The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
U. S. DEPARTMENT OF LABOR
JAMES J. DAVIS, Secretary
BUREAU OF LABOR STATISTICS
ETHELBERT STEWART, Commissioner
BULLETIN OF THE UNITED STATES 1
B UREAU OF LABOR STATISTICS J * * *
WO R K ME N ’ S INSURANCE
A ND
j
COMPENSATION
2$ |
S ERI ES
PROCEEDINGSOFTHESEVENTHANNUALMEETING
OF THE
IN TE RN ATION AL ASSOCIATION
OF IN D U STR IA L A C C ID E N T
B O A R D S AND C O M M ISSIO N S
HELD A T SAN FRANCISCO, CALIF.
SEPTEMBER 20-24, 1920
JUNE, 1921
WASHINGTON
GOVERNMENT PRINTING OFFICE
1921
CONTENTS,
MONDAY, SEPTEMBER 20, 1920—MORNING SESSION.
Safety. Chairman, Will J. French, President, I. A. I. A. B. C.
P age.
Address of welcome, by Hon. William D. Stephens, governor of
California________________________________________________________ 10-12
The safety movement in California, by H. M. Wolllin, superintendent
of safety, California Industrial Accident Commission_____________ 13-18
The organization and work of the National Safety Codes Committee,
by E. B. Rosa, Ph. D., chief physicist, United States Bureau of
Standards________________________________________________________ 20-24
Discussion:
Prof. Albert W. Whitney, general manager, National Work
men’s Compensation Service Bureau______________________24-26
John P. Gardiner, commissioner, Minnesota Department of
Labor and Industries_____________________________________
25
What Pennsylvania is doing for safety and safety codes, by Clifford
B. Connelley, Ph. D., commissioner, Pennsylvania Department of
Labor and Industry______________________________________________ 27-38
Discussion:
John R. Brownell, of the Equitable Life Insurance Society,
San Francisco___________________________________________ 38, 39
The safety movement in the State of Washington, by Harvey J.
Kelly, acting secretary, State Safety Board of Washington---------- 40-44
MONDAY, SEPTEMBER 20, 1920—AFTERNOON SESSION.
Administrative Problems. Chairman, Charles S. Andrus, Chairman, Illinois Industrial
Commission.
Report on eye injuries (first report of medical committee), by Francis
D. Donoghue, M. D., medical adviser, Massachusetts Industrial
Accident Board___________________________________________________46-53
Discussion:
Thomas F. Konop, commissioner, Wisconsin Industrial
Commission______________________________________________ 53-60
George A. Kingston, commissioner, Ontario Workmen’s Com
pensation Board_________________________________________ 54-63
F. A. Bird, M. D., chief medical adviser, Washington Indus
trial Insurance Department______________________________ 56-58
Harry A. Mackey, chairman, Pennsylvania Workmen’s Com
pensation Board_________________________________________ 58, 59
F. H. Thompson, M. D., medical adviser, Oregon Industrial
Accident Commission____________________________________59, 60
William H. Regan, M. D., of Boston, Mass_________________ 60, 61
Robert E. Lee, chairman, Maryland Industrial Accident
Commission__________________ ,___________________________ 61, 62
Francis D. Donoghue, M. D., medical adviser, Massachusetts
Industrial Accident Board_______________ - _______________62, 63
Bound Table-—Systems of Compensation for Permanent Partial Disabilities.
The California system of rating permanent partial disabilities, by
A. H. Naftzger, commissioner, California Industrial Accident
Commission_______________________________________________________ 64-70
Compensation of permanent partial disabilities under the Federal
compensation act, by Charles H. Verrill, commissioner. United
States Employees’ Compensation Commission_____________ ________ 71-80
3
4
CONTENTS.
Round Table— Systems of Compensation for Permanent Partial Disabilities— Continued.
Page.
The New York system o f compensation for permanent partial dis
abilities, by William C. Archer, deputy commissioner in charge of
bureau of workmen’s compensation, New York Industrial. Com
mission __________________________________________________________ 81-84
Oregon system of compensation for permanent partial disabilities, by
J. W. Ferguson, commissioner, Oregon Industrial Accident Com
mission __________________________________________________________ 85-87
Systems of compensation for permanent partial disability in the
United States and Canada, by Carl Hookstadt, expert, United States
Bureau of Labor Statistics_______________________________________ 88-96
Discussion:
A. J. Pillsbury, commissioner, California Industrial Accident
Commission____________________________________________ 96-107
W. A. Marshall, chairman, Oregon Industrial Accident Com
mission __________________________ ________________________
OS
Harry A. Mackey, chairman, Pennsylvania Workmen’s Com
pensation B o a rd _______________________________________ 98-106
George A. Kingston, commissioner, Ontario Workmen’s Com
pensation B o a rd _______________________________________ 98-106
George H. Fisher, commissioner, Idaho Industrial Accident
B oa rd _________________________________________________ 100-106
W. P. Monson, commissioner, Utah Industrial Commission_
101
William H. Regan, M. D., o f Boston, Mass________________ 101,102
Robert E. Lee, chairman, Maryland Industrial Accident Com
mission ________________________________________________ 102,108
John P. Gardiner, commissioner, Minnesota Department of
Labor and Industries__________________________________ 106,107
Will T. Kirk,-commissioner, Oregon Industrial Accident Com
mission ________________________________________________ 106,107
Carl Hookstadt, expert, United States Bureau o f Labor Sta
tistics ____________________________________________________
108
MONDAY, SEPTEMBER 20, 1920—EVENING SESSION.
Business meeting:. Chairman, Will J. French, President I. A. I. A. B. C.
Appointment of special committees________________________________
109
Report of the secretary-treasurer_________________________________ 109-113
Appointment of auditing committee__________________________________
113
The trend of workmen’s compensation— a glance at compensation his
tory, past and present, by Will J. French, president, I. A. I. A.
B. C___________________________________________________________ 114-122
Industrial Rehabilitation.
Practical results of rehabilitation in Massachusetts, by Chester E.
Gleason, Massachusetts Industrial Accident Board______________ 123-128
Results of rehabilitation, as shown by Elmer M. Shunk, of the Cali
fornia Industrial Accident Commission________________________ 128,129
Industrial rehabilitation in Oregon, by Will T. Kirk, commissioner,
Oregon Industrial Accident Commission_________________________ 130-137
Industrial rehabilitation in New Jersey, by Lewis T. Bryant, com
missioner, New Jersey Department of Labor_____________________138-140
Industrial rehabilitation as conducted in Minnesota, by Oscar M.
Sullivan, director of reeducation, Minnesota Department of Edu
cation __________________________________________________________ 141-156
Vocational rehabilitation for persons disabled in industry or other
wise, by Layton S. Hawkins, chief, division for vocational education,
Federal Board for Vocational Education_________________________ 157-166
Discussion:
Thomas F. Konop, commissioner, Wisconsin Industrial Com
mission________________________________________________ 166-169
Judge A. E. Graupner, attorney, California Industrial Acci
dent Commission______________________________________ 169-171
C. B. Connelley, commissioner, Pennsylvania Department of
Labor and Industries___________________________________171,172
John P. Gardiner, commissioner, Minnesota Department o f
Labor and Industry_______________________________________
172
CONTENTS.
5
TUESDAY, SEPTEMBER 21, 1920— MORNING SESSION.
Compensation Costs. Chairman, George A. Kingston, Commissioner, Ontario Work
men’s Compensation Board.
Page.
Methods of comparing compensation cost (sixth report of the com
mittee ofi statistics and compensation insurance cost), by E. H.
Downey, compensation actuary, Pennsylvania Insurance Depart
ment____________________________________________________________ 174-183
Comparison o f compensation insurance systems as to cost, service,
and security, by Carl Hookstadt, expert, United States Bureau of
Labor Statistics_______________________________________________ 185-211
Cost, service, and security under various systems of insurance, by
Albert W. Whitney, general manager, National Workmen’s Com
pensation Service Bureau______________________________ I ______ 212-220
Mutual insurance, by S. Bruce Black, vice president and actuary,
Liberty Mutual Insurance Co., Boston, Mass___________________ 221-231
Compensation costs, by C. W. Fellows, manager, California Com
pensation Insurance Fund______________________________________ 232-238
Address of J. D. Clark, commissioner, Ohio Industrial Commission- 238, 239
Discussion:
Thomas F. Konop, commissioner, Wisconsin Industrial
Commission___________________________________________ 239, 240
J. D. Clark, commissioner, Ohio Industrial Commission__ 239, 240
Service, security, and cost under different systems of compensation,
by F. M. Williams, chairman, Connecticut Board o f Compensation
Commissioners__________________________________________________ 241-248
Service, security, and cost under the Oregon compensation law, by
William A. Marshall, chairman, Oregon Industrial Accident Com
mission_________________________________________________________ 249-253
Service, cost, and security under different systems of compensation,
by F. W. Armstrong, vice chairman, Nova Scotia Compensation
Board---------------------------------------------------------------------------------------- 254-260
Discussion:
W. P. Monson, commissioner, Utah Industrial Commission. 260-263
A. J. Pillsbury, commissioner, California Industrial Accident
Commission____________________________________________ 263-265
T. Norman Dean, Ontario Workmen’s Compensation Board- 265, 266
Carl Hookstadt, expert, United States Bureau of Labor
Statistics______________________________________________ 266, 272
Oscar M. Sullivan, Minnesota Department of Labor and
Industries______________________________________ _________266
i Harry A. Mackey, chairman, Pennsylvania Workmen’s Com
pensation Board_______________________________________ 267-269
Albert W. Whitney, general manager, National Workmen’s
Compensation Service Bureau_________________________ 269, 270
J. D. Clark, commissioner, Ohio Industrial Commission^,___
271
TUESDAY, SEPTEMBER 21, 1920—AFTERNOON SESSION.
Administrative—Medical Problems. Systems of Medical Service. Chairman, G. D.
Smith, Chairman Nevada Industrial Commission.
Systems of medical service, by John Wilson Mowell, M. D., chairman,
Washington Medical Aid Board________________________________ 274, 275
System of medical service under the Massachusetts workmen’s com
pensation act, by Francis D. Donoghue, M. D., medical adviser,
Massachusetts Industrial Accident Board______________________ 276-284
Oregon system of medical service, by F. H. Thompson, M. D., medical
adviser, Oregon Industrial Accident Commission_______________ 285-290
Discussion:
M. It. Gibbons, M. D., medical director, California Industrial
Accident Commission__________________________________ 290-294
George H. Fisher, commissioner, Idaho Industrial Accident
B oa rd _________________________________________________ 294-296
Donald Maclean, M. D., chief medical adviser, Nevada In
dustrial Commission____________________________________ 296, 297
Harry A. Mackey, chairman, Pennsylvania Workmen’s Com
pensation Board________________________________________ 297, 298
George W. Goodale, M. D., of San Francisco, Calif__________
299
J. D. Clark, commissioner, Ohio Industrial Commission------300
Francis D. Donoghue, M. D., medical adviser, Massachusetts
Industrial Accident Board______________________________ 300, 301
C03TTEOTS.
6
WEDNESDAY, SEPTEMBER 22, 1920—AFTERNOON SESSION.
Business meeting. Chairman, Will J. French, President, I. A. I. A. B. C.
Page.
Report of committee on statistics and compensation insurance cost_ 302,303
303
Suggested change in constitution----------------------------------------- *-------------Medical—Administrative Problems. Chairman, Thomas F. Konop, Commissioner, Wis
consin Industrial Commission.
Economy of proper medical treatment, by Paul B. Magnuson, M. D.,
medical director, Illinois Industrial Commission________________ 306-312
The economy of proper medical treatment, by George A. Kingston,
commissioner, Ontario Workmen’s Compensation Board_________ 313-317
The economy of proper medical treatment, by Morton R. Gibbons,
M. D., medical director, California Industrial Accident Commis
sion____________________________________________________________ 318-321
Discussion:
Donald Maclean, M. D., chief medical adviser, Nevada In
dustrial Commission____________________________________ 321-323
Fred W. Llewellyn, commissioner, Washington Industrial
Insurance Department_________________________________ 323-325
John P. Gardiner, commissioner, Minnesota Department of
Labor and Industries__________________________________ 325-329
G. D. Smith, chairman, Nevada Industrial Commission____ 329, 330
A. J. Pillsbury, commissioner, California Industrial Accident
Commission____________________________________________ 330-338
James J. Donohue, M. D., commissioner, Connecticut Board
o f Compensation Commissioners_______________________ 332, 333
Francis D. Donoghue, M. D., medical adviser, Massachusetts
Industrial Accident Commission________________________ 333-342
338
J. D. Clark, commissioner, Ohio Industrial Commission______
Robert E. Lee, chairman, Maryland Industrial Accident Com
mission________________________________________________ 338-341
Mr. D ’Ancona, o f California______________________________ 339, 340
Harry A. Mackey, chairman, Pennsylvania Workmen’s Com
pensation Board________________________________________ 342-344
F. H. Thompson, M. D., medical adviser, Oregon Industrial
Accident Commission_____________________________________
343
Charles H. Verrill, commissioner, United States Employees’
Compensation Commission______________ __________________
344
THURSDAY, SEPTEMBER 23, 1920—MORNING SESSION.
Disposition of Compensation Claims. Chairman, Harry A. Mackey, Chairman, Penn
sylvania Workmen’s Compensation Board.
Address of the chairman______________________________________ - ___ 345-347
The problem o f dependency, by A. J. Pillsbury, commissioner, Cali
fornia Industrial Accident Commission__________________________ 348-374
How’ to secure full legal compensation to injured workers, by W. C.
Archer, deputy commissioner in charge of New York Bureau of
Workmen’s Compensation____________ 1________________________ 375-377
How full compensation is secured to injured workers in Massachu
setts, by Chester E. Gleason, Massachusetts Industrial Accident
Board__________________________________________________________ 378-394
How to secure full compensation to injured workers, by Charles S.
Andrus, chairman, Illinois Industrial Commission______________ 395-398
Compensation acts and maritime workers, by Warren H. Pillsbury,
compensation expert, California Industrial Accident Commission. 400-409
Discussion:
Fred W. Llewellyn, commissioner, Washington Industrial
Insurance Department___________________________________
409
Robert E. Lee, chairman, Maryland Industrial Accident
Commission______________________________________________
409
Clifford B. Connelley, commissioner, Pennsylvania Depart
409
ment of Labor and Industries____________________________
A. J. Pillsbury, commissioner, California Industrial Accident
Commission_____________ ______________________________ 409,410
CONTENTS.
7
THURSDAY, SEPTEMBER 23, 1920—AFTERNOON SESSION.
Round Table. Chairman, A . J. Pillsbury, Commissioner, California Industrial Acci
dent Commission.
Page.
Topics: (1) Occupational diseases; (2) Hernia; (3) Back strain;
(4) How are second injury cases disposed o f? ; (5) Preexisting
diseases; (6) Attorneys’ fees; (7) How are reports of all reportable accidents secured?; (8) Jurisdictional conflicts; (9) Method
of computing average weekly wages.
Robert E. Lee, chairman, Maryland Industrial Accident Com
mission____________________________________________________ 412-415
W. P. Monson, commissioner, Utah Industrial Commission.. 415-417
George H. Fisher, commissioner, Idaho Industrial Accident
Board______________________________________________________417-420
John P. Gardiner, commissioner, Minnesota Department of Labor
and Industries_____________________________________________ 420-423
George D. Smith, chairman, Nevada Industrial Commission_ 423, 424
George A. Kingston, commissioner, Ontario Workmen’s Compen
sation Board______________________________________________ 424-428
Harry A. Mackey, chairman, Pennsylvania Workmen’s Com
pensation Board___________________________________________ 427-430
Business meeting.
Chairman, W ill J. French, President, I. A . I. A . B. C.
Address of Ethelbert Stewart, United States Commissioner of Labor
Statistics_______________________________________________________ 431,432
Reports of committees; resolutions; discussions__________________ 432-439
Appendix A.— Officers and members of committees for 1920-21_________ 440,441
Appendix B.— Constitution of the I. A. I. A. B. C______________________ 442, 443
Appendix C.— List o f persons who attended the seventh annual meeting_ 444-447
BULLETIN OF THE
U. S. BUREAU OF LABOR STATISTICS.
WASHINGTON
NO. 281.
JUNE, 1921
PROCEEDINGS OF THE SEVENTH ANNUAL MEETING OF THE INTERNA
TIONAL ASSOCIATION OF INDUSTRIAL ACCIDENT BOARDS AND COMMISSIONS, SANFRANCISCO, CALIF., SEPTEMBER 20- 24, 1920.
MONDAY, SEPTEMBER 20—MORNING SESSION.
C H AIRM AN, W IL L J. FRENCH, PRESIDENT, I. A . I. A . B. C.
SAFETY.
The C h a i r m a n . It is my privilege and pleasure to call this con
vention, the seventh annual meeting of the International Association
of Industrial Accident Boards and Commissions, together, and I
shall first ask Dr. J. S. Thomas, assistant secretary of the California
Industrial Accident Commission, to invoke the divine blessing on
these sessions.
[Invocation offered by Dr. J. S. Thomas.]
The C h a i r m a n . The evening session, as originally planned, was the
session at which the delegates and visitors would be officially wel
comed. Some months ago I wrote to Gov. Stephens and asked him
to be with us on that occasion. He replied that he would be glad to
if it were possible, and asked me to write him later. He has just
returned from a visit East, and this morning kindly telephoned to
me, saying that it was impossible for him to be with us this evening,
because he had to leave the city and return to Sacramento, but offer
ing to come down and greet us at this moment, and it is really exceed
ingly appropriate to have the chief executive of the State of Cali
fornia with us at our opening session. Before William D. Stephens
became governor of the State of California he served in the National
Congress, and he took there the same keen interest in all the legisla
tion of the kind which we are to consider at these sessions as he has
done since then as governor of the State of California. It is there
fore my great pleasure to present to you Gov. William D. Stephens,
who will bid you welcome to this great State of California in his
official capacity.
9
ADD R E SS OF W ELCOM E.
B Y H O N . W IL L IA M
D. STEPHENS* GOVERNOR OF CALIFORNIA.
I am only too glad to say a word of welcome to all who come to
California. You have heard somewhere some one say a favorable
word for California, and the governor is not backward about doing
the same thing. We have much here that will delight you, and I
am sure that all of California will benefit by your presence. In Cali
fornia we are greatly interested in accident insurance and welfare
insurance, such as you gentlemen have charge of in various parts of
the world. We appreciate the splendid work which has been done
by our industrial accident commission, and we know something of
the work that you gentlemen have done elsewhere, beyond our con
fines, and we appreciate that we are among the first of the States who
recognized the problem, the seriousness of it, and the advisability o f
solving it as best we could along the lines our legislature has pro
vided. We will from time to time add to that legislation, always in
the direction of helping the man that is hurt, the public at large, and
the particular employers. We have them all in mind, and all will
have the best service and the utmost consideration that can be given.
It is true, as Mr. French has said, that previous to my occupancy of
the gubernatorial chair I had the pleasure of serving California for
a number of years in the Halls of Congress, and it was there that I
learned that the East—that Congress and virtually the whole East—
knew but little of the problem that confronts California at this time.
They believed, and it was natural that they should believe, because of
the activity of politicians, that our problem was political and not
real. I knew it was real, and so I sought a way of solving it, of in
forming Congress of the facts concerning our problem here. I refer
to the oriental immigration problem.
Perhaps a word on that problem will not be amiss at this time,
because you come from so many parts of the United States, nearly all
of which are but slightly informed concerning this problem. In
California we have now approximately 100,000 Japanese^ not so
great a number compared with the 3,400,000 people, and yet a great
many because these people come to America to settle in four or five
sections. They gather in colonies there, and they pursue farming to
a very great extent. There isn’t a treaty between America and Japan,
and let me say we have no attack to make on Japan. We have no
thought of that kind. We recognize the fact that Japan is a most
remarkable nation, and her progress is one of the wonders of the
world. No nation in the history of the world has made such rapid
progress as the nation of Japan, and yet all history shows that
oriental and occidental civilizations do not fuse. And so it is in
California—oriental and occidental civilizations will not fuse. We
10
H O N . W IL LIA M D. STEPHENS.
