disability
will be long, an agreement, together with a voucher covering two
weeks’ compensation, is sent to the injured workman to sign. The
workman must sign the voucher before he will be sent his compen­
sation check. An injured workman does not make a claim—instead
he signs an agreement which serves as a claim. In compensable acci­
dent cases the State fund signs a compensation agreement with the
injured employee, which must be approved by the industrial com­
mission. In fact the fund follows the same procedure that is required
of other insurance carriers. If the disability is severe, a doctor’s
supplementary report is not always required before a subsequent
payment is made. There have been a few overpayments. If the physian’s and employer’s first reports show that the workman will not
be disabled much over two weeks beyond the waiting period, the fund
waits until the final reports are received before an agreement is sent,
and the voucher and payment then cover the whole period. Checks
are sent to the workman direct. When vouchers are returned by
the workman they are sent to the State auditor who draws the war­
rants upon the State treasurer, after which they are returned to the
fund for mailing.
Special investigations of claims, when deemed to be necessary, are
made by the claim adjuster or a special investigator of the commis­
sion. The fund has no regular salaried medical adviser but refers
cases for examination to special physicians. The fund and commis­
sion have adopted a medical fee schedule. This schedule is some­
what lower than the prevailing medical rates. The schedule rates are
uniform for the entire State.
H earings .—As already noted, compensable accident cases are set­
tled by voluntary agreements which must be approved by the com­
mission. In disputed cases an application for a hearing must be
filed before the commission’s referee. Appeal may be had from the
referee’s decision to the commission, and from the decision of the
commission to the courts. The fund, however, is not allowed to
appeal to the commission except through its assured employer.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications and rates .—The National Workmen’s Compensation
Service Bureau’s manual classifications are used by the fund.
Originally the fund rates were 5 per cent lower than the stock
company rates. The stock companies raised their rates 5 per cent
because of war conditions. The State fund rates, however, remained
as before. This was the situation up to July, 1919, when the new
compensation benefits went into effect. The National Bureau com­
panies then raised their rates about 12 per cent. The fund is now



COMPETITIVE STATE FUNDS— COLORADO.

131

writing rates equivalent to those charged by the stock companies
prior to the 1919 increases. These rates are about 10 per cent less
than the present stock-company rates.
M erit ratin g .—-The merit-rating system of the National Bureau
has been adopted by the State fund, the administration of which
is conducted through the Colorado branch of the bureau.
D istribution of risks.— Metal mining constitutes most of the fund’s
business, about 65 per cent of the premiums coming from this source.
The fund insures about 50 per cent o f the metal mines of the State.
P ay rolls and prem ium s. Premiums are paid in advance for a
six months’ period on the estimated pay roll. At the end of the
period the actual pay roll is reported and the premium adjustments
are made. At the same time dividends are computed and declared.
About 30 employers report their pay roll and pay upon a monthly
basis, making an initial deposit premium of one month which remains
as a permanent deposit.

—

The premium record is kept in a premium journal. The pre­
mium record of each firm and a cash receipt book and a cash dis­
bursement book are also kept. All banking is done with the State
treasurer, who is custodian of the fund. No class ledger is kept,
except that premiums and losses are divided into three groups
(mining, power, and all others) for dividend purposes. Losses and
reserves are computed from individual compensation cards. The
insurance policy is subject to cancellation if the premiums are not
paid within 20 days. The annual premium income of the fund in­
creased from $134,371 in 1916 to $460,116 in 1920.
Claim reserves .—The claim reserves are computed as follows:

(1) In death arid permanent partial disability cases the full amount
is set up; (2) in permanent total disability cases, the Danish sur­
vivorship table (Fondiller), discounted at 3^ per cent, is used as
a basis; (3) temporary disability cases—Table C of the New York
State fund is followed for all indeterminate cases under six months;
for such cases over six months the amount set up is less than that
provided by Table C ; (4) in unreported losses, the New York State
fund method is followed.
Catastrophe reserve and surplus. The fund has no catastrophe
reserve apart from the surplus. The fund’s surplus as of December
1, 1920, was $262,382.85. It is the aim of the fund to have and
maintain a surplus (including a catastrophe reserve) of $500,000.
At present the fund sets aside 15 per cent of its premium annually
as a surplus.

—

Reinsurance .—The fund does not reinsure because of the excessive
reinsurance rates charged.
D ividends .—The amount of dividends to be declared depends upon
'the experience produced for each six-month period for each of the
three groups of industries (metal mining, power, and all others).
Dividends are declared every six months and credited, upon the next
year’s premiums. If a firm withdraws, it loses its dividends, but if a
firm goes out of business its dividends are remitted. The business
of public employers is kept separately. Such employers are divided
into State, municipalities, schools, irrigation districts, etc.—five
classes in all. The amount of the dividends is determined from the
experience of each class.



132

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

The total amount of dividends declared up to December 1, 1920,
was $89,992.73 for private employers and $56,454.76 for public em­
ployers, making a total of $146,447.49. For dividend purposes the
risks of the fund are divided into the following four large groups:
Metal mining, power companies, all other private classifications, and
public employments. The per cent of dividends declared varies with
the group and with the year, and averages approximately 12 per
cent for metal mining, and 5 per cent for power companies.

Expenses.—The expenses of the fund are paid out of the adminis­
trative fund of the commission, which is appropriated by the State.
The fund’s expenses are not kept separately from those of the com­
mission.
Solicitation of business.—The fund obtains its business through
letter solicitation only. The pay-roll auditor of the fund is not used
for this purpose. The State and its political subdivisions must in­
sure with the State fund.
Investments.—The investments of the fund’s reserves and surplus
are made by the State treasurer upon recommendation of the com­
mission. The State law requires all State investments to be made
in State bonds.
Liability of the State.—The State of Colorado assumes no liability
for compensation payments, present or future, due from the State
fund. If the liability of the fund exceeds its assets at any date it be­
comes technically insolvent.
Supervision over insurance rates and policies.—The compensation
law requires the industrial commission to approve the adequacy of
all compensation rates before the same shall take effect and to
approve the form of policy.
A C C ID E N T S T A T IS T IC S .

No accident statistics have as yet been compiled by the State fund,
although it intends to organize a statistical department and to this
end has installed Hollerith machines.
SAFETY W ORK.

Neither the State insurance fund nor the industrial commission
performs safety work. Under the compensation law the commission
is authorized to enforce the State safety laws but this function has
thus far been exercised by other State departments.
IDAHO STATE FUND.

The Idaho State insurance fund as originally created in 1917 was
an independent department under the direction of a State insurance
manager. In 1919, however, the “ cabinet” system of government
was adopted in the State and the fund was placed under the depart­
ment of commerce and industry. This department now consists of
a bureau of banking, a bureau of insurance, at whose head is the
insurance commissioner, and the State insurance fund, immediately
administered by an insurance manager. The insurance manager is
appointed by the governor; he is authorized to appoint his own
employees. It is the duty of the State insurance manager, in con­
nection with administering the State fund, to enforce the compulsory



COMPETITIVE STATE FUNDS----IDAHO.

133

insurance provision of the compensation act. The fund is also the
repository for the bonds required of self-insurers and insurance
companies.
The administrative expenses of the fund are paid in the first in­
stance out of the State treasury from moneys regularly appropri­
ated. This amount, however, is later refunded to the State treasury
by the fund out of its premium income.
The premium income of the fund increased from $224,549, in 1918
to $354,196 in 1920. The total surplus of the fund as of October 31,
1920, was $246,400 of which the catastrophe reserve constituted
$86,294. Thus far, the fund has declared no dividend.
The fund adjudicates its compensation claims upon written re­
ports from the workman and attending physician, supplemented by
examinations and investigations. At the end of the disability period
the fund transmits to the industrial accident board for approval a
summary and award, wT shows the time lost, the wages, the
hich
nature of the disability, and the amount of compensation and medi­
cal benefits awarded. In disputed cases, either party may apply to
the industrial accident board for a hearing. Appeal to the courts
may be had from the board’s decision.
A C C ID E N T -R E P O R T IN G A N D C L A IM S E T T L E M E N T S .

As in the case of the Idaho Industrial Accident Board, a report of
the accident is required from the injured workman, which is counter­
signed by the employer, and from the attending physician. When the
accident report is received it is verified as to coverage by the actuarial
department; the risk and manual numbers are assigned; the report is
given a claim or accident number, and a notation is made as to
whether the employer has a hospital contract. An employee’s claim
record card is made out and filed in alphabetical order by name of
employee. Physician’s and employer’s supplementary reports are
requested after five days. In noncompensable cases a fee bill is sent
to the attending physician after his report of the accident is received.
When all of the reports have been received they are examined by
the claims adjuster. An examiner’s report is made out, which, after
being approved by the manager, is turned over to the actuarial de­
partment and payments are made. „ Each check is signed by the State
fund manager and by the commissioner of the department. At the
end of the disability period the fund transmits to the industrial acci­
dent board for approval a summary and award report which shows
the time lost, the wages, the nature of the disability, and the amount
of compensation and medical benefits awarded. In disputed cases
either party may apply to the industrial accident board for a hear­
ing. Appeal to the courts may be had from the board’s decision.
The fund has a part-time medical adviser who examines claimants
and advises the fund on medical questions.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications and reties.—The fund is authorized to formulate its
classifications according to the hazard and to determine rates there­
for. The classifications and rates adopted were formulated by the
actuary of the Ohio Industrial Commission, who has been retained
as a consulting actuary for the Idaho State fund. The rates charged



134

COMPARISON

o p w o r k m e n ’s c o m p e n s a t io n i n s u r a n c e .

by the fund are somewhat lower (stated by the. manager to be from 15
to 25 per cent lower) than the manual rates quoted by the stock com­
panies. The fund submits its earned premiums and incurred losses,
by classifications, to its consulting actuary, who determines the rate
from these data, supplemented by the experience in other States. If
the premiums ’fixed for any class are subsequently found by the
manager to have been too small for any period, he may determine
what additional premiums are required from said class or for said
period, and may make assessment accordingly. The fund, however,
has as yet made no special assessment.
Tlie fund has adopted, an experience rating system modeled after
the Ohio plan. The application of this rating system has resulted
in a reduction of about 2 per cent of the basic rates.
P ay roll and 'premium income .—The actuarial and bookkeeping
methods of the fund were installed by the consulting actuary and
follow closely the Ohio system. Upon receipt of the employer’s ap­
plication he is sent a premium advice, giving classification, rate, etc.
The employer then reports his estimated pay roll. He is then sent
a pay-in order or statement covering the premium on the estimated
pay roll. Upon receipt of this by the fund he becomes a subscriber.
Thereafter actual pay rolls are reported. Logging operators report
monthly; mining operators, quarterly; other employers, semiannually
or annually. At the end of the monthly or quarterly period pre­
miums based upon actual pay rolls are submitted. The premiums
which were paid on the estimated pay roll are an advance payment
and act as a deposit. At the end of the year a settlement sheet, show­
ing the premium adjustment is made, credit or debit being given as
the case demands. A charge of $3 is made for each policy written
and for renewals.
The pay-in orders or statements are recorded in a pay-in order
register in numerical order. The receipts or actual payments are
recorded in a receipt record register. From this they are posted to
the actuarial record, in which is kept the premium record for each
risk, and then to the class ledger, which shows the premiums for each
manual classification. Only premium income is kept in these books,
losses being kept in separate books.
The State and other public corporations may insure their liability
for compensation with the State insurance fund but not with any
other insurance carrier unless the fund shall refuse to accept the
risk when the application for insurance is made.
If an employer shall default in his premium payment the fund
may collect the same by civil action. If such employer is in default
for 10 days, he shall also be liable to a penalty of $1 for each of his
employees for every day during which such failure continues. The
amount of premiums in the course of collection as of October 31,
1919, was $60,102, of which approximately $20,000 was due over 90
days.
The total premium income of the fund increased from $224,549
in 1918 to $354,196 in 1920.
Lasses .—Compensation awards and payments are taken from the
claims examiner’s report and recorded in a “ record of awards made,”
which shows both the awards and the payments made for each dis­
ability on account of each claim. The losses are then posted to an



135
employer’s claim record, which also shows the awards and payments
made. No record of losses by classes is kept as yet. These must
be obtained from the employer’s claim record. A pension record is
kept of fatal and permanent disability cases.
P ay-roll auditing.—The fund does not attempt to audit the em­
ployer’s pay roll regularly. Occasionally the chief accountant or
auditor makes a trip and audits pay rolls. These spasmodic audits
have resulted in bringing in several thousand dollars in extra
premiums. The fund admits that a considerable amount of pre­
miums are lost because pay rolls are not audited.
Reserves and surplus .—Ten per cent of the annual premiums is
required to be set aside by the fund for the creation of the surplus
until such surplus shall amount to $100,000 and thereafter 5 per cent
until such time as, in the judgment of the manager, the surplus
shall be sufficiently large to cover the catastrophe hazard and all
other unanticipated losses. The total surplus as of October 31, 1920,
was $246,400, of which the statutory surplus fund (catastrophe) con­
stituted $86,294. The reserves for outstanding and anticipated
losses are determined by the fund, subject to the approval .of the in­
surance commissioner. These claim reserves are computed by the
consulting actuary of the fund.
Reinsurance .—The fund carries reinsurance on its catastrophe
hazards to the amount of $250,000.
D ividends .—The law authorizes the fund to declare dividends, but
as yet none have been declared.
Solicitation of business .—The fund has made no consistent attempt
to obtain n«ew business. The pay-roll auditor when in the field does
some solicitation.
ACCIDENT. STATISTICS.
No accident statistics have been kept by the fund for some time.
COMPETITIVE STATE FUNDS----MARYLAND.

SA FETY W ORK.

The fund performs no safety and inspection work in behalf of its
insured. The accident-prevention work of the State is under the
jurisdiction of other State departments.
M A R Y LA N D STA TE F U N D .

The Maryland State insurance fund is administered by the indus­
trial accident commission but is under the immediate supervision of a
manager appointed by the commission. As regards administration
the fund is practically an integral part of the industrial commission.
The offices of the fund are combined with those of the commission
and some of its emploj^ees are common to both the fund and the
commission.
The administrative expenses of the fund in the first instance are
paid out of the State treasury from moneys regularly appropriated.
This amount, however, is later refunded to the State treasury by
the fund out of its premium income.
The premium income increased from $46,829 in 1915 to $211,682
in 1920. The total net surplus of the fund as of October 31, 1920,
was $352,465, which included a catastrophe reserve of $68,775. The
fund declared a dividend of 25 per cent in 1920.
The adjudication of compensation claims is based primarily upon
written reports received from the employer, the physician, and the



136 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

workman. The industrial accident commission determines the
amount of compensation to be paid and makes an award to this
effect. Upon receipt of this award by the fund payments are made.
In case of dispute appeal may be had to the commission and from the
commission to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

The State fund uses the same report forms (employer’s report,
physician’s report, and workman’s claim) as thoge used by the com­
mission. In fact, the claim procedure of the fund is closely con­
nected with that of the commission.
When an employer’s report is received it is indexed in a book in
numerical order by accident or claim number. The index shows the
number and date of the accident, the employee’s name, and the policy
and classification numbers. The report is compared with fhe policy
file to ascertain whether the employer is insured, at which time the
class number is assigned. The fund is not concerned as to whether
the premiums have been paid, compensation being paid regardless
of this fact. The fund must accept all risks offered.
Two claim index cards are made out. Each card contains the
names of the employee and employer, the accident number, the policy
number, and the date of injury. One card is filed in alphabetical
order by employee’s name and one by employer’s name.
Upon receipt of the employer’s report the physician’s report and
the workman’s claim, are requested if no claim is on file with the
commission. The commission notifies the fund (each insurer in fact)
when a claim is received. If the employer’s repart is received by the
fund first, a copy is made and sent to the commission; if received by
the commission first, a copy is made by the commission and trans­
mitted to the fund.
The commission determines the amount of compensation to be paid
and an award is made to this effect. Compensation is paid weekly
after the commission’s award is received and continues during the
disability period estimated by the attending physician. The physi­
cian’s supplementary reports are requested immediately prior to the
expiration of the estimated disability. Pension cases are also paid
weekly. The medical service of the fund is under the direction of
the chief medical examiner of the commission.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications and rates .—The industrial accident commission is
authorized under the law to determine the classifications according to
hazard and to fix the rates thereon. These classifications and rates
have been formulated by the actuary of the Ohio Industrial Com­
mission, who has been retained as the consulting actuary for the fund.
The rates are somewhat lower than those of the National Workmen’s
Compensation Service Bureau. The rates charged by the State fund
are not subject to the supervision of the insurance department.
The fund has adopted an experience rating system modeled after that
of the Ohio plan. A minimum premium is charged which varies
with the hazard of tfie classification.
Pay roll and premiums .—Employers are required to submit a pay­
roll estimate for a four-month period. Some employers send with



137
the pay-roll report a remittance covering the premium. Most of the
employers, however, do not and are billed for the amount. Ad­
justments are made at the end of the four-month period, the differ­
ence being added to or subtracted from the estimated premium for
the next period.
A firm premium record card is made for each employer and filed
by policy number. Upon this card is entered the premium amount,
when due and when paid. The premiums due are also posted to
the premium journal. Eeceipts of premium payments are entered
in the cash book, and the amount is deposited with the State treas­
urer.
The State fund has a revolving fund of $5,000 from which current
payments are made. A list of the compensation checks is sent weekly
to the State treasurer who credits or reimburses the fund for the total
amount as shown by the list. Fund checks are signed by the fund
auditor, the superintendent of the fund, and the chairman of the
commission.
A loss record card is also kept for each employer, showing the losses
paid. The losses are also recorded in a loss payment book which
shows the date entered, the claim number, and the kind of disability
(death, medical, permanent partial, temporary total, etc.). Losses
are not kept by firm or by class, and premiums are not kept by class.
The total premium income increased from $46,829 in 1915 to $211,682
in 1920.
P ay-roll audit. —The employers’ pay rolls are audited annually.
Reserve and surplus .—Ten per cent of the annual premiums is
required to be set aside for the creation of a surplus until such sur­
plus shall amount to $50,000, and thereafter 5 per cent until, in the
judgment of the commission, the surplus shall be sufficiently large to
cover the catastrophe hazard. The total surplus as of October 31,
1920, was $352,465, of which the catastrophe surplus constituted
$68,775.
D ividends .—The fund declared a dividend of 25 per cent in 1920.
Reinsurance.—The fund has reinsured against catastrophe hazard
losses between $25,000 and $75,000.
A dm inistrative expenses .—The administrative expenses of the fund
in the first instance are paid out of the State treasury from moneys
regularly appropriated. This amount, however, is later refunded to
the State treasury by the fund out of its premium income.
Solicitation of business .—The fund makes practically no attempt
to solicit business. According to the industrial accident commission
it is not the purpose of the fund to become an active competitor of
private insurance companies. Its purpose is rather to become a regu­
lator of insurance rates and to furnish insurance to employers who do
not care to or are unable to obtain insurance from the private com­
panies.
A C C ID E N T S T A T IS T IC S .
The fund compiles and furnishes no accident statistics apart from
those of the industrial accident commission.
COMPETITIVE STATE FUNDS----MARYLAND.

SAFETY W ORK.

Neither the fund nor the commission performs accident prevention
work, this being the function of other State departments.



138

COMPARISON OF W ORKMEN^ COMPENSATION INSURANCE.
MICHIGAN STATE FUND.

