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UNITED STATES DEPARTMENT OF LABOR
Frances Perkins, Secretary
B U R E A U OF L A B O R ST A TIS TIC S
Isador Lubin, Commissioner
+
Problems o f W orkm en ’s
Compensation Administration
In the United States and Canada
+
By
MARSHALL DAWSON
Division of Industrial Accidents
SWEN K JAER, Chief
Bulletin 7s£o. 672
U N IT E D ST A T E S
G O V E R N M E N T P R IN T IN G OFFICE
W A S H IN G T O N : 1940
F o r s a le b y t h e S u p e r i n t e n d e n t o f D o c u m e n t s , W a s h i n g t o n , D . C .
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Price 25 cents
CONTENTS
P reface __________ _ . ...
______________________
C hapter 1.— Scope and method of survey ______________________________
C hapter 2.— Experience under different types of laws________ _________
C hapter 3.— Persons and employments covered__________________ _____
C hapter 4.— Injuries and diseases covered______________________________
C hapter 5.—-Adequacy of benefit payments____________________________
C hapter 6.— Medical aid_______________________________________________
C hapter 7.— Claims administration_______________________________________
C hapter 8.— Allied services of workmen’s compensation administration__
C hapter 9.— Methods of financing workmen’s compensation adminis
trations and funds_______________________________________
C hapter 10.— Cooperation of workmen’s compensation administrations
with rehabilitation agencies_____________________________________________
A ppendixes :
Appendix 1.— Experience with silicosis under Wisconsin Workmen’s
Compensation Act, 1920 to 1936_______ _________ ___ 179
Appendix 2.— Principal features of workmen’s compensation laws as
of July 1, 1940____________________________________________________
Appendix 3.—heading and reference list_________________________ __
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Letter o f Transmittal
U n it e d S t a t e s D
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L abor,
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Secretary:
I have the honor to transmit herewith a report on workmen's
compensation administration in the United States and Canada. This
bulletin contains a comprehensive analysis of the methods of admin
istration in those States having workmen's compensation laws.
I sad or L u b i n , C o m m is sio n e r .
PREFACE
During the last few years economists, sociologists, and public-minded
citizens generally have been much concerned with problems of unem
ployment compensation, old-age pensions, and other forms of social
insurance. Most of them, however, have paid little attention to the
fact that in workmen’s compensation the country has had the benefit
of a laboratory in one form of social insurance for more than a quarter
of a century. The legal and administrative problems involved in
workmen’s compensation are frequently very much akin to those now
confronting administrators of the more recently enacted forms of
social insurance.
Much that should be helpful, directly or indirectly, can be learned
from an analysis of experience in administering workmen’s compen
sation. The variety of the patterns followed by the individual States
throws light on the effectiveness of different policies and procedures.
They vary as to types of coverage, exemptions, insurance require
ments, compensation, medical benefits, methods of computing the
compensation wage base, and in a host of other ways.
It is hardly necessary at this time to restate the necessity for
adequate workmen’s compensation laws. That the basic principle,
prompt protection for injured workers, has found nearly universal
acceptance in this country is attested by the fact that all States but
one now have such laws on their statute books. In the extent to
which this basic principle is realized, however, there is wide divergence.
The benefit provisions of some States are much more liberal than
others; some laws are much more comprehensive than others; and the
legal procedures required in some are much less cumbersome than
in others.
The purpose of this volume is to throw light on the conditions
under which the best results from a given type of legal provisions
or administration can be attained. Under what conditions can we
expect the law, or the administration, or both, to break down? Do
the experiences of individual States provide clues for the solution of
these problems?
Unlike other comprehensive studies in this field, this survey is not
a mosaic of studies by a group of individuals in a limited number of
States. The survey extended to every State with a workmen’s
compensation law, as well as to the Canadian Provinces and Puerto
Rico. It show's the present conditions in the individual States and
also explains how they came to be as they are.
vix
PREFACE
V III
It is apparent from this survey that further studies on a large
number of specific problems are desirable. What, for instance, are
the relative advantages and disadvantages of exclusive and com
petitive State funds? What has been the experience with various
types of industrial (occupational) disease provisions? W hat have
they cost? What has been the experience with second-injury funds?
What has been the experience with the various methods of determining
the wage base for compensation purposes? To what extent do the
workmen’s compensation laws actually cover injured workers? To
what extent does compensation offset wage loss? This list by no
means exhausts the problems. It merely indicates that much valuable
work still remains to be done.
Several chapters in this bulletin are reproduced in substantially
the same form as when they were first published as articles in the
Monthly Labor Review. An article on Ontario Procedure in Settle
ment of Workmen’s Compensation Claims, which appeared in the
Monthly Labor Review for January 1936, is not included in this
bulletin, but features of the Ontario system are discussed, especially
in chapters 2 and 7. The laws of the Provinces of Canada are not
included in the summary of workmen’s compensation laws in appendix
2. Such information may be found in a mimeographed bulletin that
is published annually by the Department of Labor (Dominion) of
Canada.
The Bureau is indebted to Prof. Arthur H . Reede, Pennsylvania
State College, for his searching examination of the manuscript. The
draft of the survey report was prepared under the direction of Sidney
W . Wilcox, chief statistician, and M ax D . Kossoris, senior statistician.
I sador L u b in ,
Com m issioner o f Labor Statistics.
F ebruary
1940.
Bulletin 7\[o. 672 o f the
United States Bureau o f Labor Statistics
Problems o f W ork m en ’s Compensation
Adm inistration
Chapter 1.— Scope and Method o f Survey
In 1934 the U. S. Bureau of Labor Statistics began a Nation-wide
survey of workmen’s compensation, which was later expanded to
include Canada and Puerto Rico. A single agent of the Bureau
visited all jurisdictions, and devoted an average of 2 weeks to the
survey in each of the State and Provincial offices. The main features
of the compensation system and of the administrative experience were
examined in their relation to necessary services, such as the prompt
and fair settlement of claims, the medical care and rehabilitation of
workers, and the prevention of industrial injuries. So far as the
nature of the survey permitted, attention was also given to the frame
work of the system— the type of law, the means of making certain
the payment of compensation, and the scope and adequacy of the
provision for injured workers.
The details of management, procedure, and results of administra
tion were discussed at length with State and local compensation
officials, who were most cooperative in making available the informa
tion at their disposal. Other persons and agencies acquainted with
compensation activities were visited. Public hearings and confer
ences relating to claims settlement, legislative investigations of
compensation administration, and hearings upon proposals to amend
compensation laws, were attended. The compensation experience
and programs of labor organizations were discussed with local leaders.
In contrast with the Bureau’s previous survey of workmen’s com
pensation in i919-20, which covered certain phases of the subject,
the recent survey was general rather than special. Because of the
numerous features included and the geographical scope of the field
visits, it was not possible to undertake new sampling tests or case
studies, but measurements of this kind made in other studies were
checked to see whether the conditions under which they were made
had changed and to determine what inferences should be drawn from
them.
The prevailing desire of compensation officals for an improvement
of the situation prompted them to discuss frankly the handicaps
1
2
W O R K M E N ’ S CO M PEN SATIO N
under which they worked, while in some cases their own constructive
contributions to administration came to light only through the
testimony of others. Criticism of performance, where presented in
this report, in the main reflects the viewpoint of those administrators
who judge their work, under existing conditions, by the goal of a com
plete program. It parallels the self-criticism of alert administrators,
records of which are found in the published reports of the compensa
tion commissions and the proceedings of the annual conventions
attended by compensation officers.
The vast amount of existing uncoordinated information on work
men’s compensation, obsolete at some points and with gaps at others,
is bewildering to students and administrators. The method of pre
sentation in this report is designed to aid the reader in securing an out
line of the situation and a grasp of principles which relate the details
of administration to the compensation program as a whole. The
best possible method of presenting in brief space the varied features of
law and administration is by analysis, summary, and illustration by
selected examples of situations and practices. Because of continual
changes in the law and administration, recourse should be had, for
current information on specific details in the benefit systems, to the
latest periodicals, tabulations, bulletins, and law digests. So far as
possible, this survey report avoids duplicating the material that is to
be found in the current publications of the Department of Labor.
Summaries of factual data are used primarily to outline the major
features of the compensation system and to illustrate important princi
ples and problems, rather than to furnish exhaustive information on
the subject in hand. Otherwise, much of the report would soon be
come obsolete.
An examination of the contrasting practices in the States and Prov
inces led to a critical consideration of some features of the compensa
tion systems that have often been taken for granted as indispensable.
On some of the main lines of development of the compensation program
the difficulties that have been encountered by administrators indicate
that at some points fundamental changes and different approaches
are necessary if progress in the extension and improvement of com
pensation law and administration is to continue. Attention has
therefore been given, not only to the details, but also to the basis of
compensation administration.
The presentation of survey findings is necessarily affected by judg
ments of what information is needed at the time and in the existing
circumstances. The first quarter century of experience under work
men’s compensation reveals the outline of an adequate program, and
also shows the gap between the desired objectives and the actual
performance. At the opening of the second quarter century it is
apparent that further study must be given to the practical arrange-
SCOPE AND M ETH O D OF SURVEY
3
ments that are necessary before an adequate program can be made
effective. Manifestly, an advance can best be planned where the ob
stacles to be met are clearly seen. This survey report therefore
shows, not only the desirable developments that are in successful
operation, but also the points at which the effort to give broad and
ample protection to workers was halted by difficulties which the admin
istration was not able to surmount. For example, the experience of
an exclusive State fund undertaking to provide broad coverage throws
the strongest light upon approaches to coverage problems, because
these funds, unlike the private insurance carriers, cannot select their
“ risks” or evade the responsibility of insuring every employer within
the scope of the law. Some adverse experience of State funds has
therefore been noted, for the same reason that buoys are placed in
channels.
The most fruitful consideration of details is that which leads to the
recognition of causes. Wherever possible, this report, in examining
the surface aspect of administration, points to the underlying factors,
such as, for example, the support of administration, its range of initia
tive, and the personnel policies.
The existing workmen’s compensation system is an incomplete
structure, especially, in most jurisdictions, as to scope. A program
of adequate compensation laws which can be effectively administered
awaits further legislative action. After objectives have been clarified
by the course of events, the familiar questions arise, WTiere is the
money coming from fco pay the cost? and, How can the law be enforced?
In the main, an administrative survey is concerned with secondary
matters, but by plain implication these lead ultimately to questions of
public policy, which, by virtue of the survey, may be seen in their set
ting of time, place, and circumstance.
Chapter 2.— Experience Under Different
W orkm en’s Compensation Laws
Types of
Social Problem o f Compensation L aw and Adm inistration
Workmen’s compensation laws, in their present state of develop
ment, are designed to give an injured worker prompt medical care
and money payments at the cost of the employer and with a min
imum of inconvenience to the worker. Before these laws were passed,
if an injured worker sued his employer for damages he had to prove
that the employer was negligent. The court remedy was slow, costly,
and uncertain. Under the compensation law the question of fault or
blame for the accident is not raised, since the cost of work injuries is
now considered part of the expense of production. Injured workers
are thus spared the difficulties and delays of court procedure.
More than a quarter of a century has passed since the first work
men’s compensation laws were enacted in the United States and
Canada. During that period there have been notable developments
tending toward a complete system of services. In the more advanced
administrations the settlement of compensation claims is not the only
activity of the commissions, but’ is tied in with a program of elimi
nating accidents and encouraging the rehabilitation of disabled work
ers. Performance has, however, been uneven, largely because of fluc
tuating support of administrations and rapid turn-over of personnel
in many jurisdictions. Despite these shortcomings the main features
of an adequate system of compensation and insurance have been
clarified by experience, and the requirements as to machinery and
procedure are now relatively clear.
Twenty-five years ago the problem facing the individual States
was, Shall we adopt a workmen’s compensation law? Today, in
most of the States, the problem is, W hat kind of a compensation law
and administration shall we have? Such a question involves, as to
legislation, the breadth of coverage and the type of insurance, whether
private or public or a combination of the two; the liberality of bene
fits, and the range of preventive and restorative services; the kind of
claim procedure, whether informal or like that of the courts; and the
extent of cooperation between the compensation authority and other
State and Federal agencies in safeguarding the worker and caring for
him or his dependents in event of his injury or death. Finally, there
is the question of expertness of the compensation commission and its
personnel. When workmen’s compensation laws were enacted and
commissions provided, it was supposed that members of the commis
sion would become experts in their field. The administration of work4
EXPERIENCE U N D ER D IFFEREN T TYPES OF LAW S
Q
men’s compensation is a difficult and complicated task which touches
on the varied fields of law, insurance, engineering, medicine, rehabili
tation, and public relations. M any years of experience and study
are necessary to master this subject.
From the point of view of social need, the outstanding problem
in the further development of the compensation system is how to
broaden workmen’s compensation coverage to include, as nearly as
possible, all workers, and to compensate all types of industrial injuries.
Second only to this is the need of setting up the administrations on
a basis, as to support and personnel policy, that will make possible a
high standard of efficiency in claims settlement and in the preventive
and restorative services of a complete compensation system.
Objectives o f W orkm en’s Compensation Legislation
In 1939 there were 62 different workmen’s compensation acts in
the United States and Canada: 47 State acts and the acts of Alaska,
Puerto Rico, and Hawaii; 3 Federal acts, covering the District of
Columbia, longshoremen and harbor workers, and Federal employees;
and 9 Canadian acts (including the Dominion provisions).1
There is great variety in the details of the acts in the States and
Provinces, but the results sought were much the same in all jurisdic
tions. Some of these are plainly set forth in the first annual report
of the compensation commissioners of the State of Washington.2
Among other things, the sponsors of the Washington act “ hoped” it
would:
Furnish certain, prompt, and reasonable compensation to the victims of work
accidents and their dependents, 80 percent of whom have heretofore had no
right to redress under common-law rules.
Free the courts from the delay, cost, and criticism incident to the great mass
of personal-injury litigation heretofore burdening them.
Relieve public and private charity of much of the destitution due to uncom
pensated industrial accidents.
Eliminate economic waste in the payments to unnecessary lawyers, witnesses,
and casualty corporations and the expense and time loss due to trials and appeals.
Supplant concealment of fault in accidents by a spirit of frank study of causes,
resulting in good will between employer and operative, lessening the number of
preventable accidents, and reducing the cost and suffering thereunder.
This statement of desired results remains to the present day a
challenging summary of the problems of compensation law and admin
istration that are not yet completely solved. Twenty-five years of
experience have added two important items to the legislative plan:
For further details regarding the State acts, see appendix (p. 192). A detailed analysis of the Canadian
acts is found in Workmen’s Compensation in Canada, a Comparison of Provincial Laws, Ottawa, July
1938, a mimeographed pamphlet which is published annually by the Dominion Department of Labor of
Canada.
State of Washington. Industrial Insurance Department. First Annual Report. Olympia, 1912. p. .
1
2
2
6
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W O R K M E N ’ S COM PENSATIO N
Provision for immediate, and in the main adequate, medical treatment when
injuries occur.
Arrangements for rehabilitating workers who, because of their injuries, are
no longer able to follow their former occupations.
The legal structure of the compensation system is best seen against
the background of these desired results, and confusion may be avoided
by keeping in mind the objectives when examining the various pro
visions and arrangements. This survey report is concerned with
administration rather than laws, and therefore presents only the out
lines and details that are necessary for understanding administrative
situations.3
The extent and complexity of the subject are indicated by the fact
that a standard digest of the State and Federal compensation laws
covers more than 800 pages, and in order to keep abreast of changes
it is necessary to issue a new edition every 2 years.4 Brief summaries
of the laws, and digests of recent amendments, are also published by
the United States Department of Labor. A recent summary of work
men's compensation in the United States by the Bureau of Labor
Statistics is included in this report as appendix 2.
Historical Development
The early American laws were necessarily based in part upon
foreign experience.5 The customary approach to an examination
of compensation laws takes, as its starting point, the German legis
lation. Late in the nineteenth century, the mounting toll of work
accidents caused by the rapid mechanizing of industry focused
attention on the plight of the injured workers, who were seldom
able to recover damages for their disabilities and often became charges
upon public support or private charity. The first modem com
pensation law was enacted in Germany in 1884. Under such legis
lation a worker who is injured in the course of his employment,
receives benefits without having to prove that the employer's fault
caused the accident. Compensation for industrial injuries is, there
fore, recognized as part of the cost of production. This new principle
was adopted in England in 1897. The German plan was compul
sory, with nonprofit mutual insurance funds; the British pattern
was elective, with the insurance provision left to private initiative.
The legal background and phases of workmen’s compensation are discussed at length in Dodd, Walter
F., Administration of Workmen’s Compensation, New York, Commonwealth Fund, 1936.
4Association of Casualty and Surety Executives. Digest of Workmen’s Compensation Laws. New
York, 60 John St., 1937.
Comprehensive studies of foreign compensation systems were made available to bill-drafting committees
and the public in the Twenty-fourth Annual Report of the U. S. Commissioner of Labor, 1909, Washington,
1911 (2 vols.).
3
8
EXPERIENCE
UNDER D IFFEREN T TYPES OF LAW S
7
American Compensation Acts
In 1908 the first of the workmen’s compensation laws that are
now effective in the United States was passed. It covers employees
of the Federal Government. In 1939 there were compensation acts
in all the States except Mississippi, and in all the Provinces of Canada
except Prince Edward Island.6 Workmen’s compensation was the
pioneer in the American movement for social security, and the wide
spread enactment of such legislation has been hailed as one of the
most important legal-economic developments of modem times.
Under workmen’s compensation statutes, the worker’s right to
benefits in event of injury is based on the fact of employment. The
remedy, which under the best arrangements is practically automatic
and certain, replaces the doubtful contest for a recovery in the courts
based on proof of the employer’s negligence and the inapplicability
of common-law defenses known as the fellow-servant rule, assump
tion of risk, and contributory negligence on the worker’s part.7
Varied Types of Compensation Acts
The rapid growth of workmen’s compensation laws came through
spontaneous action of the jurisdictions. There was an almost simul
taneous enactment of laws in a number of States, 10 having been
approved in 1911, 3 in 1912, and 8 in 1913, each act being the result
of independent study.8 Within a few years several distinct patterns
had emerged— as to insurance carrier: private insurance, exclusive
State-fund insurance, competitive State fund, and mixed; as to cover
age of employments: compulsory, elective, and mixed forms; as to
organization: setting up a new administrative agency, and leaving
claims settlements to the courts. The different patterns may even
be distinguished with regard to the extent to which they followed
British, German, and other foreign models, not excepting New
Zealand .9
The first stage of the development of workmen’s compensation in
the United States and Canada was marked by an exploration of the
entire field of compensation law and administration in search of the
best models. In several instances, a “ thoroughgoing study of the
literature of all the compensation-insurance systems in the world”
was made, sometimes including personal visitation in America and
abroad. But such study of the world’s compensation systems was
In Prince Edward Island railway workers are protected by the Dominion act.
Under these three common-law defenses it was held that a workman, in accepting employment, assumed
the risk of accidents likely to occur in such work, that the worker who sues the employer for damages for
a work injury must prove his freedom from negligence, and that the worker accepted, as an implied term
of his employment contract, the chances of injury at the hands of his fellow workers.
U. S. Bureau of Labor Statistics Bull. No. 491, P. (table 3).
The California competitive fund was based upon a New Zealand model. American Economic Review,
December 1919: An Adventure in State Insurance, by A. J. Pillsbury.
6
7
8
9
886
8
W O R K M E N ’ S C O M P E N S A T IO N
not, in general, balanced and corrected by a direct survey of the ex
perience and needs of injured workers.10 The passage of time would
be necessary before the American experience under compensation
could be interpreted and applied through legislation. The early task
was the transplanting, with modifications, of systems and devices
from one environment to another. The major attention was given
to the perplexing problem of fitting the models into the constitutional
framework of the States and adapting them to the theory of political
checks and balances. In the Province of Ontario, however, there
was a complete break with common-law theory and court methods,
and the administration was also freed from legislative control of expen
ditures. In the United States the new systems, although an improve
ment upon the existing situation, began operation with admittedly
inadequate benefits and services, methods of settling claims that were
interwoven at some points with court technicalities, and administra
tions that were handicapped by insufficient support.
The period in which enactment of workmen’s compensation acts
in the States was preceded by world-wide study of compen
sation systems soon closed. After 1916, according to Carl Hookstadt, the type of act usually adopted by a State was “ determined
generally by two factors, contiguity and the economic and political
progressiveness of the State.” 11 This statement, made in 1920, is
still valid. The imitation of near-by systems was sometimes without
much discrimination between good and bad features.
The Longshoremen and Harbor Workers Act and the District of
Columbia Act incorporated the draft of “ a model measure” by the
American Association for Labor Legislation,12 but among the problems
left unsettled by such a model are the desirability of public insurance13
and administrative self-support.
In the second stage of compensation history, continuing to the
present time, administrators in the State jurisdictions have as a rule
been occupied with office detail, to the exclusion of theoretical or
systematic study of workmen’s compensation. The administrations
have been inadequately supported, understaffed, and in many States
subject to frequent and almost complete changes in personnel. Under
such circumstances the commissioners could give little attention to
perfecting the compensation laws, and some of them have considered
this outside their sphere of duty. Amendments of the laws have
10This does not mean that the men who planned the early compensation acts were blind to the injured
worker’s situation. It is reported that Sir William Ralph Meredith, who designed the Ontario Workmen’s
Compensation Act, was “shocked” by some of the failures of workmen to secure compensation in the English
courts. (U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 273, p. 317.)
11IT. S. Department of Labor, Bureau of Labor Statistics Bull. No. 275, p. 12.
12American Association for Labor Legislation. Standards for Workmen’s Compensation Laws. New
York, 1939.
13In 1934 a bill (S. 3186) was introduced in Congress which embodied a new compensation act with an
exclusive public fund for the District of Columbia.
E X P E R IE N C E
U N D E R D IF F E R E N T
TYPES
OF L A W S
9
come largely through bargaining and compromise. The haphazard
changes in laws originally marked by wide variations in type have
increased the diversity and confusion of compensation legislation in
the United States. In Canada, on the contrary, there has been a
trend toward a uniform system, all Provinces having adopted com
pensation acts based on the Ontario plan, with minor variations.
In the United States experimentation with a variety of patterns has
not led, as had been expected, toward uniformity through the general
adoption of any one plan on the basis of its proved advantages. The
“ disinclination of most States to be guided by the experience developed
under the laws of other States” has been noted.14 One reason for such
disinclination has been the strong disagreement among administrators
as to the merits of the different types of law and insurance. In view
of the conditions under which they have operated, no type in the
States has proved altogether satisfactory.
In examining the compensation acts it must be kept in mind that the
devices found in some laws were originally selected, not as the most
desirable, but as promising the easiest way around constitutional
obstacles or problems of securing compliance. Nevertheless, after the
constitutional obstacles were removed the devices were sometimes left
unchanged. In some jurisdictions, compensation administration is
not in contact with Nation-wide experience, and in accounting for the
present legal forms and administrative practices therein, it is necessary
to keep in mind that the existing situation is a stereotype of an early
experiment. In analyzing compensation experience it is apparent,
therefore, that the history of some jurisdictions throws much more
light upon present problems than does that of other areas. Moreover,
it is evident that one must guard against the common habit of deciding
that certain patterns are preferable merely because they are found in a
majority of the jurisdictions, and that the most recent acts or modifi
cations are necessarily the most advanced.
The primary differences in the framework of the compensation
systems are in the use of the compulsory or the elective method of
covering persons and employments, and in the organization for secur
ing the payment of compensation, whether private insurance, private
insurance with a competing public fund, or exclusive public insurance.15
There are also wide differences in the arrangements for settling claims
which are explained in chapter 7 (p. 112).
So far as the structure of the workmen’s compensation acts is con
cerned, the Fifth National Conference on Labor Legislation in 1938
recommended the general adoption of the compulsory form of cover14U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 275 (1920), p. 12.
15Under most of these plans permission is granted an employer, upon showing financial responsibility,
to carry his own risk or “self insure.” See appendix 2 (p. 193).
215193°— 40------2
10
W O R K M E N ’ S C O M P E N S A T IO N
age, with an exclusive State fund.16 It is, therefore, of vital impor
tance to examine the experience of the jurisdictions with alternative
forms of coverage and arrangements for assuring payment of compen
sation to injured workers within the scope of the laws.
Problems o f Elective and Compulsory Coverage
Compensation laws may be classed as compulsory or elective,
depending upon the degree of constraint to which employers are sub
jected to accept the provisions of the act. A compulsory law is bind
ing upon every employer and employee within its scope; there is no
choice. Under an elective act, employers and employees have the
option of either accepting or rejecting the act. But in case the
employer rejects, the customary common-law defenses in personalinjury litigation are usually removed, while if the employee rejects,
the workmen’s compensation principle of liability of the employer for
work injuries without regard to fault is not applicable to an action for
damages. The compulsory type of act is found in all the Provinces of
Canada which have compensation laws. In the United States, as of
January 1, 1940, 21 compensation acts are compulsory and 32 are
elective.17
Of the 10 workmen’s compensation laws enacted in 1911, only 1,
the Washington act, was compulsory. A New York compulsory act
had been passed in 1910 but had been declared unconstitutional by the
court of appeals of that State. In 1917 the Supreme Court of the
United States held, in cases presented to it, that both compulsory and
elective types of statutes were valid. Because of the peculiarities of
some State constitutions, the validity of certain types or features of
compensation acts may require specific determination as the occasion
arises.18 Prior to the 1917 decisions several States, encouraged by a
decision in the State of Washington, had passed compulsory statutes.
Since 1917, however, most of the State laws which have been enacted
are elective. Six States 19 which began with elective statutes have
changed to the compulsory form. The Arkansas act, passed in 1939,
is compulsory.
Developments and Changes of Elective Coverage
In the Provinces of Canada, all of the workmen’s compensation
acts are now compulsory. In accounting for the prevailing use in
the United States of the elective type of act, it should be kept in mind
U. S. Department of Labor, Division of Labor Standards Bull. No. 25-A, p. 18.
For details, see appendix 2 (p. 194).
18For a recent discussion of the constitutionality of compulsory workmen’s compensation acts, see an
article by Samuel B. Horovitz and Josephine H. Klein, in U. S. Department of Labor, Division of Labor
Standards, Bull. No. 24. Constitutional problems and historical situations are discussed in Administra
tion of Wormken’s Compensation, by Walter F. Dodd, New York, Commonwealth Fund, 1936; Interna
tional Labor Office, Workmen’s Compensation in the United States, by Ralph H. Blanchard, Geneva, 1926;
U. S. Bureau of Labor Statistics Bull. Nos. 275, 423, and 541.
19Ohio. California, Illinois, Maryland, Wisconsin, and Minnesota.
17
E X P E R IE N C E
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that in the process of development some of the actual differences in
operation between the elective and the compulsory forms were nar
rowed in many jurisdictions. Many of the elective laws are compul
sory as to some employments, such as public or “ hazardous” employ
ments; on the other hand, the compulsory laws are usually elective
or “ voluntary” as to some employments, notably agriculture and
domestic service. Important steps increasing the effectiveness of
elective acts are provisions for the automatic acceptance of the act
unless it is specifically rejected by employer or employee, with a
compulsory requirement of insurance or qualification for carrying
one’s own risk, where the acceptance of the act, either by presumption
or choice, has taken place. In some jurisdictions the obtaining of an
insurance policy is sufficient to bring an employer within the scope of
the act.
A provision in several of the early acts permitted an employee to
elect, after injury, whether to take compensation or to sue for damages
in the courts. Such a provision was held to be unconstitutional under
the compulsory form of act because it imposed a double liability upon
the employer, but is still found in New Hampshire. It has been
criticized as leaving the employer little incentive to accept the act.20
Prior to 1929, some observers saw little difference, in operation,
between the elective and compulsory acts. Ralph H. Blanchard, in
his study of compensation made for the International Labor Office in
1926, said:21
In fact, these elective acts involve a degree of com pulsion little less than that
obtaining under com pulsory acts, for failure to accept is m ade the occasion of
subjecting the em ployer or the em ployee to highly disadvantageous conditions.
One explanation of the impression that little might be gained by
changing from the elective to the compulsory type of law is found in
the fact that “ complete or accurate statistics pertaining to workmen’s
compensation are nowhere collected for the country as a whole, nor
are they in most cases available for individual jurisdictions.” 22 While
judgments upon the desirability of a change from the elective to the
compulsory type of coverage have been formed by administrators
and labor leaders from observation of the losses sustained by injured
workers whose employers had neglected to insure, no accurate measure
ments of the relative extent of the failure to insure under elective and
compulsory acts have been made as a basis for comparison. The
effort to contrast the results of the alternative types of coverage is
made extremely difficult by differences in the enforcement program,
not only among jurisdictions, but also in the same jurisdiction under
successive administrations. A weak compliance program may nullify
20U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 275, p. 41.
21International Labor Office. Workmen's compensation in the United States, by Ralph H. Blanchard.
Geneva, 1926, p. 20.
28Idem, preface.
12
W O R K M E N ’ S C O M P E N S A T IO N
the superior advantage of strong coverage provisions, while, on the
other hand, diligent supervision may obtain relatively satisfactory
coverage in the absence of drastic laws. Under past and existing
situations, it is plain that there has been a wide margin of “ electing
out” under the optional laws, and considerable noncompliance with
the compulsory laws.
In the decade prior to 1929, the legislatures were tolerant of the
failure to obtain adequate actual coverage of workers under the
elective laws. Experience subsequent to 1929 caused two States,
Wisconsin and Minnesota, to change from the elective to the com
pulsory form of act. A similar change has been advocated in other
States. The renewed advocacy of the general adoption of the com
pulsory type of act arose from the sharp increase in the number of
employers withdrawing from coverage, or “ electing out,” after 1929.
A table (p. 42) in the Report of the Industrial Commission of Colorado
for the Biennium December 1, 1934, to November 30, 1936, shows
the number of rejections of the workmen’s compensation act by
employers from 1921 to 1936, as follows:
Year
Rejections
1921_________________________
1922_________________________
1923_________________________
1924_________________________
1925_________________________
. _ _____
1926___
1927_________________________
1928________________________
1
2
5
2
12
12
24
27
Year
Rejections
1929________________________
46
1930____________ ____________
71
1931____________ ____________
92
1932____________ ____________ 213
1933____________ ____________ 237
1934____________ __________ 140
1935____________ ____________ 115
1936____________ ____________ 108
In interpreting figures relating to withdrawals from coverage during
a depression, it must be kept in mind that some of the formal with
drawals are made by employers whose operations have dwindled and
who doubt that the average number of their employees remains
within the legal coverage requirements. Unfortunately, the table
does not show the number of employees actually covered, from year
to year, or affected by the withdrawal of employers. Most of the
withdrawals are by small employers. An even more serious, although
unusual, situation arises when many large employers reject the act.
The shrinking of coverage in States having the elective type of
compensation act was met in different ways. In some jurisdictions
it was ignored; some compensation commissions mentioned it in
reports, without recommendation; and in rare instances a change in
the law was advocated. In Pennsylvania a “ State-wide drive against
uninsured employers” was begun in 1933 and continued during the
first 7 months of 1934.23 In this campaign, the staff of the department
23 Pennsylvania. Department of Labor and Industry. Special Bull. No. 39, pp. 107-108: Pennsylvania
Labor and Industry in the Depression;
E X P E R IE N C E
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of labor and industry was aided by workers furnished by the Federal
Government, who conducted a door-to-door canvass of employers
as a C. W. A. project from December 1933 to April 1934. This study
was not of employers who “ elected o u t/’ but of those who neglected
to elect out formally when failing to insure. Under the Pennsylvania
act, employers who do not elect out are required to insure, but large
numbers of them have not done so, either intentionally or through
ignorance of the law. The report on the compliance study and cam
paign is of general interest and permanent value. Some of the findings
are typical of widely prevalent situations, and are therefore quoted.
T h e experience of the depression years has shown there is little hope of collect
ing com pensation against an uninsured
*
*
*
em ployer.
R elatively little
salvage of uninsured claims has been effected through the m ost persistent follow -up
work b y the few adjusters on the bureau’ s staff.
*
*
*
Considerable difficulty in enforcing regulatory statutes has been encountered
*
*
*
from local minor judiciary who are frequently lenient with em ployers
at the expense of m aintaining legal safeguards for em ployees.
T h ey base their
leniency on the contention th at an em ployer cannot bear the cost of com pensation
insurance in tim es of stress, and they contend th at it is better to allow him to
continue uninsured than to force his em ployees on relief rolls b y putting the em
ployer out of business.
T h ey forget th at the injured workers of uninsured
em ployers seldom collect any com pensation and generally m ust go on relief rolls
with their families.
The procedures and results reported were, in part:
A reply post card was developed for the use of inspectors whenever they found
an em ployer who could not produce an insurance policy.
This gave the em ployer
a clear-cut warning th at he would be prosecuted if he did not obtain such a policy.
As a further cooperative effort the bureau of inspection arranged to keep in
touch with these cases after the bureau of w orkm en’ s com pensation had checked
to determine which em ployers had refused to heed the first warning.
The result of the cooperative arrangement is indicated by a sum m ary of devel
opm ents in the case of 3 ,4 7 0 em ployers whom inspectors found w ithout insurance
policies during 1933 and the first 7 m onths of 1934.
O f these, 833 insured after
the first warning, 239 insured when subsequently contacted, 422 established th at
they were insured or were not required to be insured, and 1,976 were carried over
for further investigation or prosecution. * * *
The composite results of the three surveys (by the D ep artm en t of Labor and
Industry, the Pennsylvania Com pensation R ating and Inspection Bureau, and
the C. W . A .) disclosed th at, of the employers contacted, 2 ,9 0 8 obtained insurance
after the warning and 9 ,6 9 2 were listed for investigation and prosecution.
These figures indicate the magnitude of the problem of enforcing
thoroughly workmen’s compensation coverage provisions in indus
trial States, under an inclusive act which does not exempt small
employers. No State, under such circumstances, has ever had an
inspection staff large enough to handle the situation. A planned
compliance program is seldom found; too often it is taken for granted
that the compensation laws are self-enforcing.
14
W O R K M E N ’ S C O M P E N S A T IO N
The enforcement “ drive” in Pennsylvania was followed by an
unusual educational program. Illustrated bulletins and pamphlets
explaining the scope and operation of the State’s labor laws were
prepared and circulated among employers and employees. Never
theless, in 1938, because of increased insurance rates and costs to
self-insurers under the amended compensation act, “ electing out”
became acute. The outcome of the developments in Pennsylvania
from 1933 to 1938 should have both practical value and historical
interest, but unfortunately the results were obscured in 1939 by
controversy, litigation, and sweeping changes in the administering
personnel, if not in the program. In considering compensation situa
tions and programs, especially as to coverage and benefits, it must
be kept in mind that as a rule compensation provisions and their
application actually reflect an adjustment to estimated strains,
especially as to the competitive cost of doing business and the ability
to control small employers.
Proposals for increases in benefits and extensions of coverage are
usually contested, at legislative hearings, by parties interested in
keeping down insurance costs and in minimizing State control over
industrial operations. Any proposal for a change made by one group
is usually met with counter demands by another group. Great
changes in the system have seldom been made at a stroke, and major
changes are usually prepared for by agreements between labor and
industry. The 1937 Pennsylvania act, however, was opposed by
employers. This situation presented problems of unusual difficulty
to be met by the Pennsylvania Department of Labor and Industry,
because the passage of the act, instead of marking the conclusion of a
contest, was the prelude to wide-scale contests in the courts and
the legislature. Under 1939 legislation, benefits were reduced.
To understand the problem in the States as to actual coverage
under either elective or compulsory laws, the conditions under which
the administrators in many jurisdictions hold office must also be
kept in mind. As a rule, compensation commissioners have little
security of tenure, and their personnel is often deficient both in
number and training 24. Under the circumstances, most of the com
missions have been tolerant of noncompliance up to the point where
it becomes acute, and few commissions can do more than guess at
the extent of the neglect of employers to insure their industrialinjury risks. In the words of the Pennsylvania administration,
“ to deal properly with the job imposed upon it by the law, the bureau
24 The need for remedying this condition by inaugurating a merit system was urged in a recent message of
a governor to the legislature in these words: “Those presently employed have absolutely no security of
tenure, and must spend a large portion of their time thinking of and working for the retention of their jobs.”
In consequence, “the morale of the public service * * * is at an extremely low ebb, and in my opinion
it always will be so long as the spoils system prevails.” (U. S. Department of Labor, Division of LaborStandards. Legislative Report No. 3, Jan. 28, 1939.)
E X P E R IE N C E
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15
would require a field force many times larger than the present one.” 25
The dilemma faced by the commissions as to coverage requirements
is, therefore, whether (1) to remain content with a law that permits
“ electing out” as a safety valve, or (2) to risk opposition to the law
and administration by some employers who are in revolt against
the compensation cost, and proceed with a compulsory program
that is actually enforced.
In Pennsylvania the increasing number of withdrawals from com
pensation coverage by large employers was met by an amendment
to the compensation act to facilitate the recovery of damages in the
courts. Section 201.1 of the act, as approved September 29, 1938,
provides in part:
In an y action brought to recover damages for personal injury to an em ployee
in the course of his em p loym en t or for death resulting from such injury, the follow
ing legal presum ption, the rules for adm itting certain evidence, and the am ou n t
of dam ages which can be recovered, shall apply:
(a)
W h en injury results to an em ployee in the course of his em p loym ent, it
shall be presumed th at the em ployer’ s negligence caused such injury, which pre
sum ption m ay be rebutted b y the em ployer, and both the injured em ployee and
the em ployer will be perm itted to introduce testim ony showing the cause of said
injury.
T h e final determ ination in all cases shall be a question of fact for the
ju ry.
(b)
W h e n an em ployee sustains an injury in the course of his em p loym ent,
declarations, remarks, and utterances m ade b y the injured em ployee within 12
hours after the injury was sustained shall be admissible as com petent evidence.
(c) If the ju ry finds th at the em ployee’ s injury was caused, or contributed to,
b y the em ployer’ s violation or failure to observe any safety law or regulation in
effect at the tim e of the injury, the injured em ployee or his dependents shall be
entitled to double damages.
This amendment halted the wave of rejections in 1938, but in 1939
was held to be invalid by the courts. The experience throws light
upon the limits of an attempt to make a compensation act which is
elective in name compulsory in fact, through subjecting the employer
to peculiarly disadvantageous conditions in the courts. In the judg
ment of most compensation officers, their administrative problem,
under either elective or compulsory laws, ultimately becomes that
of obtaining the cooperation of employers and employees in the com
pensation program. Experience has indicated the difficulty of
obtaining a general acceptance of the compensation act by employers
in distressed industries.
There are disadvantages in workmen’s compensation provisions
which place the brunt of enforcement upon the courts. In the first
place, investigations have shown that even where, under the law,
the claimant has the right to collect double the amount of compensation
25 Pennsylvania Department of Labor and Industry. Special Bull. No. 39 (p. 114): Pennsylvania Labor
and Industry in the Depression.
16
W O R K M E N 'S
C O M P E N S A T IO N
through court action, on the average the recoveries are disappointing.26
In the second place, the best development of workmen’s compensation
has been where parallel litigation over industrial injuries has been
minimized. Under the Ontario plan, for example, such litigation is
eliminated. Organized railway employees have not yet unanimously
favored the replacement of court remedies by a workmen’s compen
sation law applicable to them. During the 1929 depression sporadic
proposals were made by persons inclined toward litigation to repeal
the workmen’s compensation laws and leave the employees free to
seek large damage verdicts in the courts. It is therefore questionable
if workmen’s compensation administrators can afford to make very
attractive to workers an alternative remedy which the compensation
system was designed to supersede.
In this connection the comment of George A. Kingston, a former
commissioner of the Workmen’s Compensation Board of Ontario, at
a conference on social security in 1916, has lost nothing in force with
the passing of more than 20 years: 27
It does not seem to m e logical or sensible to pu t a law on the statute books and
then b y a sort of third-degree or coaxing m ethod seek to enforce it— practically
saying to em ployers “ W e ’ll leave you to the tender mercies of a jury w ithout your
defense if you don’ t accept this new law we offer y o u .”
If the State is not ready
for the law it should not be pu t on the statute books at all, * * * bu t if the
legislators * * * come to the conclusion th at this sort of law is w anted and
is in the public interest, then let it be a law for all alike without any “ b y your
leaves” or “ ifs” abou t it.
T h e principle of “ local option” in certain laws m ay be
all right as applied to com m unities or m unicipalities, but I know of no authority
on political econom y who has sought to ju stify this principle in legislation as
applicable to the individual.
Developments Under Compulsory Coverage
The gist of the coverage problem is how to devise a practical sys
tem that will actually protect the greatest possible number of workers,
at a cost that small employers and even poor employers can bear.
Any arrangements must be examined in the light of results that
have been obtained under existing circumstances, even though it is
desired or expected that present circumstances may change. For
example, under the elective laws of New Jersey and Pennsylvania, the
coverage provision is unusually inclusive but actually there are large
numbers of uninsured employers. Under a compulsory law of simi
lar breadth, an example of which is the District of Columbia act
it has been found that the “ large scope of coverage makes it very
difficult to secure the proper reporting of cases” in some types of
employment. It has been said to be “ impossible to carry on a cam
paign to the extent of informing everybody who might employ any
26U. S. Department of Labor, Children’s Bureau Publication No. 214: The Illegally Employed Minor
and the Workmen’s Compensation Law. Washington, 1932, p . 216.
27U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 212, p. 60.
E X P E R IE N C E
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17
help.” Some employers found difficulty in obtaining insurance, while
others sought to evade the coverage requirement by camouflaging the
employer-employee relationship; as, for example, by taking their
employees into partnership.28
The actual increase of coverage caused by changing an elective
act to the compulsory form depends, in part, upon the penalty clauses
and their enforcement.29 To facilitate the enforcement of the law
the compulsory acts have penalty clauses ranging from monetary
charges to imprisonment.
The tentative nature of some clauses appears to contemplate their
use mainly as a threat, as, for example, the following provision of the
Maryland act:
A n y em ployer
*
*
*
who shall fail to secure insurance
*
*
*
shall be guilty
of a misdemeanor, and shall be subject to a fine of not less than $500 nor more
than $ 5 ,000 .
The court m ay , in its discretion, rem it any such penalty, provided
the em ployer in default assures the compensation as provided in this section;
and provided further, that he has paid or secured to be paid any compensation
or other benefits under this article which m ay have been awarded against him .
Few reports of the commissions, under either elective or compul
sory statutes, mention the number of prosecutions that the compen
sation authority has initiated against uninsured employers.
So long as the initiative in obtaining court action, either civil or
criminal, is left to the injured worker, a wide gap remains between
nominal and actual coverage. But where there is a disposition on
the part of the compensation authority to exercise initiative and
furnish diligent supervision, the compulsory act provides the neces
sary basis for administrative developments. For example, under the
New York Division of Workmen’s Compensation a “ no insurance
unit” has been set up. The Annual Report of the New York Indus
trial Commissioner for 1936 (p. 8), describes the operation of that
unit during the 12 months ending December 31, 1936.
Th e no insurance unit of the division handled 3,9 7 2 claims against em ployers
who violated the com pensation law in failing to provide compensation insurance
covering the injured workers. In these cases, awards made directly against the
em ployers am ounted to $ 3 7 5 ,8 4 3 .0 6 of which $ 2 1 8 ,6 0 1 .0 5 was collected and paid
to injured workers, with the remainder in the process of collection.
The com pensation division during the year made a special drive to ferret out
em ployers operating w ithout com pensation insurance.
Crim inal prosecution was
instituted against 1,699 such em ployers and convictions obtained in 1,384 cases,
which is more than triple the num ber of convictions secured in
tences im posed totaled 2 ,1 1 0 days and the fines $ 4 ,176 .
1935.
The sen
In this drive the division
had the cooperation of several associations of em ployers who are interested in
cleaning house in their own industry and rid t/hemselves of unfair com petition.
Th e noninsured em ployers are, in the m ain, financially irresponsible.
28 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 536: Proceedings of the Seventeenth
Annual Meeting of the International Association of Industrial Accident Boards and Commiss ions, Wash
ington, 1931, p. 103.
2« See also ch. 3 (p. 37),
18
W O R K M E N ’ S C O M P E N S A T IO N
This report manifestly indicates one of the highest peaks of effective
ness ever reached in State history, both in the scope of prosecutions
that had actual results and in the degree of success in collecting the
money that was due injured workers. Without prompt, specialized
action, little can be collected from noninsured employers, especially
in large industrial centers. Nevertheless, this report shows the
relative futility of prosecutions, even where vigorous action has been
taken, since convictions in 1,384 cases resulted in sentences totaling
only 2,110 days and fines amounting to $4,176. The disposition of
courts to impose very light sentences is conclusively shown. The
major achievement, out of all proportion to the sentences imposed by
the courts, was the collection of $218,601.05 due injured workers,
and success in this direction saved them untold distress. In many
cases, however, collection would have been impossible without the
threat of prosecution at the initiative of the no insurance unit.
In protecting all workers who are within the scope of the compensa
tion law, some of the exclusive-fund compulsory acts go even farther than
the measures taken by the New York compensation authority, and pay
the injured worker in every case, whether the employer was insured or
not. Such funds try to collect from noncomplying employers, often
without success, but in any event the injured worker is paid. The
strains upon the compensation act and administration under this form
of compulsory coverage are considered in chapter 3 (p. 44).
So far, no industrial State has undertaken to give such complete
protection to workers under compulsory-coverage provisions that are
as inclusive as those of the elective New Jersey and Pennsylvania
laws. Under existing arrangements, cost is the unsolved problem of
inclusive actual protection of workers under the compensation system.
The willingness of employers to comply wholeheartedly with the law
depends upon the cost of the insurance. If the coverage is wide, unless
the insurance rate is low and the minimum premium charge is not
formidable, many small employers within the scope of the act will not
or cannot insure. When pressure has been applied, they have taken
their case to the legislature or have sought to bring political influence
to bear upon the administration.
Official Supervision a Controlling Factor
Under either elective or compulsory provisions the type of official
supervision is the controlling factor in maintaining actual compliance
with the compensation law. This is strikingly shown by comparing
the report of the Industrial Commission of Wisconsin for the years
1930-32, when coverage was elective, with the report for the years
1934-36, when coverage had been made compulsory. The earlier
report reads (p. 44):
E X P E R IE N C E
U N D E R D IF F E R E N T
TYPES
OF L A W S
19
T h e duty of getting all em ployers who are subject to the com pensation act to in
sure their risk, unless exem pt, is one involving great difficulties.
In this State,
however, there have been com paratively few cases in which injured em ployees
have lost out in their claims for com pensation because their em ployers had failed
to insure.
This record has been possible because of never-ceasing attention to
this problem .
The same words are used in the Wisconsin report for 1934-36 (p. 8)
to describe the situation under compulsory coverage. There are no
statistical measurements to show any alteration in the actual situation
but the compensation officials say that the change was beneficial. In
this instance, one reason given for advocating the change to a compul
sory act was that since all but a few employers were operating under
the compensation act, in fairness to those who had accepted the system
all employers not legally exempt should be required to insure or qualify
as self-insurers. Prior to the passage of the act, both employers’ and
employees’ organizations had agreed to favor the legislation. The
last sentence of the paragraph quoted from the Wisconsin reports is
of vital importance. This administration, while seeking the best
available legal provisions, has at no time in its history lost sight of
the need for “ never-ceasing attention” to coverage problems.
In its report for the years 1933 and 1934, the Industrial Commission
of Minnesota said that there had been numerous instances in which
irresponsible employers had failed to procure insurance coverage, and
recommended changing the elective act to a compulsory law. Partly
because organized labor at first opposed the compulsory method, the
amendment was not passed until 1937. In discussing the situation,
J. D. Williams, chairman of the industrial commission, said, in 1938,
that following the depression “ electing out” increased 600 percent,
until practically a third of the employers were outside of the act.
The report of the Minnesota Compensation Rating Bureau for the year
ending March 31, 1938, shows that after the change to the compulsory
law the number of employers covered by compensation-insurance
policies was greater than the number insured prior to the amendment.
The Bureau said:
One of the principal reasons for an increase in the num ber of risks handled by
the bureau is the law referred to as C hapter 64, Law s of 1937.
T h is becam e
effective July 1, 1937, and voided the right of an em ployer to elect not to be bound.
In order to com ply with the provisions of the present law, an em ployer m ust
insure or becom e an authorized noninsurer.
Our records clearly indicate that
m an y risks tod ay are insured which previously carried no insurance.
For the
past 12 m onths we h ave found it necessary to create 5 ,8 40 files to accom m odate
new risks.
In addition, m an y em ployers who at one tim e carried insurance, bu t
in the past discontinued it, for some reason or other, have of late again purchased
w orkm en’s com pensation coverage so th at m an y of our files which have for 1 or
more years shown no record of coverage, now include records of current coverage.80
30 Minnesota Compensation Insurance Board. Eighth Biennial Report. Minneapolis, 1938, p. 6.
20
W O R K M E N ’ S C O M P E N SA T IO N
In recommending the change from elective to compulsory coverage
the Minnesota commission recognized that such a step would necessi
tate improved arrangements for taking care of undesirable insurance
risks, because if the law compels an employer to insure it must also
make certain that he can get insurance. The 1937 amendment accord
ingly required members of the Minnesota Rating Bureau to accept a
risk that had been rejected by any carrier. It must be noted, however,
that under such arrangements the available insurance may be on
terms which some employers think they cannot meet.
Arrangements for Insuring W orkm en’s Compensation Risks
In all of the Provinces of Canada which have workmen's compensa
tion laws, the acts provide for insurance in exclusive public funds.
Private insurance of workmen's compensation risks is not permitted.
This development resulted from observation that the exclusive funds
could pay workers higher benefits and charge employers lower insur
ance rates than had been possible under private insurance arrangements.
In the United States private insurance is the most widespread arrange
ment, and is found in all of the jurisdictions having compensation acts
except Washington, Oregon, Nevada, North Dakota, Wyoming, Ohio,
West Virginia,31 and Puerto Rico. In 11 States the private carriers
compete with public carriers, which are known as competitive State
funds.
The wide extent of private insurance of workmen's compensation
was not considered by the Fifth National Conference on Labor Legis
lation (1938) to be a sufficient reason for perpetuating this arrange
ment. The conference recommended:32
In s u r a n c e .— Should be in an exculsive State fund, with provision for adequate
penalties on em ployers not com plying with insurance requirements and proper
protection for em ployees of defaulting em ployers.
Since the exclusive funds must provide insurance to all employers
within the scope of the law, their experience throws the clearest light
on the conditions and possibilities of broad actual coverage of workers
under compulsory acts. The private carriers have, as a rule, selected
the risks they would accept, and where they have offered coverage to
“ unwanted risks" under allocation plans, it has often been at a cost
deemed prohibitive by some employers. The crucial problem is:
If the State requires the employer to insure, can insurance be furnished
at a cost he can bear? In Canada, the effort to meet this problem
resulted in the general adoption of the exclusive fund type of act.
31West Virginia is usually listed among the “exclusive” funds, but the Digest of Workmen’s Compensa
tion Laws, issued by the Association of Casualty and Surety Executives, terms it “semimonopolistic.”
(See map, inside of back cover of the Digest.)
32U. S. Department of Labor, Division of Labor Standards Bull. No. 25-A, p. 18.
E X P E R IE N C E
U N D E R D IF F E R E N T
TYPES
OF L A W S
21
In the United States the exclusive funds were provided for in the
original acts or soon after their adoption, and reflect an early prefer
ence for that arrangement rather than a development through sup
plemental legislation. The provision of competitive funds, however,
was in the main an outgrowth of experience, prompted by the ne
cessity for taking care of risks not wanted by private carriers, and,
to a lesser extent, by the need for a competitive check upon insurance
rates.
Private Insurance Carriers
At the time early compensation laws were enacted, private insur
ance carriers were insuring employers against losses through litigation
under the common law and the employer’s liability acts. Since the
workmen’s compensation laws were designed to displace the commonlaw and statutory basis for litigation, the insurance carriers desired
to take over the new field. The widespread use of private insurance
arrangements for covering workmen’s compensation risks arose natu
rally from the insurance carriers entering the new field to replace
their employer’s liability lines. No special provision of the compen
sation law was necessary as a basis for this arrangement, and some of
the early acts did not even require employers to insure. Observation
of the losses sustained by injured workers whose employers had not
insured led to the requirement, in all the jurisdictions except Alaska
and Alabama, of insurance or alternative arrangements for making
certain that compensation would be paid.
After the legal requirement of insurance had been generally adopted,
the refusal of insurance carriers to accept bad or unwanted risks
became a matter of increasing concern to the compensation commis
sions. At the 1936 meeting of the International Association of
Industrial Accident Boards and Commissions, the report of a com
mittee on the uninsured-risk problem, which reads in part as follows,
was adopted:33
The arbitrary cancelation of com pensation-insurance policies and the inability
of em ployers to procure prom ptly other coverage have becom e m ost embarrassing
to both adm inistrators of com pensation laws and employers subject to the pro
visions of those laws.
*
*
*
Unless the insurance carriers in their own name
and right and by the weapons of their own self-governm ent are able to force the
individual units to respond to the social necessity of these days, such a failure
obviously will becom e an open invitation to the State to step in and do in the
nam e of the public welfare th at which the carriers, privately controlled and
m anaged, prove them selves unable to achieve.
*
*
*
E m ployers everywhere
subject to the provisions of these laws ought to be able on short notice, if they
have the m oney to pay the prem ium , to procure the coverage.
On the other hand, the National Council on Compensation Insur
ance maintained that in some States the rates “ may be inadequate to
a point where the carriers feel it necessary to carefully select the risks
33 U. S. Department of Labor, Division of Labor Standards Bull. No. 10, pp. 29-32, 270.
22
W O R K M E N ’ S C O M P E N S A T IO N
which they cover. * * * Then, too, there are risks which are not
in good faith entitled to insurance.” In fact, little use has been made
of plans for allocating risks, either under the legal or voluntary
arrangements.
The committee on uninsured risks reported further to the 1937
meeting of the International Association of Industrial Accident Boards
and Commissions, but without making additional recommendations.
The problem of obtaining more adequate arrangements for insurance
and coverage was again considered at the 1938 meeting of the Asso
ciation.
The most recent development to reinforce the security afforded
injured workers by the private insurance system has been the pro
posal, and in some States the adoption, of legislation setting up special
funds, through compulsory contributions by stock and mutualinsurance companies, to protect workers in the event of the insolvency
of carriers. In North Carolina, for example, the insurance carriers
are required to pay semiannually into a compensation security fund
1 percent of net written premiums.34 There are arrangements for
guaranteeing the payment of awards against insolvent insurance car
riers in New Jersey, New York, North Carolina, Pennsylvania, Wis
consin, and Minnesota.
The restriction of the breadth of actual compensation coverage
under existing forms of private insurance has been apparent. A plan
for the allocation of unwanted risks has had little effect in broadening
coverage, because in many instances the actual obstacle to coverage
was the cost of insurance. Setting up a public carrier alongside the
private carriers to handle their unwanted risks has not as yet, effected
a maximum of economy in the insurance operations. In approximate
terms, the operating cost of stock-company insurance has been about
40 cents on the dollar paid as premium, which is more than four times
the average cost of administering exclusive funds, even after allowance
is made for taxes paid by the private carriers.35 While the operating
cost of some mutual companies is about half that of the stock com
panies, on the whole the private mutual plan does not solve the basic
problem of workmen’s compensation as to coverage, because in many
instances the lower cost is achieved by rigidly selecting the risks that
34 For the complete provision see North Carolina, Public Laws of 1935, ch. 228. For the New York plan,
see secs. 106—109j of the workmen’s compensation law. See also Proceedings of the 1937 convention of the
International Association of Industrial Accident Boards and Commissions in U. S. Department of Labor,
Division of Labor Standards Bull. No. 17, p. 44.
35Efforts to make exact comparison of the overhead or administrative cost of the various types of insurance
are baffled by variable factors. For an early study of comparative costs, see U. S. Bureau of Labor Statis
tics Bull. No. 301 (1922). No significant differences affecting cost comparisons have appeared since 1920.
Such comparisons rest upon the assumption that the services furnished by the respective carriers is the same,
but it is recognized that there are variations in service, not only between types of carriers, but also within
the same types. For a recent examination of the cost of alternative insurance arrangements, and the items
making up the aggregate cost of stock-company insurance, see Dodd, Walter F., Administration of Work
men’s Compensation, New York, Commonwealth Fund, 1936, pp. 552-560.
EXPERIENCE UNDER D IFFEREN T TYPES OF LAW S
23
are accepted, a process which has been called “ skhnming the cream”
of the business.36 Under a social interpretation of workmen’s com
pensation, the worst as well as the best risks require insurance, service,
and, if need be, constraints. What could be accomplished in the direc
tion of complete service at low cost by employers’ mutual companies
under a State-wide monopoly has been discussed but not tried.
The crux of the problem of private insurance arrangements is,
therefore, their relatively high operating cost. As offsetting advan
tages, some insurance carriers provide superior service in preventing
accidents and in furnishing or supervising medical aid to injured
workers, with resulting savings to employers through a plan known
as experience rating. An examination of the items of overhead ex
pense of the private companies37 does not, however, disclose that any
of them had spent more than a few cents on the premium dollar for
safety activities, while on the other hand the stock companies have
usually spent 17K cents on the insurance dollar for acquisition cost
or production of business. What could be accomplished under private
insurance if the major operating expenditure should be on safety activ
ities, remains to be seen.
A significant development under private insurance has been the
cooperative arrangement for regional inspection and rating bureaus
and for the National Council on Compensation Insurance. Through
such organizations, national experience on the cost of insurance, by
operation and industry, is used in computing rates which are designed
to distribute equitably among employers the burden of insurance
expense. Such an arrangement furnishes a check upon the under
writing and pay-roll auditing practices of the carriers, stimulates the
scientific development of actuarial methods, and to some extent helps
to maintain operating standards on a level of fair competition. Par
ticipation in the activities of such regional and national organizations
has been open to the competitive funds, but not to the exclusive funds.
Self-Insurance
Self-insurance, so called, is more an incidental feature than a struc
tural arrangement of the compensation system, and therefore does
not require detailed consideration at this point.38 The term is a
misnomer, for it means, not a form of insurance, but the privilege of
not insuring. In some jurisdictions the term “ own risk” is used
36An early statement of the distinctive merits of the various systems of insurance is found in U. S. Bureau
of Labor Statistics Bull. No. 281, pp. 212-260 (1921). (See also U. S. Department of Labor, Bureau of Labor
Statistics Bull. No. 212 (1917).)
37 For 1937 the items of actual operating expense of nonparticipating stock companies, as shown by the
country-wide experience of carriers reporting to the New York State Insurance Department, were: Inves
tigation and adjustment of claims, 8.4 cents on the earned premium dollar; acquisition and field supervision,
17.3 cents; general administration, 8.5 cents; inspection and rating bureau, 2.3 cents; taxes, 3.9 cents; total,
40.4 cents. The expense ratio of participating carriers was 20.1 cents. Under depression conditions, some
of these items were higher.
38 See appendix 2, table 1.
24
W O R K M E N ’ S COMPENSATION
instead of self-insurance. In all of the private-insurance States except
Massachusetts and Texas, and in some of the exclusive-fund jurisdic
tions, responsible large employers may be exempted from insuring,
usually by permission of the compensation authority. A bond or
the deposit of securities is usually required. In view of the laxity of
some jurisdictions in granting authorization for self-insurance, the
Fifth National Conference on Labor Legislation recommended that
“ self-insurance should be permitted only under proper and adequate
regulation.”
Under proper regulation and supervision, self-insurance has been
fairly comparable with other private arrangements for making certain
that compensation is paid to injured workers. However, under the
more advanced legislation, the term is being lengthened during which
compensation may be payable in permanent disability and fatal
cases. In the judgment of experienced administrators, because of
this prolonged period of liability, small employers should seldom be
exempted from the requirement to insure their risk. Moreover, selfinsurance has been found undesirable in State-fund jurisdictions where
the aggregate amount of insurance premiums is too small for division
among alternative arrangements; as, for example, in Puerto Rico,
where self-insurance is not permitted. The most highly developed
regulation of self-insurance is found under the New York workmen’s
compensation law.39
Public Insurance Carriers
E X C L U SIV E
FUNDS
In the first decade of compensation legislation in the United States
there was a trend toward exclusive funds. In 1913, there were 5
exclusive funds and only 3 competitive funds. In 1919 there were 8
exclusive funds, including Puerto Rico, and 9 competitive funds. In
1939 there were 8 exclusive funds, and 11 competitive funds. The
fact that in two decades no additional exclusive funds have been set
up in the United States 40 calls for a more comprehensive explanation
than the opposition of private insurance carriers to State insurance
and their influence upon legislation. The arrest of the trend toward
exclusive funds in the States would be less impressive if it stood alone,
than it is when viewed in conjunction with the acceptance of the
exclusive fund in all Canadian Provinces having compensation acts.41
30For a discussion of problems of self-insurance, see U. S. Department of Labor, Division of Labor Stand
ards Bull. No. 17, pp. 61-73; Pennsylvania Department of Labor and Industry, Special Bull. No. 40: Part
II, Self-Insurance of Workmen’s Compensation in Pennsylvania.
4° The Puerto Rico fund was reestablished as an exclusive fund in 1935, after a brief experiment with other
forms of organization.
41 The collective-liability system with an exclusive fund was adopted in Ontario in 1914. “Nova Scotia
followed Ontario’s example in * * * 1915, British Columbia in 1916, Alberta and New Brunswick in 1918,
Manitoba in 1920, Saskatchewan in 1929, and Quebec in 1931.” (Canada Department of Labor, Work
men’s Compensation in Canada, July 1937, p.l.)
EXPERIENCE UND ER D IFFEREN T TYPES OF LAW S
25
The halting of the movement in the United States at the same time
that development continued in Canada invites attention to possible
differences in the organic law and administrative bases of public car
riers in the two jurisdictions. A key to the situation is found in the
preparation for establishing the Ontario fund and administration,
which have been to a considerable extent the model for subsequent
workmen’s compensation insurance developments in Canada. A
clear understanding of the basic features of this type of fund is impor
tant, because it is the only compulsory-fund plan originating in an
American jurisdiction that has been widely reproduced.
The O ntario p la n .— The Ontario act, which became effective in
1915, was preceded by a prolonged study of existing laws and admin
istrations in the United States, England, and Europe, under the
guidance of Sir William Ralph Meredith, then Chief Justice of On
tario. His final report on Laws Relating to the Liability of Employ
ers, which contained what were then and still are radical principles
in this field, was submitted “ as constituting at least a step in the
direction of a just, reasonable, and practicable solution of the prob
lem with which it deals.” Chief Justice Meredith was convinced
that, in order to render prompt justice to the injured worker, it was
necessary for the compensation administration to be completely
divorced from the delays both of court procedure and court appeals,
especially as in such contests the workman is unequal in resources to
the employer and the insurance carrier.42
The founders of the Ontario fund emphasized also the necessity
for nonpolitical administration, and from the outset this quasi
judicial agency was autonomous. In practice, it soon became entirely
self-supporting, with relative freedom to control expenditures for
administration. Particular attention was given to the selection of
qualified administrators, at salaries larger than those paid, on the
average, in the United States. In consequence, the administration
proved satisfactory, and in time other Provinces became convinced
that this form of organization and insurance offered the best way out
of their own compensation problems. Subsequent workmen’s com
pensation insurance developments in Canada confirmed Chief Justice
Meredith’s conclusion that his plan, although “ not the most perfect
measure which could be devised nor the last word which can be said
upon the subject,” constituted “ at least a step in the direction of a
42 It is significant that so drastic a departure from existing patterns should come from a chief justice.
The advantage to workmen of the new method has been recognized, with a few exceptions, by organized
labor throughout Canada. On November 1, 1935, William L. Best, national legislative representative,
Brotherhood of Locomotive Firemen and Enginemen, Ottawa, Ontario, gave this appraisal of the Ontario
workmen’s compensation system:
“Whilst few social or industrial measures of this character produce 100 percent satisfaction in the bene
fits awarded, especially when dealing with such a large variety of industrial claims for compensation for
injuries, there is no measure of its kind in the world, to my knowledge, that has given a greater degree of
satisfaction.”
215193°— 40------ 3
26
W O R K M E N ’ S COMPENSATION
just, reasonable, and practicable solution of the problem with which
it deals.’ ’
Within the last 10 years the pressure of politics has been felt by
several of the Canadian administrations, but the foundations have not
yet been impaired and the principles essential to the successful opera
tion of workmen’s compensation funds are understood in the Provinces
and embodied in several official reports.43 The chief danger in the
Canadian situation at the present time seems to be the isolation of the
Provincial funds, making possible a drift toward administrative stag
nation, and occasionally in some jurisdictions leaving the administra
tion without adequate guidance when old administrators are displaced
by new ones. At its worst in Canada, the loss of experienced personnel
through political turn-over has never been virtually complete, as
sometimes happens in State administrations. On the other hand, the
Canadian Department of Labor, unlike the United States Department
of Labor, has not been provided with specialists in workmen’s compen
sation law and administration who are available to the Provinces upon
call.
H a n d ic a p s o f exclusive f u n d s in the U n ited S ta tes .— In contrast with
the administrative freedom of the Canadian funds and their relative
security from political turn-over, exclusive funds in the United States
have been handicapped by one or all of the following difficulties:
(1) Dependence upon legislative appropriations for support; (2) com
plicated procedure and recourse to court appeals; (3) defective or
obsolete acts, especially those which deprive the administering agency
of freedom to set up classifications and make rates; (4) political turn
over of personnel; and (5) inadequate salaries for commissioners and
technical employees. In the United States, a resumption of the early
trend toward establishing exclusive funds is dependent on a strength
ening of the administration of the funds now in existence, whose
performance will in the last analysis determine what type of workmen’s
compensation insurance is to prevail.
It would be a mistake to infer, from the account given of the handi
caps under which exclusive State funds are operating, that they have
not on the whole rendered service as good as that of private insurance
carriers. With the exception of the Puerto Rico fund, no exclusive
fund has yet been superseded even temporarily by a different type of
insurance carrier. The Puerto Rico fund failed in 1928. A competi
tive system was then established and operated for 7 years, but with a
progressively increasing deficit in the competitive government fund.
In 1935 the exclusive fund was reestablished and faced once more the
problem of imposing and collecting rates adequate to meet the cost
of injuries and administration.
43 See, especially, Report of the Investigation Commission on the Compensation in Labor Accidents,
Quebec, 1925; Report of the Royal Commission appointed to enquire into Workmen’s Compensation for
Saskatchewan. 1929.
EXPERIENCE UNDER DIFFERENT TYPES OF LAWS
27
The dilemma faced by an insurance carrier, in such a situation, is
whether to continue to give full coverage and risk insolvency or the
employers’ opposition to adequate rates, or to keep the losses within
balance by excluding classifications having a continuous deficit.44 In
Puerto Rico the government appropriated money to aid the insolvent
funds.45 The alternative method of meeting such a situation is illus
trated by the experience of the Nova Scotia fund with the fishing
industry. After the classification accumulated a large deficit because
of storm disasters in 1926 and 1927, the industry requested Govern
ment aid to ease the burden of the assessments upon the owners of
the vessels. Such aid was not granted, but the industry was allowed
to withdraw from compulsory compensation coverage in the fund.46
The resulting problem is examined further in chapter 3 (p. 42).
In judging the performance of a certain type of act or insurance
carrier in a given area, it is necessary to understand the problems
encountered. Several of the exclusive funds are operating in areas
where some of the employments are bad insurance risks. It is still
open to question whether, in the absence of public subsidies, some of
the workmen who most need compensation coverage will be able to
secure it under any known form of insurance organization.
COM PETITIVE FUNDS
The principles discussed in connection with the experience of
exclusive funds apply to a considerable extent to the competitive
funds also, since in each case there is involved the establishment and
operation of a public insurance carrier. In the past there has been
less strenuous opposition, on the part of private insurance carriers,
to the setting up of competing funds than to the adoption of exclusive
funds, since the existence of a competing fund would relieve carriers
in many instances of the necessity for accepting undesirable insurance
risks. Moreover, until the last 10 years it was often believed that
competing funds, especially where the rule prevailed that such a
fund must not solicit business, would remain small and get only a
negligible percentage of the insurance premiums. In recent years,
however, the volume of business written by the competing funds has
increased, and in Arizona this growth has been such as to make a
competing fund in fact almost an exclusive fund.
M ost of the competing funds in the States have fewer legal and ad
ministrative handicaps than some of the exclusive funds, the legisla
tures having accepted the theory that a public fund could not compete
44See also ch. 3 (p. 42).
45As late as Jan. 1, 1938, only a part of the money appropriated had been made available for paying the
claims of injured workers.
46See Report for 1926 of the Workmen’s Compensation Board of Nova Scotia (p. 13); and Report and
Findings of the Royal Commission on Ratings of the Lunenburg Fishing Fleet, 1927 (pp. 8-10, 32).
28
W O R K M E N ’ S COM PENSATIO N
with private carriers unless its affairs were conducted on a business
basis and with relative administrative freedom as to budgets, expendi
tures, and methods of support. Moreover, the competing funds have
been less isolated than most of the exclusive funds because of their
contacts, especially as to rate making, with organizations that are
regional or national in scope and scientific in methods. Nevertheless,
there are wide variations in the performance of competing funds. A
few of them are equal in excellence to the ranking private insurance
carriers; on the other hand, several competing funds have suffered
severely from rapid political turn-over of management, and a compe
tent outside analysis would show the need of strengthening their
reserves.
Considerations Affecting Choice of Type of Fund
In an examination of types of acts it is not the purpose to evaluate
in detail the different kinds of insurance carriers, but to point out the
advantages and disadvantages found in each type of law under exist
ing conditions. It is not necessary for any jurisdiction which con
templates a change in its compensation system to reproduce exactly
any existing type, including its known imperfections, after the^basis of
a satisfactory system has been made plain by wide experience. Such
experience shows that a superior administration may make a theo
retically obsolete type of insurance fairly satisfactory in operation,
while a handicapped administration may make a theoretically ad
vanced type of insurance sufficiently imperfect to give prejudiced
observers grounds for condemning it. It should not be necessary to
choose either alternative. The operating handicaps of some State
funds, both exclusive and competitive, are obvious in the light of
experience and the remedies are plain.
Legislatures at times face the question as to which is preferable,
an exclusive fund or a competitive fund. The question cannot be
answered except in relation to an existing situation and the needs to
be met. It is clear, however, that a competing fund should not be
inaugurated in a jurisdiction having a small volume of pay rolls,
since the variety and kind of service necessary in a workmen’s com
pensation system makes it highly undesirable to split up a small
amount of premiums among many carriers.47
T he Problem o f Standardisation
The situation as to workmen’s compensation law and administra
tion in the United States, from the point of view of structural arrange
ments, can best be summarized by noting some efforts to find a solu47 Proceedings of the 1937 convention of the International Association of Industrial Accident Boards and
Commissions in U. S. Department of Labor, Division of Labor Standards Bull. No. 17, p. 179. James E.
Green, Jr., superintendent of the Maryland State Accident Fund, says: “It would seem risky to establish
a [competitive] State fund in a State with less than 1 to 2 million dollars in total premiums.”
EXPERIENCE U NDER D IFFEREN T TYPES OF LAW S
29
tion of the continuing problems arising from the variety of patterns,
and considering the outlook for greater uniformity. For many years
the need for standardization and uniformity has been discussed by
administrators at the conventions of the International Association of
Industrial Accident Boards and Commissions. In 1937, the “ many
unaccountable variations, inconsistencies, and inadequacies” of com
pensation law, “ still untouched by all the sound philosophy” avail
able upon the subject, were deplored by Commissioner Donald D.
Garcelon in his presidential address to the twenty-fourth annual
convention.48
In contrast with the situation in the United States as to variety of
structural pattern, all the Provinces of Canada except Prince Edward
Island have adopted the compulsory exclusive fund act.