11
can not assimilate these people with our people in this State and in
the United States, and this problem of ours is only ours now, to-day,
in advance of to-morrow, when it will be your problem. It is a prob
lem for the whole United States to solve— how we can lessen the
number, how we can minimize the number, how we can shut out the
coming of any more orientals to this western coast. There is a gentle
men’s agreement between America and Japan which permits the com
ing of Japanese to America as merchants or as students, not as
laborers, and Japan, under the agreement between Japan and the
United States, has the right to say whether those men are one thing
or the other. America can not say. Japan may honestly enough, so
far as its officials are concerned, label a man a merchant or a student
and he be not such. Ordinarily he is not, because within a short time
after he enters America, labeled as a merchant or a student, he be
comes a farmer, and goes to the farms; and that is the fault we have
to find with the gentlemen’s agreement. Then they come from across
the border. They go to Peru, perhaps, and from there they go north
to Mexico, and they are smuggled across the lower border of Cali
fornia and into our civilization'here.
With all due respect to them and with no criticism of them, they
are of a different religion and different habits from our own people.
They labor constantly every hour of the day and into the night,
and not only their men labor, but their women labor in the fields just
as hard or harder even than the men. The matter of bearing of
children is a very much talked-of subject. They do bear children
rapidly, and within a very few weeks after a child is born the
tnother is again in the field, working at agricultural labor, with the
child in a crib near-by. They work day in and day out and know no
holidays or Sundays. They need little or no furniture in their
dwellings. They do not sleep, as I understand it, upon beds. They
sleep upon a board. They require nothing that America requires,
that American farmers and American labor require, in order to make
them comfortable. When they earn they buy mostly of Japanese
merchants. They deposit almost altogether in Japanese banks, and
the money eventually goes back to Japan. Indeed, I understand they
take for their deposits something like a certificate of deposit payable
in Japan, and under the law it would be impossible for an American
court to touch that money payable in Japan. That is their own
business. They pay their debts, so far as I know. We have no
criticism of that. They are only pursuing their way of living, which
is altogether different from our standard. We can not mix with
them. Intermarriage is absolutely impossible. Therefore we are
going to ask you folks to help us solve this problem, all of the United
States, because it is a country-wide problem, to be solved by the
Nation, for it is 95 per cent Federal. Five per cent belongs to the
State and can be accomplished by the State, and that we are doing
and will complete. But the larger part of it is Federal.
I had the information and facts gathered by the State board of
control and I forwarded a copy of that report to Secretary of State
Colby, who back in Washington is trying to find the solution of this
problem. We look forward to this problem being solved, and I want
to say to you I don’t anticipate the least physical difficulty whatever.
Our difficulty will all be argumentative, diplomatic, for Japan is too
great a nation, is making too much progress, to go to war with
12
ADDRESS OF WELCOME.
America about a thing that has already been solved by the British
nation, because no oriental can come into Canada, or Australia,
or New Zealand, and we are only asking the same thing here. 1
have just placed this before you in a limited way, but I wanted to
bring it home to you, and want you to believe that we have a problem
here and that we of California are as loyal and as true to the flag
that floats over you and me as is any other part of the United States;
that we believe Japan has the right to say for herself who shall come
to her shores and who shall live there; and we most emphatically
believe and assert that America has the right to say who shall come
'to her shores and who shall dwell among us.
Now, once more, I beg to express my appreciation of your coming
to California; as citizen and governor of the Commonwealth I bid
you welcome. I hope you will stay longer than you first intended
and when you have gone make up your minds, as no doubt you will
do, to come again; and make it very soon.
The C h a i r m a n . It is said on excellent authority that the first shall
be last and the last first, but in this particular instance we have made
the first first. We are going to consider the subject of industrial
safety. To my way of thinking— I am sure my colleagues on the
California Industrial Accident Commission think the same way, and
I think you will all agree with us— the main problem, the proper
thing to do, is to prevent the man from being injured or killed while
at work, rather than to devise ways and means of compensating him
after that unfortunate catastrophe occurs. The speaker for Cali
fornia will be our superintendent of safety. Therefore I shall not
touch upon the California situation. I would like, though, just to
take a moment to point out the excellent work that is being done in
some of our eastern cities toward a larger safety movement, whereby
not only injury but public safety may be included, so that the traffic
ordinances will be properly enforced, and police judges supported,
and the children at school taught from the beginning, as has been
so successfully done in the city of St. Louis and is being followed
in other centers. The problem is very much larger than purely in
dustrial, and becomes of interest to every man and every woman and
every child who has to go out into the world in any capacity. Mr.
H. M. Wolflin is the California superintendent of safety. We have
had the good fortune to have Mr. Wolflin aiding us in this State
ever since January 1, 1914. He was assigned by the United States
Bureau of Mines, under a cooperative agreement which came into
force at that time, to look after our mine safety work. He did that
splendidly, and when a vacancy occurred in the superintendency of
safety Mr. Wolflin was selected for that position. It is therefore
my pleasure to introduce to you H. M. Wolflin, superintendent of
safety of California.
TH E S A F E TY M OVEM ENT IN
C A LIFO R N IA .
B Y H . M . W O L F L I N , S U P E R I N T E N D E N T OF S A F E T Y , C A L I F O R N I A I N D U S T R I A L A C C ID E N T
C O M M IS S IO N .
INCEPTION.
Under the employers’ liability law which existed in California
until about 10 years ago there was little if any organized safety
work in the various industries of the State. Even the Roseberry
liability and compensation law, which became effective in Cali
fornia in 1911, contained no provisions covering the safety of em
ployees, and safety work was not seriously undertaken by the State
until the enactment of the workmen’s compensation, insurance, and
safety act, which became effective January 1, 1914.
Under the old system, a callous employer, with little humanitarianism in his make-up, was not encouraged to prevent injuries to
his employees. Frequently, instead of doing safety work, he spent
his money paying a high-priced claim adjuster who would not be
too sympathetically inclined toward the injured employees or their
dependents, but when accidents came to mean dollars lost to the
employers, with no chance to avoid payment, the safety movement
could be justified to anyone and immediately began to grow.
PRELIMINARY ORGANIZATION.
From the first the Industrial Accident Commission of California
realized that safety work could best be prosecuted through an ef
fective organization that would build up cooperation between em
ployers and employees, and since the beginning it has turned a gen
erous share of its attention to the accident-prevention organization
designated in the act as the department of safety.
Owing to the fact that organized safety work, not only in Cali
fornia but also throughout the United States, was in its infancy and
few trained men were available in 1913, the industrial accident com
mission spent some time selecting a suitable man to take charge of
its safety organization. Choice was finally made of Mr. John E.
Brownell, who had had charge of the safety work of the Pennsylvania
Steel Co., at Steelton, Pa. Mr. Brownell came to the Pacific coast in
January, 1914, and shortly thereafter the department was organized
with three safety engineers in the San Francisco office and one in the
Los Angeles office. A safety museum was opened in San Francisco
and placed in charge of a man who had the ability to install and
explain mechanical safeguards. Later a similar museum was opened
in Los Angeles.
The safety engineers first employed devoted their time to construc
tion, general, electrical, and boiler inspections. It soon developed
that in order to accomplish the end for which the department was
organized, safety work must be organized in the lumber industry.
13
14
TH E SAFETY M OVEM ENT IN CALIFORNIA.
Owing to the great hazards in connection with the operation of ele
vators, there was an imperative need for elevator inspection. Ac
cordingly an efficient engineer was assigned to cover the hazards
incident to the lumber industry, and an elevator inspection division
was organized.
MINE SAFETY WORK.
The mine safety work was organized separately from the other
safety work of the department. A cooperative arrangement was
made with the United States Bureau of Mines, by which the latter
would designate one of its engineers for service in California. The
salary and expenses of this engineer were borne equally by the
Federal and the State Governments. In addition to being re
sponsible for safety work at mines, this division has assigned to
it the safety work in all tunnels, quarries, gravel and rock crushing
plants, cement plants, brick plants, on gold dredges, suction and
clamshell dredges, etc.
METHOD OF W ORKING.
As safety work was undertaken in each industry or in each class
of work, a careful survey of the special hazards of the industry was
first made, after which a committee representing employers and em
ployees was asked to meet representatives of the industrial accident
commission’s safety department to draft safety rules or orders to
cover the industry in question. When these rules or orders were com
pleted by the committee, they wex'e published in tentative form, and
after an appropriate interval a public hearing was held to discuss
them. After the rules or orders had received a final revision, they
were adopted by the commission and the date when effective was set.
In this manner the following safety rules and orders were drafted
and promulgated:
Effective.
Mine safety rules______________________________________Jan. 1, 1916.
General safety orders---------- ,---- ----------------------------------Do.
Woodworking safety orders------------------------------------------ Aug. 1, 1916.
Engine safety orders---------------------------------------------------Do.
Elevator safety orders______________ ____________ ______Oct. 1, 1916.
Electrical utilization safety orders,____________________ Jan. 1, 1917.
Air-pressure tank safety orders________________________
Do.
Window-cleaning safety orders________________________
Do.
Trench construction safety orders-------------------------------Do.
Logging and sawmill safety orders----------------------------- ..Mar. 15, 1917.
Quarry safety rules------------------------------------------------------ Jan. 1, 1918.
General construction safety orders------------------------------- Jan. 15, 1918.
Electrical station safety orders-----------------------------------Dec. 1, 1918.
Safety rules for gold dredges__________________________ Jan. 1, 1919.
Tunnel safety rules____________________________________Dec. 1, 1919.
General lighting safety orders-------------------------------------Do.
Steam-shovel and locomotive-crane safety orders______June 1, 1920.
The following are in course of preparation:
Petroleum safety orders.
X-ray safety orders.
Shipbuilding safety orders.
Gas welding and cutting safety orders.
A number of safety bulletins have been printed in English, Ital
ian, Spanish, Russian, Portuguese, Croatian, and Greek, so that
foreign-speaking workmen may learn the safety doctrines.
H . M . WOLFLOT.
15
From the beginning it was felt that only through the coopera
tion of employers and employees could the best results be accom
plished, so every effort was made to secure this support. Encour
agement has been given to the formation c f workmen’s safety com
mittees, and the number of such committees has constantly in
creased throughout the State, with a consequent lessening of the
accident hazard. Believing that cooperation would secure much
more effective results than coercion, every effort has been made to
avoid recourse to the law to secure observance of safety require
ments, and m only a few instances during the past six years has
the commission resorted to legal action.
In an effort to increase cooperative work, the safety department
has, since January 1, 1917, published California Safety News, a 16page pamphlet, containing illustrated safety articles of interest to
employers and employees. This little pamphlet is sent free to all
who send in their names, and the circulation has reached the 6,000
mark.
One of the interesting undertakings of the department of safety
was the production of the motion picture u Preventable Accidents in
the Lumber Industry.” This picture was taken in four sections of
the State and was made possible by the moral and financial support
of the lumber industry through the California White and Sugar Pine
Association and the California Redwood Association. This picture is
constantly in demand from all parts of the country. The films, in
eight reels, are shown with only a nominal charge, which is used for
replacement purposes.
Lantern slides have been prepared of safe and unsafe conditions
found by inspectors in the department. These slides are made from
original photographs and cover many phases of the commission’s
safety work. They are used by the engineers and inspectors when
giving safety lectures to various organizations.
Recently the work of safeguarding shipyard employees has been
placed in the hands of a competent engineer, who has completed an
extensive survey of the larger plants in the State. Safety orders
covering shipbuilding hazards are in course of preparation,, in addi
tion to the “ Petroleum safety orders,” which have been delayed be
cause of changes in personnel. Committees are being organized to
prepare “ Gas welding and cutting safety orders.”
SOME RESULTS.
During the past six years safety conditions in the industries of Cali
fornia have steadily improved, although there is still room for much
improvement^ particularly in the way of safety organizations, safety
committees at the various plants, etc. Working conditions are not
ideal as yet by any means, but the attitude of both employer and
employee toward safety work has gradually changed until an unsafe
plant is quite generally regarded as an inefficient plant. The em
ployer knows that accidents cost him money. The employee is learn
ing that carelessness and a disregard of safety regulations will cause
injuries which result in suffering and loss of pay for him.
O f course, there are many plants where the improvement has been
slight, where safety discipline is poor, where safeguards are con
spicuous by their absence or ineffectiveness, but such plants are the
16
THE
SAFETY
MOVEMENT
IN
C A L IF O R N IA .
exception rather than the rule. There would be fewer of them if we
had more inspectors to use on the accident prevention work. Many
cases can not be followed to completion on account of shortage of
men and money, and some industrial fields have scarcely been
touched. But the principles of safety work are now fairly well under
stood and the success of a safety campaign is largely dependent on
the money and energy expended thereon, and so these conditions will
be corrected when the means for correcting them are available.
ORGANIZATION.
Unfortunately, it has not been possible to secure uniform develop
ment of all branches of the safety department of the industrial acci
dent commission. There is given below an outline of the present
organization, which is largely a skeleton affair that is somewhat topheavy and inadequate, but which we hope to build up to the point
where it will be adequate for the needs of California:
San Francisco office:
Superintendent of safety.
Divisions of sa fety department:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Mechanical and miscellaneous, 1 engineer.
Electrical, 1 engineer and 1 inspector.
Construction, 1 engineer.
Shipbuilding, 1 engineer.
Mines, quarries, dredges, tunnels, 1 chief engineer and 2 mining engi
neers.
Boilers, 1 chief inspector and 5 inspectors.
Elevators, 1 chief inspector and 6 inspectors.
Necessary stenographic and clerical employees.
(Authorized and soon to be added.) Lumber industry, 1 engineer
(N ote.— Position vacated by resignation more than a year ago.)
Not covered: Oil industry, chemical plants and manufacturing plants
using chemical and electrochemical processes.
Safety museum with attendant in charge, where safety devices are ex
hibited and explained.
First-aid instruction work, 1 assistant engineer. This has been dis
continued since the establishment o f a mine rescue station at Berke
ley, Calif., by the United States Bureau of Mines. Employees from
this station now take care of first-aid work.
Los Angeles office:
Assistant superintendent o f safety (formerly a construction engineer).
Divisions of safety department:
1.
2.
3.
4.
5.
Mechanical and miscellaneous, 1 engineer.
Electrical, 1 inspector.
Boilers, 1 inspector.
Elevators, 1 inspector.
Necessary clerical and stenographic help.
There is no chemical engineer or man with chemical training to
devote his time to safety work in plants where chemical processes
are used that may result in injuries to employees. This is an im
mense field which has scarcely been touched by the safety department,
although considerable cooperative work was done with the State
board of health and the United States Bureau of Mines, in connec
tion with the elimination of hookworm from .the mines. Plants
where porcelain ware is made, where chromium, phosphorus, ben
zine, lead, zinc, and quicksilver are handled, work where paints, oils,
and varnishes are sprayed, where acids or poisonous fumes are gen
erated—all are in need of attention. Occupations where various
injurious dusts are generated should be studied. For the most part
H . M . W O LFLIN .
17
the safety work of the past has been directed toward the elimination
of mechanical hazards that would cause industrial accidents, and
the hazards that would cause industrial diseases have been passed
by, although they are quite as deadly in their way as the mechanical
hazards. They do not work so quickly, and so have been neglected.
It is the belief of the writer that the mechanical hazards will be
practically eliminated long before the chemical and industrial dis
ease hazards have received the attention which they merit. The
California workmen’s compensation, insurance, and safety act was
amended in 1917 so that all industrial injuries were made compen
sable. This brought under compensation diseases that arise out of
or are contracted in the course of employment.
THE VALUE OF SAFETY WORK.
Unfortunately, there are no accurate statistics on the industrial
injury frequency prior to the time safety work was undertaken in
California, and the statistics of more recent years are of little value
for comparative purposes, because data are not collected in regard
to the number of men employed in each industry or in all industries
each year. Although the total number of injuries may vary from
year to year, we do not know whether the accidents per 10,000 hours
of work performed have varied to any great extent. We know that
the injury frequency has dropped in the only industry on which
accurate statistics are available. The table which follows gives
approximate figures for the California mines:
iA T A L , PER M ANEN T, AND TEM PO R AR Y INJURIES IN M ETAL AND NONM ETALLIC
M IN ERAL MINES OF CALIFORNIA (EXCLUSIVE OF COAL MINES).
[Data furnished by statistical department of California Industrial Accident Commission.]
Fatal cases.
Permanent cases.
Rate per
Year.
Number.
1916.........................
1917.........................
1918.........................
1919.........................
50
47
51
Total...........
168
20
1,000 em
ployees
per year.
4.5
4. 4
5. 2
2.2
Temporary cases.
Rate per
Number.
112
82
75
57
326
1,000 em
ployees
per year.
10.1
7. 8
7.7
6.3
Rate per
Number.
4,709
4,474
3,143
2 1,758
1,000 em
Number of
men em
ployed.
ployees
per year.
427.2
425.7
325.6
195.4
14,084
111,000
110,500
9,653
8,996
40,149
1Estimated by chief mining engineer
2 Cases where there was no disability wore not included in 1919 tabulation.
The foregoing table indicates steady, if relatively small, reduction
in injuries chargeable to the mining industry. The only exception
to this reduction is found in the list of fatalities for 1918. In this
connection it must be recalled that during 1918 due to war conditions
many inexperienced men were working in the mines, and also that
many Isolated small mines were operated by men with limited ex
perience who employed miscellaneous unskilled labor underground.
Even so, the percentage of permanent and temporary nonfatal in
juries decreased.
The unusual reduction in fatalities for 1919 is a record that pos
sibly will not be maintained.
2 6 0 3 9 ° '— 2 1 --------2
18
TH E SAFETY M OVEM ENT IN
CALIFORNIA.
THE FUTURE SAFETY PROBLEM.
Summarizing, then, we feel that California has done some good
safety work during the past six years, but that there is perhaps as
much more to do. Where the early safety work could remove the
glaring dangers and attempt to change the attitude of careless em
ployees who were exposed to serious mechanical hazards, the safety
work of the future will be to protect not only against these mechanical
hazards, but also against the industrial diseases, which are much
more subtle and less readily recognized- The pioneer work has been
done and we feel some pride in the wTay in which it was accomplished,
but the problems of the future are more difficult to solve and much
more difficult for the layman to appreciate. It is much easier to con
vince a workman that he may lose his hand or his life in exposed ma
chinery than it is to convince him that he may lose his life almost as
guickly and quite as surely from lead poisoning or exposure to in
jurious substances like phosphorus, benzine used as a solvent, etc.
The time has come wrhen more energy must be expended in winning
the intelligent cooperation of employees. Such cooperation is needed
if mechanical hazards are to be guarded against effectively, but it
is absolutely essential for the removal of many industrial disease
hazards that the employers are almost powerless to eliminate. The
employers can do their part by removing dangerous fumes, gases,
and dust from their plants, by providing good ventilation, by fur
nishing the best lighting facilities, by insisting upon cleanliness, and
doing all the other things reasonably necessary to remove occupa
tional hazards.
[Two reels of the motion picture a Preventable Accidents in the
Lumber Industry ” were here shown.]
The C h a i r m a n . W e have eight reels of these. These reels have
been shown all over the State o f California, wherever men are en
gaged in the lumber industry. With the reels is taken a portable
machine, so that men working perhaps miles away from the place
will have an opportunity of observing safe practices.
Mr. G e o r g e A . K i n g s t o n , commissioner, Ontario Workmen’s Com
pensation Board, Canada. You go to another camp, that is, another
than the one at which the pictures were taken, and set up those reels
for the benefit of men in that camp ?
The C h a i r m a n . Oh, yes; sent all over the State, wherever arrange
ments are made.
Mr. K i n g s t o n . An official of your commission accompanies the
reels?
The C h a i r m a n . Not necessarily. I think generally a representa
tive of one of the lumber companies, but the idea is to have them
available wherever wanted in the industry.
Dr. E. B. Rosa was not able to come to California, and Prof. Albert
W . Whitney kindly agreed to take his place on the program. The
subject is the work of the National Safety Codes Committee. A
number of years ago, in 1906, we had a fire in San Francisco. There
is some popular impression that we also had an earthquake at the
same time. Afterwards the fire insurance companies wanted to have
some work done of a special character and it was a difficult matter
for them to find the right man. They got Prof. Whitney to do that
H . M . W O LFLIN .