The Michigan State insurance fund is administered by the commis­
sioner of insurance, but is under the immediate supervision of a man­
ager appointed by the commissioner. The law also provides for the
creation of an advisory board consisting of 15 policyholders in the
fund, who with the commissioner of insurance determine the policy
of the insurance fund.
The administrative expenses of the fund are paid out of the pre­
miums. The premium income of the fund for the year ending June
30, 1920, was $402,685. The fund has declared an annual dividend
of 10 per cent, except that in 1914 a 20 per cent dividend was declared.
The catastrophe surplus of the fund as of June 30,1920, was $148,623.
In compensable accident cases the State fund signs a compensation
agreement with the injured employee, which must be approved by the
industrial accident board. In cases of dispute either party may file
an application before the board for a hearing. Appeal to the courts
may be had from the board’s decision.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

The following accident reports are required by the fund: The em­
ployer’s first report; the physician’s first, weekly, and final reports;
a card from the employer when the employee returns to work; and the
compensation agreement between the fund and the injured workman.
When the first report is received it is indexed in a book, in numeri­
cal order, a number being given at the time. This index contains the
number of the accident, the names of employee and employer, the
date and nature of the accident, and the dates of receipt of the em­
ployer’s report, the surgeon’s report, the surgeon’s bill, the hospital
bill, and the return-to-work card.
The report is also indexed in a loss-record book, which shows the
history of each claim, including the date of the accident, the agree­
ments sent and approved, the wages, the cause and nature of acci­
dent, the medical and hospital benefit, the names of employee and
employer, and the amounts and dates when the compensation is paid.
The reports are indexed in alphabetical order by the employee’s
name, the compensable and noncompensable cases being kept sepa­
rately. A request for missing reports is sent out at the time. A
jacket is made, which is filed in numerical order by accident number,
awaiting developments. Once a week the loss-record index is exam­
ined and missing reports or agreements are requested.
Agreements in duplicate are sent to the employer, who requests
the injured employee to sign them. When returned, one agreement is
sent to the industrial accident board for approval; the other is kept
on file. No payments are made until notice of approval by the board
is received by the fund. Payments are generally made for a two-week
period; in fatal or permanent partial disability cases they are made
monthly. When the case is closed the card is taken out of the lossrecord index and filed in a permanent file in numerical order.
In short disability cases a report from the employer is awaited as
to whether the employee returned to work. Periodical reports are
required from the attending surgeon, before each payment is made,
except in unusually severe eases. The fund makes an investigation
of the accident in doubtful cases. Compensation checks are signed



139
by the manager and assistant manager and are drawn upon the State
treasurer. The fund has no regular medical adviser, but employs
local physicians upon a fee basis.
COMPETITIVE STATE FUNDS— MICHIGAN*

A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications and rates.—The fund has adopted the National Work>
men’s Compensation Service Bureau’s manual classifications, but its
rates are from 25 to 30 per cent lower than the manual rates. On
several classifications the rates have been based upon the fund’s own
experience. As regards minimum premiums the fund has adopted the
plan of the National Bureau.
Merit rating .—A modified plan of the National Bureau’s schedule
rating system on manufacturing risks has been adopted by the fund,
which has reduced the general level of the rates about 10 per cent.
The fund inspects its own risks prior to the writing of the policy.
Distribution of risks.—The fund has no mining risks but has a
considerable number of sawmill, logging, machine shop, and con­
struction risks. The fund has a large number of small risks not
solicited by other carriers.
Pay rolls and premiums.—Premiums on the estimated pay roll
covering an entire year must be paid in advance. A statement of
the amount is sent to the employer, which must be paid within 45
days. At the end of the year the actual pay roll is reported. Ad­
justments on pay roll and dividends are then made. The fund may
cancel the insurance policy if the premiums are not paid. Premiums
in default are collected by the attorney general.
Pay roll and premiums are entered upon a firm premium record
card (yellow). As premiums are paid and the premium and divi­
dend adjustments are made they are entered upon the same card.
Two firm-loss record cards are kept—one for the employer (white),
the other for the employee (orange). These show the losses of each
employer. From these twro cards are made the group classification,
which shows the pay roll and losses, not by individual classification,
but by the manual groups. The total premium income for the year
1920 was $402,685.
Pay-roll audit.—The fund aims to audit the employer’s pay roll
once a year, but falls short of its aim. The fund has only one pay­
roll auditor.
Administrative expenses.—The administrative expenses of the
fund are paid out of the premium income.
Deserves.—In case of fatal and permanent disability accidents the
full reserve is set aside. In temporary disability cases the out­
standing losses are based upon the estimated disability as de­
termined by the attending physician. The catastrophe reserve of the
fund as of June 30, 1920, was $148,623.
Dividends.—The fund has declared annually a dividend of 10
per cent, except that in 1914 a 20 per cent dividend wT declared.
as
Credit for the dividend is given on the next year’s premium unless
the risk goes out of business, in which event it is returned to the
employer. Bisks changing their insurance carrier are not entitled
to dividends.
Liability of the fund.—The State disclaims liability beyond the
amount of the fund.




140

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
A C C ID E N T S T A T IS T I C S .

No accident statistics have been compiled or published by the fund.
SAFETY W ORK.

The fund performs no accident-prevention work.
MONTANA STATE FUND.

The account of the Montana State fund is incorporated with that
of the Montana Industrial Accident Board (pp. 177 to 182).
NEW YORK STATE FUND.

The New York State insurance fund is administered by the indus­
trial commission, but is under the immediate supervision of a man­
ager appointed by the commission. The employees of the fund are
appointed by the commission, subject to the civil-service laws of
the State.
The administrative expenses of the fund in the first instance are
paid out of the State treasury from moneys regularly appropriated.
This amount, however, is later refunded to the State treasury by
the fund out of its premium income. The premium income of the
fund increased from $1,269,433 in 1915 to $3,573,047 in 1920. The
fund has declared ail annual dividend of approximately 12 per
cent. The total dividend returned to policyholders as of December
31, 1920, amounted to $1,946,516. The net surplus of the fund as of
December 31, 1920, was $1,608,063, of which the catastrophe sur­
plus constituted $802,424 and the general surplus $805,639.
The fund is at present reorganizing its method of claim procedure.
Under the old system practically no records were kept apart from
those kept by the commission. In brief, the fund was merely the
disbursing department of the commission, paying the claims when
and as awarded by the commission. It is the present aim of the fund
to be an entirely separate unit of the commission, having its own
records.
The compensation cases of the fund, in common with those of other
insurance carriers, are adjudicated by the commission, which deter­
mines the award in each case. Upon the basis of this award the fund
makes its compensation payments. In disputed cases appeal may be
had to the commission and from the commission to the courts.
A C C ID E N T R E P O R T IN G - A N D C L A IM S .

The fund is reorganizing its entire method of claim procedure.
Under the old system practically no records were kept apart from
those kept by the commission. In brief, the fund was merely the dis­
bursing department of the commission, paying the claims when and
as awarded by the commission. It is the present aim of the fund
to be an entirely separate unit of the commission, having its own
records; in fact, doing business as any other insurance carrier.
The following is a description of the methods as now practiced by
the fund, part of which are new and part old. The fund receives
directly from its insured or through the commission the employers’
reports of every accident. If the reports are made in duplicate the;
fund retains one and sends the other to the commission. If only a



141
single report is received, the fund makes a copy of the report
(actuarial card) and the original is sent to the commission.
Upon receipt of the employer’s report the coverage is determined
from the employer’s insurance index in the actuarial department. In
this card index employers are arranged in alphabetical order. Each
card contains the policy number and the date of inception and ex­
piration of policy and whether canceled. The date of the accident
on the report is compared with the date of the policy. The policy
number and the date are entered upon the accident report, the classi­
fication determined from the classification index and the proper class
and group numbers assigned to the accident report. The classifica­
tion card is filed by policy number and contains the several industry
classifications and the group number of the risk, with the gross and
net rates and the estimated pay roll for each class. The classifying
is done by one clerk. The groups are used for dividend purposes.
The accident reports are numbered consecutively. Index cards
are made, but before indexing the employer’s index is searched as
to whether a report of the accident has already been received. Index
cards in duplicate are filed in alphabetical order, one by the em­
ployer’s name and one by the employee’s name. Each card contains
the names of the employer and the claimant, the date, and the num­
ber of the accident. Actuarial cards are then made in triplicate.
The original goes to the actuarial department, one copy to the docket
file, and the other to the claim file or jacket which is made out at
this time.
The accident report then goes to the medical examiner of the
fund, who supervises the medical treatment of the claimant. If it is
an ambulatory case, the claimant is called in for examination and
referred either to the Wolff Medical Service (see p. 142) or to other
physicians or specialists; if it is a hospital case, an investigator is sent
out to look into the treatment. Reports as to the condition of the
patient are received every two weeks. Copies of all reports on cases
are sent to the commission immediately or at the time of the hearing
and are made a part of the record of the case.
Payments .—Payments are made either in advance of or upon the
award of the commission. The fund makes advance payments on
records filed or on investigation reports. Formerly checks were
made out by the cashier of the commission, approved by the fund’s
claim auditor, and signed by the secretary of the commission. All
checks are drawn on the State treasurer, who receives warrants
signed by the fund manager and two commissioners. At present
checks are made out directly by the claim; auditor of the fund and
signed by the cashier and secretary. If the case is clear, payments
are made in advance of the commission’s award. Credit for advance
payment is given at the time of the hearing. Formerly no pay­
ments were made until after the commission had made its award and
such award had been; certified on a 46confirmation sheet,” which was
a list of fund cases in which the commission’s award had been made,
and which showed the main facts of each case and the amount of the
award. This confirmation sheet was an order on the cashier to
pay the claims. At present the confirmation sheet is no longer used,
payments being initiated directly by the claim auditor of the fund.
COMPETITIVE STATE FUNDS— NEW YORK.

74832°—22-----10




142

COMPARISON OP WORKMEN T COMPENSATION INSURANCE.
S

Branch offices.—Accidents up-State are handled by the branch
offices (Albany, Syracuse, Rochester, and Buffalo) of the commis­
sion and fund. Hearings are held by the deputy commissioner and
awards made. Employer’s accident reports are received at the
branch office. Bequests for the doctor’s report and the workman’s
claim are sent out by the division of claims of the commission. The
fund representative sends a copy of the employer’s accident report
and synopsis of claim to the fund in New York City. Notice of the
award is given to the fund representative and immediately forwarded
to the home office in New York City where payments are made by
the commission. These payments were formerly made from the
confirmation sheet but are now made directly from the award. If
the fund representative approves the claim it is paid in advance of
or upon award of the commission. If not, the case is set for a hearing
before a deputy commissioner.
Wolff Medical. Service.—The medical treatment for a large pro­
portion of the State fund’s New York City cases is handled by the
Wolff Service. This service has a central office in New York, con­
ducts a physiotherapy hospital, and has about 60 doctors in Greater
New York. In case of an accident the workman is referred to the
nearest doctor for attention. A fund investigator investigates the
case. The injured workman is called in and examined by the medi­
cal adviser of the fund. He is then referred to the Wolff Service or
to other physicians or specialists. The Wolff Service makes periodic
(every two weeks or oftener) reports to the fund as to the progress
of the case. A charge of $8 is made for each case. The charges of
the Wolff Service appear to be reasonable, and according to the fund
injured workmen return to work sooner than they otherwise would.
A C T U A R IA L A N D A C C O U N T IN G D E P A R T M E N T .

Classifications amd rates.—The fund is authorized under the law to
determine the classifications according to the hazard and to fix the
rates thereon. The manual classifications of the National Work­
men’s Compensation Service Bureau were used at the beginning of
1914, but in 1915 the fund withdrew from the rating board and Used
its own manual. However, in 1916 the fund reentered the rating
board and readopted the manual classifications.
The fund rates in 1914 were 8J per cent lower than the manual
rates; from 1915 to 1917 20 per cent lower, and since 1917 15 per cent
lower. This 15 per cent reduction applies uniformly except in the
classification of house wrecking, where a higher rate is charged.
Higher rates are also charged- on individual risks where the hazard
is greater than the normal hazard of the class. The minimum pre­
mium depends upon the hazard of the class, the lowest minimum
premium being $10. The fund does not compute pure premiums.
The adequacy of the rates is determined from the loss ratio as
shown by the actuarial cards and the policy file.
Merit rating.—There are two kinds of merit rating in vogue. Ex­
perience rating is applied to all risks with a sufficient premium to
qualify, and schedule rating is applied to all manufacturing risks
which qualify under the plan. The latter, however, must have a
certain premium income before becoming subject to experience rating.
Bating plans are formulated and applied by the rating board.
Schedule inspections are made by the rating board.



143
The rating board makes one complete rating survey during each
policy term of all risks subject to .schedule rating for which the
annual estimated pay roll is not less than $10,000, and where the
annual estimated premium (computed at stock-company manual
nates) is not less than $100. It is optional with the insurance carrier
to have one interim inspection, covering certain items specified by it,
made by the rating board during a policy term.
Policies ,—The insurance policy covers all employees. It can not
be canceled before the expiration of the policy. It is automatically
renewable. There are two kinds of policies: “ A,” which eovers both
compensation and medical benefits; “ B,” which covers compensation
benefits only. Qn “ B 9 policies a credit of 17^ per cent on the
9
manual rate is given. Formerly policies were issued for a six-month
period,, now either for six months or a year.
P ay-roll 'premiums and losses .—In his application for insurance
the employer includes a notice of election. The application contains
the estimated average number of employees and estimated pay roll
for each classification enumerated on application blank. The fund
applies the rates and the amount of advance premium and the em­
ployer is billed for the amount. Coverage can not be extended until
the entire advance premium (or deposit premium) as determined by
the fund is paid. The application form also calls for the names of
all the insurance carriers which previous thereto have carried the
risk. This is necessary in order that the inspection rating board
may determine experience rating credits.
When the advance premium (or deposit premium) is paid a policy
is written. The fund must accept all policies offered,38 but a policy
can not be canceled until the end of the policy period.
.Municipalities are classified according to the manual occupation
the same as private employers. The State of New York pays a fiat
rate on all hazardous work. Nonhazardous employments are not
insured, the State carrying its own risk on such employments.
A statement covering the advance renewal premium is submitted
on or about the date of maturity of the current policy period. An
adjustment bill, embodying both adjustment of earned premium,
based on the pay-roll report or audit, and dividend, is submitted as
soon as possible after the declaration of dividends. If these bills
are not paid within 30 days a statement is rendered the assured call­
ing his attention to his delinquency, and if payment is not forth­
coming within 10 days from the mailing of this statement, either a
representative of the State fund calls on the assured, or the assured
is called up on the telephone, or a letter is addressed to the assured
threatening cancellation. If the account is not paid at the expira­
tion of 10 days a cancellation notice is sent by registered mail, can­
celing the policy as of a date 10 days subsequent.
Four copies of bills are made, the first copy going to the assured,
the second copy into the folder, the third, after being posted on the
policyholders9ledger and after a tabulating-machine card is punched,
is filed according to bill number in a loose-leaf book, and the
fourth copy is used as a follow-up copy for collection purposes, and
after having served that purpose is filed away as a work sheet for
COMPETITIVE STATE FUNDS----NEW YORK.

38 But the fund is free to adjust its rates with a view to offsetting any adverse effect
of its inability to refuse a risk.




144 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE,
the next bill. In the case of cancellation, a final bill is rendered the
assured, based in most cases on an audit of the assured’s pay roll.
In the case of policyholders located in inaccessible communities, this
final cancellation bill is based on the reported pay roll. This final
cancellation bill and bills covering new business are handled in
practically the same way as are the renewal and adjustment bills.
In accordance with a specific provision of the law creating the
State fund, all bills unpaid for unreasonable periods are referred to
the attorney general for collection.
A tabulating-machine card is punched for each bill drawn up.
The totals of the various items from these cards are checked twice
each week against figures representing the changes in the policyholders’ ledger taken in conjunction with other items posted therein
(cash receipts, refunds, etc.). These totals are entered in the gen­
eral ledger.
Premium and other receipts are posted from the cashbook direct
to the policyholders’ ledger and checked through controlling accounts
as outlined above.
Loss payments are reported to the accounting division in the form
of carbon copies of checks issued, containing all information as to
claim number, name of claimant, period of accident, etc. Tabulating machine cards are punched for each check, and the necessary tab-^
ulations by period of accident, industry group, type of case, etc.,
obtained from these cards; only such totals are entered in the books
of account.
The earned premiums of the fund increased from $1,269,433 in
1915 to $3,573,047 in 1920.
Reserves .—The actuarial department of the fund computes the
reserves (approved by insurance department) not only for the fund
but for all the commission’s cases. The computations of reserves in
fatal cases are based on the Dutch remarriage table and the Danish
survivorship table, present worth being discounted at 3J per cent.
The reserves for permanent total disability are based upon the
Danish survivorship table, discounted at 3J per cent.
Up to 1920 the mortality factor was taken into account in deter­
mining the reserves for permanent partial disability. This factor
is now disregarded unless the injured man is known not to have a
dependent wife or children under 18 years of age. This change in
procedure arises from the fact that a 1920 amendment makes an
award in these cases revert to these dependents in case of the death
of the injured man. The reserves in case of temporary total dis­
ability are based upon a table formulated by the fund. A former
table gave reserves too high for serious cases and too low for minor
cases.
Catastrophe fund and surplus .—Ten per cent of the premium is
set aside for a catastrophe fund until it amounts to $100,000; there­
after 5 per cent is set aside. The total surplus as of December 31,
1920, was $1,608,063, of which the catastrophe surplus constituted
$802,424 and the general surplus $805,639.
D ividends .—Dividends are based on. the loss ratio determined in
accordance with the experience of each group. Dividends are uni­
form within each group except that firms having a loss ratio of over
100 per cent receive no dividends. Firms withdrawing from the
fund are entitled to dividends.



145
For dividend purposes the classifications were, until June 30, 1920,
divided into six general groups (light manufacturing, heavy manu­
facturing, contracting, tunneling, transportation, and special
groups). Since this date the light and heavy manufacturing groups
have been combined into one. The special group consists of indus­
tries that have a special hazard, but include all the employers within
the industry. The total dividends allowed to policyholders as of
December 31, 1920, amounted to $1,946,516.
A dm inistrative expenses .—The administrative expenses of the
fund are paid in the first instance out of the State treasury from
moneys regularly appropriated. This amount, however^ is later re­
funded to the State treasury by the fund out of its premium income.
COMPETITIVE STATE FUNDS— NEW YORK.

A C C ID E N T S T A T IS T IC S .

The fund has recently reorganized its statistical department and
procedure. At present all statistical work is handled by the punchcard machine tabulation system. A card is punched for each loss
payment, showing the date of accident, the policy number, the group
number, the claim number, the date of payment, and the amount
paid, with designation as to whether it is compensation, medical, or
claim-adjustment expense.
Two series of cards are used in connection with the individual acci­
dents. A preliminary card is punched for each case on which a
reserve is carried and a final card for each case involving no loss or
upon which payments have been entirely completed. These cards
carry the year and month of accident, the policy number, the group
number, the manual classification, and the nature and extent of the
injury. The preliminary card also carries the valuation date to
the compensation paid and reserve, and medical expense paid and
reserve, as of this date. The final card carries the age, the wage of
the injured employee, the cause of the accident, its duration (if tem­
porary disability), the incurred compensation, and the medical cost.
A fourth series gives the audited pay roll and premium for each
classification and period. It is probable that an additional series
will be installed showing for each policy the audited premium, the
dividend, and both the old and the new advance premium.
A C C ID E N T P R E V E N T I O N .

The fund has 11 safety inspectors, of whom 7 are in New York
City and 4 up-State, under the supervision of a chief safety engineer.
Inspections are made of manufacturing plants, contracting work,
mining, quarrying, etc., and any other operations that are insured in
the State fund. Investigations are also made of all fatal accidents
to employees of assured and of nonfatal accidents where it appears
that an investigation is desirable so that means for preventing a
similar accident may be adopted if possible.
Purposes of inspections .—The inspections are made for the follow­
ing purposes: {a) To enable the underwriting department to deter­
mine the proper classification of risks, the probable annual pay roll,
and what subdivision of the pay roll, if any, may be proper. In the
case of building construction or demolition, etc., the inspector also
works out an estimate of the probable pay-roll expenditure on the
job. Recommendations for safety are also made on such inspections.



1 4 6 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.