In the United States the experience with the different patterns has
not yet been such as to convince the legislatures that there is any one
paramount type of act. The strain upon elective acts under depres
sion conditions was clearly shown by the increase in the number of
employers who “ elected out.” Wisconsin in 1933 and Minnesota in
1937 changed to the compulsory form of coverage requirement.
The American Federation of Labor has recommended the adop
tion of the Ohio model of exclusive fund.49 On the other hand, this
fund has operated under handicaps which have been obstacles to
maximum efficiency, and the resulting dissatisfaction as to claims
and insurance service has been exploited by adversaries of this type
of workmen’s compensation act as proof that it is not superior to the
private-insurance arrangement. The main handicaps of the Ohio
fund, as a model, are: (1) Dependence upon legislative appropria
tion for administrative support;50 (2) a complicated claims procedure,
due largely to the predisposition of groups in Ohio for legal techni
calities and latitude as to court appeals;51 (3) salaries for commis
sioners and technicians inadequate for a fund of such magnitude; and
(4) political turn-over of commissioners. All the exclusive State
funds have suffered from one or more of these handicaps, which have
arisen, in part, from the difficulty experienced by legislatures in ad
justing a new type of governmental service to the traditional theory
of “ checks and balances” and the existing attitudes with regard to
public employment. The extension of the social-security program
has emphasized the necessity for a satisfactory legislative and admin48u . S. Department of Labor, Division of Labor Standards Bull. No. 17, p. 2.
49 American Federation of Labor, Report of Proceedings of Fifty-Fourth Annual Convention, 1934, p. 610:
“As past conventions of the American Federation of Labor have taken action upon the subject matter of
the resolution your committee recommends that the convention reaffirm the declaration of previous con
ventions in approving of the Ohio Workmen’s Compensation Act as the model workmen’s compensation
law. The report of the committee was unanimously adopted.”
50 See ch. 9 (p. 159).
si See ch. 7 (p. 125).
30
W O R K M E N ’S COMPENSATION
istrative basis for the conduct of public-insurance operations, espe
cially as to the qualifications and tenure of personnel.
The competitive public fund has been established in a number of
States as a means of easing the difficulties of the private-insurance
system. Its continuance in jurisdictions where it does not evolve
into a virtually exclusive fund therefore depends upon the future
attitude toward the private insurance of workmen’s compensation
risks.
The outlook for uniformity through the general acceptance of
private insurance arrangements was considered a possibility by some
insurance representatives 20 years ago,52but, in view of the pronounce
ments of the National Conference on Labor Legislation and the
American Federation of Labor, and the arrangements adopted for
new forms of social insurance, this is not on the horizon today. The
historical background of private insurance of workmen’s compensa
tion is employer’s liability insurance, which was for the protection of
the employer and not the worker. To some extent the tradition
of liability insurance has colored the practices of compensationinsurance carriers and retarded the best development of their serv
ices.53 In the face of the pronouncements of labor organizations
and the National Conference on Labor Legislation, it is now evident
that private carriers need to study not only the commercial but also
the social features of workmen’s compensation. On the whole, private
insurance of workmen’s compensation risks has proved unsatisfactory,
even to the carriers, some of whom have lost heavily on this line.54
However, premium rates were increased during the depression follow
ing 1929, and by 1937 the private carriers were earning substantial
profits. An improvement of the private-insurance system might be
expected from the regional and national cooperation of carriers to
set and maintain standards of claims, medical, and safety services,
but as yet no steps have been taken in this direction.
In the past, debate over the respective merit of the different insur
ance schemes, public and private, has diverted attention from the
consideration of needed improvements in all the existing types, and
especially the need for recognizing that the administration of work
men’s compensation is a distinct professional specialty that cannot
82A map on the inside of the back cover of the Digest of Workmen’s Compensation Laws, published by
the Association of Casualty and Surety Executives, still shows, in solid black, the exclusive-fund States.
The States in which there is no “state-managed insurance’’ are colored green.
82See chs. 6 and 7 (pp. 110 and 115).
84See Proceedings of the Casualty Actuarial Society, Nov. 18,1937, p. 1, An Outline of Current Problems
in Workmen’s Compensation, presidential address by Leon S. Senior: “Available date covering the period
1923 to 1936 show that a group of carriers reporting to the New York Insurance Department have sustained
Nation-wide an underwriting loss of $11,781,000 per annum. Fifteen of the insurance carriers who have
nursed it through childhood and adolescence have given up the task of supervision and have retired, laying
down their responsibilities voluntarily or by force of law. Others who would be willing to give up its
care are obliged to retain supervision, fearful to desert the offspring because of the detrimental influence
which such action may have upon the other children in the family.”
EXPERIENCE UNDER DIFFERENT TYPES OF LAWS
31
be mastered without diligent study and years of experience. The
failure to recognize that in the conduct of workmen’s compensation
there is required, not only a knowledge of law and arithmetic, but
also the touch of a trained specialist in human relations, is the cause
of the greatest defect in workmen’s compensation insurance technique
today. While in the case of public funds the profit motive does
not act directly as an incentive to “ claim shaving,” there is never
theless the pressure of the necessity for the management to make a
good financial showing, and losses arising from the lack of proper
actuarial guidance have at times compelled the paring down of claims
or of payments to physicians, to avert manifest insolvency.
In the face of continuing proposals for the amendment of compen
sation laws and changes in administration, the problem of each
jurisdiction is whether to improve its existing type or to change the
pattern.
In the year 1937 approximately 600 bills relating to workmen’s
compensation were introduced in the legislatures of the United States,
of which number 151 passed, 14 were vetoed, and 137 were enacted
into law.65 Some of this legislation brought fresh confusion into an
already overcomplicated field. The manifest need for guidance in
the direction of standardization of law and practice was one factor
which led, in 1914, to the organization of the International Associa
tion of Industrial Accident Boards and Commissions. One reason
given by commissioners for the relative failure of the recommendations
of that organization in fostering uniformity is the rapid turn-over
of administration in many of the States, with the consequent lack of
trained local guidance.
In 1934 the National Conference on Labor Legislation was organ
ized, and at its annual meetings recommendations are made upon
workmen’s compensation and other branches of labor legislation.
An important step toward guided change, as distinguished from local
experimentation in amending compensation laws, is the expansion
of the U. S. Department of Labor for promoting, through the Divi
sion of Labor Standards, regional and general conferences on labor
legislation. The Bureau of Labor Statistics has facilitated the devel
opment of the compensation system, from its earliest beginnings in
the United States, by publishing reports and studies upon compen
sation law and experience in the United States and in all countries
having such legislation.
« U. S. Department- of Labor. Division of Labor Standards. ABC Reporter for October 1937, pp. 5-7.
Chapter 3.— Persons and Employments Covered 1
Incompleteness o f Coverage
The question is often asked, How many persons are covered by
workmen’s compensation? The only answers to this question have
been estimates. For instance, in 1920, Carl Hookstadt estimated the
number of employees covered by the existing laws, but “ owing to lack
of definite information no estimates” were made “ of employees unpro
tected because of failure of employers to elect under elective acts.” 2
In 1939 exact information was not available either as to the percent of
employees included in the legal provisions or the number of employees
actually covered by compliance of employers with the statutes.
In regard to the difficulty as to sources of information upon coverage,
an explanation given in 1926 by Ralph H. Blanchard in the preface to
the International Labor Office study, Workmen’s Compensation in the
United States, is still pertinent: “ Complete or accurate statistics per
taining to workmen’s compensation are nowhere collected for the
country as a whole; nor are they, in most instances, available for indi
vidual jurisdictions.” In 1928, Ethelbert Stewart, United States
Commissioner of Labor Statistics, in discussing the problem of cov
ering small plants before the International Association of Industrial
Accident Boards and Commissions, said:
There is not a State in the Union, from which I can get statistical returns, that
knows how many and what percent of establishments, according to size, have
voluntarily elected to come under the workmen’ s compensation law. They can
tell me how many have come in. They cannot or do not or will not tell me how
many have not come in.
During the depression following 1929 the existing statistical activ
ities of the workmen’s compensation commissions were severely cur
tailed in most jurisdictions and virtually discontinued in some.
Consequently, in the absence of a Nation-wide special study of the
extent of coverage, only approximate estimates are available.
The United States Bureau of Labor Statistics has estimated that on
December 15, 1938, there were 32,945,000 workers actually employed,
not including agricultural labor, but including domestic servants and
self-employed persons. According to the census of agriculture, there
were 9,482,000 agricultural workers on December 1, 1938.3 According
to an estimate made for the Bureau of Labor Statistics by Swen Kjaer,
chief of the Division of Industrial Accidents, not more than 40 percent
1This chapter was published as an article in the Monthly Labor Review, June 1939, p. 1267.
2The estimate of employees included in the legal provision of the State acts ranged from 99.8 percent of
the workers in New Jersey to 30.7 percent in New Mexico. (U. S. Department of Labor, Bureau of Labor
Statistics Bull. No. 275, p. 33.)
3U. S. Department of Agriculture press release, Jan. 1,1939,
32
PERSONS AND E M P LO Y M E N TS COVERED
33
of the total gainfully employed workers are actually protected by
workmen’s compensation coverage. On this basis, at a time when
42,500,000 workers were employed, 17,000,000 would be covered by
workmen’s compensation. It should be kept in mind that workmen’s
compensation, unlike unemployment insurance or sickness insurance,
covers only persons who are actually working.
The problem of the scope of coverage is vitally related to cost, and
at this point, also, only approximate estimates for the country as a
whole, including the experience of all types of carriers, are available.
On the basis of actual figures as to part of the coverage and conjecture
as to the rest, it is probable that the total annual country-wide cost of
workmen’s compensation coverage is not less than $400,000,000.4 In
examining types of coverage it was observed that especially during
depressions the cost of insurance causes a shrinkage of actual coverage,
through the election of employers not to come under the law or their
noncompliance with it. In considering the problems relating to per
sons and employments covered, the effect of cost upon coverage will
appear most clearly in connection with the experience of distressed
industries and the effort to include farmers and small employers.
Types o f Coverage Provisions and Limitations
No State compensation law covers all employments. Farmers,
domestic servants, and casual workers are usually excluded, although
as a rule these can be brought within the compensation act by appli
cation, election, or taking out insurance. In several jurisdictions,
however, no election can be made for excluded employments.5 More
over, under prevailing conditions throughout the United States and
Canada, small employers are often outside the scope of the act.
The actual exemption of many small employers, in some jurisdic
tions, results from listing the industries that are included, and in
others is effected by stating the minimum number of employees an
employer must have in order to come within the scope of the law.
These two methods, at times, are found together. The “ numerical
exemptions” range from 1 employee to 16 employees.
The wide variety of the coverage provisions arose from the cir
cumstances under which the laws have been enacted. All of the
State acts have been prepared in the face of constitutional problems
*In the absence of complete reports any estimate is in part conjectural. Casualty companies operating
in New York reported to the New York State Insurance Department that their earned premiums, on a
country-wide basis, on workmen’s compensation insurance during 1937 amounted to $233,529,705. Stock
companies are credited with $141,773,299 in earned premiums, mutuals with $70,297,075, the New York State
Insurance Fund, with $21,459,331. Exclusive-fund premiums were approximately $43,000,000. The pre
miums of private carriers not included in the compilation of the New York State Insurance Department,
of competitive funds other than the New York State Insurance Fund, and the costs of self-insurers, are
estimated at $150,000,000.
6 For a detailed analysis of coverage provisions, see Monthly Labor Review, September 1938, p. 566:
Workmen’s Compensation in the United States as of July 1, 1938.
34
W O R K M E N ’ S COMPENSATION
and also the opposition or demands of certain groups or interests.
Each act is the result of compromises rather than the development
of an ideal program, although in some instances much weight was
given to a carefully studied plan. An expedient employed in a
number of the early acts, in order to make sure of bringing the leg
islation within the police powers of the State and thus assuring
its constitutionality, was to declare the law to be applicable to “ haz
ardous” or “ extra hazardous” employments, of which a list would
be given. A cautious regard for administrative practicality or the
demands of influential groups led, in many instances, to broad
“ numerical” exemptions, which are sometimes not the same for all
employments or industries within a State. Farmers were exempted
in most States because of the belief that otherwise their opposition
would defeat the passage of the act. Interstate transportation
workers were not covered by the State acts because their inclusion
would give rise to conflicts between State and Federal jurisdictions.
In examining typical provisions and limitations relating to cov
erage, it should be kept in mind that there are pronounced differences
of viewpoint with regard to principles and practices. On the one hand,
compensation administrators have usually accepted some limitations
upon coverage as inevitable under existing operating conditions. On
the other hand, the Fifth National Conference on Labor Legislation
has recommended, as to coverage that—
All industries and all employees, including the State and political subdivi
sions, should come under the act. There should be no exemption of small em
ployers or nonhazardous industries or occupations. The law should not permit
employees to waive compensation. Extraterritorial workers should be covered;
and in this connection reciprocity and cooperation between States is desirable
and necessary. All employees excluded from State jurisdictions by reason of
being subject to Federal jurisdiction should be covered by a Federal workmen’ s
compensation act.
(U. S. Department of Labor, Division of Labor Standards
Bull. No. 2 5 -A , p. 18.)
List or Schedule Coverage
It has been noted that a number of the early acts, for constitutional
reasons, included only hazardous employments, and this criterion
has been retained after the need for it has been removed by court
interpretation. In some of the exclusive-fund acts, such lists or
schedules serve as the nucleus of an insurance rate manual. In
the Ontario act, two schedules are provided— of industries under the
collective-liability system, and of industries in which the employer
is individually liable or (in the language of the State acts) a selfinsurer. However, other industries or employments may be added
by the Ontario board on the application of the employer, and any
industry excluded by number limit may be brought under the act
by notification to the board by the employer or a workman.
PERSONS AND EMPLOYMENTS COVERED
35
The use of the limiting terms “ hazardous” and “ extra hazardous”
and of restrictive lists was an expedient, and the resulting provisions
are confusing. For example, the Maryland statute lists “ extra
hazardous” employments that are covered (sec. 32), and then provides:
“ In addition to the employments set out in the preceding paragraphs,
this article is intended to apply to all extra hazardous employments
not specifically enumerated therein, and to all work of an extra
hazardous nature.” In applying this type of legislation, difficulties
of interpretation arise in regard to both the specific and the general
provisions. In some instances the extra hazardous nature of an
employment will inevitably be determined after instead of before it
has caused injuries. Under the Wyoming statute, one provision of
less than a page (secs. 124-104, 124-105) sets forth the “ extra hazard
ous occupations” that are covered. The lack of a clear-cut standard
for determining what is extra hazardous is indicated by the circum
stance that “ dude ranching” is included as extra hazardous while
stock raising is excepted from the application of the chapter.
The New York statute provides (sec. 2, subd. 3): “ Employer,
except when otherwise expressly stated, means a person, partnership,
association, corporation * * * employing workmen in hazardous
employments.” But the law nowhere defines hazardous employment.
An application of the term is found in section 3, which enumerates
employments. This section, with comment and interpretation,
covers 24 pages. Section 3, subdivision 1, group 18 includes “ all
other employments * * * notwithstanding the definition of
employment in subdivision 5 of section 2, not hereinbefore enumerated,
carried on by any person, firm, or corporation in which there are
engaged or employed 4 or more workmen or operatives regularly.”
Especially in a large industrial State, the continual changes in the
composition and processes of industry make it hard to keep up to
date any list of hazardous employments. Moreover, difficulties in
the interpretation and application of the lists continually arise.
Items in the lists sometimes represent political rather than engineer
ing judgment. A detailed examination of provisions which determine
coverage by lists, and by use of the term “ hazardous,” “ extra hazard
ous,” or both, raises the question of the desirability of replacing
such arrangements by simpler and more inclusive provisions. If, for
constitutional reasons, there is a present-day need for such limiting
words in any jurisdiction (which is doubtful), the definition of “ haz
ardous” in the North Dakota act (sec. 2) is of interest: “ ‘Hazardous
employment’ means any employment in which one or more employees
are regularly employed.”
It has been noted that in several exclusive-fund jurisdictions a
schedule or list of employments covered also serves incidentally as the
nucleus of an insurance rate manual. Experience, however, has
36
W O R K M E N ’S COMPENSATION
shown the disadvantage of elaborate specific legislation at this point,
and in the States the trend has been in the direction of general pro
visions authorizing the commissions or funds to make the classifica
tions of employments and employers. As late as 1934 the act of the
State of Washington contained an 8-page list of employments with
the accompanying rates; but in the 1937 edition of the act, this material
is omitted and reference is made (sec. 7676) to a “ yearly Classification
and Rate Manual issued January 1 of each year.” The New York
act provides (sec. 89): “ Employments and employers in the State
fund shall be divided into such groups and classes as shall be equitably
based upon differences of industry or hazard for the purpose of estab
lishing premium rates.” It has been recognized, therefore, that the
preparation of classifications as a basis for allocating insurance costs
is a year-to-year task for actuaries and engineers, rather than a matter
that can satisfactorily be put into the legal basis of the compensation
system.
Numerical Exemptions
The numerical exemption prescribes the number of employees an
employer must have in order to come within the compensation law.
For example, the Wisconsin act (sec. 102.04) applies to “ every person,
firm, and private corporation * * * who usually employs three
or more employees.” This device is found in many of the State acts
and, as to some employments, in the Canadian Provincial acts.
The numerical exemptions range from fewer than 2 employees in
Oklahoma to fewer than 16 in Alabama.6 Such exemptions may not
be uniform even with a single jurisdiction. For example, the Florida
act, which exempts employers with fewer than 3 employees, exempts
sawmills employing 10 or less, and the North Carolina act, which
exempts employers with fewer than 5 employees, exempts sawmills
with fewer than 15 employees, and this in spite of the extra hazardous
nature of small sawmill operations. An opposite practice in the use
of numerical exemptions is found in the New York act. It has been
noted that this act exempts some employers who have fewer than 4
employees, but the limitation applies only to nonhazardous employ
ments. A “ hazardous” employment with even 1 worker is covered.
The application of the law at this point, however, is sometimes com
plicated by court interpretation.
Under the numerical exemptions, in many jurisdictions the
employer with only two or three employees is exempt from coverage
upon other than a voluntary basis. Some of the reasons given for
such an arrangement are the small employer’s unwillingness or in
ability to pay insurance premiums, his neglect of safe working prac
tices, and his failure to keep accurate pay-roll records. No jurisdic6For details, see appendix 2 (p. 195).
PERSONS AND E M P L O Y M E N T S COVERED
37
tion has had enough inspectors for adequate supervision of working
conditions even in the large industries, and in most jurisdictions
small establishments are seldom visited. The same is true of pay-roll
auditing. Moreover, in some jurisdictions it is reported that the
cost of safety and pay-roll inspection alone, for isolated small estab
lishments, would exceed the total amount paid by such employers as
premium or insurance assessment.
In the face of the demands for
economy made during the depression, safety inspection and also the
compliance activities of labor departments and compensation boards
sank to a low ebb. In consequence, many of the small employers
within the scope of compensation laws neglected to report or insure
their operations, leaving a considerable gap between the legal and
the actual coverage of their workmen.
Exclusion of Specified Employments and Occupations
In many jurisdictions numerical exemptions would automatically
bar from coverage most of the persons in such employments as farming
and domestic service, even if such were not named as exempt. But
there are also specific exclusions, the list of which usually begins with
farmers, domestic servants, and casual workers. Such exclusions
give rise to serious problems, which are best understood by examining
some of these limiting provisions in their settings.
AG RICULTU RE
This is the greatest single gap in effective workmen’s compensation
coverage. The general lack of farm coverage is due primarily to the
farmers’ demand for exemption from the operation of this law. In
most jurisdictions voluntary coverage is allowed, but as a rule the cost
is deemed prohibitive by farmers. For example, in 1938 the minimum
premium for a policy covering farm workers in New York was $115.
In part because of the expense, actual farm coverage is found in the
States only on a very limited scale, although it has long been advocated.
The hazardous nature of farm work has been amply shown by
statistics. Estimates of fatalities and injuries for 1937, for example,
indicate that there were 4,500 fatalities, 13,500 permanent injuries,
and 252,000 temporary disabilities in agriculture. The total fatal
ities for agriculture exceed those of any other major industrial group.
Expressed in terms of fatalities per million workers, the fatality rating
for agriculture exceeds the ratings for manufacturing, public utilities,
wholesale and retail trade, and services and miscellaneous industries.7
In Ohio, if a farmer has 3 or more employees, he is subject to the
compulsory coverage of the act; if fewer than 3 employees, he may
7 See Monthly Labor Review, March 1939, p. 597. Agriculture, which in the aggregate had more fatal
ities than any other single group, had 416 fatalities per million employees.
38
W O R K M E N ’S
C O M P E N S A T IO N
apply for coverage. But the farm accident experience has been much
worse than in some supposedly hazardous industries. In 1930 the
farm rate was $2.20 per year per hundred dollars of pay roll, but in
1936 the rate was $4 per hundred. In the 5-year period from Jan
uary 1, 1930, to December 31, 1934, Ohio farmers paid into the State
insurance fund premiums totaling $677,131, while during the same
period the losses due to accidents and paid from the fund amounted
to $813,631. In spite of the compulsory provision for coverage,
relatively few farmers have insured with the fund. “ According to
the United States Census reports, on April 1, 1930, there were 219,296
farmers in Ohio, yet on July 1, 1935, approximately 2,150 Ohio farmers
were insured under the workmen’s compensation act.” 8 Neverthe
less, the situation in the agricultural classification “ is ideal for organ
ized safety work.” With the granges, farm bureaus, cooperatives
and youth organizations, it is possible quickly and effectively to
contact a large proportion of the employing farmers in Ohio and their
employees. The steady increase of accident frequency and severity
on farms makes some organized safety effort imperative if agricultural
insurance premium rates are to be maintained at their present level
and a start made toward an experience that will merit reductions.8
A few States (for example, Illinois, Minnesota, and Wisconsin)
facilitate farm coverage by making a farmer’s purchase of a compensa
tion-insurance policy equivalent to an election to accept the compen
sation statute. The New Jersey act seems to be an exception to the
general practice of excluding farm employments. Acceptance of the
act by the farmer is presumed; but such apparent inclusiveness is
weakened by a provision exempting farmers from compulsory insur
ance. In a few other jurisdictions not specifically excluding agri
culture the farmer is, in practice, exempted by the numerical limi
tations, or omitted from the lists of employments covered by enumer
ation. An important step facilitating farm coverage is a 1931 Cali
fornia amendment, under which a farmer is presumed to accept the
act unless his last annual pay roll has not exceeded $500. The
Oregon fund has extended coverage to farmers at low rates without
a minimum premium, but the fund takes a loss on the classification.9
The accident experience is bad. In 1937, this fund was considering
a safety code for agriculture.
There are few conclusive instances of satisfactory coverage of
mechanized farm processes. For example: The South Dakota act
imposes compulsory coverage for threshing, grain combines, corn
shelters and huskers, silage cutters, and seed hullers, but “ the pro8 Industrial Commission of Ohio. D ivision of Safety and H ygiene. Accident Experience of Ohio
Agriculture. Colum bus, 1936.
9 The 1935 Oregon rate for general farming was $3.50 on a basis of $100 of pay roll, plus an additional 1 cent
per day for each workman em ployed. Collection of premium was said to be difficult, although in some cases
the annual premium charged was less than 50 cents.
PERSONS
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39
visions * * * shall not apply * * * to those who are not generally
engaged in the operation of said machines for commercial purposes.”
Coverage, therefore, is determined not by the hazard of the process
but by the industrial classification of the person who operates the
machine. The border line between agriculture and industrial employ
ment is not well defined, and from time to time the courts are called
upon to interpret the compensation coverage provisions on this point.
Many persons are permanently injured by unguarded machinery
used in agricultural or semiagricultural pursuits. For example, the
operation of portable saws by farmers has proved to be extra hazard
ous. A workmen’s compensation commissioner sums up the accident
experience in operating portable firewood-sawing machines in his
jurisdiction by calling them “ veritable butcher shops.” In this
instance there is a gap both in workmen’s compensation coverage
and the application of safety codes.
Certain types of farming are industrialized. Such specialty farm
ing is susceptible to safety programs which might effect a saving of
life and a lowering of insurance rates to a bearable level. It is claimed
for instance, that certain sugar corporations in Florida have “ ex
tremely well-developed safety organizations” and minimum accident
experience.
An outstanding experiment in compulsory coverage of agriculture
is found in Puerto Rico. Since 1925 there has been virtually full
coverage of farm work on the Island. Under the present act, only
those farm laborers working for employers of from one to three work
men 10 are unprotected by the compulsory insurance, but their em
ployers may voluntarily pay the premium and obtain coverage.
Even under normal economic conditions the enactment of compul
sory-coverage provisions for agriculture has been followed by strong
resistance to the fixing of adequate insurance rates. The difficulty
of collecting adequate premiums was intensified in Puerto Rico by
disastrous hurricane losses. The exclusive fund failed in 1928 and
its successor, a competitive fund, became insolvent in 1935. On
July 1, 1935, a new act reestablished an exclusive fund providing
compulsory coverage for employers of four or more workmen.
The Puerto Rico experience is of outstanding importance in throw
ing light upon compensation problems, because all types of insurance
arrangements have been tried in the effort to provide coverage of
employments that are mainly agricultural. The outcome of such an
undertaking depends to a considerable extent upon the legal and
administrative bases of the insurance carrier’s operation. At the time
the exclusive fund was reestablished in 1935, it was recognized by
executives and independent actuarial advisers that its success would
10 M ost of the agricultural workers in Puerto Rico are em ployed in sugarcane operations and other types
of farming in which at least 4 workers are hired.
40
W O R K M E N ’S
C O M P E N S A T IO N
depend upon close supervision, adequate safety service, scientific
methods of accounting and rate making, special arrangements for
medical care, and nonpolitical management.11 Notwithstanding, on
account of outside budgetary control, the fund, as late as January 1,
1938, was without a safety specialist. Moreover, during the fiscal
year 1937-38 the industrial commission, which had been established
separately from the fund management as a “ quasi-judicial body
divested entirely of administrative functions,” heard appeals from
1,226 employers as to the rates fixed by the fund, and in 23 of the 39
classifications that were challenged, reduced the rates.12 Such a situa
tion throws a strong light upon the difficulty of maintaining rates
adequate for claims and catastrophe reserves, under the existing
arrangement for revision of the rates that have been fixed by the fund
management with the aid of an independent actuary. Under the
simpler method prevailing in the Provinces of Canada, if the fund
management finds the rates charged for any year more than adequate,
an adjustment is made by a reduction in the next year. The Puerto
Rico experience has shown the vital connection between agricultural
coverage and the insurance carrier’s ability to maintain adequate
rates and collect premiums.
In the Provinces of Canada and in the States, exclusive funds which
have extended coverage to farmers on a voluntary basis without mak
ing the burdensome minimum premium charge which is customary
with private insurance carriers, indicate in their reports that few far
mers have taken advantage of the privilege, and also that the collection
of assessments is difficult. Most of the reasons advanced for not
insuring small employers in general apply with even greater force to
farm coverage. In some jurisdictions the compensation commission
ers said, when questioned upon the subject, that the cost of medical
supervision and care of an injured farm employee would be prohibitive
in view of the small pay roll reported by farmers and the high charges
made by physicians for visits to isolated places. In addition they
pointed out the difficulty, especially during depressions, of knowing
when an injured farm employee has actually recovered and is able to
return to work.
In practice, farm coverage under the Provincial acts is found only
in Alberta and British Columbia, and even there to a very small
extent.
DOMESTIC SERVICE
Domestic service is one of the largest employments commonly
excluded by workmen’s compensation acts. As in the case of farming,
the exclusion does not mean that domestic service is not hazardous,
11 For an analysis of the problem in Puerto Rico and a statem ent of the m ethods applied by the present
fund m anagement, see U . S. Departm ent of Labor, D ivision of Labor Standards Bull. N o. 10, p. 44,
12 Industrial Commission of Puerto Rico. Annual Report, 1937-38, pp. 1, 8, 27.
PERSONS
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41
for there are more accidents in homes than in shops. To a consider
able degree, the difficulties that have been noted in regard to efforts
to extend coverage to farmers and small employers are also applicable
to the problem of wide coverage of domestic service. However,
employers of servants usually have the means for paying insurance
premiums and are also acquainted with the simpler forms of accounting.
The coverage of domestic service, other than casually employed help,
appears, therefore, more feasible than agricultural coverage. The
Fifth National Conference on Labor Legislation expressed the opinion
that the coverage of domestic service “ may be either compulsory or
elective.” In the existing situation the application of compulsory
coverage to this employment has not been considered, by compensa
tion officers, to be administratively practical except where the law
extends only to employers of several domestic or other employees.
RELIEF W ORK
At the outset of wide-scale local and Federal relief activities, con
fusion arose as to whether injured relief workers should receive com
pensation, and if so from what agencies. In 1933 a Federal act for
the relief of unemployment extended the provisions of the United
States Employees’ Compensation Act to enrollees of the Civilian Con
servation Corps, and to other persons given employment under that
emergency legislation. In 1934, an act extended these same provi
sions to employees of the Civil Works Administration, subject to
certain conditions and limitations. Later legislation included em
ployees of the Works Progress Administration, those injured in camps
by the Florida hurricane, and persons employed and paid by the United
States in those States in which the Federal Emergency Relief Admin
istrator assumed control (Massachusetts, Ohio, Oklahoma, and
Georgia).13
In some States there are special provisions as to coverage or exclu
sion of relief workers, while in others the coverage depends upon the
interpretation of such words in the act as “ contract of hire.” The
payment to relief workers, under the Federal legislation, of wages
lower than in prevailing scales for private employment, is reflected
in special compensation scales. Where injured relief workers receive,
under such scales, compensation lower than that paid to employees
in private industry, some discontent arises. On the other hand, in
some States, owing to the method of computing the wage base for
compensation benefits to workers in private employments, it some
times happens that such workers receive smaller compensation than
that paid to relief workers by the Federal administration.
is Address b y Frank M . Phillips, Chief, D ivision of Statistics, U. S. E m ployees’ Compensation C om m is
sion, June 6, 1938: Em ployees’ Compensation under Acts of Congress. (M imeographed.)
215193°— 40----- 4
42
W O R K M E N ’ S C O M P E N SA T IO N
OTHER EXCLU D ED EM PLO YM EN TS
Examples of miscellaneous exclusions found in the acts are casual
employees, home workers and outworkers, public charities, employ
ments not for gain, totally blind persons, the vending or delivering of
newspapers, rural employments (blacksmiths, etc.), persons earning
more than a certain sum, aircraft flying, clerical workers, teachers,
preachers, members of partnerships, executives, members of an em
ployer’s family. In the main, such exclusions arise from the desire to
simplify the administration of the act and avoid insurance difficulties.
Opposing reasons are given for certain exclusions; for instance, a
clerical worker may be excluded on the theory that the occupation is
safe, whereas an aircraft pilot may be excluded because the hazard is
too great to be insurable at a cost the employer is willing to bear. As
against such exclusions, it has been urged that all persons who are
exposed to injury by reason of their daily work should be brought
within the protection of the compensation system.
Examples of Especial Difficulties in Coverage
D IS T R E S S E D IN D U S T R IE S
Workmen’s compensation coverage has at times been curtailed by
the demand of a distressed industry for exemption on the ground that
it can no longer pay for insurance and continue to operate. A dra
matic example of such shrinkage in the original scope of an act is the
exclusion of the fishing industry from obligatory coverage by the Nova
Scotia fund after disasters had caused a heavy deficit in the fishing
classification and it became necessary to increase the insurance assess
ments. Because of the resistance of the industry to the rate increase,
the legislature excluded the fishing classification from compulsory
coverage by the fund. The risk is now carried by a mutual benefit
association which, according to recent information has no disaster
reserve out of which to pay compensation in event of the recurrence
of such storm losses as were sustained in the past. As a memento
of its experience in trying to protect employees in the fishing indus
try the Nova Scotia fund carries a permanent deficit of more than
$380,000 in the “ fishing subclass.” 14
When hazardous industries are depressed, the claim is made by
employers that the compensation rates threaten the very existence of
the industry. The alternatives are presented as a dilemma: Shall
the workmen have compensation coverage but no employment, or
jobs but no compensation coverage? A recent, admittedly unsatis
factory, arrangement in Nova Scotia was to continue giving coverage
14 N ova Scotia W orkm en’s Compensation Board. Report, 1938 (p. 21, table 8a), Halifax, 1939. See also
Report and Findings of the R oyal Commission on Ratings of the Lunenberg Fishing Fleet and the Lum ber
Industry, as applied b y the W orkmen’s Compensation Board, Province of N ova Scotia, 1927.
PERSONS
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to the lumber industry, but to pay injured workmen in that employ
ment, compensation based upon a smaller percentage of their wages
than that fixed for compensating workmen in other employments.
Such an adjustment was accepted as undesirable but, under existing
conditions, necessary. Especially in the East, difficulty has been
experienced in furnishing the lumber industry coverage at rates which
the employers are willing to pay.
COAL M IN IN G
In many jurisdictions difficulty has been encountered in the cov
erage of coal mines.15 Coal mining has been looked upon as an un
desirable risk by many private insurance carriers, and the industry
has in most jurisdictions been permitted to “ self-insure” or carry its
own compensation risks under conditions prescribed by the acts and
the compensation boards. Because of the distressed condition of
the coal industry in Pennsylvania and the increasing cost of compen
sation, in 1938 many of the coal operators rejected the compensation
act. Discussion of the difficulties involved in the coverage of coal
mines will be found in reports of the meetings of the International
Association of Industrial Accident Boards and Commissions.16
CONFLICT OF L A W S
Large gaps in coverage arise from the conflict of State and Federal
jurisdiction. A step reducing some of the jurisdictional uncertainty
was taken in 1936 by Public Act No. 814 (74th Cong.), which grants
to the States authority to apply their workmen’s compensation laws
to work done on Federal property situated within their geographical
boundaries.
The State coverage of railway employees and other workers in
interstate commerce is not only limited, but often hard to interpret
and apply to specific cases where doubt arises as to whether an employ
ment is interstate or intrastate. Because of opposition from cer
tain influential representatives of labor, there are no Federal statutes
providing workmen’s compensation coverage for railway and mari
time workers.17 In several instances, labor organizations have pre
ferred the expectation of occasional large verdicts from law courts to
the practical certainty of compensation awards in all cases. Recent
studies indicate that such a preference is not warranted by the facts.18
16 Because of the difficulty of obtaining insurance coverage for coal-mine risks in Tennessee, legal provi
sion was made for a State fund lim ited to coal-mine coverage. The arrangement, however, was not put
into effect and the proposed fund never operated.
is See especially U. S. Departm ent of Labor, Bureau of Labor Statistics Bull. N o. 511, pp. 279-290.
17 American Labor Legislation Review, December 1935, p. 169: Accident Prevention for Transportation
Workers, by John B. Andrews. For a statem ent of the attitude of the railroad brotherhoods toward work
m en’s compensation, see Proceedings of the International Association of Industrial Accident Boards and
Commissions, 1932 (U. S. Departm ent of Labor, Bureau of Labor Statistics Bull. N o. 564), p. 53.
is See American Labor Legislation Review, December 1935, p. 174: Cost of Occupational Accidents in
the Railroad Industry, by Otto S. Beyer.
44
W O R K M E N ’ S CO M PEN SATIO N
The same preference for the results of litigation, which at certain
points has retarded the spread of compensation legislation in the
United States, accounts for the failure to apply compensation cover
age in the Provinces of Alberta and Saskatchewan to train-service
employments, although such employees might come within the act
by a majority vote of their memberships.
Administrative Problems Affecting Coverage
PROBLEM S
UNDER
IN C L U S IV E
ACTS
Each type of compensation act— whether compulsory, elective,
exclusive fund, list or general coverage— has its peculiar adminis
trative problems. A number of the problems incident to exclusivefund insurance that are in part responsible for numerical and other
limitations of coverage have already been considered.
Some of the difficulties encountered in administering a compulsory
act of the inclusive type are: The failure of many employers to make
reports of injuries; difficulty of determining the status of employees;
prohibitive insurance rates for certain risks covered by the law; and
the impossibility of informing all employers as to the requirements
of the act. Employers in some economic activities, to avoid insuring,
go through the form of taking employees into partnership with them,
or attempt to create legal relationships which, although in effect
those of employer and employee, are held by courts to create a dif
ferent status, as for example that of independent contractor. Most
of the evasions or violations of an inclusive compensation law are
attributed to ignorance. 19
L IM IT A T IO N OF C O V E R A G E U N D E R A R R A N G E M E N T S
PAYM ENT
OF
FO R
G U A R A N T E E IN G
C O M P E N S A T IO N
One of the unsolved problems of workmen’s compensation is how
to guarantee the payment of compensation to all employees covered
by the act, even if their employers have neglected to insure or pay
premiums, without impairing the solvency of the insurance carrier
or limiting the scope of coverage. This problem is most clearly
illustrated by the experience of certain exclusive funds which pay
compensation to injured workers covered by the law even if their
employers have not insured or paid assessments. This is the prac
tice in Ohio, Oregon, Washington, and Wyoming, and also in the
Canadian Provinces.
The extent of the possible loss to a fund because of inability to
collect from uninsured employers is shown by the experience of the
19 See Proceedings of the International Association of Industrial Accident Boards and Commissions,
1938 (U . S. D epartm ent of Labor, D ivision of Labor Standards Bull. N o. 24): The Independent Contractor
Problem in W orkm en’s Com pensation, by Harry A. Nelson; also, U . S. Bureau of Labor Statistics Bulls.
N o. 536 (pp. 103-104) and N o. 511 (pp. 4-6).
PERSONS
AND
EM PLOYM ENTS
C O VER ED
45
Ohio fund. Up to December 31, 1936, this fund paid to the injured
employees of uninsured employers $916,726.10, while it was able to
collect from such employers only $58,332.41. With such losses
sustained under coverage subject to numerical exemptions, it is appar
ent that with existing enforcement facilities, the Ohio fund could
hardly carry its present responsibility to uninsured employees under
universal coverage. The Canadian boards are authorized, under
certain conditions, to include or exclude employments by adminis
trative action, and have restricted their losses caused by uninsured
employers by both legislative and administrative limitations upon
coverage.
Chapter 4.— Injuries and Diseases Covered
T he Legal Basis and Limitations
Compensation laws are limited, not only as to persons and employ
ments included, but also as to injuries covered. No State holds the
employer responsible for every injury received by the employee.
Some injuries are compensable and others are not. Workmen’s com
pensation laws are not designed to provide general accident and
health insurance, and if strictly interpreted cover only injuries
received in the course of the employment and as a natural consequence
of it.
Within this boundary there are three main types of limitation upon
the injured employee’s right to receive medical or money benefits.
As a rule, no cash benefit is paid unless the disabling effect of an
injury continues beyond a certain number of days, known as the
waiting period, specified in the act. If disability continues beyond
the waiting period, then, to be compensable, the injury must come
within the legal definition of accident or injury found in the statute.
In addition to the limitations upon coverage arising from duration
of disability and the legal definitions, most of the acts contain specific
limitations of one or two kinds, the first relating to the conditions
under which the injury was sustained, and the second relating to
the nature of the injury, whether sudden and violent or gradual in
onset and effects. Sudden and violent injuries are usually called
injuries by accident or traumatic injuries. An industrial injury that
is gradual in onset is classified as a disease. Such injuries are covered
by the compensation act in some jurisdictions, while in other juris
dictions they are not compensable. However, the distinction between
the terms “ accident” and “ injury” has been blurred by varying
interpretations. For example, lead poisoning has sometimes been
construed to be an “ accidental” injury. But such interpretations
have been applications of the law to individual cases rather than
the establishing of a general rule.
Reduction of Waiting Period
The tendency to reduce the length of the waiting period has brought
about one of the major improvements in compensation law. In 1916,
21 States1 required a waiting period of 2 weeks. In 1938 there were
but two States with such a limitation and only four States with
a waiting period of 10 days or longer. No Canadian Province has
a waiting period longer than 7 days, and in four of the eight Provinces
having compensation acts the waiting period is 3 days. Since the
1 U . S. Bureau of Labor Statistics Bull. 210, p. 94. Hawaii is included.
46
IN J U R IE S
AND
D IS E A S E S
CO V E R E D
47
majority of industrial injuries cause disability of less than 2 weeks,
this change has benefited great numbers of workmen. The waiting
time required in each State and Province in the year 1938 is shown
in appendix 2, table 12 (p. 201).
The Fifth National Conference on Labor Legislation (1938) recom
mended a waiting period of not more than 7 nor less than 3 days,
compensation to be retroactive to date of injury if disability continues
for 14 days.2
Legal Definitions of Accident or Injury 3
An injured workman’s right to compensation is bounded by the
legal definition of accident or injury. This definition is subject to
interpretation both by the administrative agency and the courts.
In consequence, there has been much confusion in most jurisdictions
in the attempt to apply the legal definitions to actual situations.
On the one hand, this condition of uncertainty has at times worked
hardship on claimants, while on the other hand it has occasionally
endangered the solvency of insurance carriers or threatened the
insurability of workmen’s compensation risks. In the United States
the confusion in regard to definitions of injury and accident is caused
largely by conflicting or incompatible court decisions, together with
lack of continuity of policy of the administering agencies. Canada
has avoided the former difficulty by making the decisions of the
compensation boards in most jurisdictions final, without recourse to
the courts. Confusion of definition is detrimental to compensation
administration because, on the one hand, the workmen should know
with reasonable certainty whether or not they have a right to compen
sation after an injury, and, on the other hand, insurance carriers
need to know what injuries are included in order to make fair and
adequate rates and to set up the necessary reserves.4
Court interpretation has complicated rather than clarified the defi
nitions of injury,5 according to E. H. Downey. Prof. Ray A. Brown
of the University of Wisconsin attempted to classify and rationalize
court interpretations of the phrase “ arising out of and in the course of
the employment.” He found it impossible to formulate a general
principle on the basis of the decisions examined by him, but reported
that the acts are being given a more liberal interpretation.6
2 U . S. Departm ent of Labor. D ivision of Labor Standards Bull. N o. 25-A, p. 18.
3 This and other legal phases of workm en’s compensation are treated at length in Administration of
W orkmen’s Compensation, by W alter F. D odd, N ew York, Commonwealth Fund, 1936.
4 Some compensation commissions publish annotated editions of the compensation act in order to show the
judicial interpretation of its provisions. The mass of interpretation to be considered is im pressively shown
by the annotated edition of the Virginia act. The 4-line definition of injury is followed b y ’17 fine-print
pages of commentary, citing m any court decisions.
5 “Unfortunately the British courts, followed in this respect by most American jurists, have so involved
both phrases [i. e., injury arising out of and in the course of em ploym ent] in a fog of subtle and contradictory
distinctions that 20 years’ litigation has done less than nothing to clarify the legal definition of an industrial
injury.”
6 7 W isconsin Law Review, 15, 37 (1931-32); Dodd, W alter F.: Administration of W orkmen’s Compensa
tion. N ew York, Com m onwealth Fund, 1936, p. 685.
48
W O R K M E N ’S
C O M P E N S A T IO N
The workmen’s compensation boards report that, on the whole,
both administrative and court interpretations of the legal definitions
of accident and injury have been liberal. Both public and private
compensation insurance carriers have at times complained that some
court decisions have been so liberal as to unsettle the actuarial basis
for rate making and to usurp legislative prerogatives by virtually
amending the acts.7
During the time when workmen’s compensation legislation was the
only wide-scale and measurably adequate social-security legislation
in America, there was unquestionably great pressure upon the com
pensation boundary lines. Whatever the definitions contained in the
acts, the worker’s need, in the absence of alternative provision, tended
to make workmen’s compensation in some situations a substitute for
sickness, old-age, and unemployment insurance.8 Partly because of
this, the breaking point was almost, if not actually, reached in some
jurisdictions during the depression. Many private insurance carriers
became insolvent and several of the State or Provincial funds would
have been reckoned so, by an outside actuarial audit, on any other
than an “ in-and-out” basis of payment and collection. For a full
discussion of the role of definitions and interpretations of accident and
injury in compensation administration, reference is made to law
publications.9 Only the outline of the subject can be given here.
There are two main types of definition— inclusive and restrictive.
An inclusive definition of an industrial injury may be brief and simple,
as for example, an injury sustained while in the performance of duty,
or arising in course of employment, or arising out of and in the course
of the employment.10
Restrictive definitions may be rigid and complicated, as for example:
“ The word ‘injury’ as used in this act means a sudden and tangible
happening, of a traumatic nature, producing an immediate or prompt
result, and occurring from without, and such physical condition as
results therefrom.” 11
The difference between the two types of definition (inclusive and
restrictive) has in practice been blurred by interpretation and narrowed
by the advance of either general or schedule coverage of occupational
diseases.
I n ju r i e s sp ecifica lly exclu ded .—In the definition of accident or injury,
or appended to it, there may be a list of injuries specifically excluded
7 State of W ashington. Departm ent of Labor and Industries. Report, 1932, pp. 10-12: Ominous
Abuses Threatening the Insurability of W orkm en’s Compensation, F. Robertson Jones.
8 See also ch. 5 (p. 82).
9 See also D odd, W alter F., Adm inistration of W orkmen’s Compensation, N ew York, Commonwealth
Fund, 1936, for a lengthy study w ith m any citations.
10 U. S. Em ployees’ Compensation Act; North Dakota W orkmen’s Compensation Act; M assachusetts
Act.
11 Industrial insurance law of the State of W ashington.
IN J U R IE S
AND
D IS E A S E S
C O VER ED
49
from coverage because of the conditions under which they were
received. A comprehensive example of specific exclusions is found
in the Virginia Workmen's Compensation Act (1932 ed., sec. 14):
No compensation shall be allowed for an injury or death due to the employee’s
willful misconduct, including intentional self-inflicted injury, or growing out of
his attempt to injure another, or due to intoxication or willful failure or refusal to
use a safety appliance or perform a duty required by statute, or the willful breach
of any rule or regulation adopted by the employer and approved by the industrial
commission, and brought prior to the accident to the knowledge of the employee.
The burden of proof shall be upon him who claims an exemption or forfeiture
under this section.
The application of these clauses is rigidly circumscribed by the
Virginia commission. The party wishing to make such defenses
to the payment of compensation must give notice of his intention to
do so prior to the hearing. Workmen's compensation commissions,
in practice, seldom disallow compensation on such grounds.
A clause altogether denying compensation because of the violation
of a safety rule is apt to defeat its own purpose, because commissions,
like juries, are reluctant to enforce oversevere penalties. A provision
that has produced better results is a clause, found in several State
acts, diminishing compensation instead of denying it altogether.
Under the Wisconsin act, for example, compensation is decreased
15 percent “ where injury is caused by the willful failure of the employee
to use safety devices where provided by the employer, or where injury
results from the employee's willful failure to obey any reasonable
rule adopted by the employer for the safety of the employee, or where
injury results from the intoxication of the employee." Compensa
tion is increased 15 percent where injury is caused by the employer's
violation of safety provisions.
In the judgment of the Ontario compensation officers, the only
exception that is essential, in defining “ personal injury by accident,"
is found in clause (b), section 2, of the Ontario Workmen's Compen
sation Act, under which no payment is made for injuries “ attributable
solely to the serious and willful misconduct of the workman unless
the injury results in death or serious disablement."
Under the Puerto Rico act of 1935 no compensation is paid “ when
the injury is caused to the workman or employee by the criminal act
of a third person." The Puerto Rican courts interpreted this clause
to mean the criminal act of a third person for reasons not connected
with the employment. An affirmative type of coverage provision
at such points is less open to doubtful interpretation; as, for example,
the provision in the Longshoremen's Act: “ The term ‘injury' includes
* * * an injury caused by the willful act of a third person directed
against an employee because of his employment."
50
W O R K M E N ’ S C O M P E N SA T IO N
Waiver of Compensation
In certain jurisdictions an employee handicapped by an existing
disability— as, for example, blindness, epilepsy, or the loss of a mem
ber— may by special contract waive his right to compensation in event
of a subsequent injury, subject to approval by the compensation
agency. Where such a practice prevails to any considerable extent,
the scope of the compensation law is narrowed and workmen may
suffer losses they can ill afford to bear. To avoid the necessity for a
partial surrender of the compensation principle as an alternative to
the unemployment of handicapped workers, some States have provided
“ second injury” funds which take care of an employer’s excess loss
arising from disabling injuries sustained by handicapped employees.12
In practice, waivers are restricted or prohibited in most jurisdic
tions. The laws of Massachusetts and Connecticut give broad author
ization for waivers, but in Massachusetts relatively few are granted.
Waivers are more favored in Connecticut than in any other jurisdic
tion, approximately 5,000 waivers being granted annually.13 How
ever, a 1939 amendment provides that waivers shall not be granted
for occupational disease, susceptibility thereto, or a recurrence
thereof.
The laws of four jurisdictions— Illinois, Indiana, Michigan, and
North Carolina— contain provisions for a restricted waiver, express
or implied, of compensation for disability arising from silicosis. In
Canada waivers are not allowed.
Constitutional Limitation Upon Coverage of Injuries
The Oklahoma Constitution provides that “ the right to recover
damages for injuries resulting in death shall never be abrogated, and
the amount recoverable shall never be subject to any statutory limi
tation.” Fatal injuries, therefore, are not covered by the Oklahoma
workmen’s compensation law.
Effect o f Type o f Administrative Development Upon Breadth of
Coverage o f Injuries
Unsatisfactory Result of Legalistic Approach
In order to outline the existing situation, it has been necessary to
approach the examination of injuries covered under workmen’s com
pensation by considering the legal provisions, definitions, exceptions,
and their interpretation by the courts. The one thing definitely
ascertained by this approach is that complicated provisions, especially
See ch. 5 (p. 84).
Address of James J. Donoghue, Compensation Commissioner, Connecticut, at the twenty-fourth annual
convention of the International Association of Industrial Accident Boards and Commissions in 1937.
(United States Departm ent of Labor, D ivision of Labor Standards Bull. N o. 17, p. 90.)
12
13
IN J U R IE S
AND
D IS E A S E S
CO V E R E D
51
of the restrictive type, have not led to uniformity or certainty of
interpretation of the compensation provisions.
In a study of compensation administration, it is highly important
to understand that, from some points of view, the legalistic approach
to the problem of the coverage of injuries leads into a “ blind alley.**
A preoccupation with this approach has not only caused, in some
jurisdictions, an arrested development of the compensation system,
but in some instances has led to retrogressive changes that have been
mistaken locally for progress and have been advocated, by some
administrators, as desirable measures for adoption in all the States.
Another factor responsible for retarding the development of broad
provisions for the coverage of injuries has been the attitude of the
insurance carriers. With but few exceptions, private-insurance
carriers have opposed broad coverage for injuries and especially for
occupational diseases, and have sponsored specific restrictive amend
ments of the acts.
A brief examination of the main trends of administration in the
States and Canada, showing the connection between types of admin
istrative development and the breadth of coverage of injuries, throws
light upon situations in regard to which purely legal research has
admittedly failed to find anything but confusion. In view of the
vast amount of labor that has been expended in the United States in
sifting court decisions, in order to find certainty as to the interpreta
tion of definitions of injuries that are covered by workmen’s com
pensation, it is interesting to recall that Sir William Ralph Meredith,
Chief Justice of Ontario, foresaw the difficulties that would be caused
by dependence upon legal technicalities and court interpretation of
definitions. In 1912, in formulating the basis of the Ontario com
pensation law and administration, he insisted that administrative,
instead of court, determination was essential to the satisfactory
operation of a compensation system. Those who questioned this
viewpoint said that “ then, of course, the constitution of the board
becomes of great importance.” Chief Justice Meredith replied:
“ Everything depends on the constitution of the board; if it is a bad
board the whole thing will be a failure.” 14
The alternatives presented were, on the one hand, to guard against
ill-considered awards and excessive costs by legal technicalities,
court interpretation, and litigation, or, on the other hand, to make a
broad and relatively simple provision for the protection of injured
workers, and place the dependence for prompt and just awards upon
competent administration. Chief Justice Meredith advocated the
latter alternative, which became the basis of the Ontario development.
14 Final Report on the Laws Relating to the Liability of Employers, by Sir W illiam Ralph M eredith,
pp. 510, 512 (1913).
52
W O R K M E N ’S
C O M P E N S A T IO N
Plan for Coverage of Injuries in Ontario
The Ontario plan placed in the administrative agency the ex
clusive right to interpret the compensation act. Chief Justice
Meredith said that, while some mistakes would be made, these would
be less serious than those of the courts, because the administrators,
through specialization and long experience, would have a better
opportunity than the courts for learning the subject. Moreover, in
this type of remedy prompt action was necessary. It was quite
possible, of course, that administrators might drift into subtleties and
technicalities in construing the definitions of what injuries are covered.
To prevent such a trend, the statement in the Ontario act (sec. 2,
(2).) of what injuries are compensable was followed by a clause
establishing two presumptions which would simplify the worker’s
task in establishing a claim for compensation:
Where the accident arose out of the employment, unless the contrary is shown
it shall be presumed that it occurred in the course of the employment, and where
the accident occurred in the course of the employment, unless the contrary is
shown, it shall be presumed that it arose out of the employment.
This plan worked satisfactorily and has remained unchanged.15
Occupational diseases were covered by a supplementary list or sched
ule, which has been enlarged from time to time. The legislative
changes since the passage of the act have, therefore, made the cover
age of injuries more inclusive.
Development in the United States as to Coverage of Injuries
In strong contrast with Ontario experience, which was based upon
an original legal and administrative plan that did not require subse
quent piecemeal changes in the definition of a compensable injury,
in many of the States the definition has been altered. In some
instances a definition, which in the original act was brief and simple,
has through amendment become a long and complicated network of
limitations and restrictions. In rare instances a definition has been
elaborated to make it more inclusive.16 These different directions in
the development of the coverage provisions have been paralleled by
differences in the type of compensation administration. Such a
correlation is highly significant, as a clue to solving the problem of
how to provide inclusive coverage of injuries at a cost that is not
unduly burdensome to industry.
15 For a statem ent of the attitude of labor toward the Ontario plan, see M onthly Labor R eview , January
1936, p. 1: Ontario Procedure in Settlem ent of W orkm en’s Compensation Claims.
16 In exam ining the process of change in the definition of injuries covered, w ith its setting, so far as possible
the com plications arising from the supplem entary or schedule type of occupational disease coverage are
reserved for separate consideration.
INJURIES AND DISEASES COVERED
53
RESTRICTIVE CHANGES IN DEFINITIONS
State of Washington.—The 1911 act of Washington, as amended in
1913, provided:
Each workman who shall be injured whether upon the premises or at the plant
or, he being in the due course of his employment, away from the plant of his
employer, or his family or dependents in case of death of the workman, shall
receive out of the accident fund, compensation in accordance with the following
schedule.
From time to time, reports of the department of labor and indus
tries stated that the courts interpreted the coverage of injuries so
loosely or with such “ maudlin sentiment” as to unsettle the basis for
rate making. “ Decisions have been handed down by superior courts,
and sustained by the supreme court, which have changed a mutual
agreement between employer and employee that industry care for the
injuries it causes into a blanket insurance, forcing upon the backs of
a selected group of operators the social diseases and chronic ailments
naturally accruing to the human family entirely aside from their
labor and hastened by old age.” 17
To correct this condition, a restrictive definition was inserted in
the act, as follows:
The word “ injury” as used in this act means a sudden and tangible happening,
of a traumatic nature, producing an immediate and prompt result, and occurring
from without, and such physical condition as results therefrom.
In 1929 the coverage of injuries was further restricted, in an effort
to segregate “ preexisting disease” and avoid payment for its con
sequences, as follows:
If it be determined by the department of labor and industries that an injured
workman had, at the time of his injury, a preexisting disease and that such
disease delays or prevents complete recovery from such injury the said depart
ment shall ascertain, as nearly as possible, the period over which the injury
would have caused disability were it not for the diseased condition and/or the
extent of permanent disability which the injury would have caused were it not
for the disease, and award compensation therefor.
(Sec. 7679—1.)
In 1935 compensation officials said that this provision had been
nullified and rendered inoperative by a supreme court decision. In
these circumstances, the futility of restrictive definitions of injuries
covered, as a means of solving the problems of the insurance carrier,
was demonstrated.18 In order to meet deficits during the depression
following 1929, the Washington fund was compelled to levy assess
ments upon employers. Nevertheless, during this period when em
ployers were least able to pay, the Ontario fund reduced the insurance
rates.
17 State of Washington. Department of Labor and Industries. Report, 1924-27, p. 11.
18 For a reiteration of the statement which preceded the last restrictive amendment, see Report of the
Department of Labor and Industries of Washington for 1928-31, pp. 9, 10.
54
W O R K M E N ’S COMPENSATION
The contrast in the experiences of the Washington and Ontario
funds points to differences in the bases upon which the two adminis
trations were founded, which affected their ability to control insur
ance costs by such methods as activity in the prevention of injuries
and in the supervision of medical aid of injured workers. The
Ontario fund is self-supporting and self-directing, and can spend
upon supervisory activities whatever it considers necessary. The
Washington fund, on the other hand, depends for administrative
support upon legislative appropriations, and consequently can spend
upon supervisory activities only the amounts that have been provided.
Wherever this condition has prevailed, the supervisory activities
have usually been inadequate and fluctuating.19 Moreover, the
Ontario fund, as originally established, was placed upon a nonpoliti
cal basis. The officers and employees have had time to learn their
duties thoroughly. The Washington fund, on the contrary, has been
exposed to frequent political turn-over of personnel. The contrast
indicates that the most satisfactory means of controlling insurance
costs is through providing for adequate administration rather than by
restrictive provisions relating to injuries covered.
Connecticut.— An instructive example of the process of restricting
the coverage of injuries in a private-insurance jurisdiction is found
in Connecticut. The 1913 statute provided that the employer shall
pay compensation for a “ personal injury sustained by an employee
arising out of and in the course of his employment or on account
of death resulting from injury so sustained.” Subsequent elaborate
definitions and restrictions read:
The words “ personal injury” or “ injury,” as the same are used in this chapter,
shall be construed to include only accidental injury which may be definitely
located as to the time when and the place where the accident occured, and occu
pational disease as herein defined. The words “ occupational disease” shall
mean a disease peculiar to the occupation in which the employee was engaged
and due to causes in excess of the ordinary hazards of employment as such.
The words “ arising out of and in the course of his employment,” as used in this
chapter, shall mean an accidental injury happening to an employee or an occu
pational disease of such employee originating while he shall have been engaged
in the line of his duty in the business or affairs of the employer upon the employer’ s
premises, or while so engaged elsewhere upon the employer’s business or affairs
by the direction, express or implied, of the employer. A personal injury shall
not be deemed to arise out of the employment unless causally traceable to the
employment other than through weakened resistance or lowered vitality. In
the case of an accidental injury, a disability or a death due to the acceleration
or the aggravation of a venereal or syphilitic disease or to the habitual use of
alcohol or narcotic drugs shall not be construed to be a compensable injury.
In the case of aggravation of a preexisting disease, compensation shall be allowed
only for such proportion of the disability or death due to the aggravation of
such preexisting disease as may be reasonably attributed to the injury upon which
the claim is based.
(Sec. 5223.)
See ch. 9 (pp. 153 et seq.).
INJURIES AND DISEASES COVERED
55
The right of the injured worker to claim compensation was still
further circumscribed by the wide use of “ waivers” -— which the orig
inal act (sec. 33) had forbidden. The amendment to permit waivers
reads, in part:
Whenever any person having a contract of employment, or desiring to enter into
a contract of employment, shall have any physical defect which imposes upon his
employer a further or unusual hazard, it shall be permissible for such person to
waive in writing for himself or his dependents, or both, any rights to compensation
under the provisions of this chapter for any personal injury arising out of and in
the course of his employment, or death resulting therefrom, which may be found
by the commissioner having jurisdiction to be attributable in any material degree
to such physical defect.
The workmen’s compensation administration in Connecticut, during
the period when these restrictive amendments were made, had virtu
ally no program relating to the prevention of injuries or to the super
vision of the curative phase of medical aid. As late as 1935 coordina
tion of the compensation administration with other agencies, for the
supervision of insurance, safety, and rehabilitation activities, was in
the main undeveloped. The administration lacked not only the
necessary mechanism, but also the organized information upon which
adequate supervision must proceed.21
The basic plan of the Connecticut administration set up a decen
tralized system for adjudicating claims, with virtually no provision for
the integration of supervisory services and preventive activities, such
as is found, for example, in Wisconsin and New York. In Connecti
cut, dependence for controlling insurance cost has been in part upon
restrictive legal provisions and the wide use of the waiver system. A
relatively undeveloped coordination of services and supervision, on the
one hand, coexists with restrictive coverage of injuries on the other.
This lack of coordinated action does not imply, however, that there
are no examples of excellent preventive work on the part of some
employers and public agencies. Moreover, in Connecticut, as else
where, restrictive legal definitions tend to break down under liberal
administrative interpretation.
CHANGES MAKING COVERAGE OF INJURIES MORE INCLUSIVE
Outstanding examples of changes which have made the provision
for the coverage of injuries more inclusive are found in Wisconsin,
New York, and Ohio. The development of integrated supervisory and
21 See Report of the Board of Compensation Commissioners to the Governor, covering the period Novem
ber 1, 1932, to November 1, 1934 (typewritten), p. 1: “This commission has no statistical bureau. It has
been suggested on various occasions that the general assembly allot to us sufficient funds to set up an organi
zation for gathering figures and information which are on many occasions requested by persons who are
vitally interested in the cost of compensation accidents and the administration of the law itself. This
information we cannot give to any informative extent.”
56
WORKMEN’S COMPENSATION
preventive services in Wisconsin and New York has been notable.22 In
the circumstances, these jurisdictions have been able to provide rela
tively high benefits 23 to injured workers, at a cost which employers
have been able to bear.
W is c o n s in . — In 1917 the Wisconsin act provided:
S e c t io n 2394-3. Liability for the compensation hereinafter provided for
* * * shall exist against an employer for any personal injury accidentally
sustained by his employee, in those cases where the following conditions of com
pensation concur:
(1) Where at the time of the accident both the employer and employee are
subject to the provisions of sections 23 94 -3 to 2394-31, inclusive.
(2) Where at the time of the accident the employee is providing service growingout of and incidental to his employment.
Every employee going to and from his employment in the ordinary and usual
way, while on the premises of his employer, shall be deemed to be performing
service growing out of and incidental to his employment.
(3) Where the injury is proximately caused by accident and is not intentionally
self-inflicted.
This provision for the coverage of injuries was broadened in 1919,
by an amendment which specifically makes the definition of “ injury”
very inclusive:
S e c t io n 102.01. D efin itio n s. * * * Injury is mental or physical harm to
an employee caused by accident or disease.
Such a definition provides what is known as general or “ blanket”
coverage. The conditions of liability are set forth in section 102.03
of the Wisconsin statute, but this appendix to the definition of injury
is expository rather than restrictive. For example, compensation is
not paid unless the injury “is not intentionally self-inflicted” ; but, of
course, “ intentionally self-inflicted injuries” are outside the compen
sation plan because they are not industrial or work injuries.
A t the 1937 meeting of the International Association of Industrial
Accident Boards and Commissions, Harry A. Nelson, Director of the
Workmen’s Compensation Department, Industrial Commission of
Wisconsin, said:24 “ Our experience teaches that the administration of
disease provisions is fraught with no more difficulty than those cover
ing accidental injuries. * * * In its administration of occupa
tional-disease provisions the commission has never departed from the
regular routine and procedure utilized in accident cases, nor has the
commission ever seen the need for different procedure.” However,
the “ administrators must, first of all, be capable, and then must study
and inform themselves fully upon the subjects before them, if they are
to be competent for their task. They must combine at least a fair
22 See ch. 8 (pp. 132 et seq.).
23 Under a 1936 amendment in New York the benefits payable in case of the dust diseases are now lower
than those for other injuries.
24 U. S. Department of Labor, Division of Labor Standards Bull. No. 17, p. 54.
INJURIES AND DISEASES COVERED
57
knowledge of the elements of law, insurance, medicine, and of specific
compensation provisions.”
After the broadening of the coverage provision to include occupa
tional diseases, the Wisconsin commission called a conference, to which
medical experts and research men were invited. The commission
made a special study of the subjects of tuberculosis and silicosis.
Safety codes were formulated and preventive measures were instituted.
In consequence, it is expected that in the future silicosis will be
“ stamped out.” 26 Such a program contrasts strongly with the efforts,
in some jurisdictions, to keep down occupational-disease costs, in part,
by restrictive definitions of injuries covered or by leaving unprotected
workers who have been disabled by occupational diseases.
Types o f Occupational-Disease Legislation
Methods of Determining the Coverage
It has been noted that by broad interpretation the term “ injury”
in compensation acts includes “ disease,” and also that, from the point
of view of the Wisconsin compensation officers, there is no need for
setting up separate procedures for the administration of occupationaldisease provisions. In some compensation acts, however, the provi
sions relating to occupational disease are separate from those relating
to accidental injuries. As a rule, insurance carriers have advocated
separate provisions or even separate acts as a means of limiting the
coverage that is provided for occupational disease. It is therefore
necessary to consider the types of legislation upon this subject.
Under the original State workmen’s compensation laws occupational
diseases were not specifically covered, although the provision of com
pensation for “ a personal injury,” in the Massachusetts act, was held
broad enough to include diseases of occupation. In 1920 only seven
jurisdictions in the United States (California, Connecticut, Hawaii,
Massachusetts, North Dakata, Wisconsin, and the Federal Govern
ment) provided compensation for occupational diseases.26 The other
jurisdictions, in theory at least, excluded such injuries from coverage
(1) by limiting the scope of the law to injuries by “ accident” ; (2) by
adverse rulings of the courts and commissions; and (3) by express
provisions in the compensation acts. On July 1, 1939, some or all
occupational diseases were compensated by 30 State and Federal acts
and by 8 Canadian acts,27 under the forms of coverage known as
“ schedule” or “ general.”
25 Idem, p. 55.
26 U. S. Department, of Labor, Bureau of Labor Statistics Bull. No. 275, p. 51.
27 See Appendix 2 (p. 198). For the text of State legislation, see U. S. Bureau of Labor Statistics Bull. No.
652: Occupational-Disease Legislation. For a summary of the Canadian legislation see Canada, Depart
ment of Labor, Workmen’s Compensation in Canada, July 1939. Mimeographed.
215193°— 40------5
58
WORKMEN’S COMPENSATION
SCHEDULE COVERAGE AS OF JULY 1, 1939
List or schedule coverage was found in all the Provinces of Canada
having workmen’s compensation acts, and in 12 States,28 while in 3
additional States (Kentucky, Nebraska, and West Virginia), there was
special coverage limited to a few diseases contracted in specified
employments.
An example of a rudimentary form of list coverage is the provision
of the Kentucky statute (Sec. 4880) which compensates—
* * * Injuries or death due to inhalation in mines of noxious gases or smoke,
commonly known as “ bad air,” and also shall include the injuries or death due to
the inhalation of any kind of gas. * * * Any employers and their employees
engaged in the operation of glass-manufacturing plants, quarries, sand mines or in
the manufacture, treating, or handling of sand may, with respect to the disease of
silicosis caused by the inhalation of silica dust, in like manner voluntarily subject
themselves thereto as to such disease.
An example of coverage by definition and list is found in Delaware,
as follows:
S e c t io n 6114 (asamended 1937). * * * Compensable occupational diseases
shall not include any other than those scheduled below and shall include those so
scheduled only when the exposure stated in connection therewith has occured dur
ing the employment, and the disability has commenced within 5 months after the
termination of such exposure: [Listing 12 diseases, including anthrax, lead poison
ing, wood-alcohol poisoning, and chrome poisoning.]
An example of the schedule coverage of occupational disease by a
separate supplemental act is found in the Pennsylvania legislation of
1939.
The schedule is so broad, however, as virtually to amount to
general coverage.
GENERAL COVERAGE AS OF JULY 1, 1939
Under 15 acts29 there was general or blanket coverage. Such cover
age, as has been noted, may be by definition or by specific terms, or,
as in the case of Massachusetts, by court interpretation of the word
“ injury” as used in the compensation act. An example of general
coverage by a separate supplemental act is found in Illinois. Under
such an arrangement the benefits, as for example in cases of silicosis
or asbestosis, may be subject to more limitations than under the orig
inal compensation act, especially as to the provision for medical aid.
Moreover, as has been stated, nominally general coverage may be so
28 Arkansas, Delaware, Idaho, Maryland, Michigan, Minnesota, New Jersey, North Carolina, Pennsyl
vania, Rhode Island, Washington, and Puerto Rico. Of these jurisdictons Minnesota in 1936 listed 23
diseases, New Jersey 10, North Carolina 25, Rhode Island 31, and Puerto Rico 15; while New York, which
formerly compensated 27 specific diseases, retained the schedule in the legislation but amended the law in
1935 (ch. 254) to provide general coverage of “any and all occupational diseases.”
29 California, Connecticut, District of Columbia, Hawaii, Illinois, Indiana, Massachusetts, Missouri, New
York, North Dakota, Ohio, Wisconsin, Philippine Islands, Federal Employees’ Compensation Act, and
Longshoremen’s and Harbor Workers’ Compensation Act.
INJURIES AND DISEASES COVERED
59
circumscribed by conditions and undercut by “ waivers” as to defeat,
in part, the compensation program. Inasmuch as it has often been
assumed that it is sufficient to classify the coverage of occupational
disease as “ schedule,” on the one hand, and “ general” on the other,
it is important to keep in mind the differences within the types. Under
either form of coverage what is of chief concern is the actual degree of
protection afforded the worker. From the point of view of what
injured workers have actually received in benefits and protection, the
Wisconsin development of general coverage has been outstanding.
Impact o f Cost Estimates Upon Occupational-Disease Legislation
Fear of Excessive Cost
The desirability of occupational-disease coverage has been generally
recognized, in principle. The Fifth National Conference on Labor
Legislation recommended 30 that “ injury should be defined to include
occupational disease, and coverage for occupational disease should be
by general or ‘ blanket* coverage instead of under a ‘schedule*. ** Pro
posals for occupational-disease coverage have been submitted to legis
latures in many States during recent years. In opposition to such
proposals, especially where broad or general coverage was advocated,
statements have been made that the cost of such coverage would be
high or even unbearable by industry. In this connection it is of inter
est to note that after the change in Ohio in 1939 from schedule coverage
to the coverage of all occupational diseases, the occupational-disease
rate applicable to all classifications remained unchanged at 2 cents.
Various estimates by private insurance carriers and employers*
associations relating to the cost of extending the range of coverage have
necessarily been based mainly upon past experience. Where the result
of such experience has not been available in scientifically organized
form, the dependence has been upon conjecture or analogy. The esti
mates of the cost of occupational-disease coverage that have been
presented to legislatures have therefore ranged from bona fide actuarial
computations to broad guesses. An example of the arguments that
have usually been submitted in opposition to the general coverage of
occupational disease is found in the minority report of a legislative
committee of Maine in 1939.31 The majority report favored general
coverage, with dependence upon “ the tradition of competency in
Maine*s Industrial Accident Commission** 32 as an adequate safeguard
against abuse of the broad provision. The minority report, however,
arrived at the conclusion33 that although the occupational-disease
30 U. S. Department of Labor, Division of Labor Standards Bull. No. 25-A, p. 18 (1938).
31 Maine. Legislature. Recess Committee on Compensation for Occupational Diseases. Majority and
Minority Reports, Augusta, 1939.
32 Idem, p. 27.
33 Idem, pp. 52-54.
W O R K M E N ’S COMPENSATION
60
problem in Maine is a “ minor one” the general-coverage law would
“ drive industry from Maine.” Typical statements of conclusions are:
W e are confident that the occupational-disease problem in Maine is a minor one
as compared to other problems in the accident-prevention field. The records of
the vital statistics bureau, the department of labor and industry, and the industrial
accident commission indicate that Maine is practically free from occupational
diseases, a survey of an entire year, and over 17,000 accident reports showing but
0.07 percent of all cases being attributable to “ poisonous substances.”