19
work, and he did it well. Later on the industrial accident commis
sion of the State had to have assistance in preparing its schedule for
permanent disabilities, and again Prof. Whitney was called into serv
ice, with the same result. Later on he went East, and has been as
sociated, as you know, with some of the workmen’s compensation
bureaus, but we in California feel he is really a Californian, and I
want to introduce him to you as the next speaker, to discuss the
National Safety Codes Committee work.
TH E
O R G A N IZA TIO N
AN D W O R K OF THE N A T IO N A L
CODES COMMITTEE.
SA F E TY
B Y E. B . EO S A , P H . D., C H I E F P H Y S I C I S T , U N IT E D S T A T E S B U R E A U O F S T A N D A R D S .
[Read by Prof. Albert W . W hitney, general manager, National W orkm en's Compensation
Service Bureau.]
Great possibilities for effective standardization work may be found
in the preparation of safety codes for application by State and mu
nicipal authorities, manufacturers, and insurance companies. Much
has been said of the need for standardization and much has been done
toward the standardization of safety practices by State authorities,
insurance organizations, and individual manufacturers. I f these
codes are prepared by many different organizations acting independ
ently, there will result many conflicting standards, except perhaps in
cases where the practice is so restricted in scope that only a single
interest is concerned.
Many of the States have promulgated standards of safety by wrhich
manufacturers could judge the status of their equipment and prac
tice. The insurance companies soon learned the advantage of pre
scribing a standard condition of plant upon which they could base
rates. This necessitated the adoption by cooperative action of a uni
form rating schedule, which is in reality a special kind of safety code.
Manufacturers have been embarrassed, however, by the conflict be
tween standards of the insurance companies and those of the States.
Many large interests or groups of interests have established stand
ards of their own and are following them. During the war the
Bureau of Standards cooperated with the safety engineers of the
Navy and War Departments in the preparation of a set of safety
standards to be applied in Government establishments. There has
recently been organized the Electrical Safety Conference, in which
the electrical manufacturers are associated with insurance interests
and the Bureau of Standards, and the purpose of which is the
development and adoption of safety standards for the construction*
test, application, and installation of electrical appliances and the
orderly and consistent development of safety practices in electrical
manufacture and installations. The boiler code of the A. S. M. E.
is a good example of standardization by a group of interests.
The need for a central agency through which these attempts at
standardization could be cleared soon became manifest, but the
method of procedure to set up such an agency was a problem which
had to be worked out. Various organizations, including the tech
nical societies, the International Association of Industrial Accident
Boards and Commissions, and the Bureau of Standards were sug
gested as the proper agencies jointly to coordinate the efforts of
the many organizations engaged in standardization of safety prac
tices. In order to crystallize opinion as to how this work of coordina
tion should be carried out, the Bureau of Standards invited dele
gates from Federal, State, and municipal departments, engineering
20
E. B. ROSA, P H . D.
21
and utility associations, organizations of insurance companies, and
employers, employees, and manufacturers to attend a conference at
Washington on January 15, 1919.
FIRST CONFERENCE ON INDUSTRIAL SAFETY CODES.
At this conference ^the organization, purposes, and plan of pro
cedure of the American Engineering Standards Committee were
explained and a proposal made to place the standardization of safety
practices under the auspices and rules of procedure of this body.
Briefly summarized, the rules of procedure of this organization are
as follows:
(a) A standard (or code) is assigned by the American Engineer
ing Standards Committee to a “ sponsor body,” which is any national
organization capable of carrying out the work and which may or
may not be a member of the Standards Committee.
(b) The sponsor body appoints a thoroughly representative “ sec
tional committee,” subject to approval by the American Engineering
Standards Committee.
(c) The sectional committee prepares the standard (or code) and
submits it to the sponsor body, which then submits the standard
with its approval to the standards committee.
( d ) It is then published by the sponsor body, and on approval by
the standards committee is labeled “American standard.”
This procedure was given approval by the conference, but atten
tion was called to the fact that the American Engineering Standards
Committee was representative of and responsible to the founder soci
eties only, that is, to the five national engineering societies and the
ihree Government departments (Commerce, War, and Navy), and
that the sponsor bodies had no voice in the selection of the mem
bers of the standards committee or in the preparation or amendment
of its constitution and rules of procedure.
This conference directed that the question of the plan of procedure
by which the safety codes were to be formulated be submitted to letter
ballot of all the bodies represented at the conference and to such
others as should properly be included. This conference also directed
that another conference be held to consider the vote and to take final
action. The result of the mail vote was a substantial majority in
favor of the plan to place the work of preparing safety codes under
the rules of procedure of the American Engineering Standards Com
mittee, the plans for the reorganization of which to admit to its mem
bership organizations other than the original engineering societies
and Government departments were then under consideration. These
plans have been carried through and the membership of the Ameri
can Engineering Standards Committee enlarged. It now includes
the National Safety Council and insurance interests.
SECOND CONFERENCE ON SAFETY CODES.
With the submission of the report of the balloting the Bureau of
Standards issued a call, in conformity with the wishes of the first
conference, for a second conference to be held on December 8, 1919,
to consider the procedure which should be followed in further work
on safety codes and to discuss methods of securing the cooperation of
engineering societies, Government departments, and other agencies
22
W ORK OF NATIONAL SAFETY CODES COMMITTEE.
that are actively concerned with safety work. Representatives in
attendance upon this conference discussed in some detail the re
organization of the American Engineering Standards Committee.
The result of the mail ballot referred to previously was affirmed.
The conference then proceeded to a discussion of the best method of
organizing the work in order that it could be given detailed and con
tinuing attention. It was the consensus of opinion that a special
committee on safety codes, acting as a subcommittee of the American
Engineering Standards Committee, should be appointed.
This
attitude of the conference was expressed in the following resolution:
Resolved, (1) That the American Engineering Standards Committee be asked
to request the International Association o f Industrial Accident Boards and
Commissions, the Bureau o f Standards, and the National Safety Council to
organize a joint committee on safety codes, this committee to include representa
tives of these bodies and such others as they may consider advisable; (2) that
this joint committee report on safety codes required, priority of consideration
of the codes, and sponsor bodies for their preparation; (3) that this report be
put in writing and placed in the hands of the American Engineering Standards
Committee not later than February 1, 1920.
In compliance with this resolution, the American Engineering
Standards Committee requested these organizations to appoint a
joint committee on safety codes.
Representatives of these three organizations met in Washington
to consider the organization of this committee. After very full dis
cussion it was decided that in order to organize a committee which
would not be unwieldy membership on the committee should be by
groups of organizations rather than to have each organization repre
sented. The present personnel of the National Safety Codes Com
mittee is as follows:
David S. Beyer.
L. W. Chaney.
C. B. Connelley.
L. A. De Blois.
George P. Hambrecht.
Thomas P. Kearns.
M. G. Lloyd.
Miss Frances Perkins.
Dana Pierce.
C. W. Rice.
John Roach,
E. B. Rosa.
C. B. Scott.
A. W. Whitney.
S. J. Williams.
H. M. Wolfiin.
Royal Meeker, C. C. Rausch, and W . C. L. Eglin were members
originally, but resigned.
A t the first meeting of the committee, held on January 9 at the
Bureau of Standards, 37 codes were discussed, some of which were
codes which had already been completed or on which work was
already in progress. Sponsorships for these codes were further con
sidered at a meeting in New York on February 17, the committee
having made a careful investigation as to the qualifications and the
scope of the work covered by the sponsors which had previously been
suggested. The first report of the committee, which contained defi
nite recommendations for sponsorships for 35 codes, was submitted
to the American Engineering Standards Committee on March 6,
1920, and was considered by the committee at a subsequent meeting
on April 3.
Following the meeting of the American Engineering Standards
Committee on April 3, the National Safety Codes Committee con
tinued its consideration of safety standards for other industrial fields.
It has been the purpose of the committee to suggest as sponsors only
those organizations which are able to give the work immediate and
E. B. BOSA, PH. D.
23
continuing attention and which will have the cooperation of all con
cerned. This necessitated a great deal of traveling and correspond
ence by representatives of the committee. At a third meeting of
the committee, on May 22, recommendations for sponsors for five
additional codes were made. A third report was prepared and pre
sented to the American Engineering Standards Committee on June 5.
The subjects of the codes for which arrangements have been com
pleted, together with the organizations which have been designated
by the committee to act as sponsors and wiio have accepted such re
sponsibility, are as follows:
Abrasive wheels: The Grinding Wheel Manufacturers of the United States
and Canada, and the International Association of Industrial Accident Boards
and Commissions.
National electrical (fire) code: National Fire Protection Association.
National electrical safety cod e: Bureau of Standards.
Power presses: National Safety Council.
Manufacture, transportation, and use of explosives: The Institute of Makers
o f Explosives.
Foundries: American Foundrymen’s Association and the National Founders’
Association.
Gas safety code: Bureau o f Standards and the American Gas Association.
Head and eye protection: Bureau of Standards.
Paper and pulp m ills: National Safety Council.
Mechanical refrigeration: American Society of Refrigerating Engineers.
Stairways, fire escapes, and other ex its: National Fire Protection Association.
Woodworking machinery: The International Association of Industrial Acci
dent Boards and Commissions and the National Workmen’s Compensation
Service Bureau,
Industrial lighting: Illuminating Engineering Society.
Industrial sanitation: U. S. Public Health Service.
Lightning protection: Bureau of Standards and the American Institute of
Electrical Engineers.
-The following is the list of additional codes which have been
submitted to the American Engineering Standards Committee with
a recommendation for sponsorship or which are under active con
sideration by the National Safety Codes Committee:
Locomotive boilers.
Boiler-room equipment and operation.
Conveyors and conveying machinery.
Cranes, derricks, and hoists.
Electricity in mines.
Elevators and escalators.
Internal-combustion engines.
Engine-room equipment and operation.
Steam engines and turbines.
Ladders.
Aeronautics.
Heating and ventilation.
Stationary steam boilers.
Construction work.
Combination of electrical fire and safety coda
Mechanical transmission o f power.
Industrial power control.
Nonfired-pressure vessels.
Tanneries.
Blast furnaces and steel works.
Rolling mills.
Floor openings, railings, and toe boards.
Logging operations and sawmill machinery.
Machine tools*
Textiles.
24
W O R K
O F
N A T IO N A L
S A F E T Y
C O D E S
C O M M IT T E E .
Before beginning work on a new code or the revision of an old
one the sponsor body must appoint a sectional committee, whose
membership comprises not only representatives of the sponsor body
but also representatives of all other interests concerned. The organi
zation of this committee is very important, as it is the instrument
upon which the sponsor body largely depends to coordinate the
efforts of all other organizations which have done any work or are
interested in the work to be done by the sectional committee. It
is also important that the sponsor keep closely in touch with the
central office of the American Engineering Standards Committee, in
order that it may be advised of the standardization work of all organ
izations which has a bearing on the subject under consideration.
A number of the sponsors have already appointed their sectional
committees and work on the codes has begun. Other sponsor bodies
have gathered material and prepared a tentative draft of a code
for presentation to and action by the sectional committee as soon as
its appointment is announced. Information as to the progress of the
work on the various codes can be obtained from the secretary of the
American Engineering Standards Committee, 29 West Thirty-ninth
Street, New York City.
The National Safety Codes Committee desires to express its appre
ciation of the various courtesies extended its representatives in con
ferences and correspondence they have had with the officials of the
various State boards and commissions. The present work will no
doubt result in greater uniformity in State and insurance regulations,
and the committee hopes each State will take an active interest and
criticize the work of each of the sponsors charged with the responsi
bility of developing codes, and will use the finished code as a basis
for State regulations, deferring issuance of the State code, if neces
sary, until the “American standard ” has made its appearance. The
successful introduction into practice of these various codes depends
more upon the constructive criticism during their development and
upon their prompt enactment as State regulations by the various
State boards and commissions than upon action by any other group
of organizations.
DISCUSSION.
Prof. W h i t n e y . That is the way that the things have been organ
ized. Now, as to this American Engineering Standards Committee,
everything at present looks exceedingly hopeful. We have had a
very difficult time in getting started, but things seem to' be advancing
very satisfactorily now. We have a secretary, Mr. Agnew, who was
with the Bureau of Standards, and the work is being pushed. Dr.
Agnew went to Europe lately and studied international standards,
and it is hoped that this work may be developed along international
lines. It is tremendously important from a commercial point of
view. In relation to manufacturers, when they ship their goods to
South America they are much more sure what goods will be accept
able there if there are international standards. I think that covers
the subject pretty well, except there is this to be said: The American
Engineering Standards Committee at present is just a body that
passes on things. Well, it is like a judge; it sees if the work is done
D IS C U S S IO N .
in a proper way, and then pronounces the verdict. But there is a
lot more work that needs to be done. This codes committee is a body
which supplies the material, so far as safety goes, to the American
Engineering Standards Committee. Then there is a lot of work in
seeing that these codes and standards are actually applied, and that
is the place where this association can help a good deal. Of course
it does no good to have an American standard and then not to use it.
Somebody has to do some active work in seeing that it actually goes
into effect, and I think it is up to the industrial accident commissions
of the country to get behind this movement and see that the standards
that are created in this way really and truly become American stand
ards and are used just as universally as possible.
The C h a i r m a n . I would suggest, Prof. Whitney, that you pre
pare a resolution and submit it to Mr. Verrill, our secretary, so that
we can consider that affiliation or that assistance you have outlined.
Prof. W h i t n e y . That will be done, I suppose, at a later meeting?
The C h a i r m a n . Yes.
Mr. J o h n P. G a r d i n e r , commissioner, Minnesota Department of
Labor and Industries. I would like to ask Prof. Whitney a question.
Talking along the line of those American standards, is it the inten
tion of the Bureau of Standards or this American Engineering Stand
ards Committee to assist the different States in getting them through
their legislatures ? In other words, what would it benefit the States
if these various matters are adopted by a bureau of standards, if we
can not force those standards on the employer who does not see
fit to adopt them because they are not required by the law? I do
not think Minnesota is the only State where such is the rule and not
the exception. Some people adopt the standard because they believe
it is right, and because they believe it is safety work. We get good
results in those plants. But wheny the employer guards his ma
chinery because he feels he has to do it, then we do not get very
good results. For instance, we lost a case in a city of the second
class in Minnesota the other day. The judge asked the question:
“ Are there any standards in the law that require the employer to
guard the machine a certain way or with a certain class of material ? ”
Our only standard in Minnesota is a height of 6 feet above the
working floor, but a beveled gear has to be 6 feet 7 inches above the
working floor. We lost out in court, because the lav/ said 6 feet.
The C h a i r m a n . The Chair will have to rule that we have a set
program, and the time is short, and there will not be time just at
this time to ask any more questions. I will ask Prof. Whitney to
reply to Mr. Gardiner.
Prof. W h i t n e y . Mr. Gardiner’s question is just exactly in line with
what I said last. I think you can readily see that a committee of
this kind, the American Engineering Standards Committee, is not
in a position to do any active propaganda work. It is a scientific
body. Somebody has got to get back of this thing and do the
actual work of putting it into effect. The committee itself is not
prepared to do that. It will have to be the various interested bodies,
the commissions, the insurance interests, the employers, labor, and
all, to get back of this thing and take some steps to put it into actual
operation. But the problem of the American Engineering Stand
26
W O R K
O F
N A T IO N A L *
S A F E T Y
C O D E S
C O M M IT T E E .
ards Committee is to produce a standard of which it can be said that
it is a standard which has had the very best attention given to it and
which the very best representative people are back of, and that when
you say an American standard it means something.
The C h a i r m a n . The great States of New York afid Pennsylvania
contribute, unfortunately, more to the death and accident lists than
any other two States in the country. This morning we have the
honor to have with us Commissioner C . B. Connelley, commissioner
of the Department of Labor and Industry of the State of Pennsyl
vania, who will tell us something about the safety work in that State.
W H A T P E N N S Y L V A N IA IS DOING FOR SA F E TY A N D S A F E TY
CODES.
BY CLIFFORD B. CONNELLEY, PH. D., COMMISSIONER, PENNSYLVANIA DEPARTMENT OF
LABOR AND INDUSTRY.
P A R T I .— P E N N S Y L V A N IA A N D S A F E T Y PROGRESS.
(<2) In relation to the national safety movement.—Safety work in
Pennsylvania as a function of the State government has kept pace
with the van of the great national movement for industrial safety.
Closely following the launching of the safety-first idea as a nation
wide issue the department of labor and industry was created in
Pennsylvania to promote the welfare of labor and the prosperity
of its industries. The plan of organization, its personnel of wide
awake engineers and industrial experts, and the general favor with
which the department was received tended, from the very beginning,
to put forward safety as its dominant service toward industry. Other
State agencies which contribute in a definite way to the safety program
of Pennsylvania are the department of mines and the public service
commission. As the accident reports of these agencies filter through
the department of labor and industry, it is our purpose to c’onfine
this discussion to the work of the department of labor and industry.
(b)
In relation to the evolution of industry.—The progress of
safety in the State has not only paralleled the best efforts of the
national safety movement but has been in keeping with the spirit of
the times as affecting the evolution of industry. In the short period
of less than seven years the industries of Pennsylvania and the
workers have been made to respond to demands for production and
efficiency such as were never known in the industrial history of the
Commonwealth. That all demands were met, especially during the
war period, is a matter of record, and one need not wonder, there
fore, that there is some industrial unrest in the industries of the
Keystone State, as there is in every other part of the world.
FO UR STAG ES OF S A F E T Y PROGRESS.
Four stages, or periods of progress, mark the onward march of
safety in Pennsylvania. They are what may be termed:
1. The pioneer safety period, covering the years 1913 to 1915, in
clusive, during which the department of labor and industry was
created, and a determined educational campaign was carried on in
the interest of accident prevention.
2. The compensation period, covering the latter part of the year
1915, and particularly the year 1916, in which the conscience of
industry was awakened by legislative enactment to the newer mean
ing of accident prevention, and notable for the increase in accident
reports.
3. The war period, covering the greater part of the years 1917 and
1918, in which safety was stressed as an all-important war measure.
27
28
W H A T
P E N N S Y L V A N IA
IS
D O IN G
F O R
S A F E T Y .
4.
The readjustment or reconstruction period, from 1919 to the
present time, in which safety has been stressed as an aid to produc
tion and as a remedy for industrial unrest.
A S T A T IS T IC A L ST U D Y OF S A F E T Y PROGRESS.
The accident statistics for these periods show this safety progress
in a very concrete manner. The total number of accidents re
ported are:
The pioneer safety period.
191 3
191 4
191 5
12, 752
38, 126
61, 540
T o ta l_____________________________________________ 112,418
The compensation period.
191 6
_____________________ 255, 616
(or over twice the total of the previous three years.)
The war period.
191 7
191 8
227,880
184,844
T o ta l_____________________________________________ 412,724
The readjustment or reconstruction period.
191 9
152,544
The annual increases in the first period indicate clearly that the
initial steps in safety in educating both the industries and the
workers to report accidents made notable progress. The numerical
crest of accidents, as could be expected, was reached in 1916, the
first year of the functioning of the workmen’s compensation acts.
In 1917 there was a decrease of 27,736 accidents and in 1918 a de
crease of 43,036 accidents from the 1917 report, and it is likely the
decrease wTould have been greater had not the war with its speedingup processes added new hazards to industry. The 1919 report shows
a further decrease of 32,300 as compared with 1918 and a decrease
of 103,072 as compared with the high figure of 1916, and it is certain
had not the reconstruction period been so disturbed by industrial dis
putes, profiteering, and general unrest the decrease would have been
considerably greater.
The story thus told by the figures is a cause for encouragement.
The dreaded and paralyzing disease w^hich was, slowly but surely,
destroying our industrial efficiency and putting us out of the race
for the competitive business of the world showed unmistakable
symptoms of its presence by the treatments of the first period of
the safety diagnosis. The crisis was reached in 1916, and from then
on, notwithstanding the disturbing influences and complexities, there
has been a decided turn for the better. We expect the 1920 figures
to show less accidents than 1919, and each succeeding year to work
toward the gradual elimination of industrial accidents.
P R ESEN T
O BJECTIVES IN
SAFETY W ORK.