(t>) To point out fa the assured coaditkaas; in their plants which do
not- comply with standards and to explain to them the proper m feguarding o f such c^d ition s, including the formation o f plant safety
edbabfehmenf o f plant hospital, and first-aid arrange■menis, .etc, B y complying with safety reeommmdafions covering
m vb
aii risks subject, to schedule rating may obtain aa
appropriate reduction in their rate upon inspection by the rating
board. The fund also advises the assured o f the annual saving for
compliance with each recommendation, i f such information is desired.
■(c) T o ascertain if the assured has complied, in accordance with
^sfeandsncte, with recommendations previously submitted.
PENNSYLVANIA STATE FUND.
The Pennsylvania State insurance fund is under the jurisdiction
o f a specially created workmen’s insurance board consisting o f the
State treasurer, the insurance commissioner, and the commissioner o f
tabor and industry. The fund is administered by a manager ap­
pointed by the board with the approval o f the governor. The board
also appoints the employees o f the fund.
The administrative expenses o f the fund were originally paid from
a $300,000 fund appropriated by the legislature at the time that the
fund was created in 1915. An additional $200,000 was appropriated
in 191f. However, since July 1, 1919, the administrative expenses
o f the fund are paid out o f the premiums.
The premium income o f the fund increased from $710,094 in 1916
to $3,186,668 in 1920. The fund has declared an annual dividend
o f approximately 10 per cent on coal mining and 15 per cent on
industrial risks. The total dividends declared as of December 31,
1920, were $389,537. The total surplus o f the fund as o f December
31, 1920, was $3,266,145, which included the $500,000 originally ap­
propriated fo r the administrative expenses of the fund, and the
catastrophe surplus o f $509,340. The net surplus, therefore, includ­
ing the catastrophe reserve, was $2,766,145.
In compensable accident cases the State fund signs a compensa­
tion agreement with the injured employee which must be approved
by the bureau o f workmen’s compensation o f the department of labor
and industry. In case o f dispute either party may file an appli­
cation for a hearing before a referee o f the department of labor and
industry. Appeal may be had from the referee’ s decision to the
workmen’s compensation board {an independent body), and from
flie board’s decision to the courts.
A C C ID E N T R E E O a T I N C A N D C L A IM S .

Accident reports are made out by the insured employer in tripli­
cate, one copy being retained by the employer and two copies being
sent to the fund, one o f which is forwarded to the workmeirs compen­
sation bureau in eases in which disability exceeds one day. The re­
ports are divided into three classes: (1) Noncompensable cases, or
those disabled not more than 10 days, (2) compensable cases, and
(3) doubtful cases.
Abstract cards are made for each accident, two cards for groups
one and two, and three cards fo r group three. One set o f cards is
filed in alphabetical order by name o f the employee and one set b y




COMPETITIVE STATE EUXTDS— PENNSYLVANIA.

147

name o f the employer. The third card in group three is filed in chro­
nological order not exceeding ten days in advance. On the date due,
unless supplemental reports or other information for group three
has been received, investigation forms are sent to investigators. Noncompensable cases are closed and filed after the facts are determined
to a certainty. In compensable cases an agreement form and a
synopsis o f the accident report on a special form are. sent to the
investigator for attention.
The fund enters into an agreement with the injured employee
which must be approved by the bureau o f workmen’s compensation
o f the department o f labor and industry. In case of dispute either
party may file an application fo r a hearing before a referee o f the
department o f labor and industry. Appeal may be had from the
referee’s decision to the workmen’s compensation board and from the
board’s decision to the courts.
Compensation payments are made by check every two weeks.
Checks are Hated two or three days in advance in order that the
employee may have the money on the date due. Indorsement o f
check serves as receipt. Before a check is made out the case is
always checked with the files. Reinvestigations are made when the
occasion demands.
Accident acknowledgment to the insured employer requests the
latter to request the attending physician to send in a medical bill
and report,, using a special form for the purpose. Medical charges
may be investigated by an investigator o f the fund.
Medical se?*vice.‘—The fund has contracts with a number of
physicians to take care o f accident cases of certain plants. Salaries
paid to such physicians range from $500 to $2,500, which may be
increased or decreased, depending upon the number o f accidents.
The employee is allowed to select the physician in other oases, but
must select competent ones. Nurses and surgical supplies in estab­
lishment hospitals are not paid for by the fund, but credit on the
rate is allowed for surgical kits, medical fees are based upon
county medical fee schedules.

ACTUARIAL AND ACCOUNTING DEPARTMENT.

Classificcdions and rates .—The

fund is authorized under the law
to‘ group the industries into classes according to the hazards and to
fix rates thereon. The rates fixed by the fund have been 10 per cent
lower than those charged by other insurance carriers.
Industrial risks are divided into two classes for rate making and
inspection purposes: (1) Manufacturing, and (2) nonmanufacturing.
A s regards manufacturing risks the compensation rating and inspec­
tion bureau furnishes each insurance company with a card showing
the classification and rate at which the risk should be written. This
rate the carrier quotes to the insured. The fund also informs the
insured as to the charges (as furnished by the rating bureau) and
notifies him in what way these charges may be reduced. I f recom­
mendations are complied with, the rating bureau makes a reinspec­
tion and allows such deductions as are justified. The revised rates
take effect as of the date the reinspection was requested.
As regards nonmanufacturing risks, the State fund uses the
manual classification and quotes the manual rate for this classifica­
tion. These rates are the same for all insurance carriers. Experi­



148

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

ence rating may be applied to such o f these risks as have a $500
premium. Credit for experience is determined by the rating bureau.
The experience period is the five policy years preceding the current
policy period and not less than two full policy years. In the case
o f coal risks at least $50,000 in pay roll is required for the experience
period.
Minimum 'premium.— The minimum premium o f the fund is onehalf o f the stock companies’ minimum, except in the case of coal
mines and a few other classifications which are written at a 10 per
cent reduction. The lowest minimum, however, is $5.
Inspection.— The fund has separate inspection departments for
coal and industrial risks. The former is located at Greensburg, with
eight inspectors, and the latter at. Harrisburg, with' five inspectors.
Solicitation of business.— The fund has several branch offices, used
for investigation o f claims, information bureaus, and the writing o f
new or renewal risks. No special soliciting agents are employed.
Inspectors make inquiries and solicit business while making inspec­
tion trips.
Premium income.—The premium income of the fund increased
from $770,094 in 1916, to $3,186,668 in 1920.
Catastrophe fund and surplus .—Under the law the fund is required
to set aside 5 per cent of its premiums for the creation o f its surplus
until such surplus shall amount to $100,000, and thereafter such per^
centage, not exceeding 5 per cent, until the surplus shall be sufficient
to cover the catastrophe hazard of all the subscribers to the fund
and to guarantee the solvency o f the fund. The total surplus as o f
December 31, 1920, was $3,266,145 which included the $500,000
originally appropriated for the administrative expenses o f the fund,
and the catastrophe surplus o f $509,340. The net surplus, therefore,
including the catastrophe reserve was $2,766,145.
Dividends.— The fund has declared an annual dividend o f approxi­
mately 10 per cent on coal mining and 15 per cent on industrial risks.
The total dividends declared as o f December 31, 1920, amounted to
$389,537.
# •
Reinsurance.— The fund has reinsured against unusual catastrophe
losses in the amount o f $50,000’ to $250,000.
Administrative expenses.— The administrative expenses o f the fund
were originally paid from a $300,000 fund appropriated by the legis­
lature at the time that the fund was created in 1915. An additional
$200,000 was appropriated in 1917. However, since July 1, 1919, the
administrative expenses o f the fund have been paid out o f the pre­
miums.
Liability of the State.— The State o f Pennsylvania is not liable
beyond the amount o f the fund.

ACCIDENT PREVENTION AND INSPECTION,
Inspections o f all industrial risks subject to schedule rating are
made through the Pennsylvania Compensation Rating and Inspec­
tion Bureau. This bureau is a central rating medium and all com­
pensation insurance carriers are members o f it. In addition the
fund has an inspection force o f its own consisting o f eight mine in­
spectors and five industrial inspectors.




COMPETITIVE STATE FUNDS— UTAH.

149

UTAH STATE FUND.
The Utah State Insurance Fund is administered by the industrial
commission but is under the immediate supervision o f a manager ap­
pointed by the commission with the consent o f the governor. The
commission also appoints the employees of the fund, some o f whom
are in the employ o f both the fund and the commission.
The administrative expenses o f the fund are paid out of the pre­
miums, except that the legislature originally appropriated $40,000
to carry on the work o f the fund. This amount is still carried
the fund as a liability.
The premium income o f the fund increased from $188,222 in 1918,
to $209,010 in 1920. During the first two years the fund declared
dividends to the amount of $32,814.89.- On July 1, 1919, the com­
mission changed its policy by decreasing its rates, as a result o f
which no dividends have been declared since 1919. The total sur­
plus o f the fund, including the catastrophe reserve as o f June 30,
1920, was $134,406.79.
The fund adjudicates its compensation claims, which are subject
to the approval o f the industrial commission. In case of dispute
claimant or the fund through its insured employer may apply to
the industrial commission for a hearing. Appeal may be hacf from
the commission’s decision to the courts.

by

ACCIDENT REPORTING' AND CLAIMS.
Reports o f the accident are received from the employer, the doctor,
and the injured workman. Upon receipt o f the first report the miss­
ing reports are requested. The index, filing, and follow-up systems of
the fund are the same as those used by the industrial commission
(see pp. 190, 191).
Payments are made weekly, biweekly, or monthly, depending upon
the wishes o f the claimant. I f the injury is particularly severe a
check is sent before the claim is received. Checks are usually sent
to the claimant, but in certain cases they are sent to the employer
at the latter’s request, especially when the employer pays full wages
during disability. The fund pays compensation during disability
regardless o f whether the employer pays full wages. Checks are
signed by the fund manager and two commissioners, and are drawn
upon the State treasurer, who is custodian of the fund. The treasurer
is furnished a list o f the vouchers drawn.

The fund has a part-time medical adviser who visits the office
every other day and passes upon claims and medical bills and ex­
amines claimants as to permanent partial disability. Claims which
are not regular or require additional information are investigated by
the fund’s adjuster.
Widows are required to notify the fund every six months as to
whether there has been any change, in dependency.
ACTUARIAL AND ACCOUNTING DEPARTMENT.

Classification and rates .—The industrial commission is authorized
under the law not only to determine the classifications and rates for
the fund but also to approve the rates, for all insurance carriers.
Up to July 1, 1919, the fund rates were the same as those for stock
companies, which were computed by the National Workmen’s Com­



.150

COMPARISON . m WORKMEN ’-S COMPENSATION INSURANCE.

pensation Service Bureau and approved b y the commission. The
multiplier adopted was 2.49 plus 0.01. The rates for the fund were
found to be too high—they developed too large a surplus—‘and after
•Jmly 1, 1919, they were reduced by 20 per cent.
T he fe n d divided premiums as follow s: 65 per cent loss ratio- and
*35 per cent expense ratio. The 85 per cent expense loading was
composed o f the following items: Expense, 10 per cent; statutory
surplus, 40 per cent; and fo r additional surplus returned to policyfholders at the end o f the first and second years, 15 per cent. In the
new rates, the 15 per cent dividend surplus was eliminated and the
catastrophe reserve (statutory surplus) was reduced from 10 to 5
per cent. The present rates, therefore, do not anticipate creating a
dividend surplus.
The Stafe is. required to- insure in the fund and pays its premiums
a t the end o f six-month periods according to manual classification.
Municipalities are not required to insure. I f they do they are treated
.the same as private employers.
M erit rating .— Prior to* July 1, 1919, the fund had in effect the
schedule rating plan on industrial risks promulgated by the ISational
Bureau from the Denver branch office. The fund inspected the
risks and transmitted results to Denver for rating. Since 1919 it has
no merit rating except on coal mines, where the Associated Com­
panies’ rating system is in operation.
Policies .— Insurance policies cover all employees and all liability
o f employer arising out o f damage suits up to $5,000 in fatal cases.
Under the Utah, constitution dependents can not be deprived o f the
right t o sue for unlimited.damages. Both insurer and employer are
liable fo r compensation. A ll insurers must accept whatever risk is
offered. Employers who refuse t o safeguard their plants are subject
to penalty and shutdown o f plant, though no such action has as yet
been taken by the commission.
Pay toU, premiums, and losses.—Insurance policies are written fo r
six-month periods. The fund requires 80 days.’ notification in case o f
cancellation. Two* methods o f paying premiums have been adopted:
{ ! ) iSix months’ pay roll is estimated and premiums on this pay
roll are paid in advance; adjustment is made at the end o f the period
and applied on the premiums for the subsequent six months, the
actual pay roll o f the first- six-month period being used as the estimate
fo r the subsequent period. (2) Premiums o f tw o or three months’
pay roll are deposited; thereafter a monthly report o f the pay roll is
made, accompanied by premiums, the deposit premium acting as a
permanent premium deposit. About 30 employers, all o f whom are
large employers, operate on a monthly basis.
A pay-roll form is sent to the employer between the 15th and the
1st o f the month prior to thq end o f the adjustment period upon
which the employer makes a report o f his actual pay roll. The
fund then makes an adjustment, and sends the employer a statement
covering the adjustment and the premium o f the subsequent pay roll.
Pay-roll auditing is limited to large employers and suspicious cases.
For employers fiirnishing their own medical service) a. reduction o f
from W to 1T| per cent is allowed on the premium rate. The mini­
mum premium is $6 a year or $3 a pay-roll period.




COMPETITIVE STATE FUNDS— UTAH.

151

The uncollected premium during the three years’ operation of the
fund amounted to $2,826.44. The fund experienced two coal-mine
failures, whose- unpaid premium amounted to $2,400. The amount
o f premiums; overdue more- than 90 days, as of May 1, 1920, was $825.
The total premium income for the year 1920 amounted to- $209,010.
Premium register .—Premium amounts (totals) are posted from
the policy file showing classes to the premium register, which shows
firm and amount. From the premium register they are posted to
firm ledger cards. Receipts are posted to cashbook and thence to
individual ledger cards. From pay rolls they are posted to com­
bined class and firm ledger.
Disbursements.—Disbursements are posted in the disbursement
register from vouchers, and from vouchers to combined class and
firm ledger. No pay-roll record is kept; consequently, pure premiums
are not available. The list of disbursements is made in triplicate—
one for the State treasurer, one. for the industrial commission, and
one to be retained by the fund.
Reserves.— The claim reserves of the fund are not computed on the
ease system but are based upon the premiums written. During the
first two years 65 per cent o f the premiums were set aside as a claim
reserve. In 1919 this was increased to 85 per cent inasmuch as the
fund rates* were reduced by 20 per cent.
Dividends.— During the first two years the fund declared 3 divi­
dends o f 15 per cent each on general classes and 5 per cent on coal
mines, one at the end of the first year and one at the end of the fol­
lowing two six-month periods. The total amount o f dividends de­
clared amounted to $32,814.89. Since July 1,1919, no- dividends have
been declared, because these dividends were taken out of the excessexpense loading; after 1919 the rates were reduced by 20 per cent,
and consequently in lieu o f dividends the insured receive lower rates.
Dividends were applied to all risks regardless of individual experi­
ence. These dividends were not directly remitted but were applied
on future premiums. I f a firm withdraws it can not receive divi­
dends ; the commission therefore reduced the rates.
Catastrophe fund and surplus.—Ten per cent o f the annual pre­
miums are set aside for the creation o f a surplus until such fund shall
amount to $100,000, and thereafter 5 per cent until in the judgment
o f the commission the surplus shall be sufficiently large to cover the
catastrophe hazard and all other unanticipated losses. The total sur­
plus of the fund, including the catastrophe reserve surplus, as of June
30, 1920, amounted to $134,406.79.
Reinsurance .—The fund is authorized by the law to reinsure its
catastrophe hazards, but has not done so because of the high rates
charged.
Administrative expenses.—The administrative expenses o f the fund
are paid out o f the premiums, except that the legislature originally
appropriated $40,000 to carry on the work o f the fund. This amount
is still carried by the fund as a liability.

Liability of the State .—The commission shall administer the fund
without liability on the part of the State beyond the amount of the
fund.
Solicitation of business.—The fund solicits new business through
correspondence and personal visits of the manager.




152

COMPARISON OF WORKMEN 7S COMPENSATION INSURANCE.
ACCIDENT STATISTICS.

The fund has compiled and published no accident statistics apart
from those published by the industrial commission.
ACCIDENT PREVENTION AND INSPECTION.

The fund performs ho accident-prevention work, this being a func­
tion of the industrial commission.
INDUSTRIAL COMMISSIONS.
CALIFORNIA INDUSTRIAL ACCIDENT COMMISSION.^
The California workmen’s compensation law is compulsory both
as to compensation and insurance. A ll employments except agri­
culture and domestic service are covered by the act. A ll employers
must insure with the State fund or with private casualty companies
or provide self-insurance. The compensation act is administered by
an industrial accident commission of three members, who are ap­
pointed by the governor for a term of four years. The commission is
authorized to appoint its own officers and employees and to fix their
salaries, subject to the civil-service rules. The expenses of the com­
mission are paid out o f the State treasury from funds regularly ap­
propriated for the commission. However, in 1919 an amendment to
the compensation act provided for the creation o f a rehabilitation
fund, upon which the commission may draw to promote rehabilita­
tion and accident-prevention work. This fund is created by requiring
employers to contribute $350 for each fatal accident in which there
•are no persons entitled to compensation.® In addition to administer­
ing the compensation provisions and the rehabilitation work the com­
mission has charge o f the enforcement o f the State safety laws
and supervises the State insurance fund. The State fund is under the
immediate administration o f a manager appointed by the commis­
sion. One commissioner has immediate supervision over compensation
matters, one over safety matters, and the third has charge of the
branch office at Los Angeles. In disputed compensation cases hear­
ings are held before the commission’s referees, who digest the evidence
and render a decision, which is reviewed by the commission. Appeal
may be had from the decision o f the commission to the court upon
questions o f law.

ACCIDENT REPORTS AND BUREAU OF INFORMATION.
A ll employers in the State are required to report all industrial
injuries. In case the employer is insured, the accident report may be
forwarded by the insurance carrier. In addition, the attending phy­
sician’s report is required and the insurance company or self-insured
employer is required to make a supplemental or final report, stating
when the injured workman returned to work, the amount o f com­
pensation, medical benefits, etc. The report o f the attending phy­
sician, rather than the first report o f the employer or insurer, is used
as the basic report for administration purposes.*
89 T h e C a lif o r n ia I n d u s t r ia l A c c id e n t C o m m is s io n w a s c o m b in e d w it h s e v e ra l o th e r
la b o r - la w e n fo r c in g a g e n c ie s in 1921.
* T h is la w w a s d e c la re d u n c o n s titu tio n a l b y th e S u p re m e C o u rt o f C a lifo r n ia , J a n u a r y

27, 1922.




INDUSTRIAL COMMISSIONS----CALIFORNIA.

153

All reports first come to the bureau of information and are divided
into four groups (death, permanent disability, serious, and minor).
The physician’s reports are immediately transmitted to the State
fund for the purpose of ascertaining whether any of the employers
are insured in the fund. The fund retains the reports of its own
assured; other reports are returned to the bureau of information.
The reports as to death, permanent disability, and serious injury
are indexed, a separate index being kept for each type of injury.
Those accidents which are of interest to the safety department for
accident prevention purposes are transmitted to that department,
then returned to the bureau of information, and finally transmitted to
the statistical department for further action. All- serious permanent
disability accident reports are transmitted to the rehabilitation de­
partment, and then returned, after which they are transmitted to the
statistical department for further action. Those accident reports
which show that the workman’s family or dependents may need as­
sistance are transmitted to the welfare department for consideration,
then returned to the information bureau, and then sent to the
statistical department.
The initial examination of accident reports and the follow-up work
every six months is done by the statistical department as hereinafter
described.
Death ,—All fatal accidents, as already noted, are indexed and filed
in alphabetical order. This index card shows the names of the em­
ployer, the employee, and the insurance carrier, the date of the injury
and death, information as to dependency, and when the case was
sent to the legal department. On receipt of a fatal-accident report,
the commission sends a form letter to the employer requesting the
names and addresses of dependents. A form letter is also sent to the
dependents informing them of their compensation rights and stating
what they must do. A synopsis of the law is also sent them. A blank
form is also sent to the dependents asking for the necessary data
upon which the death benefit payments may be based. Nonresident
alien dependents receive the full amount of compensation benefits
but dependency must be proved.
Permanent disability ,—The permanent disability cases also are
indexed in a separate file and filed alphabetically by name of em­
ployee. This card contains the names of the employee, employer, and
insurance carrier, the date and nature of injury, the age and wage,
and also the date the report was received and when the employee
was notified. When the permanent disability accident report is re­
ceived the employee is sent a synopsis of the law and also a memo­
randum defining what a permanent disability is and what the em­
ployee must do. An application for a permanent disability rating
is sent the employee when, in the opinion of the commission, the
disability has been reduced as far as possible. A surgeon’s special
report blank is also sent to the employee, which the attending sur­
geon is required to fill out. The rating is done by the permanent dis­
ability rating department. The secretary also has an alphabetical
card index of all rated permanent disability cases. Applications for
permanent disability ratings and surgeons’ reports are filed in the
permanent disability rating department.