* * *
It is our opinion, substantiated by abundant evidence, that an occupationaldisease law as recommended by the majority of the committee will drive industry
from Maine, afford Maine’s competitors distinct and considerable advantages
and will completely disrupt the smooth functioning of the industrial accident
commission. * * *
There is no doubt that the costs of compensation insurance will amount to
ridiculous proportions. Nor is there any doubt that the near-chaotic conditions
that have existed and now prevail elsewhere will result, to plague us here. * * *
W e are guided by experience elsewhere in our conclusion that a deluge of claims
for real or fancied injuries to health will result from the passage of such legislation,
and that Maine manufacturers will be called upon in some instances to pay for
ailments incurred in whole or part in other plants, States, and countries. * * *
W e therefore recommend that the occupational-disease legislation as proposed
by the majority of the Recess Committee to Study Occupational Diseases not be
adopted, and we further recommend that the search be continued that means may
be found whereby all interests may be protected without the imposition of crush
ing penalities on any group or groups.
“Depression” Background of High Estimates of Silicosis Cost
In explanation of such statements of the cost of silicosis coverage
as have often been made to legislatures by opponents of occupationaldisease coverage, one must bear in mind that from 1933 to 1938 the
newspapers and even the motion pictures directed public attention to
the widespread ravages of dust diseases and especially silicosis.
Under depression conditions, workmen— particularly those who were
unemployed— whose lungs had been impregnated with silica dust,
claimed compensation benefits or filed damage suits amounting in
the aggregate to many millions of dollars.
The rush to capitalize disabilities connected proximately or remotely
with dust diseases was in part legitimate and a beneficial exposure
of injurious working conditions. But to a considerable degree, since
silicosis is not disabling in its early stages, the claim situation from
1933 to 1938 was an understandable effort of distressed workers to
use workmen’s compensation as a substitute for unemployment insur
ance, health insurance, or old-age pensions, or to collect damages
for the wholesale dismissals which had been instigated by insurance
carriers.34 Moreover, the situation as to claims and damage suits
was aggravated by instances of large-scale commercial exploitation
of the nuisance value of litigation. As a rule, however, the actual
See appendix 1 (p. 186) .
INJURIES AND DISEASES COVERED
61
amounts collected were relatively small. The outcome was on the
whole beneficial, because the sensational publicity compelled many
jurisdictions which had ignored occupational-disease hazards and
coverage to study the problem and to inaugurate preventive measures.
Actual Silicosis Awards Under General Coverage
North Dakota.— In many States, the item in the occupationaldisease-coverage program that is viewed with greatest alarm is sili
cosis. In some States, however, the silicosis hazard is negligible. In
North Dakota, under the broadest general form of occupationaldisease coverage, it was said in 1936 by R. H. Walker, Chairman of
the Workmen’s Compensation Bureau, that “ there had been only
two cases that might be silicosis in 17 years, and both of these probably
were due to exposure outside the State.”
Wisconsin.— In some other States, under the existing situation,
silicosis has been the main item of occupational disease cost. The
Wisconsin experience was discussed by Harry A. Nelson, Director
of the Wisconsin Workmen’s Compensation Department, in a state
ment made to the 1937 convention of the International Association
of Industrial Accident Boards and Commissions, as follows: 35
In 17 years, since the passage of the disease provision, total payments of
compensation benefits in Wisconsin have amounted to $48,000,000. In the same
period $1,600,000 was paid because of occupational disease, or 2% percent of all
payments. Of the total payments for occupational diseases, over 95 percent were
for silicosis, which has proved the major item of occupational disease generally.
The Wisconsin experience is of outstanding importance because it
has shown that even where silicosis is the major item of occupationaldisease cost, and where the benefits paid are the highest to be found
in the States,36 the general coverage of occupational disease has been
proved to be practical. But Mr. Nelson said further:
Let it be carefully observed, however, that because of depression conditions,
and many other factors to be commented on later, a much larger amount per
year has undoubtedly been paid than will ever be paid in the future. This was
because of the factors of so-called accrued liability, and overliberality in settle
ment, because of lack of knowledge and early hysteria on the part of employers,
insurance carriers, and the industrial commission.
Actual Awards under Scheduled Coverage
North Carolina.— The occupational-disease amendment providing
for schedule coverage in North Carolina, enacted in March 1935,
has sometimes been cited as a model for consideration by other
States. Twenty-five listed occupational diseases are compensable,
subject to special provisions. From July 1, 1936, to July 1, 1937,
the compensation and medical cost in occupational-disease cases
36 U. S. Department of Labor, Division of Labor Standards Bull. No. 17, p. 53.
36 According to the comparison of benefits made by the National Council on Compensation Insurance,
the Wisconsin liberality of payment is rated at 1.145 as compared with 1.000 for New York. Seech. 5 (p. 80).
62
W O R K M E N ’S COMPENSATION
amounted to $12,280. This total included $6,000 compensation and
$145 medical cost in two silicosis cases. During the same period
approximately $1,500,000 was expended for compensation and medi
cal aid in approximately 40,400 claims.37 From July 1,1937, to July 1,
1938, the medical and compensation cost of occupational-disease cases
amounted to $4,615. This totalincluded silicosis cases which cost $465.38
In the face of actual costs of occupational-disease coverage which
have been so negligible, it appears that the main result of covering this
type of injuries has been the extension of the State’s program for
preventing occupational diseases.
Ohio.— The disbursements for occupational diseases in Ohio for
the 3 calendar years prior to 193939 have been as follows: 1936,
$149,569.54; 1937, $160,886.90; 1938, $161,408.56. No segregation
of occupational-disease cost has been made by diseases. The total
losses incurred for 1937 for all types of injuries were $21,350,784.
It appears that the occupational-disease cost under the Ohio plan
has been relatively negligible. Twenty-one occupational diseases
are listed. In addition, compensation is allowed for silicosis, but
subject to special conditions and limitations. In February 1939,
E. I. Evans, the actuary of the fund, said:
The Ohio Fund has a general occupational-disease premium rate of 2 cents
per $100 of pay roll. This is a flat rate applicable to all industries.
Prior to the inclusion of silicosis in the schedule of compensable occupational
diseases the rate was 1 cent per $100 of pay roll. The doubling of the rate does
not mean that the contemplated silicosis cost was equal to the combined cost
of all other diseases, in that the occupational-disease rate would have been
increased from 1 cent to 2 cents at a later date notwithstanding the inclusion
of silicosis.
Under date of December 13, 1938, the legal section reported that
of the 146 silicosis claims filed since the effective date of the amend
ment, July 31, 1937, 19 have been allowed by the commission:
A t the present time, judging from hearings thus far, the ratio is approximately
three claims disallowed to every one allowed. This ratio will probably become
narrower in the future since the main reason for disallowance of many of the
claims, namely, no exposure after July 31, 1937, will disappear as the time goes
Pennsylvania.— Silicosis awards in Pennsylvania during 1938, under
1937 legislation, were negligible in amount, but the situation in that
State as to silicosis cost was not clear because the 1937 statute was
involved in litigation.40 Some insurance officers say that the actual
37 North Carolina. Industrial Commission. Fifth Biennial Report, 1936-38. Raleigh, 1938, pp. 5, 14.
38 Idem, pp. 26-29.
39 In 1939 schedule coverage of occupational disease in Ohio was changed to general or blanket coverage.
i0 In the absence of available official reports, information regarding the amount of awards in claims for
disability or death resulting from silicosis during 1938 in Pennsylvania was sought from John A. Robb,
Director of the Bureau of Workmen’s Compensation, on January 11,1939. He said: “M y guess would be,
that not more than $40,000 was paid out for silicosis death cases in 1938."
63
INJURIES AND DISEASES COVERED
cost of occupational-disease claims under recent legislation cannot be
accurately estimated until several years after the effective date of
the statutes.
Limited Provision for Silicosis in New York
As has been noted, the schedule coverage of occupational diseases
in New York became, by process of amendment, in effect general or
“ blanket” coverage. But under the pressure of statements that the
cost of compensation for silicosis under the prevailing general coverage
would compel a number of employers to close their establishments
or have certain operations performed in other States, an amendment
was passed in 1936 limiting compensation payments and medical
benefits in silicosis and other dust-disease cases.
The New York experience under article 4 -A of the compensation
law, covering silicosis and other dust diseases, was stated on February
23, 1939, by J. M . Cahill, associate actuary of the Compensation
Insurance Rating Board, as follows:
T able
1 . — C o m p en sa tion Cost f o r S ilic o sis and Other D u st D isea ses in N e w Y o r k ,
1935-37
Policy year
1935 (second report)___ ________ _______________ _
1936 (first report)
_ _ __ ________ ___ _____ _
1937 (January-April p o l i c i e s ) ____________________
Total_______________________________________
Earned
premium
$37,066
397, 810
185, 942
620, 818
Incurred losses
Indemnity Medical
$5, 851
25, 950
12, 900
44, 701
$1, 417
7,151
1,850
10, 418
Total
$7, 268
33,101
14, 750
55,119
These figures were accompanied by the following qualifying state
ment:
It should be pointed out that certain additional losses have been incurred under
article 4 - A for classifications where a specific occupational-disease rate has not
been charged because there did not appear to be a serious exposure to a dustdisease hazard. The above losses do not include any employer’s liability losses
which may have been suffered during this period.
This loss experience is obviously immature. W e understand that additional
losses have been incurred which will be reported to the board when the experience
of these policy years is again compiled for submission to the board.
Furthermore, because of the accumulated liability which exists, the insurance
carriers are carrying substantial reserves to cover this accumulated liability for
occupational diseases. It is the general belief that the indications of the experience
to date are more or less meaningless and that the carriers should set aside the
difference between the loss provision in the occupational-disease premiums col
lected and the known incurred occupational-disease losses as a precautionary
reserve which will eventually emerge in future years.
From the figures cited it appears that workers disabled by silicosis
in New York have as yet received very little. The legislation, how-
64
W O R K M E N ’S COMPENSATION
ever, provides for a gradual increase in the amounts to be paid upon
future claims. The compensation provision, as stated in article 4 -A ,
section 66 of the law is as follows:
Compensation shall not be payable for partial disability due to silicosis or other
dust diseases. In the event of temporary or permanent total disability or death
from silicosis or other dust diseases, notwithstanding any other provision of this
chapter, compensation shall be payable under this article to employees in the
employments enumerated in section 3 of this chapter or to their dependents in
the following manner and amounts: If disablement or death ocicur during the .first
calendar month in which this act becomes effective not exceeding the sum of
$500; if disablement or death occur during the second calendar month after which
this act becomes effective not exceeding the sum of $550; therafter the total of
compensation and benefits payable for disability and death shall increase at the
rate of $50 each calendar month. The aggregate amount payable shall be deter
mined by the total amount payable in the month in which disablement or death
occurs. In no event shall such compensation exceed an aggregate total of $3,000.
Medical aid is restricted.
Section 68 provides:
Notwithstanding any other provisions of this chapter the medical treatment
herein provided for shall be limited in the case of an employee disabled by an
occupational disease due to or resulting from the inhalation of harmful dust to
a period of 90 days from the date of such disablement, but the requirement for
such medical treatment may be extended for an additional period not to exceed
90 days upon the order of the industrial board.
The New York Times protested editorially that such limitations
upon medical aid and compensation violate “ every fundamental prin
ciple of the compensation act.” 41 Bills have been introduced in the
legislature to remove the medical limitations and to increase the
amount of compensation payments.
M any private insurance carriers refused to accept the risk of sili
cosis coverage. In explanation of the situation as affecting the New
York State Insurance Fund, which carries the silicosis coverage,
Henry D . Sayer, deputy executive director, said in February 1939:
The rates charged for silicosis coverage were very high, because no accurate
forecast of the losses could be made, and because men were known to have been
employed in silica-dust exposures for many years and many of them might be
assumed medically to have acquired a degree of silicosis which, while not at the
moment wholly disabling, might become disabling at almost any time. As soon
as a safe reserve has been accumulated and data are assembled as to the actual
emergence of disabilities and claims, the rates will be adjusted.
In the State fund we have set apart risks having a dust hazard in special groups
for which a separate accounting is made. In these groups a considerable part of
the premium for occupational-disease coverage is set aside as a reserve to meet
the accruing liabilities which will emerge in future years in the form of claims.
Just how much these reserves should be and how long it will be before we can
discover a normal rate of emergence of occupational-disease claims, it is well-nigh
impossible to state at this time. By carrying these reserves in special accounts,
if future experience develops that the rates charged have been excessive or that
the reserves carried are too great, a fair proportion of the amount carried in reserve
will be returned to the members of the groups by way of dividends.
41 American Labor Legislation Review, December 1938, p. 172.
INJURIES AND DISEASES COVERED
65
Effect o f Preventive Measures
The experience cited has shown that, on the whole, the actual pay
ments for silicosis cases have been relatively small, and sometimes
almost negligible, except in the few instances where large payments
have been made under depression conditions or after the wholesale
dismissal of workmen at the instance of insurance carriers. Because
of the slow maturity of the dust diseases and the uncertainty as to
the extent of their prevalence, private insurance carriers have been
reluctant to insure the hazard even at high rates, and the fixing of
rates by the public competitive funds has been experimental.
There is, however, little uncertainty, in the light of experience in
Europe and America, with regard to the effect of the thorough appli
cation of preventive measures in curtailing the prevalence of silicosis
and other occupational diseases. Where such measures have been
taken, occupational-disease coverage ceases to be a costly burden,
because there are relatively few such injuries to compensate. For
example, the Ohio Health News 42 for June 1, 1935, citing Report of
the Miners’ Phthisis Medical Bureau of South Africa for the 3 Years
Ended 31st July, 1932 (p. 37), says that “ figures are presented, show
ing great decrease in silicosis with tuberculosis— a drop of 96 percent
in the case rate over a 14-year period— and, in fact, in 1 year, 1927-28,
no such disease was reported among the approximately 15,000 Euro
pean miners employed.” Dr. F. H. Lewy, under the topic “ First
Systematic Efforts of Introducing Industrial Hygiene in the Rubber
Industry,” 43 says that “ during the 10-year period preceding 1898,
there was a reported regression of 75 percent in general morbidity
and almost 86 percent in mental morbidity, among the rubber workers
at Leipzig.” Such hazards were in connection with a process not
used in the United States in the manufacture of rubber articles; but
the inauguration of an occupational-disease prevention program in
Pennsylvania disclosed the prevalence in that State of a similar type
of poisoning in the viscose-rayon industry, 30 years after the cause of
the injury had been recognized in Europe and in part controlled by
a preventive program.44
At the 1928 meeting of the International Association of Industrial
Accident Boards and Commissions, Dr. G. H. Gehrman said, in the
course of an address on How Chemistry Has Changed Industry, and
as a Result Has Changed the Tendency to Occupational Disease: 45
Our early days of handling these [poisonous] products taught the necessity of
introducing improved methods of manufacture, together with precautions in
handling, and these two factors have practically eliminated our difficulties.
42 Published by the Ohio State Departm ent of H ealth, at Columbus.
43 Pennsylvania Department of Labor and Industry. Survey of Carbon Disulphide and Hydrogen
Sulphide Hazards in the Viscose Rayon Industry. Harrisburg, 1938, p. 19. (Bulletin No. 46.)
44 See also p. 67.
45 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 485, pp. 125-129.
66
W O R K M E N ’S COMPENSATION
In February 1939, Dr. Gehrman supplemented this statement to
include 12 additional years of experience, as follows:
Since 1926 the Du Pont Co. has with medical supervision, careful methods of
handling, and rigid rules of operation been able to manufacture tetraethyl lead,
which is a potentially dangerous material, without a single case of lead intoxication.
In the early stages of the use of this product mixed with gasoline,
it will be remembered, there were many cases of illness and a few
fatalities. The impression was created at that time that the product
was “ so toxic in nature and so difficult to handle that the idea of fur
ther manufacture should be abandoned.”
The application to the problem of occupational-disease coverage
of what has been shown by such typical examples of the successful
use of preventive measures, has been epitomized by Gregory C.
Kelly, general manager of the Pennsylvania Compensation Rating
and Inspection Bureau, in the course of an interview as follows: “ I
take it that occupational disease will gradually disappear as the hazards
become known and are prevented.” He illustrated this statement by
showing the unexpected source of certain recent cases of poisoning,
and added: “ These poisonings occur in the industries where you do
not expect them, because employers in the industries where the poi
sonous substances have been used for some time have taken means
to overcome their harmful effect.”
Adm inistrative Program
In the plan for occupational-disease coverage, it has usually been
recognized that provision for preventive measures is no less impor
tant than the payment of benefits in case of injuries. In some juris
dictions the program of prevention of occupational disease has not
been developed as a distinct feature. Under recent legislation, how
ever, special units for research and inspection activity in the field of
industrial hygiene have been set up in many States.
The first step in a program of occupational-disease coverage, after
legal provision therefor has been made, is for the administrators to
study the subject thoroughly. This necessitates conferences with
experts, and often requires travel. In his account of the preparation
undertaken by the Wisconsin Commission, Harry A. Nelson, com
pensation director, explained 46 that the commissioners did not think
that because of such study “ they would be able to comprehend fully
the complicated ramifications of the medical phases involved, but
that they would comprehend the basic facts, and, above all, would
know to whom to turn as authority upon these subjects, with a view
to scientific determination of cause, condition, and extent of dis
ability.”
« U. S. Department of Labor, Division of Labor Standards Bull. No. 17, p. 54.
INJURIES AND DISEASES COVERED
67
The second step is to acquaint employers, workers, insurance car
riers, physicians, and the public with the requirements of the law and
the means of preventing injuries. In Pennsylvania, a year after the
effective date of the broadened occupational-disease coverage under
the 1937 legislation, a significant conference on the control of occu
pational disease was held. This conference was followed by a series
of smaller conferences, in which the more specific problems pertaining
to the individual types of occupational-disease hazards were discussed.
A special investigation of certain hazards was made, with the co
operation of specialists from other States, from universities, and the
Federal Government.
An adequate program necessitates the preparation and adoption of
safety codes and the organization of inspection activities. In de
scribing the Wisconsin practice, Mr. Nelson says that commissions
“ should not wait for cases to arise before making their studies. ” 47
An account of the swift action of the New York Division of Indus
trial Hygiene in mobilizing its own resources and those of other agen
cies to prevent widespread injury or death from the use of a harmful
new process in the printing industry is given in chapter 6 (p. 106).
An outstanding example of an analysis and report on health hazards
in a particular industry, sponsored by a State workmen’s compensa
tion administration, is the Survey of Carbon Disulphide and Hydrogen
Sulphide Hazards in the Viscose Rayon Industry in Pennsylvania in
1938.48 In that investigation, chemists, engineers, medical consult
ants, and governmental officials cooperated in analyzing the hazards
and in framing preventive measures. An account of the operation of
a State division of industrial hygiene is found in the New York De
partment of Labor Industrial Bulletin for October 1938 (pp. 466-470).
Obsolescence o f Schedule Coverage
The schedule plan of covering occupational disease has often been
criticized as arbitrary and unfair.49 The jurisdictions originally
providing this form of coverage copied or adapted the practice of
continental European countries and England. Such a method is
vitiated by gaps in the schedule due to poor and incomplete selection
of items in the list and also to the emergence of new processes the
hazards of which are not recognized until after workers have been
injured, whereas it has been recognized by commissions that they
should not wait until after claims are filed before undertaking research
and inspections to discover hazards. Industrial processes change and
47 Idem., p. 56.
48 Pennsylvania. Department of Labor and Industry Bull. No. 46.
49 For a recent discussion of the merits and demerits of schedule coverage, see Maine, Legislature, Recess
Committee on Compensation for Occupational Diseases, Majority and Minority Reports, Augusta, 1939.
68
WORKMEN’S COMPENSATION
the knowledge of disease hazards is rapidly expanding. A revision
made 10 years after the first publication of a printed guide to impair
ments that may occur in various occupations increased the number of
poisonous substances considered from 52 to 94. The number of
hazardous occupations listed was increased to approximately 900.50
Manifestly, the public welfare is advanced by a program for the
prevention of all occupational-disease hazards. Under effective
programs of prevention there is a dwindling of the number of injuries
that come from former recognized sources, and a relatively greater
percentage of cases that come from sources where such hazards had
not been expected. Under the type of occupational-disease schedule
which restricts the worker’s right to benefits to the injuries sustained
in connection with certain specified operations or processes, it is
apparent that a certain number of workers who have unquestionably
sustained occupational injuries are unable to recover benefits. It is
apparent that broad coverage for occupational disease has stimulated
research and preventive activities, through necessitating closer atten
tion to the reporting of occupational-disease cases and the control
of costs by medical and engineering activities. Only after the enact
ment of broad provision for occupational-disease coverage have pre
ventive activities been launched on a wide scale. In the case of
fairly comprehensive schedules, so few injuries are omitted from cov
erage that there is no economic justification for a complicated limited
form of coverage in the place of general coverage.
It is significant that the old schedule or list arrangement for limited
occupational-disease coverage has been challenged in Europe by those
best qualified to pass upon the situation— representatives of the pro
fession of industrial medicine. The Thirteenth Italian Congress of
Industrial Medicine, in September 1938, passed a resolution51 calling
for “ the abolition of the system of schedule and the introduction of
blanket coverage for occupational diseases, which would constitute
the final stage in the development of insurance against occupational
accidents and diseases; and asking that, pending this, the system of
enumeration of diseases and the list of trades and processes should
be abolished.”
In this connection it is of interest to note that New York, in 1935,
and Ohio, in 1939, expanded the existing schedule coverage to general
or blanket coverage. Moreover, the Ohio amendment of May 1939
removed the provisions limiting the scale of benefits for silicosis, and
permits benefits as for disability or death due to accidents.
so The number shown in the earlier edition was not stated. U. S. Department of Labor, Bureau of Labor
Statistics Bull. No. 582: Occupation Hazards and Diagnostic Signs. Washington, 1933, p. vi.
w International Labor Office. Industrial and Labor Information. Geneva, Oct. 10, 1938, p. 41.
INJURIES AND DISEASES COVERED
69
Desirability o f Governm ent A id to Facilitate OccupationaLDisease
Coverage
Under legislation enacted in 1937 (Act No. 552, sec. 7-a) an interest
ing experiment in financing the coverage especially of dust-disease
injuries is being tried in Pennsylvania. A legislative appropriation
has been provided, out of which, together with assets of the “ secondinjury fund,” the accrued liability is to be paid. Under the arrange
ment, during an initial period of 10 years a percentage, decreasing
year by year, of the compensation for such diseases as may be deter
mined to develop disability only after long exposure is to be paid out
of the “ second injury reserve account in the State workmen’s compen
sation fund.”
In 1935 the American Federation of Labor requested Federal
grants-in-aid to match appropriations for the conduct of State-pooled
funds for workmen’s compensation to cover occupational accidents
or diseases.52
The report of the economic, legal, and insurance committee of the
National Silicosis Conference, submitted February 3, 1937, favors
Government aid as a necessary means of satisfactorily meeting the
problem of accrued silicosis liability.53
The lack of Nation-wide coverage of occupational disease has been
an obstacle to advanced legislation on this subject in the various
jurisdictions. In the case of accident coverage, the States with high
benefit scales are, of course, at a disadvantage in competing with lowbenefit States, so far as this one element of production co st is con
cerned. In regard to an occupational disease such as silicosis, however,
there is a further consideration. Victims of this slow-maturing disease
at times move out of jurisdictions which have no compensation
coverage for such disabilities. States having or planning silicosis
coverage fear that they may be made the dumping-ground for the
accrued silicosis liability of such jurisdictions as Vermont and New
Hampshire, important quarrying regions, which give no compensation
for disability from dust diseases. The unprotected condition of work
ers in the jurisdictions that are less advanced in occupational-disease
coverage becomes, therefore, a Nation-wide instead of a local problem.
This phase of the dust-disease situation warrants action on the part
of the Federal Government to encourage the study and control of
the hazard in all jurisdictions.
52 American Federation of Labor. Report of Proceedings of Fifty-fifth Annual Convention. The pro
gram for compensation legislation to cover occupational diseases is reproduced in IT. S. Department of Labor,
Division of Labor Standards Bull. No. 13, p. 43.
63 U. S. Department of Labor, Division of Labor Standards Bull. No. 13, p. 35.
70
WORKMEN’S COMPENSATION
Canadian Arrangement for Carrying “ Accrued Liability”
Silicosis Cases
in
Canadian workmen’s compensation funds which have extended
coverage to include silicosis have been able to assume the “ accrued
liability” by including the cost in the insurance rate and spreading
the expected increase over a period of 10 years. In private insurance
States this could not be done, since no employer can be required to
contract with one insurance company for a sufficient period of time
to enable the carrier to recoup gradually the expense incurred for old
occupational-disease liabilities.
An account of the Ontario experience with the coverage of silicosis
is found in the proceedings of the 1936 meeting of the International
Association of Industrial Accident Boards and Commissions.54 Com
pensation for silicosis is at the same rate as for accidental injuries.
The conclusion from 19 years’ experience of the Workmen’s Compen
sation Board of Ontario with silicosis is that “ if industry will realize
the importance of the condition, and, without becoming panicky, will
exert all of its efforts” in discovering and applying the best preventive
measures, “ there is reasonable hope that the condition will be so far
reduced as to be a matter of only moderate peril to the workman and
of no serious danger” even to the industries in which the silicosis
hazard has been greatest.
64 U. S. Department of Labor, Division of Labor Standards Bull. No. 10, pp. 164-170.
Chapter 5.— Adequacy of Benefit Payments1
Experimental Origin and Development o f the Benefit System
The benefit scale has been called the heart of the compensation
system. Upon its adequacy rests the injured worker’s chance for
decent maintenance during helplessness and the protection of his
dependent family from destitution or a lowered living standard.
The benefit provisions of the early compensation laws were experi
mental. They were made in the face of predictions that the cost of
the new system of caring for injured workers would be overwhelming.
Although the advocates of compensation statutes were convinced
that the estimates of cost announced by opponents of workmen’s
compensation were much exaggerated, such statements had influence
with legislatures. In consequence, the early benefit scales were not
only low but the laws were sometimes without such features as medi
cal aid, considered indispensable in the present statutes.
The low scale of benefits and the technical devices for reducing
cost resulted from compromise between conflicting interests rather
than from the application of rational principles to the benefit pro
visions. Subsequent changes have come in part through a compre
hensive and intelligent development of the system and in part through
alteration of one item or another regardless of its relation to the
statute as a whole.
In the present examination of the benefit systems, attention is
given to features that have caused particular hardship to workers or
their dependents. The details of the provisions for payment are be
wildering unless they are seen in relation to the main lines of growth
in the compensation systems. Although excessive variations in the
benefit provisions still persist, the practices relating to payment have
in some jurisdictions been broadened.
The situation of the injured worker under the compensation statutes
is beyond question much better than it was under the common law
and the employer’s liability acts, but in many cases the benefits obtain
able have been too low for subsistence, and the injured worker has
at times become dependent upon private charity or public relief.
The incalculable aid furnished by the compensation system cannot
hide the fact that in a number of States many injured workers would
starve if society left them to depend entirely upon the compensation
they receive. The insufficient attention given to this situation may
arise from the defenseless condition of the lowest-paid or intermittently
i This chapter was published as an article in the Monthly Labor Review, September 1938, p. 463.
71
WORKMEN’S COMPENSATION
72
employed workers, who have in some instances received as compen
sation less than a dollar a week. How this could happen, even under
a seemingly liberal compensation act, is shown herein by explanations
and illustrations of principles and practices relating to payments.
Factors Determining the Compensation A ctually Received
Varying Applications of the Wage Base for Payment
In many jurisdictions the experience of injured workers, especially
during periods of part-time or intermittent employment, has com
pelled restudy of the wage base for the computing of compensation
payments. In jurisdictions which have not adopted a full-time wage
base, this feature in arriving at the amount of payment has been the
chief cause of complaint from workers in recent years.
Except in a few jurisdictions which pay fixed sums or pensions, the
scale of compensation is based upon a percentage of the worker’s
earnings. Insurance premiums also are based on wages. In most
jurisdictions the first step in determining the amount of compensation
is to find out what wages the worker received. At this point confused
and varied practices are found. In the first place, the amount paid
the worker may not be correctly reported, and the administrations
are faced with the problem of devising and enforcing satisfactory
reporting by those obligated to furnish information. The next step
is to determine, under the provisions of the law, whether compensa
tion is to be calculated upon full-time or part-time wages, normal or
abnormal. It is apparent that if compensation is based upon parttime earnings, especially if wages are low, the compensation received
by some workers will be insufficient for their subsistence. Workers
have challenged such an application of the compensation-insurance
principle. Administrators have been divided in their attitude.
Arguments for and against the use of a part-time wage base for
compensation payments were given at the 1932 meeting of the Inter
national Association of Industrial Accident Boards and Commissions,
an organization of compensation officers of the United States and
Canada.2 On the one hand, it was asserted that insurance carriers
could not maintain satisfactory reserves for payment of compensation
overlong periods, if payments to injured workers were based upon full
time employment while the carriers collected premiums on pay rolls
based on part-time employment. On the other hand, it was main
tained that the cost to the insurer should be rated according to the
amount of exposure to the hazard of injury, and that the part-time
worker is an insurance risk only during the time he works. Under
this interpretation the worker would be entitled to compensation
2 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 577, pp. 61-85: Ascertainment of
Average Weekly Wage, by Walter O. Stack, and discussion following.
ADEQUACY OF BENEFIT PAYMENTS
73
upon a full-time wage base even if he had been employed for but a few
hours before his injury.
Distress resulting from the use of the part-time wage base, especially
during the period 1930-35 when wages were low and employment was
intermittent, led in some jurisdictions to radical changes in the admin
istrative practice, in the law, or in its interpretation by the courts.
Outstanding instances of reversals by administrations or courts of the
prevailing rule of interpretation, by setting up full-time instead of
actual wages as the base for computing compensation, occurred in
Minnesota and Pennsylvania.
In a Pennsylvania case 57 cents per week had been awarded as com
pensation to a totally disabled skilled worker. Under a changed
interpretation of the wage base, this worker was paid $15 a week.3
In 1937 an amended Pennsylvania act (sec. 306a) put a substan
tial floor under compensation awards in total disability cases, by the
provision of an absolute minimum4 of $12 a week regardless of the
wages earned. In a number of Canadian Provinces the emergency
was met by the exercise of administrative discretion, and the work
men’s compensation boards fixed a “ subsistence” minimum below
which payments might not fall.
The Third National Conference on Labor Legislation (1936) rec
ommended, as the wage base for computing compensation, a normal
full-time week. With such a provision in the compensation statute,
reinforced by the fixing of a “ subsistence level” below which pay
ments may not fall, it would appear that a percentage-of-wage basis
for compensation is preferable to the designation of fixed sums, as in
the Washington and Wyoming acts— a method too inflexible to reflect
changes in wage scales and living costs.
In addition to the wage base used and the percentage of the wage
that is allowed, the usual factors determining the amount of compensa
tion are the limitations upon weekly and total payments and the pe
riods during which payments are made. Such limits vary widely in
the jurisdictions. At one point or another the limits upon the amount
of compensation are changed at almost every session of the legisla
tures. The exact situation as to benefits in the States, as of any given
year, is shown by periodic or occasional publications of the United
States Bureau of Labor Statistics.5 Information regarding the scale of
compensation in the Provinces of Canada has been published annu-
3 U. S. Department of Labor, Division of Labor Standards Bull. No. 2: Discussion of Industrial Acci
dents. 1934 convention of the International Association of Industrial Accident Boards and Commis
sions. Washington, 1935, p. 193.
4 In many jurisdictions the minimum is not absolute, but is qualified by the clause “unless the wages are
less,” in which case compensation would be the full amount of wages. As interpreted, such a provision
sometimes yielded only nominal compensation to intermittently employed workers.
6 A biennial analysis is given in the Handbook of Labor Statistics, the 1936 edition of which is Bureau of
Labor Statistics Bull. No. 616. Reprints of the information on workmen’s compensation are available in
pamphlet form. Analyses of legislative changes in benefits also appear in the Monthly Labor Review from
time to time.
215193°— 40------6
WORKMEN’S COMPENSATION
74
ally in a mimeographed pamphlet by the Dominion Department of
Labor (Ottawa). A current analysis of workmen’s compensation in
the United States is given in appendix 2 (p. 192), to which reference
is made for tabulations of benefit provisions.
Broadening Application of the Benefit System
Marked differences are observed not only in the determination of
the wages upon which payments are computed, but also in the scope
and application of the benefit schemes. In a comparison of the com
pensation acts in 1920, Carl Hookstadt said:
The necessity for a workable law, not excessively burdensome to the employer
and not conducive to malingering, while affording such reasonable benefits to the
injured workman as to prevent hardship to himself and family, has led to a wide
variety of attempts to determine the proper amount to be awarded. * * *
No 2 of the 45 States have identical compensation provisions, and few States
seem to have followed any definite theory in this respect. Nevertheless, two
factors have operated in determining the amount of compensation provided in the
various State laws: (1) Loss of earning capacity, and (2) social need.
(U. S.
Department of Labor, Bureau of Labor Statistics Bull. No. 275, pp. 59, 60.)
To the two factors observed in 1920 others have been added in the
subsequent development of compensation laws. Mr. Hookstadt main
tained that in estimating the loss suffered by an injured worker, he
should be looked upon as a human being subject to impaired enjoy
ment of life as well as loss of earning power. For example, a worker
who has lost an arm or suffered a serious disfigurement is not restored
to the same status he was in before the accident, even if he is reem
ployed at the same wage as before. For the rest of his life he suffers
inconvenience or humiliation because of the lack of an arm or his bad
appearance. To a limited extent this is recognized in some of the
acts. In case of disfigurement, for example, in several jurisdictions
the worker is now given additional compensation for what the courts
have referred to as impairment of life, over and above what is paid
for wage loss. Another development found in some States is the use
of increased or decreased payments to penalize unsafe practices on
the part of the employer or the injured worker. In a few States addi
tional payments are made for the maintenance of workers under
going rehabilitation.
In the administration of the benefit provisions, increasing empha
sis has been placed upon the bodily or the economic restoration of
injured workers, and such a consideration in many instances now
affects either the form or the amount of payment. In short, in the
jurisdictions where the greatest development is found, the benefit
systems are used in part to reinforce accident prevention, rehabili
tation, and the laws safeguarding the employment of minors. In
such developments what may be termed the “ humanizing” of work
men’s compensation is seen.
ADEQUACY OF BENEFIT PAYMENTS
75
Operation of Factors Determining Payment, as Observed in the Provision
for Disfigurement
Although payment for disfigurements is a minor feature of the
benefit systems, analysis of the laws and experience at this point
provides a good approach for observing both the variety and the
development of the compensation provisions. There is extreme vari
ation in the maximum amount of compensation allowed for disfigure
ments, but no general comparison can be made because the principle
underlying the payment in one jurisdiction may be different from
that in another. Examples are:
Colorado: Amount not to exceed $500 “ in addition to all other
compensation benefits.’ ’
Oklahoma: “ Not in excess of $3,000 * * * not in addition to
the other compensation provided for.”
Texas: For “ any disfigurement which will impair the future use
fulness or occupational opportunities of the injured employee, com
pensation shall be determined according to the percentage of inca
pacity, taking into account among other things * * * the nature
of the disfigurement, the occupation of the injured employee, and the
age at the time of injury * * *. Not to exceed $20 a week,
multiplied by the percentage of incapacity caused by the injury for
such period not exceeding 300 weeks.”
New Brunswick: The amount allowed for disfigurement is entirely
within the discretion of the compensation board, “ proportioned upon
the diminution of earning capacity and the degree of disfigurement,
but not exceeding in any case $2,500.”
Change in legal th eory u n d erlyin g the p a y m e n t .— There is variation
not only in the amount of compensation for disfigurements but also
in the type of injury for which compensation is allowed. Usually,
only injuries to the face or head are listed as compensable; some
times injuries to the neck or hands are included. For example, in
South Carolina bodily disfigurement is included; in New York,
“ serious facial or head disfigurement” is compensated, and also some
neck injuries.6 In New York, the payment for disfigurement of face
or head may be awarded in addition to compensation for disability
or loss of earnings, but in case of the other disfigurements mentioned,
payment is made only if “ the earning capacity of employee has been
or may in the future be impaired.”
In court decisions upon compensation awarded in New York for
disfigurements, where the payment had no relation to earning capac
ity, the broadening of the basis of compensation to include “ any
substantial physical impairment attributable to the injury, whether
6 Part of the New York provision is framed in words too difficult for the average reader to understand.
Compensation for neck disfigurement is limited to “any serious disfigurement in the region above the sterno
clavicular articulations anterior to and including the region of the sterno cleido mastoid muscles on either
side” (New York Workmen’s Compensation Law, sec, 15, subd. 3, par. t).
76
WORKMEN’S COMPENSATION
it immediately affects earning capacity or n o t /’ was held to be
constitutional.7
This transition from the narrow legal basis of early legislation to
the broad principle found in some of the later amendments is of vital
importance in the development of workmen’s compensation and has
had marked effects upon the administrative attitude. In the hands of
an alert administrator, benefit payments based upon “ any substan
tial impairment” are a means of obtaining the kind of medical care of
the injured worker that restores, as completely as possible, both
function and appearance.
V a r y in g a p p lica tion s o f the benefit p r o v is io n .— The experience of
disfigured workers in jurisdictions where no payment is made for
such an injury unless it results in wage loss is somewhat as follows:
A coal miner whose face is shattered receives no compensation
except for temporary disability, but an actor suffering such an injury
might be paid for permanent total disability if his unsightly appear
ance kept him from finding another job. But if, by good fortune,
the actor found other employment paying him the same wages he
had earned before the injury, he might thereafter either receive no
compensation, or payment based upon an estimate of probable future
wage loss, according to differences of interpretation in the jurisdic
tions. Under this theory the worker is looked upon, for compensa
tion purposes, as a robot or animated machine in need of repair for
continued work instead of a human being subject to serious impair
ments other than those registered in wage loss. In some cases the
medical care of the injury might end with restoring function, without
regard to the worker’s appearance, and the compensation commission
would lack power to demand more complete surgical attention.
The experience of a disfigured worker under the more advanced
legislation, in the course of an informal hearing conducted at San
Francisco in 1935 by Warren H. PilJsbury, Deputy Commissioner,
United States Employees’ Compensation Commission, may serve as
a vital cross section showing problems encountered in the application
of benefit provisions:
At the time a longshoreman was injured a jar of acid broke and some of it
splashed on his face. The insurance company paid the worker compensation for
temporary disability, and he signed a final settlement receipt. The deputy com
missioner, in checking upon the settlement, inferred from the report of the accident
that a facial disfigurement might have occurred, for which the worker would be
entitled to additional compensation under the Longshoremen’s Act. He com-
7 See especially New York Central R. R. Co. v. Bianc (250 TJ. S. 596). The appellant argued that “it is
of no public concern whether the claimant shall or shall not receive a further award for impairment of good
looks not in any wise related to earning power” and that “only impairment of earning power justifies com
pulsory payment of workmen’s compensation for disability or fatal injuries inflicted withour fault.” In
support of the earlier narrow construction of workmen’s compensation, Ball v. William Hunt & Sons, Ltd.
(1912), App. Cas. 496, was cited: “The theory and datum upon which such compensation proceeds is that
of compensation for injury to the worker as a wage earner.”
ADEQUACY OE BENEFIT PAYMENTS
77
municated with the worker, who said that his face was scarred. An informal
hearing was then arranged, at which the worker and the insurance adjuster
appeared. The deputy commissioner reminded the insurance adjuster that he
had not mentioned the disfigurement in his settlement with the worker, and
asked him to make arrangements for an operation to clear up the scar. The
worker then said he did not want an operation, that the scar did not bother him,
and that instead of an operation he would like to have some money. The deputy
commissioner replied that the purpose of the compensation act was to relieve the
consequences of an injury rather than to pay for injuries that could be cured;
that if he received the cash it would soon be spent, but that he would have to live
with his scarred face for the rest of a lifetime.
Meanwhile, from an adjoining
room, the insurance adjuster had telephoned a surgeon and learned that the cost
of an operation in this case would be $250. The adjuster so reported to the deputy
commissioner and agreed to take care of this expense, and also to pay the worker
for the additional time lost in connection with completing the cure. The worker
refused the operation, and again asked for money. The deputy commissioner
replied that since the scar meant so little to the worker himself, he would award
only $150 in cash, and reminded the worker that the insurance company was will
ing to spend $300 if necessary for surgical attention and payment for lost time.
Once more the worker refused the alternative, and said that he would be glad to
get the $150.
It is apparent that, in applying the benefit provision in this case,
the administrator was handicapped by the lack of a clause in the act
requiring that, if practical, disfigurements shall be reduced by medical
treatment before they are rated for compensation payments. Under
such an arrangement the worker would have had no financial induce
ment for refusing medical aid.
Certain types of injury may be exaggerated deliberately or by neg
lect, and there are occasional instances of such abuses. Proved instan
ces of self-injury, to collect compensation, are very rare. Because one
obstacle to broadening the benefit scale has been the fear of malinger
ing, it is apparent that the permanent improvement of the benefit
system, in law and application, is safeguarded by linking the scheme of
payments to the most complete possible restoration of the worker as
a chief aim of administration. In some jurisdictions there has been
notable progress in this direction both through medical aid and voca
tional rehabilitation, but as a rule the development is at a half way
stage.
Increasing D iversity in the Benefit Systems
The continuing diversity in benefit provisions was deplored by
Donald D. Garcelon, Chairman of the Maine Industrial Accident
Commission, at the 1936 meeting of the International Association of
Industrial Accident Boards and Commissions:
Not only do the individual States vary greatly in the amount of benefits paid
for similar losses, but their entire systems of such compensation, including other
factors, in many cases differ widely. In fact, the amounts paid for the losses of
certain members in each State often bear no consistent relationship at all to the
amounts paid for the losses of other members, nor are they in proportion to the
78
WORKMEN'S COMPENSATION
value of the body as a whole. The various systems of such compensation in the
United States, or lack of system, have been characterized as a veritable crazy
quilt. The schedules themselves have been declared over and over again, by
commissioners and other competent authorities, as haphazard, unscientific— even
as absurdities (U. S. Department of Labor, Division of Labor Standards Bull.
No. 10, p. 78).
The details of rating schemes and the schedules for compensating
permanent disabilities are found in the proceedings of meetings of the
International Association of Industrial Accident Boards and Com
missions, to which reference is made.8
Disadvantages of the prevailing interstate diversity in the scale of
compensation include (1) the bewilderment of workers who find, when
moving from one State to another, different practices in the payment
for injuries; and (2) because of the operation of interstate competition,
the retarding effect of low benefit scales in some areas upon programs
for securing liberal scales elsewhere.
There has been a continuing demand for exact and detailed informa
tion upon differences in the scales of payment in the various jurisdic
tions. But comparisons and tabulations of benefit systems, in other
than a broad and general way, are subject to many qualifications and
at some points fail to reflect the exact situation. Because the varia
tions occur not only in the percentages and items but in underlying
principles and administrative applications, it is difficult to find a com
mon yardstick by which the benefits of the systems can be measured
for the purpose of comparison. Until more uniform bases and admin
istrative practices are adopted, the difficulty of making comparisons
will persist.
Comparison o f Benefits Made by National Council on
Compensation Insurance
The National Council on Compensation Insurance prepares each
year for its member companies a “ Table of Comparative Benefits,
showing the approximate relative values of the benefit provisions of
the various compensation acts as near as can be estimated.” The
letter of transmittal notes, however, that—
The index numbers shown are subject to qualification and limitiation because
of the many elements entering into the computations which are not subject to
exact mathematical valuation. In addition, the index of cost under the “ Total”
column is a weighted average and is correct in a general way only. The distribu
tion of accidents by type of injury varies between States and will, therefore, be
somewhat different in each case from the national distribution or from the dis
tribution of any other set of weights which might be used to obtain an average.
For these reasons the index numbers of this table cannot be interpreted as repre
senting without qualification a mathematically exact comparison of the benefit
8 See especially U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 511 (p. 291), and U. S.
Department of Labor, Division of Labor Standards Bulls. No. 4 (p. 46) and No. 17 (p. 78).
ADEQUACY OF BENEFIT PAYMENTS
79
provisions of the various compensation acts. Accordingly, when using this table
or quoting therefrom, it is essential to realize its limitations.
Subject to these qualifications, the table for 1938 (reproduced
below) shows variations in the scale of total benefits, as compared with
an index of 1.000 for New York as the base, ranging from 0.578 for
Vermont to 1.145 for Wisconsin. Much greater variations are found
in the comparative liberality of payment for the different types of
injuries; as, for example, for permanent total disability, 0.178 in South
Dakota compared with 1.000 for New York and 1.073 for Wisconsin.
T able
2 . — C om p a ra tive B enefit C ost o f V a r io u s W o r k m e n ’ s C o m p en sa tio n I j a w s 1
State
Fatal
Perma
nent
total
Permanent
partial
Major2 Minor3
Medi
Benefits
Tempo cal
and Total pro
rary hospi
benefits
vided
in
total tal
law of—
New York_________ _____ _ __ 1.000 1.000 1.000 1.000 1.000 1.000 1.000 9- 1-37
Alabama________________________ .424 .322 .553 .750 .795 .912 .741 5- 1-36
Alaska __ __
_ _
.947 . 500 .984 .805 1. 255
1. 004 6-10-37
Arizona___ _ ___ __ ____ ____ 1.089 .897 .773 .867 1.232 .957 .994 6-26-33
California... ________ ... ____
.498 .576 .642 .736 .912 1.000 .820 8-27-37
Colorado________________________ .453 .644 .587 .397 .577 .957 .669 8-13-37
Connecticut.___________________ .498 .339 .795 .737 .779 1.000 .807 7- 1-37
Delaware. _ .. . ___ _
.339 .226 .481 .587 .736 .802 .642 5-19-37
.772 .414 1.016 1.013 .974 1.000 .960 5-26-34
District of Columbia___ ____
Florida_____________ ____ _ _ .487 .244 .592 .751 .886 .994 .798 7- 1-37
Georgia______ __ ____ _____
.393 .242 .506 .683 .704 .969 .717 3-30-37
H a w a ii..____. . . ____ ________
.459 .244 .760 .782 .826 1.000 .813 &- 3-37
Idaho__________________________
.553 .515 .650 .653 .799 1.000 .784 5- 6-37
.542 .568 .643 .852 .803 1.000 .820 7-13-37
Illinois.___________ ____ ...
Indiana_________ _____________ .498 .289 .666 .777 .754 .957 .775 6- 7-37
Iowa.. . . . . _____ . . . . ... .501 .292 .523 .550 .645 .994 .709 7- 4-37
K ansas__________ _____ ___
.496 .321 .626 .764 .807 .969 .785 5-15-35
Kentucky________ ___________ _ .495 .305 .455 .578 .856 .957 .734 4-16-37
Louisiana____ _____________ __ .438 .339 .583 .644 .925 .944 .770 8- 1-34
M aine... ______ _____ _ __ .481 .327 .785 1. 220 .886 .784 .823 7- 3-31
Maryland __ __ ______ ___ _ .608 .343 .683 .741 1.095 .969 .861 6- 1-37
Massachusetts._ _____ _ _____
.614 .769 .664 .555 1. 046 .994 .836 8-27-37
Michigan______________________
.579 .400 .575 .759 .912 .957 .808 11-10-37
Minnesota_________
.754 .511 .868 .913 .984 1.000 .926 7- 1-37
Missouri___ __ _______
.617 .540 .659 .920 1.127 .944 .892 9-14-31
Montana__________ ________ __ .628 .359 .524 .444 .837 .963 .744 3-16-37
Nebraska______________________
.562 .594 .716 .787 .833 1.000 .830 8-14-37
Nevada______________ ... _
.919 .703 .622 .722 1.166 .988 .917 4- 3-35
New Hampshire . . . ____ ___ __ .498 .210 .436 .288 .909 .877 .666 7-15-37
New Jersey__ . _ __ _______
.506 .882 .735 .956 .944 .877 .836 6- 3-37
New Mexico. _____ __ _
.467 .411 .601 .524 .827 .957 .738 6-12-37
North Carolina ___ ______
.793 .294 .633 .805 .885 .988 .855 4-24-35
North Dakota... _ _ _______ __ .998 .664 .813 .715 1.169 1.000 .962 7- 1-35
Ohio___________________________ .720 .856 .763 .832 .878 .938 .855 8-18-37
Oklahoma____ ... _ ___ ...
4.576 .418 .745 .856 .956 .938 .846 8-10-37
1 Examples of use of table: The figures on total benefits for Georgia and New York are 0.717 and 1.000
respectively. This indicates that, on the basis of this table, the ratio of Georgia benefits to New York
717
717
benefits for all kinds of injury is ——
lUOU or that Georgia benefits average lOUU: of the New York benefits. The
figures on permanent total disability for Colorado and Montana are 0.644 and 0.359, respectively. This
indicates that on the average, and on the basis of this table, the Montana benefits for permanent total
disability a r e359
^ of the corresponding Colorado benefits.
2 Defined as the loss or loss of use of a hand, arm, foot, leg, or eye and the loss of hearing in both ears. Also
partial loss of use is related to the benefits for total loss of use.
3 Defined as loss or loss of use of thumb, finger, toes, etc.
4 A figure based on actual experience has been substituted for the Oklahoma fatal value. This departure
was necessary because of peculiarities in the law.
80
T
able
.
2—
WORKMEN’S COMPENSATION
C om p a ra tive B en efit C ost o f V a r io u s W o r k m e n ’ s C om p en sa tion L a w s —
Continued
State
Fatal
Oregon. __
_
_ __ __ 0. 852
Pennsylvania... _ . _ _ _______ 1.004
Puerto Rico. _ .
__ . .378
Rhode Island.. __ . _ ___
. .686
.794
South Carolina______________
South Dakota.
_ _ . ... .378
T ennessee.___ ___ _ . ------- .420
.638
Texas___ . . . ... ____ ..
United States Longshoremen’s Act. .772
Utah________ ... _____________ .624
.320
Vermont.. _ __ _ _____ ...
Virginia____. . . _ _ _________ .464
Washington______ __ _ _ . ... .927
.724
West Virginia... _ _ ... ...
Wisconsin.. __ _____ _______
.816
Wyoming. _. . . .
...
.568
Perma
nent
total
0. 524
.840
. 170
.476
.319
.178
.269
.319
.414
.696
.184
.290
.607
.799
1.073
.366
Permanent
partial
Major Minor
0. 522
1.036
.524
.982
.663
.554
.454
.561
1.016
.631
.503
.540
.554
.701
1.645
.782
0. 584
1.291
.507
1.158
.843
.687
.580
.716
1.013
.550
.477
.675
.642
.895
1. 228
.588
Benefits
Tempo calMedi
and Total pro
rary hospi
benefits
vided
in
total tal
law of—
0.978
.974
.549
.924
1.102
1.042
.719
.906
.974
.989
.678
.733
.920
.932
1. 248
.957
0.938
1.000
1.000
1.000
.988
.914
.833
.950
1.000
.969
.710
.969
1.000
.988
.969
.994
0.819
1.044
.670
.958
.906
.777
.656
.802
.960
.810
.578
.740
.853
.886
1.145
.825
6- 7-37
1- 1-38
7- 1-35
4-27-37
7- 1-37
6- 1-33
4-22-33
1- 1-38
5-26-34
5-11-37
6- 1-37
6-19-36
6-11-37
6-12-37
6- 9-37
3- 1-37
Experience Relating to the Limits o f Liberality
The location of the “ floor” and “ ceiling” in workmen's compensa
tion benefit systems is of vital importance to workers. It has been
seen that during the depression some administrations put an absolute
instead of an adjustable floor (which was sometimes a bottomless
pit) underneath compensation awards, at approximately a “ sub
sistence” level. Between the years 1930 and 1935 there was not
much complaint from workers about the “ ceiling” or maximum
limit of weekly payments in the jurisdictions which have liberal
benefit scales, as, for example, New York, where the maximum is
$25 a week. When wages were low and employment was irregular,
few of the injured employees had earned, on the average, more than
$25 a week. But when wages have been high and employment
steady, the weekly maximum has caused much dissatisfaction,
especially in jurisdictions allowing only $15 a week or less. Pro
posals to raise the level of the weekly maximum have long had a
place on the legislative programs of labor organizations, and there
has been marked progress in this direction since the adoption of the
early acts.
The height of the “ ceiling,” as to weekly payments, is determined
not only by the fixed maximum but also by the percentage of wages
allowed as compensation. It is plain that if compensation is paid
upon 50 percent of wages fewer workers will receive awards equal
to or exceeding the fixed maximum installment than when the per
centage is 66% or 70. Conferences on labor legislation have recom
mended, as the percentage for nonfatal cases, not less than 66%
percent of the wage. In Wisconsin the percentage in nonfatal cases
is 70, but not to exceed 65 in fatal cases. New York and Ontario
ADEQUACY OF BENEFIT PAYMENTS
81
are examples of jurisdictions allowing 66% percent in nonfatal and
fatal cases.
There has been much conjecture as to the highest percentage of
wages that industry can pay as workmen's compensation. In isolated
instances compensation of as much as 100 percent has been volun
tarily paid by employers, under special arrangements. By an agree
ment between the city of Winnipeg and the Winnipeg Central Labor
Council, that city was paying compensation in 1936 as follows: For
the first month during which an employee received workmen's com
pensation, an amount sufficient to bring the total up to 100
percent of wages; and for the next 2 months, an amount sufficient
to bring the total up to 75 percent of wages. Proposals have occa
sionally been made for legislation establishing a 100-percent com
pensation scale.
It may be admitted that a prosperous industry can pay 100 percent
benefits if safety and personnel conditions are excellent and operation
is stable. But such a situation is the exception and not the rule.
Under present conditions a law may be regarded as setting a high
standard if it provides for benefits at the rate of 66% percent of wages,
with lifetime payments for permanent disabilities. With a difference
of 20 points between the State with the highest percentage and States
paying 50 percent, it is hardly to be expected that there will be
further important increases in the percentage paid in the more ad
vanced States until the gap between their rate of payment and
that of other States has been lessened. In some jurisdictions there
has been difficulty in maintaining the existing percentage levels,
especially as regards occupational disease benefits and the coverage
of distressed industries. Thus, under recent legislation in Illinois,
New York, Michigan, and Ohio, the compensation for silicosis is at
a reduced rate of payment. In Nova Scotia the lumber industry
successfully resisted an increase in benefits which had been allowed
to employees in other industries.
Under adverse accident experience, disasters, and disturbed eco
nomic conditions, it has appeared to legislatures that the limits
of liberality in compensation payments has been passed in some
jurisdictions, and the compensation scale was reduced in part or as a
whole. 9 The attainment and maintenance of high benefit scales in
some jurisdictions has been at the cost of restricting the scope of
coverage, leaving out employments and industries in which accidents
are severe and wages low, and also employments that are difficult to
control by safety codes and insurance regulations. This restriction
of coverage has worked hardship upon many wage earners, left
9 Amendments to the North Dakota compensation act in 1927 reduced the benefits about 20 percent.
Benefits under the Puerto Rico act of 1935 are less than those paid in 1925. For example, in 1925, $4 000
was the maximum for death or permenent total disability as against a $3,000 maximum in 1935. The weekly
minimum was reduced from $3 to $1.50 and the maximum from $15 to $10.
82
WORKMEN’S COMPENSATION
outside the compensation provision, who are even more in need of
protection than some of the employees covered by the act.
The difficulty of providing coverage that is at the same time inclu
sive and liberal in benefits is not, of course, an argument for reducing
or not increasing benefit scales. It does show the necessity for
studying the compensation system as a whole, and also for keeping
in mind the conditions which make high compensation benefits
possible, especially the safety education of employers and employees
and the cooperation of both in the engineering, medical, and adjudi
cation phases of compensation administration. With a better under
standing of how social insurance works, and with intelligent coopera
tion, higher benefits may be paid than would otherwise be possible;
more than that, hazardous employments can be successfully covered
which, in many instances, are now left outside the scope of the law.
Other things being equal, an economical system of administration
and insurance helps to make possible a high-benefit scale. On the
assumption that public and private insurance systems are equally
efficient, it is of course apparent that the one with an administrative
expense ratio of 10 percent of premiums is able to pay higher benefits
than one with an administrative cost ratio of 40 percent of pre
miums. It must be noted, however, that there are variations in the
performance of insurance carriers. The costliness of deficient com
pensation administration is so great that efficient rather than cheap
administration should be stressed.
To the factors affecting liberality that have already been men
tioned— the scope of coverage, the economic situation as a whole,
interstate competition, the favorable or adverse condition of an indus
try, safety and medical programs, efficient administration, and the
intelligent cooperation of employers and workers with all phases of
the compensation system— one other consideration remains for the
future to determine: The completion of a social-security program,
which will help the worker not only in event of an industrial injury
but also during sickness, unemployment, and old age, will have some
bearing upon the liberality of the payments that can be made for any
one of these purposes. Insurance organizations have claimed that
in the past workmen’s compensation has been made to serve, in some
cases, as a substitute for health and unemployment insurance and also
old-age pensions.10 It is for the future to determine whether, on the
one hand, the inauguration of health and unemployment insurance
and the extension of old-age-pension arrangements will lighten the
burden upon workmen’s compensation insurance and consequently
make possible a more liberal scale of payment, or whether, on the other
hand, the aggregate cost of all forms of social insurance will make
economy in each field a controlling consideration. The conclusion
10 See also ch. 4 (p. 48).
ADEQUACY OF B EN EFIT P A Y M E N T S
83
seems inescapable that a more inclusive scope of the social-insurance
program will compel, through pressure of aggregate cost, closer atten
tion to efficiency and economy in the administration of workmen’s
compensation and also a more constructive use of benefit payments.
An advance in workmen’s compensation law and administration, in
regard to benefit provisions, has at times been retarded by the mis
taken assumption that industry, on the one hand, is concerned only
with the economy of benefit provisions, while labor is concerned only
with the liberality of benefits. On the contrary, labor and industry
should have a common interest in adequate benefits and an economical
compensation system. Inadequate compensation provisions are
costly to industry in the long run because they retard the recovery
and rehabilitation of injured workers and impair living standards.
On the other hand, liberal benefits carelessly administered are in the
long run detrimental to workers because they discredit the adminis
tration and lead to reaction. In the nature of things, accident bene
fits can never be satisfactory, not only because human life and limb
has no rational money equivalent, but also because everybody loses
when industrial accidents occur. On the average, the workman, even
under so-called liberal-benefit systems, probably does not receive,
net, more than 40 percent of the wage loss entailed by injuries,11
whereas it has been estimated that, on the average, industrial acci
dents cost the employers four times the amount of the compensation
payments to the worker.12 From such estimates it is apparent that
both the employer and the worker have a stake in accident prevention.
The necessity for observing safety regulations is emphasized by
provisions in some of the benefit systems (1) increasing the payment
to an injured worker when the injury is caused by the employer’s
failure to comply with safety regulations and (2) diminishing it in
certain cases when the employee has disobeyed the safety orders.
The rate of increase or diminution varies; in Wisconsin it is 15 per
cent and in New Mexico 50 percent. In practice too high a percen
tage is not favored. Compensation administrators are reluctant to
make a large reduction in the employee’s compensation where a
safety regulation has been violated, especially in case of major perma
nent injuries, because of the severe hardship that would be inflicted
upon the injured worker and his dependents. Before making any
reductions in compensation, administrators inquire carefully into the
11 The shrinkage from the 50 or 66% percent of wages named in the benefit scales to approximately 40 per
cent of the wage loss, the amount actually received, is the result of the operation of waiting periods, of the
weekly maximum, and other limitations. Under earlier laws, estimates of what the injured worker actually
received ranged from 20 to 35 percent. (See U. S. Bureau of Labor Statistics Bull. No. 301, pp. 8, 66-71.)
The “hidden costs” include time lost by other employees in consequence of accidents, time lost by fore
men and superintendents as a result of the accidents, property damage, payment of forfeits for failure to
complete the job on time, and portion of overhead cost loss during delay due to accidents. (Bureau of Labor
Statistics Bull. No. 536, p. 172 (1930): Cost of Industrial Accidents to the State, the Employer, and the Man,
by H. W. Heinrich.)
12
84
W O R K M E N ’ S COM PENSATIO N
posting of the regulations said to have been violated, and also into
their actual enforcement.
Features Reinforcing the Benefit System
Second-Injury Fund
An unforeseen consequence of workmen’s compensation laws as
originally drafted was an adverse effect upon the employment of
physically defective workers, because an additional injury to such
persons may cause disability out of proportion to the last injury
considered by itself. Employers therefore considered the increased
risk of loss, in case of injury to a partially disabled worker, a reason
for refusing to employ him. For example, when a one-eyed worker
loses his second eye in an industrial accident, he is totally disabled
for life. If the law requires the employer, in such cases, to pay the
entire compensation for permanent total disability, he may be penal
ized in his insurance costs for having employed partially disabled
men. On the other hand, if the employee receives compensation
for the loss of one eye only, regardless of the resulting impairment
of earning capacity, he is inadequately compensated and the purpose
of the compensation act is partially defeated.
To remedy this injustice and also to minimize the handicap of
partially disabled workers in securing employment, some of the
States have created special “ second-injury” funds and amended the
compensation act to provide that in case of a second major disability
sometimes restricted to specific injuries, the employer shall be held
liable only for the second injury considered separately. The injured
employee, however, is compensated for the disability resulting from
the combined injuries. The additional compensation is paid out
of a special fund supported by death-benefit payments to the fund
where there are no dependents, from payments in first major injury
cases, or both.
There is a statutory provision for second-injury funds in Cali
fornia,13 District of Columbia, Hawaii, Idaho, Illinois, Massachusetts,
Minnesota, New Jersey, New York, North Carolina, Pennsylvania,
(effective Jan. 1, 1938), South Carolina, Utah, and Wisconsin, and
also in the Federal Longshoremen’s Act.
Some of the exclusive State funds, as in North Dakota, attain
the ends served by a second-injury fund by charging the employer’s
accident-experience account only for the normal effect of the second
injury and charging the excess cost to the reserve or surplus fund.
However, employers who pay compensation directly—known as selfinsurers— would not be governed in their accounting methods by
Declared unconstitutional as a result of the strict court interpretation of a too-specific clause in the
California constitution. (People v. Standard Oil Co. of California, 132 Cal. App. 563, 23 Pac. (2d) 86 (1933).)
ADEQUACY OF BEN EFIT P A Y M E N T S
85
such provisions unless the compensation act specified the practices
to be followed by them in setting up reserves and contributing to
the second-injury fund. In the absence of such requirements in
exclusive-fund jurisdictions there remains an incentive for the selfinsurer to refuse employment to partially disabled men or to dis
continue a worker’s employment after a first major injury is sus
tained, since the entire disability resulting from subsequent injuries
would be chargeable to the employer at the time the later injuries
occurred. At present, except for an unusual provision in the Ohio
act (sec. 1465-69), there has been virtually no legislation in the
States or Provinces covering this contingency.
In the absence of second-injury funds, some States provide that
the employer shall pay compensation only for such disability as would
have been caused by the later injury if there had been no preceding
disability, while other States provide that the decreased earning capac
ity of the employee because of an earlier injury shall be used as a
basis in measuring the loss of earning power to be compensated as
a result of the second injury. Under such methods of calculation
the employee is inadequately protected. Some States attempt to
meet the problem created by second injuries by permitting the
employee to “ w^aive” compensation for a subsequent injury.14
Special Allowance in Permanent Total Disability Cases
By an act of Congress approved May 13, 1936, the United States
Employees’ Compensation Act was amended to permit an additional
allowance of not more than $50 per month to employees permanently
and totally disabled where the constant service of an attendant is
needed. This is an important advance toward adequate provision
for totally disabled workmen, in the absence of which great hard
ship is sometimes entailed both upon the disabled person and his
family. A workmen’s compensation commissioner who has observed
the experience of injured workers for 20 years was of the opinion
that most totally disabled workers do not live long after the injury
and that the cost of adequate provision for them is not a burden
some feature of the insurance system. Few families of injured
workers are in a position to sustain both the diminished income
from wages and the cost of an attendant for a disabled worker when
one is needed.
Benefit Provisions in Relation to the Rehabilitation Program
In a few States there are comprehensive provisions in the compen
sation acts for thorough cooperation with the program of rehabili-
14 The Third National Conference on Labor Legislation (1936) recommended:“The right of the employee
to waive compensation (should be) prohibited.” (U. S. Department of Labor, Division of Labor Stand
ards Bull. No. 12, pp. 97, 98.)
86
W O R K M E N ’ S CO M PEN SATIO N
tation agencies for restoring injured workers to vocational usefulness.
Adequate cooperation necessitates a second-injury fund, a rehabili
tation fund, properly drafted compensation scales, and special main
tenance payments to injured employees undergoing retraining,15 to be
made from the rehabilitation fund if there is one.
Insufficient study has been given to the problem of devising a
system of rating disabilities that will give a maximum incentive to the
worker’s full cooperation in his restoration to vocational activity.
Under the prevailing plan in most of the States the worker who has
sustained a permanent partial disability receives full compensation
for a limited number of weeks, while under the Ontario plan he receives
full compensation during the healing period and then partial com
pensation during life.16 In criticism of the practice of paying full
weekly compensation for partial disabilities it has been urged that
it is the tendency for the man receiving full compensation “ to stay
away from the job” until the payments cease.17 If the payments are
generous, the loss of compensation through a. prompt restoration to
earning capacity may outweigh, in the worker’s mind, the desirability
of rehabilitation. From the point of view of the rehabilitation pro
gram, it appears that the best arrangement is full compensation during
the healing period plus a special maintenance allowance during
retraining, followed by partial compensation for life, based upon
degree of impairment, or loss of earning capacity.
There is a conflict of viewpoint and practice with regard to continu
ing compensation payments to a permanently injured worker if he
is reemployed at the full wage received by him before the injury.
The more generous practice was advocated by an Ohio commissioner
who said, in a discussion of this point: “ When we get a young man or
an older man who will cooperate with the rehabilitation service, we
go along with him.” Instances were mentioned of payment of per
manent disability compensation to workers who, after retraining had
been reemployed at a wage equal to or greater than that received
before the accident. “ We encourage them to go back and earn what
they can, feeling it is in the interest of the public policy that it should
be done.” 18
In Wisconsin the additional compensation for maintenance during rehabilitation is not more than $10
per week during a period not to exceed 20 weeks. In Arizona no limit is placed upon the additional amount
that may be spent for rehabilitation, but up to the year 1935 the special rehabilitation fund was accumulating
instead of being frequently utilized.
16 Section 39 (1) of the Ontario act provides for the computation of the payments upon the difference in
the employee’s earnings before and after the injury, but this provision is now disregarded in practice and
compensation computed upon the broader basis of section 39 (3): “Where deemed just, the impairment of
earning capacity may be estimated from the nature of the injury, having always in view the workman’s
fitness to continue the employment in which he was injured or to adapt himself to some other suitable
occupation.” This section allows the board considerable discretion in rating injuries.
A. J. Altmeyer, in U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 536, p. 137 (1930).
is U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 536, p. 138.
15
ADEQUACY OF B EN EFIT P A Y M E N T S
87
A base broader than wage loss alone for compensating permanent
injuries was advocated by Carl Hookstadt:
M o st persons sustaining the loss of a m ajor m em ber suffer a serious handicap,
irrespective of any wage loss.
Such a person’s expenses are probably greater
than those of a norm al person, and in addition he suffers m any inconveniences
and hardships and loses opportunity for advancem ent and enjoym ent of life not
experienced by a norm al fellow worker.
Such a loss deserves a recompense.
(U . S. D epartm en t of Labor, Bureau of Labor Statistics Bull. N o . 333, p. 88.)
In the judgment of rehabilitation officers, a physically disabled
person suffers an employment handicap during his working life and
especially when it becomes necessary for him to find new employment.
Regardless of the wages earned by a disabled person after his reestab
lishment in industry, he is faced with a more restricted employment
horizon than the able-bodied worker. The injustice of requiring such
a person to sacrifice any part of the compensation due him because
of the wage he receives after reemployment may therefore be
recognized.
In many jurisdictions the unwise granting of lump-sum settlements
has been an obstacle to rehabilitation. Workers unaccustomed to
handling large sums of money are exploited by salesmen and others
when they receive their compensation in a lump sum. In many cases
workers receiving lump-sum settlements have considered rehabilita
tion only after they became destitute. In the judgement of rehabili
tation officers the benefit provisions should restrict and safeguard but
not entirely forbid lump-sum settlements.19
Benefit Provisions for Widows
A p p lic a tio n o f g rou p experien ce in benefit p ro v isio n s f o r w id o w s .— The
necessity for applying the purpose and principles of a compensation
system to each feature of the program is again evident upon examining
the customary provision for widows of killed workmen. The existing
plans are upon an arbitrary or traditional basis too much resembling
the common-law payment of damages for a loss, the chief difference
between collecting damages in the courts and receiving compensation
being that under compensation the amount is specifically defined and
the payments are usually periodic instead of in a lump sum. For
compensation purposes all widows are looked upon as alike, except
that in some jurisdictions the size of the family, as to dependent chil
dren, has more effect upon payments than in others. Many acts pro
vide for additional payments to children, but on account of percentageof-wage and weekly payment limitations, the additional amount
allowed may be small, and quite inadequate for the support of the
children especially if there are several of them.
19 Because of unsatisfactory experience with lump-sum settlements in Puerto Rico the 1935 act restricted
them to fatal cases. Administrative safeguards required are investigation by the manager of the fund and
unanimous approval of the settlement by the industrial commission, with a statement of the facts and reasons
for such action.
88
W O R K M E N ’ S CO M PEN SATIO N
Although it is recognized that workmen’s compensation is social
insurance, the group experience of beneficiaries has seldom been con
sidered as having any bearing upon benefit provisions. With com
mendable initiative, the California Industrial Accident Commission,
in 1919, sponsored a case study of the experience of widows who had
received compensation. The necessary basis— commonly forgotten—
for an improvement in compensation provisions is a study of the actual
experience and needs of the persons involved. The California study
disclosed that, for compensation purposes, the group of widows needed
to be divided into such classifications as “ lone widows,” “ widows with
one child,” “ widows with several children,” and also that there were
important differences arising from age, health, and family connections.
In the cases studied some of the widows did not need a pension, while
in other cases families were broken up and great hardships suffered
because the pension was inadequate or paid for too brief a period.
The California commission stressed the undesirability of the existing
indiscriminate provision as encouraging young widows without chil
dren to remain idle and dependent, while the inadequacy of the pay
ments to widows with several children undermined living standards
and broke up homes. Under the commission’s proposal, adequate
life-time pensions would be paid to widows who needed them. Such
an increase in the cost of widows’ pensions would be balanced by
savings through rehabilitating childless widows eligible to retraining
for gainful employment. “ The reeducation, rehabilitation, and place
ment of dependents is as essential to the well-working of a compen
sation law as in the cases of workmen permanently crippled, and should
be provided for either in the death-benefit law itself, or by some
auxiliary source of income.” 20 The plan was presented to the annual
meeting of the International Association of Industrial Accident Boards
and Commissions as early as 1920, but there has been no development
of this kind in the compensation systems.
The difficulties in relation to widows’ pensions, disclosed by the
California case study, remain unsolved. In many jurisdictions the
benefit schemes are not sufficiently flexible to meet the emergency of
widows with several children, because the ostensible allowance of
additional amounts for the support of children is largely neutralized
by limitations of the period during which the provision for dependents
may continue, of the total amount payable, or both.