To understand the present objectives in our safety work, it is
necessary to trace the safety methods which have characterized the
four periods. It is noteworthy that in spite of the changed con
C L IF F O R D
B.
C O N N E L L E Y .
29
ditions, almost incredible changes in so short a period of time, not a
single plan or method has been put upon the scrap heap. In other
words, what Pennsylvania is doing for safety to-day is but a quicken
ing of the accumulated efforts of the past. It is our firm conviction
that success in accident prevention can not be attained by spasmodic
campaigning, however far-reaching and high-sounding the programs,
but by a determined, continuous effort year after year. In this con
nection the following is quoted from the Travelers Standard, Hart
ford, Conn., by way of emphasis of present-day safety objectives:
In many respects safety work is similar to advertising—particularly so in
the matter of repetition. One advertisement of a sensational bargain may
suffice to dispose of a limited stock, but for average business conduct it is
essential to keep the name of the manufacturer of the product continually before
the public. In like manner it is necessary continually to plan, instruct, and
provide for the workman’s safety. Another respect in which advertising and
safety work are much alike is in the cumulative effect. Some experts estimate
that $5,000 properly expended in advertising during a year will return $4,000 the
second year, $3,000 the third year, $2,000 the fourth year, and $1,000 the fifth
year. We do not insist upon these precise figures. It is evident, however, that
the value of an advertisement endures for a considerable time.
Unfortunately, we can not make a similarly detailed comparison with respect
to safety work. It has been amply demonstrated, however, that what we may
call the “ delayed returns ” on well-sustained, organized safety work are mate
rially in excess of those that follow advertising. A safety campaign conducted
in a plant for one year and then discontinued will show definite results for
several years in the way o f fewer accidents as compared with the accident rate
prior to the campaign. The delayed returns and influence will depend largely
on the nature of the campaign and the character of the employees, and upon
the extent of the labor turnover. The illiterate, the care-free, and the radical
workman will not respond as freely as the steady-going, conservative workman.
A slipshod campaign will have little influence on a workman o f any type, while
a large turnover will materially reduce the effectiveness of any campaign, how
ever well conceived and faithfully executed. These are just the intangible
factors that can not be accurately gauged and are the basic reasons for con
tinuing the safety work. I f the results of the first year’s efforts justified the
expense, there is every reason to continue the work, because the influence that
extends from each shear’s work over into the succeeding years is pure profit;
and the cumulative effect will continue until such time as avoidable accidents
are practically eliminated.
There will always be a need for safety work in our industries, because man
is prone to forget that which is good for him, and there is a certain element of
chance taking in all of us. New men coming from other mines or plants may
not have had the advantages in safety education that your own employees have
received, and these men must be taught. Finally, each year sees thousands of
boys, just from school, entering our industries with little or no conception of the
hazards and responsibilities that are involved, and with no training in safety.
A RETROSPECT
OF S A F E T Y
A C T IV IT IE S .
To bring to focus the efforts of the past in a summarized form
and to show the full scope of Pennsylvania’s activities for safety
we shall follow as closely as possible the four periods as outlined,
pointing out in each period (a) the important safety legislation,
(I>) the safety standards created, and (c) the safety publicity or
campaigns conducted.
T h e P io n e e r S a f e t y P e r io d .
(A) SAFETY LEGISLATION.
Prior to 1913 there was some legislation, of course, relating to the
safety of employees, but this, for the most part, was concentrated
30
W H A T
P E N N S Y L V A N IA
IS
D O IN G
F O R
S A F E T Y .
in the department of labor and industry, created June 2, 1913, and
is therefore the fundamental step in the safety program of the Com
monwealth. The department as originally constituted provided for
an industrial board, a bureau of inspection, and, as a part of the
latter, the division of hygiene and engineering, a bureau of statistics
and information, and a bureau of mediation, By later amendments
the bureau of statistics and information was removed from the
department and a workmen’s compensation board, a bureau of work
men’s compensation, a bureau of employment, and a bureau of re
habilitation were added. The department as organized at present is
a complete safety organization, not only as it affects the popular
conception of industrial accidents but also in accordance with the
more advanced definition of an industrial accident as “ anything
occurring within an industry which impairs the earning power of a
worker.”
It is not our purpose, however, to include unemployment and the
losses due to industrial disputes within the scope of this discussion,
but merely to mention in passing that both are industrial hazards of
the most serious nature.
Other labor laws passed during the period, which were largely
safety measures to be enforced by the department, apply to (1) em
ployment of certain minors in quarries; (2) making and sale of mat
tresses, known as the mattress act; (3) protection of employees ex
posed to occupational diseases; (4) protection of employees in
certain occupations by use of blowers; (5) regulating the emplo}^ment of females in certain establishments; and (6) reports of em
ployers as to accidents to employees.
(B )
S A F E T Y ST ANDAR DS.
The inspection bureau of the department in its efforts to enforce
the laws discovered that not much could be gained by a corps of
inspectors visiting the various industries of the Commonwealth
with the idea of talking safety and recommending safeguards for
dangerous machinery and conditions without fixed rules and regu
lations which would serve to call attention to safe practices and
to make* uniform the requirements. This gave the industrial board
the opportunity to develop one of its important functions—the
creating of safety standards. In this particular work, as well as
in all of the safety work of the department, the trained intelligence
and the expert service of the division of hygiene and engineering
aided considerably.
When the industrial board took up safety-standard making, it was
an almost unknown governmental function. Real pioneer work had
to be done. It meant, for example, a considerable effort to survey
the industry; the employee had to be shown that mechanical safe
guarding of machinery and prescribed rules governing the job did
not interfere with his earning capacity. It was not always easy
to convince the employer that safety was an investment rather than
an expense. The safety engineer was unknown. There were prac
tically no safety appliances on the market. The national safety
movement was in its infancy and few people were “ sold the idea.”
The State was not organized to carry out a program of safety. In
C L IF F O R D
B .
C O N N E L L E Y .
31
short, there was very little precedent to follow, but there was con
siderable tradition of industrial distrust, ignorance, and disinterest
to hinder. The board entered on the task, however, following the
plan as outlined in detail in Part II, and succeeded in having 15
codes adopted during this period.
(C) SAFETY PUBLICITY.
1. Conference.—Two conferences were held in the interest of
safety, known as industrial welfare and efficiency conferences, which
brought to Harrisburg men of the industries who were interested,
as well as the department officials, for the interchange of opinion and
experiences.
2. Permanent safety exhibits.—This is a collection of pictures and
posters, secured from industrial firms, and is sent out to fairs and
public gatherings throughout the State for the purpose of dissemi
nating information as to safety devices and the prevention of acci
dents and industrial diseases.
3. Publications.—The publishing of a monthly bulletin was begun
in 1914, which, in addition to departmental news, featured typical
accidents as found by the inspectors and recommended methods
of prevention. Articles were also printed offering suggestions for
forming fire-drill organizations in factories and for safety organiza
tion in industrial establishments. First aid was urged as a part of
the safety movement.
T
he
C o m p e n s a t io n P
e r io d .
(A) SAFETY LEGISLATION.
The outstanding legislation of this period were the acts, four of
which were passed in 1915, which established the compensation system
of Pennsylvania. The primary purpose of the workmen’s compensa
tion law and the correlative act creating a State insurance fund,
also passed in 1915, was to prevent industrial accidents. Pertinent
to the subject of safety were (1) establishment of a bureau of
employment, (2) child labor act, (3) an amendment to the woman’s
law regarding female employment, and (4) regulating the business
of assisting employers to obtain employees and persons to secure
employment.
(B) SAFETY STANDARDS AND SAFETY APPLIANCES.
But four safety standards were adopted during this period, but
they were of a nature necessitating considerable effort and much
technical advice. These codes were lighting, elevators, explosives,
and the electric code.
During this time, too, a new development of the safety idea came
about in the appointment by the industrial board of a committee on
approvals, whose duty it was to examine and test devices and appli
ances and to recommend safety features applicable to the industries
of the Commonwealth. /Twenty-two certificates of approval were
issued during 1916.
32
W H A T
P E N N S Y L V A N IA
(C)
IS
D O IN G
F O R
S A F E T Y .
SAFETY PUBLICITY.
1.
Conferences.—The immediate result of the operation of the com
pensation laws was the enormous toll of accidents which were re
ported. For the first three months of 1916 the reports showed—
January
February
March
_
Total
Killed.
Injured.
Total.
188
229
206
13,336
24, 253
26, 732
13,524
24,482
26, 938
623
64, 321
64, 944
This led to the calling of an industrial accident prevention conference,
which was probably the first assembly of its kind in the United States.
It consisted of about 150 leaders in industries (not representatives
of leaders, or safety men, or technicians), labor leaders, and Govern
ment officials. The purpose was to bring the facts to the direct atten
tion of the employer and owner and secure their cooperation.
Another type of conference which was inaugurated during this
period was that of industrial physicians and surgeons, 10 of which
conferences have been held to the present time. These have furnished
first-hand information on vocational diseases, rehabilitation, etc., and
have brought hundreds of medical men in direct touch with the
problem of industrial safety.
The emphasis put upon the medical phase of accident prevention
led to the establishment of two industrial clinics, one in the eastern
part of the State, at the University of Pennsylvania, where an entire
hospital was devoted to sufferers from diseases presumed to be
contracted in their employment and due to conditions under which
they work, and the other in the western part of the State in coopera
tion with the United States Bureau of the Public Health Service.
The purpose is ultimately to make a study of occupational diseases.
2. Publications— In addition to the monthly bulletin of the de
partment the following new publications were distributed for the
use of the industries: Accident-prevention posters, for placing on bul
letin boards and other conspicuous places around industrial plants;
Timely Hints, a series of small pamphlets written in popular lan
guage for the guidance of workers in safeguarding themselves.
3. Additional safety methods.— (a) Use of motion pictures as a
means of safety publicity; (b) organization of the Commonwealth
for safety as a.model safety organization for industrial establish
ments; (c) establishment of a “ flying squadron” in the bureau of
inspection, made up of selected inspectors who should devote their
entire time to investigating and reporting on serious industrial
accidents.
W ar P erio d .
(A)
SAFETY LEGISLATION.
The legislature of 1917 passed several acts in the interest of safety,
the most notable of which was the one creating a health-insnrance
commission to investigate sickness and accidents of employees not
compensated under the workmen’s compensation law. Other laws
applying to specific industries were: (1) An amendment to a previ-
C L IF F O R D
B .
C O N N E L L E Y .
33
ous act providing for the safety of persons from fire or panic in
certain buildings; (2) a law pertaining to the construction, operation,
and inspection of moving-picture booths or inclosures; and (3) an
act regulating the employment of persons in compressed-air work.
(B )
S A F E T Y STAN DAR DS A N D
S A F E T Y A P P L IA N C E S .
Eleven safety standards were created during this period, of which
the codes on nitro and amido compounds and shop clothing for
women are distinctly war-time codes in the sense that they were
created as a result of demands of the war. Eighty-five safety ap
pliances were approved during 1917 and 1918,
(C )
S A F E T Y P U B L IC IT Y .
Throughout this period the appeal was made for safety as a war
measure. The following is an interesting list of causes given for
accidents during this period:
C a r e le s s n e s s ; s p e e d in g l i p ; th e n e w -m a n h a z a r d ; u n g u a r d e d d a n g e r p o i n t s ;
f a il u r e to keep In c o n s ta n t se rv ic e s a fe g u a r d s p r o v i d e d ; la c k o f A m e r ic a n iz a
tio n .
1. Conferences.—In the fall of 1917 the fifth annual industrial
welfare and efficiency conference was held, and women in industry,
reconstruction, rehabilitation of the war injured, and Americaniza
tion were among the leading topics discussed.
2. Publications.—A bulletin of the department of labor and in
dustry was issued in 1918, setting forth “ Pennsylvania’s part in the
national plan for rehabilitating and placing in industry soldiers and
sailors disabled in war service.” This resulted from the realiza
tion early in the war that proper places in industry should be found
for Pennsylvanians disabled in war service. Accordingly, all the
employers in the State were circularized and tentative employment
opportunities for approximately 50,000 workers were secured.
3. Ruling of industrial' board on Americanization.—Pointing to
ward Americanization, the following ruling was promulgated July,
1917: 66No person shall be permitted to labor in any group employ
ment in a position of command or obedience who is unable to speak
or understand the language of his or her colaborers, whereby through
misunderstanding accident and injury are apt to result to fellow
workers.”
R
e c o n s t r u c t io n
(A )
P
e r io d
.
S A F E T Y L E G IS L A T IO N .
The important piece of legislation affecting industrial safety dur
ing the present period is the establishment of the bureau of rehabili
tation in the department of labor and industry by the 1919 legislature.
As an act of social and humane legislation it ranks next to workmen’s
compensation, and is related to the latter in the sense that while the
main purpose of workmen’s compensation is to prevent accident,
rehabilitation gives the man another chance after he has been maimed
by accident. To August 1, 1920, the new bureau has offered its
2 6 0 3 9 ° — 2 1 ------ 3
34
W H A T
P E N N S Y L V A N IA
IS
D O IN G
F O R
S A F E T Y .
services to 798 industrial-accident victims. Other laws passed apply
to (1) bakeries and bakery products, (2) boilers used in operation of
oil wells, (3) sanitary requirements in mills, and (4) precautions
against panic and fire in certain buildings. Of special significance
as a far-sighted safety measure was the passing of the law requiring
the teaching of safety first in public schools.
(B )
S A F E T Y STAND AR DS A N D
S A F E T Y A P P L IA N C E S .
The necessity of bringing the safety standards up to date because of
changes caused by war conditions and new industrial ‘experiences is
the reason for the "general revision of all safety standards which is now
under way. Several new codes, such as for head and eye protection,
sanitation, and laundries, are being formulated also at this time.
Over 50 approvals for safety appliances have been granted during
this period. Illustrated bulletins are being compiled, setting forth
these devices as safe for the industries of the Commonwealth. A
museum of safety appliances has also been established, and houses
the devices for which certificates of approval were granted.
(C )
S A F E T Y P U B L IC IT Y .
1. Conferences.—No conference of a general nature has been called
since 1917, due to unsettled conditions. In the spring of 1920 a fiveday convention was held, known as the Pennsylvania Safety Congress.
This was the greatest gathering of its kind, and in a way epitomized
the safety efforts of the past six years. The purpose of the congress
was set forth as follows:
The demands of the Great War upon industry and the consequent lowering
of standard of industrial safety, the period of readjustment and consequent
industrial unrest, make it important that Pennsylvania rally to meet the chal
lenge of the hour. This congress is the forerunner of a particular program
for industrial safety that will touch every industry in the Commonwealth.
2. Community safety week.—In keeping with the avowed intent of
reaching the industries of the Commonwealth, two community-wide
safety-week campaigns have been held, in which the department
furnished considerable help.. Similar campaigns are now being ar
ranged to cover the entire State.
3. Newspaper publicity.—A continuous accident campaign is being
conducted, in which the newspapers of the Commonwealth cooperate
by publishing the monthly accident reports with comments.
SU M M A R Y
OF
SAFETY
A C T IV IT IE S .
By way of summary, the safety program of Pennsylvania is based
upon—
1. The enforcement of at least 25 specific acts of the legislature,
notable among them being the act creating the department of labor
and industry and the workmen’s compensation and rehabilitation
act.
2. The placing of responsibility upon employers as well as em
ployees of the Commonwealth for complying with the requirements
of 30 safety standards, and others that are being developed from
time to time.
C L IF F O R D
B .
C O N N E L L E Y .
35
3. Serving the employers, the State officials, and manufacturers of
safety devices with a means of knowing and approving appliances
which are safe for the industries of the Commonwealth. The ap
proved devices, numbering 160, are classified as (a) boiler appliances;
(5) elevator appliances; (c) mechanical appliances, machine and
woodworking guards; (d) electrical appliances; (e) motion-picture
appliances; ( /) fire prevention and protection appliances; and (g)
miscellaneous safeguards and appliances, as antislip treads, no-slip
ladder shoes, ladder, etc. These are open for public inspection in
the department museum.
4. Educational campaigns, such as the safety congress and com
munity-wide safety programs, motion-picture entertainments, indus
trial clinics, and the publication of bulletins, posters, and pam
phlets, so that in every industry in the Commonwealth all who run
may read.
5. Cooperation with the department of public education in the
instruction on safety first in our public schools.
What Pennsylvania is doing for safetv codes, in addition to the
facts already stated, may be seen by tracing out more in detail the
making of a Pennsylvania safety standard as shown in Part II.
P A R T I I .— TH E M A K IN G OF A S A F E T Y S T A N D A R D .
A COO PER ATIVE EFFORT.
The making of a safety standard, or a code of rules governing in
dustrial safety, is more than a one-man job. It represents the co
operative interest and experience of (1) the worker or wage earner,
(2) the employer, (3) the engineer or technical expert, (4) the
manufacturer, (5) the State, (6) the insurance carrier, and (7) the
public. It affects the life and health of the worker, the pocketbook
of the employer, the ingenuity of the engineer, the skill of the
manufacturer, the law-enforcement power of the State, the field of
business for the insurance carrier, and the welfare of the community.
In the last analysis, every interest that can contribute toward the
protection of the life, health, safety, and morals of the worker in
industry is concerned in the making of a safety standard.
A PR OGR ESSIVE D EV E L O P M E N T.
There are two possible viewpoints in drafting a code of safety
rules. There is that which holds that a safety standard is the ulti
mate goal to be reached—that it is the 66bar of platinum,” preserved
and guarded under ideal conditions, to which everything must be
made to conform. The other view is that a standard is a progressive
growth, measured by the best experience and practice of our con
stantly developing industries. The better training of the worker,
the achievements of the inventor, the keener sense of responsibility
of the employer and of the State, the closer and fuller organization
of the employer and of employees and better understanding between
them, and the larger interest of the public are the forward steps in
the march of industry. These must be written into the code of
rules, according to this view, from time to time. This is, of course,
the viewpoint of the State of Pennsylvania in the safety standards
issued by the industrial board. The inspector, under this view, has
36
W
H A T
P E N N S Y L V A N IA
IS
D O IN G
F O R
S A F E T Y .
not the right of private interpretation, but must confine his instruc
tions to the standard as written.
M ETHOD OF PR OCEDURE IN W R IT IN G S A F E T Y S T AN D AR D S , AS IL L U S T R A T E D
B Y T H E E L E V A T O R ST AN D AR D N O W IN PROCESS OF R E V IS IO N .
To illustrate what is meant by making a safety standard, it may
be to the point to take a specific standard and trace its development.
The safety standard applying to elevators, which is now uppermost
in the minds of some people, may serve our purpose. The duty of
initiating the formulation of a standard rests with the safety stand
ards committee of the industrial board. In the case of the elevator
standard the task was to revise the original draft, which had been
in effect for the past three years. The method of procedure in revi
sion is not unlike- writing the original draft, except as the expe
rience makes possible a more finished document, consistent with
up-to-date industrial conditions. The first step was to secure a
committee, representative of all interests in the making of an ele
vator, the installation of it, the owner, the user, and the operator.
The plan was to have as small a committee as practicable in order
to facilitate the work. This committee was to discuss the standard
in effect with the view of suggesting changes where necessary. The
interest was so keen that the attendance was too large to attempt the
work at the first meeting. (A significant fact in this connection is
that the State does not pay a single penny of the expenses of those
who do this work.) By vote it was decided that the chair appoint a
subcommittee of 10 and refer the rewriting of the standard to this
body, with the idea that the redrafted document would be submitted
to the larger group at a later date. The subcommittee of 10 spent
six full days in considering the standard before submitting it to the
general committee.
One hundred and fifteen pages of typewritten copy were returned
to the subcommittee, representing the criticism of the general com
mittee. It is no~w the task of the subcommittee to digest this material
and incorporate it into another draft, which will be the tentative
code for public hearing. The public hearings involve a campaign
of publicity in newspapers and trade journals, and the circulariza
tion of all persons of the State who may be affected by any provision
of the standard. The meetings will be scheduled at convenient parts
of the State, probably in Philadelphia, Pittsburgh, Scranton, Erie,
Harrisburg, and other places if found necessary. Stenographic record
will be made of all criticism offered at each meeting, and this will
be made available for the subcommittee of 10, which will be called
together again to make a final draft of the standard. The final draft,
when completed, will be submitted at a regular meeting of the indus
trial board for adoption. It is then distributed to all interested, free
of charge.