XM

COMPARISON OF WORKM EN^ COMPENSATION INSURANCE.

Serious injuries> card index is also kept of serious injuries (not
—A
.permanent disabilities), filed alphabetically by name of employee.
Upon receipt of the accident report the injured employee, as in the
-erase-of permanent disability accidents, is sent a synopsis of the law
sand also a form letter stating in a general way what his rights are
and what action to take if the injury later results in a permanent dis­
ability. No further report from the workman is required in these
eases unless or until the insurance carrier denies liability, refuses
f urfeer necessary medical treatment or disability payments, or unless
the injury results in some permanent partial disability.
Minor a&mdents.—No card index of the minor accidents is kept.
These imports are .immediately transmitted to the statistical depart­
ment, unless the nature of the accident requires attention by the
safety department. . .
Receipts and reports not required.—The following reports are not
required by the commission: Supplemental reports of insurance car­
riers; final physicians’ reports,* receipts from workmen for payments
made by employers or insurance companies. No follow-up work is
done in ordinary cases except that a request for a final report of the
accident is sent every six months by the statistical department. The
commission does not know when payments are made or whether they
have actually been made.
STATISTICAL DEPARTMENT.

All reports received by the statistical department come directly
through the bureau of information. State-fund accident reports,
however, are transmitted directly to the fund, and the commission
therefore does not keep a record of or tabulate these reports. Instead,
the State fund furnishes the statistical department with a punched
card similar to those made by the commission for all other accidents,
and these cards are tabulated.
All accident reports (employer’s, insurer’s, and doctor’s) when first
received by the statistical department from the bureau of informa­
tion are filed in large groups by name of employer. At the end of
each quarter these accident reports are arranged in alphabetical order,
assembled, examined, and compared. They are then divided into
three groups—closed, open, and incomplete files. A closed case is one
in which the workman has returned to “ ork and the amount of com­
w
pensation and medical benefits has been reported. A master report,
usually from the employer’s report, is then made out. This report
combines all the data on the three reports. The reports are then num­
bered, but for statistical identification only, after which the reports
are ready for punching and tabulation. The discarded reports, that
is, those remaining when the master report is made out, are arranged
in alphabetical order in convenient sized packages and filed away.
The open cases and the incomplete reports are filed separately in
alphabetical order. When the supplemental or final reports are re­
ceived the case is extracted from the open file and placed with the
closed cases; similar action is taken as regards the incomplete file.
Every six months the files are examined and missing or final reports
are requested. Special report blanks are used for fatal and perma­
nent partial disability cases. In temporary disability cases a list is



IOTUSTE1AL COMMISSIONS— CAniFOBMA.

155

made for each carrier, and only the period of disability, medical cost,
and amount o f compensation are requested.
The .accident statistics are kept by year of occurrence, Separate
cards are punched for temporary, permanent., fatal, and dependency
cases. Formerly separate statistical tables were made for fatal and
permanent and temporary disability accidents, but in 1919 these acci­
dents were combined in a single table.
A ll of the above reports are merely for statistical purposes and are
not used by the claim or compensation department described below,
In controversial cases an application is made by the claimant setting
forth the facts. A synopsis o f the case is then transmitted by the
compensation department to the statistical department, which is noted
on the accident report ; similarly, the compensation department noti­
fies the statistical department of any award made by the commission.
I f the cards for any of these cases have already been punched they
are extracted and a new card in conformity with the award sub­
stituted.
Insurance company’s reports are classified as to manual number by
the insuring company. Self-insurers are classified by the statistical
department.

COMPENSATION DEPARTMENT—HEARINGS,

The compensation department o f the California commission has to
do only with contested cases.
In cases of dispute the applicant makes the claim to this depart­
ment. These cases are numbered and indexed. Hearings are set after
10 and before 30 days after the filing of the application. The respond­
ent is notified and must file an answer with the commission and
also with the applicant. The applicant may determine w hat wit­
T
nesses and evidence are necessary from respondent’s answer.
The case is then heard before a referee and testimony taken. Hear­
ings are held at places most convenient to the injured workman, most
o f them being held at San Francisco or Los Angeles. The commis­
sion has several traveling referees. Attorneys are present in about
one-third o f the cases. The injured workman must pay all expenses
incurred, including those o f witnesses., unless suit is unreasonably
defended.
The referee prepares a memorandum on the case containing his
decision. I f the case is heard by a traveling referee who can not
consult th e . commission, a decision writer reads the evidence and
writes an opinion. The case is then taken up with one of the com­
missioners, after which another commissioner reviews the case. The
first commissioner marks the case “ plain,” u fairly plain,” or “ in
doubt,” and the second commissioner governs himself accordingly.
A ll referees’ reports are sent to the San Francisco office. The third
commissioner is stationed at Los Angeles,, coming to San Francisco
once a week. This commissioner usually participates only ip those
cases in which the other two commissioners disagree.
The State fund has a much smaller percentage o f disputed cases
than other insurers. The fund does not fight claims as do insurance
companies. It is the policy o f the manager o f the fund not to appeal
from the commission’s decision to the court, although this policy does
not affect the right o f appeal o f the claimant in State-fund cases.




156

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.
PERMANENT DISABILITY RATING DEPARTMENT.

The California system of compensating permanent disabilities
differs from those o f all other States and Provinces. The compensa­
tion law authorizes the commission to establish a schedule o f per­
manent disabilities in which the amount o f compensation shall be
based upon (1) the nature of the physical injury, (2) the occupation,
and (3) the age. In accordance with this authorization the com­
mission has issued an elaborate schedule in conformity with which
all permanent disability injuries are rated.
The permanent disability rating department o f the commission re­
ceives the workman’s application for a permanent disability rating
and a special report o f the surgeon setting forth the facts. These
reports are examined by the commission’s medical advisers. Dis­
crepancies between the workman’s and attending physician’s reports
are investigated. A ll permanent disability cases near San Francisco
or Los Angeles are requested to come to the office for examination by
a medical director o f the commission, after which they are rated for
permanent partial disability. Ratings are changed in accordance
with change in condition. Ratings are made on functional loss pri­
marily. The percentage o f loss o f function is based upon the degree
o f immobility o f the member, stated if possible in amount o f flexion
and extension. Then the age and occupation as shown by the sched­
ule are applied. The commission has a special schedule for eye
injuries.
In permanent disability cases in distant portions of the State spe­
cial cards are sent to the workman requesting specific data as to
nature o f injury. The exact disability of the injured member as
reported by the attending surgeon is shown on a diagram. I f the
workman’s statement agrees with the attending physician’s report,
the case is given a permanent disability rating; if not it may be re­
ferred to a medical referee, who makes an examination and renders
his report.

WELFARE DEPARTMENT.

The purpose o f the welfare department is to study the economic
status o f dependents o f workers killed in industry with a view to
determining their needs and to what extent the present death benefits
fail to meet these needs. The commission hopes to amend the com­
pensation scale to provide ^
benefits which will more adequately
meet the needs o f the surviving dependents. It also hopes to intro­
duce a plan for the reeducation and retraining o f dependent widows
and children similar to that provided for the rehabilitation o f the
permanently disabled.
The commission investigated nearly 700 fatal cases and ascertained
the condition o f dependents subsequent to the accident. The work
was performed in cooperation with the board o f control. Four in­
vestigators were furnished by the latter, but were paid by the indus­
trial commission. The person in charge o f the welfare department is
under the supervision o f the commission. She devotes one-half o f
her time to the commission and one-half to.the board o f control.
A ll fatal accident reports, awards, and synopses o f all claims are
filed with the welfare department. The record o f the fatal accidents




INDUSTRIAL COMMISSIONS----CALIFORNIA.

157

is kept by name of deceased, and by county. When the necessary
data have been recorded in the files of the department the accident re­
ports are returned to the bureau of information.
M E D IC A L D E P A R T M E N T .

The medical department consists of four medical advisers, two of
whom devote only a part of their time to the work of the commission.
Three of the medical advisers are in the San Francisco office and one
in Los Angeles. These medical advisers examine claimants, select
the impartial examining physicians, and pass upon the reasonableness
of medical fees. The commission also appoints resident medical
referees to whom are referred for examination claimants who are
unable to come to the office of the commission. Employers have the
right of selecting the physician, except that in case the physician
rendering the service is incompetent the employee has the right to
choose a physician from a panel nominated by the employer.
R E H A B IL IT A T IO N D E P A R T M E N T .

The California compensation act provides that in case of a fatal
injury in which there are no dependents entitled to compensation the
employer must pay, in addition to any other payments, the sum of
$350. The moneys so paid in shall constitute an industrial rehabilita­
tion fund upon which the commission may draw for the promotion of
vocational reeducation and rehabilitation of persons disabled in in­
dustry. Any surplus not needed for rehabilitation work is placed to
the credit of the accident prevention fund. The constitutionality of
this provision is being tested in the courts, and until the constitu­
tional question is decided the commission is handicapped in the
prosecution of its rehabilitation program.®
The commission, however, has created a rehabilitation department*
in immediate charge of which is a young man who has lost both his
hands. All permanent partial disability accidents are referred to
him and record is made of each case. He regularly visits the hos­
pitals near San Francisco and discusses with the patients the prob­
lems connected with their retraining.
S E L F -IN S U R A N C E .

All self-insurers1are required to deposit security. The minimum
amount required is $20,000. A self-insurer must also file a financial
statement showing his assets, liabilities, etc. This statement need
not be renewed yearly.
The commission has no supervision over insurance and does not
know until an accident occurs whether or not the employer is in­
sured. Quite a large number of cases are not insured. The exact
number is-not known. The only consequence provided in the law for
noninsurance is that the injured workman retains his right to sue
for damages. A number of workmen have been deprived of their
compensation because of the noninsurance of the employers.
In pension cases self-insurers must deposit the present worth of the
compensation payment, discounted at 3 per cent, with the State fund*
which thereafter becomes responsible for payment. There are at
present 221 self-insurers with 204,802 employees. The deposited
“ Declared unconstitutional by Supreme Court of California, Jan. 27, 1922. [Ed.]

74832°—22---- 11




158

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

security is $4,275,000. In addition to the self-iftsurers there are 215
maritime employers insured in a maritime insurance company not
authorized to do business in California. No self-insurers have failed
as yet.
SAFETY D EPAR TM ENT.

In California the enforcement of the safety laws is a function of
the industrial accident commission. In fact it is one of the few States
in which accident prevention work is regarded by the commission as
of equal importance with the administration of the compensation pro­
visions. The prosecution of the accident prevention work is under
the immediate direction of a superintendent of safety supervised by
one member of the commission, who devotes practically all of his
time to this work. The personnel of the safety department consists
of *46 inspectors and other employees. The department is divided
into several branches (boiler, electrical, elevator, mining, shipbuild­
ing, construction, and general), each division being in charge of a
chief inspector.
COLORADO INDUSTRIAL COMMISSION.

The Colorado compensation act is elective as to the compensation
provisions and compulsory as to insurance. All employments except
agriculture, domestic service, and employers having regularly less
than four employees are covered by the act. All electing employers
must insure with the State insurance fund or with private casualty
companies or provide self-insurance. The act is administered by an
industrial commission of three members appointed by the governor
for a term of six years. The commission is authorized to appoint its
officers and employees, subject to the civil-service rules. The admin­
istrative expenses of the commission *are paid out of the State treas­
ury from moneys regularly appropriated.
, In addition to administering the compensation provisions the com­
mission has supervision over the State fund and administers the
minimum wage law. The State fund is in the immediate charge
of a manager appointed by the commission. The commission is also
charged, under the act, with the enforcement of the child labor, fac­
tory inspection, and safety acts, but these functions are performed
by the factory and mining departments.
Compensable accident cases are settled by voluntary agreements
which must be approved by the commission. In disputed cases either
party may file an application for a hearing before the commission’s
referee. Appeal may be had from the referee’s decision to the com­
mission and from the decision of the commission to the courts.
A C C ID E N T R E P O R T IN G - A N D C L A IM S .

A ccident reporting .—All accidents are required to be reported by
all employers under the compensation act. The present waiting
period is 10 days.
The employers’ first accident reports are sometimes transmitted by
the insurance carriers or made out by insurance carriers from the
employers’ reports transmitted to them. In the case of mining acci­
dents two copies are received, one of which is transmitted to the
mining department. The attending physicians’ first reports are re­



INDUSTRIAL COMMISSIONS----COLORADO.

159

quired in compensable accident cases, though not always received.
A physician’s supplementary report is required in special cases.
Employers’ supplementary reports are countersigned by the workman
when he returns to work. In compensable accident cases agreements
as to compensation, etc., are made between employer or insurer and
injured workman. Receipts for compensation payments, including
final receipt, are required by the commission. If there is no agree­
ment on file with the commission the workman is requested to make
an application for a hearing.
Claim frocedure .—When the employer’s first report is received it
is given an accident number. The report is acknowledged by card
and the workman is sent a card stating briefly what he must do and
to what compensation he is entitled. The report is then indexed for
card index (showing names of the employee and employer, the acci­
dent number, aiid the date of accident) ; these cards are filed in alpha­
betical order by name of employee. An employer’s card is also made
out (showing the accident and claim number, the employer’s and
employee’s names, the date when injured, and the date the employee
returned to work). These cards are filed in alphabetical order by
employer’s name. Each card contains a record of all the accidents
of an employer. A compensation card is also made out showing
the history of the accident and the payments made. These cards
are filed in numerical order by accident number. The accident re­
ports themselves are kept in a file in numerical order.
In all compensable accidents agreements between employer or in­
surer and workman as to compensation, etc., are required. As these
agreements are received they are given a claim number which, to­
gether with other data, is transferred to the compensation card. The
accident report is withdrawn from the accident file (a tracer showing
the claim number being left) and a new claim file is made. The
agreements are filed in numerical order by claim number. As re­
ceipts for compensation are received they are noted on the back of
compensation card, together with dates of receipt. No medical pay­
ments are recorded. A new final receipt form, however, calls for
detailed medical expenditures. When the final receipt and final
employer’s report are received and approved by the claim department
the case is closed. The compensation card is withdrawn and put in
the closed file. Compensation cards are made out for all accidents.
If the first or supplementary reports show that the case is not com­
pensable and that the workman has returned to work, the card is
withdrawn and placed in the closed accident card file. The com­
pensation card index is examined periodically and missing agree­
ments or supplementary reports requested. If no response to these
requests is received the workman is requested to file a claim.
The voluntary agreements are examined by the commission’s claim
agent, who compares the agreement with the accident report and
clears up inconsistencies. Acknowledgment of agreement is sent to
both parties.
H earings .—In case of dispute the workman or insurer files an ap­
plication for hearing before the commission’s referee, whose decision
is final unless appealed to the commission. Either party may also ap­
peal from the commission to the courts. The referee travels about the
State holding hearings which have been arranged for in advance.



160

COMPARISON OF WORKMEN'S COMPENSATION INSURANCE.

Permament partial disability .—Examination of permanent disabili­
ties to determine the degree of disability is made either by the com­
mission’s special doctors or by the commission’s referee. Special
reports may be required. The commission has no- regular medical
adviser or medical department, but refers cases upon which it desires
expert medical opinion to special physicians for examination.
S T A T IS T IC A L D E P A R T M E N T .

Only compensable accidents are tabulated. All accidents are kept
by year of occurrence. The compensation amounts, as tabulated,
cover the compensation paid and awarded on such accidents.
Amounts outstanding are not included. The data are tabulated
from compensation cards when first made out and later additional
data are added, when the card is complete and the case closed. The
accident report itself is not used in statistical tabulation. There is
no tabulation of accident by industry, cause, or severity.
S E L F -IN S U R A N C E .

Self-insured employers must furnish the commission with an an­
nual statement setting forth their assets, liabilities, etc. A number
of self-insurers are required to give bonds ranging in amount from
$10,000 to $100,000, and in case the employer’s business is subject to a
catastrophe hazard the commission requires the employer to reinsure
its risk for losses exceeding $25,000 up to $150,000. In case of claim
awards in excess of $1,000 the commission also requires the employer
to set up reserves which are subject to the exclusive control of the
commission. There are 46 employers who carry their own risk. No
self-insured employer has failed or gone into receivership since the
act went into effect.
SAFETY W ORK.
The industrial commission does not engage in accident prevention
work. Under the creative act the commission was given jurisdiction
over all places of employment for the purpose of enforcing the
safety statutes, but thus far the accident prevention work has been
carried on by the factory inspection and mining departments, who
were charged with this work before the creation of the industrial
commission.
IDAHO INDUSTRIAL ACCIDENT BOARD.
The Idaho compensation law is compulsory, both as to compensa­
tion and insurance. All industries are covered except agriculture
and domestic service. All employers must insure with the State
insurance fund or with private casualty companies or provide selfinsurance. The law is administered by an industrial accident board
of three members appointed by the governor for a term of six years.
The board is authorized to appoint its employees, whose tenure of
office is subject to the pleasure of the board. The board has no
authority over the State fund, which is under the jurisdiction of the
department of commerce and industry. The administrative expenses
of the board are. paid out of the State treasury from moneys regu­
larly appropriated. In each case of fatal injury in which there are
no dependents entitled to compensation, $1,000 is paid by the em­
ployer into the general revenue fund of the State, which is used to
defray the administration expenses of the board and other depart­
ments of the State.



INDUSTRIAL COMMISSIONS----IDAHO.

161

In addition to administering the compensation provisions- the board
is also authorized to make and enforce safety rules, but thus far it
has not undertaken this function.
In disputed compensation cases the matter goes! before a committee
of arbitration, of which a member of the board is chairman. Appeal
may be had from, the committee’s decision to the full board and from
the board’s decision to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

Only employers under the compensation act are required to report
accidents, but all their accidents must be reported. The waiting
period is one week. Employers are not required to make a first
report of the accident.
The first notice of injury and preliminary application is made by
the employee and countersigned by the employer, who merely states
that the employee was employed by him. The employee’s report,
however, is usually made out by the employer. Upon receipt of this
first report it is given an accident number and an “ employee’s acci­
dent record ” card is made out. This card contains the name and
address of the employee, the accident number, the date of the acci­
dent, the employer’s name, and the nature of the accident. Cards
are filed in alphabetical order by name of the employee. The acci­
dent is also' recorded in a record of accidents book by accident
number. This book contains; the accident number, the date when
the accident report was, received, the name of the employee, the name
of the employer, the date of the accident, the nature of the injury,
and the date when the case was closed. The accident is also recorded
in an employer’s register, in which all employers are listed in alpha­
betical order and which contains the name of the employee and the
date of the accident.
Upon receipt of the employee’s first report the employee is sent a
card informing him of his rights. The report is then put in a^jacket
and filed in numerical order, awaiting the attending physician’s
report and the employer’s supplementary report. At the end of the
disability the employer or insurer sends in a summary and award
report which shows the time lost, the wages, the kind of disability,
and the amount of compensation and medical benefits awarded. This
completes the case, which is then submitted personally to the board
for approval. The file is searched once a month and missing reports
requested. A record of such requests is kept in a special follow-up
index.
Physicians make three reports: (1) First report, (2) supplemen­
tary report in long continuing cases, and (3) final report which is
accompanied by fee bill. A surgeon’s special report is made for eye
and ear injuries. All physicians’ bills are passed upon by the board.
Receipts for compensation payments are required in all cases,
though it is not possible always to secure such receipts from the
employee. Payments are required weekly but may be made monthly
upon agreement of parties. Monthly payments are the rule. One
insurer in lieu of receipts sends in a statement that payment has been
sent to the employee. Two files are kept, one containing the current
and unadjusted cases and the other the closed cases, which include
fatal and permanent partial disability cases for which awards have
been made.