A rra n g em en ts for su p p lem en ta ry p a y m e n ts to d ep en d en ts .— In Wis
consin there is a separate fund out of which additional death benefits
are paid to children under the age of 15, and such a device merits
20 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 281, pp. 348-374. For a later discussion
of the problem, see idem, Bull. No. 536, pp. 129-130.
ADEQUACY OF BEN EFIT P A Y M E N T S
89
study as a clue to desirable readjustments in the benefit provisions
for dependents. The Wisconsin arrangement operates in two direc
tions to discourage discrimination by employers against hiring work
ers with dependents. At the same time it removes the differential in
insurance loss upon workers with families, and makes necessary the
collecting of appreciable payments from employers in cases of fatal
injuries to workers without total dependents, the maximum charge for
the children’s additional death benefit fund being $2,000 in such
instances.
States which have or in future provide second-injury and rehabili
tation funds could meet the purposes of the Wisconsin arrangement
by expanding the scope of such funds to include part of the benefits to
dependent children in cases where, because of the size of the family,
the requirements of a subsistence provision would exceed the maximum
percentage of payments fixed by the statute.21
The expansion of second-injury and rehabilitation funds to include
payments above the basic maximum where there are several dependent
children would cause a more active use of these funds. In several
instances money has piled up in rehabilitation funds, almost unused,
to such an extent as to create an administrative embarrassment.
There are few jurisdictions which have supplementary arrangements
for increasing the amount or extending the term of payment to de
pendents. In many of the States widows’ pensions are for a limited
period and payments cease in some instances when the need for sup
port is greatest. In practically all jurisdictions the amount is in
sufficient to maintain a completely dependent person. But in Utah
the Industrial Commission has discretionary power to extend pay
ments to wholly dependent persons after the expiration of the cus
tomary term of benefits. The additional amounts are paid out of a
special fund maintained, for this and other purposes, by payments in
fatal injury cases where there are no dependents.
Lifetime pensions are desirable in some but not all cases.22 Com
plete and permanent dependence upon an inadequate pension is
demoralizing.
S p ecia l p a y m e n t to w id o w s .— The Ontario and Quebec acts provide
for a special payment to the widow of $100, in addition to all other
benefits. Such a provision is based upon the well-understood need
of the widow of a killed workman for immediate cash with which to
meet extraordinary incidental expenses.
21 In Russia the maximum payment to dependents is from 94 to 100 percent of wages. See Report of the
International Labor Office, part II, Social Conditions: Technical Tripartite Meeting on the Coal-Mining
Industry, p. 74, Geneva, 1938.
22 According to Pennsylvania experience for the policy years 1930-34, of 1,465 widows of killed workers,
590, or 40 percent, were without children.
215193°— 40-
-7
90
W O R K M E N ’ S CO M PEN SATIO N
Safeguarding the Welfare o f Injured Workers and T heir
Dependents
“ After-Care” Service
The New York Division of Workmen’s Compensation has on its
staff specialists in “ after-care” service to workers and their dependents.
Among other activities, this unit gives advice on the law and secures
“ financial assistance from outside agencies to carry the worker and
his family along until a decision is made on his claim.”
As early as 1920, A. J. Pillsbury, of the California Industrial Acci
dent Commission, suggested a plan of development to meet the need
for “ the reeducation, rehabilitation, and placement” of dependents
of killed workers. But the Federal rehabilitation act did not extend
to widows and children the service it provides for disabled workers.
With the enacting of the Federal law, the movement of individual
States to set up independent rehabilitation systems ended. The
California plan was dropped, and a gap remains in the compensation
and rehabilitation service at the point discussed by the California
commissioner. After-care service to dependents of workers by the
compensation administration is needed, especially as to financial
guidance and funeral contracts. This is largely a neglected field in
the development of compensation administration.
At present, there is an almost complete lack of information in the
compensation agencies as to the experience of widows in regard to
expense for burials.
The Washington act (sec. 7679a), for example, provides: “ No sum
shall be paid an undertaker for the burial expenses * * * unless
the undertaker shall make and file with the department an affidavit
that no part of the burial expenses have been either directly or indi
rectly paid by or charged to the widow or orphan child or children.”
In 1935, however, the compensation officers said this provision was
not enforced.
Inasmuch as the compensation agency pays a funeral benefit, it
should be in a position to pass upon the bills for burial expense, in
like manner as the commission supervises medical bills, and safeguard
the widow against assuming a large debt for expense in addition to
the amount allowed the undertaker in the benefit provisions. The
restriction of expense found in the Washington act, to be readily
enforceable, requires the supplementary clause, “ unless the contract
for such expense in addition to that provided for under the act shall
have been approved by the commission.” What is reasonable in the
circumstances can be determined only by an examination of each
case.
ADEQUACY OF B E N E F IT PA Y M E N T S
91
Safeguarding the Expenditure of Compensation Payments
Prior to the enactment of workmen's compensation laws, when the
injured worker or his dependents collected damages in the courts, no
public interest was recognized in the use of the money received. What
was done with it, and how soon the receivers became destitute, was the
business only of the successful party in the lawsuit. In contrast,
provisions in the more advanced compensation acts recognize a funda
mental difference between compensation benefits and recoveries at
law. The theory is occasionally urged that compensation belongs to
the worker to do with as he pleases, and that it should be paid in a
lump sum if desired by him. The fact that under compensation law
the benefits are paid to the worker without regard to fault in the cause
of the injury is, however, ample basis for the principle, recognized in
advanced compensation law, of a public interest in the transaction.
The third National Conference on Labor Legislation (1936) recom
mended that “ commutation of workmen's compensation shall be
approved only for good cause shown with proper safeguards as to the
use of the funds so commuted, with the best interests of the workman
or his dependents in case of death being the primary consideration."
An example of broad power given the compensation administration
to safeguard the expenditure of compensation awarded to minors is
found in the Alberta act, section 59:
W here a workm an or a dependent is under the age of 21 or under any legal
disability the com pensation to which he is entitled m ay be paid to him or applied
in such manner as the Board m ay deem m ost for his advantage.
Section 47a of the Ontario act safeguards the wife and children of
workmen receiving compensation. If a worker is entitled to compen
sation and it appears to the board that the worker is no longer residing
in Ontario, but that his wife and children are still residing there
without adequate means of support and apt to become charges upon
charity or public relief, the board may pay his compensation, in whole
or in part, to the wife and children. If the worker still lives in Ontario
but is not supporting his wife and children, the board may, in certain
cases, divert his compensation for the benefit of the wife and children.
Chapter 6.— Medical A id 1
Competent and adequate medical aid for injured workers is of
great significance to all parties concerned. It is important to workers
because on it depends the speed and degree of their recovery and
restoration to earning capacity, and the rating of the extent of dis
ability for which they receive compensation. It is important to em
ployers and insurance carriers because they pay the bills. It is
important to physicians because of the broad scope and rapid expan
sion of industrial medicine as a phase of medical practice.2 Finally,
medical aid is of importance to administrators, because their duty is
to see that injured workers receive adequate and proper medical
attention.
The discussion which follows is based primarily on the results of
interviews with compensation commissioners, medical officers, insur
ance representatives, labor leaders, and attorneys in all the States
and Canadian Provinces having compensation laws, as well as in
Puerto Rico.
Medical-Aid Provisions
In the United States the greatest advance in the workmen’s com
pensation system since the first acts were passed has been in the pro
vision for medical aid. Even as late as 1919 there were three juris
dictions which furnished no medical service, except that in fatal cases
involving no dependents the medical expenses of the last sickness
were paid by the employer. In 1938, 15 jurisdictions provided vir
tually unlimited medical aid under the law or the administrative prac
tice, as compared with 6 in 1919. To these 15 jurisdictions there
should be added, for most practical purposes, 10 others in which the
administering authority may extend, without limit, the provision
for medical aid beyound the initial limitation of time or amount spec
ified in the acts. 3
In proposals to legislatures for remedial amendments the prevail
ing argument has been that adequate medical aid is “ economical” ;
humanitarian motives, though undoubtedly present, have seldom
been stressed. Employers and insurance carriers increasingly recog-
1 This chapter was published as an article in the Monthly Labor Review, January 1939, p. 25.
2 For the programs of medical organizations in relation to the compensation system, see American College
of Surgeons, Medical Service in Industry and Workmen’s Compensation, Chicago, and American-Medical
Association, Bureau of Medical Economics, Medical Relations under Workmen’s Compensation, Chicago.
3 For details, see Bureau of Labor Statistics Serial No. R. 815: Workmen’s Compensation in the United
States as of July 1, 1938. For a presentation of early situations and developments prior to 1920, see U. S.
Department of Labor, Bureau of Labor Statistics Bull. No. 275, pp. 90-112.
92
MEDICAL AID
93
nize that “ what is best for the patient is, in the same proportion, an
economy for the insurance carrier and for i n d u s t r y 4
In Canada, under all the Provincial workmen’s compensation acts,
with the exception of Nova Scotia, unlimited medical aid is furnished.
In Nova Scotia medical aid is given for 30 days only, unless author
ized for a longer period by the workmen’s compensation board. In
British Columbia and Alberta the workers themselves contribute
toward the cost of medical aid.5
The Ontario act has served to some extent as a model in the drafting
of other Canadian acts. The Ontario provision for medical aid reads:
E very w orkm an entitled to com pensation
*
*
*
or who would have been
so entitled had he been disabled for seven days, sh?ll be entitled to such medical,
surgical and dental aid, and hospital and skilled nursing services as m ay be nec
essary as a result of the injury, and shall be entitled to such artificial m em ber or
members and apparatus and dental appliances and apparatus as m ay be neces
sary as a result of the injury and to have the same kept in repair for a period of
one year (sec. 49 ).
Problem o f Medical Cost
While on the one hand workmen have pressed for increased medi
cal benefits in some jurisdictions, on the other hand much has been said
and written, especially during the years 1930-35, about so-called
alarming increases in the cost of medical aid. The change in the
ratio of medical aid to compensation cost especially under depression
conditions has become a matter of concern to both insurance car
riers and State administrations.
Some attempts to make upon the basis of State reports a comparison
of the ratio of medical cost to compensation payments are vitiated
by the diversity in the reporting and statistical practices in the States
compared, and also by the variable nature of the two items compared.
Few States have complete and dependable data on medical cost.6
Factors in the Situation
In an analysis of the situation the following appear to be significant
factors:
(1) Both the scale of compensation and the provision for medical
4 American Journal of Surgery, March 1936 (p. 436): Economic Aspects of Industrial Fractures, by Dr.
A. D. Lazenby.
fi For details of provisions and practices in the Provinces, see Canada, Department of Labor, Workmen’s
Compensation in Canada, a Comparison of Provincial Laws, Ottawa, July 1938.
6 The general situation as to estimates of medical cost, is indicated by a typical explanation in the report
of the Industrial Commission of Minnesota for 1933-34 (p. 186): “The total cost of medical and hospital
treatment rendered to injured employees in the State of Minnesota in the cases closed during the biennial
period is not given in this report as indicated by tables numbered 5, 6, and 7 because of the fact those figures
are not obtainable.” Medical cost under what is known as “contract medical” arrangements is seldom
reported. The medical cost of self-insurers is rarely known. The Minnesota Industrial Commission adds
this caution with regard to its tabulations of medical cost: “In studying the medical and hospital expenses
hereinafter given in the statistical tables and in the analyses of these tables it must be borne in mind that
the figures there shown are for those cases only in which the employers or their insurers have reported these
items.”
94
W O R K M E N ’ S CO M PEN SATIO N
aid have been greatly increased in many jurisdictions during the last
20 years.
(2) The increase in the scale of compensation payments has stimu
lated an increase in medical aid or made it necessary, to save the large
compensation costs which would result from inadequate medical
treatment of injuries.
(3) An increase in medical cost, wisely applied, diminishes compen
sation payments, and therefore may increase the ratio of medical to
compensation cost.
(4) Compensation payments in some States are abnormally lessened,
during periods of intermittent employment, by a method of computing
the wage base which makes it only a fraction of full-time earnings.
Where this is done a high ratio of medical cost may indicate either
low compensation payments or ample medical aid.
(5) No matter how low the wage or the wage base sinks, the cost
of treating an injured worker is relatively constant, and tends to
increase during depression periods under the stress of physicians’
pecuniary need and the reluctance of the worker to admit that he is
cured in the absence of available employment.
(6) Fee padding and other unethical practices on the part of a
minority of the medical profession, especially in the largest cities,
has increased medical-aid cost.
(7) Where the worker selects a physician of his own choice, admin
istrators find that in some cases the physician has difficulty in control
ling the situation, because he risks losing the practice of the worker’s
family and friends if he reports, contrary to the wishes of his patient,
that the injured employee is able to return to work. The question
of the comparative skill of the physicians engaged under the two
methods is also a point at issue.
(8) In most of the States medical supervision by the compensation
commissions has been deficient, since few of them have a medical
staff, and the turn-over of the administering personnel has been too
rapid to allow the commissioners to master the medico-economic
phase of the work. Statistics are seldom used by the compensation
administrations for the guidance of their medical supervision.7
Inexpert Service as a Factor in Cost
In addition to the factors mentioned, it must be noted that in
some areas part of the recent increasing cost complained of is attrib
uted, by both compensation administrators and insurance carriers,
to the increasing participation of the general practitioner or “ family”
physician in the treatment of industrial injuries. In the early stage
of workmen’s compensation many physicians did not seek or accept
7 Forms for use in compiling information relating to medical aspects of workmen’s compensation are found
in a Manual on Industrial-Injury Statistics prepared by Max D. Kossoris, U. S. Department of Labor,
Bureau of Labor Statistics Bull. No. 667.
MEDICAL AID
95
opportunities to treat injured workers if they could avoid doing so,
in part because of their reluctance to make reports and appear at
hearings, and attention to such cases was in the main left to surgeons
and specialists. But since 1929 physicians of all types have sought
a wider participation in workmen’s compensation practice. Com
pensation officers attribute this to the relative certainty of payment
for the medical care of injured workers, in contrast with the difficulty
of collecting medical bills from private individuals during the period
1929-35.
Unspecialized and inexpert medical care of injured workers has
often proved disproportionately expensive because of errors in diag
nosis and treatment. Compensation officers mention instances of
serious harm done by bandages that were too tight, of permanent
impairment of function because plaster casts were left on too long,
and even of skull fractures that were overlooked until the patient
died and an autopsy brought to light the unsuspected cause of his
unwillingness to return to work. It is not expected that a general
practitioner will be skilled in interpreting the diagnostic signs of the
varied types of occupational diseases. Under workmen’s compensa
tion, mistakes in medical diagnosis and care are reflected not only in
the bills for prolonged treatment, but also in augmented benefit
payments.
Medical A id as Affecting Rehabilitation
As reported by the Vocational Rehabilitation Service, U. S. Office
of Education,8 difficulties of the medical aspect of workmen’s com
pensation which affect the rehabilitation of injured workers are:
1. A m pu tation s are frequently m ade more with a view to m inim izing the com
pensation benefits to be paid than to usefulness of the remaining part. For
exam ple, in the case of an injury to a foot requiring am putation, the surgeon
m akes a Chopart am putation leaving an alm ost totally useless stum p but reducing
the benefits to be paid.
In any num ber of cases the disabled person m ust either
use an appliance th at at best is very unsatisfactory or have a reamputation in
order to get a useful stum p.
2. In m an y instances in m aking am putations even when the am ount of com
pensation is not involved, the surgeon either leaves too long or too short a stum p
for effective use of an appliance.
3. Am pu tation s are frequently left improperly shaped and closed, or the bone
is too long for the stum p and, therefore, improperly padded.
4. In the case of m utilations, muscles th at otherwise m ight be restored to m uch
usefulness are rendered practically useless b y adhesions and contractures that
could be avoided b y better procedures and more careful treatm ent.
W h ile great strides have been m ade in the past few years in these respects
there is still room for im provem ent.9
8 Summary furnished by Terry C. Foster, Oct. 15, 1938.
9 For an account of the effective use of surgery in the rehabilitation of amputation cases under workmen’s
compensation, see the discussion by Henry H. Kessler, M. D., in U. S. Department of Labor, Division of
Labor Standards Bull. No. 17: Discussion of Industrial Accidents and Diseases, 1937 convention of the
International Association of Industrial Accident Boards and Commissions (p. 160).
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W O R K M E N ’ S CO M PEN SATIO N
Such difficulties point to a lack of coordinated supervision on the
part of workmen’s compensation and rehabilitation administrations
and the medical profession. The Vocational Rehabilitation Service,
U. S. Office of Education, has planned conferences with representa
tives of medical organizations and workmen’s compensation adminis
trators as a first step toward the formulation of coordinating pro
cedures for Nation-wide use.
Relations o f Medical Profession and Compensation A uthorities
The attitude of physicians and medical organizations toward the
compensation law, the administrators, and the insurance carriers,
has been an important factor in the operation of the compensation
system. Because of the narrow limitation of payment for medical aid
to injured workers provided by the early compensation acts, physi
cians complained that part of the burden of workmen’s compensation
insurance had been put upon their shoulders. Disputes over the pay
ment of medical bills were frequent. Amendments providing more
adequately for medical expense have facilitated the improvement of
relations between the compensation authority and the medical pro
fession. At present, either informal or organized cooperation is
found in most jurisdictions, and as a rule compensation adminis
trators stated that on the whole their relations with physicians and
their organizations were satisfactory. Difficulties experienced were
attributed to a minority— sometimes a small minority— of the mem
bers of the medical profession.
Continued improvement in medical relations is expected as a result
of the advancing standard of medical education, the increased empha
sis in education and practice upon organized attention to industrial
hygiene, and a better understanding by physicians of the require
ments of the compensation system, particularly as to records and
reports. It is customary to invite the participation of the medical
organizations when medical-fee schedules are formulated or revised.
In many jurisdictions, in case of disputes over doctors’ bills and
hospital charges, the judgment of officers or committees of medical
organizations is requested by compensation officers.
Scope o f Medical Adm inistration
The full scope of medical participation in workmen’s compensa
tion includes treating, adjudication, and preventive service. A
medical officer who had long experience under workmen’s compensa
tion insisted that “ compensation aministration is 80 percent medi
cal.” Certainly the satisfactory operation of workmen’s compen
sation depends largely upon competent medical treatment of workers,
together with the prompt furnishing by physicians of correct medical
reports upon injuries and the giving of unbiased testimony at hear-
M EDICAL AID
97
ings. The ability of compensation officers, therefore, to enlist the
full cooperation of the medical profession in the compensation
program is a highly important factor in administration. In some
of the States and Provinces compensation commissioners, as a means
of advancing a program of intelligent medical cooperation, make
addresses at medical conferences and sometimes at medical schools
which give courses in industrial medicine. In some jurisdictions,
by arrangement with the medical associations, committees are created
to aid the compensation commission in settling controversies over
medical fees. In some instances, through such committees the
cooperation of medical organizations is secured for upholding pro
fessional standards in the treatment of injured workers.
The supervisory responsibility of the workmen's compensation
authority extends not alone to the medical care of injured workers
but also to medical expenditures, the scrutiny and weighing of
medical testimony in the course of settling claims for compensation,
and the physical rating of injuries or disabilities, including the
determination of their relation to the employment of the injured
worker and their probable effect upon his earning capacity.
The Rating of Disabilities
The awarding of compensation payments depends in part upon the
reports and testimony of physicians with regard to the occupational
cause and the extent of disability resulting from the injury. The
rating of disabilities, or the determination of the degree to which a
certain injury entails loss of function and the relating of such impair
ment to some corresponding degree of industrial disability, is a task
of the greatest difficulty, sometimes requiring a revision of the find
ings of the medical practitioner by the compensation officer, who
should have a knowledge of the injured man's working situation
which the physician may lack. In at least one instance the court
has held that the compensation officer's expertness in medico-economic
judgments may justify his disregarding medical testimony and
forming an opinion upon the facts.10 Discussions of this problem
and of rating schemes are found in the reports of the annual meetings
of the International Association of Industrial Accident Boards and
Commissions. 11
10 McCarthy v. Industrial Commission, 194 Wis. 198. Cited by A. J. Altmeyer in University of Wisconsin
Studies in the Social Sciences and History, No. 17: The Industrial Commission of Wisconsin, Madison,
1932, p. 96.
11 For an analysis of the rating problem, see U. S. Department of Labor, Bureau of Labor Statistics Bull.
No. 577 (p. 162 et seq.); and U. S. Department of Labor, Division of Labor Standards Bull. No. 10 (pp.
78 and 99). For an example of the correction, by a compensation commissioner, of a medical rating of an
injury in its bearing upon vocational disability, see Bureau of Labor Statistics Bull. No. 577 (p. 172). See
also Disability Evaluation, by Earl D. McBride, New York, J. B. Lippincott Oo., 1936.
98
WORKMEN’S COMPENSATION
Problem of Preexisting 111 Health
In compensation cases where a preexisting condition of ill health is
aggravated by an industrial injury, a problem arises not only in regard
to compensation and medical benefits but also in determining the bur
den to be borne by insurance carriers. As to the latter there are two
contrasting practices in the jurisdictions. In some areas, the legal
rule is that industry takes the workman as it finds him and is fully
responsible for what subsequently happens to him in the course of his
employment. In other areas, the legal rule is that industry is respon
sible only for the ordinary consequences of the kind of injury sustained
by the workman; medical aid is limited to the period over which the
injury would have caused disability had there been no diseased condi
tion, and compensation payments are limited to the disability which
the injury would have caused except for the disease. In many
instances it would seem to be difficult if not impossible to divide with
an accurate line the mingled consequences of an injury and the
aggravation of an existing disease. It would appear to be more desir
able to allocate a workman who has heart disease, for instance, to
tasks not requiring overexertion than to pay compensation for his
untimely death. But the difficulty with some existing approaches to
the problem is that they would deny such a man the right to work,
because of the expectation that he might be a compensation liability.
Administrative Safeguards Against Biased Ratings 12
Among the causes of difficulties in rating injuries, compensation
officers mention, as leading factors: Lack of knowledge on the part of
physicians in regard to the occupational relations and consequences of
industrial injuries, which affects not only their estimates of extent of
disability but also in some cases surgical operative practices and
results; extreme differences of viewpoint upon extent of disability,
arising in part from the absence of accepted standards of measurement;
differences of attitude with regard to subjective factors affecting dis
ability, such as, for example, “ hang-overs” of fear and pain or loss of
self-confidence; and, most important of all in the judgment of admin
istrators, the absence of scientific impartiality on the part of many
physicians in their reports and testimony regarding the cause and
extent of disability. Compensation officers find, in regard to medical
testimony upon extent of disability, that too often the attitude of
physicians resembles that of retained advocates rather than impartial
experts. Where there is much antagonism between injured workers
and the insurance carriers or the compensation hearing officers, it
frequently is caused by the feeling that medical specialists called upon
to make “ impartial” ratings of disabilities have not been unbiased in
their reports and testimony. Administrative steps to guard against
12 See also ch. 7 (p. 127).
MEDICAL AID
99
partisan testimony include the exercise of care in avoiding the use, as
impartial specialists, of physicians known to be employed, on a fee
basis or otherwise, by compensation insurance carriers; and, in rare
instances, the disciplining of physicians habitually giving biased testi
mony. Under the Rules of Procedure of the Workmen’s Compensa
tion Board of Pennsylvania (sec. 38) “ the board will, upon petition, or
of its own motion, issue a rule to show cause why” a physician who
gives partisan testimony, and who is “ not actuated by a desire to
further the just administration of the act,” should not be disciplined.
The steps in such action are as follows:
If, after a full hearing, the board in conjunction with two members of the
Medical Society of the State of Pennsylvania selected by the Medical Board of
Education, shall deem that the facts require such action, the rule will be made
absolute, and a certified copy of the order of the board sent to all referees and
compensation authorities, who will be instructed that, in any matter when such
physician shall testify, in considering what weight to give his testimony, due con
sideration shall be given to the action of the board in the matter in which the rule
was issued.
Under this new measure only one instance was mentioned, early in
1939, in which disciplinary action had been considered.
Checking Up on Progress and Results of Medical Care
The task of watching over the honesty of the injured worker and his
physician, as indicated by the size of the compensation claim and the
medical bills, has too often overshadowed the necessity for unceasing
vigilance to make certain that the worker is receiving the best possible
care. Medical supervision has usually been unbalanced by the stress
of medicolegal tasks. With the formulation and adoption of uniform
methods of rating disabilities, and also with the use of a claims proce
dure which minimizes public controversy over the disabilities of
injured workers,13 more attention could be given to developing
improved methods of guarding against unnecessary loss and suffering
to workers resulting from delayed recovery and undue permanent dis
ability. Compensation officers have cited instances of treatment
unsuccessfully prolonged for more than a year, under one physician,
when a cure has been promptly effected after the patient was trans
ferred to a properly qualified practitioner. A method sometimes used
for disclosing such situations, before irreparable harm has been done,
is to check upon the progress of cases by comparing the time during
which treatment has continued with statistical averages of the period
of treatment for similar injuries.
The American College of Surgeons, after making surveys of medi
cal departments and services in industry, reported that “ these surveys
revealed that compliance with the compensation law does not in itself
13 See U. S. Department of Labor, Bureau of Labor Statistics Serial No. K. 734; Claims Administration
in Workmen’s Compensation.
100
W O R K M E N ’S
C O M P E N S A T IO N
signify an efficient medical service and that financial awards cannot
correct a disability that is chargeable to inadequate medical service.” 14
Clearly, maintaining or elevating the standard of medical care of
workers by approved methods of checking upon medical performance
and by unceasing administrative vigilance is a service that goes beyond
enforcing the letter of the compensation law. An example of such
service would be a thorough check upon the completeness of restora
tion, at the time disability ratings are made. The unsatisfactory
surgical results that have been noted by rehabilitation officers indicate
the absence of such a check. Reasons given by some compensation
officers for not checking upon surgical results are the lack of a medical
director, the inadequacy of the medical staff, or the cost of the
examinations.
A thorough medical reexamination of many old cases, made in
Alberta Province in 1936, brought to light a number of instances of
unsuspected conditions that were a cause of troublesome complications
and dissatisfaction with previous awards of compensation.15 In the
Alberta examinations a group of specialists cooperated and con
sidered, in conference, their findings upon “ problem” cases. One
result of the intensive attention given to complete examinations has
been the inauguration of a program for the after-care of certain injured
workers, which has resulted in some instances in a marked reduction
of permanent disability. Such reduction of disability, by reducing
compensation payments, has more than offset the unusual expense of
the examinations and additional care. The Alberta experience indi
cates that a complete examination of the “ end results” of treatment
at the time an award is made would eliminate one of the causes of the
reopening, in later years, of cases supposed to have been finally closed.
In States where claims are settled under the procedure known as
the “ agreement system,” investigations disclosed that the actual condi
tion of the injured worker is sometimes incorrectly shown by the reports
and agreements. The Fifth National Conference on Labor Legisla
tion, 1938, recommended that “ wherever agreement settlements are
permitted, no case should be considered closed unless the injured per
son has been examined by the board or commission or its medical
staff.”
Problem of Choice of Physician.
Whether the injured worker shall freely choose his own physician or
accept a physician selected by some one else is one of the most contro
versial points in compensation administration. Under the earlier acts
the choice of a physician by an injured worker, except at his own cost,
14
A m e rica n
C o lle g e o f S u r g e o n s.
C h ic a g o , 19 34, p . iii.
M e d i c a l S e r v ic e in I n d u s t r y a n d W o r k m e n ’ s C o m p e n s a t io n L a w s .
16 Analysis of the results of the examinations has been in preparation by the Alberta Workmen’s Compen
sation Board, but has not yet been published.
M E D IC A L
A ID
101
was seldom permitted, but there has been a trend toward free choice
both in statutory amendments and in the administrative practice.16
The various arrangements for the selection of the injured em
ployee’s physician are: (1) Choice of physician by employer or insur
ance carrier, (2) selection by the employee from a list or panel made
up by the employer or carrier, (3) selection by the worker from a
panel made up by the workmen’s compensation authority and medi
cal organizations, and (4) “ free choice” by the worker. In actual
practice the first two and the fourth methods are sometimes found in
the same jurisdiction. It should be kept in mind that under any ar
rangement the right of choice is not absolute, but is subject to control
by the compensation authority in case of abuse. It is quite common,
in jurisdictions where the employers or insurance carriers have the
legal right to choose the physician, for them to allow the worker to
do so if he prefers his own physician. Where the worker is entitled
to choose, he often accepts the employer’s medical service, especially
in large plants with medical-aid arrangements which the worker has
found satisfactory. Often the industrial worker does not have a
“ family physician” ; he is sometimes not in a condition to choose;
in thinly populated areas the scarcity of physicians often makes a
range of choice by either party impractical, and it is usually so under
“ contract” medical arrangements. “ Self-insurers” are often allowed
to follow their own practice with regard to the selection of physician.
In Wisconsin the employer or carrier makes up a list or panel,
from which the employee may select his physician. In 1937 Harry A.
Nelson, director of workmen’s compensation, said that there was very
little dissatisfaction with this system of selection, and that employers
and insurance carriers were liberal in making up or revising panels
to meet the worker’s preference.
In 10 States 17 the law or the administrative practice gives the
injured worker first choice.
In New York, under a 1935 amendment, the injured employee has
a right to select his physician but must choose from a list or panel
made up by the compensation administration in cooperation with
county medical societies. Physicians who are licensed to practice
have been admitted without question to the panel, but the medical
societies determine what type of injuries they may treat.
By rule of the New York Department of Labor, employers are not
16 This subject has been discussed at length at the annual meetings of the International Association of
Industrial Accident Boards and Commissions. See especially U. S. Department of Labor, Bureau of
Labor Statistics Bull. No. 432 (pp. 117-128), and No. 577 (p. 41); and U. S. Department of Labor, Division
of Labor Standards Bull. No. 17 (p. 108).
17 Arizona, Massachusetts, Nevada (by administrative practice whenever the employee expresses a
choice), North Dakota, New York (from a panel), Ohio, Rhode Island, Utah (by administrative regula
tion, i. e., Medical and Surgical Fee Schedule, Rule 2), Washington (except in contract hospital cases),
and Wyoming. The usual qualifications upon the right of choice have been mentioned elsewhere. In
other States, the injured worker is usually allowed to choose a physician at his own expense if he so desires.
102
W O R K M E N ’S
C O M P E N S A T IO N
allowed to recommend a physician to an injured employee, except
when requested by the worker. The new system has caused grave
concern to some insurance carriers, who contend that under it their
power of safeguarding the medical care of the injured worker is
impaired. On the other hand, the insurance carriers actually retain,
to some extent, the power to influence the treatment that is given,
because if dissatisfied they can resist payment of a physician’s fees
subject to arbitration by a committee or in some cases to a contest
before the compensation authority.
From the point of view of persons and organizations emphasizing
the importance of assuring the best possible medical attention to the
needs of the injured worker, an important phase of the problem of
medical administration is the marked reluctance of compensation
officers to interfere, except upon specific complaint, in cases of
unsatisfactory treatment. In some jurisdictions compensation officers
at times undertake to discourage physicians from treating injuries
which are outside the range of their knowledge and skill by disallowing
part of their fees. It is apparent, however, that such punishment of
a physician does not repair the damage done to a worker who has
lost an eye because the family practitioner in charge of the case
neglected to call in a specialist.
Experience indicates that if the extension of “ free choice” of
physician by the injured worker is not to be followed by reaction to
directed choice, thorough supervision of medical aid is necessary.
In the best examples, such supervision is furnished in part by welltrained claims officers and by medical officers whose checking upon
the performance of physicians is aided by adequate records and
statistical information, as for instance, calculations of average periods
of duration of temporary disability in certain types of injuries.
The information that is available indicates that under the existing
situation compensation costs under “ free choice” are greater than
under directed choice. In the 1934 edition of its publication Medical
Service in Industry and Workmen’s Compensation Laws, the Ameri
can College of Surgeons made reference (p. 24) to a continuing study
of the “ costs and disabilities resulting from injuries, based upon the
fact that the physician * * * is or is not selected by the insurance
carrier.” By September 1938, comparative statistics had been pre
pared covering over two million noncompensable cases, or cases
showing no loss of time from work, and also 182,000 other cases
covering cuts, lacerations, punctures, abrasions, bruises, and con
tusions, excluding all cases involving any permanent disability or
temporary disability exceeding 40 days. According to Allen D.
Lazenby, M. D., chief surgeon of the Maryland Casualty Co., “ the
results have indicated that the choice of doctor by the employer or
his insurance carrier, if that choice is intelligently, sincerely, and
M E D IC A L
A ID
103
effectively exercised, results in definite saving not merely in medical
expense, but in compensation loss, as evidenced by decreased periods
of disability and improved end results.”
An interesting example of oscillation from one type of medical
control to another is found in Quebec, where each system, in turn,
has proved unsatisfactory to one group or another. From 1931 to
1933, the claimant had the right to choose his physician. From 1933
until late in 1936 the choice was given to the employer under the
supervision of the compensation board. Since that time, under the
1936 amendment, the claimant has had the right to choose his physi
cian. According to the compensation officers, under free choice the
medical bills increased.18
No arrangement for medical aid yet devised in the States has
been altogether free from abuses. The preponderance of evidence
indicates that under directed choice of physician recovery is quicker
and permanent disability is less. On the other hand, compensation
officers find that in some instances favoritism has put unqualified
practitioners on an employer’s panel. It is significant that in one
State the legislature, beset by the difficulties of medical administration,
passed a Medical Abuses Act. This title is symptomatic of the
medical-aid situation in a number of jurisdictions. In recent years
measures for controlling abuses have received more attention than
the objectives of maximum restoration and adequate after-care which
were earnestly advocated by some compensation commissioners as
early as 1920. At times the medical care of injured workers has been
a battleground upon which workers and insurance carriers, doctors,
lawyers, and commercial interests have fought for control.19
Main. Points Xo Be Guarded
Although there are differences of opinion as to the best arrange
ments and also the scope of activity of compensation officers in super
vising the medical phase of administration, in the judgment of
medical officers the main points to be guarded may be summarized as
follows:
(1)
The worker should be treated by a physician, surgeon, or specialist whose
competence to treat the type of injury sustained has been determined by recog
nized medical organizations. 20
18 An article in the Journal of Commerce and Commercial (New York) for July 19, 1938, announcing
changes in the Quebec workmen’s compensation administration, says that “costs to employers have risen
sharply, notably so since the injured workmen have been allowed to choose their own physicians. This
has meant an additional cost of approximately $500,000. While the expectation is that the choice will still
be left with the workmen, observers say that more prudence will have to be exercised by the new commission
in checking abuses.” This statement was orally confirmed by members of the compensation board.
19 The medical phase of the compensation system has been more fully investigated in New York than in
any other State. See U. S. Bureau of Labor Statistics Bull. No. 577: Proceedings of the International
Association of Industrial Accident Boards and Commissions (pp. 27-42); and Dodd, Walter F., Adminis
tration of Workmen’s Compensation, New York, Commonwealth Fund, 1936 (pp. 445-469). The New York
investigations were prompted not alone by a concern for costs but also for the proper care of injured workers.
20 There are national boards of certification for the various medical specialties. These boards, approved
by the American Medical Association, certify to the competence of individual practitioners in the specialty.
104
W O K K M E N ’S
C O M P E N S A T IO N
(2) The injured employee should be protected from a biased rating of his
disability or prejudiced medical testimony as to its cause by reference to the
medical staff of the compensation commission or, in the absence of such staff, to
impartial medical experts or to special medical boards.
(3) Physicians should be required to submit upon standard forms to the com
pensation administration, prompt, accurate, and comprehensive reports upon all
industrial injury cases treated by them. These reports should serve as the basis
for determining the adequacy of medical care. Serious injuries, particularly
those involving permanent disability, should be reviewed by competent physicians,
preferably on the staff of the compensation administration.
(4) Fees charged for treating industrial injuries should be supervised by the
compensation administration.
(5) The desirability of transferring the injured man from one physician to
another, or from one institution to another, should in some cases be conceded
but safeguarded from capricious exercise and from abuse by interested parties.
It has been noted that compensation administrators do not always
accept without qualification the medical rating of injuries and dis
abilities made by physicians. They say that physicians employed by
insurance carriers often underrate or minimize the seriousness of dis
abilities, while physicians employed by injured workers usually over
rate disabilities.
Medical Examination o f Workers as a Preventive Procedure
The main step in the medical program for the prevention of injuries
has been the physical examination of employees. Except under the
provisions of recent legislation giving workmen’s compensation cov
erage for the dust diseases (silicosis, anthracosilicosis, asbestosis, or
those included in the more general term pneumoconiosis), preemploy
ment physical examination of workers and also periodic reexamination,
where it was found, was required by the employer but not by the law. 21
A necessary phase of the extension of occupational disease coverage,
and especially coverage of the dust diseases, is a program of coopera
tion between the State and industry in guarding the health and to
some extent supervising the placement of workers. But the fact that
preemployment and periodic examinations of workers have sometimes
been used oppressively has aroused opposition to such practices.
There are, however, examples of legal and administrative protective
measures which have led to a more favorable attitude of workers
toward medical examinations. In Wisconsin a recent law provides for
payment up to the sum of $3,500, predicated on wage loss, if a work
man is discharged on account of nondisabling silicosis. In the absence
of protection against the unjust use of medical examination the volun
tary cooperation of workers in this feature of a health program is not
to be expected.
21 An unusual provision found in the New Mexico Compensation Act (sec. 23) makes it the “duty of the
workman, at the time of his employment or thereafter at the request of the employer, to submit himself to
examination by a physician or surgeon duly authorized to practice medicine in the State, who shall be paid
by the employer, for the purpose of determining his physical condition.”
MEDICAL AID
105
In the judgement of medical officers, the medical examination of
workers should be thorough, should be given by a physician and not
by a first-aid man or nurse, and should be used not only as a guide
to placement but as a step toward the correction of remediable defects.
For example, impaired eyesight has caused many accidents, and com
petent attention to the eyes of the worker, if contemplated in the med
ical program, is mutually advantageous to employee and employer.
The chief concern of compensation officers, in regard to the exami
nation of workers by employers, has been to protect workers against
indiscriminate discharge. Although compensation officers seldom
have adequate legal authority for interfering in this matter, they
ha ve at times by persuasion, threats, or disability awards, halted the
discharge of workers or secured their reinstatement. Where the
offending employer was a self-insurer, the compensation commission
has sometimes warned him that the privilege of self-insurance would
be revoked unless the employer used the medical examinations
more constructively. An outstanding example of protection of the
workers by the compensation authority occured in Massachusetts in
1933. Because the situation is one which may recur during the initial
stage of an occupational-disease-coverage program in other States,
an account of the procedure is quoted from the Report to the General
Court of the Special Industrial Disease Commission (1934), (p. 171).
The Taunton case.— In April 1933 a situation arose in Taunton whereby 42
foundrymen were summarily discharged, following physical examinations by a
local physician at the behest of an insurance company, on the theory that they
were suffering from silicosis or tuberculosis. This situation, it was stated, was
caused primarily by the refusal of another company to continue to carry the risk
and the cancelation of their policy on 10 days’ notice. The matter was a serious
one and gave the commission grave concern. At its door at almost every hearing
was a delegation from these 42 discharged men, begging for an opportunity to
work. They pleaded that they were able to work, that they were not sick, and
that all they wanted was an opportunity to go back to their employment and
support their families. The commission rightfully devoted no little time to the
problem of getting these men back to work, and also endeavored to secure for
them some payment for their loss of time. After 7 months, it was able to secure
for them the payment of compensation, on the theory of total incapacity, for the
entire time they were out, a total payment of over $17,000, and an agreement
that all who were adjudged by the commissioner of public health fit to do so might
return to work. Forty-one of the men did return to work, and, at the writing of
this report, are still employed.
An outstanding example of the use of medical examinations, as a
step in the disclosure of injuries and prevention of unsafe working
conditions, is reported in the September 1938 issue of the New York
Industrial Bulletin (p. 424). Because many States are as yet not
aware of the need of labor department facilities for such action, part
of the narrative is reproduced to show how the health and lives of
workers were safeguarded and disastrous losses avoided or minimized.
215193°— 40----- 8
106
W O R K M E N ’ S COMPENSATION
The initiative, in this instance, was taken by the division of industrial
hygiene. In New York, this division is set up separately from the
workmen’s compensation division, while in Ohio the division of safety
and hygiene is within the agency that administers workmen’s compen
sation; but in any event the operation of such a unit, where it exists,
is aided by a coordination with the compensation authority, which,
through the accident reports received by it, may be the first to know
of situations requiring preventive measures.22
Word came to the division that a death occurred in an establishment in Phila
delphia where rotogravure printing was done with the use of inks containing large
amounts of benzol. It appeared that with the introduction of faster printing
presses, a need was created for inks which would dry more rapidly, and benzol
inks were introduced to meet this need.
Immediately on hearing of this death, an investigation was begun to determine
whether or not these inks were also being used in New York State. This brought
to light the fact that they were in use in three large rotogravure plants in New
York City. The inks were being purchased from the same ink manufacturer
which was supplying the Philadelphia plant with its fast-drying ink.
Almost coincidental with this initial survey, a telephone call came to the division
from a physician in the city who had a case which he suspected of being benzol
poisoning in a man working in one of the rotogravure plants under investigation.
This man subsequently died of benzol poisoning in the Brooklyn Jewish Hospital.
Within a few days following the initial investigation of the three plants, arrange
ments were completed for the physical examination of all workers there employed,
the making of air tests, ventilation studies, and chemical analyses of all materials
handled. Because of the emergency, the division of women in industry arranged
for the doctor connected with that division to work with the medical staff of the
division of industrial hygiene.
Within the following 3 weeks, 361 workers were given complete physical
examinations including blood counts and, where indicated, urine analyses. Ap
proximately 2,000 blood determinations were made and 96 urines examined. A
total of 47 air analyses were made, and 25 inks and solvents were analyzed quanti
tatively to determine their precise chemical composition.
Seven of the workers were found to be in need of immediate hospitalization.
Six were admitted to the Rockefeller Institute and one to Presbyterian Hospital.
One hundred and thirty-eight of the workers were found to be in need of medical
care and were referred either to their own physicians or the blood clinic at the
Rockefeller Institute. All of these workers were carefully followed by the division
of industrial hygiene and 123 reexamined. * * *
Conferences with the companies * * * resulted in the immediate discon
tinuance of the use of benzol-containing inks, and the substitution of nontoxic inks.
Special Adm inistrative Devices
Special devices relating to medical administration appear from time
to time in one place or another, such as boards and committees which
have to do with fee supervision, the medical examination of workers,
22 A description of the coordination of the New York Division of Industrial Hygiene with the Division
of Workmen’s Compensation is found in the Industrial Bulletin for October 1938, p. 470.
M E D IC A L
A ID
107
the rating of disabilities, and also appeals from such ratings when
made by compensation officers. Upon close examination, some of
these devices prove to be of local significance only. The remedy that
is tried may prove to be useful as an expedient but may be discarded
soon or superseded by another device.23 In 1938, in seven States
(Massachusetts, Michigan, New York, North Carolina, Ohio, Penn
sylvania, and West Virginia) there was a statutory provision for
special medical boards or referees, in some instances as a phase of
silicosis coverage. In any effort to supplement the administration by
setting up special medical and rating boards, care should be exercised
not to curtail or undermine the authority of the compensation com
mission, which, through long experience, may have an understanding
of the problems and situation of the injured worker superior to that
of some medical practitioners.
In 1936 an experiment of unusual interest was made in Alberta. A
traveling group of specialists was established, for making thorough
reexamination of all cases in which the claimants had expressed dis
satisfaction with their disability ratings or awards. This committee,
accompanied by the chairman of the compensation board and some
times by labor leaders, visited cities and also isolated mining com
munities. Its findings provided a basis for the reconsideration of
“ problem” cases. There were no formal sessions for “ hearings”
attended by attorneys. The method was that of diagnosis and
conference.
Importance o f Adequate Provision for Medical Supervision
Existing Provision for Medical Staffs
As of January 1, 1938, in 21 States 24 the workmen’s compensation
authority had a medical staff, but with full-time officers in only 8
instances.25 With the exception of Saskatchewan, which has parttime medical officers, all the Canadian funds have full-time medical
officers. In New Brunswick in 1936 a physician was appointed as a
member of the workmen’s compensation board. In Alberta the
chairman of the board is a physician.
A compensation commission can hardly cover its task of medical
supervision unless it has authority under the law, as well as funds, for
making upon its own initiative any needed arrangements for advisory
23 In the State of Washington the administration of the medieal-aid law was transferred in 1921 from the
State medical-aid board to the workmen’s compensation authority. This ended the experiment in that
State with dual responsibility in medical administration.
24 Arizona, California, Florida, Georgia, Illinois, Iowa, Massachusetts, Nevada, Nebraska, New Jersey,
New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina,
Virginia, Washington, and West Virginia.
25 Discussions of the necessity for and duties of a medical staff are found in U. S. Department of Labor,
Bureau of Labor Statistics Bull. No. 577 (pp. 159 et seq.) and in U. S. Department of Labor, Division of
fLab&r Standards Bull. No. 4 (pp. 184 et seq.).
108
W O R K M E N ’S
C O M P E N S A T IO N
medical committees, disability ratings by expert consultants, and
independent medical examinations. Most of the commissions, in
case of medical dispute or apparent prejudice, have authority to
select an independent physician to examine the worker, but in several
instances commissions reported lack of funds to pay for examinations
which they did not consider properly chargeable to the employer or
insurance carrier. One remedy for such deficiencies is an improved
method of financing the administration.
Notwithstanding the notable progress made in many States and
Provinces in the extent and quality of medical care provided for
injured workers, much remains to be gained by further improvement.
A necessary step in this direction, in most jurisdictions, is more ample
support for medical supervision and research. In the States the
salary scale for medical officers is seldom sufficient to enable the
commissions to secure and retain the highest type of medical person
nel on other than a part-time basis. In the existing situation such
attention as medical officers can give to the broader problem of the
type of medical aid received by workers is usually incidental to the
examination of bills and rating of injuries. Attention to the organ
ization of medical aid to injured workers is left to insurance carriers,
employers, and others who have a stake in this field of service. In
the circumstances it is inevitable that while some of the medical care
is excellent and well organized, in other instances the care is haphazard
and inferior.
Costs Under Alternative Types of Supervision
In the United States measurements are not available to show the
effect upon compensation cost of alternative types of supervision.
Comparisons of European industrial accident statistics emphasize
the importance of well-organized and qualified medical service in
preventing loss to employers and undue suffering and disability on
the part of injured workers. In the Monthly Labor Review for
February 1938 (p. 435) Dr. Alfred Manes invited attention to a “ very
instructive comparison” in compensation cost “ between two coun
tries which seem completely comparable— the Netherlands and
Switzerland.”
The legal requirements of the insurance system covering industrial accidents
are very similar in the two countries and the few deviations which do exist are
negligible. A comparison of the insurance costs of both countries for the years
1932-34, however, shows the following differences:26
26 It was explained by Dr. Manes that the differences in wage levels and medical fees in the jurisdictions
compared were not sufficiently significant to vitiate these figures.
109
MEDICAL AID
T a b l e 3. —
N et
C ost
o f In s u r a n c e f o r In d u str ia l A c c id e n ts
S w itz e r la n d 1 9 8 2 - 3 4
in
N e th e r l a n d s
and
,
Industry
Net costs (percentage of
wages)
Netherlands Switzerland
Shoe manufacture
____ _______
__________ _ _ _______
Paper manufacture __ _________ ________ ______________ _________ _
Mills _ _________ __ _______ _ _________________ ___ __ _
Breweries______ ___ _ __ __________ _______ _____ __________ _
B uilding_________________ __ __ __________ _______ _________
Generation and distribution of electricity __ ___ _____________ _________
3.9
5.1
9.3
9. 7
19. 7
7.0
6.1
10. 3
23. 3
18. 7
35.6
23.6
The Netherlands seem to have a most efficient medical service and this may
be the reason that the time of treatment in case of an accident is comparatively
short. Ninety-five percent of all workmen’s accidents there require less than 6
weeks of medical attention before the worker is able to return to work. Such
a favorable result is probably due to the fact that in the Netherlands all accidents,
even the least serious, are inspected by official experts, and, if necessary, the in
jured persons are attended by specialists.
Impact of Inexperience Upon Medical Supervision
In the course of the Bureau of Labor Statistics’ survey of compen
sation administration it was apparent that insufficient attention has
been given in the States to the study of loss prevention through medi
cal supervision. As to the use of statistics in such supervision, a
compensation officer of long experience summed up the situation by
saying that “ this is a matter upon which the commissions require
education.” In part, the cause of this lack of development is inex
perience. In many States the prevailing practice with regard to
appointment, qualifications, and tenure of compensation adminis
trators and personnel has had an adverse effect upon medical
supervision. Almost from the start of compensation administration
in the States, commissioners have deplored the rapid turn-over of
personnel. At the 1937 convention of the International Association
of Industrial Accident Boards and Commissions, Donald D. Garcelon,
chairman of the Maine Industrial Accident Commission, said in his
presidential address:
The rapid changes of personnel in compensation administration in this country
is nothing short of appalling. * * * Continuity of service, especially in a
highly technical branch such as this, is absolutely essential if we are to have really
efficient administration of existing laws, or the mature experience that would
warrant us in endeavoring to better them.
(U. S. Department of Labor, Division
of Labor Standards Bull. No. 17, p. 4.)
Where there is periodic turn-over of personnel, appointees facing the
medicolegal problems of workmen’s compensation often find them
selves in need of specialized knowledge which at the outset they lack.
Compensation officers have said that not less than 2 years of special
study and experience are needed for understanding the medical phase
110
W O R K M E N ’S COMPENSATION
of administration. In some jurisdictions compensation officers are
replaced, sometimes before they have completed their apprenticeship,
by others who may have to learn the subject anew. In consequence,
defects of supervision resulting from inexperience are inevitable in
many States.
In several of the Provinces of Canada where compensation adminis
tration has actually been upon a merit basis, though not under civil
service, and in Wisconsin where under a thorough application of civil
service the administration closely approaches a “ career service,”
experience indicates that with consistent adequate supervision abuses
incident to medical aid can be minimized and reasonable satisfaction
given to workers. Observation of the situation in the United States
and Canada indicates that this factor, after the legal provision for
unlimited aid has been enacted, is the controlling one. With con
sistent adequate supervision under an ample grant of authority, the
problems incident to medical aid are understood as they arise and
solved before they become chronic.
In the present situation there is little indication that significant
improvement is to be expected, in many States, until compensation
administration has been recognized as a special profession offering a
career to those qualified for this exacting branch of public service. In
the circumstances, indiscriminate criticism of the performance of com
pensation officers overlooks the cause of the difficulty; better service
cannot be had until its basis has been provided.
A ttitude o f Insurance Carriers
Since the supervision, if any, of the cure of injured workers (as
distinguished from supervision of medical expense) is often left almost
completely to the insurance carrier or employer, the attitude, organ
ization, and equipment of the carriers, for supervision, is of the
greatest importance to the worker and the State. This factor has
seldom received adequate consideration in administrative studies.
The impression has found currency that most insurance companies
rate more highly a physician’s skill on the witness stand than in the
curative art.27 Such an attitude on the part of the insurance carrier,
where it prevails, is an inheritance from the employer’s liability
insurance practice which was the predecessor of compensation insur
ance. A few carriers, for a number of years, have recognized that
“ it is not only good ethics but also good business to supply the best
of medical attention for the period it is needed.” 28
“The conclusion is inescapable that most of these doctors are selected or retained for their legal ability
in defeating employees’ claims rather than for their medical skill in healing their injuries.” (Dodd, Walter
F., Administration of Workmen’s Compensation, New York, Commonwealth Fund, 1936, p. 491.) This
statement is based upon surveys in industrial centers.
28 Idem, p. 491,
27
M E D IC A L
A ID
111
From time to time the medicolegal service of insurance carriers is
complained of at legislative hearings on proposals for amending the
compensation laws. Commonly, the service of all carriers is con
sidered as a unit, when such complaints are made. It should be
remembered that in many jurisdictions there are 40 or 50 carriers
writing compensation insurance policies, some of them with a very
small volume of business. Such insurance is sometimes accepted
reluctantly, or only where it accompanies other types of casualty
insurance written for the client. In the circumstances, adequate
servicing is sometimes difficult and the standing of all carriers is
affected by unfair competition. But so far no joint arrangements
have been made by insurance carriers for maintaining, by all insurers,
minimum standards of medical supervision applicable both to the
treating service and the conduct of medical witnesses.
The carriers which have superior medical supervision, based upon
high standards of performance and ethics, naturally look upon this
superiority as one of their competitive advantages over other carriers,
to be stressed when presenting their service features to employers who
are interested in securing fair and competent attention both to the
injuries and claims of workers. On the other hand, until more uni
formly fair medicolegal service is rendered by all insurers, the report of
unfairness at the hands of any carrier causes workers to look upon
insurance adjusters and doctors with suspicion, and at times to be
noncooperative in the curative program. The element of suspicion
has consequently become a factor in the medical care of workers, and
is a recognized and costly source of neurosis and delayed recovery.
In the absence of legislation imposing upon carriers minimum stand
ards as to organization for service to injured workers, the solution of
this problem awaits, in part, the realization by compensation-insurance
carriers that they have common interests in the supervision of the
medical phase of the compensation system. But in the absence of
cooperative action for maintaining standards of service and practice,
attention may be directed to the example of those insurance carriers
which, instead of making their medical supervision a subordinate
feature of the claims department, have set up their medical depart
ment as a scientifically minded agency for supervision, research, and
preventive activity, and which give both preemployment and con
tinuation training to their claims examiners.
C hap ter 7 .— Claim s A d m in istra tio n 1
In establishing the workmen’s compensation system one of the main
purposes was to provide a prompt, simple, convenient, and inexpensive
method of settling the claims of injured workers. This purpose has
not been completely realized in the States, although the system,
especially where administrative agencies have been created, has
demonstrated its superiority over common-law and statutory “ liabil
ity” remedies in the courts.
In examining the details of workmen’s compensation administration,
the needs and purposes the system was designed to meet should be
kept in mind at every point. Injured workers require not only sup
port during their period of incapacity but also specialized service for
restoring them to health and working opportunity. Twenty-five
or more years ago, it was apparent that such needs could be effi
ciently met only through an administrative agency. In practice,
the routine of such agencies is to be judged by the degree to which it
fits the condition and needs of injured workers.
Existing measurements of the kind of claims-settlement service
now rendered by the State agencies show that there has been little
change in performance since the survey made by the Bureau of Labor
Statistics in 1919-20. The situation could hardly have improved in
many jurisdictions under the prevailing circumstances as to legislation,
support, staffing, and personnel policies. Especially during the years
1930-35 there was a marked increase in the number of controverted
cases, which necessarily caused a widening lag in the payment of
compensation.2
In the States the main methods of settling workmen’s compensation
claims are: By direct settlement, as in Wisconsin; by the agreement
system, as in Pennsylvania; and by the hearing system, as in New
York. In seven jurisdictions (including Alaska) court procedure
remains, as a survival of earlier practice. In Canada, the Provinces
have adopted what may be called the Ontario plan. Before describ
ing these systems in detail a brief explanation is given of fundamental
differences between the Canadian and the State systems of procedure.
1 This chapter was published as an article in the Monthly Labor Review for June 1938, p. 1321.
2 Illustrative of the situation in many jurisdictions are the following figures, from a table in the report of
the Idaho Industrial Accident Board, 1932-34, which show the average number of days between date of
disability and date of first payment of compensation:
1928.
1929.
1930.
1931.
112
Average
interval
(days)
35. 32 1932.
37. 97 1933.
41.41 1934.
43.84
Average
interval
(days)
46.12
46. 30
42.31
CLAIM S A D M IN ISTRATIO N
113
In the legislative plan for setting up a compensation agency the
crucial question is whether or not to give the administration final
authority. The answer to this question affects profoundly the routine
of claim settlement. The administration that is given final authority
has a free hand in simplifying its procedure, but if decisions are
subject to court review it is necessary to develop a system that in
appealed cases will furnish the courts an acceptable basis for the
administrative decisions. The State systems are complicated by a
statutory provision for appeals to the courts. The Ontario Workmen’s
Compensation Act gave the compensation board final authority.
The Ontario plan proved satisfactory and was adopted in all the other
Provinces having workmen’s compensation acts, except that in New
Brunswick and Nova Scotia there is a very limited appeal on questions
of law.
Since giving final authority to a compensation agency is the most
far-reaching step affecting procedure that has been taken in com
pensation legislation, it is well to examine the considerations which
led to the adoption of the plan in Ontario.
Background o f Ontario A ct
The Ontario act was drafted by Sir William Ralph Meredith,
Chief Justice of Ontario, after an exhaustive study of workmen’s
compensation systems in Europe and America. His guiding prin
ciple was “ to get rid of the nuisance of litigation” and “ to have
swift justice meted out to the great body of men” even though some
mistakes might be made. He was shocked by some of the English
cases in which workmen had failed to recover, though, as he said,
the court decisions might from a legal point of view be technically
sound. The worker, apparently, was at a disadvantage in litigating
his claim in a court of law. Some mistakes are inevitable under any
system of procedure, but the Chief Justice’s study convinced him that
the mistakes made by an expert administrative board with final author
ity would be fewer and less costly than those made by the courts. He
therefore opposed any compromise giving the courts even the most
limited control over the administrative process: “ Half measures
which mitigate but do not remove injustice are, in my judgment,
to be avoided.” 3
3 The discussion of such points is found in the Final Report made by Sir William Ralph Meredith, vol.
2, pp. 510, 512 (1913), which is one of the most valuable documents in compensation literature. The crux
of the debate is in the lines quoted-’
Mr. W egenast. I would suggest that there might be an enumeration of what might be classed questions
of fact (as a basis for appeal to the courts).
Mr. M eredith. I would not complicate it that way.
Mr. W egenast. Y ou have to shut off appeal entirely?
Mr. M eredith. Certainly.
Mr. B ancroft. (P. 510.) Then of course the constitution of the board becomes of great importance.
Mr. M eredith. Of course everything depends on the constitution of the board; if it is a bad board the
whole thing will be a failure.
114
W O R K M E N ’ S CO M PEN SATIO N
Section 67 (1) of the Ontario Compensation Act, defining the juris
diction of the board, gave the administrative agency final authority.
The board shall have exclusive jurisdiction to examine into, hear and deter
mine all m atters and questions arising under this part and as to any m atter or
thing in respect to which any power, authority or discretion is conferred upon
the board, and the action or decision of the board thereon shall be final and
conclusive and shall not be open to question or review in any court and no pro
ceedings b y or before the board shall be restrained by injunction,
prohibition,
or process or proceeding in any court or be rem ovable b y certiorari or otherwise
into any court.
With complete emancipation from court interference or control
over its decisions, the workmen’s compensation authority was free to
develop its own routine, and virtually has no problem in relation to
procedure. In the light of experience, it adopts the most convenient,
economical, and swift methods of finding out what the injured worker
is entitled to and then mailing his compensation check. In all the
Provinces the claims-settlement routine is much the same, subject to
minor variations in forms and practice reflecting local peculiarities
of geography, population, and industry.4 The first important
contrast to bear in mind, when examining methods of claims settle
ment in the United States and Canada, is, then, that the Provincial
boards have complete control over their routine, while the State
administrations do not.5
Contrast Betw een Procedure o f States and Canadian Provinces
The Situation in the States
Although there is a fairly uniform system of claims administration
in Canada, adopted on its proved merits by all the Provinces having
workmen’s compensation acts, there is in the United States a variety
of systems ranging from the court administration found in seven
States (including Alaska) to the highly developed claims adminis
tration methods of Wisconsin set up under civil service or the “ merit
system.” Between these two extremes there is the widest diversity
of mechanism and practice. One compensation statute, the United
States Employees’ Compensation Act, closely resembles the Ontario
plan in regard to freedom from court appeals.
In some States, because of the deficient staffing of the administra
tion and inexperience resulting from rapid turn-over, the actual
claims administration is in effect left in the hands of the private insur
ance carriers, with only nominal supervision from the State agency.
4 For example, in Quebec the forms and reports are printed in two languages, English and French. Since
lawyers are often appointed as compensation administrators, it was inevitable that for a time in one or two
Provinces technicalities were overemphasized, and this led to personnel changes. But especially in Ontario
and British Columbia the routine, from the beginning of the administration, was informal, and the employ
ment of lawyers by claimants was discouraged as an unnecessary expense.
5An explanation is given later of how the courts, through their right to review administrative decisions,
can to some extent control the procedure of the compensation commissions.
CLA IM S A D M IN ISTRATIO N
115
In such States the claimant may actually get what the insurance
adjuster decides to give him, unless he requests a hearing before the
State agency. Under this situation, as indicated by State investi
gations, injured workers lose millions of dollars annually.6 In strong
contrast to such methods, which sometimes approximate nonadmin
istration by a State agency, New York installed what until recently
was a virtually universal “ hearing system” under which an effort was
made to have every injured worker attend, in person, a hearing upon
his possible claim. Such attendance on the whole, however, cost
workers a vast loss of time and much money in lost wages.7 The sys
tem was modified in April 1936 and the number of hearings curtailed.8
In some States the procedure is formal and technical like that in
the courts; in other States it is relatively informal. In all the States
except Nevada there is the right of court appeal, in some jurisdictions
with a new trial before a jury if desired, while in others the appeal is
restricted to questions of law. In Nevada the commission may be
sued in the courts. Where there is a wide latitude for appeal both
upon fact and law with a trial de novo in the courts, the hearing before
the commission may become a mere perfunctory gesture as the first
step toward a court trial. In this medley of methods the guiding
principles of compensation practice, as distinguished from litigation,
are often lost from sight.
Difference in Objectives
A second major contrast between the simple pattern of claims
administration in Ontario and that found in most of the States arises
from a difference in the object of the administrations. On the one
hand, the task of the Ontario claims administration is payment, while
on the other hand the task of all the State administrations, except in
exclusive-fund jurisdictions, is the supervision of payments to be
made by an employer or insurance carrier.9 To a certain extent, the
claims administration of the compensation agency in all private insur
ance States duplicates the work of claims examination done by the
insurance carriers.
So far as the payment of compensation is concerned, the purpose
of such supervision by the State agency is to make certain that injured
workmen are paid, by employers or insurance carriers, what they are
« The best-known examples of studies of losses by claimants on settlements are the Connor investigation
in New York, and the 1934 Pennsylvania survey. The investigation by Jeremiah F. Connor was made as
early as 1919, but similar conditions as to inadequate supervision are still found in a number of States. (U. S.
Department of Labor, Bureau of Labor Statistics Bull. No. 275, p. 117; Dodd, Walter F., Administration of
Workmen’s Compensation, New York, Commonwealth Fund, 1936, p. 108, Pennsylvania Department of
Labor and Industry, Special Bulletin No. 40, Pt. I-b, (1934).)
7 Bureau of Labor Statistics Bull. No. 511, p. 303.
8New York. Industrial Commissioner. Report, 1936, p. 7.
9 In exclusive-fund States and Provinces which permit self-insurance by employers, the claims adminis
tration of course has a supervisory function as to the self-insured or “own risk” employers.
116
W O R K M E N ’ S CO M PENSATION
entitled to under the law. All the types of public supervision of
claims administration, whether by a commissioner, a board or com
mission, or the courts, are expected to check upon the payments
made by private agencies or by competitive State funds. Their
administrative routine or procedure, however different it may be in
form, is for this primary purpose. And however it may be simplified
it remains a partial duplication of work done by private agencies.
The duplication is least in jurisdictions where there is virtual nonad
ministration by the State agency, and it is greatest in the jurisdictions
where the work of the State agency in claims supervision is diligent,
thorough, and comprehensive. With present methods this is the
dilemma faced by compensation administration under the private
insurance system; the closer the supervision the greater the
duplication.
Principal Types o f Claims Administration
The main features of the several types of claims administration
may be covered by a brief description.
Claims Procedure in Ontario
An account of the Ontario method of settling workmen’s compen
sation claims was given in the Monthly Labor Review for January
1936, as follows:
T h e Ontario system has developed a brisk claims routine, in the hands of
veteran em ployees who have been carefully trained for their special tasks.
W ith in 3 days after the occurrence of an industrial injury the em ployer m ust
send a report to the w orkm en’ s com pensation board.
A short, sim ple “ notice of
accident” form is sent in b y the em ployer in cases in which it is apparent th at
the disability will be less than 7 days, i. e., the “ waiting period” during which
indem nity is not paid bu t “ m edical aid” is furnished.
In cases in volving m edical
aid only no further report from the em ployer, and none from the em ployee, m ay
be necessary.
In the com pensable cases a fuller report is m ade b y the em ployer,
with details about the em ployee’ s earnings.
quired from the w orkm an and the physician.
In such cases a report is also re
W h en the em ployer’ s report of a compensable accident is received, a form letter
is im m ediately sent to the workm an, instructing him w hat to do.
A t the same
tim e, he is sent a form to be filled out b y him self, and another to be filled out by
his attending physician.
T h e physician usually m ails in his report separately.
W henever there is any appreciable lag in p aym en t b y the w orkm en’ s com pen
sation board, it arises from the em ployee’ s neglect to send in his claim.
at this point is guarded against b y a vigilant follow -up system .
D ela y
Tardiness in the
handling of claims received b y the board is m inim ized b y a close check on the
daily flow of work.
If the routine work preliminary to the p aym ent of a “ straight” claim is not
com pleted within the working day, som ebody m ust remain overtim e.
A sum
m ary of the flow of business is m ade each day and the percentage of claims that
have not m oved to their destination is so small as to be negligible.
It is estim ated th at between 80 and 90 percent of the claims received are
“ straight” cases.
There is no question about them .
Such claims pass auto-
CLAIM S A D M IN ISTRATIO N
117
m atically and im m ediately through the hands of the claims clerks and com puting
clerks, so th at practically all of the first paym ents are placed in the m ail within
2 days after the receipt of the necessary reports.10
T h e claims involving m edical aid only are scrutinized b y a “ claims clerk” ;
the compensable cases, in which indem nity is paid, are passed upon b y senior
members of the personnel called “ claims officers.”
Prom ptness is assured b y a
rule th at “ all com pensable claims in which the investigation is com pleted m ust
be ready for p aym en t the day following the com pletion of the investigation.”
T h e somewhat doubtful claims m ay be handled by a clerk or m ay be referred
to the chief claims officer.
Some of these m ay be referred to the workm en’ s
com pensation board for a ruling or decision.
Form erly, the award m ade b y a claims officer came to the desk of the chairman
for signature.
B u t M r. George W ilk ie refused to sign decisions which he lacked
tim e to study carefully, and placed final responsibility for an award on the claims
officer who makes it.
Such a procedure leaves the chairman with a fresh mind
when a disputed award is brought to him for a decision; he is not then placed
in the embarrassing position of having to reverse himself if he concludes that the
original decision of the claims officer was wrong.
T h e thoroughness of the labor of the clerical staff, medical officers, and claims
officers is attested b y the very small number of cases which require field investi
gation.
W h en more than 4 % million dollars are paid out in a year on com pensa
tion and m edical aid, and the number of disputed cases calling for field investi
gation is so small th at one m an can handle them all— with only occasional aid in
pinches— an extraordinary achievem ent in adm inistration is apparent.
Procedural M ethods in th e States
In the private insurance States the main patterns of claims adminis
tration, nominal or actual, are known as the direct-settlement system,
the agreement system, and the hearing system. In most jurisdictions
the three methods are mixed, while in a few the hearing system co
exists either with direct-settlement or the agreement system. Under
the direct-settlement plan, employers or insurance carriers begin pay
ment to the injured worker of their own initiative, subject to a super
visory check by the administering agency. The injured worker is
not asked to sign any papers other than receipts for his money, nor
does he have to agree to anything. He does not have to make any
bargain whatever with the employer or insurance carrier; the law
specifies what he is entitled to receive, and if he does not get it the
supervisory agency is supposed to correct the discrepancy either by
checking upon reports and receipts or through a conference or hearing,
formal or informal, attended by the interested parties. Under the
agreement system the employer or insurance carrier has the injured
worker agree to a certain settlement. Thereupon payment is made
to him, either immediately or after approval of the settlement by the
State agency.
Under lax or inadequate supervision, gross abuses may arise in
either of these informal systems of claims administration. Because
of such abuses, shown to have existed in New York by the Connor
10 Exact computations of promptness are not available.
118
W O R K M E N ’ S COM PENSATIO N
investigation in 1919, a drastic change was made in the New York
claims-administration routine and a public hearing was required in all
cases of industrial injury. In successful operation, such a system
would afford the most complete conceivable supervision of claims
adjustments by private agencies or the competitive fund. In prac
tice, it was never possible to get all the injured workers to whom
notices of hearings were sent to attend the hearings, and many of
those who did attend were bitterly disappointed to learn, after coming
to the hearing room, that they would get no money at all or no more
money than they had already been paid.
In between the supervisory procedure found in States where there
is direct settlement or the agreement system with inadequate super
vision, and the New York experiment with a universal hearing system,
is the Wisconsin routine. In this State most of the claims are paid
under the direct-settlement method, a limited number under “ com
promise settlements,” and the remainder as a result of conferences
and hearings, informal or formal. The supervisory methods are flexi
ble, and diligent attention is given to the injured worker’s rights.
But, as has been said, the routine does not represent the maximum
of simplicity or economy, since it is inevitably in part a duplication of
work done by the insurance adjusters.
Th e direct-settlem ent m eth od .— Most of the claims in Wisconsin are
disposed of by the direct-settlement method. Payment is made in
uncontested cases upon the initiative of the employer or insurance
carrier, under close supervision by the industrial commission. The
effort of the administration is to provide, through this plan, a “ speedy,
simple, and inexpensive procedure.” But in speeding up the pro
cedure, there is no relaxing of standards applicable to thoroughness in
the examination of reports or in the inquiries and hearings. In this
respect Wisconsin presents as good an example for study as may
be found in private insurance jurisdictions. The system has been
described in a study of the Industrial Commission of Wisconsin, by
A. J. Altmeyer,11 and more briefly in the 1932-34 report of the
Industrial Commission of Wisconsin on Workmen’s Compensation. In
describing its practice, the commission groups the claims under the
heading “ uncontested” and “ contested” cases.
U ncontested ca ses .— This term is applied to all cases in which applications for
the adju stm en t of the claim are not filed, although they m ay have given rise to
serious disputes between the parties.
If these disputes are adjusted through
correspondence or through inform al conferences, then the case is term ed “ uncon
tested. ”
I t has alw ays been the policy of the commission not to form ally approve any
settlem ents in “ u ncontested” cases.
In all such cases the com m ission tries to
determine whether the settlem ent is m ade in accordance with the requirements of
the law and when it discovers th at this has n ot been done the em ployer or insur-
n University of Wisconsin Studies in tUe Social Sciences and History, No. 17, 1932, p. 35.
119
CLAIM S A D M IN ISTRATIO N
ance carrier is advised to pay additional com pensation.
Since the commission
does not form ally approve the settlem ent, the case can be reopened at any tim e
within 6 years if it develops th at the full liability of the em ployer has not been
discharged.12
In checking settlem ents the com m ission relies principally upon the reports of
the employers and insurance carriers.
Em ployers are required to m ake a report
on the fourth day after the beginning of disability upon every accident and occupa
tional disease entitling an injured em ployee to com pensation.
I t also requires
th at the insurance companies or self-insured em ployers, on the eleventh day
after an injury occurs, shall file a report showing th at p aym ent has com m enced
or the reason for n ot m aking p aym en t.
A t the tim e paym ents are discontinued
for any reason, another report must be subm itted, and,
if a dispute
m em orandum m u st be attached advising of the nature of the dispute.
exist,
a
W h en a
final settlem ent is m ade this m ust be prom p tly reported to the commission and
such final report m u st be accom panied by a copy of the final receipt signed by
the injured em ployee.
Th e com m ission also requires the filing of doctor’s reports
in all cases in which there is any perm anent partial disability, or in which the
tem porary disability exceeded three weeks.