SA F E T Y STAN D AR DS ADO PTED .
The following is the complete list of safety standards now in
operation:
Volume I.
Power transmission.
Standard railings and toe boards.
Machine tools.
Boilers.
Stationary steam engines.
Ladders.
C L IF F O R D
B .
C O N N E L L E Y .
37
Volume II.
Lighting.
Elevators.
Electric.
Cranes.
Scaffolding.
Compressed air.
Volume III.
Forging and stamping.
Polishing and grinding.
Woodworking.
Foundries.
Fire prevention.
Sanitary.
Volume IV.
Bakeshops.
Canneries.
Cereal mills.
Motion pictures.
Shop clothing.
Printing.
Volume V.
Explosives.
Nitro-amido.
Lead corroding.
Paint grinding.
Dry colors.
Plant railroads.
NEW
CODES B E IN G FO R M U LATE D .
In addition to the general revision of all codes now in operation,
the department through its regular channels is engaged in formulat
ing the following new codes:
Head and eye protection.
Sanitation.
Laundries.
Housing.
Refrigeration.
P E N N S Y L V A N IA ’ S A T T IT U D E T O W A R D TH E ST A N D A R D IZ A T IO N OF STA N D AR D S.
Pennsylvania favors standardization and is represented on the
national committee by th,e commissioner of labor and industry. It
is not the purpose of the State, however, to give up the work of draft
ing standards or to lose its identity in the larger movement. The
best standards for Pennsylvania will always bear the 44Made in Penn
sylvania” stamp. There is ever the danger in pooling interests of
losing what might be termed the 44personal touch.” A national body
is sure to become a group of experts, in which the technical side will
be emphasized, not intentionally of course, at the expense of the hu
man interest. Somebody has said that standards, to be of the maxi
mum value, must be 15 per cent technical and 85 per cent human.
The technical or legal must never replace the common-sense view
point. This is one of the best features of the Pennsylvania standards.
By this we do not mean that standard making must not rise above
the 44rule-of-thumb ” method. The technical spirit and the legal
thought must be incorporated, but only in as far as the industry
in which the standard is to apply is educated to the safety idea.
Nothing weakens laws or rulings quite so much as making enforce
ment or compliance unduly difficult. Provision should be made*
therefore, to have the standards as simple as possible and, by con
stant cheeking and rechecking, adding and subtracting, keep them
within the range of those for whom they were intended. It should
not be necessary to employ a lawyer to interpret a safety standard,
nor should the specifications be such that only an engineer can un
derstand them.
38
W H A T P E N N S Y L V A N IA IS DOING FOR SAFETY.
We will be able to get somewhere in the United States if we can
have the people at Washington understand what we are trying to
do and have the men in Congress in their budget making give to
the Department of Labor and the Bureau of Mines a sufficient
amount of funds to carry on this work, because I have always said
it is the human side which comes in, and the Bureau of Standards in
Washington is doing a piece of work that nobody perhaps realizes,
except those people who are doing it and we who are in the safety
wTork.
DISCUSSION.
The C h a i r m a n . For the discussion we have John E. Brownell,
the first superintendent of safety of California, who came to us, by
the way, from the Pennsylvania Steel Co.’s plant at Harrisburg.
The time is rather short, and I will ask Mr. Brownell to confine his
remarks to a few minutes.
Mr. J o h n R. B r o w n e l l , o f the Equitable Life Assurance Society,
San Francisco. In regard to the paper that Mr. Wolflin prepared,
I wish to augment the information with just one or two things. The
first general orders committee was comprehensively representative,
as bn it were represented the California Employers’ Federation, the
California State Federation of Labor, and the California Under
writers’ Association, in San Francisco, and the Merchants & Manu
facturers’ Association, the Central Labor Council, and the Under
writers’ Association of Southern California, in Los Angeles. It
has always been the policy of the industrial accident commission
to have representative bodies give their men, so that there could be
no criticism that the commission chose picked men who would cast
their votes in a desired way. As to the films that were shown I
wish to make two statements: One is that the actors were always
men who were used to doing the kind of work portrayed; the
second is that in other films which show a great deal of first-aid
work the lessons learned by the men who were filmed, such as the
preparation of the crude stretcher, have been of inestimable value
in the lumber industries. I agree with Mr. Wolflin that his work is
hampered by lack of men for general inspection. Particularly, as I
see it, there is need for a man to be assigned to the lumber industry
alone, which I understand is soon to be done. Excellent work is
being done in the different departments, which, I think, were se
lected in the right way fundamentally. Polities was not allowed to
influence in any way the selection of the first safety men or any other
men now connected with the industrial accident commission, and
I think that is something California may well be proud of.
Prof. Whitney so ably discussed the paper by Dr. Rosa that I shall
say practically nothing about that, except that the work of the
national safety codes committee will be invaluable to those States
which desire to have an American standard, and certainly your
body is the one to get back o f it for any legislative functioning.
I read with a great deal of interest, of course, the paper of Dr.
Oonnelley. There are some pertinent features there, and some on
which he did not touch. It seemed to me the vital thing in Pennsyl
vania’s work is its safety program. The approvals committee has
doubtless done excellent work. There is great danger that unless
DISCUSSION.
39
such an approvals committee is wisely chosen, the hint of commer
cialism is apt to be made. Evidently Pennsylvania has seen to it
that such was not the case there. I think Dr. Connelley was mis
taken in saying the Pennsylvania industrial accident prevention con
ference was the first safety conference of its kind, because certainly
the National Safety Council congresses are equally broad in their
scope. The medical conferences are undoubtedly of great value.
One particular thing he did not touch on is that in their bulletins
on accidents that have happened they print an analysis of the acci
dent and a definite recommendation for its prevention in the future.
Also the very vital subject of school education should be included,
because, as Mr. French said, the whole subject of safety has to be
handled in a broad way in this country, including the accidents
which are not wholly industrial. The department in Pennsylvania
has a peculiar body called its “ flying squadron,” which consists of
specially qualified men in their inspection force to investigate acci
dents that happen, and that flying squadron has made special studies
of great value. I would speak of the splendid standards of Pennsyl
vania, and I wish to call your attention to one matter which struck
me as being indeed extraordinary, a ruling of the industrial board
on Americanization in Pennsylvania. It states here, u No person
shall be permitted to labor in any group employment in a position
of command or obedience who is unable to speak or understand the
language of his or her colaborers, whereby through misunderstand
ing accident and injury are apt to result to fellow workers.” That
is indeed drastic and interesting.
Now, Commissioner French has asked me to be brief, so I shall
close with a very favorite quotation, the epitome of accident preven
tion : “ Safety, and the end is that the workman shall live to enjoy the
fruits of his labor; that his mother shall have the comfort of his
arm in her age; that his wife shall not be untimely a widow; that his
children shall have a father; and cripples and helpless wrecks who
were once strong men, shall no longer be a by-product of industry.”
The C h a i r m a n . The next on the program, and the concluding
speaker, so far as the discussion is concerned, is Commissioner C. TI.
Younger, of the State of Washington, but he is not here. By the
way, a representative gentleman of the State of Washington has
asked that a paper prepared by one of the State organizations there
be added to the program, and if there is no objection it will be so
added.
THE SA FE TY MOVEM ENT IN THE STATE OF W A SH IN GTON.
BY HARVEY J. KELLY. ACTING SECRETARY, STATE SAFETY BOARD OF WASHINGTON.
The safety movement as a Washington State enterprise is yet in its
infancy. It can move only as fast as educational propaganda can mold
sentiment in its favor among employers. Upon the employer rests
the burden of giving safety a place of importance in the administra
tion of his business. His cooperation, coupled with the educational
work of the State safety board, can reduce to a minimum the pre
ventable accidents which, in the Washington lumber industry alone,
have killed 91 men and maimed 4,199 others between May 1 and
August 31, 1920, at a cost to the industry of $468,414 in money for
compensation alone, and untold physical and mental suffering by
workmen and their families.
The money loss does not take into consideration the inestimable loss
in production through labor turnover, disorganization, and unsettled
conditions brought about through industrial accidents, or the cost
of medical aid. It does not represent pending unsettled claims of
recent accidents. In other words, the amount named can be con
sidered a portion only of the real cost.
“ Prevention of ” rather than “ compensation for ” industrial acci
dents is the broad principle upon which the Washington safety law
is based. The State safety board, created by that act, has completed
the first year of its existence and is energetically driving toward its
objectives.
Those objectives, briefly stated, are the elimination of preventable
accidents in Washington industries through engineering revision and
through education and the compilation of statistics upon which will
be based the merit rating of employers. The undertaking is so great
and is so interwoven with the economic life of the State that progress,
of necessity, must be slow. The first year was consumed largely in
hewing away the mountain of detail which confronted Washington’s
first State safety board when the law became effective in June, 1919.
It did not become operative until October of that year.
To understand fully the operation of the State safety board, its
personnel, and functions, it is necessary to go briefty into the history
of the workmen’s compensation act and the related medical aid and
safety acts. The last two are interlocking to a certain extent.
Following the passage of the workmen’s compensation act in 1911,
Washington was without a workable medical-aid law until 1917,
when the present medical-aid board was created.
The medical-aid act is based upon the theory that industry, the
creator of industrial accidents, should bear the cost of repairing, so
far as is humanly possible, workmen broken by these accidents. It
differs from the compensation act, which charges the entire bill to
the employer, in that both the workman and employer contribute
equal parts of the fund. The employer, under penalty, is responsible
for the collection of the workman’s half.
40
H A R V E Y
J .
K E L L Y .
41
The levy ranges from 1 to 3 cents per man-day, according to class.
Workman and employer are both represented on the State medicalaid board. Dr. John S. Kloeber, of Yakima, is the representative
for the employers and Martin J. Flyzik, of Seattle, is the representa
tive for the workmen. Dr. J. W. Mowell, of Olympia, chairman of
the board since its creation, is the third member. This board, under
the medical-aid law, furnishes free of charge to injured workmen
coming within the scope of the workmen’s compensation act, hospital
care, medical and surgical treatment, artificial limbs, eyes, or teeth,
and under certain conditions glasses.
Prior to June, 1919, the field work of this board was done by local
aid boards in all industrial centers of the State. These boards con
sisted of two members, a workmen’s representative and an em
ployer’s representative.
Until 1919 there was no State direction of accident-prevention
work and no workable merit rating for employers. It is notable that
the lumber industry, through the organization of safety councils
and the employment of safety engineers, took the lead in safety work
in Washington. But the careful employer, who cut his accident cost
to' the minimum through safeguarding and safety educational work,
found his efforts nullified by the careless employer, whose accident
costs ran far above his contribution. Both paid the same rate for
insurance. There was a crying need for some system whereby the
employer who cost the accident fund the most would pay the most
for his insurance. This system is provided in the safety act.
By the terms of that act the two members of the State medicalaid board, other than the chairman, constitute the State safety board.
The labor commissioner and State mine inspector are advisory mem
bers without vote. The appropriation for carrying on the work
comes one-half from the medical-aid funds and one-half from thei
general fund of the State.
Local aid boards were abolished and in their stead were created
three district boards to perform the field work for both the State
medical-aid board and the State safety board.
The State is districted between offices at Spokane, Seattle, and
Tacoma. Each district office maintains one or more subdistrict
offices within its territory. The office of the State board is in the
statehouse at Olympia.
The board members, Dr. John S. Kloeber and Martin Flyzik, faced
an uncharted sea at the beginning of their administration. There
was no beacon light of experience to assist them in shaping a course.
Immediately confronting them was the task of organizing a head
quarters staff and equipping a head office and three district offices;
there were district board members and assistants to examine as to
qualifications, and to appoint; safety device, safety place, and safety
educational standards fitted to 50 classes of industry to promulgate
and publish; a statistical department to build up; a multitude of
forms to devise and have printed; and overlapping and duplication
of work to be eliminated. The thousand and one details incidental
to building up a State-wide organization presented a veritable moun
tain of work. The board attacked it resolutely.
John W. Pace, a veteran in secretarial work in connection with
large undertakings, was appointed secretary of the State board. Ira
42
SAFETY M OVEM ENT IN STATE OF W A SH IN G TO N .
L. Lockney, an experienced safety engineer, was appointed consulting
engineer. Tentative standards were published and hearings held for
every class of industry throughout the State. At these hearings
individual employers could voice objections to any provisions of the
safety codes as proposed.
It was found that the work of field assistants of the district boards
and field assistants of Labor Commissioner Charles Younger over
lapped. Cases came to the attention of the board where plants were
inspected by a representative of both departments on the same day.
One employer told a field assistant that along with his safety com
mittee he thought he would organize a reception committee for State
inspectors. The field work of the two departments was coordinated.
Deputies were assigned to different districts, wherein they perform
periodically the inspections for both departments.
Following the hearings, safety standards were adopted. By these
standards will be measured compliance or noncompliance on the part
of the employer with the general spirit and letter of the safety law.
Compliance with the standards entitles an employer to the follow
ing awards, based upon his contribution to the accident funds: Safety
device standards, 5 per cent; safe place standards, 5 per cent; safety
educational standards, 10 per cent- Noncompliance involves a
penalty in like amount.
An additional award of 10 per cent may be earned, or penalty in
curred, by the accident experience of the firm. In other words, the
ratio w^hich the accident cost bears to the contribution to the accident
fund affects the insurance cost to the employer. Thus, it can be seen,
there is a range of 60 per cent possible between employers who comply
fully with the standards and cut their accident cost below the aver
age and employers who do not comply, and whose accident cost soars
above the average.
The safety device standards adopted contemplate guarding all
possible points of hazardous contact between workmen and moving
machinery. Improbable points of contact are included, as well as
those points where duty takes the workman. In other words, the
standards contemplate making moving machinery as nearly “ fool
proof ” as possible in so far as accident causation is concerned.
The safety place standards are closely related to the safety device
standards. Manifestly, it would avail nothing in accident preven
tion carefully to guard moving machinery hazards and leave unsafe
floors, ladders,, stairs, platforms, and other hazards too numerous to
mention, in plant, yard, and woods.
The safety educational standards are considered most important,
and as such carry the highest award for compliance or penalty for
noncompliance, as the case may be. It is estimated by safety experts
that three-fourtlis of the preventable accidents (and 80 per cent of
all accidents are preventable) are due to unsafe practices and care
lessness on the part of workmen in every industry.
Education is the only method of combating this class of accidents,
and upon safety education the State safety board is bending every
energy.
A free bulletin service is maintained and bulletins are sent out to
every employer monthly for use on bulletin boards. Lectures illus
trated with moving pictures are provided at intervals. Thousands of
H A R V E Y
J .
K E L L Y .
43
standards have been furnished for free distribution, Schools of firstaid and safety instruction are conducted by district boards and their
assistants, under the supervision of the State safety and medical-aid
boards. Several hundred first-aiders have been trained among em
ployees in Washington industries since the State safety board com
menced to function, These employees have been taught safety com
mittee work and how to care for injured fellow employees when
accidents occur until the doctor arrives. In the statistical depart
ment an account is kept with every employer under the workmen’s
compensation act in the State. Each item of cost to the accident or
medical-aid funds and contributions thereto are recorded.
It is a tribute to the constructive genius and ability of the State
safety board that the mass of expensive detail surrounding the
launching of so great an enterprise has been cleared away, and the
organization is approaching the end of the biennium well within the
limits of its appropriation.
The requirements of the safety educational standards have been
made very easy to comply with. Two things only are necessary.
They are: (1) The forming and continued operation of a safety
organization under one of the plans set forth in Code No. 2; and (2)
the installation and continued maintenance of a bulletin board,
A theoretical safety organization can not earn the award, Monthly
reports from the safety committee or inspector must be mailed to
the State safety board upon Form No. 33, which is provided for that
purpose. This is the only official documentary evidence that a firm
is complying with the educational standards and is very important.
All information asked for on it should be supplied.
If the plant is shut down the report should be filed stating that
fact. In the absence of any report the safety board can not deter
mine whether the plant is shut down or its safety organization is
failing to function. The thousands of these reports filed in increas
ing numbers each month furnish evidence that the efforts of the
board are meeting with success;.
Throughout the administration of the safety law by the State
safety board there has been a noticeable absence of friction or ar
bitrary and hasty actions. The board and the various safety coun
cils of the State work harmoniously toward the common end. Many
men from the original field staff have left to accept positions as
safety engineers of new safety groups organized by employers.
To the industries of Washington the State safety board extends a
helping hand and a willingness to assist each employer to earn the
various awards.
The C h a i r m a n . That, I think, concludes the set program, and I
take it, the time being nearly half past 12, it is late enough to close
this meeting. At the close of this meeting I want to ask the execu
tive committee to meet.
The papers have all been printed and are available at the table
outside. When speakers were invited it was announced that it was
not desired to read the papers, but to summarize or to add to them,
or in some other way to discuss the matter without the formality
of reading, largely because it takes considerable time to read papers,
and the other plan is far preferable. That has been followed at other
conventions of the International Association of Industrial Accident
44
SAFETY M OVEM ENT IK STATE OF W A SH IN G TO N .
Boards and Commissions, and will be the rule at this. The next
session will be held at 2 o’clock this afternoon, and then there will
be an evening meeting at 8 o’clock that will be particularly inter
esting. Of course Gov. Stephens will not be here, he having come
this morning, but we will show for a few minutes a rehabilitation
reel prepared under the auspices of the Industrial Accident Com
mission of the State of California. We have a young man who is
without hands who will discuss our work for a few moments, and
he will pass around for your benefit some samples of his penman
ship. He is a splendid penman, and you will be surprised to see
what he can do. In addition there are various speakers who will
discuss this important question from different angles, and I am sure
you will all be present. It is the only evening session we will hold
of this character, and you will miss a very great deal if you are not
with us.
The various committees will be appointed and named either at
the next session or at the evening session.
When Dr. Meeker resigned to go to Switzerland a number of
months ago a very excellent choice was made in his successor pro
tempore, Mr. Verrill being chosen.
We have at 529 Market Street a safety museum I think you will
find well worth visiting; our offices are upstairs above the mu
seum, and we shall be glad to show you around at any time.
I f there is no further business to come before this session we may
adjourn. Hearing none I shall declare it adjourned, and we shall
meet at 2 p. m.
MONDAY, SEPTEMBER 20— AFTERNOON SESSION.
CH AIRM AN, CHARLES S. AN DR US, CHAIRM AN, ILLINOIS IN D U STRIAL COMMISSION.
ADMINISTRATIVE PROBLEMS.
Mr. F r e n c h . At the conclusion of the morning session it was pre
sumed we would hold a short business meeting, appoint committees,
and hear the reports of the secretary-treasurer, but it has been
decided to delay those three items until the beginning of this even
ing’s program, because they will not take long.
The chairman for this afternoon’s session comes to us from the
Illinois Industrial Commission. He is the vice president of our
International Association, Mr. Charles S. Andrus, and I take pleasure
in introducing Mr. Andrus and leaving the chair to him.
The C h a i r m a n . I presided at a meeting last year at Toronto, and
I was under very definite instructions from Dr. Meeker, our secre
tary, to see that nobody exceeded his time limit. He sent me a pro
gram with the amount of time each speaker should have written in
red ink, and I announced before the discussion started that accord
ing to my instructions I was going to stop each speaker at the time
set, and I did. I received many congratulations from members
of the association; in fact, nearly everybody congratulated me ex
cept the speakers. Some of the speakers would hardly speak to me
for two or three days. Dr. Meeker’s idea of speakers is a disappear
ing platform, in which at the given time the platform and the speaker
disappear. It is hardly practical, however. Unfortunately, and
without the slightest excuse, I left at home my program which held
the amount of time each speaker should have; but I trust you realize
that we have a great many things to discuss and that you ought not
to exceed the time limit which was given you.
The subjects this afternoon are both of practical importance to
all commissions, no matter what their insurance system is.
The first subject is in regard to compensation for eye injuries.
Those of you who were at Toronto last year remember that there
was a great difference of opinion among members of the commis
sions as to what should be done, especially as to the adoption of a
percentage system, reducing the Snellen system to percentages, and
we will have that matter discussed this afternoon. Instead of taking
any action on that matter last year, it was referred to the medical
committee, of which our good friend, Dr. Donoghue, who has at
tended every meeting of the association I think, at least every one
since I became a member, and who has taken a vital interest in this
subject, is chairman. We will now hear Dr. Donoghue, medical ad
viser of the Massachusetts Industrial Accident Board.