162 COMPARISON op

w o r k m e n ’s c o m p e n s a t io n in s u r a n c e .

H earings .—Disputed cases come before an arbitration committee
of which a member of the board is chairman. An appeal may be
had from the decision of the committee to the full board, and from
the board to the courts. Hearings are held in the places best suited
to the injured workman. Only 12 arbitration hearings, seven review
cases by the board, and one appeal to the court have been had since
the act went into effect’. Most disputes are settled by correspond­
ence. Insurance carriers usually accept the opinion of the board.
M edical service .—About one-half the employers under the com­
pensation act are under the contract hospital system. Employees of
such employers are charged $1 a month for unlimited service in case
of accident or sickness. The board has no medical department or
medical adviser, but in disputed cases appoints impartial physicians
to examine injured workers. The physician is usually selected by the
employer. The board passes upon every medical bill whether or not
disputed.
Perm anent partial disabilities .—In permanent partial disability
cases compensation is paid for temporary total disability in addition
to the amounts provided in the statutory schedule. The degree of
disability in cases involving loss of use of a member is determined
by the board. In case of a second permanent injury compensation is
paid upon the basis of the disability of the combined injuries.
S T A T IS T IC A L D E P A R T M E N T .

.The board was just organizing its statistical department at the
time the investigation was made. It is the aim of the board to
organize its statistical work along the lines recommended by the
committee on statistics of the International Association of Industrial
Accident Boards and Commissions.
IN S U R A N C E .

The compensation act is compulsory and every employer is re­
quired to secure compensation to his employees either by insuring
in the State fund or by depositing security satisfactory to the board.
Such security may consist of a surety bond or guaranty contract,
which has been interpreted by the court to permit employers to
insure their risk in private casualty companies.
Self-insurers must deposit either bonds or surety bond. The board
also inquires as to the finances of the self-insurer, although it does not
require the filing of a financial statement. If cash or Government
bonds is deposited, $15,000 plus 5 per cent of the pay roll is the
amount required; if surety bonds, they must be unlimited. The
amount of the bonds or security required is determined by the board.
The minimum amount required is $15,000 (formerly $22,500), which
is supposed to be the average cost of three fatal accidents. There are
21 self-insured employers in the State.
Employers who wish to insure in private casualty companies must
furnish an unlimited surety bond, which is provided by the com­
pany which carries their insurance. The company then takes over
the obligations of the employer. Each company must be approved
by the board before it can do business, and must deposit a bond of
$25,000. Only four companies are writing business at present, two
stock companies and two reciprocal exchanges, both of the latter
consisting of lumber companies.



INDUSTRIAL COMMISSIONS— ILLINOIS.

163

All bonds are deposited with the State insurance manager, though
they must be approved by the accident board. The compensation
act is compulsory and every employer is required to insure. The
enforcement of this provision is under the State fund. Hundreds
of employers are not insured. The present manager has made no
prosecutions nor has he attempted to enforce this provision. The
manager at the beginning of the operation of the law tried to carry
out this provision and collected a number of fines. According to the
accident board the reason for nonenforcement is that prosecution
would alienate the good will of such employers, and if compelled to
insure that they would insure with the private companies and
thereby handicap the fund.
SAFETY W ORK.

The board has full authority to make and enforce safety rules,
but as yet has not done so because of lack of funds. There is no
factory inspection department in the State. Board members, how­
ever, do a little personal work while on hearing trips.
ILLINOIS INDUSTRIAL COMMISSION.

The Illinois compensation law is compulsory both as to compen­
sation and insurance. Only enumerated hazardous employments are
covered by the act. All employers must insure with private casualty
companies or provide self-insurance. Illinois has no State fund.
The act is administered by an industrial commission of five members
appointed by the governor for a term of four years. The commis­
sion is authorized to appoint its own officers and employees, subject
to the civil-service laws of the State. The administrative expenses
of the commission are paid out of the State treasury from moneys
regularly appropriated.
In addition to administering the compensation provisions the com­
mission Is charged with the administration of the conciliation and
arbitration act. The commission performs no safety work, this
being one of the functions of the department of labor.
Disputed compensation cases go to one of the commission’s arbi­
trators for a hearing. Appeal may be had from the decision of the
arbitrator to the commission and from the commission to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

Only compensable accidents (those lasting over seven days) are
required by the commission to be reported, and only emploj^ers under
the compensation act are required to report. All accident reports
of insured employers are filed by their insurance carriers. No reports
of accidents are received from insured employers or from physicians.
Each employer is given a number. A card index is made of all
employers, each card having the name and number of the employer,
and filed alphabetically. When an accident report is received a filing
clerk assigns the employer a number and the report is then filed
under the employer’s number by name of employee in alphabetical
order. There are two files for each employer, one for the open
cases and one for the closed cases.
The compensation receipts (partial and final) are filed with the
accident report. Every three months the cases are examined and



164

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

requests sent for missing receipts. Compensation payments are made
weekly or semimonthly. A receipt for each payment is required.
These receipts are transmitted monthly to the commission.
The commission has no checking-up system to see whether the acci­
dent report and compensation receipts are correct except by compar­
ing the original report with the final report. Payments in disputed
cases are stopped at the pleasure of the employer or insurer. Further
action must then be taken by the employee if he is not satisfied.
H earings .—In case of dispute the employee may file a claim petition
and the case will be set for a hearing before the commission’s arbi­
trator at or near the place of the accident. Appeal may be had from
the decision of the arbitrator to the commission, one member hearing
the case, and from the decision of the commission to the courts.
Perm anent 'partial disabilities .—In case of permanent partial dis­
abilities compensation is paid for temporary total disability during
the healing period in addition to the statutory amounts in the sched­
ule. The degree of disability in case of loss of use of a member is
determined by the commission, based upon the opinion of the medical
adviser of the commission.
M edical departm ent .—The commission has a medical adviser who
examines claimants and advises the commission with respect to the
medical questions arising under the administration of the act.
S E L F -IN S U R A N C E .

Self-insured employers are required to file a financial statement
showing assets, liabilities, etc. In a number of cases the employer
must also deposit security. Coal mines are required to set aside five
per cent of their premiums for a catastrophe reserve. There were
558 self-insurers in 1918.
S T A T IS T IC A L D E P A R T M E N T ,

Accident statistics are kept by calendar year and include all acci­
dents occurring within the year. The accident data are punched on
Hollerith cards when the case is closed.
In cases which are still open in May of the following year the length
of the disability is estimated.
SAFETY W ORK.

The commission performs no safety work, this being one of the
functions of the department of labor.
INDIANA INDUSTRIAL BOARD.

The Indiana compensation act is compulsory as to insurance and
elective as to compensation except in the case of mining, which is
compulsory. All industries except agriculture and domestic service
are covered by the act. All employers must insure with private
casualty companies or provide self-insurance. There is no State fund.
The act is administered by an industrial board of five members ap­
pointed by the governor for a term of four years. The board ap­
points its employees subject to the approval of the governor. The
expenses of the board are paid out of the State treasury from moneys
regularly appropriated.



INDUSTRIAL COMMISSIONS----INDIANA.

165

In addition to administering the compensation act the board is also
charged with the enforcement of all the labor laws, including woman
and child labor, factory inspection, and accident prevention work.
Compensable accident cases are settled in the first instance through
the medium of voluntary agreements signed by the injured workman
and the employer or insurer. In case of dispute either party may
apply for a hearing before a member of the board or before the full
board. Appeal may be had from the decision of the board to the
courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .
Accident reporting .—All employers are required to report all acci­
dents resulting in disability of one day or more, but in practice only
employers subject to the compensation act report accidents. The
statutory waiting period is one week.
The following reports are required: (1) Employer’s first report, to
be sent in by the insurance company (the employer’s original report
is supposed to be sent in, but some of these reports are made out by
the insurance company, and some are not signed, or the signature is
typed); (2) physician’s first report (these reports were on file in only
about 10 per cent of the cases; many of the physicians’ reports were
duplicates, with typewritten signatures, made out and sent in by the
insurance company; (3) employer’s final report sent in by insurance
company (only about 5 per cent of these were on file); (4) agreement
between employer or insurer and workman; (5) receipt for compen­
sation signed by workman; (6) final receipt.
When an accident report is received it is numbered and indexed
in numerical order on cards (25 names on a card) which contain the
date of the accident, the accident number, the employer’s and em­
ployee’s names and the claim number if it develops into a claim. The
report is then transmitted to the statistical department and cards are
punched. The accident report is also indexed by the name of the em­
ployer—there being a separate card for each employer, with all the
accidents of each employer on his card. The accident report is then
placed in a jacket and filed in numerical order, where it remains until
the agreement is received, when it is withdrawn, the agreement at­
tached, and sent to the chairman of the board for examination and
approval. If not correct the chairman writes for information. In­
surance companies sign agreements for their assured employers.
The agreement then goes to another statistical clerk, who punches
another statistical card similar to the first except that in closed cases
the amount of compensation is added.
The agreement is then filed in numerical order in a separate file
and stays there until the case is closed, when it is put in the closed
file. All cases are filed in numerical order. The board has no follow­
up system of accident reports to see whether agreements have been
received except in fatal cases and cases involving dismemberments.
There are three separate files: (1) Accident reports; (2) agree­
ments; (3) claims (adjudicated cases). All are filed in numerical
order. All files except claims are destroyed after two years. Some
of the earlier claims were also destroyed.
Claims are indexed on cards by employee’s name. A record is kept
of accident reports which develop into claims. These are filed in



166

c o m p a r is o n o p w o r k m e n ’s c o m p e n s a t io n i n s u r a n c e ,

numerical order by accident number, and each card also shows the
claim number.
When the agreement is approved a compensation card is made out
by a statistical clerk. These cards are filed in alphabetical order by
name of employee. As compensation receipts are received by the
board they are posted on these cards. There is no follow-up of these
receipts, although the bookkeeper goes over them every three months
and copies off the amount of compensation paid during the period.
Perm anent partial disability and fatal cases .—A separate record
of permanent partial and fatal cases is kept. If no agreements are
on file within three or four weeks a request for them is made. The
physician’s report also is requested. The board has no special follow­
up system as regards temporary disabilities. The board relies upon
the workman to make complaint if he is not receiving his compensa­
tion. The attending physician’s report in permanent partial dis­
ability eases is ordinarily accepted by the board and an award is made
from such report. If the injured workman lives near Indianapolis
he is called in for examination by the board. The board has no
medical department or medical adviser.
H earings .—Compensable accident cases are settled in the first
instance through the medium of voluntary agreements signed by the
injured workman and the employer or insurer. In case of dispute
either party may apply for a hearing before a member of the board
or before the full board. In case the initial hearing is held by an
individual member of the board an appeal may be had from his de­
cision to the full board. About 20 per cent of the initial hearings
come before the full board for‘review. Either party may appeal
from the board’s decision to the courts. f
Children under 16 .—When children under 16 years of age are in­
jured, as shown by the accident report, the matter is referred to the
department of women and children for investigation and attention.
S T A T IS T I C A L B E P A H T M E X T .

After the accident report is indexed it goes to the statistical clerk
who punches on Hollerith cards such data as are then available. The
amount of compensation is not punched and the time loss is punched
only in those cases in which the first accident report shows that the
workman had returned to work. Another clerk makes out the com­
pensation card after the agreement is approved. She also, punches
another Hollerith card, taking off such data as is available at the
time the agreement is approved. A large proportion of the agree­
ments are closed cases when made. The compensation amounts and
disability periods of these are punched, but in open cases these data
are not recorded.
SELF-INSTTRAITOE.
Self-insurers are required to furnish a financial statement showing
assets, liabilities, etc. About 10 self-insurers have been required to
file surety bonds with the board. The minimum bond required is
$5,000, and the maximum $10,000. Most of these self-insurers are
small employers having one or two employees. About 300 employers
carry their own risk. They have about 10 per cent of the total num­
ber of accidents. No failures of self-insurers have as yet been re­
ported.



INDUSTRIAL COMMISSIONS— MARYLAND.

167

R E C IP R O C A L S .

All reciprocal insurance exchanges are required to deposit $50,000
in some depository approved by the board. They must also deposit
as a trust fund the amount of the award in fatal and permanent
partial disability cases. The withdrawal of the amount deposited
is subject to the order of the board. The board may make an ex­
amination of the books of the reciprocals.
SAFETY W ORK.

The industrial board, which is charged with the enforcement of
all State labor laws, is composed of five departments as follows:
Compensation, women and children, mines, boilers, and factories
and workshops. The safety work of the board is performed by the
mining, boiler, and. factories and workshops departments.
MARYLAND INDUSTRIAL ACCIDENT COMMISSION.

The Maryland compensation law is compulsory both as to com­
pensation and insurance. Only enumerated hazardous industries are
covered by the act. All employers must insure with the State fund
or with private casualty companies or provide self-insurance. The
act is administered by an industrial accident commission of three
members appointed by the governor for a term of six years. The
commission appoints its own officers and employees, whose term of
office is subject to the pleasure of the commission. The administra­
tive expenses of the commission are paid by the insurance carriers
and self-insured employers in the State in proportion to their several
pay rolls, the total assessment, however, not to exceed $60,000.
In addition to administering the compensation provisions the com­
mission has supervision over the administration of the State fund.
The fund is in the immediate charge of a manager appointed by the
commission. The commission performs no safety work, this being
a function of the board of labor and statistics.
#
Compensable accident cases are adjudicated on the basis of written
reports from the employer, the attending physician, and the work­
man. In case of dispute application may be made to the com­
mission for a hearing. Either party may appeal from the decision
of the commission to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

Accident reporting .—Only employers under the act report acci­
dents, but all their accidents are required to be reported. The statu­
tory waiting period is two weeks. The following reports are re­
quired : Employer’s report, physician’s report, and workman’s claim.
Each report is given a number and filed in the separate files in
numerical order.
Employer’s report .—An index card is made which is filed in
alphabetical order by name of employee. This card contains the
name of the workman, the date of the accident, the employer’s name,
and the number of the accident, which is assigned at the same time.
The report itself is filed in numerical order by accident number,
awaiting the workman’s claim.
Physician’s report .—An index card similar to the employer’s index
card, but of different color, is made out and filed in alphabetical



168

COMPARISON OF WORKMEN^ COMPENSATION INSURANCE.

order by employee’s name in the same index. The physician’s report
number is assigned to the card. The report itself is then filed in
numerical order by physician’s report number, awaiting the work­
man’s claim.
W orkm an’s claim .—When the workman’s claim is received the in­
dex is searched to see if the employer’s and physician’s reports are in.
An index card is then made out, which contains the name of the
workman, the date of the accident, and the claim number. If the other
reports have been received (employer’s and physician’s) they are
withdrawn from the file and the claim number is attached to the
employer’s and physician’s index cards and reports. A large propor­
tion of the workmen’s claims are made out in the office of the commis­
sion. There is no follow-up of the employer’s or doctor’s report.
The commission assumes that a claim will be made by the workman
if the accident is a compensable one.
The reports are then put in a jacket and given to the claim agent
for examination. Two sets of cards are again made out: (1) Index
cards in duplicate, showing the claim number, the date of the acci­
dent, and the employee’s and employer’s names. Of these cards one
set is filed in numerical order by claim number and the other in al­
phabetical order by name of employee. (2) Docket card which shows
subsequent action on claim. These docket cards are turned over to
the docket clerk.
If the claim is O. K. a notice of the employee’s claim is sent to the
employer and the insurance company, giving a synopsis of the claim
and stating that if no request for hearing is received the commission
will grant an award on the basis of the claim. The claims are then
filed in a day file and set six to nine days ahead. If no reply is re­
ceived an award is made by the claim agent and approved by the com­
mission. Four copies of these awards are made, one being sent to the
employer or insurer, one to the claimant, one to the docket clerk, and
one filed with the case. At the time the notice of the employee’s
claim is sent a bequest is also made for missing reports. Compensa­
tion payments are usually made weekly. Some insurance companies
pay compensation before the award is actually made by the commis­
sion, although the State fund does not.
D ocket clerk .—The original award goes to the docket clerk, who
enters the data in a docket book. The awards are entered in numeri­
cal order. The docket cards mentioned above are also filed by the
docket clerk in alphabetical order by name of employee. Awards are
filed in numerical order. When final receipts are received the data
thereon are entered in the docket book and on docket cards. The
docket book is examined periodically and receipts requested in cases
which are probably closed. Final receipts are filed with docket clerk.
H earings .—The claim procedure of the Maryland commission ap­
proximates that in use in most of the exclusive State funds in that
written claims are filed before the commission by the injured work­
men. When a*workman’s claim is received a notice thereof is sent to
the employer and insurance carrier, who, in case they dispute the
claim, may file an application for a hearing before the commission.
The commission may order the case heard by an arbitration com­
mittee. If the employer does not protest the workman’s claim, the
commission makes an award on the basis of this claim and the em­



INDUSTRIAL COMMISSIONS— MASSACHUSETTS.

169

ployer’s and physician’s reports of the accident. In case a hearing is
demanded, an award is made after the hearing is held. Either party
may appeal from the decision of the commission to the courts.
Perm anent 'partial disability .—In permanent partial disability
cases compensation is paid in accordance with the schedule provided
in the act, this compensation being in lieu of all other payments. In
cases involving partial loss of use of members the degree of disability
is determined by the commission, being based on the recommendation
of the commission’s medical adviser. No compensation is paid for
temporary total disability during the healing period.
M edical departm ent .—The commission has a medical adviser who
devotes only part of his time to the work of the commission. The
medical adviser comes in daily to examine claimants, to estimate the
probable disability of injuries, and to determine the degree of dis­
ability of permanent partial disability cases.
S T A T IS T IC A L D E P A R T M E N T .

After the award is made the claim jackets are filed in numerical
order by claim number, but in the meantime they are turned over
to the secretary of the commission who has charge of the compilation
of statistics. Statistical data are first entered from the claim in a
book, the items of which correspond to those on a Hollerith card.
The data from the book are then punched onto cards. The length
of disability is taken from the final settlement receipts.
S E L F -IN S U R A N C E .

The commission requires each self-insurer to deposit security, the
minimum being $5,000, and the maximum, $30,000. A statement
assets and liabilities is furnished by self-insurers only when
requested by the commission. There are about 120 self-insurers.

of

SAFETY W ORK.

The commission performs no safety work, this being a function
of the board of labor and statistics.
MASSACHUSETTS INDUSTRIAL ACCIDENT BOARD.

The Massachusetts compensation act is elective as to compensa­
tion and compulsory as to insurance. All industries except agri­
culture and domestic service are covered. All employers must
secure their compensation liability by insuring with some private
casualty company, no self-insurance being permitted, nor is there a
State fund. The act is administered by an industrial accident board
of six members appointed by the governor for a term of five years.
The board is authorized to appoint a secretary. The appointment of
other employees is subject to the civil service laws of the State. The
administrative expenses of the board are paid out of the State treas­
ury from moneys regularly appropriated.
In addition to administering the compensation provisions the board
has supervision over the administration of the rehabilitation work.
The board does not enforce the safety laws, this work being a func­
tion of the department of labor and industries.