These several reports are used as a
check against each other, and a follow -up system is em ployed to see that they are
supplied prom p tly to the commission.
In addition to this system of reports from em ployers and insurance carriers,
the com m ission establishes direct contact with injured em ployees.
As soon as
the com m ission receives knowledge from any source of an accident to an em ployee
entitling him to com pensation, it sends him a circular letter advising him of his
rights and duties under the compensation act, which suggests also th at he write
the com m ission, if a dispute develops, or if he is in doubt upon any point.
The com m ission has also developed a plan for investigating and system atically
follow ing up cases in which there is a probability th at injured em ployees are
entitled to increased com pensation.
E very case which the com m ission’s safety
departm ent believes m ay possibly involve a violation of a general safety order
is investigated by one of the com m ission’s deputies.
If his investigation indicates
th at the accident was due to the em ployer’s failure to com ply with a general
order of the com m ission, the em ployer is advised of this fact.
If the em ployer
adm its liability, the com m ission sees to it th at the increased com pensation is
paid.
I f he disputes liability the m atter is brought on for form al hearing before
the commission.
Clases involving the em p loym en t of minors in violation of the child labor law,
which entitles th em to either “ double” or “ treble” com pensation, are handled by
the com m ission in a similar manner.
C ontested ca ses .— Contested cases are initiated by an application for the ad ju st
m ent of the claim, com ing usually from the injured em ployee, bu t som etim es from
the em ployer or insurance carrier.
Hearings upon these contested cases are
conducted at county seats and industrial centers throughout the State, to avoid
the expense to the interested parties of bringing witnesses to M adison.
These
hearings are conducted either by an examiner or b y one m em ber of the com m ission.
A com plete stenographic record is m ade of all testim ony taken, although the
proceedings are otherwise inform al.
Since October 1, 1933, examiners have made findings and orders upon m atters
heard b y th em .
This has obviated m uch of the delay which previously occurred
because of the necessity of the commission as a body deciding compensation
m atters.
The law perm itting examiners to m ake findings and orders in contested
12 In some cases the commission permits a compromise settlement, which, if approved, cannot be set aside
after 1 year from the date of approval.
120
W O R K M E N ’ S CO M PEN SATIO N
cases has resulted in speedier and more carefully considered decisions than other
wise could have been the case in view of the m ultifarious dem ands m ade upon the
tim e of m em bers of the com m ission.
T h e agreem ent s y s te m .— A description of the agreement-system
routine, as it operates in Pennsylvania, is found in the November
1937 Laborgraphic, published by the Pennsylvania Department of
Labor and Industry.
If a Pennsylvania em ployee is injured in the course of his em p loym ent, he
should n otify his em ployer at once.
The em ployer shall notify the departm ent
of labor and industry of the accident within 15 days.
If the injury disables the
worker for more than 7 days, an agreem ent should be m ade with the em ployer
for com pensation.
T w o copies of such agreem ent shall be sent within 30 days to
departm ent for approval.
em ployer are notified.
I f the agreem ent is approved, the em ployee and
T h e em ployee is sent a copy of the approved agreem ent
and com pensation shall be paid accordingly.
If disapproved, com pensation shall
be paid according to first agreem ent until case is finally settled b y revised agree
m ent or decision of w orkm en’s com pensation board.
I f em ployee and em ployer
fail to reach such an agreem ent, the em ployee m ay file a claim petition w ith the
board.
Th e board will assign the case for hearing and decision b y w orkm en’s
com pensation referee.
to the b oard .
Th e referee’s decision m ay be appealed b y either party
Further appeal m ay be m ade to a court of com m on pleas, and then
to the superior court, whose decision is final unless appeal is allowed by the State
supreme court.
The agreement system is slower than the direct-settlement method.
In theory, it has the advantage of giving the injured worker a chance
to look over the proposed settlement and correct possible errors or
injustice in computing the payment. In practice, the worker may not
know his rights under the compensation law; neither is he in a position
to bargain with the employer or insurance carrier; and consequently it
is open to question whether he should be required to sign an agree
ment before receiving the benefits specified in the statute. Investi
gations have shown that in the absence of vigilant supervision by the
State agency, the agreement system affords little protection to the
injured worker.
The hearing s y s te m .— The only example in the United States or
Canada of a claims system under which hearings have been scheduled
for all claims was established in New York after the Connor investi
gation in 1919. This “ hearing system,” as it has been called, was
explained to the conference of the International Association of In
dustrial Accident Boards and Commissions in 1929 by V. A. Zimmer,
the compensation director:
W e receive in N ew Y o rk State every year upwards of 50 0 ,0 0 0 reports of acci
dents sent in to the departm ent by the em ployers.
T h e com pensation bureau
sends every one of these injured workmen a claim form ; and we m ake up a case
folder and index it, even though we have no claim, if the paper indicates a possible
or probable prim a-facie disfigurement or anything of any serious nature on the face
of it, even though the disability is indicated as being less than 7 days.
T hen, on
every single claim th at comes in, even though the claim ant m ay allege disability
121
CLAIM S A D M IN ISTRATIO N
of only 2 days and no perm anent disability, we autom atically m ake up claims on
that form , and they are all indexed, numbered, and listed for calendar hearing.13
The compensation director said that a series of facts had indicated
the advisability of curtailing the number of hearings. In the annual
report of the New York Industrial Commissioner for 1936, it was
said that the division of workmen’s compensation was weeding out
the noncompensable injury cases and forestalling the useless filing of
claims.
T h e new procedure is as follow s: U pon receipt of reports on minor injuries
which indicate th at the worker will not lose more than 1 w eek’s tim e or suffer any
perm anent injury, a letter o f advice, rather than a com pensation claim form , is
sent to the injured worker.
In simple language the letter informs the worker
th at the nature of his injury appears to be such th at he will not be eligible for com
pensation, but th at if this inform ation is inaccurate he should prom p tly file a claim,
or if he desires to protect himself against any future com plication resulting from
the injury he m ay file a claim and a hearing will be held on it.
This change in
procedure was the result of a study of a number of cases which clearly indicated
th at m any workers suffering only slight noncompensable injury accepted the
receipt of a compensation claim form as an invitation for filing a claim.
In its conception, the New York hearing system provides the worker
an ironclad protection against an unjust settlement. In practice,
the disadvantages of the system are: The worker’s loss of time and
money in attending hearings; delays and continuances arising from
congested hearing dockets; the pressure of minor cases, making it
difficult for the referees to give adequate consideration to the serious
injury cases; 14 inconvenience to physicians having to attend the
hearings; and expense to the employers and insurance carriers for
attendance or representation.
Methods of Claim Settlement Under Court Administration
Court administration of compensation claims is still found in
Alabama, Alaska, Louisiana, New Hampshire, New Mexico, Tennes
see, and Wyoming. So far as is known, no constructive contribution
to the theory and practice of compensation claims-settlement methods
has been made by any American jurisdiction under court administra
tion. On the contrary, the merit of the systems displacing court
administration may, as a rule, be gaged by the relative completeness
of their departure from court attitudes and practices. Except in the
State of Wyoming, where the judges have installed a form of adminis
tration under their clerks or stenographers, the court administration
of workmen’s compensation is virtually nonadministration except in
contested cases. The judges seldom have time, in most jurisdictions,
either for examining the files relating to workmen’s compensation
claims, or for giving special study to workmen’s compensation legisla-
!3 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 511, p. 302.
14 Compensation referees conducted 378,883 hearings throughout the State during 1936. (Report of the
New York Industrial Commissioner, 1936, p. 8.)
215193°— 40------- 9
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W O R K M E N ’ S CO M PEN SATIO N
tion and the intricate problems peculiar to this branch of administra
tion. Under court administration, as a rule, there are no accessible
records (outside the private files of the insurance carriers) of the
majority of the cases in regard to which no court action is sought by
the parties. If accident reports are sent in at all to any public agency,
they are seldom used for statistical purposes or as an aid to accident
prevention or a check on violations of labor laws. In the cases in
which a record of a claim agreement is filed with the courts for approval
the customary routine is for the clerk of the court to examine the
document to see if both parties have signed and acknowledged it in
proper form. If so, he “ rubber stamps” it and that is the end of the
transaction as far as any public supervision is concerned. Under this
system, the abuses, especially as to delay and flagrant underpayment,
are more serious and prevalent than under any other form of claims
administration.15
Contested Cases
While uncontested claims commonly receive no further attention
from the State agency than a supervisory check as to correctness of
settlement, made by clerks, claims officers, and in rare instances by
the medical staff of the commission, a hearing system is provided for
contested cases. Few compensation commissions have exact figures
as to the percentage of contested and uncontested claims. Estimates
given by administrators in the States as to the percent of cases settled
without contest range from “ probably 80 percent, including ‘medical
only’ cases” in Colorado to more than 99 percent in Arizona. The
basis upon which the percentage of contested and uncontested cases is
estimated is seldom exactly the same in any two jurisdictions, hence it
should be understood when interstate comparisons are attempted that
the figures range from broad guesses to fairly precise calculations.16
As noted, the New York plan was until recently a virtually universal
hearing system regardless of contest. Payments in compensable cases
start without waiting for the hearing.
The available figures, while faulty for purposes of interstate com
parison, show clearly that the actual work of administration is or
should be mainly supervisory, even though the compensation agency
is described as a “ quasi-judicial” body. But where the administration
is inadequate the demands upon its time made by the contested cases
may unbalance its working program and seriously impair the super
vision required by the majority of the claims.
15 This statement is not applicable to Wyoming, where the court administration is reinforced by the claims
administration of an exclusive State fund and some defects of court administration are counteracted. Alaska
was not visited in the course of the survey made by the Bureau of Labor Statistics.
16 Tables covering this and other points in administration will be suggested in the Manual on Industrial
Injury Statistics, Bureau of Labor Statistics Bull. No. 667.
CLAIM S A D M IN ISTRATIO N
123
Under the Ontario plan the type of contested hearing that prevails
in the States is unknown. There are no controversial hearings before
a referee. Instead, in the very few cases requiring unusual investiga
tion, a claims officer visits the claimant, interviews him, and then,
without taking more of the injured worker’s time, talks with the
doctor, the employer, and other persons who know anything about the
case. His report and findings are then submitted to the chief claims
officer as the basis for a decision. If the claimant is not satisfied with
the result he can appeal to the board. Although the decision of the
board is final as far as court appeal is concerned, the case can be
reopened at any time if fresh evidence is discovered or new phases of
the injury develop. In British Columbia it was estimated in 1936
that hearings on disputed cases were required only in from one-tenth
to one-twentieth of 1 percent of the claims. In Manitoba so few dis
putes remain unadjusted after informal conferences that it has not
been necessary to report a hearing in shorthand oftener than once in
6 months.
In most of the States the proportion of contested cases, and also
the time consumed in the controversies, increased during the depres
sion. In Minnesota it was said by a compensation officer, in 1936,
that contested “ cases running 3 and 4 days are now as common as were
cases running 1 day before the depression. Many cases consume an
entire day.” The increasing tendency of insurance carriers to con
test claims during the years 1930-35 arose from an attempt to “ save
the last 10 percent” at a time when losses instead of profits were
experienced. As for the claimants, the desperate situation of many
workers during this period explains their determination to get all
possible benefits after an injury. The situation was expressed in these
words by a labor leader: “ They [the insurance companies] gyp us
and we try to gyp them.” In such an atmosphere it is difficult for
the commission to make prompt and just settlement of claims.
Hearings
Place of Hearings
Compensation laws provide that if a hearing upon a claim is re
quired, it shall be held at a place reasonably accessible to the worker.
To meet this need, the commissioners in a body, or a commissioner,
or an officer authorized to conduct hearings (variously known as an
“ examiner,” “ referee,” “ arbitrator,” or “ deputy commissioner” )
travel in a circuit and hold hearings in the towns nearest to places
where accidents have occurred. In Connecticut and New York, there
is regional decentralization as to hearings. In New York the officers
travel out from the branch offices, but are subject to a centralized
authority, while in Connecticut the commissioners are appointed
124
W O R K M E N ’S COMPENSATION
by the Governor for separate districts. Under a 1937 amendment
in Ohio there is now partial decentralization as to hearings, through
the creation of four boards of claims, composed of three members
each, appointed by the Governor.17 The desirability of decentrali
zation is open to question. In the absence of central control, cleav
ages appear in a type of administration that demands, for success,
harmony of viewpoint and uniformity of action upon many matters
of law and practice; and the services of the main office, if any, are
deficient especially in regard to safety work, claim supervision,
records, and statistics.
Procedure in Hearings Upon Claims
As already noted, one of the original aims of compensation legis
lation was to provide a simple, swift, and inexpensive method by
which an injured worker could receive financial and medical aid.
The passage of compensation statutes marked a revolt against the
delay, uncertainty, and costliness of court remedies. The change
from court to commission determination of claims was, however,
a step into an unexplored field of administration. The technique
essential to the success of the new procedure was imperfectly under
stood, if not distrusted. In the States the original purpose of com
pensation legislation to provide prompt and inexpensive service was
impaired by halfway measures which left compensation procedure
with one foot, so to speak, still in the courts. In Canada, as it has
been explained, there has been virtually complete emancipation from
court rules and practices in most of the Provinces. The Ontario
act provides:
S e c t io n 64. The commissioners shall * * * conduct their proceedings
in such manner as they may deem most convenient for the proper discharge
and speedy dispatch of business.
Sec . 67. * * * The action or decision of the board * * * shall be final
and conclusive and shall not be open to question or review in any court and no
proceedings by or before the board shall be restrained by injunction, prohibition,
or other process or proceeding in any court or be removable by certiorari or
otherwise into any court.
In the States, the desirability of making the administrative decision
conclusive has seldom been discussed, and it is commonly supposed
that there would be constitutional obstacles to such a development.18
17 In Hawaii (not visited in the course of the present survey) there are 4 industrial accident boards each
consisting of 5 members.
Downey’s argument against appeals from the administrative agency to the courts has had no influence
upon compensation development in the States. He said: “The grounds for allowing an appeal from the
administrative board to a court are rather a matter of constitutional fetichism than of reasoned policy * * *.
It nowhere appears that court review of compensation cases has served any useful end * * *. The commis
sioners ought to be, and often are, fully equal to the judges in intellectual ability and general attainments.
They are daily deciding compensation cases and are familiar as no court of law can be with the practical
effect of particular interpretations.” (Downey, E. H.: Workmen’s Compensation. New York, Macmillan
Co., 1924, pp. 73-75.)
CLAIMS ADMINISTRATION
125
There can be no complete break with court methods in passing upon
workmen’s compensation claims as long as it is necessary for the
compensation commissions to build up paper records of cases with a
regard to the kind of evidence that may be required by the courts as
a basis for sustaining the decisions made by the commissions. In
their work, the commissioners in the States have been compelled to
keep one eye upon the courts. This has warped the development of
compensation administration in most of the States, giving the com
missions a legalistic twist that has hampered their full development as
social-service agencies.
Most of the compensation acts specifically provide that the compen
sation officers, in conducting hearings, shall not be bound by court
rules of evidence, and that the procedure shall be informal.
Where the compensation procedure is made cumbersome and tech
nical, serious delays are inevitable. Official and unofficial investiga
tions in Illinois, Ohio, and New Jersey have shown the abuses that
thrive in such a situation.19
The report of the Joint Commission on Study of the Workmen’s
Compensation Act and Practices, submitted to the New Jersey Legis
lature, April 12, 1935, said:
This (com pensation) act never contem plated that agreements of settlements
should be reached in a room th at is a replica of a courtroom and following as nearly
as it can court procedure.
T h e referees are looked upon as judicial officers, when
they in fact should not be so.
M a n y of the unfortunates that are called before
them in form al hearings are not versed in court procedure, some are illiterate, a
num ber cannot even speak English.
T h ey stand alone, unrepresented, while an
alert, well-versed, and inform ed representative of an employer, who knows his
rights, is opposed to him.
This statement is subject to modification at the point where the
claimant is described as “ unrepresented.” In some instances he may
be so, but under the system prevailing in Illinois, New Jersey, and
Ohio, it is often necessary for the claimant to have an attorney at
formal hearings since he is in no position to “ stand alone, unrepre
sented,” and he is frequently represented at a cost he can ill afford to
bear, especially as the service rendered by some attorneys engaged by
claimants is inexpert or slipshod, according to the universal report
of commissioners.
The Ohio act fastens upon the compensation agency a cumbersome
and costly procedure in “ rehearings” prefatory to court appeals.
Attorneys in Ohio are active in securing business from compensation
claimants, and as a result there is an excessive number of controverted
19 It is not the purpose of the present study to expose the abnormal shortcomings of any particular admin
istration but to evaluate the working of types of administration and their desirability. Where there
has been gross laxity in the appointment of hearing officers, no system, of course, would be efficient. A
fuller discussion of handicapped hearing systems, with specific reference to alleged abuses, may be found in
Administration of Workmen’s Compensation, by Walter F. Dodd, New York, Commonwealth Fund, 1936,
under the topic “Hearings.”
126
W O R K M E N ’ S CO M PEN SATIO N
and appealed cases. A “ rehearing” is required before an appeal may
be taken to the courts, and under the Ohio law an entirely new record
must be made, under court rules of evidence, at such rehearings. The
impact of this provision upon the entire Ohio compensation system is
highly detrimental. An undue amount of the attention of the more
expert compensation personnel and also of the commissioners is
consumed by the controversial aspects of claim settlement, and in
consequence the commissioners are deprived of time needed for ade
quate attention to the major business of their vast insurance enter
prise. The handicapping of the Ohio fund by such an undesirable
feature in the law is especially unfortunate, because the fund has been
publicized as a “ model” and consequently exposed to attack by oppo
nents of State insurance. Prompt performance is not possible under
a cumbersome procedure, the remedy for which is primarily a change
in the law.
Workmen’s Compensation Personnel
To guard against bias in the conduct of claims administration and
hearings, in most jurisdictions the appointing authority takes care
that both employees and employers are represented on the commis
sion. In practice, if compensation administration is perceptibly
affected by “ bias,” the leaning is usually favorable to the claimant.
With but few exceptions, compensation officers report that they give
the claimant “ the benefit of the doubt,” in deciding upon the pre
ponderance of the evidence. Several compensation officers report
that they are impartial and favor neither one side nor the other.
In general, the administrators and the courts hold that the compensa
tion act is social legislation to be liberally interpreted. On the one
hand, some labor organizations criticize an administration or certain
of its officers as “ employer minded,” but on the other hand insurance
carriers insist that the administrations are either liberal or “ ultra
liberal.”
Personal observation of hearings leads to the conclusion that where
there is dissatisfaction with the manner of conducting hearings (under
the rules applicable to the existing type of hearings), the difficulty
arises not so much from bias but from the hearing officer’s inexperi
ence, lack of especial fitness for this type of work, or imperfect under
standing of the social phases of compensation insurance. There are
hearing officers whose work is notable, and in several jurisdictions the
hearings are conducted on a high level of efficiency. But some hear
ing officers bring to bear upon their tasks a business or legal experi
ence insufficiently ripened by acquaintance with the medical and
vocational problems which in the main are the substance of compen
sation situations. Consequently, there has been a sterile legalistic
drift in compensation administration in many of the States. The
things done may be skillfully done, without being the most desirable
CLAIMS ADMINISTRATION
127
things to do in the circumstances. In some cases the procedure may
be obviously harmful to an injured worker.
In general, the officers conducting hearings are hard-working and
capable persons. In some instances, their travel and hearing routine
is exhausting. Some of the deficiencies in the conduct of hearings
arise from the overcrowded hearing schedules. In certain jurisdic
tions or in some circuits it is not possible for any officer to give ade
quate attention to the volume of business awaiting disposal. There
have been charges that some compensation officers are slackers. In
a few instances the charges are well attested, but on the whole such
a situation is so exceptional in compensation administration as scarcely
to deserve mention in a Nation-wide study. Some such adminis
trative failures are inevitable wherever many appointments are made
upon a political basis regardless of the special qualifications for
compensation work of the persons appointed to office.
Medical Controversies 20
The most serious and common defect in the conduct of compensa
tion hearings in the States arises from the toleration of prolonged
medical controversies. Many compensation officers do not know the
best method of handling, or preferably stopping, public medical con
troversies over the condition of injured workmen in the presence of
the unfortunate victims of industrial accidents. If some injured
workers are not already “ shell shocked” or neurotic before they attend
a hearing and listen to the medical testimony, they are indeed hardy
and nonsuggestible if they leave the hearings in other than a hopeless
state of mind. It is a common occurrence for medical witnesses, in
order to obtain a maximum disability rating for the worker, to testify
loudly and emphatically that the injured man will never be able to
resume his accustomed occupation, that he is seriously and perma
nently disabled, that his condition will get worse instead of better,
and as an occasional climax that the worker may die soon.21 Such a
20 See also ch. 6 (p. 98).
21 This statement rests upon personal observation of medical controversies, which, in some jurisdictions,
may continue for 2 or more entire days in a single case.
Joseph A. Parks, Chairman (1937) of the Massachusetts Department of Industrial Accidents, in U. S.
Bureau of Labor Statistics Bull. No. 577, p. 172, commented on the harmful effect upon the injured worker
of listening to medical testimony about his disability as follows:
The doctors wdll testify very glibly in order to establish the man’s case so that he may get compensation,
forgetting entirely that they are doing everything they can to put the man on the shelf where he will not be
able to work any more. In their endeavor to help the attorney put the case across so that the commis
sioner will award compensation, physicians often do the man an injustice.
Let me give you an illustration of this. A man in one of the large cities of Massachusetts, who was a
woodworker, had a serious injury to one of his hands, the hand that was needed in his work. Five doctors,
one after the other, got up and testified that that man could never be a woodworker again. He was a man,
not yet 45 years of age, who had never done anything but woodworking in this particular city * * *
and these doctors were advertising broadcast to that city that he was through as a woodworker—let anybody
take notice that this man cannot work as a woodworker any more.
Why were they doing this? To establish the fact that he should get $18 a week compensation, and he
was a man accustomed to making about $45 a week.
When the doctors were through, I called the man over and said, “Here, I will tell you what I would do
if I were you. Don’t take any notice of these doctors who are condemning you to oblivion.” The tears
came in his eyes, he liked his work. I said, “You go back to work; do the best you can.” He burst into
tears and said, “I will.” Within 2 weeks that man was back at work as a woodworker. For all I know, he
is working today. That was some years ago.
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W O R K M E N ’S COMPENSATION
practice in connection with hearings has long been recognized as highly
detrimental to the worker and sometimes responsible for irreparable
harm. But in spite of its condemnation the abuse is widely prevalent
in the States.
In Canada, commissioners said that public medical controversy in
the presence of the injured worker is unknown in their compensation
practice. Under the procedure in the States the proper practice is for
the hearing officer, as soon as a medical controversy begins, to refer
the injured worker either to the medical staff of the commission or to
an impartial medical expert for examination. Controversial medical
testimony is an outstanding example of “ hang-overs” from court
procedure grafted upon compensation practice by legislatures and
administrators acquainted with court methods but less familiar with
the more scientific method of inquiry and the care needed by injured
persons. A drastic reform at this point awaits the public recognition,
in the States, that workmen’s compensation administration is a new
professional specialty and not a revamping of the accustomed phases
of law practice. Examples of the proper handling of medical contro
versies may be found in several of the more advanced jurisdictions,
especially in Massachusetts and New York, but nowhere in the States
has controversial testimony been completely eliminated.
Appeals to Courts
A study of claims procedure in the States shows that the main
chronic difficulty in regard to uncontested cases is the loss sustained
by injured workers through deficient supervision of the process, while
in regard to contested and especially the appealed cases the chronic
difficulty is the delay and cost incident to the type of procedure that
is provided for handling controversies. From time to time these
deficiencies are measured and also investigated. There is underlying
some of these measurements or exposures the assumption that the kind
of administration being measured would be satisfactory if some of the
slack could be taken up. In the light of a comprehensive survey,
however, it is apparent that the defects arise in large part from the
basis of the administration.
A reconsideration of the basis of compensation procedure in the
States is long overdue and urgently needed, because it is evident that
the principles best suited to the settlement of claims of injured workers
are not generally understood either by compensation administrators,
legislatures, or the constituencies having most to do with securing
amendments of the compensation acts. The most common example
of such misapprehension is the sporadic introduction of bills in legis
latures to widen the scope of appeals from administrative decisions to
the courts. Those who reap a profit from litigation have in many
localities led workers to overestimate the value of their constitutional
CLAIMS ADMINISTRATION
129
right to court controversy in compensation cases, and the worker has
seldom examined the argument either as to its applicability to com
pensation procedure or the cost of such “ rights” to him.
If the so-called constitutional right of appeal had proved advanta
geous to injured workers, its unsuitability to the compensation system
might be overlooked. But court appeals in compensation cases have
proved, on the whole, to be both harmful to the administration and cost
ly to the workers. It is unfortunate that the compensation commissions
have not presented in their reports statements and tables which would
make plain to workers their losses on court appeals. The report of the
Industrial Commission of Minnesota for the years 1933-34 shows
that of 87 cases appealed to the supreme court, 46 were affirmed, 6
modified, 7 reversed, 8 dismissed, and 20 were still pending. From
such a statement it is apparent that all parties lost, in Minnesota
through appealing, because the few revisions of awards by the supreme
court would have amounted to less than the attorneys' fees and court
costs. To the workers, however, the information is meaningless as
presented, because it does not show in dollars and cents the difference
between amounts awarded by the commission and by the court
decisions.
In Nevada and Virginia, workers have discovered that they have
more to lose than gain in the courts and have almost ceased appealing.
The Nevada Industrial Commission claims that it has “ by far the
lowest percentage of controverted claims” (meaning court trials)
“ of any State in the Union, and this results in a saving to the tax
payers of many thousands of dollars in court costs each year. During
this biennium” (1934-36) “ two cases, which were filed in the previous
period by dissatisfied claimants against the commission, have been
adjudicated, resulting in a victory for the commission in one instance,
an adjustment without having to resort to final court action in a second
case, and a third is still pending in the United States District Court.” 22
In Virginia in the year 1932 there were 13 cases appealed to the
State supreme court of appeals. In nine of these cases the appeal
was denied, in two cases the decision of the commission was affirmed,
in no case was the commission's decision reversed, and two cases are
pending. In 1934 out of 14 cases appealed, the appeal was denied in
10 cases, two cases were pending, and there were two reversals of
the decision. The Virginia report, like the Minnesota report, does
not show whether the appeals were mainly taken by claimants or by
the insurance carriers, hence it is impossible to tell which parties lost
the most by appeals, but it is apparent that the percentage of reversals
of the commission by the court is so small that it would be more than
counterbalanced by the aggregate court costs and attorneys' fees,
leaving a net loss for all parties on the prolonged controversy.
22 Nevada Industrial Commission. Report, 1934-38, p. 7.
130
W O R K M E N ’ S COMPENSATION
In certain jurisdictions the widest possible latitude of appeal is
found, sometimes secured through the influence of workers upon the
legislature, and occasionally through the influence of attorneys. The
Texas Workmen’s Compensation Act allows complete freedom of
appeal from the decision of the commission both upon questions of
fact and law, followed by a trial de novo in the lower courts with
further opportunity for appeals to the higher courts. A study of the
cost to the workers of such appeals was made for the Texas State
Federation of Labor. Tables prepared in that study show that in
all Texas Employers Insurance Association cases appealed from the
award of the industrial accident board during the years 1932-34,
the board’s awards totaled $685,102, the court judgments $623,828,
the claimants’ legal expense $207,943,23and the claimants’ net recovery
$415,885. These figures, showing a net loss to claimants of $269,216,
exclusive of incidental expenses and interest, confirms the conclusions
upon which the Ontario plan for the settling of claims was based.24
The Texas experience with court appeals from the administrative
decision is of vital interest to workers because in that State there is
the latitude of appeal, both upon fact and law, with trial de novo
which some local organizations of workers are seeking to obtain in
other States. The industrial accident board commented upon the
situation in its biennial report September 1, 1932, to August 31, 1934:
D uring the year ending Au gu st 31, 1932, a total of 1,265 cases were appealed
from the industrial accident board *
*
*.
I t was just slightly more than
43 percent of the contested cases passed on b y the board.
* *
*
O f the
1,265 cases appealed to the courts only 745 had been tried on January 1, 1933.
T h e remaining 520, or 41 percent, are still pending in the courts.
O f the abovem entioned 745, in which judgm ents were rendered, m an y were settled b y agreed
ju d gm en t im m ediately after they were appealed, and a num ber have now been
appealed to the court of civil appeals.
Practically every one of these settlem ents
on agreed judgm ents could have been m ade before the industrial accident board
23 “Claimants’ legal expense” is based on the statutory legal fee of one-third of the amount recovered.
It does not include additional expense incurred by the claimant for witness fees and other necessary inci
dental expenses of a trial which undoubtedly are very considerable.
24 From time to time the desirability of barring appeals to the courts, in compensation practice, is reexam
ined by legislatures in Canada. In Manitoba, in March 1935, all 15 members of a special committee for
studying the act and administration voted against changing this provision of the act. Reasons for continu
ing the existing plan under which the board’s decisions are final were given in the Winnipeg Tribune, Mar.
12, 1935:
The present system provides greater and more certain benefits to the injured workmen than would a
system of unlimited appeal. In 9 cases out of 10, the workmen cannot afford to appeal, and the costs of
appeal would be out of all proportion to the added damages he might collect.
The practice, uniform throughout Canada, of making the Provincial compensation board the final arbiter
* * * is at once the most efficient and the most reliable method of securing adequate compensation for
those who are injured in industrial pursuits.
It is quite true that such a system has a tendency toward rigidity, and that it theoretically conflicts with
a canon of British common law. But periodical revisions such as that now being carried out in Manitoba
are an adequate safeguard against undue rigidity, and until costs of appeal cease to be in themselves a handi
cap to claimants, it is better to have the claims promptly and finally adjudicated.
It is of especial interest in this connection that the chairman of the Manitoba board took the initiative
in proposing to allow court appeals, saying that the board could not be right every time. This gave work
men and employers the opportunity for a unanimous vote of confidence in administrative decisions.
CLAIMS ADMINISTRATION
131
and court costs would have been eliminated and attorneys’ fees decreased. The
result would have been beneficial both to the employers who paid premiums,
and to the employees who were entitled to the compensation.
From every point of approach it is plain that constitutional rights
to litigation, superimposed upon compensation administration in the
States, are a burden instead of an advantage to the claimant. Labor’s
main chance for more satisfactory handling of compensation claims
is not through appeals to the courts, but through a program for im
proving the compensation law and administration.
Mr. Downey has said that “ the grounds for allowing an appeal
from the administrative board to a court are rather a matter of con
stitutional fetichism than of reasoned policy.” On the other hand it
has been said that “ under our conditions it would be unwise to remove
the restraint of judicial review unless we could build up a personnel
with an independence and a tenure comparable to that of the courts.”
But it is apparent that the judicial review of a small percentage of
the cases handled by a compensation board is not a satisfactory
remedy for an undesirable personnel situation. In the present survey
no instance has been found where the deficiency of an administration
has been made good by advantages derived from the court review of
decisions. A cumbersome procedure intensifies instead of cures the
evils in such a situation, while the chance for an appeal to the courts
has sometimes diverted the attention of workers from more suitable
remedies for an intolerable situation.25
If an examination of the law shows that in any jurisdiction the
constitution makes it necessary to superimpose litigation upon the
service methods of settling compensation claims, it is of course pos
sible to change constitutional provisions at points where they block
socially desirable developments. In Idaho in 1936, by a referendum
vote, the State constitution was amended so as to eliminate inter
mediate appeals and to provide that in compensation cases the
supreme court shall have jurisdiction to review questions of law only
upon direct appeal from orders of the industrial accident board.
National conferences on labor legislation have recommended that
“ appeals from decrees” of the compensation agency “ should not be
allowed except on questions of law and should be carried direct to the
highest court.” 26 In the face of such a recommendation and the
accumulated experience of a quarter of a century, some local labor
groups have continued to advocate statutory changes to widen in
stead of restrict appeals to the courts.
25 For a statement of these contrasting viewpoints, see Downey, E. H., Workmen’s Compensation, New
York, Macmillan Co., 1924, pp. 73-74, and Dodd, Walter F., Administration of Workmen’s Compensa
tion, New York, Commonwealth Fund, 1936, p. 785, footnote 3.
26 U. S. Department of Labor, Division of Labor Standards Bull. No. 12, p. 98.
Chapter 8.— Allied Services of W orkm en’s Compensa
tion Adm inistration
Broadening Scope o f Service of Compensation Administration
The history of workmen’s compensation in the States and Provinces
shows a marked increase in liberality of benefits and also in the
spread of service to workers. The early compensation acts were
experimental, and their main object was to give the worker a sub
stitute for damage suits for personal injuries. Because of high esti
mates of the cost of the new remedy, the scale of payment was low,
and in some jurisdictions not even medical aid was included. Out
standing compensation administrators maintained, however, that it
was not only humane but economical to provide accident-prevention
service, to furnish ample medical care, and to aid in restoring perma
nently disabled workers to vocational usefulness.
In several jurisdictions the broadening of the law and adminis
tration was stimulated by examination of the leading compensation
systems of the world and also by case studies, made by the commis
sions, into the situation and needs of injured workers and their
dependents. Before the close of the first decade of workmen’s com
pensation, some of the commissions were rendering a wide range of
service. The capstone of the legal provision of aid to injured work
ers by the compensation commissions and related agencies is the
Federal Vocational Act of 1920, under which the Federal Govern
ment cooperates in the State programs for the rehabilitation of
disabled workers.
Statutory Basis o f Related Services in Compensation Administra^
tion
There are few examples in the jurisdictions of an inclusive pro
vision in the act for coordinating the related services in compensation
administration, although there may be found isolated references to
safety or rehabilitation activities. In California, however, a well
thought out plan of action emerged within a few years after the
beginning of the compensation system. In 1917 the commission’s
plan for developing a complete program of service was embodied in a
preamble (Scope and Intent) superimposed by legislative enactment
upon the earlier section 1. This declaration of purpose, a striking
departure from the perfunctory clauses with which compensation
132
133
ALLIED SERVICES
acts usually begin, provides a summary of the main services of
compensation administration.1
Section 1.
This act and each
and every part thereof is an expression of the
police power and is also intended to m ake effective and apply to a com plete
system of w orkm en’ s com pensation the provisions of section 17 % of article 20
and section 21 of article 20 of the Constitution of the State of California.
A com plete system of workm en’ s com pensation includes adequate provision
for the com fort, health, safety and general welfare of any and all em ployees
and those dependent upon them for support, to the extent of relieving from the
consequences of any injury incurred b y employees in the course of their em p loy
m ent, irrespective of
the fault of
any pa rty ;
also full provision for
securing
safety in places of em p loym en t, full provision for such m edical, surgical, hos
pital and other rem edial treatm ent as is requisite to cure and relieve from the
effects of such injury, full provision for adequate insurance coverage
against
the liability to p a y or furnish compensation, full provision for regulating such
insurance coverage in all its aspects, including the establishm ent and m anage
m en t of a State com pensation insurance fund, full provision for otherwise secur
ing the paym en t of com pensation and full provision for vesting power, authority
and jurisdiction in an adm inistrative body w ith all the requisite governmental
functions to determine any m atter arising under this act, to the end th at the
adm inistration of this act shall accomplish substantial justice in all cases expe
ditiously, inexpensively, and w ithout incumbrance of a ny character; all of which
m atters contained in this section are expressly declared to be the social public
policy of this State, binding upon all departm ents of the State governm ent.
It is plain from an examination of this section of the California
act that all the services mentioned can hardly be rendered by a
compensation authority without the help of other public agencies.
Under such a development in the legal base of administration, it
becomes a part of the commission’s task to arrange for cooperation
with other governmental units having related purposes. The last
clause of the section, also unusual in a compensation act, makes the
rendering of the related services by other agencies obligatory, and
pledges the united power of all departments to the task of safeguard
ing and assuring justice to those within the scope of the compensation
act. The administration, of course, determines whether such a pre
amble turns out to be rhetoric or a vital force, but no better legal
basis for the coordination of related services has ever been written
into compensation statutes.
Administrative
Basis o f Related Services
Compensation
Under
W orkm en’s
Although in most States there has been an incomplete development
of the coordinated services, an example of comprehensive arrangements
for securing the varied services needed in compensation administration
1 The explicit statement of the elements of a complete system of services contained in sec. 1 of the Cali
fornia act has been omitted from the consolidation and revision of the compensation law as published in the
Labor Code of 1937. The section may be found, however, in earlier editions of the act, and appears on p. 7
of the 1933 edition. This is an illustration of the fact that the most advanced developments of compensation
legislation are not always found in the latest publications or legislation.
134
W O R K M E N ’S COMPENSATION
is found in Wisconsin. In this State distinct administrative units,
both within and outside of the industrial commission, furnish spe
cialized attention at points involving relationships of claim settle
ments with the safety, rehabilitation, and child-labor laws.2 The
plan of cooperation proceeds under a carefully formulated routine which
assures prompt reference of reports and attention to inquiries and
requests for action.
In the following discussion of the related activities of compensation
administration, each type of service will be spoken of as though it
had its own administrative unit, as in the Wisconsin plan. This is
for convenience only. In some jurisdictions there has been little
specialization in the arrangements, and a number of services would be
rendered by the same members of the staff. In this chapter the
emphasis is on the administrative arrangements for obtaining the
related services rather than on the services themselves.
In the jurisdictions the provision for administrative service under
the workmen’s compensation act, other than claims adjudication,
ranged in 1937 from one clerk employed by an ex officio commissioner3
to the highly specialized arrangements in New York, where the
division of workmen’s compensation is one of the many divisions of
the department of labor, with the varied labor activities integrated
under a single head. In some jurisdictions not highly industrialized,
the labor functions are rudimentary and their administration is merged
with the work of the department of agriculture, the department of
commerce, or the department of industry. In a few instances, vigi
lant and well-informed compensation commissioners render broad
service without the help of specialized units or personnel, while in
other instances the service available to a compensation commission
through specialized agencies has not been utilized.4
In practice, the mobilizing of needed services to injured workers by
the compensation commission depends largely upon the commission’s
knowledge of the various things to be done and the approved ways
2In a study of the Industrial Commission of Wisconsin (1932), (p. 103), A. J. Altmeyer, then secretary of
the commission, says: “The Commission is to be commended for the close correlation existing in the admin
istration of the workmen’s compensation act, rehabilitation law, the safety law, and the child-labor law.
It is questionable whether any other State excels Wisconsin in the correlation of workmen’s compensation,
rehabilitation, and safety. Certainly, no other State excels it in the correlation of workmen’s compensation
and child labor or, perhaps, even approaches it.” (See also U. S. Department of Labor, Children’s Bureau
Publication No. 214 (1932): The Illegally Employed Minor and the Workmen’s Compensation Law, for
information on this latter phase of administration in Wisconsin.)
2 As in Alabama.
4 An example of the absence of coordinated services is given in the report on a survey of administration in
Oklahoma made in 1935 by the Brookings Institution (Organization and Administration of Oklahoma,
The Brookings Institution, p. 195):
Closely related activities are carried on by different and separate organizations. No method has been
devised to coordinate them. Influenced by the Federal Government, the rehabilitation unit in the depart
ment of education has two cooperative agreements, one with the department of labor covering employment
service, and the other with the industrial commission. The former has a breath of vitality, but the latter,
entered into with due formality on November 23, 1920, is so much a dead letter that certain responsible offi
cers of the present organization did not even know of its existence. Experience in public administration
indicates that such cooperative agreements tend to become mere scraps of paper unless some definite organ
ization is provided to give them effect.
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135
of doing them, and also upon teamwork on the part of each official
having a share in the program. In some jurisdictions, because of
periodic turn-over of personnel, cooperation that had been well
started has lapsed, and even the existence of a formally accepted plan
has been forgotten. In a number of jurisdictions there is no program
under which an outgoing administration instructs the incoming one in
regard to the arrangements for coordinating the related services of
workmen’s compensation, and literature on all phases of this subject
has not been at hand for use in training the personnel.
The four main fields in which arrangements are usually found for
coordinating administrative activities under workmen’s compensation
are vocational rehabilitation, child-labor regulation, safety service,
and insurance supervision.
Cooperation W ith Rehabilitation Agency
Rehabilitation Coordination in the United States
Rehabilitation coordination is considered in detail in chapter 9,
Cooperation of Workmen’s Compensation Administrations with
Rehabilitation Agencies, but is also examined in this connection to
indicate its place in the system of allied services.
A distinctive feature of rehabilitation coordination in the States
is the statutory basis for joint action found in both Federal and State
laws. This feature of allied compensation administration is encouraged
by Federal grants to the States in the form of matched appropriations
for rehabilitation. As a prerequisite to Federal aid, it is stipulated that
“ in those States where a State workmen’s compensation board, or
other State board, department, or agency exists, charged with the
administration of the State workmen’s compensation or liability laws,
the legislature shall provide that a plan of cooperation be formulated
between such board, department, or agency, and the State board
charged with the administration of this act, such plan to be effective
when approved by the governor of the State.” Several States incor
porated in the compensation act a provision for the required coopera
tion; as, for example, this paragraph in the North Dakota act:
I t is hereby declared to be the intent of this act to restore to industry those
injured in th e course of e m p loy m en t; and the bureau shall aid in carrying out the
intent, assisting industrial cripples to obtain appropriate training, education, and
em p loym en t, b y cooperating with the Federal Board of Vocational Rehabilitation.
In the plan of cooperation between State and Federal governments
under the Vocational Rehabilitation Act a formal agreement for
coordinating compensation and rehabilitation services is required. The
vitality of such an agreement depends mainly upon what arrangement
is made for furnishing the rehabilitation agency prompt and systematic
information in regard to permanent disabilities resulting from indus
trial injuries. If such information is furnished by the compensation
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W O R K M E N ’S COMPENSATION
commission, and if a plan is developed for the rehabilitation of injured
employees, the compensation authority may facilitate the program
by making advancements of compensation or, as in some States, by
awarding extra allowances for maintenance during retraining, since the
major problem in many cases is that of support during retraining. The
compensation commission may seek the assistance of the rehabilita
tion official in such matters as the selection of artificial members and
appliances for disabled workers, and consult him before making lump
sum settlements. The rehabilitation agency may report to the com
pensation authority the steps taken and results achieved in the re
training and placement of workers under the joint program.
The variety of practice in the various States in regard to furnishing
to the rehabilitation office information relating to disabilities is shown
by typical answers given during the administrative survey in 1934-37
to the question: “ Does the commission systematically notify the
[rehabilitation agency] of all cases of major scheduled permanent
disability?” In 11 jurisdictions the answer was “ no,” without quali
fication; in 3, “ not systematic” ; in 2, “ temporarily lapsed” ; in 2,
“ sporadic” ; in 2, “ just starting” ; in 1, “ a bit indefinite” ; in 1, “ almost
inoperative.” In 9 jurisdictions the answer was “ yes.” To the 9
affirmative answers may be added 4 others, subject to the explanation
that in such cases the rehabilitation officer comes for the information
at intervals ranging from daily to once a month.
In one jurisdiction a local survey disclosed that the compensation
commission was not aware when interviewed, that an agreement for
cooperation existed. Moreover, in most of the court-administration
States there is no arrangement by which cooperation for rehabilitation
can take place through a central workmen’s compensation authority.
In some jurisdictions it was explained that the practice of notifying
the rehabilitation agency of disability cases lagged or lapsed because
the rehabilitation office was “ swamped,” had “ a long waiting list,”
and was “ understaffed.” During 1934-36 the difficulty of finding
employment for partially disabled workers was mentioned in some
jurisdictions as a reason for neglecting the cooperation of compensa
tion and rehabilitation agencies.
The most effective arrangement found for supplying the rehabilita
tion agency with the information needed in disability cases was for
the compensation authority to notify the rehabilitation office promptly
when accident reports indicating permanent disabling injuries were
received by the compensation commission. In some jurisdictions an
alternative plan, under which the rehabilitation authority secures
information directly from the reports and files in the compensation
office, has worked well, and such an arrangement may be preferable
if the compensation agency is understaffed. In isolated instances the
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137
compensation commission and the rehabilitation agency have jointly
maintained a liaison clerk.
The survey disclosed that in many instances delay in notifying the
rehabilitation office of injury cases was an obstacle to the rehabilitation
of workers. In a number of jurisdictions there was need for closer
and more cordial contact between the compensation and rehabilitation
agencies, and a reexamination of the opportunity for fuller service to
disabled workers through a more active program. In most jurisdic
tions the benefit system of the compensation acts makes no special
provision for the maintenance of disabled workers during the period
of retraining.5
At the 1938 meeting of the International Association of Industrial
Accident Boards and Commissions, John A. Kratz, chief of the Voca
tional Rehabilitation Division, United States Office of Education,
outlined the fundamentals of an effective system of cooperation
between workmen’s compensation and rehabilitation agencies.6 Such
a system would provide for the following activities:
BY THE COMPENSATION COMMISSION
1. R eport to the rehabilitation service prom p tly and regularly: (1) Cases of
m ajor physical im pairm en t; (2) cases of m inor physical im pairm ent who are
potential rehabilitation cases; (3) controversial com pensation cases, probably in
need of rehabilitation service.
2. Furnish to the rehabilitation service such supplem entary reports on cases
as are needed to determine eligibility and feasibility; and inform the rehabilitation
service on m ajor decisions or actions b y the com pensation commission with respect
to those cases.
3. Consult the rehabilitation service regarding cases in which there m ay be an
adju stm en t of com pensation schedules in order to facilitate rehabilitation of the
client.
4. Consult the rehabilitation service regarding awards of lum p sums or com m u
tations of com pensation which would affect rehabilitation of the client.
BY THE BEHABILITATION SERVICE
1. R ep ort periodically to the com pensation commission the rehabilitation serv
ice rendered to cases reported b y the commission.
2. M a k e investigations for the commission of cases applying for lum p-sum
awards or com m utation of com pensation who are eligible for or in process of
rehabilitation.
3. A d vise the com m ission regarding the advisability of extending m edical treat
m ent to special cases.
4. U pon request m ake special investigation of com pensation clients for the
com m ission, when such can be handled advantageously.
JOINT COOPERATION
1. E ach agency to keep inform ed relative to the provisions of the other’s laws
and policies of adm inistration, and to support im provem ents in both laws.
5 See also ch. 5 (p. 85).
6 Cooperation of Workmen’s Compensation and Rehabilitation Agencies, by John A. Kratz, in U. S.
Department of Labor, Division of Labor Standards Bull. No. 24, Washington, 1939.
215193°— 40------- 10
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W O R K M E N ’ S COMPENSATION
2. E ach agency to participate, whenever feasible, in m eetings and conferences
called b y the other for the purpose of pooling inform ation and exchanging experi
ences.
W ith respect to joint cooperation, it is m y opinion th a t the tw o agencies m ay
be m u tu ally helpful in advice and support regarding needed changes in com pensa
tion and rehabilitation acts.
M achinery of cooperation:
*
*
*
A liaison officer or clerk [should be] em p loyed b y the com m ission, or
b y th e rehabilitation departm ent or join tly, with the follow ing duties:
1. T o review all reports of injuries and bring to the attention of the rehabilita
tion departm ent all cases poten tially eligible for and in need of rehabilitation.
2. T o furnish additional inform ation regarding any case when requested by
the rehabilitation departm ent.
3. T o advise the rehabilitation departm ent as to changes or adjustm ents in
awards on all cases reported.
Rehabilitation in Canada
In Canada the rehabilitation of injured workers is not aided by the
Federal Government, but depends upon the initiative of the Provincial
workmen’s compensation boards. The Ontario act (sec. 51) provides:
T o aid in getting injured workm en back to work and to assist in lessening or
rem oving any handicap resulting from their injuries, the Board m a y take such
measures and m ake such expenditures as it m a y deem necessary or expedient
*
*
*
provided th at the total expenditure under the provisions of this section
shall n ot exceed $ 1 0 0 ,0 0 0 in any calendar year.
In spite of this broad authorization, it was reported in 1936 that
little had been expended upon rehabilitation.7 Provisions similar to
section 51 of the Ontario act are found in several other Provinces, but
in 1936 were almost or entirely inoperative. In most of the Provinces
it was said that no specialized staff or institution was available for
rehabilitation purposes. In some instances the commissioners or the
chief claims official gave personal attention to rehabilitation cases.
On the whole, the rehabilitation program in Canada is undeveloped.
It is evident that amendments to the laws, beginning in 1924, con
templated greater activity in this field on the part of the compensation
administrations than has been realized.
Cooperation W ith the ChikULabor U n it in the United States
In some jurisdictions when reports of accidents to children 18 years
of age or less are received by the compensation commission, investiga
tion is made to ascertain the child’s actual age and whether there has
been compliance with the laws relating to work permits and prohibited
employments. If there is no specialized administrative unit for
7 The term “rehabilitation/’ in this study, means retraining and placement or vocational supervision
during readjustment, rather than the use of physiotherapy, which in the United States is usually considered
a feature of medical aid. The Ontario fund and the Oregon fund, have facilities for furnishing physiothera
peutic treatment to injured workers, and usually refer to such service as rehabilitation. A complete program
may include both physiotherapy and vocational features.
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139
enforcing child-labor legislation, any investigation undertaken is made
by some other agency or directly by the compensation commission.
In a number of jurisdictions there is a specialized administrative
unit for such purposes, although the arrangements and the names used
vary from State to State. In Wisconsin, there is a woman-and-child
labor department; in New Jersey, there is a bureau of women and
children; in New York, within the division of women in industry, there
is a bureau of enforcement of woman- and child-labor laws; in Dela
ware there are separate child-labor and women’s labor divisions under
the labor commission; in California, there is a division of industrial
welfare and a division of labor statistics and law enforcement. But
even the presence of specialized units for safeguarding the welfare of
children in industry does not necessarily mean that the compensation
commission requests them to aid in the investigation of certain acci
dents. There may be no legal basis, in the compensation statute, for
action by the compensation authority in case of injuries to children
involving a violation of the child-labor law.
In 25 States compensation officials interviewed in the course of this
survey said that reports of injuries to minors were not referred to any
other agency for special investigation, and in most instances such a
reply meant that no special investigation was made by the compensa
tion authority. Typical replies given by administrators in States
where the compensation agency does not call upon any special admin
istrative unit for investigating injuries to children are: “ There is no
coordination” ; “ there are no prohibited occupations mentioned in the
compensation act” ; “ we have no jurisdiction” ; “ would recommend
suit for damages” ; “ we have no child-labor problem.”
The report upon a recent study of work accidents to minors in
Illinois emphasizes, among other things, the necessity for comprehen
sive and adequate provisions in workmen’s compensation acts relating
to injuries to minors, placing the initiative in the administering agency
rather than the courts; for close supervision of claims adjustment,
medical aid, and attorneys’ fees; and for competent, supervised guard
ianship of the disposition of money awarded to injured minors, in
order that it may be conserved or expended in such a way as to
advance the restoration, education, and rehabilitation of injured
minors.8
The procedure in Wisconsin when an accident report is received
either showing directly or indicating that the injury involves the illegal
employment of a minor is described in A. J. Altmeyer’s study of The
Industrial Commission of Wisconsin: 9
8 Klein, Earl E.: Work Accidents to Minors in Illinois. Chicago, University of Chicago Press, 1938.
See especially the summary of findings and conclusions, pp. 207-223.
6 University of Wisconsin. Studies in the Social Sciences and History No. 17 (1932), pp. 60 et seq.
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W O R K M E N ’S COMPENSATION
I t has already been stated th at reports of accidents to children 18 years of age
or less are referred to the w om an and child labor departm ent for attention.
T he
child-labor perm it records are first checked to ascertain whether there was a perm it
in effect at the tim e of injury, or if a perm it had ever been issued for the em p loy
m en t of the child.
Perm its are not required for the em p loym ent of children 17 10
years of age or older.
H ow ever, it has been found th at a considerable proportion
of the children whose ages are reported as 17 years are in reality under 17 years
and th at a sm all percentage of the children whose ages are reported as 18 years
are really under 17 years.
I f the correct age of the child cannot be ascertained
from the com m ission’ s records, the em ployer is asked for a special report of age.
T h is report gives date of birth, place of birth, names of parents, and the kind of
proof of age secured when the child was hired.
T he additional inform ation is
used to check the records of the bureau of vital statistics of the State board of
health.
If these records do not contain the inform ation sought, the com m ission
com m unicates directly with the child to secure definite proof of his age.
I f he
fails to furnish it, the child-labor perm it officer in the locality is asked to secure
it.
H ow ever, if all these attem p ts prove fruitless, a deputy of the commission
attem p ts to secure the inform ation when in the locality.
T h e w om an and child labor departm ent also scrutinizes the report of accident
to determine whether the occupation at which the child was injured is one prohib
ited b y statute.
If it is found th at the child should have a child-labor perm it, or
was em ployed at a prohibited occupation at the tim e he was injured, a letter is
sent to the em ployer requesting an explanation of the violation.
T h e em ployer’s
attention is called to the fact th at he is required to pay increased com pensation
because of such violation in addition to the fact th at he has placed him self liable
to a pen alty because of violation of the child-labor law.
T h e com m ission points
out in this letter th at while it has discretion as to whether it shall com m ence legal
action for the imposition of the pen alty, it has no power to waive p aym en t of the
increased compensation.
T h e m erits of this plan as a scheme of com pensation to be com pared with
com m on-law damages will not be discussed.
Necessarily, it possesses the same
advantage claimed for com pensation in general as contrasted w ith em ployers’ lia
bility.
Its merits as a device for securing better compliance w ith the child-labor
law are obvious.
I t is practically autom atic in its application, whereas legal
action for the im position of a pen alty requires th at the commission request the
attorney general to com m ence prosecution.
M oreover, judges and juries are not
always sym pathetic w ith restrictions placed upon child labor, so th at convictions
are not certain and fines actually im posed are sm all.
The Wisconsin experience supports the advocacy of a provision
in compensation laws for extra compensation to children injured while
illegally employed. The provision was inserted in the Wisconsin
law in 1917. There has been a marked decline in the proportion of
children employed in Wisconsin since 1920, and there may be some
connection between the compensation program and that decline.
The following statement of increased compensation paid by employers
for injuries to illegally employed minors, over a period of 15 years,
indicates that where such a provision is consistently enforced its
educational effect upon employers leads to improved employment
10 Changed to 18 by a 1931 amendment.
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practices and safer working conditions, which avert a burdensome
increase in compensation costs.
T o t a l in c r e a s e d
co m p en s a tio n
1 9 2 1 _______________________________________ ____________________ $ 2 4 ,4 9 9 .3 7
1 9 2 6 ___________________________________________________________
22, 434. 24
1 9 3 1 ___________________________________________________________
8 , 7 8 7 .2 0
1 9 3 6 ___________________________________________________________
392. 01
In the absence of a child-labor program the fact that a compensa
tion agency knows little or nothing about work injuries to children
illegally employed is not satisfactory evidence that such injuries
are not occurring, since in many jurisdictions the reporting practices
are lax, and in some instances injuries to illegally employed minors
might not be reported or the age might be incorrectly stated.
Although studies have been made of experience in one or more
States, there has been a lack of data upon the Nation-wide experience
of injuries to minors. In United States Children’s Bureau Publication
No. 214 (1932), The Illegally Employed Minor and the Workmen’s
Compensation Law (p.l), it is said: “ It is estimated that at least 1 in
every 10 persons reported as injured in the course of employment in
the United States is under 21 years of age. Many of these are mere
children.” 11 Occasional local estimates appear in publications of
the State compensation commissions. For instance, a safety bulletin
issued by the Oregon Industrial Accident Commission in April 1938
contains the warning: “ Approximately 8 percent of the 410,000 people
employed in Oregon are under the age of 17 years. Hundreds of
them will be injured during the coming year.”
Apparently there has been a decline in the proportion of children
employed in industry, and certainly this is so since 1930, according
to the statements of compensation commissioners. One difficulty
in estimating the Nation-wide extent of the decline is that the most
dependable information upon injuries to children is furnished by a
few States, in which there is an advanced development of child-labor
legislation, while in jurisdictions not paying extra compensation in
case of injuries to minors illegally employed little information is
available, as a rule, in regard to the extent and seriousness of injuries
to minors. The relative decline in the employment of children in
States having advanced labor legislation may be greater than in other
areas, since it may be due in part to effective law enforcement.
11 Citing the Nineteenth Annual Report of the Chief of the Children’s Bureau, 1931 (p. 13), which says
that the estimate is made upon “a comparative summary of the information now available from published
reports and from unpublished sources for 17 States. * * * These States, according to the 1920 census,
employed three-fourths of the minors both under 16 and under 18 years of age who were reported at work
in nonagricultural occupations in the United States.”
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W O R K M E N ’ S COMPENSATION
Coordination in Canada for Enforcing Child-Labor Provisions
In the course of the survey of compensation administration in
Canada in 1935-36 no cooperation with specialized woman and childlabor units was reported by the officials interviewed. In none of the
Provinces was there a provision for special compensation to minors
illegally employed. In Saskatchewan the administration doubted
its right to compensate for injuries arising out of illegal employment.
In Manitoba the bureau of labor gets copies of all accident reports
directly from employers, in addition to the report sent to the compen
sation administration. In New Brunswick the compensation board
has its own factory inspector, who investigates work permits.
Cooperation W ith Safety and Sanitation Services in the United
States
Wherever compensation administration is developed as a complete
system of services, the program for the prevention of injuries involves
activity in the field of safety and sanitation. Where there are no
specialized units supervising the safety and health of workers, it
becomes necessary for the compensation authority to render what
service is possible with the means at its disposal. In a number of
States the authority and personnel for safety service are lodged in
the labor department or its equivalent. In Wisconsin, under the
industrial commission, there is a safety and sanitation department.
With the increasing emphasis upon the study and prevention of
occupational disease, specialized service relating to industrial hygiene
is emerging. For example, in New York, there is a division of indus
trial hygiene; in Connecticut, a bureau of occupational disease;
in Massachusetts, a division of occupational hygiene; in Ohio, a
division of safety and hygiene. Whether the specialized service in
safety and hygiene is lodged in the workmen’s compensation authority
or elsewhere, it is desirable to recognize in the compensation act the
connection of accident prevention with compensation administration.
For a model provision, reference is made to the 1917 preamble of the
California compensation act (new section 1, Scope and Intent).
In the course of the Bureau of Labor Statistics survey during 193437, compensation officials in 25 States 12 said that the compensation
act did not authorize them to perform safety work. In two other
jurisdictions it was reported that while the act authorized safety work,
there was “ no special appropriation for it” and “ no personnel was
provided.” In the absence of a plan for cooperating with safety and
sanitation units, the compensation authority in most of these States
12 The States are not named here, because to do so might create a wrong impression of the safety work in
certain jurisdictions. The situation is complicated; for instance, the authority administering the compen
sation act and also other labor laws may be active in accident prevention, but through units other than the
compensation department and under other legislation.
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143
would have no accident-prevention program. Such answers indicate
the desirability of having the scope of compensation service stated in
the statute.
In 24 States compensation officials said that accident reports, or
information prepared from them, were referred to the inspection units
or safety and sanitation department, but in some instances the fur
nishing of information was limited and unsystematic. Typical replies
in States where the safety coordination was limited are that infor
mation is given only in very serious or fatal cases; only where there are
violations of regulations; where we suspect a dangerous condition
exists.
The methods by which the safety units received information relating
to compensation-accidents reports varied widely. In one State the
compensation authority sent cards monthly to the inspection office;
in other States, the safety director called or sent for the desired infor
mation daily or at less frequent intervals. In some States a duplicate
accident report was sent directly to the factory or mine inspector by
the employer or insurance carrier.
In Wisconsin, New York, and a few other jurisdictions, there is a
well-developed plan for promptly furnishing adequate information
upon accident reports to the inspection and research units. In Wis
consin the original accident reports are sent to the safety department
as soon as they are received. After checking, the reports are returned
to the compensation office. The importance of prompt investigation
is emphasized, because the employer is more receptive to safety sug
gestions immediately after an accident has occurred in his plant than
at any other time. In several States the value of the information
furnished to inspectors is much impaired by the lag in its trans
mission. In New York a copy of the pertinent part of the accident
report is made available to the division of factory inspection. For
New York City, in which 60 percent of the claims arise, a photostat
machine is used; in the up-State cities the information is copied on
cards by hand.
Important developments in Pennsylvania in 1938, in the use of
accident statistics in the program of prevention, are described in the
Keystone 13 for July 1938. Because of its informational value to all
jurisdictions, the account is quoted in full.
A ccident Statistics Used fo r A ccident Prevention
In the past, one of the difficulties with the use of accident statistics for accidentprevention purposes has been that it has not been possible to secure from them the
real accident cause. Frequently accident statistics were designed primarily for
workmen’s compensation purposes and stressed the nature of the injury rather
than the cause of the accident.
u A review published monthly by the Pennsylvania Department of Labor and Industry.
144
W O R K M E N ’S COMPENSATION
This difficulty has been recognized by the department of labor and industry,
and since January 1, 1938, a new accident-report form and a new accident-cause
code have been used. Both of these have been designed to give a picture of the
real cause of the accident. This code is a modification of the well-known Heinrich
Cause Code. The new report form and the cause code have been developed by
the department with excellent technical assistance from the U. S. Bureau of Labor
Statistics, and that Bureau continues its cooperation in the development of the
present program.
It was also recognized that no matter how meritorious the cause code used
might be, it could only be of real value as a means of preventing accidents if the
accident causes were coded accurately. A safety engineer, who is a graduate
mechanical engineer with wide inspection and other industrial experience, has
been placed in charge of cause coding to insure this accuracy.
The accident statistics secured as a result of this new cause code, it is believed,
present the best picture of the real causes of industrial accidents thus far secured
in any State.
However, the statistical tables showing the real causes of accidents in themselves
could never prevent accidents. It is the Ube of this information by the interested
bureaus and divisions of the State government and by industry that makes them
valuable.
The department has, therefore, placed in charge of the analysis of these data a
trained statistician, who devotes his entire time to analyzing the causes of acci
dents for the purpose of making recommendations for removing them. This
analysis involves concentration upon individual accident causes as well as the
study of the accident records of specific industries and individual establishments.
The recommendations of this statistical analyst are made to the accident preven
tion division of the bureau of inspection.
In order to make these recommendations effective, an accident prevention
engineer has been appointed in each of the seven supervising factory inspectors'
offices scattered throughout the State. The recommendations of the statistical
analyst are submitted to these men through the chief of the accident-prevention
section, together with such safety-promotion material or programs of accident
prevention as may have been developed by him to make the recommendations
effective and otherwise promote the cause of safety.
The accident-prevention engineers in the various supervising factory inspectors'
offices are also responsible for working with the factory inspectors in the district,
assisting them in the investigation of accidents, and in promoting an interest in
safety in the individual plants, industries, and communities in their territories.
In the manner described above, the department believes that it will make
effective use of the accident statistics which have been prepared, and the employer,
when making out an accident report, can feel assured that he is not only fulfilling
a requirement of the law, but also, to the degree that he uses care in answering
all the questions asked on the report, he is making a substantial contribution to
the prevention of accidents in the future.
In this manner, accident reports and accident statistics are prepared, not to be
filed away unused, but for the purpose of eliminating, as far as humanly possible,
the cause of suffering and misery which follows in the wake of accidents.
What is accomplished through cooperation with the safety unit
depends mainly upon the personnel available for inspection and educa
tional purposes and also upon the funds provided for traveling expenses.
In some States the safety work is just beginning or in an early stage
of development on a basis of very meager support and with relatively
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untrained personnel. In many States in 1935 the inspection service
was at a low ebb on account of economy cuts. The service was defi
cient in extent or quality in virtually all jurisdictions.14
In the foregoing paragraphs emphasis has been placed on bringing
the original report materials to the eye of the factory inspectors. No
human mind, however, can digest and interpret all of the implications
of such a mass of information without tabulation and condensation,
which are part of the statistician’s work. But in many of the States,
especially during 1935-37, there was no statistician of professional
rank available in the compensation departments or the labor depart
ments. In a few jurisdictions the commissions felt no need for a
trained statistician; in some others, this official had been dropped in
the early stages of the “ economy” programs which prevailed in the
administrations during 1930-36. In a number of States the statistical
work was done by clerks who were following rule-of-thumb methods;
some of them knew the reason for what they were doing, and others
did not.
In short, the coordinating of related services for the prevention of
injuries, in recent years, has been deficient, except in a few jurisdictions,
because of: (1) Lack of statutory authority in some States; (2) lack of
a systematic plan of cooperation; and (3) inadequate personnel and
support.
Difficulties arising from inadequate appropriations for safety service
under workmen’s compensation could be minimized, so far as some
commissions are concerned, by a change in the method of support,
whereby the administrative expense of the commission would be as
sessed upon insurance carriers and self-insurers, or, in the case of
State funds, taken directly out of the premium income.15
Safety Coordination in Canada
Some of the Provincial compensation boards cooperate for the pur
pose of accident prevention, both with the inspection service of the
departments of labor and with employers’ safety associations.16 In
other Provinces, information relating to accident reports is sent only
to the safety associations. In Saskatchewan, an abstract of every
case is sent to the inspector of the department of labor. In British
Columbia, the boiler and machinery inspection department and the
electrical-energy inspection department are under the workmen’s
compensation board. In Alberta, the pay-roll inspectors are used as
u A statement in the 1935-36 report of the Pennsylvania Department of Labor and Industry (p. 37) is
applicable to the entire situation: “The performance of the growing duties (of the bureau of inspection) was
made harder by the fact that the bureau’s personnel was smaller in 1935 and 1936 than in previous years. At
no time since the creation of the department have there been enough inspectors to enforce the laws as thor
oughly as desired.”
is See ch. 9 (p.153).
is Most of *he interviews with Canadian administrators were in 1936.
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W O R K M E N ’S COMPENSATION
safety inspectors, but the fund's accident prevention officer is an engi
neer by profession with 7 years' experience in safety work.
A distinctive feature of Canadian administration is the arrangement,
in four Provinces,17 by which the compensation funds support the
employers' safety associations. These are organized along the lines
of industrial classification. Groups of employers, or “ classifications,"
who do not desire to cooperate are not required to do so; consequently,
there may be gaps in this type of safety work. One compensation
board using this system has its own inspector to check on the work
of the safety associations. The most highly developed employers’
safety organization in Canada is found in Ontario; it is the Industrial
Accident Prevention Associations, with headquarters in Toronto.
The plan and methods of the organized safety work of the Ontario
Industrial Accident Prevention Associations are described in the
report of the Proceedings of the 1928 Annual Meeting of the Inter
national Association of Industrial Accident Boards and Commissions.
The practices mentioned by R. B. Morley, general manager, are in
the main the present routine. According to Mr. Morley, there is a
close coordination with the workmen's compensation board:18
W e are enabled to keep a close check on the general experience of the indus
tries included in our membership, as we receive from the workmen’s compensa
tion board, with which there is, of course, the closest kind of contact, brief reports
known as accident memos, which give information regarding accidents on which
claims have been made and which, in most cases, invlove a loss of 7 days time or
more and, consequently, mean compensation to the injured worker. These
accident memos are invaluable to us in enabling us to check the experience of
the various firms on our lists, and the information sent to industries whose accident
frequency was running too high has frequently resulted in a complete change in
the experience of that plant.
In some Provinces the absence of specialized units or coordinated
arrangements does not necessarily indicate lack of attention to acci
dent prevention. As a rule, the compensation personnel has been
relatively permanent in tenure, understands the local problems, and
watches closely the accident experience of insured employers. In
some areas, however, the need of further development in safety work
was frankly admitted.
Effectiveness of Safety Work Under Compensation System
When compensation legislation was first proposed in the United
States, some advocates of the system argued that the provision of
definite payments for injuries would automatically reduce the number
of accidents, because the employer would see that unsafe working
conditions were costly to him. Attempts to find out whether the
early expectation, put in this broad and general way, has been realized
17 New Brunswick, Nova Scotia, Ontario, and Quebec.
18 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 485, pp. 157-161.
ALLIED SERVICES
147
are inconclusive. Sweeping comparisons, on a scientific basis, of
accident experience before and after the passage of compensation acts
cannot be made. Neither is it possible to compare the experience of
industry covered by compensation legislation with that of employments
not covered. It is known that the accident experience of many employ
ments not now within the scope of compensation statutes is bad, and
in some jurisdictions their unsatisfactory experience is precisely the
reason some of these employments are outside the compensation
coverage. It is also true, however, that the accident experience of
some employments within the compensation coverage is bad.
Some compensation administrators soon realized that instead of
depending upon the benefit system to make working conditions safe,
it was necessary to develop a broad program including accident pre
vention, and some of the statutes were amended to authorize or
require safety activities. Even in the absence of a compensation
law an employer has ample incentives, from considerations of selfinterest, for adopting a safety program, for the amount paid as com
pensation to injured workers has been estimated to be only one-fourth
the cost of accidents to employers.19 Not all employers however,
have a farsighted viewpoint of their self-interest, and a number of
them cling to old habits and are not apt to change to new practices
in the absence of contact with persuasion or constraint. The experi
ence under workmen’s compensation has amply shown that the State
cannot afford to neglect to provide other incentives to safety than
the self-interest of employers. The omission from an earlier compen
sation act of specific provisions relating to accident prevention is
understandable, but it is now apparent that the absence of safety
mandates in some compensation acts should be remedied, even in
those cases where the labor department is empowered to make regu
lations and provide inspection services. In the course of the survey,
a compensation official of one State said, “ We are not concerned
with safety.” On the other hand, many compensation officers
are of opinion that the administration should be “ safety conscious,”
and that a reference to accident prevention in the act may stimulate
such a state of mind.
Not only is the self-interest of employers an insufficient assurance
of safe practices,20 but the self-interest of insurance carriers cannot
altogether be relied on to assure an adequate check upon the employers’
equipment or methods by the carriers’ safety specialists. Although
some insurance carriers have done notable work in accident prevention,
in the judgment of compensation officers their inspection service is
19 Cost of Industrial Accidents to the State, the Employer, and the Man, by H. W. Heinrich, in U. S.
Department of Labor, Bureau of Labor Statistics Bull. No. 536, (1930), p. 173.
20 Even in the case of employers having a highly developed safety program, the safety engineer is usually
less influential in determining practices than the production engineer, and there are instances where the
safety engineer’s decision has been overruled, with disastrous results.
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W O R K M E N ’S COMPENSATION
at times biased by business-getting considerations, and needs to be
supplemented by impartial public inspection service. Wide-scale
effectiveness in safety work necessitates, therefore, not only a provi
sion for the payment of compensation in cases of industrial injury,
but also properly drawn laws relating to safety, together with an
administrative program, personnel, and adequate financial support
for research, inspection, and enforcement of regulations. In this
program the compensation administration, in most jurisdictions
where there is advanced development, has a significant part either
by independent or coordinated action.
A rating officer, in explaining the difficulty of securing adequate
appropriations or other support for a complete safety program, said
that what is saved by such measures cannot be shown.21 But while
such savings cannot be demonstrated by broad and general compari
sons, they are amply established by specific examples.
Instances of the effectiveness of safety work are given in articles
entitled, respectively, “ Accident Experience of Federal Civilian
Employees” and “ Injury Experience in the Iron and Steel Industry,”
which appeared in the Monthly Labor Review, August 1936 and
May 1938. In the examination of the accident experience of Federal
civilian employees, the example of the Navy Department is cited:
In 1921 an office of safety engineering was established there, with a department
safety engineer in charge and a local safety engineer in each of the 37 navy yards
and stations. A program which at first centered on the elimination of dangerous
conditions and the introduction of safety devices was subsequently enlarged to
include an educational program, and later competitive safety awards. The
result of these efforts * * * has been a reduction of the frequency rate
from 20.3 in 1926 to 5.17 in 1935, and a reduction in the severity rate from 2.09
in 1926 to 0.62 in 1935. In other words, for every 4 accidents per million man
hours worked in 1926, only 1 accident occurred in 1935, and for every 2 days
lost per 1,000 man-hours in 1926, only 0.6 of a day was lost in 1935. Roughly,
then, both the frequency and severity rates of 1926 have been reduced threefourths over a period of 10 years.