45
REPORT ON E Y E INJURIES.
( F i r s t R e p a rt o f th e M ed ica l C o m m itte e .)
BY FRANCIS D. DONOGHUE, M. D., MEDICAL ADVISEE, MASSACHUSETTS INDUSTRIAL
ACCIDENT BOARD.
The purpose of the medical committee in preparing this report
should not be to go back of existing laws or to concern itself with
the reasons underlying specific compensation payments. A prin
ciple honored by general acceptation must serve the purpose of
practicability. It may be considered unwise, therefore, to suggest
radical changes, but rather to concern ourselves with simplifying by
broad interpretation the administrative problems.
The eye, it would seem, occupies a place by itself in the compensa
tion law, in that the earning power in a large number of trades and
employments depends upon the working condition of the organ of
vision. “ Nearly all trades and professions require good sight, even
the coarsest sort of labor being affected if the vision falls below 50
per cent, and being impossible if it is below 0.05 per cent of the nor
mal visual acuity. For finer kinds of work the visual range is be
tween 75 per cent and 15 per cent. A workingman who either sud
denly or gradually becomes blind loses his job and with it his earning
ability.” (Wiirdemann—Injuries of the eye.)
In considering the factors in occupational vision, we must consider
“ first that the most important of the visual factors is the central
visual acuity; next in importance is the visual field; and the next the
ocular motions. There are secondary factors concerned in the act o f
seeing that are physically of importance, which are the cerebral
vision, the sense of light and color, and that of adaptation. Acci
dental injury limited exclusively to any one of these factors is cer
tainly not recognizable; for where such takes place other portions of
the visual act, especially the visual acuity, and the field, are im
plicated. Therefore, we include the secondary functions when we
treat of injuries to the three primary factors of vision.” (Wiirdemann—Injuries of the eye.)
It is our purpose to call attention to statutory defects concerning
the conditions under which specific compensation is to be granted fol
lowing ocular injury. In some acts it is laid down that specific com
pensation is to be granted when vision is reduced to one-tenth of
normal with glasses. But what constitutes normal, and how is a
board of laymen to determine intricate points in higher physics when
statutory language is either defective, ambiguous, or nonspecific? To
correct this situation let us lay down two theses:
I. Normal central visual acuity is not normal vision.
II. One-tenth of normal vision does not mean one-tenth of normal
central visual acuity alone.
It (II) means normal central visual acuity and normal peripheral
vision, or, said another way, a normal field of vision with lowered
46
FRANCIS D. DONOGHUE, M . D.
47
central visual acuity. So that any attempt to construe normality
in terms of central vision alone is bound to work injustice in many
cases. What, for example, boots it for a man to possess with glasses
100 per cent central visual acuity, or normal central visual acuity, and
at the same time possess but 50 per cent of his visual field ?
As illustrating this is the case o f ---------, who has a cuneal hem
orrhage. Now, a cuneal hemorrhage may mean that if on the
mesial surface of the occipital pole of the cerebrum, on one side,
there occurs destruction of tissue by reason of circulatory change,
the resultant change in the field of vision is that in one eye the
whole temporal (50 per cent) part of the visual field and in the
other eye the whole nasal (50 per cent) part of the field become
perfectly black and nonexistent, a condition known as “ homonymous
hemianopsia.” Who shall say that this vision is normal because the
central visual acuity is 100 per cent in either eye ? Must not any act
which is intended to be not only equitable but welfare-working take
into account the loss of visual breadth of this case ?
For example, the Massachusetts act says that specific compensation
can only be granted when the vision is reduced to one-tenth normal
with glasses. The practical working out of this is, however, that
a broad-gauged and properly advised commission has had the wisdom
to grant specific compensation in traumatic cataract even when the
resultant vision is 100 per cent. Is not this in contravention of the
law? Not at all—the answer is that after cataract operation the
vision is only obtained by putting up a thick convex lens before the
operated eye, and that if the other eye be either normal or approxi
mately normal it is impossible to make use of the operated eye.
The value of the operation under such circumstances is but potential.
The vision may only be had in event of losing the remaining sound
eye, and not until that time is reached.
A further limitation of use of the operated cataractous eye lies
in the fact that in order to read a still thicker convex lens than that
mentioned for use in obtaining distance vision is necesssary, requir
ing constant change of glass from one focus to the other, and further
still, there is but a very inelastic focal range for near work. This
changing so handicaps a worker that the occupational possibilities for
those depending on vision following cataract operation, no matter how
good the resultant vision may be, are extremely limited. In the
same way, it is possible to get after injury central visual acuity of
four-tenths, five-tenths, six-tenths, or eight-tenth^, with a coexisting
detachment of the retina, but also with a badly damaged field and
annoying subjective symptoms of light flashings and other un
pleasant subjective sensations, so that the eye is without practicable
value.
It follows that in a laborer, shoveling or working with gross
tools, two-tenths to three-tenths would still permit adequate binocu
lar vision for the occupational needs, while in a machinist’s helper,
handling a micrometer screw or gauge, it would not only not be help
ful but the binocular vision obtained would be confusing by reason of
the blurring of the superimposed image from the defective eye, so that
the man woiild actually be better off with the injured eye covered,
even though the vision of the covered eye taken separately might
be as high as four, five, or even six tenths.
48
REPORT OK EYE IK JURIES.
Or, again, for example, if a watchmaker has a resultant vision of
as high as seven-tenths in a master eye, with circles of diffusion from
the slight irregular astigmatism which blurs the image—particularly
if obliged to work in artificial light—he may yet have binocular
vision, but not useful binocular vision, in that he is unable to do his
former work; whereas a factory hand may work levers, put in shut
tles, or feed a press with a resultant three-tenths or possibly twotenths vision in the injured eye, still having adequate useful binocular
vision meeting the needs of that type of occupation.
The same objection occurs in hyalitis, vitreous opacities—island
scotomata, gunbarrel fields of hysteria, choroidal changes, and many
other conditions—so much so that it is imperative that any act, in
order to render justice in post-traumatic ocular conditions, must be
broad and elastic in its wording, leaving the interpretation in the
individual case to the administrative board, which will take into
account in its findings the occupational requirements, age, station,
education, and occupational training of the injured employee in de
termining whether or not specific compensation is to be awarded
instead of fixing an arbitrary low point which' in reality shows
nothing and works hardship.
Attempts to reduce complex human mechanism to formulas are
very old. Nowhere has this tendency been more pronounced than in
the attempt to formularize visual economics. And both effort and
object are alike laudable were it not for the fact that we are dealing
not in terms of constants nor of approximate constants but with a
multiplicity of variables admitting of such broad limits of interpre
tation that in each instance the variable becomes a subject of expert
discussion. Thus when the number of such variable factors approach
15 to 20 to the completed formula with the end design of estimating
visual diminution in percentage, together with its value to the par-.
ticular individual, of what practical value is such a completed for
mula if each component term is again to be made the object matter
of expert controversy and time loss ?
The human machine is not the sum of its parts; a man is not the
sum of his functions. He is the sum of his functions plus an indi
viduality. This individuality—it is bromidic to say it—is the differ
ence between success and failure, between artistic achievement and
barren years of effort, between efficient economic output and dis
couragement.
To particularize: For 35 years attempts have been made so to
estimate visual diminution or loss in terms of central and peripheral
visual acuity—in percentage, in terms of age, occupation, social
status, general health, education, physical type—residual condition
of opposite impaired or unimpaired eye, and many other more or
less factors, with the icfea of rule-of-thumb adjustment in visual loss
from injury or disease. As in so many other avenues of human
activity, such, data can only be computed as integers and measured
in their entirety by the life-trained individual who can properly
separate the essential from the nonessential and winnow the wheat
from the chaff.
Formula construction applied to the human eye and its functions
has been done 25 years since, and thoroughly done, admitting o f
but little improvement. I f you concede the value of a formula hav-j
ing for its aim estimation of economic visual loss in percentage it is .
FRANCIS D. DONOGHUE, M . D.
49
ready at hand and has been so for a quarter of a century, having ap
peared in Visual Economics, by Magnus and Wurclemann, 1902.
More recently we have had the efforts of the Chicago Ophthalmological Society, reported by Dr. Frank Allport in the Monthly Labor
Review of the United States Bureau of Labor Statistics of April,
1920, His table is as follows:
Basis of settlement of visual losses in one eye.
20/20 indicates 100 per cent of visual efficiency and no loss of vision.
20/30
“
94.5 per cent of visual efficiency and 5.5 per cent loss of vision.
20/40
“
89.0 per cent “
“
“
“ 11.0 per cent “
20/50
“
83.5 per cent “
“
“
“ 16.5 per cent
20/60
“
78.0 per cent “
“
“
“ 22.0 per cent
20/70
“
72.5 per cent “ * “
“
“ 27.5 per cent
20/80
“
67.0 per cent “
“
“
“ 33.0 per cent
20/90
“
61.5 per cent “
“
“
“ 38.5 per cent
20/100
“
56.0 per cent “
“
“
“ 44.0 per cent
20/110
“
50.0 per cent “
“
“
“ 50.0 per cent
20/120
“
41.0 per cent “
“
“
“ 59.0 per cent
20/130
“
36.5 per cent “
“
“
“ 63.5 per cent
20/140
“
32.0 per cent “
“
“
“ 68.0 per cent
20/150
“
28.5 per cent “
“
“
“ 71.5 per cent
20/160
“
23.0 per cent “
“
“
“ 77.0 per cent
20/170
“
18.5 per cent “
“
“
“ 81.5 per cent
20/180 ' “
14.0 per cent “
“
“
“ 86.0 per cent
20/190
“
12.0 per cent “
“
“
“ 88.0 per cent
20/200
“
10.0 per cent “
“
“
“ 90.0 per cent
Snellen’s test letters are used and should be hung in a good light 20 feet
from the applicant. The uninjured eye should be covered during the test.
Vision is expressed in fractions. The distance of the applicant from the
letters constitutes the' numerator of the fraction ; the smallest line seen con
stitutes the denominator. Thus if the applicant is seated 20 feet from the
letters and can see the line marked 20, his vision is 20/20 or normal. I f he
can only see the 50-foot line, his vision is 20/50, etc. The applicant should
be given credit for a line if he can read a majority o f the letters in the line.
This table assumes that if an injured applicant can see the 200 line while
sitting 20 feet away— in other words, if he has still a vision of 20/200— he is
not industrially blind; his visual efficiency is 10 per cent and his visual loss is
90 per cent. If his vision is worse than 20/200 he is industrially blind. From
20/200 vision is gradually scaled up to 20/20, or normal, by fractions of 10, as
will be seen on the table, and estimations of visual efficiency and visual losses
deducted thereby.
A similar table prepared by Dr. Y. A. Chapman, of Milwaukee,
Wis., and presented before the American Academy of Ophthalmology
and Oto-Laryngology in a paper which he read at its annual meet
ing, at Pittsburgh, October 30, 1917, varies from Dr. Allport’s table
only slightly, and is as follows:
Chaptnan’s percentage vision table.
20/15 =100 per
=100 per
20/30 = 95 per
20/40 = 90 per
20/50 = 85 per
20/60 = 80 per
20/70 = 75 per
20/80 = 70 per
20/90 = 65 per
20/100= 60 per
20/20
26039 ° —
cent ^
cent
cent
cent
cent
cent
cent
cent
cent
cent
2 1 --------- <
ri=superexcellent vision.
= n o loss of vision.
= 5 per cent loss of vision.
= 10 per cent
= 15 per cent
= 20 per cent
= 25 per cent
= 30 per cent
= 35 per ccnt
= 40 per cent
REPORT ON EYE IN JU RIES.
50
20/110=
20/120=
20/130=
20/140=
20/150=
20/160=
20/170=
20/180=
20/190=
20/200=
20/210=
20/220=
55
50
45
40
35
30
25
20
15
10
5
0
per
per
per
per
per
per
per
per
per
per
per
cent vision= 45 per cent loss aof visioa.
a
“
= 50 per cent “
cent
“
“
= 55 per cent “ “
cent
a
cent
“
= 60 per cent “ a
a
u
cent
“
= 65 per cent “
a
“
= 70 per cent “ a
cent
a
cent
“
= 75 per cent “ a
u
“
=
80 per cent “ u
cent
a
“
=
85 per cent “ a
cent
it
cent
“
= 9 0 per cent “ a
a
cent
“
=
95 per cent “ a
ii
“
=100 per cent “ a
These tables appear to be supererogatory. The need is not so much
for a measure of central visual acuity under this table or that (and
Snellen serves perfectly well without embellishment) as a measure
of practicable vision. No attempt to modify any present standard of
central visual acuity meets this requirement, and so many are the fac
tors to be taken into consideration in the individual case, some of
which, naming only a few, are intensity of the light sense, size and
character of the visual field, industrial requirement of the individual
case, previous training, doctrine of master eye associated with right
or left handedness, and muscular errors, that any attempt to create
an arbitrary table which wTould adequately evaluate these factors is a
practical impossibility.
It is therefore evident that those men involved with the practical
administration of the law involving complex formulas and scientific
facts must choose a practical and working ground between tables and
charts or the other extreme of mathematical formulas, impracticable
by reason of their complexity even if correct in the scientific sense.
In administering present laws and in striving for changes, such
laws as have the wording “ to one-tenth of normal vision with
glasses” are unjust and can not be too quickly discarded. Threetenths should be a minimum, and specific compensation should be
granted when vision is reduced to three-tenths of normal central
visual acuity if no concurrent field or muscular defect exists.
Specific compensation for the loss of vision should be within the
discretion of industrial accident boards, who in granting such com
pensation should have in mind the occupational visual requirements,
previous training of the injured employee, and the fact that one eye
was better than the other before the injury. When central visual
acuity of five-tenths of normal with glasses exists, specific compensa
tion should not be granted unless a considerable defect of the visual
field exists whereby the resulting vision is impracticable.
Industrial accident boards should take into account not only central
visual acuity but also central or peripheral field defects of perma
nent or annoying conditions, such as dazzle, blend, or diffusion circle.
Arbitrary construction of present laws may work an injustice in a
very large portion of cases.
To adjudge such cases, the rationale must be—
1. Is binocular vision necessary for the occupation?
2. Does the employee have binocular vision?
3. Is the resultant vision of the injured eye such as to produce
useful or nonuseful binocular vision?
F R A N C IS D . D O N O G H U E , M . D .
51
It then follows that for an equitable award in the given case, at
least the following procedure must be carried out:
1. The exact vision of either eye must be established.
2. The master eye must be determined.
3. The visual needs of the particular occupation must be con
sidered (not difficult).
4. A decision should be rendered, after hearing testimony on those
three points, as to whether the vision in the injured eye is so low as
to preclude useful binocular vision in the individual’s occupation.
In board practice this would readily work itself out by (which
amounts to a paraphrase of the foregoing}—
1. Categorizing occupations in terms oi their visual requirements.
2. Obtaining visual data of injured and other eye by impartial
examinations, together with a statement as to binocular vision and
master eye.
3. Determining by conference, hearing, or even by impartial re
port alone (as is possible in all but very few of these cases) whether
the resultant vision in the injured eye is so efficient in producing
binocular vision that the binocular vision thus obtained will enable
the employee to carry on his occupation as before.
The boards may well consider the establishment of standard
methods of examination, and as the law at present reads “ to onetenth of normal vision” the committee considers standardization
upon that basis, although the same standards apply if the minimum
vision be stated as two-tenths or three-tenths, and as many laws
read u with glasses,” that also is considered.
The following factors should be taken into account:
a. A definition of normal vision expressed in terms of ability
correctly to interpret form at infinity.
b. Test object and illumination.
c. Examination methods.
d. What is considered one-tenth of normal vision.
e. A word as to the practicability of that part of the law which
reads “ with glasses.”
a, By normal vision is meant the ability correctly to interpret at
infinity symbols that are constructed according to definite mathe
matical formulas, in that the letter or ideograph as a whole must
subtend an arc whose visual angle is five minutes and the com
ponent parts of the letter a visual angle of on& minute measured
from the top and bottom of the letter to the nodal point of the eye.
The symbols used may be letters in English (Roman), Hebrew,
Russian, Greek, or any other form of letters or hieroglyphics or
ideographs, provided only the arc subtended be five minutes and the
parts one minute.
b. The letters or symbols should be illuminated more diffusely
than focally from any steady source and within rather broad limits,
say of from 2.5 to 5 foot candles when artificially illuminated (and
for purpose of uniformity artificial illumination is always best),
but in no case be so overilluminated that glare and cross lights
result. The illuminating source should be screened from the ex
amined. The symbols should, except in the instance of measuring
the light sense as in glaucoma or optic atrophy, show marked con
trast to the background. Some have personal preference for india
52
R E P O R T
o
k
e y e
i n
j u
r
i e
s
.
ink or lampblack etched into white porcelain and as second choice
black printed letters on a white card.
c. The examined is placed at infinity (the distance at which ac
commodation and convergence no longer act, roughly 21 feet) and is
instructed to read—each in language of preference—and in the case
of illiterates to tell the content of an ideographic card. Having
ascertained the visual acuity of either and both eyes at infinity, the
individual is moved to different distances and again told to read to
the extent of his ability. This properly done is a time-consuming
maneuver but has the desirable quality of exactness in that a half
dozen or a dozen distances may be tried and the result fraction or per
centage must always be the same. Such procedure is the only way in
which exact vision may be obtained and proved, and must accord with
the corroborative results of skiascopy, keratometry, and examination
of the fundi. These last three should always be done, and a record of
vision without these records, while not valueless, is inexact. With
them in experienced hands there can be no cavil as to visual results,
even in those cases which are either just above or just below the
arbitrary one-tenth of normal standard the law sets. Such method
contrasts violently with the rule of thumb adopted in quick exami
nations of placing the patient 20 feet from the card and asking him
if he can “ see the big E.” The necessity of using skiascopy, kera
tometry, and fundus examinations is shown if the law expressly
states vision with corrective glasses, and corrective glasses are
properly not a matter of subjective choice as an individual part but
are a carefully worked out formula obtained objectively by these
methods before put upon the patient for correction. To sum up,
either eye is tested separately at varying distances for the purpose
o f proof and checking, and further checked by objective methods.
d. That eye should be considered below one-tenth of normal which
with correction fails to read test symbols designated for ten times the
distance of the patient from the symbol, repeating the test at vary
ing distances and checking for uniformity of results and finally
showing a consistence with objective tests.
e. A word as to glasses. In just the same way a thick biconvex
lens of 12 dioptrics over an eye operated for cataract can not be
worn for practical purposes when a good opposite eye is present, and
consequently for purposes of the law such an eye is to be considered
as lost or valueless, just so impracticable is the correction of the ir
regular astigmatism caused by corneal cut (and a very large per
centage of industrial eye injury results in corneal scarring from cut,
burn, or traumatic ulcer), since the glass which corrects must needs
be adjusted to such a degree of nicety as regards axis that in event
o f opposite sound eye, the glass which corrects the injured eye is
generally of no value to a laborer or an> artisan, and oftentimes is
not tolerated even when urged. In this respect the law “ with
glasses ” should be as broadly interpreted as in the instance of the
cataract glass. In the working out of such a revised law a proper
report of ocular examinations should contain a statement, not merely
of the central visual acuity, but also a statement of field measure
ments of the light sense, refraction, and adaptation index of the par
ticular eye to the individual’s occupation both before and after in
jury (if possible).
F E A N C IS
D.
D O N O G H U E ,
M .
D.
53
To summarize, a standard eye examination would be about as fol
lows :
I. A visual test—with vision expressed for either eye, according
to Snellen or Monoyer, both in the refracted or unrefracted states
under a diffused light of not less than 2-foot candles and not so
great as to produce glare. This gives wide range.
II. The nature of the refraction.
III. A statement as to the fundi and refractive media.
IV. The retinoscopic data of either eye.
Y. The ophthalmometric data of either eye.
VI. The visual fields—in important cases reduced to diagrams in
degrees—giving peripheral limitations, central, para central, and
peripheral scotomata.
VII. Data of external eye.
V III. The muscular balance.