I^Q COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

The compensable accident cases are settled by voluntary agree­
ments which must be approved by the board. In disputed eases
either party may file an application for a hearing before a member
of the board. Appeal may be had to the full board and from the
board to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

AeeM ent reporting. —All employers are required to report all ac­
cidents. The statutory waiting period is 10 days. All accident
reports and correspondence are received in the mailing division of
the board. The reports as received are first separated into tabulatable and nontabulatable reports. The accidents are numbered con­
secutively. The tabulatable or u incomplete ” reports received each
day are numbered first, after which the nontabulatable or “ complete n
reports are numbered. The accident report is then checked for in­
complete items and a blank form with such items checked is sent
to the employer. The insurance companies send in a list of their
assured accidents each week. This list is checked with the board’s
index cards.
The accident report is then indexed, two index cards being made.
One card is filed in alphabetical order by name of employer, and one
by name of employee. In fatal cases three cards are made, the addi­
tional copy being sent to the board’s inspector for investigation.
Each index card contains the number of the accident, the name of the
insurance company, the names of the employer and employee, the
date of the accident, and the date when indexed. The blank form
of the employer’s first report also contains a detachable supplemental
report form. If the supplemental report has not been detached by
the employer when transmitting the first report, it is detached by
the board and sent back to the employer to be filled out when the in­
jured employee returns to work.
The cards and accident reports are then sent to the filing depart­
ment for filing. The follow-up work of the “ incomplete ” reports
is performed by the statistical department. An advisory card is
sent to each employee sustaining compensable injuries, that is, those
in which the disability lasts over 10 days. Each insurance com­
pany sends in the list of its insured employers.
F iling departm ent .—The filing of the index cards, accident re­
ports, and agreements is in charge of a filing department. Separate
files are kept for accident reports and agreements, each being filed
in numerical order by number of report or agreement. The sup­
plemental report is filed with the accident report unless it is an
agreement or arbitration case, in which case it is filed with the
agreement. When an agreement is received in the filing department,
the corresponding reports are extracted from the files and the cor­
respondence in regard thereto is attached to the reports and then sent
to the agreement and arbitration department. Slips are placed in
the report file and in the agreement file when a case goes to the agree­
ment and arbitration department. A charge file is kept in the filing
department, by means of which each report and case are charged
when they leave the filing department.
A greem ent and arbitration departm ent .—Agreements, when re­
ceived by the mailing division, go to the agreement department and



INDUSTEIAL COMMISSIONS— MASSACHUSETTS-,

171

from there to the filing department where the accident reports are
extracted from the files. The agreement is then numbered and re­
port slips written which are substituted for the reports in the files.
Agreements are then examined and compared wdth the accident
report and with the supplemental report if in the files. If the agree­
ment is all right it is approved by the board and a notice of approval
sent to the insurance company; if it is not, inquiries are sent to the
parties concerned for additional information. An agreement index
card is made. This index card contains the name of the employee,
the report number, the agreement number, the name of the insurer,
the date of the accident, and the name of the employer. The agree­
ment and card are sent to the filing division. Agreements are filed
in numerical order; cards in alphabetical order by name of employee.
When final settlement receipt is received, the file is withdrawn and
compared with the receipt. Underpayments are noted and the
insurance company written to. Overpayments are noted and if
material, the insurance company is notified. If the supplemental
report is not in when the agreement is received the agreement is
filed; when the supplemental report is finally received through the
follow-up system of the statistical department the agreement and
reports are extracted from the filing department files and compared
with the supplemental report. If the final settlement receipt is
inaccurate the insurance company is written to, and the case is placed
in the pending file for a period of 10 days, awaiting reply from the
insurance company. If no reply is received at the end of 10 days
another request is sent.
In case of eye, hand, foot, or other injuries possibly resulting in
permanent partial or total disability, with additional specific com­
pensation due therefor, a letter is sent to the attending physician,
or in hospital cases first to the insurance company (to the hospital
for record if that becomes necessary), requesting full information
as to the nature and extent of the injury, submitting a diagram if
helpful. These cases are put in the follow-up file (described above)
awaiting reply.
Claims are filed, if no agreements are received, upon request of
the board. Upon receipt of the claim it is acknowledged and a claim
card made, filed in alphabetical order by name of employee. The
action taken is recorded upon the card, the claim is filed with the
case, and a letter is sent to the insurance Company. If the case goes
to arbitration, this fact is noted on Jhe claim card.

The following special files are also kept: (1) Discontinuance ap­
plication cases, filed in alphabetical order by name o f employee;
(2) unusual cases; (3) special-board cases, filed in alphabetical order
by name o f employee.

Investigations .—The board has a corps of inspectors engaged in
investigating certain problems connected with the administration of
the act, the matters investigated including the following: The rights
of dependents and the cause and manner of the accident in fatal
injury cases; the degree of partial dependency; cases where the facts
are not reported or where they are in dispute; discontinuance cases,
to ascertain whether the injured man is able to return to work or to
perform a specific job; the desirability of granting lump-sum settle­
ments ; ages of minors; employer’s failure to report, accidents; com­



172 COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.
plaints of underpayments; employee’s refusal to accept medical treat­
ment offered; and disputes between attorneys and clients as regards
the reasonableness of attorneys’ fees. No physician’s reports are
received in ordinary cases.
Insurance companies must continue to pay compensation until
ordered by the board to discontinue payment. Final settlement re­
ceipts are no longer approved by board because of the possibility of
the court ruling that such receipt is final and irrevocable and releases
the insurance company from further liability.
H earings .—If the parties fail to agree on compensation a request
for a hearing is made to the board. However, the questions at issue
are settled by informal conference if possible. If not, a date is set
for a hearing before one member of the board. Hearings are held
in the city in which the accident occurred, notices being sent to the
parties concerned. In some of the larger cities definite day or days
are set aside each week for hearings; otherwise hearings are held as
required. Upon completion of hearings a decision is written by the
member of the board and sent to the parties. Either party, if not
satisfied, may appeal to the full board for review. Thursday of each
week is full-board day. Parties may appeal from the decision of
the board to the supreme judicial court, by presenting the certified
record in the superior court, obtaining a decree of court and claiming appeal therefrom.
perm anent partial disability .—The Massachusetts system of com­
pensating partial disabilities differs from that of most of the other
States. Compensation is paid for temporary total disability during
the healing period and thereafter for partial disability based upon
the actual wage loss if the injury has resulted in a reduction in
wages. In addition, compensation is paid for certain definite periods
enumerated in the schedule. These schedule periods are much
smaller (50 weeks for all major disabilities and 12 weeks for all
minor disabilities) than those provided for in other States. No com­
pensation is granted for partial loss of function unless it results in a
reduction in earnings, as stated above.
M edical departm ent .—The board has a medical department con­
sisting of a medical adviser and several assistants. It is the duty of
the medical adviser to examine claimants; to be a witness or give
counsel at hearings; to iqake medical reports on cases before the
board; to make arrangements for specialists’ examinations; to select
impartial physicians for examination of claimants; and to pass upon
the reasonableness of medical and hospital fees.
S T A T IS T IC A L p E P A R T M E N T .

The statistical department receives only tabulatable accidents. All
the complete reports, together with the supplemental reports, are
taken from the filing division 60 days after the accident, when the
disability on these reports is computed. Each day’s reports are listed
in a book. If the accident report shows that no supplemental report
has been received a postal card is sent to the employer and the report
is placed in a pending file by name of employee. At the end of two
weeks a follow-up letter is sent to the employer. Two weeks later a
second follow-up letter is sent to the employer. If the report shows
disability over 10 days and no agreement or settlement receipt has



17a
been received, a letter is sent to the insurance company and listed in
a book by report number and employee’s name. If no reply is
received within two weeks a follow-up letter is sent. At the same
time a letter is sent to the employee. If the insurance company
reports less than 10 days’ disability and the employee does not reply
the insurance company’s statement is accepted, as correct. If the
insurance company states that the accident did not arise out of the
employment a letter is sent to the employee. If the insurance com­
pany states that the employee has sued a third party, this informa­
tion is checked up by writing to the employee and inclosing a claim
which may be used if the latter decides to claim under the act. If
the insurance company and employer report different dates of return
to work, a letter is sent to the employee and the claim inclosed. If
no reply to the various inquiries sent to the employer is received, a
postal card is sent to the insurer, and if no reply is received from the
insurer a follow-up letter is sent.
Where there is no settlement receipt on file a postal card is sent
to the insurer asking for the amount of compensation paid and the
date of return to work. No supplemental report is requested from
the employer in agreement cases. In place thereof a postal card is
sent to the insurer and if no reply is received from the insurer a
second follow-up request is made. In noninsured fatal cases a letter
is sent to the dependents. If no answer is received, the case is in­
vestigated by an inspector of the board.
The reports are then returned to the files and kept about two
months. They are then taken out, coded, and returned to the file
and later on cards are punched. The reports are separated into three
groups: (1) Completed or closed cases; (2) incomplete and out-of­
file cases—in the incomplete cases all data are punched except as to
length of disability, and in the out-of-file cases only the number of
the report is punched; (3) agreement cases in which the report num­
ber is punched and the number of the agreement is written on the
statistical card. The completed cards are filed away. The agree­
ments are later on taken from the file and cards punched. If com­
plete they are filed away with the completed cards; if incomplete,
letters are written as described above and the case is filed in a pend­
ing file, the card being attached, awaiting reply from the insurer.
Out-of-file cases are looked up and the data punched later.
Accident statistics are kept and tabulated by year of occurrence.
Inasmuch as the board’s statistical report is not issued until a year
after the period covered, the time loss of all temporary disabilities
under one year is known; the others are tabulated as over one year’s
disability. In its statistical tabulations the board follows in gen­
eral the recommendations of the committee on statistics of the Inter­
national Association of Industrial Accident Boards and Commis­
sions.
S E L F -IN S U R A N C E .
The Massachusetts compensation act does not permit employers to
self-insure or carry their own risk.
INDUSTRIAL COMMISSIONS— MASSACHUSETTS.

IN S U R A N C E .

In order to accept the a4t each employer must insure in some pri­
c
vate casualty company: Insurance companies must file with the
74832’°—22-----12




174

COMPARISON OF WORKMEN ?S COMPENSATION INSURANCE.

board a notice of insurance of each subscriber. Such notice shows
the name of the employer, the insurer, the date the policy went into
force, and the date of expiration. The State insurance commissioner
has supervision over rates and all matters relating to insurance com­
panies except compensation.
SAFETY W ORK.

The board performs no safety work whatever. This is a function
of the department of labor and industries. Formerly the board was
given authority in cooperation with the then board of labor and
industries to issue safety rules and orders and to undertake safety
work. This cooperative arrangement was not successful and the
statute authorizing this joint enforcement was repealed.
MICHIGAN INDUSTRIAL ACCIDENT BOARD.40

The Michigan compensation act is elective as to compensation and
compulsory as to insurance. All industries are covered except agri­
culture and domestic service. All employers must insure with the
State fund or with private casualty companies or provide self-insur­
ance. The State fund is under the supervision of the insurance
department and a board of directors representing the policyholders
of the fund.
The act is administered by an industrial accident board of three
members appointed by the governor for a term of six years. The
board is authorized to appoint its own employees. The adminis­
trative expenses of the board are paid out of the State treasury from
moneys regularly appropriated. The board does not perform any
safety work, this being the function of the department of labor.
Compensable accident cases are settled by voluntary agreements
which must be approved by the board. In disputed cases the matter
comes first before an arbitration committee of which a deputy com­
missioner or member of the board is chairman. Appeal may be had
from the deputy’s decision to the full board and from the board to the
courts.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .
A ccident reporting .—Only employers subject to compensation act
report accidents, but all their accidents are required to be reported.
These reports must be transmitted to the board by the employers and
not through the medium of the insurance carriers. The statutory
waiting period is one week.
The following reports are required: Employers’ first report, Form
A (abbreviated form) for noncompensable; Form B (regular form)
for compensable accidents; agreement; partial receipt; final re­
ceipt ; and final report from insurance company.
N oncompensable accidents .—Noncompensable accidents, reported
on a condensed form, are filed in a drawer, by date of accident, each
month’s accidents being kept separate. Each day’s accidents are
filed in alphabetical order by name of employer. A distributor cabi­
net is used for separating reports. Each cabinet index card bears
the day of the month, each day having a guide card for each letter
40 T h e M ic h ig a n I n d u s t r ia l A c c id e n t B o a rd w a s c o n s o lid a te d w it h th e D e p a r tm e n t o f
L a b o r in 19 2 1.




INDUSTRIAL COMMISSIONS— MICHIGAN.

175

of the alphabet. If a compensable accident is reported on Form A,
a request is made to send Form B, a copy of which is inclosed; a
copy of an agreement form is also inclosed. Nothing more is done
with these noncompensable accident reports.
Compensable accidents .—Reports of compensable accidents are first
examined as to completeness. Then an employee’s index card is made
(current follow-up index) which contains the names of the work­
man and employer, the date of the accident, and the date of receipt.
A red check mark is put on the accident report when this card is made.
The cards are then filed on a revolving index in alphabetical order
by name of employee. This card is also used as a charge index, i. e.,
the subsequent location of the case is noted on the card.
Next, an employer’s index card is made (current cross index).
This consists of two detachable parts. Part 1 contains the em­
ployer’s name; part 2, the employee’s name, the date of the acci­
dent, and the date of the receipt. These cards are also filed on a re­
volving index by employer’s name and under each employer by em­
ployee’s name in alphabetical order. The report is checked with a
blue mark when the employer’s card is made.
The accident report is then placed in a monthly follow-up file by
date of accident and by name of employer. The report is placed 30
days in advance of the date of the accident, awaiting the receipt
of the agreement. If the accident report shows that an agreement is
due, a form letter is immediately sent to the insurer and the employee
requesting that an agreement be filed, and the accident report is
again set ahead 30 days.
When the agreement is received, the employee’s revolving index is
consulted as to the location of the report. The report is withdrawn
from the file, the agreement is attached and then transmitted to the
agreement clerk for examination and approval. If the agreement is
irregular, it goes to the board for further action; if in order, it goes
to the receipt file, where it is filed in alphabetical order by em­
ployer’s name and under employer by employee.
When the final receipt of compensation is received, the case is
withdrawn from the receipt file and the employee’s index card is
withdrawn from the revolving index, going to the completion clerk,
and the whole case is examined as to completeness. The employer’s
index card is also withdrawn from the revolving index. If the case
is complete and correct, the report, together with the employer’s
and employee’s index cards, is numbered. The employee’s card is
filed in the drawer in alphabetical order within certain limits (e. g.,
all names within the letters Poa-Poo are filed together). The
employer’s index card is placed on a closed revolving index and the
case filed in numerical order.
An examination and follow-up of the receipt file is made once in
six months or oftener if necessary. Insurance companies must con­
tinue payments until they petition the board for permission to dis­
continue. The board may refuse to accept agreements from the in­
surance carrier and hold the employer responsible for compensation
payments, which the insured employer may make to his injured
workmen.
H earings .—Compensable accident cases are settled by voluntary
agreements which must be approved by the board. In disputed cases



176

COMPARISON OF WORKMEN *S COMPENSATION INSURANCE.

the matter comes first before an arbitration committee of which a
deputy commissioner or member of the board is chairman. In order
to expedite procedure the board asks the parties to waive arbitrators
and to appear only before the deputy. Waivers are agreed to in 50
per cent of the cases. Appeal may be had from the deputy’s decision
to the full board on review. Some cases may be heard directly by the
board. Either party may appeal from the decision of the board to
the supreme court. Many disputed cases are settled by informal
conferences.
Perm anent partial disabilities .—Permanent partial disabilities are
compensated in accordance with the statutory schedule but only am­
putations are included in this schedule. Other partial disabilities are
compensated on the basis of the resulting wage loss. In determining
this wage loss the effect of the injury on the occupation of the in­
jured man is taken into account. The board may and does pay com­
pensation for permanent total disability if the injury prevents the
injured man from resuming his regular occupation, although he may
not be incapacitated from earning at other occupations. Loss of
use of members is compensated only on the wage-loss basis. Some
of these loss-of-use cases are granted a lump sum. In some cases com­
pensation- is paid for total disability in addition to the specific
schedule.
M edical service .—The board has no medical department or medical
adviser. Disputed or technical medical questions are referred to im­
partial physicians appointed by the board.
S T A T IS T IC A L D E P A R T M E N T .

The board issues a number of statistical tables, the data for each
table being obtained from different sources. One clerk tabulates the
data as shown on the approved agreements. The number of com­
pensable accidents reported during the year are classified by industry,
but the severity of these accidents is not shown. Another clerk tabu­
lates the amount of compensation as shown by the receipts received
during the year. These data are classified according to the four gen­
eral severity groups as follows: Fatal, permanent total, permanent
partial, and temporary total cases. A third clerk tabulates the
amount of compensation and medical aid paid as shown by the final
receipts received during the year, classified by industry.
S E L F -IN S U R A N C E .

No security is required of self-insurers except the filing of a finan­
cial statement. No special form of financial statement is required.
Thus far no injured workman has suffered loss of compensation
through the failure of self-insured employers. There are about 600
self-insurers, who have approximately.one-third of the accidents.
in s u r a n c e

. *

Employers electing to come under the compensation act must file
an acceptance with the board and must also file a certificate of insur­
ance. The latter is, however, usually filed by the employer’s in­
surance carrier. Employers are not under the act unless insured.
The only penalty for noninsurance is liability to suit for damages



INDUSTRIAL COMMISSIONS— MONTANA.

177

by the injured employee. Insurance companies must notify the board
when a policy is canceled and the board then notifies the employer
that he must reinsure or he is not under the act.
SAFETY W ORK.

The board performs no safety work, this being a function of the
department of labor.
MONTANA INDUSTRIAL- ACCIDENT BOARD.

The Montana workmen’s compensation act is elective as to com­
pensation and compulsory as to insurance. Only enumerated haz­
ardous industries are covered by the act. All employers must insure
with the State fund or with private casualty companies or provide
self-insurance. The act is administered by an industrial accident
board of three members, composed of the commissioner of labor
and industry (ex officio), the State auditor (ex officio), and a chair­
man appointed by the governor for a term of four years. The board
is authorized to appoint its own employees, whose tenure of office
is subject to the pleasure of the board. The administrative expenses
of the board are paid out of the State treasury from moneys regu­
larly appropriated. In addition to administering the compensation
provisions the board is also charged with the administration of the
State fund and with the enforcement of the safety laws. The State
fund is an integral part of the board and is in the immediate charge
of an accountant appointed by the board.
In disputed compensation cases the parties in interest come before
the board for a hearing. However, few hearings have Been held, it
being the policy of the board to settle disputes whenever possible
through correspondence and investigation. Appeal may be had from
the decision of the board to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM S .

Accident reporting. —Only employers under the act report acci­
dents, but all their accidents causing disability or requiring medical
aid are required to be reported. The statutory waiting period is two
weeks.
Under the Montana law three plans of insurance are provided-:
Plan 1, self-insurance; plan 2, insurance in private casualty com­
panies; plan 3, State-fund insurance. Accident reports and claims
for each plan are kept and filed separately. The first report of the
accident is made by the employer except that under plan 2 the
insurer usually reports for the employer.
Procedure under plans 1 and 2 .—When the first report of the acci­
dent is received the firm or employer’s number is assigned by the
file clerk. A card index of employers under each plan is kept—
cards being filed in alphabetical order. An employee’s card is then
made out in duplicate. This card contains the employee’s or acci­
dent number, the name, address, and occupation of the employee,
and the date of the accident. One card is filed in alphabetical order
by name of employee, the other in numerical order by accident
number.
The accidents and claims under each plan are numbered in sepa­
rate series (for example, 20-a, 20-b, 20~e), “ a ” being plan 1,'“V ’



178 COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

plan :2, etc. Separate series for each year are also kept (for example,
2&-a5, 20-b5, 20-c5), the.figure “ 5” representing the fifth year of
the act. The report is then transmitted to the statistical and ac­
counting department for further action.
When the report is returned to the filing clerk of the claims divi­
sion, the physician’s report and the employer’s supplemental report
are requested. These, however, are usually transmitted with the first
report. To these reports are attached the firm, claim (if a compen­
sable accident), and accident numbers. If the reports show that the
case is a noncompensable one it is filed in the closed file by accident
number. If it is a compensable case the employee is requested to
file a claim made under oath. Under plans 1 and 2 these employees’
claims are filed with the employer or insurer and are not ordinarily
received by the board. In the meantime the reports are filed in the
current accident file case in numerical order by accident number.
When the claims arrive (or when receipts for compensation payments
arrive) they are checked with the employer’s first report. A claim
index card is made and filed in numerical order by claim number.
This card contains the firm, claim, and accident number; the name,
address, and occupation of the employee; the date of the injury;
the date when compensation begins and ends; the date each pay­
ment is made; and the total compensation paid. Each succeeding
payment is added to the claim card. The case is then transferred
from the accident file to the open claim file, in which the cases are
filed in numerical order by claim number. Each plan is kept sepa­
rate as usual. The receipts for compensation payments, which are
made every four weeks, are attached to the case, and similarly the
final settlement receipt. Both the open accident and claim files are
examined every two weeks and missing reports or receipts requested.
In the closed cases the compensable and noncompensable eases are
filed separately, the former by claim number and the latter by acci­
dent number.
A monthly statement is required from each self-insured employer
and each insurer showing the amount expended on account of com­
pensation and medical, hospital, or burial expenses for each injured
employee during the month.
Procedure under fla n 3 (S tate fu n d ).—The employers’ accident re­
ports, physicians’ reports, and employees’ claims are handled the same
as under plans 1 and 2. An employee’s claim is required in every
compensable case. Payments are made every four weeks. If the dis­
ability ends before the four-week period as shown by the physician’s
and supplemental reports, compensation is paid at the end of disabil­
ity. If the compensation period lasts over four weeks, a certificateof-condition report form is sent to the employee, which must be
signed by the employer and physician. Upon receipt of this report
the board pays the compensation. However, in severe cases, if the
physician has reported the probable disability, compensation is paid
during the estimated disability period and the monthly certificateof-condition reports are not required until near the end of the esti­
mated disability period.
Each claim is approved by the board. These approval sheets are
the authority for the accounting department to pay compensation.
A special report form is sent to the attending physicians upon which



INDUSTRIAL, COMMISSIONS— MONTANA.