Other examples of very effective safety programs are cited in this
publication. The endeavor to provide safer working conditions for
employees in the iron and steel industry resulted in a notable decline
in the injury frequency rate from 1913 to 1936, as shown in the
accompanying chart.
In the face of monumental examples of the saving of both life
and property by an adequate safety program, it is plain that the
small economies effected, especially from 1930 to 1935, by deficient
2i A discussion of probable savings through increased expenditures upon accident prevention is found in
U. S. Department of Labor, Bureau of Labor Statistics Bull. 536, pp. 182-183 (1930). Dr. Leonard W. Hatch,
then a member of the Industrial Board of New York, said that the State of New York was spending $500,000
a year “pecking away” at a loss of $250,000,000, that if the State would spend $5,000,000 a year and reduce
accidents 2 percent, the State “would not only save its additional $4,500,000 but would have $500,000 over
to cover all it is now expending for safety work.”
149
ALLIED SERVICES
support of safety service were more than offset by heavy concealed
losses borne by employers, insurance carriers, the public, and injured
workers.
FREQUENCY RATES FOR DISABLING INJURIES
IN A SELECT GROUP OF IRON AND STEEL ESTABLISHMENTS
BY CAUSES OF INJURIES
1913 TO 1936
Fr e q u e n c y
Ra t e s
U S. Bu reau
F
of
Fr e q u e n c y
ates
La b o r S t a t i s t i c s
Cooperation w ith the Insurance Commissioner
A complete system of workmen’s compensation, as outlined in
section 1 of the California act (1917), includes full provision for
adequate insurance coverage against the liability to pay or furnish com
pensation, and full provision for regulating such insurance coverage
in all its aspects. The legal basis for the participation of the com
pensation agency in the supervision of insurance ranges from the
broad grant of authority in the California act to none in some of
the court-administration States. The actual supervision is compre
hensive and systematic in a few jurisdictions, but elsewhere the
attention of the compensation commissions to insurance matters is
150
W O R K M E N ’S COMPENSATION
too often limited to action upon specific complaints and serious
deficiencies in service. In some States the compensation and the
insurance administrations cooperate in supervising compensation
insurance, while in others the compensation officers act independently.
In the course of the survey a wide variety of practice was found
in regard to the extent of coordinated supervision of insurance.
Moreover, many of the officials interviewed were recent appointees
some of whom were not familiar with all aspects of the control of
insurance operations. In 13 States, compensation officials said that
there was no cooperation with the insurance department. In some
of these States there was little actual supervision of compensation
insurance by any public authority. In a few States, as for example
Arizona, the compensation commission has such complete control of
insurance operations that little or no recourse to another State
department was necessary for obtaining supplementary action.
The approach to this feature of compensation administration is
complicated, not only by differences in the compensation statutes,
but also by the departmental organization of the State governments.
For example, an Arizona compensation official, when asked to describe
the cooperation of his agency with the insurance commissioner,
replied “ we are both,” and that the licensing of insurance companies
to write workmen’s compensation policies was done by the corpora
tion counsel. In Alabama, the workmen’s compensation clerk is
an employee under the superintendent of insurance. In Maine and
Montana the insurance commissioner is an ex officio member of the
compensation commission, but in each instance the connection is
virtually nominal. In Michigan the State fund (competitive) is
under the supervision of the insurance department, while in Pennsyl
vania the insurance commissioner is a member of the board that
manages the fund. Cooperation between exclusive funds and insur
ance commissioners goes little farther than checking upon occasional
substitutions of accident and liability insurance for workmen’s com
pensation coverage.
While most of the compensation commissions have independent
authority to penalize insurance carriers for failure to pay compen
sation promptly, it is desirable that in extreme cases recourse may
be had to the insurance department for canceling a carrier’s license
to write compensation-insurance policies. Under the Illinois act the
industrial commission, after a hearing, may order the offending carrier
to discontinue writing compensation insurance in the State.
In States where the direct supervision of compensation insurance by
the compensation commission is limited, it is essential that there
should be cooperation between the compensation and insurance
departments in regard to rates, terms of coverage, and policy forms.
In some States the regional compensation rating and inspection bu-
ALLIED SERVICES
151
reau is an intermediary in such a plan. In isolated instances the insur
ance department may designate its own actuary to work with the
rating and inspecting bureau. Under one arrangement or another,
the insurance department needs independent data upon workmen's
compensation costs at the time rate changes are requested by the
insurance carriers, and in most instances data for checking upon
the figures compiled by the insurance carriers can be supplied, if at
all, only by the statistician of the workmen's compensation commission.
The compensation commission usually needs cooperation in the
task of making certain that employers desiring insurance can secure
it upon a reasonable basis. When carriers refuse to accept a risk,
the employer may communicate with the compensation commission.
In some States the compensation official who is appealed to for help
may lack authoiity to do more than plead with an insurance carrier
to write the policy. Such informal attention has often proved unsat
isfactory and has been superseded in many jurisdictions either by
joint agreements with insurance carriers or by statutory requirements
for full coverage of all employers requesting insurance. Under such
arrangements coverage is usually secured, in case of difficulty, through
the rating and inspection bureau, upon request either of the compensa
tion commission or the insurance department. The rating bureau, in
assigning the risk to a carrier or group of carriers, usually takes into
account any exceptional hazard involved and adjusts the rate
accordingly.
In supervising insurance coverage the compensation commission
must have ready access to a record of all insurance policies. In
Wisconsin, prior to 1927 a copy of all policies was filed with the com
mission, but since that time a card containing the necessary informa
tion has been furnished the commission by the rating and inspection
bureau, which also furnishes a card for each policy not renewed upon
expiration.
An account of the experience and practice of the Industrial Com
mission of Wisconsin as to insurance supervision is given in A. el. Altmeyer's The Industrial Commission of Wisconsin (pp. 77-84).22
Parts of this account have wide application.
Insurance companies are required to report directly to the commission all can
celations of policies prior to date of expiration. If a policy is not renewed upon
expiration or notice of cancelation before expiration is received, the commission
communicates with the employer. If he is still employing anyone, the commis
sion requires that he immediately secure insurance.
In this manner, when once the commission has a record of an employer being
subject to the act, it is possible to obtain continuous coverage. Sometimes an
employer who has gone out of business resumes operations. In such cases, as
in the cases of employers who have never carried insurance, the commission is
obliged to rely upon other sources of information. All field employees are in-
22 University of Wisconsin, Studies in the Social Sciences and History No. 17 (1932).
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W O R K M E N ’S COMPENSATION
structed to make inquiries as to insurance coverage. Directories and information
furnished by competitors are also utilized.
Of great assistance to the commission in its supervision of insurance coverage
is an amendment passed in 1921, providing that every insurance policy shall be
construed to grant full coverage of all liability of the assured, notwithstanding
any agreement of the parties to the contrary, unless the industrial commission
specifically grants permission for partial insurance coverage. This eliminates all
controversy as to whether or not particular operations of the assured were or
were not covered by the terms of the policy. * * *
The commission resorts to prosecution when it cannot induce an employer to
insure or when it is convinced that past failure to insure has been deliberate.
The law provides both a criminal penalty and a forfeiture which may be collected
as in an action for debt. * * * The commission has also resorted to the use
of the injunction to restrain an employer from employing anyone so long as he
fails to carry insurance. This procedure is expressly authorized by an amend
ment to the law passed in 1921.
In the Provinces of Canada the insurance operations are an integral
part of the work of the compensation boards.
O ther Fields o f Coordination
The four main fields of coordination that have been discussed,
linking related services of rehabilitation, safety, child welfare, and
insurance, are the only ones that have virtually universal application
in the States. There are other related services which can be made
more effective through a plan of cooperation. In many jurisdictions
the commission secures legal representation in the courts through
the attorney general's office, the most acceptable arrangement being
for the attorney general to allocate to the compensation office some
attorney who can specialize in compensation law. In rare instances
there is an informal cooperation with the department of health.
State funds cooperate with the State auditor or controller and treas
urer with reference to the signing of vouchers and handling of deposits.
Where the cooperation has to do with the signing of vouchers, it is
important to plan an arrangement that will avert a delay of several
days in getting compensation vouchers signed after an award has been
made.
Chapter 9.— Methods of Financing W orkmen’s Com
pensation Administrations and Funds 1
A workmen’s compensation commissioner said recently, “ If the
workmen’s compensation commissions are to give satisfactory service,
we must have more money.” This remark raises two questions: How
much money does a workmen’s compensation commission need?
What is the best way to get the support that is necessary? Espe
cially during the depression, many compensation commissions have
suffered severely from insufficient provision for doing the work
expected of them. The distinction between “ cheap” administration
and economical administration is often overlooked. As a test of the
merit of an administration, it is useless to ask how little it costs
unless one is shown what service is rendered.
It is easy to understand how a layman may be misled at this point.
A letter published by the California Standard 2 shows how simple
the matter seems to a workman.
In Oregon the State plan there allows only 10 percent for overhead. Injured
workmen and their dependents get 90 percent in Oregon, while California pays
52 percent or less.
An analysis of this statement, in the light of all the facts, shows a
fallacy in the reasoning. The statement is quoted here not as a
basis for comparisons between the two States mentioned, but as an
interesting specimen of confused thinking upon measurements of serv
ice. What the workman receives, and what the administration
costs, are two different things. What he receives is provided in the
workmen’s compensation act of his State. The scale of benefits
provided by such acts is seldom the same in any two States. Because
of such erratic variations, strange as it may seem, in one State the
workman may get 90 percent of the dollar the employer pays for
insurance and still receive less than is paid the workman in an adjoin
ing State where the injured man is said to receive only “ 52 percent
or less” of the amount paid as insurance premium. The benefits
actually paid to the workman depend upon the standard of liberality
set by the State workmen’s compensation law and the interpretation
of the law. At present, in the two States mentioned in the newspaper
article, it happens that while in one State the administrative cost is
low, in the other State the liberality of the act is high, so that the
workmen who “ get 90 percent” in one State may actually receive less
than do the workmen in the other State which “ pays 52 percent or
1 This chapter was published as an article in the Monthly Labor Review, March 1936, p. 592.
2 California Standard, Eureka, Calif., Apr. 26, 1935.
153
215193°— 40------ 11
154
W O R K M E N ’S COMPENSATION
less” 3 of the dollar expended by employers for workmen’s compensa
tion insurance.
The patterns of workmen’s compensation law and insurance are so
varied that they have to be examined carefully before attempting to
make comparisons. Even the correction, set forth above, of the
newspaper’s comparison may also be misleading, without further
explanation. It must not be mistaken for an assertion that adminis
trative cost has nothing to do with what the workman receives. Low
administrative cost, other factors being equal, makes possible increased
benefits by easing the competitive burden upon employers and making
them more disposed to join with labor in favoring a generous work
men’s compensation act. But whenever low administrative cost is
considered, as a desirable goal for labor, the factor of “ service” must
be scientifically scrutinized. If this is not done, the worker may lose
instead of gain by the cheapening of the administration of the work
men’s compensation act.
Cost in Relation to Service
Labor’s primary needs in this field are generous benefits and
efficient administration. While it is important to know whether the
“ overhead” in the administration of the compensation law and
insurance is 10 percent, or 50 percent, of the insurance premium,
it is much more important for the worker to know what he is getting
for the 10 percent or the 50 percent overhead expenditure. The safe
thing to do, at this point, is to start by asking the question: What
services should be rendered by the workmen’s compensation adminis
tration and the insurance carrier? Emphasis should be put, first,
on the actual rendering of essential service, and second, on reason
able cost for that service. Comparisons of administrative expense
should be checked against a schedule of services rendered, for instance,
in claims adjustment, insurance supervision or underwriting, investi
gating solvency of carriers, administration of “ second injury” fund,
accident prevention, and rehabilitation. To afford a scientific basis
of comparison, definite weightings would have to be given for specific
items of service. Otherwise, in a scrutiny of relative administrative
cost, one may be comparing an administration that renders services
“ x, y, and z” with an administration that renders only services
“ x and y .” Such a comparison, instead of penalizing the deficient
administration, might exhibit it favorably as the more economical
of the two. This caution is needed in regard to the method of
approach to the subject. But at the same time that attention is
3 The comparison of actual benefits provided by the acts of the two States mentioned, made by the Na
tional Council on Compensation Insurance, as of January 1935, shows that the benefit liberality of Oregon
is 0.768 as compared with New York (1.000), while the liberality rating of California is 0.802. Such com
parisons are approximate, and do not take into account local variations in the liberality of the adminis
tration. as distinguished from the liberality of the provisions of the act itself.
METHODS OE FINANCING
155
called to the danger of assuming that low-cost administration is
economical, it must also be said that a high administrative cost is
not necessarily proof of adequate service. In each case the adminis
trative values received by the public which is served can be deter
mined only by checking the items of expense loading against the
kind and amount of service actually rendered.
In 1919-20 the Bureau of Labor Statistics made a study of work
men’s compensation insurance systems. One of the points upon
which information was sought was the “ relative cost” of the various
types of insurance carriers. “ The question of costs included both
the cost of insurance and the cost of administration.” The results
of that study, which covered 20 States and 2 Canadian Provinces,
were given in a bulletin published in April 1922.4 That report
compared the administrative cost of exclusive State funds, competi
tive State funds, and private insurance. A striking contrast, drawn
between the “ expense ratios” 6 of State insurance and stock-company
insurance, focused attention and debate upon the possibility of
eliminating waste or private profit in this branch of social insurance.
The most controversial factor in this comparison was “ service.”
In order to make a dollar-for-dollar comparison in administrative
cost, it was considered necessary to assume “ that each type of insur
ance has furnished the same kind of service.” Upon that assump
tion, certain averages were arrived at. “ Using one figure only,
the average expense ratios are as follows: Stock companies, 38
percent; mutual companies, 20 percent; competitive State funds,
10.6 percent; and exclusive State funds, 4 percent.” 6
That comparison of administrative cost, made upon the assumption
that the same type of service had been rendered by the carriers com
pared, has sometimes been detached from its hypothetical basis and
mistaken for a statement of what the administrative cost of a com
mission and/or 7 State fund should be. As attention was drawn
to the very low administrative cost of State funds, especially exclu
sive State funds, some legislatures came to look upon reduced adminis
trative cost as the most important objective in workmen’s compen-
4 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 301: Comparison of Workmen’s Com
pensation Insurance and Administration, Washington, 1922.
5The “overhead” cost of insurance and administration, as distinguished from the “pure premium” or
charge for the cost of compensation and medical aid received by injured workmen.
6 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 301: Comparison of Workmen’s Com
pensation Insurance and Administration. Washington, 1922, p. 10.
7 In some States and in some Provinces of Canada, the administrative functions of the commission and
fund are merged; in other cases, they are distinct. This difference of pattern causes one of the difficulties
in comparing the cost of workmen’s compensation administration and insurance. One cannot make a
clean-cut comparison of cost as between the operations of a State fund and private insurance. It is some
times as difficult to compare the cost of operation of two State funds as it is to compare the costs of State
and private insurance, because all funds do not render the same kind or amount of service. Thus, if com
parisons are made on the basis of administrative cost alone, without knowing what service is rendered,
it is like comparing the price tags on several packages without knowing exactly what is in the packages.
To make an intelligent choice, both cost and content of the package must be known.
156
W O R K M E N ’ S COMPENSATION
sation administration. On the other hand, well-informed students
of the subject understand that mere cheapness of administration is a
delusive goal which has often ended in a quagmire of waste, non
service, and very costly inefficiency. Because there are controversial
phases of any discussion of administrative cost involving comparison
between types of insurance carriers, it must be said again, at this
point, that high cost of insurance is not, in itself, proof of satisfactory
service, any more than low cost of insurance is, in itself, proof of
economical administration.8
Effect o f the Depression in Impairing W orkm en’s Compensation
Service
In 1919 something was to be gained, especially as a starting point
for further study, by comparing the administrative cost of certain
types of administration and insurance upon the assumption “ that
each type of insurance has furnished the same kind of service.” But
the impact of the historic period 1929-34 makes it necessary to place
the emphasis elsewhere in the present study.
In the year 1935 the outstanding feature of workmen’s compensation
administration was the impairment of service by deficient support of
the administrative agencies. There are other causes of impaired
service, but in 23 States visited only one State was found where the
support was considered adequate by those responsible for the admin
istration. And even that State had severely cut one essential phase
of workmen’s compensation service, resulting in a level of performance
below the attainment of former years.9
This impairment of service in workmen’s compensation adminis
tration and insurance by deficient support is not a new condition,
except in the degree of impairment resulting from the difficulties of
the States in financing expenditures during the past 5 years.
Probably the greatest handicap suffered by State funds and industrial com
missions is inadequate appropriations and salaries. An industrial commission
cannot perform its functions properly nor furnish adequate service if it does not
have sufficient appropriations to carry on its work and if the salaries provided are
so low that high-grade employees cannot be retained.10
8 Some of the factors involved in the wide variation in the “overhead” cost of workmen’s compensation
insurance are: Acquisition cost, duplication of service, excessive competition, small volume of business in
proportion to fixed overhead cost, differences in the provision for inspection service, auditing of pay rolls,
and adjustment or claim service, organization and coordination of service, regional georgaphical variations
with thinly scattered risks in some areas, etc. Especially during the depression, excessive overhead,
where it existed, was due to such causes rather than to the loading of cost with “profit” since it is claimed
that most of the stock companies lost money on workmen’s compensation insurance during recent years.
9 In the Bureau of Labor Statistics survey of workmen’s compensation administration and insurance,
some of the tests of administrative cost and adequacy are objective, while others are subjective and involve
expressions of opinion from qualified experts actually in charge of the operations studied. For example,
the officer in charge of a department may be asked, at the close of the factual study, if in his opinion his
personnel is adequate, measured by an ideal standard of service. Replies to such questions are confidential;
hence when such an opinion is quoted, the name of the State is not disclosed.
10 U. S. Department of Labor, Bureau of Labor Statistics Bull. No. 301, p. 5.
METHODS OE FINANCING
157
This deficient support, which in most States had been bad enough
but endurable prior to 1929, was further reduced during the depres
sion. In consequence, many State administrations were slowed down
and weakened. Some branches of service were lowered from a pro
fessional to a clerical status, or were altogether wrecked. Indeed, it
is greatly to the credit of the workmen’s compensation commissions
that, in the face of such difficulties, they were able to carry on their
administration well enough to avoid a revolt of the labor movement
against the commission administration of workmen’s compensation.
As long as it seemed necessary, the workmen’s compensation com
missions accepted salary cuts and curtailment of personnel. The
year 1935, however, was marked by a trend toward the restoration of
essential services. Some commissions, surveying the impairment of
service in their States, are now giving thought to the renovation and
perfecting of workmen’s compensation administration and are seeking
methods of financing which will not be subject to destructive fluctu
ations such as those experienced in recent years.
The outstanding question is, What service shall be rendered and
how is it to be financed? From this point of view, it is apparent that
the depression years 1929-34 have made a distinct contribution to the
development of workmen’s compensation administration in the
United States, by so exaggerating certain existing defects in the law
and administration as to compel attention to the necessary remedies.
Chief among the constructive contributions made by the depression
to the development of workmen’s compensation administration are
the investigations or audits 11 made in certain States by outside
actuaries of accredited ability. The most striking feature of such
audits was the uncovering of heavy losses, traceable to deficient ad
ministration, which outweighed the cost of the administration itself.
Such evidence that an adequate administration is more economical
than a deficient, poorly supported administration, gives impetus to
the movement to place the administrative cost of workmen’s com
pensation service upon an efficiency basis.12
In a recent report the statement is made: “ It is distinctly apparent
n Since the administrative functions in most exclusive fund States are a unit, an audit of the fund would
usually result in recommendations relating to the administration as a whole as well as to the conduct of the
specific insurance functions.
i2 As samples of actuarial reports and reports of investigating committees made in States at the instance
of governors, legislatures, or voluntary groups, see Actuarial Survey, Ohio State Insurance Fund, Report to
Governor’s Investigating Committee, Workmen’s Compensation Law, Nov. 26, 1934, New York, Wood
ward & Fondiller, Inc.; and Ohio Government Survey Committee, Booklet No. R7, The Industrial Com
mission, Columbus. In other States there have been important actuarial reports made directly to work
men’s compensation commissions. Some of these reports are held to be confidential, but most of them
reach the same conclusions. As contributions to the literature of workmen’s compensation administration
and insurance, some of the actuarial reports are especially valuable because they are the work of specialists
in this type of insurance. While some of the reports of investigations made by others than specialists in
workmen’s compensation administration contain excellent material, such reports are sometimes vitiated by
the lack of expert knowledge, and may contain suggestions which if acted upon would make a bad situation
worse.
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W O R K M E N ’S COMPENSATION
that the major difficulty [of compensation administration] has been
inadequate legislative appropriations for proper functioning.” As a
typical instance of losses due to undermanned departments, that re
port points out that “ a test study in Cuyahoga County indicates
that $1,500,000 annually would accrue to the fund if pay-roll audits
were kept up to date.” This one item of loss is greater than the entire
legislative appropriation for the support of the commission and fund
in that State. “ The appropriation measure carried $933,593 for the
industrial commission for 1935,” of which amount items totaling
$58,700 were vetoed.13 This report is the more significant as a recog
nition of the imperative need for adequate financing of workmen’s
compensation administration, because it recommended increased
appropriations for that service at the same time that the agency
which made the report was urging economies in certain other State
departments.
In view of the fact that many branches of public service have been
cut to the bone, in the name of economy, workmen’s compensation
commissions have been reluctant to demand preferential treatment in
the matter of appropriations. But the function of insurance is to act
as a stabilizer. Such a function is especially needed in times of indus
trial fluctuation. To cut an insurance administration drastically at
such a time hampers its power to render the very service for which it
was created. If the depression experience in relation to the financing
of workmen’s compensation administration has taught any one lesson,
that lesson is the necessity for permitting commissions and funds to
be self-supporting, for at times the willingness or ability of State
legislatures to support the service by general appropriations has failed.
Methods o f Financing W orkm en’s Compensation
The crisis in workmen’s compensation administration, precipitated
in some States during the depression by the dwindling of appropria
tions, has emphasized the main division in methods of financing
workmen’s compensation commissions and funds— the difference
between support by legislative appropriations and self-support either
through an assessment on the insurance or by the direct use of part
of the insurance income for administrative purposes. The simplest
way to explain the different effects upon workmen’s compensation
administration of the two methods of financing is to say that under
one method the administration must give what service it can out of a
fixed sum of money allowed it, while under the other method the
commission ascertains what service it should render and makes up its
budget accordingly. In the first case the criterion is what the com
mission can get; in the second case the criterion is what it should do.
13 Ohio Government Survey Committee. Workmen’s Compensation. Columbus, 1935, pp. 8,17.
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METHODS OF FINANCING
In the first case the commission must “ muddle along” as best it can;
in the second case the service can be put upon an efficiency basis.
The first method— support by legislative appropriations— almost
invariably produces “ deficient” administration. It is most unjust to
the workmen’s compensation commissions in many States to say that
their administration is “ inefficient” when they are doing all that is
possible with the means at their disposal. The correct characteriza
tion of the type of administration usually found where the commission
and/or fund is supported by legislative appropriation is “ deficient”
administration.
It is not the purpose of the present study to draw attention to the
condition of administration in certain regions by naming the States
in which different types of financing are found. To do so would
distract attention from an impersonal consideration of the main pat
terns of financing observed in the course of the Bureau of Labor
Statistics’ survey. But because so many expert and costly studies
have been made of the Ohio administration, there is some justification
for citing, by name, the Ohio experience.
It has been said that the support of a commission and/or fund by
legislative appropriation almost invariably results in deficient service.
The investigators of the Ohio Government Survey Committee exam
ined the service rendered by the divisions of the workmen’s compensa
tion administration and found it deficient. A correct measure of that
deficiency would show the financial margin between deficient support
and adequate support of each phase of the service and of the service
as a whole. For such measurements, the ground had been prepared
by thorough actuarial studies previously made. In the light of such
knowledge, the increased appropriation which would make possible an
adequate administration was recommended. The investigation showed
that the Ohio commission and fund were rendering the State a service
of such great value as to warrant increased expenditures upon admin
istrative operations.
The method of checking the work of a compensation administration,
division by division, against a standard of service, is an excellent way
of arriving at a correct figure for the budget. The Ohio Government
Survey Committee, by this method, sketched a long-range plan and
reached the following conclusion:
To carry out the program detailed in these recommendations,
including the long-range view, these appropriations will be required:
1 9 3 5 __________________________________________________________
$1, 200, 000
1 9 3 6 __________________________________________________________
1, 442, 800
1937
__________________________________________________________
1, 442, 800
1938
__________________________________________________________
1 ,1 4 2 ,8 0 0
These figures represented a large increase over previous appropria
tions.
160
W O RKM EN'S COMPENSATION
It is most unusual to find such an example of long-range planning
of administrative allowances or expenditures. But the entire past
experience in Ohio, and in most State administrations dependent upon
legislative support, proves that it is one thing to make up a budget,
and quite a different thing to obtain an appropriation. The longrange planning of administrative expenditure emphasizes the necessity
for a different method of financing, since the legislature which makes
the appropriation for 1936 has no power over the legislature which
will meet in 1938.
There is but one way of assuring progress from deficient to adequate
administration, i. e., by changing the method of financing from legis
lative support to self-support. Such a change at one stroke removes a
tax item from the general appropriation list, makes the commission
financially autonomous, and helps to remove workmen’s compensation
administration from the recurring political struggle for the means of
survival.
The accumulated experience upon this feature of workmen’s com
pensation administration prompted the formulation of a new “ plank”
in the platform of standards recommended by the Second National
Conference on Labor Legislation, held at Asheville, N. C., October
1935:
Administration. * * *
Cost of administration to be defrayed, not by legisla
tive appropriation, but by an assessment on insurance companies and self-insurers.
Administrative cost of State funds to be taken directly out of insurance premiums
or income.
Because of the desire to simplify, it would be gratifying if one
could dispense with further elaboration of the principle that the
standard method of financing workmen’s compensation commissions
and/or funds is now self-support either by assessment or by the use of
insurance income for administrative purposes. Unfortunately, work
men’s compensation acts and administrative machinery in the States
cannot be divided into two main groups or patterns, for they are
complicated by the variations in the State acts and practice and some
times by constitutional obstacles.14 Mixed patterns are often found.
Occasionally, also, the manner in which a plan is carried out nullifies
the value of a plan which, on paper, resembles a “ standard.” The
possibility of continuous adequate support of the workmen’s com
pensation administration and/or fund is determined, not by the letter
14 The effect of constitutional provisions upon workmen’s compensation law and administration is a study
in itself, upon which a volume could be written. The main difference in constitutional patterns is that
between the relatively brief and general form of constitution and the constitution which undertakes to cover
every phase of State experience and which is in effect a code of massive proportions. Since social-security
legislation represents a relatively new and unforeseen stage of American experience, some of the older State
constitutions, especially those which undertake to regulate legislation in detail, present difficulties which
are from time to time met by amendments.
METHODS OF FINANCING
161
of the law alone, but also by the local practice in regard to the resources
and expenditures of State agencies.15
Adjustm ent to Changing Conditions
The present situation of workmen's compensation administration
in the United States as a whole cannot be understood unless one bears
in mind the change, which began about 25 years ago, in the scope of
State functions. In the nineteenth century State governmental
activity was almost exclusively regulatory. At the beginning of the
second decade of the twentieth century, many of the States were ex
tending their functions to include certain “ service” activities. But
the existing constitutions and laws had been framed, perhaps in the
eithteenth century, for use in a government restricting itself to
regulatory action. Workmen's compensation administration is mainly
a “ service” function. In some States the necessity for making consti
tutional and statutory changes was recognized as soon as the demand
arose for the enactment of workmen's compensation laws. The
process of adaptation to a new function was experimental, and some
of the new provisions were necessarily imperfect. Changes made
at one point sometimes caused unforeseen difficulties at other points.
In studying the present condition of workmen's compensation law
and administration in the United States, it is of the utmost importance
to understand that what is now taking place in many jurisdictions
is the attempted adjustment of the imperfect adaptation of the old
body of law and practice to new social and industrial conditions.
This adaptation has taken place more rapidly in some States than
in others, but it has already gone far enough to enable all the States
to benefit by the experience of those jurisdictions which have made
the most successful adaptation of their law and administrative ma
chinery to the exigencies of such a service agency as workmen's
compensation administration. Most of the present difficulties of
workmen's compensation administration arise out of a transition
period of development. The chief imperfections in the adaptation
of old legal patterns or in the framing of new patterns may now be
clearly seen and expertly remedied.
Some of the earlier laws setting up workmen's compensation
commissions and/or funds were marked by the fear of delegating
ample authority to those responsible for the conduct of compensation
administration and insurance. The habit of restricting the delegation
15 An interesting illustration of such a local practice, found in some States during the depression, is the
“self-denying” clause requiring all State agencies to place themselves upon a parity or equal footing, in a
time of shortage of State revenues, regardless of their separate departmental resources for support (if any).
Under such a clause, employees in a well-financed departments or agencies were expected to share the vicis
situdes of the employees in departments suffering from a deficiency of support. Where this “self-denying
clause” was found, the professional employees of workmen’s compensation administration were sometimes
compelled to accept nominal salaries, while clerical salaries would be reduced to the subsistence level, and
“service” was cut to a minimum.
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W O R K M E N ’S COMPENSATION
of authority to regulatory agencies was applied to the mechanism of
the new service agency. Experience soon showed that the new
mechanism, when it was so tied up with detailed mandates and
restrictions, would not work satisfactorily.16
Necessity for Self-Direction Plus Self-Support
The method of financing workmen’s compensation commissions
and/or funds, in any jurisdiction, is the specific method prescribed
by the law, as affected by the practice in that jurisdiction either to
subject the agency to detailed control or to allow it ample scope for
self-direction in its operations. In some States, the compensation
act may seem to give a commission powers of self-direction in budget
making, which in fact the commission may not exercise. Partial
attempts to put workmen’s compensation administration upon a
better financial basis have shown that, without an elastic provision
for budget making, a change in the source of the support of a com
mission may not remedy the difficulties of the situation. The com
mission’s needs for the power of self-direction and for self-support
go together; one without the other does not help much.
The attempt to ease the administrative difficulties of a workmen’s
compensation administration and/or fund is nullified when the act
provides for self-support by assessment or by use of insurance funds
for administrative expense, but compels the commission neverthe
less to have its budget approved or an appropriation made by the
legislature. This is especially true where the budget to be approved
by the legislature is a “ line item,” i. e., a detailed analysis of pro
posed expenditures. In such a case, a workmen’s compensation
commission, even though its expenditures are reimbursed by an
assessment upon insurance carriers, may be unable to hire an addi
tional stenographer or increase the salary of an employee until the
next session of the legislature convenes and a new budget is approved
and a covering appropriation is made.17 Some States have avoided
16 For example, one of the first acts providing for a State fund contained detailed instructions upon rate
making and the handling of insurance revenues. A business cycle, with the attendant acute fluctuation
in receipts, was not foreseen by the lawmakers. The need for elasticity in emergencies was overlooked.
In consequence, many of the classifications into which the fund was rigidly divided became insolvent during
the depression, yet there was no method by which the fund as a whole could lend to its own subdivisions
without overstepping the law. Such detailed regulation put the commission in a most embarrassing situ
ation. It was compelled to throw a maximum burden of insurance cost upon employers when these were
least able to bear it. Moreover, to escape the risk of complete insolvency, it was constrained to guard its
compensation awards so closely as to antagonize labor. The hostility of both employers and workmen was
incurred, and the existence of the fund itself was threatened by bills introduced in the legislature.
In sharp contrast with this experience is that of a certain fund, unhampered by detailed restrictions, which
was able to take the unusual step of reducing its insurance rates, at the depth of the depression, without
curtailing its awards, and thus ease an emergency condition without impairing its solvency. The names
of these two funds are withheld because the aim of the present study is to compare methods rather than
point out conditions in different jurisdictions.
17 Abundant examples of the crippling of the functions of workmen’s compensation administration by
“line-item” budgets may be found. For instance, one commission had discontinued its former practice
of notifying injured workmen of their rights because the appropriation had not allowed the office sufficient
postage stamps.
METHODS OF FINANCING
163
such difficulties by adopting a policy which frankly recognizes a
difference between service agencies and regulatory agencies, allowing
the service agency a maximum of self-direction. Some of the com
petitive State funds have benefited by such a change of policy in
regard to their operations and budget making. The viewpoint is
gaining acceptance that if the State goes into the insurance business,
the efficient operation of the business necessitates the delegation of
responsibility and authority to a properly safeguarded administration.
What is involved in the change of legislative attitude toward the
powers of workmen’s compensation commissions and/or funds is not
an abandonment of safeguards upon the administration, but a choice
between old methods of safeguarding and new methods adapted to
present conditions. For example, prior to the depression of 1929
the auditing of State funds in some jurisdictions was intermittent,
weak, and inexpert, while at the same time there was strict legislative
control of the budget. The present tendency is to place more reli
ance on competent audits, while relaxing legislative control of the
budget. In short, the trend of development stresses the importance
of nonpolitical rather than political checks upon the operations of
the commission, and of “ locking the door” before “ the horse is stolen”
instead of afterward. Another example of the newer type of checks
upon administration is the provision of an advisory committee for
the commission and/or fund. The exigencies of workmen’s compen
sation administration and of the insurance business arise from day
to day, and cannot satisfactorily await the convening of a legislature
1 or 2 years hence. The checks necessary for the efficient conduct
of such operations are those which are available in the course of
the daily business, rather than checks which are applied at intervals
of 1 or 2 years with no direct contact during the intermission.
In the case of State funds which have been set up alongside the
existing system of private insurance, without displacing stock-com
pany and mutual insurance but on a competitive basis with them,
autonomy in budget making has often been allowed. The theory
upon which this has been done is that the “ competition” of the State
fund with private insurance carriers will of itself furnish a check upon
its administrative expenditures, which may take the place of a con
trol over the budget by the legislature. But in some cases this auton
omy may be subject to an arbitrary maximum limit of expenditure.
A typical device is a provision in the act that the fund may not ex
pend, for administrative purposes, more than 10 percent of premium
income. This check upon the budget may be further complicated
by a specific provision for calculating the percentage; as, for instance,
10 percent of the premium income for the preceding fiscal year.
Such detailed provisions have caused great difficulties. Thus, the
budget of a State fund for the year 1934 had to be calculated upon a
164
W O R K M E N ’ S COMPENSATION
percentage of the premium income for 1933. In 1933, the premium
income dropped to a very low level. In 1934, the increase of employ
ment naturally expanded the business of the fund, and, in addition,
the fund had to take on a heavy load of insurance covering emer
gency relief workers. In consequence, the administrative expense
of the fund leaped beyond the legal maximum. The administrators
faced the alternative of refusing to protect the workers by insurance
or of violating the law by spending more than the maximum allowed.
The commission chose to protect the workers and take the personal
risk incident to violating the legal restriction upon administrative
expense.
Specific limitations of administrative expense written into work
men’s compensation acts have failed to take into account two things:
(1) Business cycles with the attendant acute fluctuation in the volume
of insurance coverage and consequent fluctuation in receipts; and
(2) the scope of service which, according to advancing standards,
should be rendered by commissions and funds. Such arbitrary limi
tations upon budgets have compelled sudden reductions in the work
ing personnel of commissions and funds, especially during the depres
sion. As an illustration of the difficulties caused by such detailed
limitations in acts, one may cite the experience in a State where the
commission was compelled to drop from its working force all of the
referees.18 Fortunately, after this commission had operated for a
period of 6 months without the services of referees for adjudicating
claims, a change in receipts or in legislative authorization made pos
sible the reemployment of these indispensable agents in workmen’s
compensation administration.
Among the mixed patterns of financial support is the method of
self-support for a competitive fund, coexisting with support of the
workmen’s compensation commission by legislative appropriation.
This may result in a fluctuating provision for the commission admin
istration alongside a relatively stable administration of the fund.
There are historic examples of the effect of this dual method. In
one State, the early popular enthusiasm for workmen’s compensation
administration, following the enactment of the law, assured adequate
appropriations. An unusually expert administration was built up.
Later, at one stroke, the appropriation was cut in two. Some fea
tures of the compensation administration had to be discontinued,
with the wholesale dismissal of employees. More than 10 years later
the uncertainty of appropriations to pay the salaries of employees led
the personnel of the workmen’s compensation administration to adopt
the plan of paying into a common pool a percentage of their salaries,
so that if the appropriation failed, some of the employees, instead of
is Officers who conduct hearings upon claims for compensation. To do such work intelligently, a con
siderable period of training is needed.
METHODS OF FINANCING
165
being forced out, could get their support from the common pool.
The fluctuation of legislative appropriations has not only seriously
hampered the work of the commission at times, but has made un
certain the tenure of employment even for employees with a civilservice status.
One of the chief defects in the legislative-appropriation method is
the lack of continuity of gubernatorial policy in the States. At the
present stage of development of our administrative technique, there
may be a reversal of fiscal policy with each change in occupancy of
the governor’s chair. Such variations of policy have had at times
disastrous effects upon the relatively fixed needs of the workmen’s
compensation system, and at all times have introduced an element of
insecurity not conducive to the development of personnel efficiency.19
The chief methods of supporting the workmen’s compensation
administration and funds may be summarized as follows:
Legislative appropriation from general funds, without reimbursement from an
assessment upon the insurance or in any other way.
(Such a provision is, in
effect, a subsidy to employers, relieving them of a customary part of the expense
of workmen’s compensation coverage.)
Legislative appropriation from general funds for the support of the commission,
the expenditure to be repaid by an assessment upon insurance carriers and selfinsurers.
(States have been found where self-insurers are overlooked in the tax
ing provision and consequently contribute nothing to the administration.)
Support of the commission by assessment upon insurance, with the amount
of the budget, or expenditure, fixed by legislative determination, or limited by the
act.
Self-support subject to approval of the budget by the Governor, budget com
mittee, legislature, or other control agency.
T h e Ontario Method
An example of almost complete autonomy, in regard to adminis
trative expense, is found in the Workmen’s Compensation Act of
Ontario (sec. 95).
The board shall in every year assess and levy upon the employers in each of
the classes such percentage of pay roll * * * as it shall deem sufficient
to pay the compensation during the current year in respect of injuries to workmen
* * * and to provide and pay the expenses of the board in the administration.
No budget is made up for submission to any outside authority.
The expenses of administration are taken out of the insurance receipts.
The act authorizes the board to appoint the necessary officers and
employees, and “ subject to the approval of the lieutenant-governor
in council,” fix their salaries (sec. 66). As a matter of policy the
board also submits to the lieutenant-governor in council, for approval,
any appreciable new expenditures.
i0 Employees in some States have come to accept such a condition of insecurity as a necessary aspect of
their employment. An employee in one State, which was visited during an election, said: “We never
resign or are discharged. We all go out automatically after each election.”
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W O R K M E N ’ S COMPENSATION
The Ontario practice shows how experience has led to the selective
use of only one out of two available means of support. The Ontario
act has since its passage in 1914 permitted a dual method of support,
i. e., self-support, supplemented by aid from the consolidated revenue
fund (sec. 77):
To assist in defraying the expenses incurred in the administration * * * there
shall be paid to the board out of the consolidated revenue fund such annual sum
not exceeding $100,000 as the lieutenant-governor in council may direct.
This provision for supplementary support is now inoperative. In
the main it was discontinued in 1923, although the salaries of the
board members were so provided for until 1928. The Ontario admin
istration chose complete self-support rather than self-support plus
aid from the Province. This is of interest because in some States the
question is asked, when -the standard of self-support is considered,
whether the commissioners or board should not be excepted from the
rule and continue to receive their salaries from the general appro
priation.
Experience points to complete administrative self-support as essen
tial to efficiency in workmen’s compensation administration and the
management of funds. This need has been crystallized into a specific
recommendation by the Second National Conference on Labor Legis
lation. The general adoption of the correct legal and administrative
devices needed for freeing compensation administration from depend
ence upon legislative support will put an end to a condition which,
as long ago as 1922, was recognized as “ probably the greatest handi
cap suffered by State funds and industrial commissions.”
Chapter 10.— Cooperation of Workmen’s Compensation
Administrations W ith Rehabilitation Agencies1
When the first workmen’s compensation laws were enacted in the
United States, more than 20 years ago, the main task in the minds of
the legislators was to find a way to provide prompt medical and
financial aid to injured workmen. These laws gave great impetus to
the “ safety” or accident-prevention movement, because the excessive
number and severity of accidents meant high insurance costs to the
employer. For the first time in our history a definite money value was
set upon the loss of a worker’s limb or life, and humane sentiments
were reinforced by economic considerations. The work of the board
or commission administering the workmen’s compensation act expand
ed to include either direct activity in accident prevention or coopera
tion with State and private agencies charged with that task. But even
with accident-prevention activity and attention to giving injured work
men medical and financial aid the program of service to victims of
industrial accidents was still incomplete.
The rehabilitation of soldiers wounded during the World War threw
a strong light upon the lack of such service to injured workmen. A
demand that injured workers be put upon the same basis as wounded
soldiers and given equal opportunities for restoration to vocational
activity compelled the workmen’s compensation administrations to
consider the injured worker’s need for “ rehabilitation.” Such reha
bilitation is defined as “ the rendering of a physically handicapped
person fit to engage in a remunerative occupation. The goal is to
adapt such persons by special training, advice, and assistance, to an
occupation in which they may find employment.” 2
As a rule, the early compensation acts provided meager financial
benefits and limited medical aid. The workmen’s compensation often
stopped before his reemployment began. Liberalizing the financial
benefits to injured workers did not completely fill this gap. If the
workman was to be restored as nearly as possible to his condition
before he was injured, it was evident that something more than a
pension was needed. He must be refitted for an active, productive
life, instead of being left a dependent invalid.
A few States, acting independently took prompt steps to include
rehabilitation in the scope of service rendered by the workmen’s com
pensation administration. But such service was upon an uncertain
basis of support, was in danger of being cut off by fluctuating
1 This chapter was published as an article in the Monthly Labor Review, February 1936. It has been re
vised to harmonize with data available in 1938.
2 Bowers, E. L.: Is it Safe to Work? Boston and New York, Houghton Mifflin Co., 1930, p. 115.
167
168
W O R K M E N ’ S COMPENSATION
appropriations, and also lacked an adequate personnel and super
vision. The necessity for Federal cooperation in the program was soon
recognized.
The Federal Vocational Act of 1920 met this need. It provided a
means for the vocational rehabilitation of disabled persons, whatever
the cause of their disability, and encouraged the organization of a
service in which the States and the Federal Government would coop
erate. After the national Vocational Rehabilitation Act became effec
tive in June 1920 and the States began to accept its benefits and to
organize their rehabilitation services, State boards for vocational edu
cation and State compensation agencies entered into agreements to
cooperate to the end of making the rehabilitation service practical
and effective for persons disabled as a result of industrial accidents.3
A suggested plan of cooperation between the workmen’s compensa
tion administration and the rehabilitation agency was drawn up by the
Federal Board for Vocational Education.4 The plan called for the
interchange of certain information by the rehabilitation and compen
sation agencies and the joint promotion of a program of service to
injured persons.
Such cooperation in rehabilitation is the newest and one of the
most promising phases of workmen’s compensation administration.
The degree to which this plan succeeds is one measurement of the effi
ciency of workmen’s compensation administration in the rehabilitation
service. The technic and devices employed in such cooperation were,
therefore, given detailed study in the survey of workmen’s compen
sation administration and insurance. This survey was begun in 1934,
and before the close of the following year 23 States and the Province
of Ontario had been visited. In some cases it was found that c o o r
dination was “ on paper” only. In other instances, however, excellent
cooperation prevailed. Further progress is now being made.
The purpose of the Bureau’s study is to throw light upon the effec
tiveness of legal and administrative devices, rather than to invite
comparison between localities. Conclusions arrived at are based upon
the entire experience in all the regions visited.
The first step in the survey was the preparation of a comprehensive
outline of the points to be covered. This was submitted, for criti
cism, to outstanding specialists in workmen’s compensation adminis
tration. The revised outline was used as a guide during personal
interviews and conferences. In studying the rehabilitation coordi
nation all of the allied agencies were visited. Clinics were inspected.
Tentative conclusions, arrived at after visiting 12 States, were sub
jected to the test of conference presentation and discussion. After
3 Federal Board for Vocational Education Bull. 126: Workmen’s Compensation Legislation in Relation to
Vocational Rehabilitation. Washington, 1927, p. 9.
*The Federal Board furnishes information and supervisory service to the States through regional super
visors, and has on its staff an officer who specializes in workmen’s compensation problems.
COOPERATION W IT H
REHABILITATION AGENCIES
169
23 States and the Province of Ontario had been visited, conclusions
were submitted in writing to supervisory officers and specialists in
rehabilitation. The conclusions so tested and approved are presented
in this article.
An outline of the situation as a whole makes the details of an ade
quate cooperative program more easily understood, A general and
comprehensive view of existing conditions shows that the main rea
sons for the incomplete utilization of rehabilitation opportunities are:
(1) Failure of States to accept the Federal legislation; failure of States accept
ing that legislation adequately to match the Federal funds available for rehabili
tation work; insufficient rehabilitation staffs in such States for handling the case
loads; lack of sufficient diversified equipment for rehabilitation needs.
(2) Understaffing of workmen’s compensation personnel, caused by cuts in
budgets as an economy measure or by the unsatisfactory method of financing
the compensation administration.
(3) Recurrent political turn-over of personnel in some States, with the resulting
inexperience and lack of knowledge about either workmen’s compensation or
rehabilitation administration.
(4) Imperfect understanding of the technique of cooperation; and, to a minor
degree, jurisdictional conflicts. In some cases, neglect of the rehabilitation
agency to cultivate a close relationship with the compensation commission. In
some cases, lump-sum settlements which have proved to be obstacles to
rehabilitation.
(5) Gaps in the workmen’ s compensation acts, such as lack of second injury
funds or of special rehabilitation funds.
(6) Provisions in the workmen’s compensation acts or rules for rating of injuries
and wage computations, as a result of which the workmen do not cooperate in
their own rehabilitation for fear of losing part or all of their compensation.
(7) Popular ignorance in regard to the provision for rehabilitation.
This, as noted above, is an administrative study. It is still too
early in the history of rehabilitation experience in the United States
to make a satisfactory statistical study of the subject. The reason for
this is that the statistical proof or measurements must take into ac
count the earnings of rehabilitants over a period of 10 to 20 years, in
order to show adequately the relation of administrative cost to results.
Since we do not have records, on a large scale, of the earnings of reha
bilitated persons during a long period of years, most of the present
statistical efforts to show the great social gains effected by rehabilita
tion have been based upon an assumption that probable future
earnings of persons rehabilitated will amount to the figure shown in
the tabulations. There is, however, sufficient evidence of a nonstatistical type, partly in the world-wide recognition of the principle of
rehabilitation and partly from numerous case studies in which earning
power has clearly been the result of a rehabilitation program. In this
study information has been gained mainly from wide observation of
administrative performance and the consideration of many different
points of view. The success of such a method depends upon the coop215193 0— 40------12
170
W O R K M E N ’S COMPENSATION
eration in the study of local and regional officials. The readiness
of workmen’s compensation and rehabilitation officials to show what
they are doing and to explain their methods and the results obtained
has expedited the survey and supplied the factual basis upon which
its conclusions rest. Proper means were used to safeguard against
any bias or undue optimism on the part of the officials.
The law and practice essential to efficient administration will here
be considered point by point.
Effect o f State Law Upon Cooperation for Rehabilitation
A prerequisite to complete cooperation for rehabilitation is a work
men’s compensation act with standard provisions affecting rehabili
tation. Some of the points which should be included are discussed
below.
(1) Where the act defines the scope of duties of the workmen’s
compensation commission, cooperation in the rehabilitation of injured
workmen should be mentioned. The act should indicate in general
terms the full scope of service to be rendered by a workmen’s compen
sation administration. The reason therefor is evident from the fact
that in one State the scope of service to be performed by the compensa
tion commission was so narrowly defined by the act as to lead an ad
ministrative officer to say, when describing his duties: “ I am not
interested in accident prevention.” The language of the act should
make it plain to everyone that the workmen’s compensation commis
sion is interested not only in passing upon claims for compensation
but in preventing accidents and in fostering the rehabilitation of
injured workers.
(2) A satisfactory workmen’s compensation act should provide for
a “ second-injury fund” and a “ rehabilitation fund,” to be supported
from death benefits in cases where there are no dependents, and from
payments in first major-injury cases.5
The “ second-injury fund” facilitates the reemployment of an
injured worker. A workman who has lost one eye or one arm, for
instance, will be given a total-disability rating if he loses the second
eye or the second arm. Consequently, where there is no “ secondinjury fund” to take care of the excess liability in such cases, employers
and insurance carriers may object to reemploying a partially disabled
workman, because the compensation award in event of a second
injury may be out of proportion to that injury considered by itself.
There are two stages in the recovery of an injured workman— his
physical recovery and his restoration to earning capacity and oppor-
5 In most instances such special funds are maintained by payments in no-dependency fatal cases. But
under the Wisconsin act (sec. 102.591 there is a payment of $75 in some permanent partial injury cases. In
Idaho there is an additional payment of 2 percent in specific injury cases (sec. 6234a). In Minnesota there
is a payment into the “special compensation fund” both in no-dependency fatal cases and in case of some
permanent partial disabilities (sec. 4276).
COOPERATION W IT H REHABILITATION AGENCIES
171
tunity. The latter means something more than the mere return of
the injured person to work, since, without the aid of rehabilitation,
he may have to go back to work on too low a basis or at tasks unsuited
to his ability. The “ rehabilitation fund” facilitates the vocational
recovery of an injured workman by providing extra compensation to
cover his increased living expenses during the period of vocational
readjustment or retraining. Such a fund may also be drawn upon
for supplementary or extraordinary expenses connected with rehabili
tation, which are not provided for by the routine appropriations of
the State rehabilitation agency. Thus, the existence of such a special
fund, in the State of Arizona, provided a training trip to Chicago and
New York for a policeman whose trigger finger had been shot off in
an encounter with a burglar, so that he was disabled for the duties of
a patrolman. The special training fitted the injured man for success
ful “ identification work” with the police department.6
In several jurisdictions special rehabilitation funds controlled by
the workmen’s compensation commissions have been looked upon as
reserve funds and allowed to pile up unused. Such accumulations
attract the attention of budget makers and legislators, and may be
diverted from their special objectives and used as a substitute for
legislative appropriations for general administration. In drafting
the section of a workmen’s compensation act which sets up a “ reha
bilitation fund,” the purposes for which the fund may be used should
be carefully defined. Freer expenditure of this special fund for cur
rent rehabilitation needs is of course one of the best safeguards against
the loss or diversion of the rehabilitation assets.
(3) In addition to surgical care, the workman who has suffered an
amputation may need an artificial limb, and he will not be altogether
ready for retraining until this has been supplied. A provision in the
workmen’s compensation act for furnishing, as a part of the medical
aid, such artificial members and appliances as may be needed, expe
dites the work of the rehabilitation agency in handling industrialinjury cases and relieves the strain upon rehabilitation funds, because
the injured workmen then come to the supervisor of rehabilitation
prepared for immediate training or placement.
(4) On the average, the financial compensation received by an
in jured worker is at best only about two-thirds of his customary wages.
As a rule the entire earnings of the worker are needed for the support
of his family if he has dependents. So the workman has to deprive
6 To persons not familiar with the terminology of workmen’s compensation the various uses of the word
“fund” may be confusing. The literature of the subject contains frequent reference to “competitive State
fund,” “exclusive State fund,” “second-injury fund,” and “rehabilitation fund.” The first two terms are
applicable in those States in which a State agency has been set up for the underwriting of workmen’s com
pensation risks. Where private insurance carriers are also in the field, as in New York, the State fund is
“competitive.” Where, as in Ohio, the law does not permit operations in the field of workmen’s compen
sation by private insurance carriers, the fund is “exclusive.” The “second-injury fund” and the “rehabili
tation fund” are funds for meeting the special needs implied by their names, and are raised as described
above.
172
W O R K M E N ’S COMPENSATION
his family of necessaries if he makes any special expenditures upon
himself during his period of disability. He may, therefore, refuse the
offer of a rehabilitation training course, especially if he has to go
elsewhere for it, because of his distress over the problem of mainte
nance. Again, if the workman’s healing period is prolonged, his com
pensation payments will expire, under the legal provisions now in
effect in some States, before he has had time to complete his course of
retraining, and, facing destitution, he will quit the training course.
For example: If a workman loses part of his hand, and because of
infection or for other reasons the hand is very slow in healing, all his
compensation may be used up before he is ready for retraining, if he
is paid only for the loss of part of his hand. But if he is also paid for
his loss of earning power during the healing period, the payments con
tinue for a longer time. This gives him a better chance to retrain
himself before the payments stop. A standard workmen’s compensa
tion act takes care of this emergency, by providing that compensation
shall be paid, not only for the loss of a member, but also for the loss of
earning capacity during the healing period.
(5)
The method of determining what an injured workman shall
receive is called the rating system. A workman may lose his earning
power as well as his limb, as the result of an industrial accident. His
compensation may be based upon either or both of these losses. The
practice varies in different States. If a workman loses a limb or the
use of it, and he is paid no compensation for the injury itself but
receives only a certain percentage of the difference between what he
earned before the injury and what he can earn afterward, he may not
be eager to retrain himself and take another job promptly. Under
such a law, he thinks that an injustice is done him if his compen
sation is taken away when he is reemployed, because, even though he
may get a job, he has lost a limb and will continue to suffer that depri
vation for the remainder of his life. But if he is paid a definite
amount for any permanent physical disability, regardless of his pay
for whatever work he can obtain thereafter, the injured man has every
reason for retraining himself and returning to work promptly.
Because some workmen’s compensation acts contain provisions
which seem unjust to the injured workman and consequently dis
courage his participation in the plan for his rehabilitation, one unfin
ished task in the workmen’s compensation field is the formulation of
a rating system that will accelerate instead of hinder rehabilitation.
Such a system should use both incentives and constraint. One
incentive would be a specific amount to be paid in case of loss of mem
bers or permanent disability without any deduction, from compensa
tion, on the basis of what the injured person may earn in some futureemployment. An additional allowance to cover increased living
expenses during retraining is an incentive used in some jurisdictions.
C O O P E R A T IO N
W IT H
R E H A B IL IT A T IO N
A G E N C IE S
173
New Jersey has tried the method of constraint, recognizing that “ a
very serious impediment is encountered in the fact that some disabled
persons are unwilling to submit to training. * * * In New Jersey
the permanent total disability award ceases after 400 weeks unless
the worker shall have submitted to such rehabilitation as may have
been ordered by the rehabilitation commission of that S tate/’ 7
Workmen’s compensation acts usually provide that if an injured
workman refuses to cooperate in the medical plan for his restoration
to health, his compensation may be suspended. It seems reasonable
also to authorize the workmen’s compensation authorities to modify
or suspend the compensation of a workman whose refusal to cooperate
with his rehabilitation is in their opinion unjustifiable. Research
into the best means of securing the hearty cooperation of injured work
men in the program of rehabilitation is needed, to guide the further
progress of workmen’s compensation legislation and practice at this
point.8
Necessity for Adequate State Appropriations
Many of the States have not taken full advantage of their oppor
tunity under the plan of cooperation between States and the Federal
Government. In States which have only partially matched the avail
able Federal grants, the rehabilitation agency may be undermanned
or unsatisfactorily staffed, and the instruments available for rehabili
tation relatively meager. Such a condition limits the cooperation
between the workmen’s compensation commission and the rehabilita
tion agency, because of the inability of the rehabilitation staff to take
care of the cases referred to it.9
7 Bowers, E. L.: Is it Safe to Work? Boston and New York, Houghton Mifflin Co., 1930, p. 127.
8 Dr. H. H. Kessler, medical director, New Jersey Rehabilitation Commission, has employed a psychol
ogist who assists in making personality studies of physically handicapped workmen, to determine the
psychological factors which are obstacles to eliminating their dependency.
8At the close of 1937, 2 States had not accepted the Federal legislation relating to rehabilitation, 21 had
partially matched the available Federal funds, 7 States had completely matched, and 17 States had more
than matched the available Federal aid. These States are shown below;
S ta t e s p a r t i a l l y m a t c h in g F e d e r a l a l lo t m e n t
Alabama
Arizona
Arkansas
Colorado
Connecticut
Maryland
Massachusetts
Missouri
Montana
Nevada
New Hampshire
New Mexico
Florida
Idaho
Louisiana
Ohio
California
Georgia
Illinois
Indiana
Iowa
Kentucky
Maine
Michigan
Minnesota
Mississippi
Delaware
Kansas
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
S t a t e s f u l l y m a t c h in g F e d e r a l a l lo t m e n t
New York
North Dakota
S t a t e s o v e r m a t c h in g F e d e r a l a l lo t m e n t
Nebraska
New Jersey
North Carolina
Oklahoma
Tennessee
S ta t e s n o t c o o p e r a t i n g i n r e h a b ili t a t io n p r o g r a m
Texas
Utah
Washington
Wyoming
West Virginia
Virginia
Wisconsin
174
W O R K M E N ’S
C O M P E N S A T IO N
The ability of the rehabilitation agency to serve the workmen’s
compensation commission meets its most severe test when the socalled “ problem” industrial injury cases are faced. Typically difficult
cases include the uneducated laborer who has lost an arm, the middleaged workman who has suffered a back injury and must shift to lighter
work for the remainder of his life, the older workman who is nearing
unemployability for the heavy work he has always done and which is
the only work he understands, and the workman who is rebellious
because of his injury and is drifting into a so-called neurosis. These
are hard cases for vocational restoration, but the purpose of the
rehabilitation program is to provide experts who have learned how to
handle difficult cases. Unfortunately, some rehabilitation super
visors avoid the more difficult portion of their case load, accepting
the youth of high-school age and rejecting the older injured man who
often has a family dependent upon him for support.10
Where the appropriation for the maintenance of the State rehabili
tation agency is inadequate, State directors of rehabilitation are
compelled to limit the scope of the work. They will prefer to give
attention only to the younger, better-educated, and eager candidates
for rehabilitation on the lists furnished by the workmen’s compensa
tion commission. It will be impossible to give sufficient study to the
problems of placement, or to the perplexities of the injured middleaged worker who has already reached the border line of industrial
obsolescence even though his children may not yet be in high school.
No thorough study can be made of the situation of applicants for lump
sum settlements from the workmen’s compensation commission.
When because of reduced resources the rehabilitation director must
“ pick and choose” the cases he accepts and must reject many, the work
men’s compensation commission may abandon the rehabilitation co
ordination in discouragement, explaining that it is no use to send
injured workmen to the rehabilitation agency because that office is
unable to handle its case load.
T h e W orkm en’s Stake in the Rehabilitation Program
The emergencies of a technical age are putting a new emphasis upon
the value of rehabilitation. A workman no longer is placed securely
10 California undertook, some years ago, to follow up the awards to widows of industrial accident victims,
and give these women vocational guidance if necessary, but because of a drastic cut in appropriations for
the workmen’s compensation commission this plan could not be carried out. Very inadequate consideration
has been given to the problem of vocational readjustment often encountered by the widow of a workman
who has been killed. In many States the widow’s compensation payments cease after a few years. Such
payments are seldom large enough for complete support, especially when the amount of the award has been
computed on the workman’s part-time employment. In such cases, the widow’s allowance is sometimes a
mere pittance. The widow may be compelled to change from her vocation of homemaker and seek remu
nerative employment, for self-support or the support of dependent children, at a time when she is least able
to face the ordeal. Where a special rehabilitation fund exists, an allowance for maintenance, during retrain
ing at a vocational school or elsewhere, may well be recommended in such cases. Consideration of an
amendment to compensation acts to permit attention to the rehabilitation of the widow of a killed workman
is in order.
C O O P E R A T IO N
W IT H
R E H A B IL IT A T IO N
A G E N C IE S
175
for life in some small vocational compartment. He may be dislodged
at any time from one occupation and compelled to acquire new skills,
as old techniques become obsolete and consumer demands change.
It is therefore probable that the labor movement may become more
and more interested in the rehabilitation agencies.
The injured worker who retrains himself gets a new lease on life.
His readiness to remake himself protects him from premature obsoles
cence. The point of the old saying, “ Jack of all trades and master of
none,” is blunted by the current demand for flexibility, versatility, and
the readiness to learn something new. A successful rehabilitation is
of benefit to a workman not only vocationally, but also mentally and
physically.
Labor has a vital stake in the rehabilitation program. A successful
rehabilitation means that the worker who has lost an arm or a leg in
the course of his employment does not pay the added penalty of losing
also his chance for an active and useful career, or sink into the condition
of a passive and dependent member of society. Adequate rehabilita
tion service costs something but the lack of it costs much more.
Administrative Aspects
The workmen’s compensation act and the legislative appropriations
may provide a satisfactory basis for efficient rehabilitation service to
injured workmen, but even so, the results secured will depend upon
the attention given to administrative details of cooperation.
The most common cause of deficient rehabilitation service to injured
workmen is delay on the part of the compensation commission in fur
nishing the rehabilitation agency with the reports of certain types of
injuries. This delay may be accidental or intentional. If intentional,
it arises out of a theory, sometimes held by compensation commissions,
that an injured workman is not a subject for rehabilitation until the
physicians and surgeons have finished their service to him and a final
award has been made. One may call this a “ closure” rehabilitation
coordination, as distinguished from a “ reporting” coordination. An
unfortunate result of this theory and practice is that many injured
workmen will have become chronic cases before the rehabilitation
officials find them, if they ever find them. Injured workmen frequently
move, and where the “ closure” coordination is the administrative
practice, rehabilitation officials sometimes have great difficulty in
locating the disabled men. A timely visit from the rehabilitation
officer would save some of these handicapped men from chronic and
hopeless drifting.
A prompt reporting coordination is desirable. As soon as accidents
of certain types are reported to the workmen’s compensation commis
sion, the rehabilitation agency should be notified. A rehabilitation
agent can then call on the injured and help, early in the course of the
176
W O R K M E N ’S
C O M P E N S A T IO N
disability, to start planning the route to vocational recovery. This
contact is of great value in maintaining morale as well as in shaping
recovery plans.
The rehabilitation agency can render valuable service to the work
men’s compensation commission by assisting in the placement of
certain types of injured workmen, especially where preliminary job
training is necessary. The compensation commission also has much
to gain by furnishing the rehabilitation agency the names of appli
cants for lump-sum settlements, in order that the rehabilitation ex
perts may give the commission advice in such cases if they care to do
so. Where that is not done, too often the workman gets the lump
sum, spends or loses the money and is then reduced to destitution if
not thrown upon relief. The compensation commission, in despera
tion, sometimes awards lump-sum settlements to troublesome claim
ants as a means of curing a so-called neurosis. The therapeutic
value of lump-sum payments has, however, been challenged.11 The
competent rehabilitation agent may in some cases be able to suggest
or provide a better means of curing the neurosis by diverting the mind
of the sufferer from himself and focusing his attention upon some
useful activity. Early attention to injured workmen by rehabilita
tion agents will prevent many cases of so-called neurosis, especially if
a curative workshop is available.
In a satisfactory coordination, the rehabilitation agent will cooper
ate with the compensation commission by furnishing reports on
progress and end results of cases referred to him. The agent will also
watch carefully to avoid conflicts of authority. Thus, before telling
an injured workman the amount or kind of compensation he should
receive, the rehabilitation agent will take up such points with the
compensation commission or with the referee handling that particu
lar case. Occasional conferences participated in by the compensation
commission, the rehabilitation agent, and the Federal supervisor of
rehabilitation for the region will promote a better understanding of
the subject and more cordial cooperation of all parties to the rehabili
tation plan.
The mechanism available for rehabilitation needs expansion and
diversification. There should be more rehabilitation clinics combin
ing, under competent professional direction, physiotherapy and the
curative workshop. If special rehabilitation funds controlled by the
workmen’s compensation commissions are to be used at all for admin
istrative purposes, the maintenance of such clinics should be a pre-
n New York State Department of Education. Rehabilitation Division. Lump-Sum Settlements in
Workmen’s Compensation, by Carl Norcross. New York, 1936. The author points out that a distinction
must be made between the effect of finality in a settlement and the form in which money is paid. See also
Lump-Sum Settlements in Workmen’s Compensation in New York in Monthly Labor Review for Decem
ber 1936, reprinted as U. S. Bureau of Labor Statistics Serial No. R. 481.
C O O P E R A T IO N
W IT H
R E H A B IL IT A T IO N
A G E N C IE S
177
ferred expenditure. There should be, of course, an adequate staff of
skilled rehabilitation agents, prepared not only to direct the injured
workman’s vocational retraining, but to help him in employment
placement and give him sound advice upon his economic opportunities.
The Bureau of Labor Statistics’ survey shows, not only that addi
tional personnel and facilities are needed, but also that the existing
facilities are sometimes not used promptly and to the limit of their
service. Very cooperative relationships are found in States where
frequent contacts are maintained between the workmen’s compen
sation commissioners and the rehabilitation officers. The excellent
results obtained in many cases justify the extension and better sup
port of the rehabilitation program.
The task of directing and supervising the cooperation in rehabilita
tion work between the States and the Federal Government is vested
in the Rehabilitation Division of the United States Office of Educa
tion. That office aids the perfecting of administrative technique by
publications, conferences, personal contacts, and supervision.
Cost o f Rehabilitation
The need of aid for persons disabled by injuries is not a new thing,
but the World Wa;r presented this need on a scale vast enough to
arouse public opinion and compel attention to a duty that society had
long neglected. Social duty to the handicapped is the true basis of
rehabilitation work. But there are still some social duties which are
neglected because they are looked upon as expensive and a burden
upon the taxpayers. If the theoretical basis of rehabilitation work
is social duty, its cash basis is the appropriation that may be voted
by a legislative body. For this reason, persons and agencies pro
moting rehabilitation programs try to show not only that rehabilita
tion service is a duty but that it is profitable to the individual and to
society. In the main, statistics used to show the relation between
the cost of rehabilitation and the wage values produced are frankly
promotional.
Estimates of the relation of the increased earning power of rehabilitants to the cost of rehabilitation are usually based upon the
assumption of continued earning power over a period of 10 or 20
years. If, for the purpose of making an estimate, this assumption is
permitted, the analyses prepared or cited by the Rehabilitation Divi
sion, United States Office of Education, “ show that the cost of reha
bilitation was only an insignificant percentage of the increased earning
capacity resulting therefrom.” 12 On the same conjectural basis one
writer has estimated that “ the cost of rehabilitation to the govern-
12 See printed folder, Why Yonr State Should Adopt Vocational Rehabilitation (1928), also Vocational
Rehabilitation of Disabled Persons, pp. 8, 9, published by that office.
178
W O R K M E N 'S
C O M P E N S A T IO N
merits concerned was only a little more than 2 percent of the probable
increased earning power during the life of the rehabilitant.” 13
In the field of rehabilitation, one is dealing with a long-term
process. Satisfactory precision measurements of results may be avail
able by 1946. Meantime, if scientific accuracy is required, computa
tion must be limited to a comparison of administrative cost with the
case load handled by the rehabilitation agencies. This is done in the
following table:
T able
4 .— Num ber o f Cases and Cost o f Rehabilitation, Fiscal Year Ending June
30, 1937 1
[Data cover States operating under Rehabilitation Act of 1920, exclusive of 2 States not accepting Federal
grants in aid, for which the figures are not available]
Item
Number
N u m b e r o f r e h a b ilit a t io n c a s e s
Cases of all types, eligible and feasible, in process of training or placement, contacted by
rehabilitation agencies. _ _ __ _
_ __ _
_ _ _ _ _ _ __
Cases of all types rehabilitated and placed _ ________ _ _ _____ _ _________________
Industrial accident cases rehabilitated and placed in jobs 2__ _ _ __________________
Percentage of all cases __
_ ___ ____ _______ ___________________________
A p p r o p r i a ti o n s a n d ex p en d itu re s
42,055
11,091
2,371
21.4
Amount
Federal appropriations available to States, fiscal year 1936-37, for rehabilitation purposes:
Total ______________________________________________________________
$1, 813,116. 71
Amount expended in States ___ _ _ _
_ __ ______ _______ ____
1, 534, 552.01
Total amount spent by States accepting Federal law for purposes covered by act (including
State appropriations and gifts but excluding amount of Federal aid). _ __ _________
1, 784, 544.13
Total expenditures for rehabilitation____ ___________ _____________
3, 319, 096.14
1 Data by Rehabilitation Division of U. S. Office of Education, from advance figures for the Digest of
Annual Reports of State Boards for Vocational Education to the Office of Education, Division of Voca
tional Education, for the fiscal year ending June 30, 1937.
* Rehabilitation is not considered complete until the person being rehabilitated is placed in employment.
13 Bowers, E. L.: Is it Safe to Work? Boston and New York, Houghton Mifflin Co., 1930, p. 124.
That author is reluctant to apply quantitative measurements to results achieved in rehabilitation, and
does so only to meet the demand for such tentative estimates. (“Only the absence of any other method
of measurement has led us into a pecuniary valuation of rehabilitation/’ Pp. 118, 121.)
Appendixes
Appendix 1.— Experience w ith Silicosis Under Wiscon^
sin W orkm en’s Compensation A ct, 1920 to 1936 1
By
M ax . D . K o sso ris,
XJ. S. B ureau o f Labor Statisticsj and 0. A . F ried ,
Chief Statistician , Industrial Com m ission of W isc o n sin 2
Wisconsin was one of the first States to legislate in the field of
workmen’s compensation, its law becoming effective in 1911. In
keeping with the philosophy of the time, the law applied to accidental
injuries and proceeded on the theory that compensation for such
injuries should be considered as part of the cost of production.
In 1919 the law was amended to include as compensable injuries
occupational diseases growing out of and incidental to the employment.
The determination of what were occupational diseases was left to
the industrial commission. The power of the commission to make
such determinations as findings of fact, and apply to them the exist
ing law, was upheld as constitutional by the Supreme Court of Wisconsin
in 1924.3
The second occupational-disease case to reach the State supreme
court involved silicosis with superimposed tuberculosis. The court
held that in the stonecutting industry, the filling of the lungs with
granite dust made employees of this industry “ much more, and
particularly, susceptible to pulmonary tuberculosis,” thus recognizing
tuberculosis developed under such circumstances as within the
occupational-disease provisions of the workmen’s compensation law. 4
The Schaejer case in 1924 raised a point peculiar to many occupa
tional diseases, and particularly to silicosis— that of lengthy exposure.
Generally, in an accidental injury the damage to a worker is inflicted
quickly. He falls and breaks an arm. An explosion occurs and he
is killed. But silicosis, making the lungs particularly susceptible
to pulmonary infections— usually tuberculosis or pneumonia— devel
ops over an extended period of time. The current medical opinion
is that the time necessary to develop silicosis depends on several
factors: (1) The amount of free silica dust of harmful size in the air
breathed by the worker, (2) the rhythm of work on which depends
1 This section was published as an article in the Monthly Labor Review, May 1937.
2 For the data dealing with the discussion of the legal phase of Wisconsin’s silicosis experience, the
Bureau of Labor Statistics is indebted to C. J. Otjen, attorney, of Milwaukee, Wis.
3 Schaefer & Co. v. Industrial Commission (1924), 185 Wis. 317, 201 N. W. 396.
* Wenrich v. Industrial Commission (1924), 182 Wis. 379, 196 N. W. 824.
179
180
W O R K M E N ’S
C O M P E N S A T IO N
the depth of breathing, (3) the length of exposure, and (4) the indi
vidual's own power of resistance. While the length of exposure
varies for different industries, and within these industries for various
occupations, the exposure period necessary to develop a disabling
stage of silicosis usually runs into years. During this period, a
worker may be exposed to harmful silica dust while working succes
sively for two or more employers. If all of them contributed to
ultimate disability resulting from silicosis, which one should be held
liable for the benefits to be paid under the workmen's compensation
act?