IX . Data of adnexa,
DISCUSSION.
The C h a i r m a n . Y ou will remember last year that Mr. Wilcox,
of the Wisconsin commission, had some very firm and decided ideas
about this subject, and I understand that since then the Wisconsin
commission, of which he is a member, has adopted such a table. Mr.
Wilcox is not here to-day, but Mr. Konop, a member of the Wisconsin
commission, is here and will lead the discussion on this subject.
Mr. T h o m a s F. K o n o p , commissioner, Wisconsin Industrial Com
mission. In looking over the table presented by Dr. Donoghue I find
that it is about the same thing as that we have adopted in Wisconsin.
We have not adopted anything formally. We have been waiting
for the report of this committee to suggest something that could be
practiced in all the jurisdictions and then we will adopt that.
Now, in our State the compensation act provides for 140 weeks for
the total loss of vision. Up to about two years ago, or probably not
that long ago, every time when the doctor said that a man’s reading
was 20/40 after an accident to his eyes we took the 20/40 of 100 and
rated him one-half loss of vision, which was a very simple way to
do. But since the war or since they began to examine applicants for
service in the Army why we thought wre had to adopt a different
principle. As I said before, we have not adopted any table, but we
follow a tentative table like this. The only difference is that at the
present time we call 20/200 total loss of vision. Then we also have
20/30 as about 5 per cent loss of vision, but if a man by the use of
glasses can get that normal, 20/20, then we allow him one-half of
the 5 per cent, or 2J per cent loss. That 2J per cent we think is to
compensate the man for the inconvenience of wearing glasses in
order to bring his eyes to normal vision. There is only one differ
ence between this table of Dr. Donoghue’s and ours; that is, ours
is much shorter. We do not have all these different steps. I think
we have only about 10 steps in all, 20/20, and 20/30, and 20/40, and
2Q/80, and 20/100, and then we jump to about 20/120, and 20/200 is
total loss of vision.
Now, before we began using this table we had two meetings at
Milwaukee with the Ophthalmological Society of Milwaukee, eye
54
R E P O R T
O N
E YJB
IN J U R IE S .
experts, and we had a thorough discussion of the subject. Of course,
it necessitates in every case a statement from the doctor, who offers
his report or his testimony in open hearing before the commission
in order to have a record that will stand the test of the courts. We
have had this doctor make a statement in the record of 20/40 sight
remaining after injury; that does not mean one-half loss of vision,
but it means less than that. I f our finding is 20/40, instead of allow
ing, as the doctor has it, 11 per cent, I think we allow 16 per cent. On
this 16 per cent we can make our finding, and it has been sustained
by the courts. I do not know whether you practice the same way
in the administration of the compensation act, but we have three ex
aminers and two of the commissioners, Mr. Wilcox and myself, who
are actively engaged in going around and adjusting compensation
cases. We visit every corner of the State, take in the principal
county seats, and have a schedule calendar, wherein we probably
spend six days a week in adjusting compensation cases.
The C h a i r m a n . You will remember the excellent discussion we
had in Toronto on eye injuries, a paper presented by Dr. Trebilcock,
who does the eye work for the Ontario board, and the next person,
who will discuss this subject will be Commissioner George A. Kings
ton, of Ontario, who, as you know, last year was president of the
association.
Mr. K i n g s t o n . I am very glad indeed to see this subject given prac
tically first place in the convention proceedings; and I want to con
gratulate the association on the work that its medical committee has
performed in preparing this report. I do not agree by any means
with everything in it, but, nevertheless, Dr. Donoghue has presented
a subject for discussion, and he has discussed it in a way which I am
sure will benefit everyone who is interested in the subject. Some o f
you who attended the Boston convention will remember I tried in
a very weak way to present some of the problems in eye-injury cases
which we as commissioners have to solve. I tried to improve on
that last year by presenting to you Dr. Trebilcock, of Toronto, a
first-class eye specialist, and it was as a result of the discussion
following Dr. Trebilcock’s excellent paper that Mr. Wilcox moved a
reference to the medical committee, which has resulted finally in the
presentation of this report to-day. I f Dr. Donoghue were the medi
cal adviser of the Ontario board he would be where he has expressed
himself as desirous of being with relation to a compensation law.
Fortunately for the administering board there, we are vested with
the fullest possible discretion in awarding compensation in the par
ticular case for the particular injury and having regard to all the
elements of impairment which are reported. Visual acuity, as Dr.
Donoghue has stated, is of course only one of the difficulties which
one finds in dealing with an eye injury, and of course, it is very
wrong to attempt to size up such an injury on a report which does
not indicate all the surrounding circumstances and conditions as well
as the impairment o f visual acuity. No one should attempt to rate
an eye injury without knowing the visual acuity, and amongst other
things he should ask: What is the retina like ? Is the lens clear ? Is
the fundus normal? Is there good reaction to light? and, Is there
any narrowing of the field? Claimant may see straight ahead, but
not this way, or this way (indicating with hand one side and then
D IS C U S S IO N .
55
vhe other). A man may have practically 100 per cent visual acuity
and yet he may have a very poor eye. Is that not so, Doctor ?
Dr. D o n o g h u e . Yes; absolutely.
Mr. K i n g s t o n . I hope something will come from this discussion
which will result in a standardized form. We use a certain form in
Toronto, but I am not altogether satisfied with it. We were talking
of a bureau of standards this morning. I don’t know whether the
Bureau of Standards at Washington ever discusses such subjects as
this, but it would be an ideal thing for this convention if we could
have a standard eye form which each commission would use and
regard as quite the last word in that respect; then we might possibly
hope to reach something like uniformity in dealing with these cases.
In Toronto we have adopted the following basis or scale, not because
the law says so, but, groping in the dark, so to speak, for a basis
upon which we should rate eye cases, or determine the loss in the
particular case, we have said that if a man has lost his eye—that is,
if it has had to be enucleated—he is 18 per cent totally disabled. I f
the eye is blind but does not require enucleation, and it is normal in
appearance, there being simply complete loss of vision, we rate it
16 per cent, recognizing a small difference of 2 per cent between the
complete loss of the eye by enucleation and loss of vision. I f
the eye has been successfully operated on for cataract—that is, if
the lens has been removed so that there is still the possibility of a
fairly useful eye should he lose the other eye, a sort of reserve eye—
we rate it 12 per cent, feeling that there is that slight difference
between an eye that is totally blind and an eye of which it may be
said there is still some reserve of usefulness. As we all know, how
ever, that reserve is of very small moment, because until he loses the
other eye he will not be able to use the eye from which the lens has
been removed because it does not make up, as we say, with the good
eye. Possibly one reason for the difference is that although he will
not be able to use that eye from a practical point of view yet it does
enlarge his field to some extent, so it is not quite right to say that
it is absolutely of no present use to him. One word I wish to say
as to the fractional figures we use. I think on this side of the line
you use almost altogether figures such as 20/40, 20/60, 20/100, and
so on—what we might speak of as the decimal system—in referring
to the Snellen test card. A great many of our doctors in Canada
do the same, but a great many use what we call the metrical system.
I understand the continental schools use the metrical system, whereas
the American schools use almost altogether the decimal system; but
there is practically no difference, 6 meters being about 20 feet, and
the fractions stated by the doctors using the metrical system are 6/12,
6/18, 6/36, 6/60, etc.; so when we speak of a 6/60 eye in metrical
terms we are referring to a 20/200 eye in terms of the decimal system.
I am glad to hear Dr. Donoghue in his report criticize his own law,
as he has done. He recognizes the weakness of that system. I have
felt from my first study of the Massachusetts law that unless the ad
ministering board read into it a very liberal interpretation it would
not give the injured man a square deal. I understand, however, the
board has exercised a very liberal discretion in its administration and
interpretation of the law, which in effect gives the injured man that
compensation in respect to eye injuries to which perhaps a strict
56
R E P O R T
O N
E Y E
IN J U R IE S .
reading of the law would not entitle him. Suppose a man has lost
half the usefulness of his leg, or his arm, or his hand; I can not con
ceive of anybody being willing to deny that man compensation on the
basis of at least half the loss of the limb mentioned. The eye surely
is just as important a member as any the average man possesses. Of
course, it is more important to some men than to others, depending
upon the particular employment in which they are engaged; but I
am firmly of the opinion that if a man has lost half the usefulness of
his eye—I am not saying how we are going to determine how much
loss there is, but assuming that we find that as a fact—he should be
compensated accordingly. To say, however, that he must lose ninetenths of the usefulness of the eye (which I understand is the Massa
chusetts law) before he is entitled to compensation is surely doing
the man a great injustice. The tables referred to in the report, I sup
pose, had their inception in the tables, which were published and I
think to some extent used a few years ago, sometimes referred to as
the German tables and sometimes the Russian tables. Both of those
jurisdictions published eye tables, and they were, I presume, in pos
session of and no doubt used to some extent by most of the commis
sioners here before the war. There is considerable similarity between
the figures mentioned in the tables embodied in this report and the
two tables to which I refer. We tried for a time, in our groping for
light on this type of injury, to see if we could adapt the tables re
ferred to, but we found, as Dr. Donoghue has stated, that they were
altogether impracticable. I feel that if you attempt to reduce this
question of eye injuries to a rule-of-thumb or fixed basis without
putting common sense judgment into the particular circumstances in
each and every case you are not going to do the man justice, nor are
you going to feel satisfied yourself that you have fulfilled your duty
as compensation commissioner. I feel that every eye case must be
studied, taking into consideration all the difficulties which your eye
specialist will bring to your attention in his report. Every compli
cated eye case—that is, every case of an eye the sight of which is less
than totally destroyed but in which there is some remaining vision—
should be referred not only to your own medical examiner but to an
eye specialist who can thoroughly discuss it and give you light on
the conditions which exist, and then it is up to the administering
board to do justice to the man in the particular case. These are some
of the matters which I felt deserved mention, and I do not know that
I need add anything more, except that I would like to see this matter
referred back to the medical committee, with the hope that before our
next convention some steps can be taken to prepare a form which we
might hope would be adopted to enable the boards to deal with these
various eye cases.
The C h a i r m a n . The discussion will be continued by Dr. F. Jl.
Bird, of the Washington Industrial Insurance Department.
Dr. F. A. B i r d , chief medical adviser, Washington Industrial In
surance Department. In beginning the discussion of Dr. Donoghue’s
report on eye injuries, I wish to call your attention to the fact that
Dr. Donoghue referred to the table arranged by the Chicago Ophthalmological Society as being supererogatory, meaning something
not required by duty or necessity; or, in other words, something more
than duty requires. Now, under the Washington compensation act
D IS C U S S IO N .
57
this table represents exactly the intent of the law, because we are re
quired to pay for the actual loss, and we do not wait until the vision
is lowered to 1/10 of normal vision with glasses to begin to pay.
In fact, under our act when the vision has reached 1/10 we have paid
9/10 loss of vision. Therefore, I do not consider the table arranged
by the Chicago Ophthalmological Society to be supererogatory.
The Washington act does not take into consideration the occupa
tion, the age, or earning capacity of any individual, but treats all
industrial workers as one class. This, however, would not prevent
us from using a standard table to work from. At the same time,
other States having laws differing from ours, in that they begin
paying only when vision is lowered to 1/10 of normal, and take into
consideration the occupation, age, and wage, could likewise work
from the same table as a basis.
Just recently it came to our notice that the Federal War Risk
Bureau had under consideration the preparation of a table to be
used in rating eye injuries under their jurisdiction. This table is
now being considered by the United States, Canada, Great Britain,
and France. It has been submitted to a number or high-class eye
specialists for their criticism and recommendation. When com
pleted it will represent the conclusions of some of the best men in
the countries mentioned. It is very comprehensive and not too
voluminous to be handled by a law commission after a standard
examination has been made by a competent examiner, setting forth
the conditions found. At present this table is not available, but con
sidering the fact that there is no difference in economic effect between'
war injuries and industrial injuries, it seems to me that it would be
very appropriate to investigate this table. I wish to quote in this
connection part of a letter received from W. C. Rucker, chief medical
adviser to the Bureau of War Risk Insurance:
M y D e a r D octor : I am in receipt of your very kind and very interesting
letter of August 17, 1920, relative to the rating of eye disabilities. It has been my thought all the time in working up this table that it was the primary duty
of the Bureau of War Risk Insurance in carrying out the war risk act to pre- ;
pare and adopt a very carefully worked-out schedule of impairment in earning
capacities on account o f various injuries and diseases. To this end a board
has sat from time to time, first o f all creating a table, and secondly in correct
ing it and improving it in the light o f our experience.
Last spring I decided to ask the assistance o f a considerable number o f
prominent specialists to pass upon the table which had previously been com
pared with the rating tables of Canada, Great Britain, and Prance. Greatly
to my surprise practically all of the specialists whom we asked to help us
regarded the request very seriously and sent in simply magnificent criticisms.
W e are still working on a rating table and hope before long to have it in pretty
good shape. It was my idea to ask the Surgeon General of the Army and the
Surgeon General of the Navy to adopt it for their respective corps, and when
this was done we would recommend it to the Federal Employees’ Compensation
Commission, and the compensation commissions of the respective States.
In studying this question, I endeavored to secure such information as I could
relative to the tables in use by the States. There was such a lack of uniformity,
both as to basis and final conclusion, that the need of a standard table seemed
to be very great.
I was struck by one great point of difference in a great many of the States
as to how their law differs from the war risk insurance. In war risk insurance,
the basis upon which the impairment is made is the average in earning capacity,
rather than upon the actual impairment in earnings in the individual case.
You are at liberty to quote this letter at San Francisco, if you so wish, and
I will be more than glad to confer with you or any other representative of the
58
R E P O R T
O N - E Y E
IN J U R IE S .
respective commissions at any time, if you believe that such conferences will be
to our mutual benefit. Certainly I believe that we could learn a great deal
from the commissions in regard to this very important matter.
(Signed)
W. C. R u cker.
It might be well for the International Association of Industrial
Accident Boards and Commissions to defer the adoption of a stand
ard table of ratings until this table of the Bureau of War Risk In
surance is available, for it seems to me that if the Federal Govern
ment is going to adopt and accept a standard table of rating, it
might be well for the commissions of the respective States to adopt
the same schedule of rating as a standard, provided it meets with
their approval. I have not seen this table personally, but Dr. J. W.
Mo well, my associate in the service of the State of Washington, has
gone over it carefully and informs me that it is more comprehensive
than he thought a table could be arranged. It takes into considera
tion all conditions relative to the eye, and vision both central and
peripheral, ocular imbalance brought about either by injury or
disease, and has for its base the effect on loss of earning of an average*
person, not taking into consideration wage, occupation, or age.
The Washington commission has always considered 20/20 central
vision indicates 100 per cent of visual efficiency and no loss of vision,
and that 20/200 central vision indicates 9/10 loss of visual acuity.
We always take into consideration any other condition relative to
the eye or its adnexa, and require that the special examination upon
which the rating is based show the following:
1. The condition of adnexa.
2. The macroscopic condition of the eye.
3. Muscular imbalance, if any.
4. The visual field, if other than normal.
5. The ophthalmoscopic findings.
6. A statement of the findings in the fundus and refractive media
~ of the eye.
7. The uncorrected vision of both eyes and the refracted vision
of both eyes; also an opinion as to whether the condition present is
the result of accident, as claimed. I f not, we require a statement
giving an opinion of cause for condition present, if other than normal.
I am authorized by the industrial insurance commissioners of the
State of Washington to state that they are very anxious to see a
standard table of rating and a standardization of examination
adopted by the International Association of Industrial Accident
Boards and Commissions.
The C h a ir m a n . The subject will now be open for discussion by
the members of the association.
M r. H a r r y A. M a c k e y , chairman, Pennsylvania Workmen’s Com
pensation Board. We recognize the necessity of the adoption of some
table or standard, such as has been suggested. It seems to me a number
of commissioners are in the same position in which we are. We must
have some legislation first before a standard table can be available
for the use of the court, for the purpose of determining the extent
of disability and the corresponding amount of compensation.
Recognizing the deficiency of our laws in that respect, at the last
session of our last legislature I proposed some legislation on the
D IS C U S S IO N .
59
power of the board to pass on loss of vision, the compensation to be
awarded according to the loss of vision; but our legislature did not
seem to absorb the idea, and therefore we are left with our old pro
visions, which simply provide for 125 weeks or 60 per cent compen
sation for the loss of vision. I don’t know how many States are
working under that rather crude and unsatisfactory provision; but
I am sure before our board in Pennsylvania, would be sustained in
the courts in the graduation of compensation for percentage of loss
of vision we would have to have enabling legislation. Under our
ruling we have two alternatives. We can grant compensation for
the loss of an eye, for the loss of the use of an eye, but as between
the actual loss of the use of the eye and a percentage of vision, we
have no elasticity of judgment whatsoever. For instance, if a work
man loses 50 per cent vision he goes back to his old occupation. We
are powerless to award him anything for the loss of that amount of
vision, unless the loss of vision sends him to some other employment;
then he becomes a partially disabled man, and under the partialdisability clause we can award him partial disability. Therefore it
seems to me that in Pennsylvania, and perhaps a good many other
States represented here, we are in the same position many States are
in regarding safety standards.
I was interested this morning in a very pertinent question asked
in this respect, “ What does this all mean, the establishing of a
safety standard?” Uniform safety standards will mean nothing
unless each board has power to create and adopt those standards,
and power to enforce them in establishments. Some States, like
Pennsylvania, would be powerless to adopt this very fine idea of the
graduation of compensation awards proportionate to the loss of
vision unless enabled to do so by the legislature. Therefore, it seems
to me this body ought to suggest in the first instance the placing by
each State of sufficient legislative authority in the courts to adopt
such a standard.
The C h a i r m a n . Any further discussion?
Dr. F. H. T h o m p s o n , medical adviser, Oregon Industrial Accident
Commission. The paper of Dr. Bird was very excellent. The Ore
gon and Washington laws, are, I think, practically identical. Under
the Oregon system, the loss of vision has been estimated on the
Snellen type of central vision, unless the examination revealed a
contraction of the visual field, or some other condition which was
to be taken into consideration. I do not believe with the commis
sioner from Wisconsin that the schedule they are working under is
a fair or correct schedule to the injured workmen. It is true that a
person may have an injury and yet have 20/20 central vision, and
still have a defect of the eye. The object of estimating central vision
is because that is the most acute vision you have, and probably the
majority of eye injuries received affect central vision rather than
the field of vision, and that should not be lost sight of in making
the table to which all boards could conform. I agree with Dr. Bird
that it is a very wise thing, probably, at least to give consideration
to the table that is in compilation now by the Federal Government
before adopting a table for all the commissions. I personally be
lieve where a person has suffered an injury to the eve, however you
arrive at the conclusion as to the degree of disability to that eye,
60
R E P O R T
O N
E Y E
IN J U R IE S .
that he is certainly entitled to compensation for whatever degree of
loss it is, the same as if it was a hand, or foot, or arm, or anything.
Mr. K o n o p . I f a man has lost his sight, we take all those facts into
consideration, just like they do in Toronto. I do not want to be
understood that we follow this tentative table strictly. Every case
has to depend on the facts and particular conditions of the eye, and
it would certainly be a very bad thing simply to follow these measure
ments of straight vision. We have had cases where a man has had
20/20 vision looking straight ahead, but has lost his field of vision,
and we have allowed as high as 72 per cent. We take all those things
into consideration.
Dr. T h o m p s o n . What I had reference to was, for instance, taking a
20/40 vision, provided other conditions are equal. Suppose the field
of vision remains the same, and the man has by test, practically the
only test you have for vision, 20/40; I say that man has lost one-half
vision in that eye. He may be able to do the same work he was doing
before, but he has lost one-half, and I don’t believe it ought to be
rated at one-tenth or one-fourth.
Mr. K o n o p . I don’t agree with you now. I believe the man has
not lost one-half of his vision when he has 20/40. I think Dr.
Donoghue’s paper determines that. I can’t believe that. But I think
every fact of the situation should be taken into consideration. Just
because a man has 20/40 distance vision, he has not lost half his sight.
Every eye specialist will tell you that.