179

they itemize the services rendered. The board also has a physician’s
special report form for eye-injury cases.
Hearings .— In case o f dispute the questions at issue are settled by
correspondence if possible. Hearings are held only when negotia­
tions fail. There have been less than 25 held thus far. In some o f
these only briefs were filed, witnesses not appearing in person.
Permanent partial disabilities .—Under the act only amputations
and total loss o f use are compensable. Partial impairments and par­
tial loss o f vision are not compensable except on the basis o f loss o f
wage. Under the State fund, however, many o f these are paid.
Others are settled on a compromise basis. In impairment cases com­
pensation is also paid for temporary total disability up to the time
the board determines the injury is permanent. The board has also
ruled that loss o f use of a member, if practically total, shall con­
stitute loss o f member and shall receive the specific schedule amounts.
Medical service .— The board has no medical department or medi­
cal adviser. About three-fourths of the employees under the act are
covered by the contract-hospital system. These hospitals are op­
erated by private persons not connected with the employer’s estab­
lishment. The employer deducts $1 a month from the employee’s
wages and turns the proceeds over to the contract hospital, which
must furnish unlimited service. The employer therefore bears no
medical expense, while the employees must bear it all. The board
may require financial reports from such hospitals, but has not re­
quested any thus far. Employees, except those under the contract
hospital system, are usually permitted to select the physician. Dis­
puted or technical medical questions are referred to impartial phy­
sicians.
A C C O U N T IN G A N D A C T U A R IA L D E P A R T M E N T .

Employers ’ register .— The statistical work o f all three plans is
done in the same department. A card index is kept o f every em­
ployer under each plan, filed by the employer’s or firm number. Each
card shows the whole history o f the employer, i. e., the kind o f
business, the number o f employees, the security, the rate, etc., and
whether the firm risk has been canceled or transferred These cards
are made ont by the accounting department.* The data are trans­
ferred from cards to an employers’ register ledger, which shows what
employers are actually under the act at any given time. The new
firms are recorded on a monthly report sheet and the firms whose
risks are canceled on another sheet. A t the end o f the month they
are transferred to the employers’ register ledger. A record o f each
firm is shown in a separate book.
Accident report record .—A ll tabulatable accidents received are
recorded and tabulated. The data on the accident report, as trans­
mitted from the claims department, are recorded on sheets kept in
a loose-leaf ledger. A sheet is provided for each report. This sheet
contains practically all the information contained on the accident
report and includes industry, cause and nature o f injury, and extent
o f disability, etc. The names o f the injured employees are also
recorded in the 6 injured employees’ register.” A monthly summary
4
is made from the individual sheets, the accidents being classified into
three groups— (1) , fatal, (2) permanent partial, (3) temporary
total— and recorded on separate sheets, In each group the accidents



180

COMPARISON OF WORKMEN ’s COMPENSATION INSURANCE.

are classified by industry. In addition, the 4 fatal ” sheet contains
4
the names o f the employee and employer; the 6 permanent partial ”
4
sheet contains the specified partial disability injuries; the 4 tempo­
4
rary total ” sheet shows the nature o f the injury. These data are
transferred at the end o f the month to the permanent ledger, separate
records being kept for the fatal, permanent partial, and temporary
total accidents, by industry.
Compensation payments .— The compensation payments as shown
by the monthly receipts are recorded on a monthly sheet, classified
by industry and severity o f injury. The data on these monthly
sheets are transferred to the permanent ledger, showing the number
o f accidents, classified by severity, and compensation and medical
payments made, classified by industry.
A C C O U N T IN G A N D A C T U A R IA L D E P A R T M E N T .

Glassification and rates .— The law classifies the industry according
to hazard and prescribes the rate for each classification. There ares
26 classes and 103 subclasses. The board is authorized to change the
classification o f a risk and to change the rate o f a classification if
the experience warrants. Such changes in classification and rates
have been made by the board. I f the losses exceed the premium
income provided through the statutory rates, the classification may
be transferred to another having a higher rate or the rate itself may
be increased. I f the statutory rate produces a premium income in
excess o f the losses, the rate is reduced by decreasing the number o f
monthly assessments. In fact, during each o f the first two years
only four monthly assessments were made, and during each o f the
next three years six assessments, which means that only one-third and
one-half o f the statutory rates were charged for the two periods.
The number o f assessments, when once determined, applies to all
classifications irrespective o f their respective loss ratios.
The class ledger shows the premium income and compensation
paid for the industrial class and subclass. No computation of out­
standing losses is made for the separate classifications. The deter­
mination o f the rates is based principally upon the ratio o f losses
paid to premium income. However, the accountant is guided also by
the accident experience for each class. The board makes a monthly
computation o f outstanding losses based upon the physician’s esti­
mate o f future disability. A ll employees within each class have the
same rate. No merit-rating system has been adopted.
Premiums and assessments.— Each employer accepting plan 3
(State fund) must file with the board an initial monthly pay roll.
Upon this initial pay roll the first assessment is levied. As soon as
this assessment is paid the employer comes under the act, but not until
then. Thereafter the employer must file his pay roll every m onth;
assessments are made every two months, usually upon the two pre­
ceding months’ pay rolls, but the board may take any two pay rolls
submitted. A t the end o f the calendar year an adjustment is made;
either excess premiums are returned or additional premiums are re­
quired. Each employer is assessed on the same basis regardless o f
when he came under the act. I f he came under the act in the middle
o f the year, he would be assessed the same proportion of his pay



INDUSTRIAL COMMISSIONS— MONTANA.

181

roll as an employer coming under the act in the beginning of the
year.
Each employer is sent a statement of his assessment. This is re­
corded in the assessment ledger. The premium receipts are recorded
in the income register, from which the items are transferred to the
firm ledger and also to the class ledger. A separate firm ledger is
kept for the State and public corporations. A ll public agencies
(and voluntary employments) must insure in the State fund. The
public corporations are assessed at the rate called for by the occu­
pation. For example, carpenters would take the building class rate,
clerks the office employees’ rate, etc.
The chief accountant audits the pay rolls of the larger companies
when he finds time. The smaller risks are never audited. A small
amount o f premiums (estimated by the accountant at $1,500) have
been uncollectible.

When an employer accepts the act by paying his initial premium
the State fund becomes liable for compensation in case the employer
thereafter fails. The State fund brings action against the default­
ing employer, and the State’s claim is a first lien against "the em­
ployer’s property. The fund has had to take such action once, but
recovered the entire amount of premium in default.
Payment of claims .—The approval sheet (see p. 178) signed by the
secretary is the accountant’s authority to pay compensation. From
these sheets the warrants or checks are written. The warrants must
be signed by a board member and the State treasurer and counter­
signed by the accountant o f the board. Upon the warrant is shown
which accident and claim it covers. The data on the approval sheet
are posted to the disbursement register, and from the disbursement
register to the firm ledger and also to the class ledger.
Payments are made monthly and are sent by registered letter.
Although payments are not due until four weeks after the waiting
period, if the attending physician reports the injury as a serious one
compensation for one or two months may be paid in advance. There­
after the physician must report upon the condition of the injured
before the next payment is made. The board generally makes pay­
ment two or three days before it is actually due. Insurance com­
panies are inclined to delay after making first payment.
Reserves and security .— The premium income and losses for each
industry class are kept separately. Each class must meet its own
liabilities. Ten per cent of the premiums, however, are set aside as
a reserve to meet catastrophe losses and also to apply to any class
in case such class has losses in excess of its income. Thus far there
has been no occasion to draw upon the reserve, which at present
amounts to $160,000, or nearly the total annual premium income.
Eeserves are also required in some cases (under plans 1 and 2 as
well) to guarantee payments in fatal cases and other long-continuing
payments. Some of the extrahazardous risks under the State fund,
especially logging companies, are required to make a deposit to
guarantee payments. Insurance companies are also required to. de­
posit security with the board before they can do business in the State.

The reserves and excess cash funds are invested in Liberty bonds
and county and municipal bonds.




1 8 2 COMPARISON OP w o r k m e n ’s c o m pe n sa t io n in s u r a n c e .

Dividends —No dividends are declared under the State-fund plan.
I t is the policy of the board to collect only sufficient premiums to
meet the cost of accidents as they occur.
INSURANCE.

There is no supervision by the insurance department over insurance
.rates. Rebating, however, is prohibited. Insurance companies must
deposit security with the industrial accident board before they can
do business. Policies must also be filed with the board. Public cor­
porations must insure in the State fund. There are no mutual com­
panies in the State.
SELF-INSURANCE.
Self-insurers must each year furnish a financial statement under
oath which is acceptable to the board. Many, however, do not give
the number of employees. Quite a number of employers have been
denied the self-insurance privilege, but in no case has this privilege
been revoked. Employers must also deposit security at the request
of the board. Only 12 out of fit self-insurers have deposited such
security, which ranges in amount from $1,000 upward. The nature
of the financial statement and the character of the employers are
the determining factors in granting self-insurance. Thus far no
self-insurers have failed.
SAFETY WORK.

The board is charged with the enforcement of the safety laws.
The board has two mine inspectors (one coal and one quartz) and
three boiler inspectors. The latter also inspect factories. The coal­
mine inspector also investigates each fatal accident as to cause and
reports on dependency.
NEW YORK INDUSTRIAL COMMISSION.41

The New York compensation law is compulsory as to both com­
pensation and insurance. All enumerated hazardous industries and
all other employments having four or more workmen or operators
(agriculture and domestic service excepted) are covered by the act.
All employers must insure with the State fund or with private
casualty companies or provide self-insurance. The act is admin­
istered by an industrial commission of five members appointed by
the governor for a term of six years. The commission is authorized
to appoint its own employees, subject to the civil-service law of the
State. The administrative expenses of the commission are paid in
the first instance out of the State treasury from moneys regularly
appropriated, but the commission assesses and collects from each
insurance company, including the State fund and self-insurers, an
amount sufficient to cover such administration expenses. The amount
each insurance company must pay is prorated according to its com­
pensation payments during the year.
In addition to administering the compensation act the commission
is charged with the enforcement of the State fund and all the labor
laws, including woman and child labor, factory inspection, concilia­
41 The New York Industrial Commission was reorganized in 1921, a single adminis­
trative head superseding the previous commission of five members.



INDUSTRIAL COMMISSIONS— NEW YOLK.

183

tion and arbitration, immigration, etc. The State fund is in the
immediate charge of a manager appointed by the commission.
The claim procedure method under the New York compensation
act is unique. Hearings must be held by the commission in every
compensable case. These hearings in the first instance are held by
a deputy commissioner; in certain cases by a commissioner. Appeal
may be had from the decision of the deputy commissioner to the full
commission for review and from the commission’s decision to the
courts.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

Accident reporting .— The following is the procedure for the New
York City district. Only employers covered by the act report acci­
dents, but all their accidents are reported. The statutory waiting
period is two weeks. The accident reports when received are divided
among eight units, each unit having supervision over all accidents of
claimants whose names begin with certain letters o f the alphabet.
F or example, all employees whose names begin with E, F, and G are
handled by one unit, etc. Each unit consists of one examiner, one
assistant examiner, two or three clerks, and two or three stenog­
raphers. A ll reports and correspondence are distributed by the mail­
ing division to the units to which they belong. The accident reports
are then separated by each unit into two groups, (1) probable non­
compensable and (2) probable compensable accidents.
The noncompensable accidents are not indexed but are filed by
month according to the date o f the accident. They are filed in alpha­
betical order by name of employee. The reports are kept six months
in the New York office and then shipped to the statistical department
in Albany.
When a noncompensable accident report (o f 10 days’ disability or
more) is received, a letter, claim form, and synopsis of law are sent to
the injured workman, acquainting him with his rights and request­
ing him to notify the commission and file a claim if his injury has
developed into a compensable accident. Each compensable accident
when received is given a number. This number designates the dis­
trict, the year, the unit, and the number o f the accident. For example,
the number 1-9-3-3604 indicates the following facts: “ 1 ” indicates
the district of the State (in this case New York City) ; “ 9 ” indicates
the year (1919) * “ 3 ” indicates the unit (E F G) ; and “ 3604 ” indi­
;
cates the number o f the accident for that year. In other words, it is
the 3604th accident received by unit 3 in the New York City district
during the year 1919. Each year’s accidents are numbered separately.
Three indexes are made for each compensable accident: (1) The
employee’s index book, in which the accidents are indexed by name o f
employee— a separate book for each year’s accidents. This index reg­
ister contains the names of the employee and the employer, the date
o f the accident, and the file or accident number. Only those accidents
which occur in the New York City district are here recorded. I f re­
ports are received from other districts they are forwarded to the
branch office o f the commission o f that district. (2) Employer’s in­
dex card, filed in alphabetical order by name of employer. This card
contains the names of the employer and employee, the file or acci­
dent number, the date of the accident, and the name of the insurer.
Claim docket

(3)




index book, in which the accidents are recorded in

184 COMPARISON OF W ORKM EN^ COMPENSATION INSURANCE.

numerical order by accident or docket number. This book contains
the name of the employee, the date of the accident, the date when in­
dexed, and the accident number. The claim docket is also used as a
charge book.
Upon receipt of the employer’s accident report, the workman’s
claim form and the'doctor’s report form are sent to the injured work­
man to be filled out. It is also incumbent upon employers to furnish
physician’s reports. Meanwhile the employer’s accident report is
placed in a pending file, arranged in numerical order by accident
number, awaiting the receipt of the workman’s claim. This file is ex­
amined once a week in order that the missing workman’s claims may
be requested. When the workman’s claim and the doctor’s report are
received (though the latter is not essential), the case is sent to the
calendar department and set for hearing. Inasmuch as every com­
pensable case is heard formally by the commission, the employer’s
supplemental reports are of subordinate importance. When or if re­
ceived they are filed with the claim. Moreover, even first reports are
not absolutely necessary.
Every probable compensable case is set for a hearing irrespective of
whether the case is actually compensable, or whether a claim has been
made, or whether the employer’s supplemental report shows less than
two weeks’ disability. If no claim is in and the accident report or
supplemental report shows less than two weeks’ disability, the case is
dismissed. If the workman does not appear and the accident is prob­
ably not compensable, the case is dismissed. The injured workman is
always notified to appear for hearing. Physicians’ reports are not
received in most cases. It is incumbent upon the claimant and the
employer to furnish the physician’s report. The employer and work­
man may enter into an agreement as to compensation, but the case
later comes before the commission for a hearing in the same way
as if a claim had been made.
The State fund accident reports which are received by the commis­
sion are sent to the State fund, which makes copies of such reports
as it has not itself received and returns them to the commission. It
also makes copies of the reports of the more serious accidents, includ­
ing all death cases, which it receives and which the commission has
not received. The fund also transmits to the commission copies of
physician’s reports and other information which it has on file which
would be useful for the commission in determining the merits of
the case. If there is no insurance policy on file covering the injury
the commission treats it as a noninsurance case.
Formerly receipts were required from employers and insurance
carriers. When these receipts were received they were arranged in
numerical order by claim number, and when the case was closed the
receipts were checked up and missing ones requested. At present em­
ployers and insurers submit a final report showing the total amount
of compensation paid.
Hearings .—The New York practice is unique in compensation
procedure in that hearings are held by the commission on every com­
pensable accident case. When a case is complete a synopsis of it is
made by the unit examiner and transmitted to the calendar depart­
ment, where it is'placed upon one of the calendars for a hearing.
Hearings are set from one to two months after the date of the ac­



INDUSTRIAL COMMISSIONS----NEW YORK.

185

cident. The commission has the following calendars: (1) Regular
calendar, in which are listed the regular nonfatal cases; (2) fatal
calendar, in which only fatal cases are listed; the fatal calendar
cases are heard either by the second deputy commissioner or by one
of the commissioners; (3) medical calendar, in which are listed ques­
tions relating to the adequacy o f and responsibility for medical
treatment and to payments for medical bills; (4) final adjustment
calendar, in which are listed permanent disability cases only; (5)
testimony calendar, in which are listed those cases requiring expert
or lengthy testimony; (6) motion calendar, in which are listed
motions for rehearing of cases before the commission; (7) session
calendar, in which are listed review or difficult cases; (8) lump-sum
calendar, in which questions involving the granting o f a lump sum
are listed.
Hearings are so arranged that all the cases of a given insurance
carrier may be heard before one commissioner upon a certain day o f
the week. For example, on Monday the Aetna cases may be heard;
on Wednesday the Travelers cases; on Friday the State fund cases,
and so on. A fter a case is heard it is returned to the claims division
with notations as to what action was taken at the hearing. A t least
two hearings are held on most cases—the original hearing and one
when the case is closed. Awards are always made for definite!
periods, generally for the time up to the hearing, but occasionally;
for certain periods in advance, at the expiration of which another
hearing is held. Long-continuing cases have numerous hearings. I f
the injured workman is in a hospital at the time of the hearing the
insurance company may waive his appearance in person at the hear­
ing. Final hearings are held when disability ends.
When the cases are returned from the hearing department to the
claims division they are divided into closed and open cases. The
closed cases are filed in numerical order and later sent to the statis­
tical department at Albany. Most o f the open cases are disposed of
by placing them on one o f the above-mentioned calendars. Others
are filed in a pending file, awaiting further action and subsequent
hearings.
At the initial hearing the commission frequently finds that it re­
quires additional information before it can decide the case. An in­
vestigation is therefore made by the claims division and the case set
for a later hearing, at which time the results o f the investigation
are presented. Such investigation includes the following questions:
Manner o f death, dependency, married status, whether the accident
arose out o f the employment, and medical service furnished.
Under the law the injured w orkman must have his claim sworn to,
T
but this provision is not insisted upon by the commission. As
already noted, hearings in the first instance are usually held by a
deputy commissioner. The deputy’s decision may be reviewed by
the commission and appeal may be had from the commission’s de­
cision to the courts.
Permanent 'partial disabilities .— Compensation for permanent
partial disabilities is paid in accordance with the statutory schedule,
these payments being in lieu o f all other compensation. In case of
partial loss o f use of a member, the degree o f permanent disability
and the amount of compensation therefor is determined at the final




1 8 6 COMPARISON OF WORKMEN ?S COMPENSATION INSURANCE.
adjustment hearing. The injured workman is then examined by
the medical department of the commission, outside expert physicians
being called in i f deemed necessary. The degree o f disability is based
upon loss o f function only.
Medical department .— The commission has a medical department
which consists o f a chief medical adviser and five assistants (four
in New York City and one up-St ate). Claimants are examined by
the medical advisers at or before the hearing.
S T A T IS T IC A L D E P A R T M E N T .

A ll o f the statistical work of the commission, including accident
statistics, is done by the bureau of statistics and information (a sub­
ordinate branch o f the industrial commission) at Albany. When an
accident case is closed the files are sent to the statistical department
at Albany. No accident statistics have been published for several
years.
S E L F -IN S U R A N C E .