In the S ch a efer case , the industrial commission had before it
the situation of a worker who was suffering from tuberculosis super
imposed upon silicosis. The disabled worker, a tool sharpener, was
employed concurrently by three separate concerns, each of which
exposed him to dangerous silica dust. He had been employed before
then by two other employers in the same industry. The commission
decided that the compensation due the injured employee should be
prorated among the three concerns employing the injured at the time
the disability became effective, but denied the contention of these
employers that the two earlier employers should be also held liable.
The Supreme Court of Wisconsin affirmed the award of the industrial
commission, and in connection with this particular point held that
“ liability attached as of the date of disability," as in the case of
traumatic injuries. On the basis of this rule, the industrial com
mission continued to hold that liability for compensation attached
to that employer in whose employment the disabled worker was at
the date of disability, even though employment was as short as 3
months in one case and 2 months in another.
The question came up for decision again in 1928, in a case which
arose because of a change of insurance carriers during the period of
exposure of a worker who had been awarded compensation. The
second insurer maintained it was not liable because the time it had
carried the risk was too short to have permitted the causation or
aggravation of the case of silicosis in question. The supreme court,
however, held to its rule and decided that the relative length of
exposure was not important, and that inasmuch as the second insurer
covered the risk at the date the disability developed, it was liable.
The court maintained that any other rule would make it very diffi
cult to administer the occupational-disease provision of the work
men's compensation act. If liability were to be determined as of the
date of the inception of disease, the worker would be under the
necessity of giving notice of every slight ailment which might be due
to incipient stages of occupational diseases and which, sooner or
later, might cause disability.5 As for the hardship on the insurance
5
Employers Mutual Liability Insurance Co. v. McCormick (1928), 195 Wis. 410, 217 N. W. 738.
E X P E R IE N C E
W IT H
S IL IC O S IS
181
carrier who was caught in such a risk, the court thought that in the
long run no harm would be done because the law of averages would
equalize such burdens among employers and insurance carriers.
New questions arose, however: If a worker had contracted sili
cosis while working for one employer, but did not become disabled
until after he had entered the employ of a second employer who in no
way had contributed to the development or aggravation of silicosis,
was the second employer liable just because the date of disability
occurred during employment with him? The court answered in the
negative, insisting that there must be a causal relationship between the
disease and the work of the employee.6
But if the second employer was not liable for compensation, could
the disabled worker have recourse against the first employer, even
though no longer employed by him? The supreme court dealt with
this issue in 1933 7 in a case involving not silicosis but another occupa
tional disease, dermatitis. The worker in this case, although experi
encing discomfort, kept on working. He did not become disabled
until after the employer-employee relationship had terminated.
Although there was apparently little question of the existence and
cause of the disability, the court held that the former employer was
not liable because the employer-employee relationship did not exist
on the date when the disability began. In this type of situation,
then, the disabled worker had no recourse against anybody.
This decision came during a period when the industrial commission
had before it a great many claims for disability resulting from silicosis.
Workers who had been exposed to silica dust but were now unemployed
or employed only part time, filed claims in the hope of obtaining some
income in lieu of wages. Perhaps even more important were the
claims filed by workers who had been discharged or refused employ
ment because physical examinations—not always competent—had
indicated some silicotic condition. Current public concern with
silicosis and relatively large compensation awards had caused em
ployers and insurance carriers to center their attention on silicosis. A
considerable number of insurance carriers refused to write or renew
policies unless employers subjected their workers to physical examina
tions and discharged all those with any symptoms indicative of
silicosis. Such workers, although not disabled at the time, might
later become claimants for compensation. Employment was refused
to applicants if they could not pass medical examinations for silicosis.
Some self-insurers followed the same practice. As a result, many
workers who had been discharged or refused new employments, on
the ground that they had silicosis, filed claims.
6 Hayes v. Industrial Commission (1930), 202 Wis. 218, 231 N. W. 574.
7 Kimlark Rug Corp. v. Industrial Commission (1933), 210 Wis. 319, 245 N. W. 424.
182
W O R K M E N ’S
C O M P E N S A T IO N
In 1935, the supreme court had occasion to study this problem
and came to the conclusion that an employer could discharge his
workers for any silicotic condition, even though developed in his
employment.8 This ruling meant that an employer could have his
employees examined, discharge them for any silicosis discovered,
and be free from any liability thereafter, unless a worker could prove
actual disability due to silicosis while still in his employment. If
the disability occurred while the worker was unemployed, or while
he was employed by another company at an occupation free of any
silicotic hazard, the worker had lost his right to compensation.
The harshness of these rules led to attempts on the part of claim
ants to find ways out of the dilemma. Obviously, meritorious claims
were being barred. The right of recovery was perceived to hinge
on the meaning of “ disability.” Ingenious attempts were made
to distinguish between physical disability and medical disability.
“ Physical disability” was interpreted to mean actual physical inability
to carry on. “ Medical disability” was defined as a physical condition
such that a medical adviser would have recommended stoppage of
work although the employee continued at work. The industrial
commission allowed compensation on this theory, interpreting “ disa
bility” to mean “ medical disability.” The court put an end to this
procedure, however, by refusing to recognize “ medical disability”
in the absence of an actual wage loss in the regular course of
employment.9
Part-time employment, staggered employment, and temporary
lay-offs, however, facilitated recovery in compensation for silicotic
disability, even though workers could not prove disability while
actually working. It was a relatively simple matter to date medical
testimony back to a period of temporary idleness of the employee,
so as to prove that the disability did occur while the employeremployee relationship existed. Such testimony was hard to disprove.
Backed up by medical opinion, the additional point was made that the
employee was able to continue at work only because it was staggered,
and that he could not have continued under steady work. The court
met these contentions by interpreting “ disability” to mean wage loss
when work was available.10
To provide for cases in which disability arose subsequent to dis
charge, the Workmen’s Compensation Act was amended in 1933
defining, for occupational diseases, the date of injury as “ the last
day of work for the last employer whose employment caused disability”
(sec. 102.01 (2)). The court, however, held that even under this
amendment, wage loss had to be shown, and that in the absence of
v. I n d u s t r i a l C o m m i s s i o n (1935), 219 Wis. 204, 262 N.W. 577.
v. I n d u s t r i a l C o m m i s s i o n (1936), 220 Wis. 289, 265 N.W. 390, and N o r t h E n d F o u n d r y C o .
c a s e s (1935), 217 Wis. 363, 258 N.W. 439.
10 See K i m l c r k R u g C o r p . c a s e and N o r t h E n d F o u n d r y C o . c a s e s already cited. There were a number of
other cases to the same effect.
8 M o t o r C a stin g s G o.
9 S c h a e fe r & C o .
E X P E R IE N C E
W IT H
S IL IC O S IS
183
wage loss, there was no disability and consequently no recovery in
compensation. Before an employee was entitled to compensation,
therefore, it was not sufficient to prove medical disability. It was
also necessary to prove wage loss, and not simply potential wage loss.11
Summarizing, the effects of the legislative enactments applied by
the commission, as approved, modified, or reversed by the Supreme
Court of Wisconsin, are as follows:
1. Prior to the am endm ent in 1935, to have a valid claim , a worker had to prove
th at his disability occurred while the em ployer-em ployee relationship existed.
2. Subsequent to the am endm ent in 1935, m aking the date of liability “ the last
day of work for the last em ployer whose em p loym ent caused disability,” an
em ployee who becam e disabled subsequent to discharge had a valid claim against
the last em ployer whose em ploym en t was a contributing factor to his silicosis.
3. D isability prior and subsequent to the 1935 am endm ent m ust be dem on
strable in wage loss, and not sim ply potential wage loss or m edical disability.
4. T h e em ployer in whose em ploym ent a worker is at the tim e of his disability,
or the last em ployer whose em p loym en t was a contributing factor in his disability,
m ust bear the full cost of com pensation even though th at period of em ploym ent
was not sufficiently long to cause the condition, it being sufficient if it contributed
thereto.
As a result of these rules, the 1935 legislature enacted the following
amendments to the compensation law:
1. A final award dismissing a claim because the disease had not as yet caused
disability was n ot to be a bar to a claim for disability developed subsequently.
(Sec. 10 2.18 .)
2. In cases of discharge from em p loym en t because of nondisabling silicosis,
thus occasioning wage loss, the com m ission m ay allow com pensation not to
exceed 70 percent of the em p loyee’ s average annual earning; but a paym ent of
such a benefit was to bar any subsequent recovery from silicotic disability.
(Sec.
102.505.)
The purposes of these amendments obviously were (1) to safeguard
the right of an employee to be entitled to compensation when actually
disabled, even though an earlier claim had been dismissed because no
disability could be proved at the earlier date, and (2) to provide for a
method of rehabilitating workers barred from following their regular
occupations because they had contracted silicosis, even though not
disabled. They represent an attempt to couple wage loss with the
termination of employment, and thus to meet the standard prescribed
by the supreme court.
Neither of these two amendments has as yet run the gauntlet of
judicial opinion.
Incidence o f Silicosis 12
During the 17-year period from 1920 to 1936, 799 claims 13 for dis
ability resulting from silicosis were filed and passed upon by the
11 See Schaefer case cited above.
12 The statistical data upon which this discussion is based were obtained from a preliminary tabulation
of a comprehensive survey of Wisconsin’s silicosis experience by the statistical division of the Industrial
Commission of Wisconsin.
13 A subsequent recheck has raised this fiaure to 893.
184
W O R K M E N ’S
C O M P E N S A T IO N
Industrial Commission of Wisconsin. The 10 cases shown as settled
by the commission in 1936, in the preliminary survey, fall short of the
number of cases actually filed or settled during that year, estimated to
be between 40 and 50. In 469 of the 799 cases compensation was
paid, although sometimes in small amounts as compromises in what
may be called nuisance cases fostered by ambulance-chasing attor
neys. In 330 the claims were disallowed or, in some instances, with
drawn by the claimants themselves. Fully 55 percent of all com
pensated claims and 62 percent of those rejected were filed in the 2
years 1933 and 1934.
Distribution o f Cases, by Industry
The distribution of compensated claims for silicotic disability is
shown in table 5 for eight general industry groups. The largest
number of cases for any one group is in the machinery industries, with
foundries second and stonecutting and quarrying ranking third. This
distribution is not particularly significant, however, for the number of
cases is obviously dependent upon the number of workers exposed to
the danger of developing silicosis. But due to the fact that silicosis
is a disease developed over a period of years, it is practically mean
ingless to compute any exposure rates on the basis of the number of
workers exposed at any one time.
It will be noted that about one-third of all cases resulted in death.
The highest ratios of fatal to nonfatal cases occurred in the miscel
laneous manufacturing and stone industries other than cutting and
quarrying— both small in total number of cases. Out of 46 cases in
the enameled-ware industry, 27 resulted fatally. In stonecutting and
quarrying, 47 out of 99 cases resulted in death. In iron mining
exactly one-third of all compensated cases were fatal. These data,
however, are not indicative of the relative hazards in the industries
covered. The compromised and nuisance cases appeared more largely
T a b l e 5 .—
Compensated Silicosis Cases in W iscon sin , Classified by In d u stry, 1920
to 1936
xuuusuy
All industries ___________ _ ___________ _________ __
Mining_______ ________ _ _ __ _ _______ __ _
Stonecutting and quarrying _ _ _ _ _ _ _ _ _ _
Allied stone industries _ __
___ _ _ _ ____
Enameled-ware industry _
_______ _ _ _ ____ _ ____
Foundries___ ___
_____ __
Other metal industries. __ ___ ____ ____ _ _ _ __ _____
Machinery industry (including transportation equipment), _ __ __
Miscellaneous manufacturing industries _
_ __
_____
Number of cases
Fatal
159
14
47
9
27
14
8
36
4
Nonfatal
310
28
52
6
19
87
28
89
1
Total
469
42
99
15
46
101
36
125
5
E X P E R IE N C E
W IT H
185
S IL IC O S IS
in some industries than in others. The employment status of possible
claimants, together with the activity of lawyers who interested them
selves in developing claims, should be kept in mind in reading the
ratios of fatal to nonfatal cases.
Distribution o f Cases, by Occupation
The 469 compensated cases have been classified by occupation in
table 6. Molders headed the list with a total of 86 cases, 10 of which
were fatal. Stonecutters followed with 69 cases, and of these, 29,
or 42 percent, were fatalities. Sand blasters and sandblast-machine
operators in foundries accounted for 57 cases, but 52 percent of these
were deaths. The death rate of 58 percent for sand blasters, includ
ing two cases in the stone industries, was higher than that of any
other occupation.
More than half of both fatal and nonfatal cases in the enameledware industry occurred to sand blasters, with 3 fatalities for
molders. Most of the molder cases were in the foundry group.
Also high in the foundry group was the laborer classification with 17
cases, 3 of them fatal, and unclassified occupations with 18 cases, of
which 5 were fatal. In other metal industries, molders again
T a b l e 6 .—
Compensated Silicosis Cases in W iscon sin ,r Classified by\Occupation
1 9 2 0 to 1 9 2 6
Occupation
All occupations.
Blacksmiths_____________
Carvers, hand (stone)____
Chippers________________
Core markers, core blowers.
Cutters (stone)__________
Drillers, machine_____________
Enamelers___________________
Foremen, superintendents_____
Grinders, finish______________
Grinders, rough (machine shop)
Grinders, snag, rough grinder hands, swing grinders.
Laborers______________________________________
Letterers and engravers (stone)__________________
Miners________________________________________
Molders_______________________________________
Polishers, hand (stone)_______________________________
Polishers, machine (stone)____________________________
Polishers (metal)____________________________________
Sand blasters and sand blast-machine operators (foundry)
Sand blast-machine operators (stone)__________________
Sand dryers____________
Sand mixers____________
Shake-out men__________
Stone-crusher operators- __
Welders, acetylene cutters.
Unclassified_____________
Number of cases
Fatal
Nonfatal
159
1
12
2
29
1
2
1
5
10
2
14
10
4
1
32
2
1
1
2
1
26
310
1
20
7
40
3
6
5
10
22
1
28
76
3
25
7
5
5
46
Total
469
1
1
32
9
69
1
2
4
6
10
10
32
3
42
86
4
3
1
57
2
1
8
5
2
6
72
1 The data to be published by the Industrial Commission of Wisconsin also was to contain an analysis by
length of exposure. Errors in the preliminary data made inadvisable the inclusion of such an analysis here.
215193°— 40------ 13
186
W O R K M E N ’ S COMPENSATION
accounted for 19 out of 36 cases. As in the case of foundries, the pro
portion of fatalities for this occupation was low, with only 1 out of
19 cases. Sand blasters, on the other hand, had 3 fatalities out of a
total of 5 cases.14
In the machinery group, molders and chippers accounted for 25
and 24 cases respectively, out of a total of 125 cases of silicosis for
all occupations. Four out of the 25 molder cases were fatalities,
as were 8 out of 24 for chippers. Sand blasters accounted for 18
cases, but of these, 13 were fatal.14
Table 6 indicates that it is not necessary to work directly with
materials involving free silica in order to contract silicosis. That
nothing further than exposure is required is shown by the four cases
concerning foremen and superintendents. In the reading of this
table, however, the above comment concerning the indication of rela
tive hazard is again in point. The filing of claims was influenced by
various factors, among them the employment status of possible
claimants, attitude of employers and insurance carriers, and activities
of claim adjusters and lawyers.
Employment Status W hen Filing Claim
The number of cases involving claim for disability from silicosis
rose slowly until 1932. In that year 62 claims were filed with the
industrial commission, 22 of which were disallowed. In the next year,
167 claims were filed, and in 1934, the peak was reached with 298
cases. More than half of these, incidentally, were disallowed, even
when early stages of silicosis were found. No compensation was
allowed in such cases because the workers concerned could not prove
any disability.
Why this concentration of claims in these 2 years, with the rela
tively sharp drop from 298 claims in 1934 to 100 claims in 1935?
The distribution according to the employment status of the claimants
when first filing claim with the industrial commission, as shown in
table 7, throws some light on the question.16
In 1933 and 1934, 168 out of 465 claimants, or 36 percent of the
total for the 2 years, were unemployed due to lack of work. In 73
of these cases, compensation was paid. In 95 cases, the claims were
disallowed, indicating that in perhaps one-third of the total cases in
these 2 years workers filed claim in the search of some means of
income.
Another high concentration of claims was in the group in which
employment was terminated or refused because medical examinations
indicated some stage of silicosis. There were 124 such claims in 1933
w Because of lack of space, the tabulations upon which these statements are based have been omitted.
ifi Subsequent check of the preliminary data revealed some changes in the distribution of the data, but not
sufficient to disturb the general setting or conclusions.
187
EXPERIENCE WITH SILICOSIS
and 1934, more than one-quarter of the total claims filed during these
2 years. In 94 of these cases compensation was paid, and in 30 case^
it was disallowed. The practice of discharging employees because
a medical examination revealed silicosis, although rarely in a formproducing total disability, appears to have been a boomerang, for
such employees promptly filed claims for silicosis, and in 76 percent,
of these cases were able to prove actual disability and to collect com
pensation.
During these 2 years only 54 claimants were unemployed because
of voluntary stoppage of work attributed to silicotic disability. In
about half of these cases, compensation was paid. In the other
half, compensation was disallowed, usually on the ground that what
ever disability there was could not be attributed to silicosis.
T a b l e 7.—
E m p l o y m e n t S t a t u s o f W o r k e r s i n W i s c o n s i n at T i m e o f F i l i n g C l a i m v
1 9 2 0 to 1 9 3 6
Unemployed because of— Em ClainL
ploy filed*
after
ment death,
With On Lack Medi Dis Other status
With
Total
cal abil rea un by de
respond subse relief of
ent em quent work work exami ity 2 sons3 known pend
ployer employer
nation 1
ents
Claimant employed—
Year
Total silicosis claims, 1920
5
29
to 1936________________
21
2
Compensated claims._____
1920 __ ________
1921_________________
1922_________________
1923_________________
1924_________________
1
1925
.. ________
1
1926 _______________
1
1927
....................
1928_________________
1
1929
_____________
3
1930_________________
1931 _______________
3
2
1932
__________
4
2
1933_________________
2
1934_________________
3
1935
______ ____
1936 <________________
8
3
Noncompensated claims__
1920_________________
1921_________________
1
1922_________________
1923 ___ _______
1924 ______________
1925_________________
1
1926_________________
1927_________________
1928........................ .
1929_________________
1930_________________
1931_________________
1
2
1932_________________
2
1933_________________
1
1
1934_________________
1
1935_________________
1
1936 4____________
1 Discharge; rejection from available employment.
3 Discharged as inefficient, out on strike, etc.
4
1
190
89
1
3
5
32
41
8
3
101
186
130
1
1
2
1
2
1
4
5
49
45
18
1
56
177
108
2
2
4
2
2
3
7
9
11
10
13
9
19
12
3
69
30
18
1
2
4
9
1
1
12
142
75
1
3
1
3
3
1
2
2
5
6
8
14
22
3
1
67
36
25
799
469
T
'
2
1
1
4
5
1
6
4
1
11
4’
5
9
5
7
6
1(*
15
20*
30
40
116
144
49
7
330
1
4*
2
2
2
1
2”
1
1
2
5/
2
2
1
2
3 f- ri
2
1\ 4
1
1
1
2
1
1
>1 5'
5',',
3
2
7
2
' m
6
7
6
2%
1 18
6
10
6
8
51
2 77
20 20
4
28
i 154
6
13 12
14
Six
5
1
I
3*
2 Voluntary stoppage of work charged to disability..
* Data incomplete,
1
1
188
W O R K M E N ’ S COMPENSATION
The over-all picture for the 17-year period tells much the same
story. Out of a total of 799 claims, only 29 were filed by workers
still in the employ of the respondent employer. There were five
claimants who were employed with an employer subsequent to the
one against whom claim was filed, and four claimants were on relief
work. In 36 cases, claims were filed by dependents of deceased
workers, and in 11 of these compensation was denied.
Fully 190 cases, or nearly one-quarter of the total claims, were
filed by workers unemployed because of lack of work. More than
half of these cases were disallowed. In nearly again as many cases,
186 claims were made by workers who had been discharged or refused
employment after medical examinations disclosed silicosis. In 70
percent of such cases compensation was paid.
In 177 instances claimants had stopped working because^of disabil
ity. But nearly a third of their claims were refused compensation
because, the disability was held not due to silicosis. In 30 cases,
unemployment was due to such causes as strikes, discharge for ineffi
ciency, and other miscellaneous reasons. Claimants were given
compensation in 18 such instances. In 142 claims, the employment
status at the time of filing claim could not be determined from the
records of the industrial commission.
Cost o f Silicosis Cases
The amounts of compensation paid in compensated cases during
the period of 1920 to 1936 are shown in table 8. Approximately onethird of the 469 cases were fatalities.
For these 469 cases $1,614,648 was paid or awarded.16 Approxi
mately 40 percent of this was paid in compromised settlements.
About 28 percent, $452,138, was paid as compensation for fatalities,
and an additional $18,735 for funeral expenses. Slightly in excess
of $400,000 was paid for permanent, and about $119,000 for tempo
rary disabilities. The amount paid for medical aid was $26,589, or
1.6 percent of the total paid for silicotic disability.
The number of claims for fatalities increased from 1 in 1920 to a
maximum of 27 in 1934. That same year also saw the peak of nonfatal claims for which compensation was paid, 117.
Of particular significance is the heavy concentration of compen
sated claims in the 2 years 1933 and 1934. During these 2 years
alone were filed more than half of the total compensated cases during
the 17-year period analyzed. The average amount per case was
lowest in 1934, with $2,137, and 1933 followed closely with $2,891.
The only other year to show an average as low as these was 1923, dur
ing which only five claims were filed. One reason for these low aver16 Recheck of the preliminary data showed a total of $1,856,663 paid for all silicosis cases from 1920 through
1936. The difference is accounted for m ainly b y the discovery of 94 additional claims.
EXPERIENCE W IT H
SILICOSIS
189
ages in 1933 and 1934 was the large number of compromised settle
ments. It will be noted that the total amount paid in this manner
was higher in each of these 2 years than in any other year.
The highest average cost per case was found not for one of the latei;
years during which the public was “ silicosis conscious,” but for 1925.
For six claims filed during that year, the total average cost per case
amounted to $7,291; four of these six cases, however, were fatalities.
The attention paid to the silicosis problem is reflected in the fact
that of the allowed claims filed during 1933 and 1934, only 13 and 19
percent, respectively, involved death. In contrast, in the earlier
years the percentage of fatal cases to total cases filed was very much
higher: 90 percent in 1928, 80 percent in 1929, 85 percent in 1930, 60
percent in 1931, and 60 again in 1932. In 1935, however, the trend
of 1933 and 1934 continued, with fatalities only 18 percent of the
total.
T
a b l e
8 .—
C om p en sa ted S ilic o s is C ases in W h ic h P a y m e n ts
W is c o n s in , 1 9 2 0 to 1 9 3 6
W e r e M a d e in
Year of
Num ber of cases
Paym ents for—
Aver
first infor
age
m ation to
Perma Tem po M edi Funeral Compro
per
industrial
ex
T o ta l2 case
com m is Fatal Non- Total Death nent dis rary dis cal
mise
1
ability ability care penses
fatal
sion
All cases___
1920 3
1922
1923
1924
1925_______
1926_______
1927_______
1928_______
1929_______
1930
1931_______
1932_______
1933_______
1934_______
1935_______
1936 4______
159
1
3
2
7
4
4
4
9
12
17
18
24
15
27
9
3
310
1
3
2
2
3
2
1
3
3
12
16
101
117
40
4
469 $452,138 $408,879 $119,313 $26, 589 $18, 735 $588,994 $1,614,648 $3,443
1
185
200
4,135 4,135
3, 750
4
6, 529
5,639
95
15, 813 3, 953
200
3, 350
5
2, 829 1, 533
6,650
11,012 2, 202
9 16, 366
2,147
511
600 12, 441
32,065 3, 563
43, 743 7, 291
6 20, 992 14,050
3,636 1, 765
800
2, 500
742
7 15,711
2, 500 12, 703
600
1, 550
33, 806 4,829
6 17, 200 20, 809
2, 723
800
42, 452 7, 075
420
500
4, 982 3,120 1,350
10 36, 205
6,800
54, 407 5,441
1,950
15 65,130
4, 742 11, 358 2,706 2, 20C
7,000
93,136 6, 209
20 68, 004
14, 695 4,073 2,795 15,800
105, 367 5, 268
30 71, 467 30, 681 15,162 4, 541 2, 550 21, 225
145, 626 4, 854
193, 455 4,836'
40 55, 443 46, 219 28, 670 2,043 2,640 58,440
335, 389 2,891
116 36, 288 102, 987 10, 876 1,177 1,800 182, 261
144 32, 272 80,063
1, 534 1,299 1,400 191, 226
307, 794 2,137
49
4, 531 78, 836
159, 313 3, 251
1, 869 2,176
400 71, 501
7
6, 000 26, 042
4, 000
37,135 5, 305
490
203
400
1 It was not possible to separate the amounts paid as compromise into paym ents for various types of disa
bilities and medical and funeral expenses.
2 More complete data showed a total of $1,856,663 paid from 1920 through 1936.
3 No silicosis claims filed in 1921.
4 D ata incomplete.
A comparison is given for the cost of all injury cases and silicosis
cases in table 9 for the period from 1920 through 1934. The total paid
as indemnity for 285,742 compensated claims was $47,968,891. The
total paid for 413 silicosis cases was $1,393,990. The entire cost for
all injuries, i. e., all indemnities plus medical aid, was $63,201,928.
The cost for silicosis cases was $1,418,200. Whereas the average total
cost per nonsilicosis injury was $216.54, the average cost per case of sili
cosis was $3,433.90—nearly 16 times as high.
190
W O R K M E N ’S COMPENSATION
O f interest also is the comparison of total silicosis cost with total all
injuries cost. In 1920, the cost of silicosis claims filed during the year
was 0.16 percent of the total cost for the year. The percentage
climbed steadily, reaching 1.06 in 1928, 3.17 in 1931, 4.75 in 1932,
9.40 in 1933, and then declined somewhat to 8.80 in 1934. For the
entire 15-year period, silicosis averaged 2.23 percent of the total cost.
.But until 1931, for 11 years, the percentage remained at less than
2, and for 8 of these years, below 1 percent. Contrasted with these
figures, the percentages for the 4-year period from 1931 through 1934
show very large increases. The most significant reasons for these
increases no doubt were unemployment and the rather general practice
o f discharging employees for silicosis indicated by medical examinations.
T a b i ^e 9 , — C om p a rison o f C ost o f A l l I n j u r y C ases and S ilic o sis C ases in W is c o n s in ,
1 9 2 0 to 1 9 3 4 1
N um ber of
cases
“Year
'Total.
1 9 20 ._
1921
1922—
1923_
19 24 -_
1925—
1926__
1927__
1928__
1929—
1930 —
1931 —
1932._
1 3 33._
1334—
Compensation
Cost of medical
care
Total cost
Average cost
per case
Silicosis 1
All Sili
NonSili All injuries
All injuries Silicosis All injuries cosis
Per sili Silicosis
in
juries cosis
cent
cosis
2
Amount of
total
285,742
16,246
15,898
16, 705
20,941
22,766
21,137
22,177
20,473
21,818
22,630
20,070
16,943
16,195
14, 563
17,180
413 $47, 968, 891 $1, 393, 990 $15, 233, 037 $24, 210 $63, 201, 92sj$l, 418,200
569, 571
185 2, 540,084
3, 950
1 1,970,513
4,135
661, 562
2, 918, 817
2, 257, 255
746,429
95 3,156, 958
15, 718
4 2,410, 529
15, 813
9,479
924,032 1, 533 3, 719,030
11,012
5 2, 794, 998
31, 554 1,153,332
511 4, 200,479
32, 065
9 3, 047,147
41, 978 1,100,852 1,765 4, 590, 873
6 3,490,021
43, 743
33,064 1,122,624
742 4, 848,484
7 3, 725,860
33,806
6 3,662,406
42,032 1,114, 056
420 4, 776,462
42, 452
51, 287 1, 250,216 3,120 5,136,066
54,407
10 3, 885,850
90,430 1,433, 552 2,706 5, 742,123
15 4,308, 571
93,136
20 4,447,141 101, 294 1,398,338 4,073 5, 845, 479 105, 367
141,085 1,101,978 4,541 4, 588,173
30 3, 486.195
145, 626
945, 953 2,043 4,072, 865 193, 455
40 3,126, 912 191, 412
116 2, 711, 320 334,212
857, 992 1,177 3, 569, 312 335, 389
144 2, 644,173 306,495
852, 550 1,299 3, 496, 723 307, 794
2. 24 $216. 54 $3, 433. 90
. 16 156. 11 4 ,135.00
183. 60
.50 188. 08 3, 953. 25
.30 177.11 2, 202.40
.7 6 183.17 3, 562. 78
.95 215.19 7, 290. 50
.7 0 217.17 4, 829. 43
.89 231. 30 7,075.33
1.06 233.02 5,440. 70
1.62 249. 79 6, 209.07
1.80 286. 29 5, 268. 35
3.17 262. 67 4, 854. 20
4. 75 240.14 4, 836. 38
9.40 223.85 2. 891. 28
8.80 187.19 2,137.46
1 _3>a£a on all injuries apply to cases settled during the year. Silicosis data apply to settled cases tabulated
^according to year of filing of claim w ith industrial commission. The tabulation was made to disclose
^general trends, but is not to be taken as an accurate measure of annual silicosis cost relative to over-all injury
even though percentages to that end are given.
3 T o arrive at the nonsilicosis data, the silicosis data were deducted from the all injuries data.
In connection with such discharges, three interesting intances may
be cited, two of which account for much of the compensation paid or
awarded during 1933 and 1934.
One of the self-insured iron-mining companies became very much
interested in the silicosis problem and had all of its men examined.
Where advanced stages of silicosis were found, fairly good-sized settle
ments were made with the workers. Where silicosis was found in
Incipient and less advanced stages, minor settlements were made,
even though no disability was present. In all, this one company
EXPERIENCE W IT H SILICOSIS
191
made payments in about 100 cases, in most instances without waiting
for claims against it to be filed with the industrial commission.
The second instance, with a different motivation, occurred in the
metal-industry group and accounted for about 56 claims. The com
pany was discontinuing operations in the State. It had all of its
employees examined, and wherever any silicosis was found, advised
the filing of claims against its insurance carrier. This one company
is reported to have cost its insurance carrier over $100,000, paid
mostly in compromise settlements.
In contrast with the general practice of discharging men wholesale
whenever any trace of silicosis was indicated by medical examination—
according to reliable reports, a practice often insisted upon by insur
ance carriers under threat of not renewing coverage— a large, selfinsured foundry followed a procedure both more humane and much
less costly. All of its employees were examined, and those with
silicosis but with no disability were shifted to other occupations
devoid of the silicosis hazard. Only one case of advanced silicosis
was found, compensation was paid, and the services of the employee
terminated. Whereas other concerns in the industry were deluged
by claims of silicosis in the wake of their wholesale-discharge policy,
this establishment enjoyed peace. A n d whereas other companies had
to hire new workers, this firm kept its experienced men and enjoyed
both better efficiency and a better morale among its workers.
Appendix 2.— Principal Features o f W orkm en’s Com
pensation Laws as of July 1, 19401
By
Charles
F.
Sharkey,
U . S . B u rea u o f L a b or Sta tistics
At the beginning of 1940 all of the States except two (Arkansas
and Mississippi) had compensation laws in effect. In addition, such
laws are operative for the benefit of employees in the District of
Columbia, Puerto Rico, Alaska, Hawaii, and in the Philippines, and
for civil employees of the Federal Government, and for longshoremen
and harbor workers. As a result, there are now in operation in the
United States no less than 53 independent compensation laws which
have been drafted and put into effect over a period of some 30 years.
All agree in their main objective, which is the payment of benefits to
injured employees or to the dependents of those killed in industry,
without regard to the question of negligence. But similarity almost
ends here, for the application of the principle presents a great diversity
of details in the various laws. This extends not only to the primary
factors of the scope of the laws and the amount of compensation
payable under them, but also to the matter of making the laws
compulsory or voluntary, the securing or not securing of the pay
ments of benefits, the mode of securing such payments (where
required), the methods of administration, and the question of election
or rejection of the act.
The Legislature of Arkansas adopted a workmen’s compensation
law in 1939, the effective date of which has been held in abeyance
pending the outcome of a referendum vote of the people in November
1940. The principal provisions of the law, however, have been
included in this study.
The following comparative analysis touches, as it were, only the
high spots, and is limited strictly to the compensation features of
these laws, many of which also include provisions regarding safety.
The information contained herein has been obtained from a study
of the workmen’s compensation laws of the various jurisdictions and
in some cases by correspondence with the agency administering such
laws. In some instances the laws have been modified or clarified by
court decisions and administrative rulings; hence, some of the infor
mation contained in this article may not follow strictly the text of
the law.
For convenience, all workmen’s compensation laws in existence at
the present time, irrespective of whether the act applies to State,
1 For report of legislation as of January 1, 1940, see M onthly Labor R eview, M arch 1940, pp. 574-600.
Current analysis of principal features of workmen’s com pensation laws appear from tim e to tim e,
usually at intervals of 1 year, in the M onthly Labor Review.
192
FEATURES OF W O R K M E N ’S COMPENSATION LAWS
193
Territorial possession, the District of Columbia, or the Federal
Government, are referred to as “ State” acts.
Insurance
It has become recognized generally that the only satisfactory method
of financing the payment of benefits to injured workmen is through
insuring the employer’s liability. This may be effected through
insurance with a private company or in a State fund. Self-insurance
is authorized in most of the States. In such cases an employer
must be able to satisfy the compensation board that he is financially
able to cover his risks before he is allowed to carry his own insurance.
In the majority of States the employer is allowed to insure in pri
vate insurance companies. However, in Nevada, North Dakota,
Ohio, Oregon, Puerto Rico, Washington, West Virginia, and W yo
ming an exclusive State fund is maintained, and the employers coming
under the coverage of the workmen’s compensation law are required
to insure their risks in this fund, although in Ohio and West Virginia
self-insurance is permitted under certain circumstances. In 11
States competitive State funds are maintained; and the employers
have the choice of insuring their risks either in the State fund or
with private insurance companies or by self-insurance.
Of the acts listed in table 10, it will be noted that 22 are compulsory
and 32 are elective. Some of the elective acts, however, are com
pulsory as to public employees.2 In Massachusetts, Nevada, and
Pennsylvania contractors on public works are compulsorily covered.
In 4 States (Illinois, Maryland, Montana, and Washington) the acts
are compulsory as to hazardous employments and elective as to
other occupations. The Indiana and Iowa laws are compulsory as
to coal mining, while in Massachusetts the statute is quasi-compulsory as to certain industries using dangerous machinery. In
Texas the statute is compulsory as to motorbus companies.
State insurance systems exist in 19 States. Of these 8 are monopo
listic, and 11 operate on a competitive basis. The Idaho statute
seems to contemplate an exclusive State fund, but with an option
for self-insurance and the deposit of a surety bond or guaranty con
tract as the means of satisfying the industrial board as to the security
of payments. The reports of the board indicate, however, that in
practice the system is competitive, and that approved private com
panies are permitted to do business in the State. The Ohio and West
Virginia laws provide for self-insurance as well as for a State fund;
they are, however, listed here as having monopolistic State funds, as
no other means of insurance is provided.
* Colorado, Georgia, Indiana, Iowa, Louisiana, Maine, Massachusetts (State only), Michigan, Nebraska,
Nevada, New Jersey, North Carolina, Oregon, Pennsylvania, Rhode Island (State only), South Carolina,
South Dakota, Vermont, Virginia, and West Virginia.
W O RKM E N 'S COMPENSATION
194
T
a b l e
1 0 .— In su r a n ce R eq u irem en ts o f W o r k m e n ’s C o m p en sa tio n L a w s
State
>
0
Connecticut __ _________________________
Elective.......... ......
____do___________
1
i
o
Alabama____
_______________________
Alaska
_
_ ______________
Arizona
____ _ ______________
Arkansas __
_ ____ _ ________________
California ____ ____________ _____________
Insurance required in—
Compensation com
pulsory or elective State fund: Exclu Private companies
sive or competitive or by self-insurance
0).
(2).
Either.
Do.
Competitive_____
Do.
do___________
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Competitive.........
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Competitive_____
Do.
Private companies.
Competitive_____ Either.
Do.
Do.
Competitive_____
Do.
Do.
Exclusive________
Self-insurance.
Either.
Do.
Competitive_____
Do.
Do.
Exclusive________
Do.
do _ ______
Do.
Competitive ___
Competitive_____
....... do____ ____ _
____do .................
Elective_________
____do____ ____ _
do___________
Compulsory_____
Elective_________
_ do___________
Compulsory_____
....... d o ........... ......
___ do._................
Elective_________
____do..................
. . . do..................
do______ ____
....... do_____ _____
____do__................
Compulsory_____
Elective_________
.. do._.........— .
Compulsory_____
Elective________
Compulsory_____
Elective4________
do. ________
do___________
do___________
_ do___________
Compulsory..........
Elective _______
Compulsory_____
do__ ________
do
_____
E le c tiv e
_ ._ E x c lu s iv e
do
_____ Competitive____
Compulsory_____
do
_______ Exclusive________
E le c tiv e
_ _ __
do__________
do
__ ____
Kansas
__
_____________________
Kentucky___
_ _ __________________
Louisiana __ __ _____________________
Maine. _______ _ _____________________
Maryland
_ __________
Massachusetts _________________________
Michigan__ _ _________________________
Minnesota __ __________________________
Missouri_____ __________________________
Montana________________________________
Nebraska ____ _ ___________ k___________
Nevada ___ _ _______________________
New Hampshire. _______________________
_________________________
New Jersey
New Mexico
_________________________
New York______________________________
North Carolina _________________________
North Dakota___________________________
Ohio_____ _____ ________ _____ ___________
Oklahoma___ _ _______________________
Oregon__ ___ __________________________
Pennsylvania____________________________
Philippine Islands_____________________ _
Puerto R ico__ ____ ______________ _____ _
Rhode Island____________________________
South Carolina__________________________
South Dakota___________________________
Tennessee____ __________________________
Texas___________________________________
Utah..................... .......................................... Compulsory _ _ Competitive .
Vermont________________________________ Elective ______
Virginia _______________________________
E x c lu s iv e
W ashington__________________ ___________ C o m p u ls o r y
do
West Virginia __________________________ E le c tiv e
Wisconsin_______________________________ C o m p u ls o r y
Wyoming__________________ ____________
Exclusive
United States: Longshoremen’s Act.... ........ ___ do__..................
Civil employees___________
do .............. («)....................
Do.
Do.
Do.
Do.
Do.
Do.
Private companies.
Either.
Do.
Do.
Self-insurance.
Either.
Do.
1No security is required. Insurance is optional.
2 N o security is required, b u t in case beneficiary files notice of death claim em ployer m a y deposit $9,000
w ith clerk of district court or give bon d for th a t am ou n t. In other cases claim ant m a y h ave w rit of attach
m en t issued unless em ployer files an un dertakin g in an am ou n t double that sued for.
3 A s to em ployers.
4 T h e State com pensation court has ruled th at all pu blic em ployees are subject to th e act, w ith ou t right
of election b y either the em ployer or the em ployee.
4 B y direct ap prop riation of Congress.
In the following States exclusive State funds were established when
the original laws were enacted: North Dakota (March 5, 1919);
Ohio (June 15, 1911); Oregon (November 4, 1913); Washington
(March 14, 1911); West Virginia (February 22, 1913); and Wyoming
(February 27, 1915). The original act of Nevada did not provide
for any insurance, but on July 1, 1913, a new act became effective
providing for an exclusive State fund. The Puerto Rico law, as
FEATURES OF W O R K M E N ’ S COMPENSATION LAWS
195
enacted on April 13, 1916, provided for an exclusive State fund, but
in 1928 a new statute authorized employers to insure either in the
State fund or with private companies. However, in 1935 this act
was repealed and an exclusive State fund was again established.
The laws of the following States as originally enacted provided for
a State fund, but in addition permitted insurance with private com
panies: Colorado (April 10, 1915); Idaho (March 16, 1917); Mary
land (April 16, 1914); Michigan (March 20, 1912); Montana (March
8, 1915); New York (December 16, 1913)3; Pennsylvania (June 2 ,
1915); and Utah (March 15, 1917). The original statute of Arizona
did not provide for insurance, but a new law, adopted November 2,
1925, established a competitive State fund. In California a State
fund was created, but employers were not required to insure in it or
with private companies. However, in 1917 this was remedied b y
requiring insurance in the fund or with private companies. The
original act of Oklahoma provided for private insurance, but by an
amendment adopted in 1933, a competitive State fund was established.
Coverage
The compensation laws do not attempt to cover all employments.
Railroad employees and other persons engaged in interstate commerce
are not covered by the State laws, as interstate commerce comes
within the jurisdiction of the Federal Government. Certain employ
ees are also specifically excluded by the various acts. Some laws
apply only to employees engaged in hazardous employments. Casual
employees are usually excluded, and generally the laws do not apply
to persons engaged in agriculture and domestic service. Most o f
the State laws cover minors and 14 of the acts (Alabama, Illinois,
Indiana, Maryland, Massachusetts, Michigan, Missouri, New Hamp
shire, New Jersey, New* York, Pennsylvania, Rhode Island, Utah, and
Wisconsin) provide extra compensation in the case of injury to minors;
who were employed illegally. The United States Employees7Compen
sation Act applies to all civil employees of the United States, employees
of the Alaska and Panama Railroads, Panama Canal, and employees
of the government of the District of Columbia. Enrollees of the
Civilian Conservation Corps are included, as well as relief employees.
The Act also covers employees of the Tennessee Valley Authority, and
members of the Army and Navy Reserve Corps.
N u m e r ic a l e x e m p tio n s .— In 28 States, employers of less than a
stipulated number of employees are exempt. However, voluntary
elections are usually permitted in such cases and also in regard to those
employments classed as not hazardous, when the law covers only
hazardous occupations. Table 11 lists the States in which the num
ber of employees determines the coverage.
3 Reenacted on March 16,1914, because of doubt as to the constitutionality of the former measure.
W O R K M E N ’S COMPENSATION
196
T a b l e 1 1 .— S tates M a k in g N u m eric a l E x em p tio n s 1
Employers are exempt who have fewer than—
2 employ 3 employ 4 employees
ees
ees
Oklahoma Arizona
Florida *
Kentucky
Ohio
Texas
Utah
Wisconsin
5 employees
6 em
ploy
ees
10 em 11 employ 15 employ
ploy
ees
ees
ees
16 em
ployees
Alaska
Colorado
Maine Georgia Missouri2 South Caro Alabama
New Mexico4 Arkansas 1
Vermont
lina
New York 6 Connecticut
Virginia
Puerto Rico Delaware
Rhode Island Kansas7
New Hampshire8
North Carolina9
Tennessee
1 The following States do not make numerical exemptions: California, District of Columbia, Hawaii,
Idaho, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana,
Nebraska, Nevada, New Jersey, North Dakota, Oregon, Pennsylvania, Philippines, South Dakota, Wash
ington, West Virginia, Wyoming, and United States (Civil Employees’ and Longshoremen’s Acts). In
some of these States, however, coverage is limited to certain enumerated industries.
2 At option of Workmen’s Compensation Commission, numerical exemption does not apply in case of
hazardous employments.
2 Tractor sawmills and other sawmills employing 10 or less are excluded.
4 Numerical exemption does not apply if injury occurs when at work upon any derrick, scaffolding, or
pole, or such structure, 10 feet or more above ground.
« Contract for building or building repair work is covered if contractor employs 2 or more employees at
any one time.
« Numerical exemption applies only in case of nonhazardous employments. However the 14 groups of
hazardous industries are so comprehensive that the numerical exemption seldom applies.
i Numerical exemption does not apply in employment in mines and in building construction.
« Numerical exemption applies only in case of nonhazardous employments.
•Sawmills and logging operators with less than 15 employees are excluded.
H a z a r d o u s e m p lo y m e n ts .— In 9 States 4 the compensation laws
apply only to hazardous employments, but in all of these, except
Oklahoma and Wyoming, employers and employees in other occupa
tions are permitted to come under the act. The laws of Kansas,
Louisiana, and New Mexico are elective, while those of the other
States are compulsory. In Illinois and New York the workmen’s
compensation acts are compulsory as to hazardous industries and
elective as to other employments. In New York, however, the lists
of hazardous industries are so comprehensive that practically all
employments are compulsorily covered. The New Hampshire act
applies only to employers having a specified number of employees,
but in hazardous industries the numerical exemptions do not apply.
In Missouri the commission may require coverage of hazardous
industries without regard to the numerical exemption. In most of
these States the industries covered are enumerated, but the list is not
complete in several States and in some a blanket clause is used, while
in others additions have been made by administrative agencies and
the courts.
P u b lic e m p lo y m e n ts .— Employees of the State and its subdivisions
and of municipalities are included in 31 States. In several of the
States compensation for public employees is compulsory, although it
is elective as to private employments. In the following jurisdictions
practically all public employees are covered:
4 Kansas, Louisiana, Maryland, Montana, New Mexico, Oklahoma, Oregon, Washington, and Wyoming.
FEATURES OF W O R K M E N ’S COMPENSATION LAWS
Arizona (if receiving not Kentucky
Louisiana
over $2,400)
Maine
California
Michigan
Colorado
Minnesota
Connecticut
Montana
Florida
Hawaii (if receiving not Nebraska
Nevada
over $2,400)
New Jersey
Idaho
North Carolina
Illinois
North Dakota
Indiana
Ohio
Iowa
Pennsylvania
Puerto Rico
South Carolina
South Dakota
Utah
Virginia
West Virginia
Wisconsin
United States:
employees 6
197
Federal
Public employees are partially included in the laws of 15 additional
States:
Delaware
Georgia
Kansas
Maryland
Massachusetts
New Mexico
New York
Oklahoma
Oregon
Philippines
Rhode Island
Texas
Vermont
Washington
W yom ing
In four States (Alaska, Arkansas, Missouri, and New Hampshire)
public employees are excluded, although in Missouri the law author
izes an affirmative acceptance of its provisions by the State, county,
etc., and in New Hampshire, the governor and council, upon petition
and hearing, may award compensation to State employees. In
Alabama, Arkansas, and Tennessee public employees may be covered
by voluntary action.
Employments Excluded Specifically
A g ricu ltu re an d d om estic service .—Agricultural employees are ex
cluded, either expressly or impliedly, from the operation of all work
men’s compensation laws except in California (but agricultural em
ployment is included in this State only when the employer’s pay roll
has exceeded $500 in the preceding year), Connecticut, Hawaii, Illinois,
New Jersey, Ohio, Puerto Rico, and Vermont. Domestic servants
are also excluded in all States except Connecticut and New Jersey.
In California, however, domestic servants working over 52 hours a
week are covered, and in New York in cities of over 2,000,000 popula
tion private or domestic chauffeurs are subject to the act. In most
States employers in these occupations may elect to come within the
coverage of the compensation law, although in some States it appears
that their exclusion is intended to be absolute. Employees engaged
in threshing grain, etc., are specifically covered in Kentucky and
Minnesota (commercial threshermen and balers). In South Dakota
* This act also covers employees of the District of Columbia
198
W O R K M E N ’ S COMPENSATION
the operation of certain farm machinery for profit is covered, and the
Arizona and Philippine acts cover employees engaged in the operation
o f mechanical implements in agriculture.
O ther ex clu sio n s .— Employees whose employment is casual and not
in the usual course of the employer’s trade or business are generally
excluded. In a few States employees receiving more than a designated
wage are also excluded, and in some States clerical and certain other
occupations not considered to be hazardous are not included. Ques
tions involving the coverage of loaned employees, casual employees,
and independent contractors have caused much dispute and have been
settled in various ways by court decision. The common-law rules
determining the master-servant relation or the question of agency have
been followed in most instances.
Occupational Diseases
As originally enacted, none of the workmen’s compensation acts
provided for the payment of benefits for disability resulting from an
occupational disease. It is now generally realized, however, that it is
just as important for workmen to be protected from occupational
diseases as from accidental injuries.
There are three usual methods of covering disability resulting from
occupational diseases. Some of the States compensating for occu
pational diseases list the specific diseases which are compensable,
while in other States the law provides compensation for any dis
ability resulting from an occupational disease. In a few States, the
workmen’s compensation act uses the word “ injury” instead of the
word “ accident” and the courts in some cases have construed this to
mean that any injury resulting from an occupational disease is com
pensable. In Missouri occupational diseases are compensable when
both employer and employee elect to be covered, and in Oklahoma
the State insurance fund is authorized to insure employers against
liability for occupational diseases.
The following 30 States provide for compensation for all occupational diseases or for certain specified ones:
Arkansas
California
Connecticut
Delaware
D istrict of Columbia
H aw aii
Id ah o
Illinois
Indiana
Kentucky
M aryland
Massachusetts
Michigan
Minnesota
Missouri
Nebraska
New Jersey
New York
North Carolina
North Dakota
Ohio
Pennsylvania
Philippines.
Puerto Rico
Rhode Island
Washington
West Virginia
Wisconsin
United States:
Civil Employees’ Act
Longshoremen’s Act
FEATURES OF W O R K M E N ’S COMPENSATION LAWS
199
Election
There are 32 States which have elective workmen’s compensation
laws. In the following 23 States election is presumed in the absence of
positive rejection, this presumption affecting both the employer and
employee:
Alabama
Alaska
Colorado
Connecticut
Delaware
Florida
Georgia
Indiana
Iowa
Kansas
Louisiana
Missouri
Nebraska
New Jersey
New Mexico
North Carolina
Oregon
Pennsylvania
South Carolina
South Dakota
Tennessee
Vermont
Virginia
In the other elective States the employer must take positive action,
but, if he acts, the employee’s acceptance is presumed, except in
Kentucky, where he must sign an acceptance. The acceptances are
filed with designated State authorities in 6 States (Kentucky, Maine,
Michigan, Nevada, New Hampshire, and Rhode Island), while the act
of securing insurance signifies election in Massachusetts, Texas, and
West Virginia.6 In Arizona the law is compulsory as to the employer,
but the employee may elect not to be covered.
Extraterritorial Effect o f the Law
In about two-thirds of the States the workmen’s compensation
laws are applicable to accidents happening outside of the State.
Generally, the law specifies that the contract of hire shall have been
made within the State and either that the employee is a resident of the
State or that the employer’s place of business is within the State.
In the other States, the law contains no statement as to whether it
applies to accidents happening outside the State, but the courts of
some of these States have interpreted the law as being applicable to
such accidents.
The different States have various other provisions, presumably
enacted in an effort to limit the extraterritorial application of the law,
but Indiana declares that the law applies to an accidental injury
occurring in another State or in a foreign country; Hawaii provides
that jurisdiction of the several boards extends to injuries occurring on
vessels operated by residents of the Territory; and Maryland holds the
law applicable to miners working in parts of mines extending under
ground into another State. In Delaware and Pennsylvania the laws
are applicable to employees temporarily outside the State for not
more than 90 days and performing service for an employer whose
place of business is within the State. The Utah law, after stating
that the act applies to injuries received outside the State if the work
man was hired in the State, also declares that a workman hired outside
6 Notice must be posted in place of business.
200
W O R K M E N ’ S COMPENSATION
the State is entitled to compensation under the laws of the State in
which he was hired, and is entitled to enforce his rights against his
employer in the courts of Utah.
Suits for Damages
Where both parties have accepted the act, suits for damages are
generally forbidden, but in New Hampshire (an elective State) after
an injury the employee may choose whether he will proceed under the
workmen’s compensation act or sue for damages at common law. In
most of the States having an elective act, if the employer has accepted
the act, an employee who has rejected it may sue, but in this case the
employer retains the common-law defenses.
Upon failure of the employer to secure payment of compensation
or to provide the insurance required by the act or to pay the pre
miums, the employee may bring an action for damages, with the com
mon-law defenses removed, in the following States:
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Indiana
Iowa
Kentucky
Maryland
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Mexico
New York
North Carolina
North D a k o ta 7
Ohio
Oklahoma
Oregon
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wyoming
United States: Longshore
men's Act
In 9 States, if there is an “ intent” on the part of the employer to
injure, or if the injury■is due to his gross negligence or willful misconduct, the employee may bring suit. These States are as follows:
Arizona
Kentucky 7
Maryland
New Hampshire 8
Oregon
Texas
Utah
Washington
W est Virginia.
In the following 15 States, no suits are permitted after both the
employer and the employee have accepted the provisions of the com
pensation act:
Alabama
Alaska
Georgia
Hawaii
Idaho
Illinois 7
Kansas
Louisiana
Maine
Massachusetts
New Jersey 9
Pennsylvania
Philippines
Vermont
Wisconsin
7 An illegally employed minor may elect after injury.
8 An employee has option after injury to sue at law or to collect compensation under the act.
9 An illegally employed minor may elect after injury. Suits are permitted for a disease not covered by the
law (Smith v. International High Spted Steel Co., 120 Atl. 188).
FEATURES OF W O R K M E N ’ S COMPENSATION LAWS
201
Waiting Period
All of the States except Oregon provide that during a specified
period of time immediately following the injury, compensation shall
not be paid. This “ waiting” time ranges from a minimum of 1 day
to a maximum of 14 days, with the majority of the States requiring a
7-day waiting period. The period for which no compensation is paid
has no relation to the requirement that medical and hospital care shall
be provided, as the employee is entitled to these benefits immediately.
In most of the States if the disability continues for a certain number
of weeks, the payment of compensation is retroactive to the date of
the injury. The number of waiting days required by each State is
presented in table 12, and the last column shows the number of weeks
of disability required for the payment of compensation from the
date of the injury.
T a b l e 1 3 .— W a itin g T im e R equ ired by E a ch State
No waiting
time
Oregon
1 to 6 days
Alaska (1)
Florida (4)
Illinois (6)
Maryland (3)
Missouri (3)
Oklahoma (5)
Rhode Island (3)
South Carolina (3)
Utah (3)
Washington (3)
Wisconsin (3)
United States:
Civil Employees
(3)
7 days
10 or 14 days
Compensation paid for
waiting period if disability
lasts specified lime
Alabama (4 weeks)
Arizona (2 weeks)
Arkansas (4 weeks)
Connecticut (4 weeks)
Delaware (4 weeks)
District of Columbia (7
weeks)
Hawaii (7 weeks)
Idaho (4 weeks)4
Illinois (30 days) 8
Iowa 7
Kentucky (4 weeks)
Louisiana (6 weeks)
Massachusetts (2 weeks)
Michigan (6 weeks)
Minnesota (4 weeks)
Missouri (4 weeks)
Montana (3 weeks)
Nebraska (6 weeks)
Nevada (1 week)
New Hampshire (1 week)
New Jersey (7 weeks)
New York (6 weeks)
North Carolina (4 weeks)
North Dakota (1 week)
Rhode Island (2 weeks)
South Carolina (2 weeks)
South Dakota (6 weeks)
Tennessee (6 weeks)
Texas (4 weeks)
Virginia (6 weeks)
West Virginia (3 weeks)
Wisconsin (10 days)
Wyoming (15 days)
United States: Longshore
men (7 weeks)
Arizona
Alabama (14) i
Arkansas
Colorado (10)
California 3
Iowa (14) 3
Connecticut
Delaware
D istrict of C o
lumbia
Georgia
Hawaii8
Idaho
Indiana
Kansas
Kentucky
Louisiana
Maine 3
Massachusetts
Michigan 3
Minnesota1
Montana 8
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio9
Pennsylvania 10
Philippines 8
Puerto Rico 11
South Dakota
Tennessee
Texas
Vermont
Virginia
West Virginia
Wyoming ®
United States:
Longshoremen
I Applies only to temporary disability.
3 In case of death, compensation is payable from date of death.
* Compensation begins on date of injury in case of permanent partial disability.
4If disability period exceeds 4 weeks, waiting period is to be reduced by 4 days, and by 1 additional day
for each week the total disability exceeds 4 weeks.
8Total disability, but compensation payable from first day of disability in case of partial disability.
®Applies only to temporary total incapacity.
7 If compensation extends beyond such number of weeks after injury, compensation for fifth, sixth, and
seventh week is increased by two-thirds.
8 In case employee has beneficiary or dependent residing in United States. If there is no such beneficiary
or dependent, waiting period is 2 weeks, but if disability continues 6 weeks, compensation payable from date
of injury.
9 Also, no compensation allowed for the first week of total disability, whenever it may occur.
10 No compensation to injured “work-relief employees” during first 26 weeks of disability, except in cases
of permanent injuries in specific schedule or death.
II Applies to temporary disability only. No compensation is allowed for first 7 days following date on
which employee presents himself to physician for treatment.
215193°— 40------- 14
202
W O R K M E N ’ S C O M P E N S A T IO N
Second Injuries
All of the compensation laws except those of Alaska, Louisiana,
New Hampshire, Pennsylvania, the Philippines, Puerto Rico, Ver
mont, and the United States (civil employees) contain specific provi
sions regarding payment of compensation in second-injury cases.
When an employee has sustained an accident causing the loss of a
member of the body and subsequently loses another in a second acci
dent, he may become permanently and totally disabled, thus increasing
the amount to be paid in the form of workmen’s compensation. The
States have enacted certain second-injury provisions to cope with this
situation. About half of the State laws provide that compensation
shall be apportioned according to the disability resulting from the
injury, the last employer paying only that amount which is attribut
able to the second injury, while other States provide that in determin
ing compensation for the second injury the decreased earning power
(because of the first injury) shall be used as a basis in rendering the
award.
“Second-injury funds” have been established in a number of States
(Arkansas, District of Columbia, Hawaii, Idaho, Illinois, Massa
chusetts, Minnesota, New Jersey, New York, North Carolina, North
Dakota, Ohio, South Carolina, Utah, Wisconsin, and the United
States (Longshoremen’s Act)). These funds were created so that
when a second accident occurs the employer will have to pay only
for the second injury, yet the employee is compensated for the dis
ability resulting from the combined injuries, the remainder of the
award being paid from the second-injury fund.
The method of raising revenue to sustain the second-injury fund
differs in the several States. One method which appears popular and
satisfactory is to place in the fund the amounts awarded in fatal cases
in which it has been determined that there are no surviving dependents
entitled to compensation under the law.
Scale of Compensation
The amounts actually payable under the various compensation acts
are determined by three factors: The rate, usually a percentage of the
wages; the term or period of payment; and in most States a fixed
maximum or weekly total payment. The amount and method of
payment also differ according to the type of the injury. The acts
prescribe certain payments in case of death and in case of permanent
total disability, and also have specific provisions covering permanent
partial disability and temporary total disability.10
• For a discussion of the effect, upon the amount actually paid, of the method of determining the wage
base of compensation, see chapter 5 of this bulletin.
FEATURES
OF
W O R K M E N ’S
C O M P E N S A T IO N
LAW S
203
P ercen tage o j w a g es. — Alaska,11 Oregon,11 Washington, and Wyoming
are the only States which do not base the amount of compensation on
the wage received by the injured worker. A few States provide fixed
lump sums or pensions for certain injuries, but apply the percentage
system to all others. In other States, there are varying percentages
for different types of injuries and in some the percentage varies with
the Conjugal condition and the number of children, but in most cases
the prescribed percentage remains uniform for all injuries.
M a x i m u m term a n d a m o u n t .— In the great majority of the laws, dif
ferent maximum terms or amounts are established. It is obvious that
the reduction of a workman’s income by one-half or even one-third
leaves a large portion of his loss uncompensated. The burden on the
employer is restricted further (and transferred necessarily to the
injured employee and his family), since the term of payment is fixed in
most States not by the period of disability but by an arbitrary maxi
mum; death benefits likewise rarely continue for the period of probable
need, as only about 8 or 10 States provide for payment of benefits
during widowhood or during the minority of children.
Table 13 shows for the various States the percentage of wages paid,
the maximum number of weeks during which benefits are paid, and the
limitation of payments as to weekly and total amounts. This infor
mation is given in tabular form for injuries causing death, permanent
total disability, permanent partial disability, and temporary total
disability. In the case of permanent partial disability, in many States
compensation is based on a percentage of the wage loss instead of a
percentage of average weekly wages.
The limitations are in many cases more restrictive for temporary
total disability than for permanent total disability, though where the
latter is compensated for life, the former is as a rule compensated
during the period of disability. In a few cases the rates for temporary
disability are higher than for permanent disability.
D ea th benefits .— It will be noted that the methods provided for
determining compensation for death vary considerably and do not in
all cases depend upon the fact that the deceased was an actual financial
benefit to his dependents. Most of the States have not been very
liberal in prescribing the amount of compensation to be paid to
dependents, although several of the laws have been amended in recent
years to increase the amount. In Arizona, Nevada, New York,
Oregon, Washington, West Virginia, and the United States (Civil
Employees’ Act), the law provides for the payment of benefits to a
widow for life or until remarriage, and in the case of children until a
specified age is reached. The majority of the other States have a
similar provision but limit the total amount payable. In Utah the
industrial commission is given authority to pay benefits indefinitely
in meritorious cases. Oklahoma pays no death benefits.
11 Except for temporary disability.
204
W O R K M E N ’S
C O M P E N S A T IO N
In a few States, the death benefits are limited to monthly payments
for a specified period, while others set a total maximum ranging from
$3,000 to $15,000. The remarriage of the widow usually terminates
the benefits in about half of the States, although in a few jurisdictions a
lump sum is payable upon remarriage. The experience of some State
commissions, as shown in their reports, indicates that a life benefit to
the widow with additional amounts for each child under the age* of 18
is the best system to adopt in rendering assistance to the dependents
following the death of a workman from an industrial accident or
disease.
Funeral benefits are provided in all States except Oklahoma, which
does not compensate for death. In some States such benefits are
given only when there are no beneficiaries.
D is a b ility benefits .— Compensation is paid in four designated classes
of disability— permanent total, permanent partial, temporary total,
and temporary partial. The term “ disability” has been defined in
varying ways by the courts in interpreting State compensation laws.
Some hold that it means inability to earn wages, or full wages, at the
work in which the employee was working at the time of the injury,
while other courts have held that it means the inability to perform any
kind of work which might be obtained. A few courts have interpreted
the term to mean inability to obtain work.
It will be observed that there is an apparent tendency to recognize
the greater economic loss in case of permanent total disability than in
case of death. Although death benefits continue for life or until the
remarriage of the widow in only 7 States, life benefits are paid for
permanent total disability in 17 jurisdictions.12
T able
13.— M in im u m and M a xim u m Benefits Under W orkm en ’s Com pensation
L aw s, by Extent o f D isability and by State, J u ly 1, 1940
DEATH
Limit of payments
State
Percent
age of
wages
Per week
Maximum period
Minimum
Total
maxi
Maxi mum
mum
1
25-65 300 weeks____ ________ ________ $5 (or actual wage, if less) __ $18.00
$9,000
15-6626 Widowhood, or specified minority
age of children
15-65 450 weeks________________________ $ 7 _________ _____ _ _
* 7,000
65
$6.50___________ ________ 25.00 7, 275
50 312 weeks_______ ___ ___________ $5______________________ 14.00 4,375
50 ____do____________________ ___
$7_______________
25. 00 7,800
15-60 285 weeks; thereafter, to children till Weekly wage deemed not 18.00 5,130
specified age.
under $ .
* Total maximum payments computed by Bureau of Labor Statistics, where not stipulated by law.
* In case of uncomplicated silicosis or asbestosis, maximum is $500 if death or disablement occurs in first
month act becomes effective and maximum increases $50 each month until limits provided for accidents are
reached.
u Arizona, California (for 70 to 100 percent total disability), Colorado, Idaho, Illinois, Massachusetts,
Missouri, Nebraska, Nevada, New York, Ohio, Oregon, Utah, Washington, West Virginia, Wisconsin,
and United States (civil employees).
Ala________
Alaska_____
A riz_._____
Ark__ _____
Calif.......... .
C olo____
Conn
Del________
2 0 .0 0
10
FEATURES
T able
OF
W O R K M E N ’S
C O M P E N S A T IO N
205
LAWS
13.— M in im u m and M axim um Benefits Under W ork m en ’s Com pensation
Law s, by Extent o f D isability and by State, J u ly 1 , 1940— 'Continued
D E A T H — Continued
Limit of payments
State
Percent
age of
wages
Per week
Maximum period
Minimum
D. C_______ 15-66% Widowhood or specified minority
age of children.
35-60 350Veeks______________________
Fla
42%, 300 weeks.______________ ______
Ga
Hawaii------- 25-60' 312 weeks; thereafter to children to
age 16 (for 104 weeks more, if unmarried and incapable).
10-55 400 weeks (in case of incapacitated,
unmarried child, 400 weeks more
after reaching 18 years).
55 300 weeks________________________
Ind ____
60 ____do........... .......... ...........................
K a n s_____
Ky
65 400 weeks________________________
32%-65 300 weeks________________________
La
Maine
% . ..do _____ ___________________
% 416 weeks____________________ ___
Md
400 weeks; thereafter to children till
Mass ____
specified age; other dependents,
% percent—maximum period,
500 weeks.
Mich
% 300 weeks_________ ___ _ _______
Minn______ 30-66% 300 weeks; thereafter, if dependent
wife and children to total of $7,500.
% 692% weeks______________________
Mo
30-66% 400 weeks________________________
Mont
% 325 weeks____________ .. _______
Nebr
- % Widowhood, or specified minority
Nev
age of children.
N. H ______
(5) 300 weeks; thereafter to children till
N. J_______ 35-60
specified age.
N. Mex
___________________
20-60 300 weeks
N. Y _____ 15-66% Widowhood, or specified minority
age of children unless blind or
crippled.
N. C_______
60 350 w eek s_______________ _______
N. Dak____
- % Widowhood, or specified minority
age of children.
Ohio_______
% Period between death and years
after date of injury.
Okla........... .
Widowhood, or specified minority
Oreg_______
age of children.
Pa_________ 15-66% 300 weeks; thereafter, reduced pay
ments to children to age 16.
P. I ............. 25-60 208 weeks_______________________
111
66
66
Total
maxi
Maxi mum
mum
Weekly wage deemed not $25.00 $7,500
under $ .
(or actual wage, if less).. 18.
5,000
Weekly wage deemed not 30.00 5,000
under $5.
(or actual wage, if less).
12
$6
00
$6
1 2 .0 0
$7.50___________________ 3
5, 500
$8.80 (or actual wage, if 16. 50 5,000
less).
______________________ 15. 00 4, 500
Total minimum not less 18.00 4,000
than $ , .
$5______________________
.
4,800
$3 (or actual wage, if less) __
.
______________________ 18.00 4,000
(or actual wage, if less) _. 18.
5, 000
$4______________________ «
2 0 .0 0
$6
2 000
12 00
6 ,0 0 0
2 0 00
$6
00
1 0 .0 0
$8
66
66
66
66
$7______________________
(or actual wage, if less) _ _
$ . ..........................................
______________________
(or actual wage, if less) _ _
18.
5,400
7, 500
13,845
8,400
15.00 4,875
18. 46
5,400
.
18.00 5,400
23.08
$8
00
2 0 .0 0
6
$8
2 0 .0 0
2 1 .0 0
$6
10 6 6
10 6 6
(or actual wage, if less) _
$5______________________
$10
2 0 00
$7________ _____________
Weekly wage deemed not
under $18.
18.
00
2 0 .0 0
8
66
6 ,0 0 0
15,000
18. 75 , 500
6
30.00
Weekly wage deemed not 18.00
under $15.
Weekly wage deemed not 718.00 3,000
under 4 nor over 30
pesos.
P. R ___
3,000
R. I ______
50 500 weeks________________________ ______ ____ __________ 16.
S. C ______
60 350 weeks________________________ $5______________________ 25.00
S. Dak_____
3,000
Tenn______
50 400 weeks______________________ _ $5 (or actual wage, if less) __ 16,00 5, 000
Tex
60 360 weeks_________ _ ____
$7____ ____ .
7, 200
Utah______
60 Period between death and years Total minimum not under 816.
7, 500
after date of injury.
$, .
v t ________ 15-50 260 w eek s......... _ _________ ____ Weekly wage deemed not 13. 46 3,500
under $5.
55 . 300 weeks____________ ___________ ______________________ 16.00 5,000
Va_________
* For injuries occurring after July 1,1939, the installment rate, but not the aggregate amount, shall be in
creased percent.
* F o r widow, plus
for each child under 18, or over 18 and incapacitated.
* 150 times average weekly earnings.
o Per month, for widow, plus for each dependent child.
Pesos.
s^Plus 10 percent for each depe ndent child (not to exceed 5) under 18 years. Benefits may be extended
indefinitely in meritorious cases.
6
7
$8
00
2 0 .0 0
00
6
2 000
$6
10
$2
$8
7
8 ,0 0 0
6 ,0 0 0
206
T able
W O R K M E N ’ S C O M P E N S A T IO N
13.— M in im u m and M axim um Benefits Under W orkm en's Com pensation
Laws, by Extent o f D isability and by State, J u ly 1, 194-0— Continued
D E A T H — Continued
Limit of payments
State
Percent
age of
wages
Per week
Maximum period
Minimum
Total
maxi
Maxi mum
mum
Wash...........
Widowhood, or specified minority
»$55 ______
age of children.
___ do.................. ............................—
W. Va..........
30.00 ______
_____________________ 15.00
W is ............ («)
_
$180 per year to child___ 13 50.00 $8,500’
Wyo______
U. S.:
Civil em 10-66% Widowhood, or specified minority Monthly pay deemed not 26.92 ..........
under $87.50.
age of children.
ployees.
Longshore 16-66% ____do.................. .................................. Weekly wage deemed not 25.00 7,500under $ .
men.
.0 0
$10
10
1
12
PERMANENT TOTAL DISABILITY
Ala___
Alaska.
Ariz...
A rk...
Calif..
Colo..
Conn.
D. C_._
55-65 550 weeks..............................................
15 65 iJifeZIZIIIIZIIIIIIIIIIIIIIIIZIIIIIIII
65 450 weeks.______________________
65 241 weeks; thereafter 40 percent of
wages for life.
50 Life............................................. ...........
50 520 weeks...............................................
50 475 weeks____ ____________ ______
% Whole period of disability..................
50-60 350 weeks___________ _____ ______
50 ___ do______ ____ _______________
60 312 wgbIcs
is 55-60 400 weeks; thereafter weekly ($ ,
if dependent children).
50-65 417 weeks.......... .....................................
$5 (or actual wage, if less). H $18.00
$9,000
$7...
*7,000
$6.50.
25.00 ..
$5.......................................... 14.00
$7______________________ i« 25.00 13,000
$5 (or actual wage, if less) _. 15.00 4.000
(or actual wage, if less).. 17 25.00 7, 500'
(or actual wage, if less) _. 18.00 5.000
Fla____
$4 (or actual wage, if less) ._
Ga____
7.000
Hawaii..
5.000
Idaho—
16.00
( )
$7.50 ($11 if 1 child under i®
Ill_____
16, if 2, $13 if 3, and
$14 if 4 or more).
55 500 weeks.
In d ....
$8.80 (or actual wage, if 16.50 5.000
less).
60 400 weeks_______________
Iowa..
(or actual wage, if less) _. 15.00 ,
60 416 weeks.......... ..................
_____________________ 18.00 7,488
Kans..
65 520 weeks............................
$5_________________ ____ 15. 00 7,500
Ky_._.
65 400 weeks.........................
$3 (or actual wage, if less)__
La___
% 500 weeks______________
______________________ 18.00
Maine.
% Whole period of disability.
M d ...
(or actual wage, if less) _.
% 500 weeks_________ _____
$9 (or actual wage, if less; 18.00 4, 500
Mass..
but not under $7 for nor
mal weekly hours of 15
or over).
% ___ do.................... ............ .......... ......... $7________ _____________ 18.00 9,000
Mich.
% Whole period of disability............ .
Minn.
(or actual wage, if less)..
% 300 weeks; thereafter 25 percent of ________________ _____
M o...
wages for life.
50-66% 500 weeks............... ............ .................. ............................................
Mont.
10,500
In case of uncomplicated silicosis or asbestosis, maximum is $500 if death or disablement occurs in first
month act becomes effective and maximum increases $50 each month until limits provided for accidents are
reached.
®Per month for widow with 2 children, plus $5 for each additional child under 16 years.
Amounts are increased or decreased up to 15 percent for employers or employees violating safety regu
lations; triple compensation for minors illegally employed.
11 Compensation equals 4 times average annual wage, payable in installments of 50 percent of average
weekly rate, but total for death, plus disability compensation, may not exceed 70 percent of weekly wage for
from 280 to 1,000 weeks, depending on age. Additional compensation allowed to dependent spouse with
dependent children, according to age.
Per month, to widow, plus $5 for each child under 16 years.
is Per month, for widow or invalid widower (total $3,500), plus $180 per year per child (total $5,000).
n $5 (or actual wage, if less) after 400 weeks.
,s Plus additional allowance for constant attendant if necessary.
i Additional compensation at same rate for maximum of 104 weeks for serious and permanent dis
figurement of face, neck, head or hands, but combined compensation not to exceed 520 weeks.
17
In addition to compensation, employee undergoing vocational rehabilitation is paid cost of mainte
nance, maximum weekly.
1 Award is increased 5 percent for each dependent child.
i®In case of injuries occurring after July 1, 1939, compensation is increased 10 percent.
Benefits are paid until amount equals death benefit. Thereafter annual life pension of percent or
percent of total previous payment^.
*1Thereafter 50 percent of wages during disability.
66
$6
2 0 .0 0
$8
$6
8
2 0 .0 0
20
$12
$6
$6
6 000
2 0 .0 0
66
66
66
66
66
66
$8
2 0 .0 0
8 .0 0 0
6 ,0 0 0
6 ,0 0 0
$8
$6
2 0 .0 0
1 0 ,0 0 0
$8
2 1 .0 0
$6
2
10
12
8
$10
8
20
12
8
207
FEATURES OF W O R K M E N ’S COMPENSATION LAWS
T a b l e 13.—
M in im u m
and M a x i m u m
B en efits
U n d er W o r k m e n ’s C om p en sa tion
L a w s , b y E x ten t o f D isa b ility and b y S ta te , J u ly 1 , 1 9 4 0 — Continued
PERM ANENT
TOTAL
D I S A B I L I T Y — C o n tin u e d
Limit of payments
Percent
age of
wages
State
Per week
Maximum period
Minimum
N. Mex........
N. Y__.........
N. C............
N. Dak........
Ohio_______
Okla.......... .
Oreg_______
Pa................
66** 300 weeks; thereafter, for life 45 per
cent of wages (but not under $4.50
(or actual wage, if less) and not
•over $10).
60
L ife..................................... .............
50
300 weeks _______________________
66** 400 weeks; thereafter at reduced rate
(in proportion to earning capac
ity) if submitting to rehabilitation.
60
550 weeks________________________
66** Life................................................
400 weeks.... ................ .....................
60
66** Whole period of disability..............
66** L ife...._________ _____ __________
66** 500 weeks___ ____ ______________
Whole period of disability_________
66** 600 weeks.............. ............... ............
P. I..............
P. R_______
R. I _______
S. C_______
s. Dak.........
60
50
50
60
55
Tenn....... .
..............
Utah..........
vt____..... ...
Va____ ____
Wash______
W. Va_____
Wis.10______
Wyo_______
50
60
Tex
60
50
55
Nebr............
Nev _____
N. H ....... .
N. J..............
U. S.:
Civil em
ployees.
Longshore
men.
$6 (or actual wage, if less) _.
$6.92.................................. .
$8.............................. .........
$10 (or actual wage, if less).
Total
maxi
mum
Maxi
mum
$15.00
13.85 (18)
18.00 $5,400
20.00
18.00 9,900
___do.................................
$15 (or actual wage, if less). 2725.00
$7__________
____
18.00 6,000
$6 (or actual wage, if less) _.
20.00 15,000
18. 75
$8 (or actual wage, if less)..
.do... _
.
18.00 9,000
$6.92............................. .. 228.08
$9 (or actual wage, not
18.00 7, 500
under $5).
208 weeks............................. ............ . 4 pesos..
________ ___ 718.00 73,000
340 weeks.............. ............................ $3 .......................................
10.00 3.000
1,000 weeks............................ ............ $7............ ............................
20.00 10,000
500 weeks........................................... $5 ____
25.00 6.000
.
_______
15.00 3.000
$7.50
550 weeks...... ................................. .
401 weeks................................. .........
Whole period of disability_________
260 weeks_______________________
500 weeks______ _______ _____ _____
Whole period of disability_________
66** Life___________ ______ ______ _____
70 ....... d o ................................................
$5 (or actual wage, if less).. i* 16.00 5.000
20. 00 8, 020
$7
.............................
16.00 (23)
$ 7 ..... .............................
15.00 4, 000
$7 (or actual wage, if less)..
16.00 6.000
$6.......... .
......................
$4.62_______ ____________ 2<60.00
$8 ____________________
16.00
$14___
___________
21.00 (28)
$50 per month; additional 2870. 00 2710,000
benefit for disfigurement.
66** Whole period of disability................. $13.46 (or actual wage, if
26. 92
less).
66** ____ do_____________________ ____
$8 (or actual wage, if less).. 1? 25. on
7 5na
1'
PERM ANENT
P A R T IA L
D IS A B IL IT Y
[Maximum period for specific injuries is given, followed by maximum period (if greater) for disabilities
_________ not listed in schedule of specific injuries (here referred to as “nonlisted disabilities,,)]_________
A la............... 55-65 400w eeks... __________ _________ $5 (or actual wage, if less). $18.00
Alaska_____
$7,200
(28)
Ariz_______ 18 55 260 weeks; during disability, for non
listed disability.
Ark................
65
28 7,000
weeks; 450 weeks for nonlisted $7 ......................................
disability.
65 240 weeks__________________ _ . $6.50.................................... 25.00 ( )
Calif_ ...........
50 208 weeks_________ ____ _________ $5________ _____ ___ ____ 14.00 30 2,912
Colo............
7Pesos.
Amounts are increased or decreased up to 15 percent for employers or employees violating safety regu
lations; triple compensation for minors illegally employed.
ui* $5
(or actual wage, if less) after 400 weeks.
Plus additional allowance for constant attendant if necessary.
In addition to compensation, employee undergoing vocational rehabilitation is paid cost of mainte
nance, maximum weekly.
73Plus monthly for each dependent Child.
33Compensation for 260 weeks, then 45 percent of average weekly wages for life. In addition, award is
increased 5 percent for each dependent child (not to exceed 5) under 18 years.
Per month if wife and 2 children, plus $5 for each additional child, plus $25 for constant attendant
if necessary.
25
In addition employee receiving rehabilitation instruction is paid cost of maintenance, maximum
weekly, for maximum of weeks.
Per month, plus $180 per year for each child.
37Additional
benefit for disfigurement.
In addition to compensation for temporary total disability. There is an additional amount for dis
figurement.
Plus life pension of from to 40 percent for over 70 percent disability.
In addition to compensation for temporary total disability. For nonlisted permanent partial dis
ability maximum is $3,640. There is an additional amount for disfigurement.
2 00
2 0 .0 0
22
17
$10
$8
24
$10
20
26
28
29
20
10
208
T able
W O R K M E N 'S COMPENSATION
13. — M in im u m and M a x im u m B e n e fits U n d er W o r k m e n 's C o m p en sa tio n
L a w s , by E x ten t o f D is a b ility an d by S tate, J u ly 1, 194-0 — Continued
PERM ANENT
P A R T IA L
D I S A B I L I T Y — C o n t in u e d
Limit of payments
State
Percent
age of
wages
Per week
Maximum period
Minimum
Conn..
50
50
D el__
%
D. C_.
50-60
F la....
50
Ga___
60
Hawaii..
55
Idaho. ____
_________ 50-65
66
111
55
Ind________
60
Iowa_______
60
K a n s._____
65
K y------------65
La_________
%
M a in e..___
%
Md________
Mass ____
M ic h ...___
%
%
M inn______
%
Mo________
Mont______ 50-66%
%
Nebr______
50
N ev. ... ..
50
N. H ______
%
N. J_______
66
66
66
66
66
66
66
N. Mex. ...
N. Y ______
N . C_______
N . Dak____
Ohio_______
Okla. _____
Oreg ____
Pa_________
P. I................
60
%
60
%
%
%
66
66
66
66
%
50
66
225 weeks; 520 weeks for nonlisted
disability.
194 weeks; 285 weeks for nonlisted
disability.
288 weeks; during disability, for non
listed disability.
200 weeks; 350 weeks for nonlisted
disability.
200 weeks; 300 weeks for nonlisted
disability.
312 weeks________________________
238 weeks________________________
225 weeks; 417 weeks for nonlisted
disability.
250 weeks; 500 weeks for nonlisted
disability.
225 weeks________________________
210 weeks; 415 weeks for nonlisted
disability.
200 weeks; 335 weeks for nonlisted
disability.
400 weeks________________________
150 weeks; 300 weeks for nonlisted
disability.
200 weeks___________ ____ _______
175 weeks________________________
200 weeks; 500 weeks for nonlisted
disability.
450 weeks (including 25 weeks each
for healing and rehabilitation).
232 weeks; 400 weeks for nonlisted
disability.
200 weeks; 500 weeks for nonlisted
disability.
225 weeks; 300 weeks for nonlisted
disability.
260 weeks________________________
300 weeks________________________
230 weeks; cumulative for 2 or more
specified injuries, to maximum of
500 weeks.
180 weeks___________________ ____
312 weeks; during disability, for non
listed disability.
200 weeks; 300 weeks for nonlisted
disability.
234 weeks; 450 weeks for nonlisted
disability.
215 weeks
250 weeks; 300 weeks for nonlisted
disability.
208 weeks for married workman____
215 weeks; 300 weeks for nonlisted
disability, weekly maximum $15
208 weeks in addition to compensa
tion for temporary total disability;
benefit for certain disfigurement.
Total
maxi
Maxi mum
mum
$7____________ ______ _ is 25.00 $13, 000
$5 (or actual wage^, if less). _ 15.00 4,275
$8 (or actual wage, if less).. 17 25.00 28 7, 500
$6 (or actual wage, if less). _ 18.00 27 5,000
$4 (or actual wage, if less)..
si 5,000
285,
16.00 31 3,808
$7.50 ($11 if 1 child under
825,500
16, $12 if 2, $13 if 3, and
$14 if 4 or more).
$8.80 (or actual wage, if 16. 50 5.000
less).
$6 (or actual wage, if less). _ 15.00 3,375
18.00 3i 7,470
$5______________________
4.000
$3 (or actual wage, if less)..
______________________ 18.00 5.400
$8 (or actual wage, if less).. 18.00 3, 750
33
1,750
18. 00 9,000
$8 (or actual wage, if less). _
28 9, 000
$6_____________________ _
27
$ ______________________
10,500
$6 (or actual wage, if less) _. 15.00 3i 4, 500
$6.92___________________ 13.85 3, 600
______________________ 18.00 5.400
$10 (or actual wage, if less).
000
1 2 .0 0
2 0 .0 0
1 2 .0 0
2 0 .0 0
8 .0 0 0
$6
28
1 0 .0 0
2 0 .0 0
8 ,0 0 0
2 0 .0 0
8
2 1 .0 0
28
$8
3110,000
___ do______________ ___ 18.00 28 3,(» 240
$8 (or actual wage, if less) .. 17 25.00 )
$7______________________ 18.00 276,000
______________________
9,000
18. 75 28 4,000
$8 (or actual wage, if less).. 18.00 27 4, 500
$8.08__________ _________ 11. 54 3i 2, 400
$9, or full wage, but not 18.00 4,500
under $5.
7 3,000
8
$6
2 0 .0 0
1 Pesos.
Additional compensation for total disability, and 104 weeks for serious and permanent disfigurement
of face, neck, head, or hands, but combined compensation not to exceed 520 weeks.
In addition to compensation, employee undergoing vocational rehabilitation is paid cost of mainte
nance, maximum $10 weekly.
In case of injuries occurring after July 1,1939, compensation is increased 10 percent.
Additional benefit for disfigurement.
In addition to compensation for temporary total disability. There is an additional benefit for dis
figurement.
31 In addition to compensation for temporary total disability.
In addition to payments for total disability, for not to exceed 64 weeks. There is an additional amount
<not to exceed death benefit) if disfigured where no specific loss.
33 In all cases, in addition to all other compensation. For nonlisted disability, 66% percent of weekly
wages during disability, maximum $18, total maximum $4,500.
18
17
19
27
28
32
209
FEATURES OF W O R K M E N ’ S CO M PEN SATIO N LAW S
T able
13.— M in im u m and M axim um Benefits Under W orkm en ’ s Com pensation
Law s, by Extent o f D isability and by State, J u ly 1, 1940— Continued
PERM ANENT
P A R T IA L
D I S A B I L I T Y — C o n tin u e d
Limit of payments
Percent
age of
wages
State
Per week
Maximum period
Minimum
P. R__..........
R. I...............
S. 0 . . . ..........
S. D ak.........
Tenn______
Tex ______
Utah............
Vt................
Va________
Wash______
W. Va_____
Wis ______
. 10
W yo. _ ___
U. S.:
Civil em
ployees.
Longshore
men.
50 300 weeks._______________________
50 150 weeks; 700 weeks for nonlisted
disability, weekly maximum $13.
60 200 weeks; 300 weeks for nonlisted
disability.
34 55 200 weeks; 312 weeks for nonlisted
disability.
50 400 weeks_________ ____________ .
60 200 weeks; 300 weeks for nonlisted
disability.
60 200 weeks; 312 weeks for nonlisted
disability.
50 170 weeks; 260 weeks for nonlisted
disability.
55 200 weeks; 300 weeks for nonlisted
disability.
% 240 weeks; 340 weeks for nonlisted
disability.
plus 70 percent of earnings
70 500for*weeks,
healing period. Maximum, for
nonlisted disability,
weeks.
66
1 ,0 0 0
66
66
% Whole period of disability.. ______
% 288 weeks; during disability, for non
listed disability.
TEM PORARY
TOTAL
$
$1.50_______ __ ______ $
______________________
3i 9,100
$5______________________ 25.00
$7.50 (or actual wage, if less) 15.00 4,680
$5 (or actual wage, if less). 16.00 6,400
$7__________ ___________
3« 16.00 , 250
$7 (or actual wage, if less) ._ 15.00 3i 3,900
______________________ 16.00 ,
a3,000
__________________ ___ 16.00 5,440
$14_____________________
1 0 .0 0 23 2 ,0 0 0
2 0 .0 0
$8
27 6 ,0 0 0
28
2 0 .0 0
6 ,0 0 0
28 6
$6
27 6 0 0 0
88
$8
27 2 1 .0 0 252 1 ,0 0 0
$50 per month.
$8
3« 70.00 2, 500
28
26.92i
(or actual wage, if less).. 17 25. 00 28 7, 500
D IS A B IL IT Y
55-65 300 weeks________________________
65 Whole period of disability ________
65 433 weeks________ _______________
65 450 weeks_______ _______________
65 239 weeks .. _______________ _
50 Whole period of disability_________
50 520 weeks . .. _______ _______
50 475 weeks_______________________
% Whole period of disability..______
50-60 350 weeks________________________
50 ____do___________________________
60 312 weeks___________ ____ ______
is 55-60 400 weeks; thereafter weekly ($ ,
if dependent children).
50-65 Whole period of disability_________
Ala___
Alaska
Ariz_u_
A rk ...
Calif..
C olo..
ConnD el. ..
D. C__
Fla___
Ga........
Hawaii.
Idaho..
.
Total
maxi
Maxi mum
mum
$5 (or actual wage, if less). $18.00
27
$7______________________
$7,000
$6.50___________________ 25. 00 5, 975
$5______________ _____ 14.00
$7_________________
25.00 13,000
$5 (or actual wage if less).. 15.00 4.000
(or actual wage, if less). . 25.00 7, 500
(or actual wage, if less) .. 18.00 5.000
$4 (or actual wage, if less)..
7.000
$5 (or actual wage, if less) .. 25.00 5.000
___________________ 16.00
$7.50 ($11 if 1 child under 16, i® .
5, 500
$12 if 2, $13 if 3, and $14 if
4 or more).
55 500 weeks_____________ ________ . $8.80 (or actual wage, if 16.50 5,000
Ind__
less).
60 300 weeks_______________________
(or actual wage, if less). 15.00 4, 500
Iowa.
60 415 weeks_______ ___________ ...
______________________ 18.00 7. 488
Kans.
In case of uncomplicated silicosis or asbestosis, maximum is $500 if death or disablement occurs in first
month act becomes effective and maximum increases $50 each month until limits provided for accidents
are reached.
Amounts are increased or decreased up to 15 percent for employers or employees violating safety regu
lations; triple compensation for minors illegally employed.
In addition to compensation, employee undergoing vocational rehabilitation is paid cost of maintenance,
maximum weekly.
Plus 5 percent for each dependent child.
In case of injuries occurring after July , 1939, compensation is increased 10 percent.
In addition employee receiving rehabilitation instruction is paid cost of maintenance, maximum $10
weekly, for maximum of weeks.
Additional benefit for disfigurement.
In addition to compensation for temporary total disability. There is an additional amount for dis
figurement.
si In addition to compensation for temporary total disability.
3< For nonlisted disability, 50 percent of wages.
Plus 5 percent for each dependent child (not to exceed 5) under 18 years.
a where there are or more injuries, an employee may receive compensation in excess of maximum given.
Per month.
Plus $10 per month for total dependents residing in the United States.
66
$6
111
8
2 0 .0 0 2
$8
$6
2 0 .0 0
$6
20 00
$6
$6
2
10
17
$ 10
18
19
1
28
20
27
28
88
35
88
17
2
77
210
T able
W O R K M E N ’S COMPENSATION
13. — M in im u m and M a xim um Benefits Under W ork m en ’ s Com pensation
Law s, by Extent o f D isability and by State, J u ly 1, 1940— Continued
TEM PORARY
TOTAL
D I S A B I L I T Y — C o n tin u e d
Limit of payments
Percent
age of
State
Per week
Maximum period
Minimum
65
65
%
%
%
K y .....
La____
Maine _
M d___
M ass...
66
66
66
520 weeks..
300 weeks .
500 weeks312 weeks .
500 weeks .
500 weeksM ich....
% 300 weeksM inn__
% 400 weeksMo____
50-66% 300 weeks.
Mont__
do..
N eb r....
433 weeks .
Nev____
50 300 weeks .
N. H — .
^
doN. J____
60 550 weeks_______________
N . Mex.
% Whole period of disabilityN. Y ___
60 400 weeks...............................
N. C.___
% Whole period of disabilityN. Dak..
% 312 weeks...............................
O h io ....
% 300 weeks...............................
Okla___
40-66% Whole period of disabilityOreg----% 500 weeksPa...........
208 weeks .
P. I.
50 104 w eeks...
P. R ...
weeks..
50
R. I ....
60 500 weeks...
S. C__._
55
S. Dak.
50 300 weeks............................ .
Tenn______
60 401 weeks...............................
Tex...............
Utah______
60 312 weeks................................
50 260 weeks............................ .
Y t................ .
55 500 weeks........ .....................
Va____ ____
Whole period of disabilityWash............
% 78 weeks________________
W. Va..........
70 Whole period of disability..
Wis ...........
___ do......................................
W yo.............
U. S.:
% -doCivil em
ployees.
Longshore
% -do..
men.
66
66
66
66
66
66
66
66
1 ,0 0 0
66
. 10
66
66
Total
maxi
Maxi mum
mum
$5______ ______________ $15.00 $7,500
$3 (or actual wage, if less).
$.
18.00
(or actual wage, if less) 3,750
$9 or actual wage if less; 18.00 4,500
but not under $7 for nor
mal weekly hours of 15
or over).
$7.
18.00 9.000
(or actual wage, if less)..
(or actual wage, if less).
$.
6,300
(or actual wage, if less). 15.00 4,500
$6.92........ .......... ..............
16.62 7,200
$.
18.00 5,400
(or actual wage, if less).
___ do.................................... 18.00 9,900
(or actual wage, if less). 25.00 5.000
$7.
18.00
(or actual wage, if less).
(or actual wage, if less), 18.75 3,750
do.
18.00 5,400
$6.92 (or actual wage, if 22. 38
less).
$9 (or actual wage, but not 18.00 7,500
under $5).
4 pesos (or actual wage, if 718.00 3.000
less).
$1.50___________________
1,040
$7...........................................
$5______________________ 25.00
$7.50 (or actual wage, if
15.00 3.000
less).
$5 (or actual wage, if less). 16.00 4,800
$7.
$7 (or actual wage, if less). 38 16.00 6,250
.......do--------------------------- 15.00 3,900
.......................................... . (38)
16.00
16.00 1,24:
$7.35_________
$50 per month«• 90.00 7)
$13.46 (or actual wage, if 26.92
less).
(or actual wage, if less).. 25.00 7,500
2 0 .0 0
6
$8
2 0 .0 0
$8
$6
8
2 0 .0 0
2 0 .0 0
2 1 .0 0
6 ,0 0 0
6 ,0 0 0
6 .0 0 0
8 ,0 0 0
*7
8
$ 10
2 0 .0 0
6 ,0 0 0
$8
6 .0 0 0
$6
$8
2 0 .0 0
7
1 0 .0 0
2 0 .0 0
2 0 .0 0
$6
8 ,0 2 0
6 .0 0 0
2 1 .0 0
$8
1 0 .0 0 0
6 ,0 0 0
0
17
Pesos.
Amounts are increased or decreased up to 15 percent for employers or employees violating safety regu
lations; triple compensatfon for minors illegally employed.
J In addition to compensation, employee undergoing vocational rehabilitation is paid cost of main
tenance, maximum weekly.
Plus 5 percent for each dependent child (not to exceed 5) under 18 years.
plus per month for total dependents residing in United States.
38 Same as for permanent total disability; special schedule of monthly payments for first months of
disability, for married or widowed employee.
3®Per month; additional benefit for disfigurement.
7
10
7
$10
15
37
$ 10
6
Period o f Benefits for Permanent Partial Disability
Awards of compensation for injuries causing permanent partial
disability are made by two methods—payment of a percentage of the
wage loss and payment for fixed periods for specified injuries. These
two methods exist side by side, as the laws have schedules covering
certain specified injuries, and those not included therein are compen
sated on a percentage basis. In Alaska, Washington, and Wyoming
211
FEATURES OF WORKMEN’S COMPENSATION LAWS
the payments are fixed sums, but in all other States the schedule
payments are weekly amounts based on wages, except in California
where the amount of the benefit depends on the age and occupation
of the employee.
In some States the scheduled provisions provide for payments in
addition to the period of total disability (healing period) or they may
cover the entire allowance for the injury other than medical aid.
Such payments are exclusive in 25 States13 and in addition to the heal
ing period in 29 jurisdictions.14 In Maine the payment prescribed in
the schedule is in lieu of payments for temporary total disability,
but a subsequent partial disability is compensated for not more than
300 weeks from the date of the injury. The New Hampshire law
provides for additional compensation for the healing period except
in the case of loss of hearing.
Under the Massachusetts law, compensation is paid for the period
of total disability and also for partial disability after the scheduled
period; the same is true in Rhode Island, subject to a maximum
number of weeks. Schedule payments are normally in lieu of all other
payments under the New York act, but if the period of total temporary
disability is protracted beyond designated periods the schedule period
is extended correspondingly. In Georgia a uniform period of 10
weeks is allowed as healing time. The number of weeks provided by
law during which compensation is payable for a specified injury under
the compensation laws of the several States is shown in table 14.
T able
14.— Num ber o f W eeks fo r W hich Com pensation is Payable fo r Specified
In ju ries, by States
Loss or loss of use of—
State
Arm
Hear
Index Mid
Other Sight Hear ing
(at
Ring Little Leg
dle finger
(at Foot Great
shoul Hand Thumb finger finger
finger hip)
toe toe ofeyean ing,
ear both
der)
ears
1
Ala ..........
Ariz ____
Ark _____
Calif ____
Colo ........
Conn ___
Del ..........
D. C ........
Fla ...........
Oa _____
Hawaii2...
.1
.2
.2
.8
.2
.2
.1
.2
.1
.2
150
60
r
217 \
[4 217 4173 / 65
60
150
340
f 240 3180
i
36
4160
50
208 104
60
225 175
194 158
60
51
280
60
150
150
30
60
312 244
2 00
3 2 60
3
2 00
3
.4 2 20
4
2 12
2 00
2 00
45
39
35
3 32
28
26
38
35
28
35
35
46
4
30
30
30
20
3 24
3 24
4 20
4 20
11
18
30
30
-18
30
30
30
25
17
20
20
20
25
15
«16
13
15
7
15
15
15
4 12
20
175
217
175
240
208
208
194
248
175
175
288
125
173
125
160
104
156
135
173
125
125
205
30
30
30
32
26
38
30
26
30
30
38
10
1 00
11
4*130
10
100
8
80
4»139
208
113
140
100
100
128
87
40
40
35
52
52
40
60
150
260
150
160
139
156
2 00
150
150
312
See footnotes at end of table.
“ Alabama, Alaska, California, Delaware, Florida, Indiana, Iowa, Kentucky, Louisiana, Maine, Michi
gan, Missouri, Montana, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and United States (civil employees).
Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Georgia, Hawaii, Idaho, Illinois,
Kansas, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New
Mexico, Ohio, Oregon, Philippines, Puerto Rico, Rhode Island, South Dakota, Utah, Vermont, Wisconsin,
Wyoming, and United States (Longshoremen’s Act).
14
212
W O R K M E N ’ S COMPENSATION
T able
14.— Num ber o f W eeks fo r W hich Com pensation is Payable fo r Specified
In ju ries, by States— -Continued
Loss or loss of use of—
Hear
Arm
Index Mid
Ring Little Leg
Other Sight Hear ing,
(at
dle finger
(at Foot Great
finger hip)
shoul Hand Thumb finger finger
toe toe ofeyean 1ing,
ear both
der)
ears
State
Idaho 8___ 240
111.3............ 225
Ind.i_____ 250
Iowa i........ 225
Kans.2___ 210
Ky.i
200
200
La.i
Maine®__ 150
Md.2 ___ 200
Mass.i°___ /\ 4375
50
Mich.i
200
Minn.®___ 200
M o.i_____ \4f3232
212
M ont.i___
Nebr.®____ 225
Nev.2____ f3260
217
N. H .u___ 170
N . J.2 ___ 230
N. Mex.2__ 180
N . Y.i2____ 312
N . C.i____
N. D .i___ 234
Ohio 2____ 215
Okla.i____ 250
Oreg. ___ 208
Pa
215
P. 1 .2 _______ 208
P. R.2____ 300
R .I ____
S. C.i____
S. D .2_____
Tenn.i___
Tex.i_____
Utah ____
Vt.2______ 170
Ya.i______
W. Va.i___ 240
Wis _____ 500
U. S.: Long
shoremen 280
2 00
\4
2 00
13
.1
.2
1 00
2 00
2 00
2 00
2 00
2 00
2
2 00
.2
2
200
170
200
150
150
150
150
125
150
*75
450 )J
150
175
3 175
4 160
150
175
3217 \
4 173
140
175
244
150
195
165
165
175
160
J
\4180 }
80
150
150
150
150
150
140
150
333!
1 10
200
3 2 00
2 00
212
70 40 40 30 20
70 40 35 25 20
60 40 35 30 20
40 30 25 20 15
60 37 30 20 15
8 60 8 45 8 30 8 20 815
50 30 20 20 20
50 30 25 18 15
50 30 25 20 15
320 12 12 12
60 35 30 20 15
60 35 30 20 15
«60
335 335 322
*55 *40 *30 *30 *16 }
60 30 30
60 35 30
15
65 39 30
17
15
40 25
15
65 40 30
50 25
15
75 46 30 25 15
60 35 30
15
45 29i 24f 15f 13!
60 35 30
15
60 35 30
15
52 35
17 13
60 35 30
15
40 30 25
50 35 25 25 15
50 36 26
18
60 35 30
15
50 35 30
15
60 35 30
15
815
60 845 30
60 30 30
40 25
15
15
60 35 30
80 40 28
125 50 40 30 30
51 28 18 17
7
340
345
12
20
20
22
10
20
20
12
20
20
8
3
8 20
20
8
8
20
20
20
8
10
20
20
20
20
8 21
8
20
20
20
20
12
10
20
180
190
200
200
200
200
175
150
175
50
175
200
207
215
217
170
175
180
288
175
234
190
175
191
215
190
250
175
160
175
180
170
175
240
500
248
2 00
100
2 00
125
135
150
125
125
125
125
125
150
50
125
150
150
125
150
173
125
205
125
136|
140
150
139
150
130
160
80
125
125
125
125
125
125
140
250
173
120
100
120
30
35
60
25
30
30
20
25
25
12
30
30
40
30
30
30
30
30
39
30
m
30
30
12 4» 140
12 120
(7) 150
15 100
10 110
10 100
10 100
10 100
10 100
12 50
10 100
10 100
14 4a 118
4a
125
*a 130
12
10
120
11
20
8
10
12
100
100
10
100
1 00
*a 125
16 160
7!
125
9 87
125
15 *a160
80
10
10
100
10
100
35
50
50
25
150
125
200
150
100
50
100
52
44
50
87
42
40
35
60
70
29!
156
168
20
120
1 00
260
170
160
135
150
150
156
78 208
150
25
40 208
25
25
30
30
150
30 i*
30
150
30
150
30
*a
1842! 170
30
50
40 16 132
83| 25 a275 50 333!
26
140 52
22
10
10
10
100
1 00
100
100
120
100
100
10
10
12
8
10
20
18
200
0
4
8
2 00
Payments under this schedule are exclusive of or in lieu of all other payments.
* Payments under this schedule are in addition to payments for temporary total disability during the
healing period.
3 For major member.
* For minor member.
*» By enucleation.
*Payments under this schedule are exclusive of or in lieu of all other payments. Amounts depend on age
and occupation of employee. Figures given are for unskilled workman 39 years old.
Payments under this schedule are in addition to payments for temporary total disability during healing
period; 99 percent of specific schedule to be paid employee. Employer must pay 2 percent additional to
special indemnity fund.
For loss of second toe, 30 weeks; third toe, weeks; fourth toe, 15 weeks; and fifth toe, weeks.
For loss of a metacarpal bone for corresponding thumb, finger , or fingers, 10 weeks is added.
®Payments cover total disability for period specified. Partial disability based upon wage loss may be
compensated at end of period given for not over 300 weeks in all.
Payments under this schedule are in addition to all other compensation.
Plus compensation for actual healing period not in excess of specified number of weeks, except in case of
loss of hearing.
I®In lieu of other payments unless period of temporary total disability exceeds fixed periods for each class of
injury.
13 Computations based on compensation payable to a married man or a man with dependent child. Pay
ments are in addition to payments for temporary total disability during healing period.
h For additional loss of or more toes other than the great toe, an additional period of weeks.
In lieu of all other benefits except medical and hospital.
i®For loss of second toe, 30 weeks.
I
8
7
8
20
10
II
1
18
10
213
FEATURES OE W O R K M E N ’S COMPENSATION LAWS
Medical Benefits
In all the States medical aid is required to be furnished to injured
employees, usually in addition to compensation payments. In some
States additional amounts are allowed for hospital expenses, while in
others artificial limbs and other appliances are furnished. As indi
cated in table 15,17 States limit neither the amount nor the time during
which aid shall be rendered; 12 other States limit the amount but
not the time; 12 States limit the time but not the amount; and in 13
States there is a restriction on both the amount and the time.
T able
15.— States L im iting the P eriod and A m ou nt o f M ed ical Benefits
Neither time nor amount No limitation on amount No limitation on time Both amount and time
limited
limited
Arizona
California
Connecticut
District of Columbia
Hawaii
Idaho
Illinois
Minnesota
Nebraska
New York s
North Dakota
Philippines
Puerto Rico
Washington
Wisconsin
United States:
Civil employees
Longshoremen
Alaska
Arkansas
Indiana
Massachusetts
Michigan
Nevada
New Hampshire
North Carolina
Oklahoma
South Carolina
Texas
Virginia
2
Florida
Iowa
Louisiana
Maryland
New Jersey
New Mexico
Ohio
Oregon
Rhode Island
Utah
West Virginia
Wyoming
Alabama
Colorado
Delaware
Georgia
Kansas
Kentucky
Maine
Missouri
Montana
Pennsylvania
South Dakota
Tennessee
Vermont
1
1
1
1
1
1
4
4
1 Additional services in special cases or in discretion of commission.
Except in case of treatment for silicosis or asbestosis.
«In case of disability resulting from inhalation of harmful dust, period of treatment is limited.
Virtually unlimited under administrative practice.
2
4
Medical benefits are without cost to the workmen in the great
majority of the States, but in Alaska the employer may deduct from
the employee's wages $2.50 per month to maintain a medical fund.
In Arizona and Nevada one-half the cost but not over $1 per month
may be deducted, while in Washington one-half of the cost must be
paid by the workman. Table 16 presents in greater detail the pro
visions regarding medical benefits.
214
W O R K M E N ’S COMPENSATION
T a b l e 16.—
M a x i m u m P e rio d s and A m o u n ts o f M e d ic a l S ervice , by States
State
Maximum
period
Maximum
amount
Alabama___________
A laska____________
Arizona............ ............
California._________
Colorado____-______
Connecticut________
Delaware.. _______
District of Columbia..
Florida .. ________
Georgia_____ _______
Hawaii
IdfthnS
Illinois ___________
Indiana ___________
Io w a ______________
Kansas
.... _
Kentucky__________
Louisiana__________
Maine
Maryland__________
Massachusetts _
Michigan___________
Minnesota
M issouri..--------------Montana___________
Nebraska......................
Nevada.......................
90 days ----year..........
Unlimited—
60 days ___
Unlimited _ _
4 months 4_ _
Unlimited...
30 days ----Unlimited—
__do...........
weeks3...
Unlimited—
____do...........
____do_____
90 days ___
Unlimited-_.
60 days____
90 days ___
Unlimited—
30 days ___
Unlimited—
2 weeks ___
90 days____
Unlimited—
90 days ___
6 months___
Unlimited—
6 months 8. _
$ .
Unlimited
Do
Do.
Do.
$500.
Unlimited.
$150.8
Unlimited.
$250.8
$500.
Unlimited.
Do.
Do.
Do.
$600.
$
$
$250.
$
$500.
Unlimited.
Do.
Do.
8
8
1
1
8
8
10
1
8
8
8
8
200
.8
.2
1 0 0 .3
2 0 0 .3
1 0 0 .3
$750.
$500.®
Unlimited.
Do
Maximum
period
State
New Hampshire......... 30 days
New Jersey.................. Unlimited. _
New Mexico................ ........do...........
New York ____ ____ ____d o ____
North Carolina
weeks __
North Dakota............. Unlimited—
Ohio............................. ____do_____
Oklahoma__________ 60 days ___
Oregon.......................... Unlimited—
Pennsylvania_______ 60 days .
Philippines.................. Unlimited...
Puerto Rico________ ____do __ _
Rhode Island............... .. .do...........
South Carolina........... weeks __
South Dakota...........
weeks___
Tennessee.................... 30 days i___
Texas.......................... 4 weeks 8a__
Utah________ ______ Unlimited—
Vermont___________ weeks . . .
Virginia____________ 60 days 72— .
Washington________ O8)_____ .
West Virginia __
Unlimited—
Wisconsin........... ........ ........do...........
Wyoming_______
_.do
United States:
Civil employees.. ........do..........
Longshoremen— ____do..........
7
8
10
8
8
10
20
2
8
8
Maximum
amount
Unlimited.
$
$400.
Unlimited.
Do.
Do.
$200.3
Unlimited.
$250.8
$150.®
Unlimited.
Do.
$ .°
Unlimited.
$300.
$ .
Unlimited.
$500.3
$50.ii
Unlimited.
Do.
$800.
Unlimited.
1 0 0 .8
200 1
200
$150.1®
Unlimited.
Do.
.2
1 Additional service may be given at option of employer.
2 Employees contribute.
* Additional service in special cases or at discretion of commission.
8a Additional service may be authorized, not to exceed 91 days.
* In case of hernia, if employee requires operation he is entitled to service without limitation of time.
« In surgical cases maximum may be increased by order of commission to $600.
6A special operating fee of $100 allowed in case of hernia.
7 In case of disability resulting from inhalation of harmful dust, period of treatment is limited to 90 days,
but may be extended for an additional 360 days by the Industrial Board.
8Special limitations upon medical benefits in case of certain occupational diseases.
9 Exclusive of hospital treatment.
10 In case of employee receiving hospital treatment for more than 14 days, the maximum is $260.
71 Also hospital first 30 days, maximum $150.
12 Extended in unusual cases. Not to exceed 180 days.
13 In case of temporary disability, continues not longer than period of compensation, and in case of perma
nent disability not beyond the date of award. Employees contribute.
Additional expenditure of not more than $200 for medical service and $300 for hospital treatment may be
authorized by court.
Adm inistration and Settlement o f Claims
There are two general methods of administration of the workmen's
compensation laws: (1) By an administrative commission or board
created for the purpose of enforcing the provisions of the law, and (2)
by the courts. When administration is left to the courts it is usually
because no other machinery for administration has been created and
this law, like other laws, is enforced in the various Federal, State, and
county courts.
The desirability of an administrative agency charged specifically
with the supervision of the compensation laws is recognized by all but
seven States (Alabama, Alaska, Louisiana, New Hampshire, New
Mexico, Tennessee, and Wyoming). However, in Alabama there is
FEATURES OF W O R K M E N ’S COMPENSATION LAWS
215
limited supervision by the department of industrial relations, and in
Wyoming the workmen's compensation fund is under the supervision
of the State treasurer. In these seven States the agreement between
the parties may be without supervision or there may be provision for
approval by the court. Summary procedure is generally directed, but
a trial jury may be demanded in certain cases.
It is generally agreed that administration of a workmen's com
pensation act by an administrative agency is more satisfactory than
administration by the courts. The major difficulties of court adminis
tration have been summed up as (1) delay, (2) cost, and (3) the unfit
ness of the courts for the settlement of compensation claims. A com
plete understanding of industrial conditions is essential in successful
administration of the laws. The vital factors in successful administra
tion are the giving of prompt, honest, and full compensation and im
mediate medical aid, as required by the law. To achieve these pur
poses an administrative board or commission is almost essential.
In States where the law is administered by a commission or board,
appeals to courts are usually limited to questions of law, the de
termination of facts being left to the exclusive jurisdiction of the
commission.
Accident Reporting and Prevention
The workmen's compensation acts of only 25 States15 require that
reports be made of all industrial accidents. In 13 States the acts
require reports of accidents which cause disability of 1 day or more,16
and Rhode Island requires reports of all accidents causing disability
for more than 2 days. In North Carolina and South Carolina em
ployers must report accidents causing disability for more than 3 days.
The Maryland law provides that accidents causing disability for more
than 3 days must be reported, and by recent enactment notice must
be given promptly after knowledge of disability caused by an occupa
tional disease.
Arizona, Arkansas, Colorado, Delaware, District of Columbia, Florida, Massachusetts, Michigan,
Missouri, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Puerto
Rico, South Dakota, Utah, Virginia, Washington, Wyoming, and the United States (Civil Employees*
and Longshoremen’s Acts).
day: California, Connecticut, Hawaii, Idaho, Maine, Philippines, and Vermont. More than day:
Indiana, Iowa, Kansas, Kentucky, New York, and Texas.
161
1
216
W O R K M E N 'S COMPENSATION
Notice must be given when the disability lasts 1 week in Georgia17
and Tennessee,18 and in Illinois notice must be given when the injury
is fatal or the disability is for more than 1 week. In Alabama
employers must give notice when the disability lasts for more than
2 weeks. Under the New Jersey law insured employers are required
to report all accidents and compensable occupational diseases,
whereas uninsured employers need report only those causing disability
for more than 1 week or causing any permanent disability. The
Minnesota act requires reports of all accidents causing death or
serious injury, as well as other accidents causing disability for more
than 1 day. In Nebraska, New Hampshire, West Virginia, and
Wisconsin, accident reports are submitted in the manner and at the
time required by administrative authorities. Although there is no
provision requiring reports in the Alaska law, a separate act provides
for the reporting of accidents in coal mines.
These provisions of the State compensation laws clearly illustrate
the lack of uniformity on the subject of accident reporting. The
importance of complete reports showing causes, nature, severity, and
costs has been too little recognized, even among those charged with
the administration of the laws, while the employer has been too prone
to minimize or disregard the occurrence of accidents except as an
unfortunate incident involving some form of liability.
Existing deficiencies in the compensation laws in regard to accident
reporting and prevention are offset to some extent by the fact that
a few industrial States have inspection agencies which are charged
with the duties of prevention of accidents, chiefly by way of enforcing
safety statutes, although some agencies also prescribe standards.
Some attempt has been made in the direction of combining compen
sation administration with the enforcement of labor laws generally,
although the majority of the States distribute the responsibility among
several agencies. However, in some States 19 the agency administering
the compensation law is also given certain additional powers as to
safety devices, inspection, etc.
Cost o f Compensation
In almost all of the States, the cost of compensation is borne
entirely by the employer, although in some of the States having a
State insurance fund a small part of the cost is shifted to the public.
,7Or accident requires medical aid.
18Or accident results in death.
19For example, Alabama, Arizona, California, Colorado, Florida, Hawaii, Idaho, Maryland, Montana,
North Dakota, Ohio, Oregon, Puerto Rico, Utah, Washington, West Virginia, and Wisconsin.
FEATURES OF W O R K M E N ’S COMPENSATION LAWS
217
In the following States the employees are permitted to make contribu
tions: Oregon, in which deductions of 1 cent per day are made to
help cover the cost of compensation; Alaska, Arizona, Nevada, and
Washington, where employees contribute to the medical benefit fund;
and Colorado, Idaho, Kentucky, Montana, and Oregon, where the
employees may contribute toward cooperative hospitals, etc. The
original occupational-disease law of Washington required equal
contributions by employers and employees, but in 1939 an amend
ment was adopted repealing this provision.
Nonresident A lien Dependents
None of the workmen’s compensation acts makes any distinction
between resident aliens and resident citizens, but a large number have
discriminatory provisions in the laws affecting nonresident alien de
pendents. Under the liability system, the rule had become almost
universal that such dependents should have the same status as resi
dents or citizens of the States; but of the 22 State compensation laws
on the statute books at the close of the year 1913, nearly one-third
(7) made discriminations unfavorable to such claimants, while in 1916,
of 35 States, nearly one-half effected discriminations. At the present
time, of 54 laws analyzed, 39 have provisions more or less discrimina
tory. Thus an increasing tendency in the direction of less favorable
treatment is noted. Such discrimination may be by way of exclusion,
reduced benefits, permitting commutations to lump sums in reduced
amounts, restricting possible beneficiaries to persons of a designated
relationship (a provision that may exist alone or in connection with
reduced benefits), not extending the presumption of dependency to
aliens who are nonresidents, or excluding payments to beneficiaries in
countries with which the United States does not maintain diplomatic
relations.
Nonresident aliens are placed on the same footing as residents in 5
States, while in 10 they are not mentioned. The laws of a number
of States except residents of Canada from the discriminatory provi
sions, or declare such provisions subject to conflicting terms of any
treaty, or deny all benefits to aliens whose national laws would exclude
citizens of the United States in like circumstances. Table 17 analyzes
the provisions regarding nonresident alien dependents.
215193°— 40-------15
2 1 8
W O R K M E N ’S
T able
C O M P E N S A T IO N
1 7 .— States H a vin g D isc r im in a to ry P r o v isio n s R ega rd in g N o n r esid e n t A l i e n
D ep en d en ts 1
Exclusion
Alabama
Hawaii
New Mexico
Pennsylvania
Philippines
South Dakota
West Virginia
Reduced benefits
Alaska
Arizona
Colorado
Delaware
Florida
Georgia
Idaho 2
Illinois
Iowa 2
Kansas
Kentucky
Maine
Michigan
Montana 2
Nevada
Oregon
Utah
Virginia
Washington
Wyoming
Permitting commuta
tions to lump sums in
reduced amounts
Arkansas
District of Columbia
Kentucky
Maryland
Nebraska
New York
North Carolina
Oklahoma
South Carolina
United States:
Civil employees
Longshoremen
Presumption of depend
ency destroyed
Excluding payments to
dependents in coun
on same footing
tries not maintaining Placed
diplomatic relations as resident dependents
with United States
California
Washington
Connecticut3
Minnesota
Ohio
Tennessee
Texas
Restricting possible
beneficiaries
Arkansas
Delaware
District of Columbia
Florida
Illinois
Kentucky
Maryland
Montana
Nebraska
New York
North Carolina
Oregon
South Carolina
Washington
Wisconsin
Wyoming
United States:
Longshoremen
No provision
Indiana
Louisiana
Massachusetts
Missouri
New Hampshire
New Jersey
North Dakota
Puerto Rico
Rhode Island
Vermont
1The provisions are subject to change by treaties between the United States and foreign countries.
2If foreign government excludes payment to United States citizens then payments are excluded under
State law.
3 If dependents as defined under the law are nonresidents and there are residents who are dependents in
fact, compensation may be apportioned between them.
Chronological Development o f W orkm en’ s Compensation Legisla^
tion in the United States
The first legislation in the United States providing for benefits for
accidental injury in industry without suit or proof of negligence was
a cooperative insurance law enacted in Maryland in 1902. How
ever, this law, as well as the one adopted in Montana in 1909, was
adopted without adequate regard for either legal or economic prin
ciples. The first official recognition of the true principle of workmen’s
compensation by the Congress of the United States was the Federal
act of 1908, providing limited benefits for designated classes of
employees of the United States, though acts of 1882 (Life Saving
Service) and 1900 (Postal Service) had made some provision of a
limited nature.
In the field of State control, investigative commissions were pro
vided as early as 1903 (Massachusetts) and 1905 (Illinois), but no
FEATURES
OF
W O R K M E N ’S
C O M P E N S A T IO N
219
LAW S
tangible results immediately followed. Later commissions in both of
these States, and two and even three commissions in other jurisdic
tions, indicate the degree of caution with which approach to the
subject was made. Tables 18 and 19 show the progress of such
action, both in the appointment of commissions and in the enactment
of the laws.
T
a b l e
1 8 . — States in W h ic h C o m m is sio n s W e r e A p p o in te d and in W h ic h C om
p en sa tion L a w s W e r e E n a c te d , by Y ea rs.
Year first
commis
sion was
appointed
State
Alabama_____________
Alaska_______________
Arizona______________
Arkansas____________
California____________
Colorado_____________
Connecticut__________
Delaware____________
District of Columbia:
Public employees.Private employees..
Florida______________
Georgia______________
Hawaii______________
Idaho_______________
Illinois______________
Indiana______________
Iowa________________
Kansas______________
Kentucky_____
Louisiana_____
Maine________
Maryland____
Massachusetts..
Michigan_____
Minnesota____
Missouri______
Montana_____
Year
compen
sation
law was
enacted
1919
1915
1912
1939
1911
1915
1913
1917
1919
1928
1935
1920
1915
1917
1911
1915
1913
1911
' 1914
1916
1914
1915
1914
1911
1912
1913
' 4 1919
1925
1909
1915
1911
1907
1911
1905
1913
1911
i 1915
1912
3 1913
1903
1911
3 1909
1910
2
2
1 Voluntary.
2 Law declared unconstitutional.
3 Appointed by the Governor.
T
a b l e
Year first
commis
sion was
appointed
State
Year
compen
sation
law was
enacted
1913
1911
1911
1911
1917
s 1910
1913
1929
1919
1911
1915
1913
1915
1927
1916
1912
1935
1917
1919
1913
1917
1915
1918
1911
1913
1911
1915
1908
1916
1927
1911
Nebraska. ___ ____ _____
Nevada
__ . . . __ ______
N ew Hampshire___ _ _ __
N ew Jersey _ _____ __ _____ 1910
N ew Mexico . .. _ ________
N ew York. . . . . _ ___
1909
North Carolina _______ _ _ 1929
North D akota . . . _ _______ 1911
Ohio ___________________ __ 1910
Oklahoma. _ _______ __
Oregon.
_ _ _ _ _ _ _ _ 3 1911
Pennsylvania____ . . . ____ _ 1911
Philippine Islands _ ________
Puerto Rico
__ _ _ __
1913
Rhode Island . . ___ . . .
South Carolina . _ . . . . . .
South D akota. ____ __ . . .
Tennessee _ ____ __ ____
1913
Texas _ _ _ _ _ _ _ _ _
1911
U tah.
____
1915
Vermont
___ _ __
1913
Virginia
___ ___
1916
W ashington _______________ 3 1910
W est Virginia ____ ____
3 1911
W isconsin
1909
W yom ing _ ____ __ _ _ __
U nited States:
Public em ployees._ _ _ _ 1910
Longshoremen ___ _
4 Rejected on referendum.
5 2 laws, 1 (compulsory) declared unconstitutional.
1 9 .— N u m b er o f W o r k m e n ’s C om p en sa tion C o m m is sio n s and L a w s, b y Y ea rs
Year
Total
1903
1905
1907 ___
1908
1909 _ _
1910______
Commis States
sions
formed or enacting
provided original
law
for
41
1
1
2
3
8
Year
1 9 1 1 ____
1913 _____
1914 _____
1915______
1 1916______
1 1917______
1 1918______
54
1919
Commis States
sions
formed or enacting
provided original
law
for
121
7
3
1
104
7
2
9
1
5
1
Year
1919
1990
1927______
1928-.. _.
1929______
1935_____
1939______
Commis States
sions
formed or enacting
provided original
law
for
1
1
42
2
1
1
2
1
220
W O R K M E N ’S
C O M P E N S A T IO N
The 41 commissions listed operated in 34 jurisdictions. Laws have
been enacted by the legislatures of 47 States, the Territories of Alaska
and Hawaii, the Philippines, and Puerto Rico, and by Congress for
the civil employees of the Federal Government, for the District of
Columbia, and for longshoremen and harbor workers. It is evident,
therefore, that every law has not been preceded by a commission, but
every commission has been followed by the enactment of a law, though
in some cases so remotely as to suggest a lack of any real connection
between the two events.
Reference to the foregoing tables discloses both the progress and
extent of compensation legislation. The first law of general applica
tion was enacted in New York in 1910. It was declared unconsti
tutional after a very brief term of existence, but following an
amendment to the constitution a new law was passed which has been
sustained by both the State and the Federal courts. Compensation
legislation was concurrently enacted in other States, and by 1936 the
only States without such legislation were Arkansas and Mississippi.
The 1939 legislature of Arkansas passed a workmen’s compensation
act, but, as previously stated, it has been held in abeyance pending a
referendum.
Table 20 shows in chronological order the States which have enacted
compensation laws.
T
a b l e
2 0 . — States H a vin g C om p en sa tion L a w s, W it h the D a te o f T h eir E n a ctm en t
and C o m in g In to E ffect
State
U nited States 1__
W ashington____
K ansas_________
N evad a_________
N ew Jersey_____
California______
N ew Hampshire.
W isconsin______
Illinois__________
Ohio____________
M assachusetts.,.
M ichigan____. . .
Rhode Island___
Arizona_________
W est V irginia. __
Oregon_________
Texas___________
Iow a____________
Nebraska_______
M innesota______
C onnecticut____
N ew York 2____
M aryland---------Louisiana_______
W yom ing_______
Indiana_________
M ontana 2______
Oklahoma______
Approved
May 30,1908
Mar. 14,1911
___ do______
Mar. 24, 1911
Apr. 4, 1911
Apr. 8, 1911
Apr. 15, 1911
May 3, 1911
June 10, 1911
June 15, 1911
July 28, 1911
Mar. 20, 1912
Apr. 29, 1912
June 8, 1912
Feb. 22, 1913
Feb. 25, 1913
Apr. 16, 1913
Apr. 18, 1933
Apr. 21, 1913
Apr. 24, 1913
May 29, 1913
Dec. 16, 1913
Apr. 16, 1914
June 18, 1914
Feb. 27, 1915
Mar. 8, 1915
do.
Mar. 22,1915
Effective
Aug.
Oct.
Jan.
July
July
Sept.
Jan.
May
May
Jan.
July
Sept.
Oct.
Sept.
Oct.
July
Sept.
July
Dec.
Oct.
Jan.
July
Nov.
Jan.
Apr.
Sept.
July
Sept.
1, 1908
1, 1911
1, 1912
1, 1911
4, 1911
1, 1911
1, 1912
3, 1911
1, 1912
.1, 1912
1, 1912
1, 1912
1, 1912
1, 1912
1, 1913
1, 1914
1, 1913
1, 1914
1, 1914
1, 1913
1, 1914
1, 1914
1, 1914
1, 1915
1, 1915
1, 1915
1, 1915
1, 1915
State
Approved
Effective
Vermont__________
Maine____________
Colorado__________
Hawaii____________
Alaska____________
Pennsylvania______
Kentucky 2________
Puerto Rico_______
South Dakota______
New Mexico_______
Utah______________
Idaho_____________
Delaware__________
Virginia___________
North Dakota_____
Tennessee_________
Dist. of Columbia L.
Alabama__________
Georgia___________
Missouri__________
United States:
Longshoremen___
Philippines________
Dist. of Columbia__
North Carolina____
Florida____________
South Carolina_____
Arkansas__________
Apr. 1,1915
___ do______
Apr. 10,1915
Apr. 28,1915
Apr. 29,1915
June 2,1915
Mar. 23,1916
Apr. 13,1916
Mar. 10,1917
Mar. 13,1917
Mar. 15,1917
Mar. 16,1917
Apr. 2,1917
Mar. 21,1918
Mar. 5,1919
Apr. 15,1919
July 11,1919
Aug. 23,1919
Aug. 17,1920
Apr. 30, 1925
Mar. 4,1927
Dec. 10,1927
May 17,1928
Mar. 11,1929
May 25,1935
July 17,1935
Mar. 15,1939
July 1,1915
Jan. 1,1916
Aug. 1,1915
July 1,1915
July 28,1915
Jan. 1,1916
Aug. 1,1916
July 1,1916
June 1,1917
June 8,1917
July 1,1917
Jan. 1,1918
Do.
Jan. 1,1919
July 1,1919
Do.
Do.
Jan. 1,1920
Mar. 1,1921
Nov. 2, 1926
July 1,1927
June 10,1928
July 1,1928
July 1,1929
July 1,1935
Sept. 1,1935
(3)
1 Public employees only.
2 Earlier laws of Montana (1909), New York (1910), and Kentucky (1914) were declared unconstitutional.
* Law is held in abeyance pending referendum to be voted upon at next national election (Nov. 5, 1940).
A p p en d ix 3 .— R eading and R eferen ce L ist
The following brief list of publications is submitted as a reader’s
guide to further study of workmen’s compensation. The list, in the
main, is limited to publications that are most generally in use and
usually available at local libraries. The omission of a publication
from the list does not imply that it is not valuable or has not been
taken into consideration in this survey report. This is especially true
with regard to actuarial reports, which are confidential, and reports
of State or Provincial investigations, which are of interest but seldom
readily available in libraries.
Survey Reports
General
U n it e d S t a t e s .
B u rea u o f L a b or Statistics.
Comparison of workmen’s compensation insurance and administration, by
Carl Hookstadt. Washington, 1922. 194 pp. (I t s Bulletin No. 301.)
Now out of print, but available in many public libraries.
This report covers the first major survey of workmen’s compensation in the United States and
Canada. Hookstadt visited 20 States and 2 Canadian Provinces during the years 1919-20. The
survey is recognized as a landmark in American compensation studies, and the three tests applied,
“cost, service, and security,” reappear in most of the subsequent surveys.
D o d d , W a l t e r F.
Administration of workmen’s compensation.
wealth Fund, 1936. 845 pp.
New York, The Common
This study of administration was undertaken by The Commonwealth Fund in 1929. It is
based upon field studies mainly in the more important industrial States, but is in part the result
of collaboration. The report has an excellent index, and is a readily available source of information
and opinion upon most of the features of workmen’s compensation.
State Surveys
P e n n s y l v a n ia .
D ep a rtm en t o f L ab or and In d u str y .
Outline of needed changes in the Pennsylvania workmen’s compensation
system. ’ Harrisburg, 1934.
(I t s Special Bulletin No. 40, part I-a .)
----------------- The results of workmen’s compensation in Pennsylvania. Harris
burg, 1934. ( I t s Special Bulletin No. 40, part I-b .)
-----------------The results of workmen’s compensation in Pennsylvania— Statis
tical tables. Harrisburg, 1934.
{Its Special Bulletin No. 40, part I-c .)
----------------- Self-insurance of workmen’s compensation in Pennsylvania, by How
ard M . Teaf, Jr. Harrisburg, 1934.
{Its Special Bulletin No. 40, part II.)
----------------- Pennsylvania labor and industry in the depression. Harrisburg,
1934.
{Its Special Bulletin No. 39.)
The above bulletins, relating to the survey of workmen’s compensation in Pennsylvania in 1933-34,
were published with the aid of Federal funds. This is the most extensive study ever made within a
single jurisdiction.
221
222
W O R K M E N ’S
C O M P E N S A T IO N
Digests or Analyses o f Compensation Laws
U
S
n it e d
t a t e s
B u rea u o f L ab or Statistics.
.
Principal features of workmen’s compensation laws.
Labor Statistics and in its Monthly Labor Review.)
( I n its Handbook of
For many years the Bureau of Labor Statistics has published summaries of the principal features
of the workmen's compensation laws, either in the Handbook of Labor Statistics or in the Monthly
Labor Review. Reprints of such summaries are available in serial form. An example of the data
included in such summaries is included in this survey report as Appendix 2.
The Bureau has discontinued the publication of complete digests of the workmen’s compen
sation laws of the United States and Canada. Bulletins Nos. 423 and 496, published, respectively,
in 1926 and 1929, are of historical interest only, because of the rapidity of the changes in the laws.
The Bureau continues to publish digests or texts of special features of legislation, as, for instance,
occupational-disease provisions. Bulletin No. 652, Occupational-Disease Legislation of the United
States, was published in 1938, and a 1939 revision is in preparation.
C
a n a d a
.
D ep a rtm en t o f L ab or (D o m in io n ) .
Workmen’s compensation in Canada: a comparison of Provincial laws.
Ottawa.
An analysis or “comparison” of the Provincial compensation laws is issued annually, in mimeo
graphed form.
Association of Casualty and Surety Executives.
Digest of workmen’s compensation laws in the United States and Terri
tories. New York, 60 John St., 1937. 817 pp.
Published every 2 years.
Reports o f Proceedings o f Organisations
U
n it e d
St
a t e s
B u rea u o f L ab or Statistics.
.
Proceedings of annual meetings of the International Association of Industrial
Accident Boards and Commissions.
(Until 1934, in its Bulletins.)
-------- D ep a rtm en t o f L a b or.
D iv isio n o f L ab or Standards.
Proceedings of International Association of Industrial Accident Boards and
Commissions.
(Beginning with 1934, in its Bulletins.)
A mine of information and viewpoints upon workmen’s compensation is found in these reports
of the meetings of this Association.
-------------- Cumulative loose-leaf index to the proceedings of the International
Association of Industrial Accident Boards and Commissions.
1939.
(Its Bulletin No. 29.)
Washington,
Reference is made to this topical index as to many subjects not mentioned or inadequately covered in
this list of references.
C
a s u a l t y
A
c t u a r ia l
Proceedings.
S
o c ie t y
.
New York.
In these reports are found many discussions relating to workmen’s compensation, usually from the
point of view of the private insurance actuary.
International Labor Office Publications
I
n t e r n a t io n a l
L
a b o r
O
f f ic e
.
(Lists of publications of the International Labor Office may be obtained from
that office.)
------- Workmen’s compensation in the United States, by Ralph H . Blanchard.
Geneva, 1926. 103 pp.
This publication is based in part upon U. S. Bureau of Labor Statistics Bulletin No. 275, Comparison
of workmen’s compensation laws of the United States and Canada up to January 1, 1920, by Carl
Hookstadt. which is out' of print.
R E A D IN G
AND
REFERENCE
223
L IS T
I n t e r n a t io n a l L a b o r O f f ic e .
Margaret Mackintosh.
Workmen’ s compensation in Canada, by
(In its International Labor Review for July 1939.)
General Studies o f W orkm en’s Compensation
D ow ney, E. H .
Workmen’ s compensation.
New York, The Macmillan Co., 1924.
223 pp.
This book has been regarded as a classic in its field.
B o w e r s , E d is o n L.
Is it safe to work? A study of industrial accidents.
Mifflin Co., 1930. 229 pp.
New York, Houghton
This study of workmen’s compensation emphasizes accident prevention and rehabilitation. In
the course of his preparation for writing, Mr. Bowers visited many of the workmen’s compensation
commissions.
Case Studies in Administration W ith in a State
A ltm eyer,
A. J.
The Industrial Commission of Wisconsin.
1932. 324 pp.
Madison, University of Wisconsin,
An outstanding study, by an administrator, of the administration of workmen’s compensation
and other laws in a single State.
B r o o k in g s I n s t it u t io n .
(Reports of surveys of administration in certain States.)
In these reports the Institution has at times included comment on workmen’s compensation, as,
for example, in the Oklahoma and Iowa studies (Survey of administration in Iowa, 1933; Organization
and administration of Oklahoma, 1935).
Special Aspects o f W orkm en’s Compensation
Insurance
(For early comparisons of various types of carriers, see U. S. Bureau of Labor
Statistics Bulletins Nos. 212, 281, and 301.)
Private Insurance
M ic h e l b a c h e r ,
G. F., and N ia l , T h o m a s M.
Workmen’s compensation insurance. New York,
1925. 503 pp.
P u blic In surance
McGraw-Hill Book Co.,
M c C a h a n , D a v id .
State insurance in the United States.
vania Press, 1929. 290 pp.
Philadelphia, University of Pennsyl
This author’s viewpoint of the State funds is critical.
U n it e d S t a t e s . Departm ent of Labor. D ivision
o f Labor Standards.
Discussions of industrial accidents and diseases, 1938.
Washington, 1939.
(Its Bulletin No. 24, pp. 10-43.)
Both sides of the subject of State funds are presented.
----------- :-------------Progress of State insurance funds under workmen’s compensation.
Washington, 1939.
(Its Bulletin No. 30.)
S elf-I nsurance
P e n n s y l v a n ia .
Departm ent o f Labor and Industry.
Self-insurance of workmen’s compensation in Pennsylvania, by Howard M.
Teaf, Jr., Harrisburg, 1934. 176 pp.
(Its Special Bulletin No. 40, part II.)
224
W O R K M E N ’S
C O M P E N S A T IO N
M cS h a n e ,
H
O. F.
Under what conditions should the self-insuring privilege be granted, if at all.
(In U. S. Bureau of Labor Statistics Bulletin No. 432, pp. 172-181.
Washington, 1927.)
o w a r d , M . T.
Problems of self-insurance.
(In U. S. Department of Labor, Division of
Labor Standards Bulletin No. 17, p. 61. Washington, 1938.)
Rehabilitation
U n it e d S t a t e s .
Federal B o a rd f o r V ocational E d u ca tion .
Workmen’s compensation legislation in relation to vocational rehabilitation.
{ I n its Bulletin No. 126, Civilian Vocational Rehabilitation Series No. 15.
Washington, 1927.)
K essler, H en ry H .
The crippled and the disabled: rehabilitation of the physically handicapped
in the United States. New York, Columbia University Press, 1935.
N o r c r o ss , C a r l .
Vocational rehabilitation and workmen’s compensation.
Rehabilitation Clinic, 1936. 126 pp.
New York, The
Mainly a study of lump-sum settlements, especially to ascertain whether or not these have
therapeutic value or cure so-called neuroses.
Work Accidents to Children
U n it e d S t a t e s .
C h ild ren ’ s B u rea u .
The illegally employed minor and workmen’s compensation.
tion No. 214. Washington, 1932. 226 pp.)
{Its Publica
K l e in , E a r l E .
Work accidents to minors in Illinois.
1938. 256 pp.
Chicago, University of Chicago Press,
Medical Relations
A m e r ic a n M e d ic a l A s s o c ia t io n .
B u rea u o f M e d ic a l E c o n o m ic s.
Medical relations under workmen’s compensation.
Dearborn St., 1935. 176 pp.
Chicago,
535
North
Also subsequent publications to show developments to the present time.
A m e r ic a n C o l l e g e o f S u r g e o n s .
Medieal service in industry and workmen’s compensation
revision. Chicago, 40 East Erie St.
laws.
1938
Legal Aspects of Workmen’s Compensation
U n it e d S t a t e s .
B u rea u o f L a b or Statistics.
Recent court decisions of interest to labor.
{ I n its Monthly Labor Review.)
There appear currently, under this head, analyses of court decisions upon workmen’s compensa
tion cases, and also analyses of new legislation.
B r o w n , R a y A.
The administration of workmen’s compensation.
(In University of W is
consin Studies in the Social Sciences and History No. 19, Madison, 1933.)
See also articles in 7 Wisconsin Law Review, 15, 37 (1931-32), and 8 Wisconsin Law Review,
133, 217 (1933).
From time to time articles of interest appear in the law reviews issued by the leading universi
ties, and also in the American Labor Legislation Review, published quarterly by the American
Association for Labor Legislation, 131 East Twenty-third St., New York City.
See Dodd, Walter F., Administration of workmen’s compensation, New York, Commonwealth
Fund, 1936, for legal studies and references.
B E A D IN G
M c B r id e , E a r l
D.
Disability evaluation.
AND
REFERENCE
225
L IS T
Rating of Disabilities
Philadelphia, J. B. Lippincott Co., 1936.
New edition is in preparation.
U n it e d S t a t e s . B u re a u o f L abor
623 pp .
Statistics.
Proceedings of the International Association of Industrial Accident Boards
and Commissions.
(I t s Bulletin No. 577, p. 162 et seq.)
-------- D ep a rtm en t o f L abor.
D iv isio n o f L abor S tandards.
Discussion of industrial accidents and diseases, 1936.
pp. 78 and 99.)
(I ts Bulletin N o. 10;
T O P IC A L IN D E X
Benefit payments:
After-care service______________________________________________
Benefits:
Comparison__________________________________________________
Diversity__________________________________________________________________________
Safeguarding expenditure___________________________________________________________
Compensation:
Factors determining________________________________________________________________
Wage base, application of___________________________________________________________
Liberality—limits of____________________________________________________________________
Origin and development________________________________________________________________
Permanent total disability—special allowances____________________________________________
Rehabilitation_________________________________________________________________________
Second-injury fund_____________________________________________________________________
Widows_______________________________________________________________________________
Claims administration:
Administration, types of________________________________________________________________
Ontario system_____________________________________________________________________
States of United States______________________________________________________________
Agreement system______________________________________________________________
Direct-settlement system___________________________________
Hearing system_________________________________________________________________
Court administration____________________________________________________________
Background and purpose—contrast, States and Canada____________•________________________
Contested cases________________________________________________________________________
Appeals to courts___________________________________________________________________
Hearings:
Medical controversies-___________________________________________________________
Place of________________________________________________________________________
Personnel______________________________________________________________________
Procedure______________________________________________________________________
Coverage—injuries and diseases:
Administrative development:
Legalistic approach_________________________________________________________________
Ontario plan_______________________________________________________________________
United States______________________________________________________________________
Legal basis:
Constitutional limitations___________________________________________________________
Definitions:
Accident, injury________________________________________________________________
Expansion of___________________________________________________________________
Restrictive changes_____________________________________________________________
Waiting period—reduction of____________________________________________________________
Waiver of compensation________________________________________________________________
Occupational disease:
Accrued liability:
Canadian method_______________________________________________________________
Federal aid_____________________________________________________________________
Awards:
General coverage________________________________________________________________
Schedule coverage__________________________________________________ i ----------------Cost of____________________________________________________________________________
Coverage—method of determining____________________________________________________
General type___________________________________________________________________
Schedule type__________________________________________________________________
Obsolescence of______________________________________________________________
Preventive measures—effect of___________________________________________________________
227
Page
90
78
77
91
75
72
80
71
85
85
84
87
116
116
117
120
118
120
121
114
122
128
127
123
126
124
50
52
52
50
47
55
53
46
50
70
69
61
61
59
57
58
58
67
65
228
INDEX
Coverage—persons and employments:
Administrative problems:
Page
Guaranteeing payment______________________________________________________________ 44
Inclusive acts______________________________________________________________________
44
Incompleteness of______________________________________________________________________
32
33
Provisions—types of limitations____________________________________________
Difficulties:
Coalmining_____________________________________________________
43
Conflict of laws______________________________________________________
43
42
Distressed industries____________________________________________________________
Exclusions:
Agriculture_____________________________________________________________________ 37
Domestic service________________________________________________________________ 40
Relief w~ork____________________________________________________________________ 41
34
List or schedule____________________________________________________________________
Numerical exemptions______________________________________________________________
36
Coverage—type of law:
Elective, development__________________________________________________________________ 10
Compulsory, development---------------------------------------------------------------------------‘-------------------- 16
Insurance:
21
Private carriers________________________________________________________________________
Public carriers_________________________________________________________________________ 24
Competitive fun ds_________________________________________________________________ 27
Exclusive funds____________________________________________________________________
24
Type, choice of_________________________________________________________________ 28
Self insurance__________________________________________________________________________ 23
28
Standardization, problem of------------------------------------------Medical aid:
Administration:
Disability rating____________________________________
97
Biased ratings__________________________________________________________________ 98
111 health—preexisting_______________________________________________________________ 98
Scope of_______________ ..___________________________________________________________ 96
Special devices_____________________________________________________________________ 106.
Cost:
Factors involved___________________________________________________________________
93
Inexpert service____________________________________________________________________
94
Problem of_______________________________________________________________
93
Insurance carriers, attitude of-------------------------------------------------------------------------------------------- 110
Medical care:
Checking on_______________________________________________________________________
99
Choice of physician_________________________________________________________________ 100
Provisions for______________________________________________________________________ 92
Preventive procedures—Medical examination of workers___________________________________ 104
Rehabilitation_________________________________________________________________________ 95
Relations—medical profession and compensation authorities________________________________ 96
Supervision:
Costs, alternative types__________________________________________________
108
Existing provisions for medical staffs_________________________________________________ 107
Inexperience_______________________________________________________________________ 109
Services allied to workmen’s compensation administration:
Basis of relationship:
Administrative_____________________________________________________________________ 133
Statutory__________________________________________________________________________ 132
Child labor:
In Canada_________________________________________________________________________ 142
In United States___________________________________________________________________ 138
Insurance commissioner_________________________________________________________________ 149
Other fields____________________________________________________________________________ 152
Rehabilitation:
Administrative aspects______________________________________________________________ 175
Appropriations______________________________
173
Cooperation—existing conditions:
In Canada____________•________________________________________________________ 138
In United States________________________________________________________________ 135
Cost of________________________________________________ -___________________________ 177
State law, effect of__________________________________________________________________ 170
Workmen’s stake___________________________________________________________________ 174
IN D E X
229
Services allied to workmen’s compensation administration—Continued.
Safety and sanitation:
Page
In Canada_________________________________________________________________________ 145
In United States___________________________________________________________________ 142
Silicosis, Wisconsin experience______________________________________________________________ 179
Survey—scope and method_________________________________________________________________
1
Workmen’s compensation laws:
Historical development_________________________________________________________________
6
Objectives_____________________________________________________________________________
5
Social problem_________________________________________________________________________
4
Principal features, July 1, 1940___________________________________________________________ 192
O
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