A financial statement o f assets, liabilities, etc., is required from all
self-insurers and such statement must be renewed annually. In addi­
tion t o the financial statement each self-insurer must deposit collat­
eral security (surety bond not permitted). Each self-insurer must
also report to the commission every six months all outstanding death
claims and all disability claims of 104 weeks’ disability. I f the pres­
ent worth o f such claims equals one-half of the security deposited,
additional security is required. There are about 350 self-insurers in
the State. Self-insurance tends to increase.

PENNSYLVANIA WORKMENS COMPENSATION BUREAU AND BOARD.
The Pennsylvania workmen’s compensation law is elective as to
compensation, and compulsory as to insurance. A ll employments
except farm labor and domestic service are covered. A ll electing
employers must insure with the State insurance fund or with private
casualty companies or provide sell-insurance. The State fund is not
administered by the workmen’s compensation bureau or board, but
by a specially created workmen’s insurance board consisting of the
commissioner o f labor and industry, the insurance commissioner, and
the State treasurer. The compensation act is administered by two
State departments. The initial administration of the act is under the
bureau o f workmen’s compensation o f the department of labor and
industry. This bureau has supervision up to the time the case goes
to a hearing. In case o f a dispute or when an application for a hear­
ing is made, the matter comes for hearing before one of the districtreferees. These referees are independent o f each other, but are
directly responsible to the commissioner of labor and industry, by
whom they are appointed, and to the workmen’s compensation board.
In case either party is dissatisfied with the decision of the referee, an
appeal is taken to the workmen’s compensation board, which is an
independent judicial body of which the commissioner of labor and
industry is an ex-officio member but has no vote in the disposition
o f cases brought before the board.
The workmen’s compensation board consists o f three members
appointed by the governor, with the advice and consent o f the Sen­




187

INDUSTRIAL COMMISSIONS— PENNSYLVANIA.

ate, for a term of

five years. The commissioner o f labor and industry
is also appointed by the governor. The commissioner is authorized to
appoint the referees and other employees o f the bureau with the
approval o f the governor. The workmen’s compensation board is
authorized to appoint a secretary and other clerical employees. The
administrative expenses of both the workmen’s compensation bureau
and the workmen’s compensation board are paid out o f the State
treasury from moneys regularly appropriated.
As already stated, neither the workmen’s compensation bureau nor
the workmen’s compensation board has jurisdiction over the State
fund; nor have they direct supervision over accident prevention.
This work is under the direction o f the department o f labor'and
industry, but is performed by the inspection bureau o f the depart­
ment.
The compensable accident cases are settled by voluntary agree­
ments, which must be approved by the bureau. In disputed cases
either party may file an application for a hearing before a referee.
Appeal may be had from the referee’s decision to the workmen’s com­
pensation board and from the board to the courts.
A C C ID E N T R E P O R T IN G A N D C L A IM P R O C E D U R E .

Accident reporting .—A ll employers are required to report all
accidents o f two days’ disability., The statutory waiting period is
10 days. Insurance carriers report accidents for their insured.
When an accident report is received it is examined for complete­
ness but only in so far as affects code items. I f incomplete, the
original report is sent to the employer or insurer for correction,
together with a letter. No record is kept of such report sent. A
number is then given to the report. The supplemental report, unless
already filled out, is detached and sent back to the employer. A b­
stract cards o f the accident report are made in duplicate. One card
is filed in alphabetical order by name o f employer and the other
sent to the employer as a receipt. These cards contain the accident
number, the names o f the employer and employee, the date o f the
accident, and the date of the receipt of the accident report, also
whether the accident was fatal, the degree of disability, and whether
the case is complete or continuing. Keports then go to coders, who
prepare reports for the punch operators who take off the statistical
information on Hollerith cards. The period of disability is esti­
mated, unless the supplemental report is attached, in which case
the actual disability is recorded.
Accident reports are then divided and treated as follows:

(1) Complete reports (supplemental report attached) involving
no compensation (less than 10 days) are filed numerically in a sepa­
rate case, and are kept as “ live ” cases for one year, after which
they are barred from compensation by law.
(2) “ Suspense” reports— those having incomplete supplemental
reports. Supplemental reports are detached and returned to em­
ployer or insurance carrier with index card for completion. They
are filed numerically. As the supplemental reports are received they
are attached to original reports, which are taken from the file. I f
no supplemental report is received within 60 days after the accident
a form letter is sent to the employer, followed by two
letters




more

188

COMPARISON OF WORKMEN’S COMPENSATION INSURANCE.

at 30-day intervals. I f there is still no response, an inquiry is sent
to the employee and then the case is given to the adjuster for investi­
gation or the workman given a claim petition.
(3) Compensation reports—showing disability o f over 10 days or
death. In such cases agreements should be received. As soon as
an agreement is received it is attached to its appropriate accident
report, the abstract card is taken from the file, and the whole case is
turned over to the agreement division for approval and further
action. I f no agreement is received within a reasonable time a letter
o f inquiry is sent to the employer and action taken similar to that
in the case o f suspense cases.
(4) Adjuster’s file— old cases which could not be settled by corre­
spondence.
Agreements .— The case is then examined by the examiner o f agree­
ments. I f it is disapproved a letter is sent to the parties pointing
out the reasons for disapproval and asking that a new agreement be
submitted. I f no satisfactory agreement is received the matter is
turned over to an adjuster, or referred to a referee for a hearing. I f
approved, notice is sent to the self-insured employer, or the insurance
company and the employee, and the case is filed in numerical order
under three separate classifications: (1) Fatal, (2) permanent dis­
ability, and (3) temporary disability. Every three months the cases
are examined to see if settlement receipts are on file. When final
settlement receipt is received the case is taken out of the file and
filed with the permanent closed cases. Fatal accidents are investi­
gated by factory inspectors, whose reports are submitted to the ex­
aminer o f agreements.
Approval of agreements .—The agreement is approved if it tallies
with the accident report. Both agreement and accident report are
usually made out by the same party. The bureau’s inspection de­
partment or investigator is required to investigate fatal and serious
cases, especially when the facts are in dispute. I f no agreement is
received within 60 days from the receipt o f the accident report the
injured is informed o f his rights under the act and assisted in filing
a claim petition.
Compensation in cases o f multiple injuries is paid consecutively.
In some cases the agreement covers both temporary and permanent
injuries. In others the agreement covers- only temporary injuries,
and the case is filed in the temporary accident file. I f an agreement
for temporary disability also involves permanent disability, it is so
recorded on the agreement, and is also taken ciare o f in the Hollerith
tabulation system by an additional card for the temporary disability
compensation. Temporary disability cases may be closed either by
final receipt or a petition for termination before a referee, and the
case may be reviewed within one year from the date o f the last pay­
ment o f compensation. In exceptional cases the workmen’s com­
pensation board has ordered compensation to be paid after a year
has elapsed from the date o f the last payment. Every three months
the cases are gone over for final settlement receipts, and the absence
o f agreements may thus come under observation. The question of.
permanent disability is left largely to the employer and insurer and
the employee. The latter is considered qualified to look out for his
own interests.




INDUSTRIAL, COMMISSIONS----PENNSYLVANIA.

189

Hearings .—The initial administration of the compensation act is
under the bureau of workmen’s compensation of the department of
labor and industry. This bureau has compensation supervision up
to the time the case goes to the hearing. In case of a dispute or when
an application for a hearing is made the case goes to one of the
district referees for hearing. These referees are appointed by the
commissioner of labor and industry. They are independent of each
other, but are directly responsible to the commissioner of labor and
industry and to the workmen’s compensation board. In case either
party is dissatisfied with the decision of the referee, an appeal is
taken to the workmen’s compensation board, which is an independent
judicial body, of which the commissioner of labor and industry is a
member ex officio, but who has no vote in the disposition of cases
brought before the board. Appeal may be had from the decision of
the board to the court of the county in which the accident occurred.
Public defender .—The compensation law authorizes the commis­
sion to appoint attorneys to act as legal advisers for the bureau and
to represent impecunious claimants. Under this authority the com­
missioner has assigned one of its legal experts to assist impecunious
claimants with advice and in the preparation of their cases before
the referees or board. If this attorney, acting in behalf of the
claimant, is not satisfied with the decision of the referee he may, and
does, appeal from such decision to the workmen’s compensation board.
This legal adviser also investigates commutation cases and arranges
for the appointment of guardians and performs other duties of a
legal nature.
Permanent partial disabilities .—Compensation for permanent par­
tial disability is paid in accordance with the statutory schedule, these
payments being in lieu of all other compensation. The injuries
enumerated in the schedule are limited, however, to major disabili­
ties, such as the loss of a hand, an arm, a leg, a foot, or an eye. In
case of all other permanent disabilities compensation is based upon
the subsequent wage loss. If an employee with an impaired arm, for
example, or with complete loss of use of an arm, is reemployed at the
same wage he received at the time of the injury he will receive no
compensation for the loss of use of the arm.
Medical department.—Neither the workmen’s compensation bureau
nor the workmen’s compensation board has any regular medical de­
partment. However, one of the physicians connected with the de­
partment of labor and industry has been detailed to the board. The
duties of this physician are to examine claimants, testify at hearings,
and pass upon medical questions,
STATISTICAL DEPARTMENT.

As soon as a complete accident report is received by the claims
division of the workmen’s compensation bureau it is transmitted to
the statistical department, where the reports are coded and the de­
sired statistical data is punched on Hollerith cards. If a case is still
open when the report is received by the statistical department, dhe
probable period of disability is estimated.
74832°—22-----13




190

COMPARISON OF W ORKM EN^ COMPENSATION INSURANCE.
SELF-INSURANCE.

A financial statement is required from all self-insurers. In addi­
tion a financial report may be furnished by Dun or Bradstreet. A
few self-insured employers have also been required to deposit se­
curity. About 40 employers have been refused self-insurance by the
bureau. In no case, however, has the self-insurance privilege been
revoked. One self-insurer (munitions manufacturer) went into the
hands of a receiver, but all compensation obligations were met.
There were 557 self-insurers in 1918. The §elf-insured employers
have approximately two-thirds of the total accidents in the State.
SAFETY WORK.

Neither the workmen’s compensation bureau nor the workmen’s
compensation board has jurisdiction over accident prevention. This
work is performed by the bureau of inspection of the department of
labor and industry. In fact the department of labor and industry
is charged with the enforcement of all the labor laws of the State.
UTAH INDUSTRIAL COMMISSION.

The Utah workmen’s compensation law is compulsory both as to
compensation and insurance. All employments except farm labor,
domestic service, and employers having less than three employees
are covered by the act. All employers must insure with the State
insurance fund or with a private casualty company or provide selfinsurance. The act is administered by an industrial commission of
three members appointed by the governor, with the advice of the
senate, for a term of six years. The commission is authorized to
appoint its own employees, including the manager of the State in­
surance fund, and to fix their salaries, subject to the approval of the
governor. .The administrative expenses of the commission are paid
out of the State treasury from moneys regularly appropriated.
In addition to administering the compensation provisions the com­
mission has supervision over the State fund and is also charged with
the enforcement of all the labor laws, including accident prevention,
factory inspection, woman and child labor, etc.
Disputed compensation cases go before a referee of the commission
for a hearing. Appeal may be had from the referee’s decision to
the commission and from the commission to the courts.
ACCIDENT REPORTING AND CLAIM PROCEDURE.

Accident reporting .—All

employers under the compensation act
are required to report all tabulatable accidents. The statutory wait­
ing period is three days. All accidents arising out of or occurring
in the course of the employment and causing disability of over three
days are compensable.
Every employer, whether or not insured, is required to send in a
first report of accident. Also the attending physician must report
the accident. Supplemental (or final) reports are required of in­
surance carriers, showing length of disability and amount of com­
pensation and medical benefits paid. Supplemental (or final) re­
ports are also required of self-insured employers, but not of insured
employers if the insurer makes a supplemental report. A supple­
mental report is required of physicians only in special cases, especially



INDUSTRIAL COMMISSIONS— WISCONSIN.

191

permanent disability cases, when the commission desires additional
information. Compensation receipts are required from insurers and
self-insured employers.
F iling system .—Each insurer is given a number, the State fund
being No. 1. The employers of each insurer are arranged in alpha­
betical order and are numbered Al, A2, Bl, B2, etc. Each em­
ployer’s accidents are numbered consecutively. For example, an
accident bearing the number 1M5-27 means that it is a State rund
case, the employer’s name begins with M, he is the fifth employer
in that alphabet, and the accident is the employer’s twenty-seventh
accident. Self-insurers are given the initial number 2 and then ar­
ranged in alphabetical order.
Two index records are kept of each accident: (1) An employee’s
card index arranged in alphabetical order by name of employee. This
card contains the employee’s name and his accident number (file
number). (2) An employer’s card, which contains the employer’s
name and the file number. The employer’s cards are filed first by
file number and then by employer’s name in alphabetical order and
by injured employee’s name.
When an accident report is received, the index is examined to see if
it has been previously reported; if not, it is given an accident number
and the two index cards are made. If the case is incomplete a
follow-up card is made in duplicate; one is given to the chairman of
the commission for attention. The accident reports are filed in the
open, file by insurer and employer in accordance with the system
already explained. Every two weeks the files are examined and
missing reports requested.
H earings .—In disputed cases the matter comes before the commis­
sion’s referee for a hearing. Appeal may be had from the referee’s
decision to the commission, and from the commission to the courts.
Perm anent partial disabilities.—In the case of permanent partial
disabilities, compensation is paid for temporary total disability dur­
ing the healing period in addition to the statutory amounts in the
schedule. The degree of disability in case of loss of use of a member
is determined by the commission, being based upon the opinion of im­
partial physicians selected by the commission.
M edical departm ent. —The commission has nd regular medical
adviser except that the secretary of the board of health upon request
advises the commission upon medical matters.
SELF-INSURANCE.

Employers are required to furnish a financial statement showing
their assets, liabilities, etc. The commission may also require such
employers to deposit security in addition to the financial statement.
SAFETY WORK.

The commission is charged with the enforcement of all the labor
laws of the State, including safety laws.
WISCONSIN INDUSTRIAL COMMISSION.

The Wisconsin workmen’s compensation act is elective as to com­
pensation and compulsory as to insurance. All employments except
farm labor and those having less than three employees are subject



192 COMPARISON OF WORKMEN COMPENSATION INSURANCE.
to the act. All employers must insure with private casualty com­
panies or provide self-insurance. There is no State fund. The com­
pensation act is administered by an industrial commission of three
members appointed by the governor, with the consent of the senate,
for a term of six years. The commission is authorized to appoint its
own employees, subject to the civil-service laws. The administrative
expanses ol the commission are paid out of the State treasury from
moneys regularly appropriated.
In addition to administering the compensation provisions, the com­
mission is charged with the enforcement of all the labor laws of the
State, including accident prevention, factory inspection, woman and
child labor, arbitration and conciliation, etc.
In disputed cases either party may file an application for a hearing.
These hearings are held before one of the examiners of the commis­
sion or by one of the commissioners. The testimony taken at these
hearings is then reviewed by the commission as a whole and a de­
cision rendered. Appeal may be had from the commission’s decision
to the courts.
ACCIDENT REPORTING AND CLAIMS.
A ccident reporting .—All employers having four or more employees
must report accidents, but only compensable accidents (those lasting
over 7 days) are required to be reported. The statutory waiting
period is one week. A confidential first report of the accident must
be sent to the commi^ion by the employer. The commission does not
permit first reports to be transmitted- by insurance carriers. The
latter, however, must file supplemental and final reports showing
amount of compensation paid.
A card is made out by the file clerk for every employer reporting
accidents. This card contains the employer’s name and his accident
numbers, which run consecutively (each card having 277 numbers).
White cards are used for employers under the act and blue cards for
those not under the act. These cards are filed in alphabetical order
by name of employer.
Each accident report is examined when received. Upon it is
written the employer’s number, the employer’s accident number, the
date the employer.came under the act, the code number of the insurer,
and the docket number if it is a compensable accident. Incomplete­
ness of the report is noted, and it is given to clerk No. 2 (follow-up
clerk) for recnecking. Frequently supplemental reports are received
for which there are no first reports on file. These are noted and
requests sent to the employer for the first report. Clerk No. % who
has all these data on file, therefore examines all first reports. If
supplemental reports have already been received, these are attached to
the first report and all reports transmitted to clerk No. 3.
Clerk No. 3 transfers the data on the accident report to a claim
docket. Each docket card contains the following data: Names of em­
ployee and employer; date of accident; cause, nature, and extent of
disability; time lost, wages, and compensation rate; compensation
award and amounts paid; medical costs, etc. The accident report is
transmitted to the safety department for notation as to violation of
safety laws and for accident prevention purposes.
The claim docket cards are given to the claim docket clerks. There
are three such clerks, each clerk being responsible for claims for dif­




INDUSTRIAL COMMISSIONS— WISCONSIN.

193

ferent periods. Clerk No. 3 also makes out synopsis cards for clerk
No. 4, who has charge of the supplemental reports and releases.
These synopsis cards contain the employee’s name, the employer’s
name, the accident number, the docket number, and the date of the
accident.
Clerk No. 4 receives the supplemental reports, which are first
checked with the synopsis card. If no synopsis card is on file they are
turned over to clerk No. 2, who, as already explained, is in charge of
the follow-up work. The other supplemental reports, together with
all papers and correspondence on file, are given to docket clerks who
enter information on docket card. The chief duties of docket clerks
are to check the employer’s and doctor’s reports with the insurance
company’s supplemental report; to see that the amount paid is in
accordance with law, that the insurer’s reports are received regularly
and promptly, and that all the information called for is given; to
examine temporary disabilities of long duration to see if they are not
probable permanent disability cases. Dtocket clerks have complete
supervision and responsibility over temporary disability cases unless
a question of unusual importance arises. Fatal and permanent dis­
ability cases are sent to the secretary and manager of the claims de­
partment for action, although many permanent disability cases are
closed by docket clerks without being brought to the attention of the
commission or its examiners. These are cases in which the physician’s
report on file shows that the correct amount of compensation has
been paid.
Fatal cases are transmitted directly (by clerk No. 3) to the manager
of the claims department for action. He immediately communicates
with the dependents, informs them of their rights under the law, and
advises them what they must do. The commission tries to prevent
these cases from getting into the hands of attorneys. The commission
advises claimants when it would be to their interest to employ an
attorney. As soon as cases are closed they are taken from the files
and once a week such cases are sent to the statistical department for
coding.
As each department examines the accident reports, omissions and
incompleteness are noted in turn. Blank accident forms with the
omissions checked are then sent to the employer, and he is requested
to complete the report.
The following reports are required: The first report of the accident
from the employer; supplemental reports from insurance companies
(or self-insurers) showing compensation and medical benefits paid;
the physician’s report in all cases of permanent disability, occupa­
tional disease, and temporary disability lasting over three weeks.
The following are not required: A report from the injured work­
man; supplemental reports from the employer, unless he is a selfinsurer ; agreements between the employer and employee.
M edical service .—The commission has no medical department. In
disputed or technical medical cases the claimant is referred to expert
impartial physicians for examination.
H earings .—In disputed cases either party may file an application
for a hearing. These hearings are held before one of the examiners
of the commission or by one of the commissioners. The testimony
taken at these hearings is then reviewed by the commission as a



194

COMPARISON OF WORKMEN 7S COMPENSATION INSURANCE.

whole and a decision rendered. Appeal to the courts may be had
from the commission’s decision.
STATISTICAL DEPARTMENT.

After the employer’s accident reports have been recorded and dock­
eted they are transmitted to the statistical department, where they
are coded and punched in so far as information is available. When
docket and synopsis cards of closed cases are received from the claim
division the additional information is punched. This includes the
number of dependents, the duration of the disability, the amount of
compensation, and the medical aid.
SELF-INSURANCE.

Self-insured employers are required to furnish a financial state­
ment showing their assets, liabilities, etc. The commission may also
require the employer to furnish such security as it may consider suffi­
cient to insure payment of all claims under compensation. Oldestablished reliable companies are not required to file new statements;
other companies, however, must file a financial statement at the begin­
ning of each fiscal year. In granting the self-insurance privilege the
commission takes into account the employer’s accident record and his
previous experience in reporting accidents and settling claims.
SAFETY WORK.

The commission is charged with the enforcement of all the labor
laws of the State, including the safety laws.




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AT
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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102