Dr. W i l l i a m H. B e g a n , of Boston, Mass. It is well to remember
that all injured men are not truthful. It will be well to remember
that, getting down to low fractions, you are going to pay out a lot
of money unnecessarily. Secondly, that as a rule an injury to the
cornea, or other part of the eye, is not corrected by glasses. Ninety
per cent or more of the cases are from scarred tissue, they are de
pressions that a glass does not overcome. The defect is there pri
marily. You are leaving a great deal to the man’s say-so. It all
comes down to the question of opinion. The question of opinion,
then, is how much interest the examiner is going to take in the man
he is examining, what his connection is, what his pay is, who pays
him.
>
The fields of vision, I think, are given fully all they deserve. Your
field of vision for white is larger than for red or green. They are
correspondingly lessened. You don’t have any trouble seeing green;
you don’t have any trouble seeing red; they are perfectly bright and
clear, down to an infinitesimal amount. White you see. White
probably is less conspicuous to you than red or green. Your central
vision is what you need to see with. Your eyes are made to rotate
wherever you look. Your central vision takes in the object. You
can not see distinctly; it is like a pacer to a racer, something to drive
you on. When you are looking straight ahead, something impels you
to go out there; your subconscious vision, you might call it, takes you
on. The only difference when you lose the peripheral vision is that
things might come quickly to one side and cause damage to your per
son without this part saying it is there. 20/40 vision depends alto
gether on what diminution is supposed to exist by regulations, and
the extent—how much actual loss a man has. He might have a thin
corneal scar directly oyer the central part of the cornea from an
D IS C U S S IO N .
61
acid burn or a caustic burn, that takes in simply the epithelial
layer. Take that alone, and the cornea will regenerate over night.
I f you touch the second layer, you have a scar, and then it depends
on how deep the scar is, and how opaque. With a thin corneal scar
a man could see with 20/40 vision, he could make out a letter of that
type; on the other hand, he could see as fully and distinctly as with
his good eye, only the image would be blurred. The internal damage
to an eye is of greater moment, as I see it. Whoever estimated, as
we have in Massachusetts, 50 weeks at $10 a week for the loss of an
eye, evidently was not thinking about his own eye at the time. I feel
that more compensation should be paid for specific injuries, and more
attention paid to the malingering end. It is very easy, especially in
the Atlantic Coast States, where we have so many foreigners, to
have malingerers. It is a common thing. As a matter of fact, I
never examine a man without feeling my first test must be a malinger
ing test, because it is seldom he will tell you anything about himself
until you develop some optimism. And the only way you can test
out this foreign element is by being an optimist and minimizing an
injury. It is not good, though, for the health to tell a man his eye
is going to be all right and have it go wrong.
Talking of visual acuity, from a cataract standpoint, in our State
an eye is considered lost if a cataract develops from an injury. Some
one has said a man gets certain vision afterwards, and he doesn’t get
full compensation for that eye. In my mind, an operated eye that
can be corrected with glasses is worse if the other eye is in good
shape. There is a condition where the clear light goes directly into
the retina, causing photophobia, which causes the other eye to lose its
function for near work and in depth much more than if the eye were
taken out. As to interocular changes, such as thermic action on. the
retina, our great trouble is the light from the oxyacetylene gas.
Many cataracts are supposed to be caused from that. It is well to
consider the age of the patient when you get cataracts and distinct
injuries placed on them. There is a peculiar little condition, which
has been written of by one man, of injury to the nerve tunnel caus
ing injury to the man’s eye by operation on the cornea, which leaves
no scar. That may be true, I have not seen it. I was in on a case
that was brought out, and it came out afterwards that the fellow was
working his eyelids, having got so he could do it nicely, thus causing
hyperemia of the eye, and it looked red and photophobic at the time.
Mr. R o b e r t E. L e e , chairman, Maryland Industrial Accident Com
mission. I am very much impressed with the thought given to the
subject and the attempt made to have a definite table which can
apply universally. I feel that is going to be, in the States at least,
an extremely difficult problem. Of all the compensation laws in
question, there are hardly any two alike, and yet each State thinks
it has the best law. Consequently it would mean that we would
have to have practically a universal compensation law before we
could have a universal standard to govern any disability, and I be
lieve that any standard that leaves out of consideration the character
of the employment a man follows will be a faulty standard. I f a
man is a day laborer it may be all right when he is examined by an
oculist to have that oculist say that he has 50 per cent loss of vision;
but if a man follows a highly skilled mechanical trade that
62
R E P O R T
O N
E Y E
IN J U R IE S .
requires acute vision it would not be a fair proposition to apply
the same rule to him. I believe therefore we have to take into con
sideration the kind of employment the man follows, together with
the injury that the medical experts give us to understand he labors
under. And my own judgment is that we will be better off if we
can have wider discretion placed in the hands of the commissioners,
so that we can work these problems out from a common-sense and
humane standpoint, than if we have everything enacted by legisla
tion, and rules and tables established for us, thus making us carry
out a purely ministerial duty and leaving us without any administra
tive duty. I believe it would have the effect of doing what compen
sation laws are intended to do, that they should be administered with
common sense to relieve individual cases, according to the judgment
of the men selected by the municipality to dispense justice in each
case. I believe that discretion ought to be placed in the hands of
the commission, and that there will follow in its wake a higher
standard of commissionership in the different States.
I expect our law is about as defective as any law on the statute
books. I don’t know but what it is as much of a crazy quilt as any
thing that was ever handled, but taking it “ by and large ” our law
•works out about as well for the people it was enacted to benefit as
any law I have heard of in the United States. For instance, I hear
that Massachusetts has a splendid law. I believe it has; it has
splendid people. Yet Massachusetts is satisfied to give a man
50 weeks at $10 a week for an eye; and then I think of poor little
Maryland. We give $1,800 for the loss of an eye. They have done
the best they can; we have done the best we can. In some things they
have eclipsed us and in some things we have eclipsed them. You
can.not establish any universal rule, because Maryland would not
accept $500 for the loss of an eye, and Massachusetts may not accept
$1,800. They may be right; we may be wrong, but we have the man
examined by a medical expert, and after he gives an estimate of that
man’s disability, after he tells us what his handicap is, we take into
consideration his estimate, together with the character of employ
ment the man follows, and believe under that system we have a more
happy condition than we could have if the legislature could say to
us, “ Thus far shalt thou go and no farther.”
I am glad to see the question come up, because it will open a dis
cussion which I believe in the final analysis will work out for the
benefit of all those interested in industrial insurance.
The C h a i r m a n . I think after w^e allow Dr. Donoghue to close the
discussion we should proceed to the next subject. We can then dis
cuss that subject, and if anyone wishes further to discuss this sub
ject he can also do so at that time. Doctor, in your absence another
compliment was conferred upon your Commonwealth, the fact that
you gave 50 weeks for the loss of the sight of an eye.
Dr. D o n o g h u e . I want to correct the idea that seems to be preva
lent in the minds of some of the men, that we pay simply 50 weeks
for the loss of an eye. We pay 50 weeks’ specific compensation for
the loss of an eye, or reduction of vision to 1/10 with glasses, but
that’s a little side line. We have a disability payment, consisting
of two-thirds of the man’s earning capacity while disabled and
D IS C U S S IO N .
63
until he gets back to suitable employment, and if he does not earn as
much as he did before, two-thirds of the difference between his new
rate and old rate. So, when you add all that together, when you
add his disability payment of $500 to the other payments for a;
Massachusetts eye injury, it will be found that our payments will
compare favorably, very favorably, with any State that pays on a
table basis. I had that in mind, that our law was a disability law,
with a specific payment, and I am somewhat skeptical about tabulat
ing eye injuries on the basis of the partial disability of a m a n total disability of a man—because most men with one eye can work
and work properly when encouraged, and will work a great deal
better when they are paid a specific payment than if paid upon
the basis of their total or partial loss as men. It has been suggested
that we wait for the War Risk Bureau to have the various depart
ments at Washington agree upon a table. I f the commissions wish
to wait that long, I am perfectly willing to wait, or I am perfectly
willing to proceed in this life and see what we can do.
I think the paper which I prepared has brought out a very good
discussion, and I believe, in view of all the discussion, that the paper
is well worth rereading and studying, because there has been no criti
cism upon the paper.
Mr. K i n g s t o n . I would like to make one observation as to what
Dr. Donoghue said, speaking of the fact that they make disability
payments in addition to the permanent partial allowance of $500.
I think many of the States do the same thing and I know all the
Provinces do. There are a few States, I know, that pay compensa
tion for so many weeks for a lost eye, dating from the date of the
accident, but I think many of the States pay for the healing period
or during total disability in addition to the statutory number of
weeks. This is as it should be, and I hope the time is not far off
when every compensation jurisdiction will calculate the statutory
number of weeks in these cases as from the conclusion of the healing
period.
ROUND TABLE— SYSTEMS OF COMPENSATION FOR PERMANENT PARTIAL DISABILITIES.
The C h a ir m a n . The next subject, “ Systems of compensation for
permanent partial disabilities,” is one of the most important and
one of the most difficult subjects which can confront any commis
sion. It confronts the commissions which have their State funds
just the same as it confronts the commissions which do not, and I
know you will all be interested in the discussion of this subject. The
first discussion will be the California system, by A. H. Naftzger,
who is one of the commissioners of the California board.
TH E C A L IF O R N IA SYSTEM OF R ATIN G PERM AN EN T P A R T IA L
DISABILITIES.
BY A. H. NAFTZGER, COMMISSIONER, CALIFORNIA INDUSTRIAL ACCIDENT COMMISSION.
When the California workmen’s compensation, insurance, and
safety act was in course of preparation, prior to January 1, 1914,
the industrial accident commission decided to introduce a system of
rating permanent partial disabilities that should be based on loss
of earning power. The study that was made showed this to be a
new and superior method, as compared to the plan of rating the in
juries at so much per, regardless of the use of the lost or injured mem
ber, prior to the accident.
To illustrate: I f a bookkeeper loses a foot and a stevedore meets
with a similar loss, more compensation is paid the stevedore, be
cause he has to seek new employment, while the bookkeeper returns
to his occupation without any reduction in wage-earning power.
Another illustration will show how the California way balances.
I f the bookkeeper loses his right forefinger, and the stevedore suffers
a like loss, more money is paid the bookkeeper, because his employ
ment is more or less affected, while such a loss to the stevedore
would not be serious, so far as his business is concerned.
In the California law the three main factors used in determining
the percentages of permanent disability are: (1) Nature of the
physical injury or disfigurement; (2) occupation; (3) age.
In preparing the schedule for rating permanent disabilities the
California commission called into service experts from the staff* of the
University of California, one or two of whom were employed for
several months, so that the schedule could have the advantage of
scientific guidance. The outcome was beneficial to the plan in
contemplation. A careful survey of the industries and the injuries
that occur to those employed therein, with particular reference to
the way each injury affects the individual in his work, aided in the
collection of a mass of data that showed the wisdom of considering
loss of earning power as the basis of rating.
64
A. H . NAFTZGER.
65
A proper method of rating permanent disabilities adds much to
the efficiency of a workmen’s compensation act. The number of in
juries resulting in permanent disabilities is a small percentage of the
total number of injuries occurring, but the effect of such injuries
upon the working population is very important in its result upon the
loss of earning capacity and the cost of compensation insurance.
The permanent disability is responsible for the creation of a class
of permanently maimed and crippled workers who suffer a decrease
in earning power through loss of a function or a part of the body*
Statistics compiled from the last report of the California Indus
trial Accident Commission show that the liability created by per
manent disabilities exceeded the liabilities created by either fatal or
temporary disability cases or the total cost of medical expense.
The difficult problem is determining the compensation benefits to
be given in those cases where there is “ partial ” disability of a
permanent nature. “ Permanent total ” disability presents a defi
nite status which time will not change. Where there is maiming
or other continuing limitation upon the earning capacity, ques
tions arise as to the decrease of disability, the capacity for adjust
ment in the old employment, or the ability to acquire a new trade or
to find employment of a different nature. Age, mental and phys
ical aptitude, different effects of the identical injuries in different
occupations, and differences in local opportunities for reemploy
ment in a competitive labor market, are only a part of the factors
that operate to render complex the problems arising in cases of per
manent partial disability.
Many of the States have embodied in their compensation laws
specific schedules of awards in terms of weeks or months for cer
tain defined injuries. Most of these schedules are based upon phys
ical loss only, and award varying amounts for the various injuries
enumerated as causing permanent disabilities. These amounts are
paid to all employees who sustain the same kind of an injury, irre
spective of the employee’s age and occupation. The ideal method
is as nearly as possible to standardize each injury, having regard
to age and occupation and the diminished ability of the injured
workman to compete in the open labor market.
The amount of skill or experience required is a function, first*
of the occupation, varying from no skill at all to the highest type o f
efficiency which requires an elaborate training or years of experience;
and, second, of age, varying as the worker passes from an appren
tice to the status of a skilled mechanic, or efficient worker of any
kind of employment.
A disability in general is more serious the greater the age, for the
reason that there is less power of accommodation and less ability to
learn a new occupation in which the injured or lost member will not
be so necessary. The degree of skill required to perform the work
of a given occupation has a direct bearing on the requirements im
posed upon the various parts of the worker’s body. One occupation
may require a great amount of physical use of some particular func
tion ; another may require no physical use of the same function.
The California schedule is based upon two theories: First, that
permanent injuries should be compensated for, not upon the basis of
loss of future earnings, but upon the loss of earning capacity; and,
2 6 0 2 9 ° — 2 1 ------ 5
66
CALIFORNIA SYSTEM OF RATING DISABILITIES.
second, upon the necessity of providing an adequate period for re
habilitation. A period for rehabilitation following a permanent
injury is necessary for reeducation in a new line of employment or
for learning new methods or technic in performing the requirements
demanded by the old occupation.
A workman who loses a finger, or who has a disfigurement which
hideously distorts the face, may suffer no loss in actual earning
capacity by reason of his physical impairment, but he does lose in
competitive ability. He must compete wuth healthy, 100 per cent
workers; and although he may be physically able to perform the
work equally as well as before the accident, he will have difficulty
in obtaining a chance to work in competition with other workers in
his class who are not injured. He will be the first to be laid off in
times of business distress, and under certain circumstances he may be
considered by the employer as constituting an exceptional risk under
compensation laws.
It was the purpose of considering all these factors scientifically
that led to the construction of the rating schedule in use by the
State of California. As it is evident that the determination of the
percentage of disability for the various combination injuries, ages, and
occupations can be made in advance as easily as after the injury has oc
curred, it was decided for practical reasons to construct a schedule
o f permanent disability ratings to be used as a guide in determining
the rating for any particular case.
The underlying theory of the schedule is that there is a certain
standard occupation and a standard age which can be used as a basis
in determining the percentage of disability caused by various in
juries; that all other occupations can be rated in accordance with
the standard occupation, depending upon the physical requirement
and skill; and that the age of the injured person can be made a
function of the standard age, based upon the diminished ability to
rehabilitate himself as he becomes older.
The standard occupation is taken as that of an ordinary unskilled
workman, and the standard age as 39. The occupation chosen makes
an admirable standard because of the simple nature of the physical
requirements placed upon the different parts of the body. Age 39
was taken as the standard age because statistical records at that
time showed this age to be the approximate average age of persons
injured in California.
The first problem involved the compilation of a list of permanent
injuries and the determination of what should be the rating for each
injury for the standard man. Information was secured from every
possible source as to the benefits allowed for various injuries. A
study was made of the benefits allowed in the schedules of other
States and in foreign countries having compensation laws. Esti
mates were obtained from recognized medical authorities through
out the United States and medical directors of various insurance
companies. A list of some 300 injuries was compiled, and a schedule
of percentage ratings for the standard man was determined upon for
each injury. The standard used for determining the ratio between
various injuries was “ the loss of the major arm at the shoulder
joint.” Rating given for this injury to a standard man is 60 per
cent. Criticism might be made of the ratios between the ratings for
A. H . NAFTZGER.
67
different injuries, but a study of the ratios in the schedules of other
States shows an entire lack of uniformity, and the ratios used in this
State are probably as correct as those used in any other State.
The list of injuries was divided, for the sake of convenience, into
21 groups, each group being designated by Roman numerals. Group I
begins with injuries to the head, and Group X X I ends with injuries
to the toes.
The next problem was the study and grouping of occupations.
Investigations were made by a group of investigators who visited
a number of typical industries throughout the State, making a study
of industrial processes and the physical requirements of the occupa
tions in each industry. Conferences were had with employers and with
representatives of workmen’s organizations, and a study was made
of the by-laws and of the division of work among different crafts.
The occupations were then correlated and assigned to a classification
called a “ form.” The forms are 52 in number and were expected
to give proper value to any group of functions, according to the
physical requirement of the occupation. It has been found from
experience that there are very few occupations which can not be
readily assigned to one of these 52 forms. Probably 90 per cent of
the occupations could be assigned to half this number.
To allow for the occupational variations for the same injury in the
schedule there were constructed 17 rating tables, from A to Q,
inclusive. This allows 17 possible variations of occupational re
quirement, but actually there is no injury group with more than 13
variations, and some have only 3 occupational variations.
Adaptability to a changed condition is dependent upon age. It
was assumed that a boy of 15 has complete adaptability. He has
not yet settled down in life, and if he is handicapped by reason of
an injury from following one occupation he is young enough to
learn another. A man of 75 years of age, on the contrary, was as
sumed to have no power of adaptability. He must do the work he
has always done or not work at all. The power of adaptability be
tween these two extreme ages was made a matter of computation
in two-year periods. The age variation factor was computed from
a formula, based upon the assumption that a 10 per cent disability
at age 15 was equivalent to a 17^ per cent disability at age 75. The
working out of this formula was necessarily limited by the fact that
no injury could be rated for more than 100 per cent, nor less than
zero, and a leveling off in the tables had to be made to allow for
this limitation. This ratio of 10 to 17-J- was determined upon after
submitting the question to more than a score of medical authorities.
For a 10 per cent disability at age 15 the average of the estimates
at age 75 secured from these sources was 26 per cent. Our ratio,
therefore, of 10 to 17^ at the respective ages of 15 and 75 is on the
side of conservatism.
In order to determine the percentage of physical impairment in
any particular case, it is only necessary to have given the nature
of the physical injury and the age and occupation of the injured
workman. By reference to the schedule the percentage is readily
determined. Under the terms of the workmen’s compensation act
of California each 1 per cent of permanent disability up to 70 per
cent is to be compensated for by payments of four weeks’ compen-
68
CALIFORNIA SYSTEM OF RATING DISABILITIES.
sation at the rate of 65 per cent of his average weekly earnings. It
is, therefore, both a percentage system and a schedule system.
Under a purely percentage system a 10 per cent impairment of
earning capacity would entitle an injured man to 10 per cent of his
wTeekly earnings for the remainder of his life. This method of com
pensation is to be criticized for three reasons: First, because of the
overhead expense of keeping the account open for the remainder of
a man’s natural life with all the necessary bookwork which such a
method would require; second, it would not compensate the injured
man sufficiently during the time of greatest need—his greatest need
of compensation is immediately following the injury and before he
has readapted himself to his changed condition; third, it does not
take into consideration the ability of the injured workman to re
habilitate himself and to increase his earning capacity to what it
was before the injury.
For these reasons compensation, instead of being paid on a per
centage basis, is paid during a definite period of time and then
terminated, depending upon the percentage of permanent disability.
It is considered that this period of time will in the average case be
amply sufficient for the purpose of rehabilitation. For example, if
a man has a 10 per cent disability it is considered that at the end of
40 weeks he will have accommodated himself to his injury and will
have regained his old standard of earning efficiency.
But not all of those who are injured will be able to reestablish an
earning power. The workmen’s compensation, insurance, and safety
act of California provides that the loss of both eyes or the sight
thereof, the loss of both hands or the use thereof, total paralysis,
incurable imbecility, or insanity, shall be regarded as involving a 100
per cent permanent disability. Any scheme of compensation that
does not provide a life pension for such persons is inadequate and
only puts off the fatal day when such persons must become charges
upon public or private charity.
It was found by investigation that the average workman spent
approximately 40 per cent of his earnings upon himself and 60 per
cent upon his family. Now, one who is by injury made totally and
permanently disabled is, so far as his family is concerned, dead.
Therefore, it was thought fair to allow compensation at the rate of 65
per cent for 240 weeks, which would be equal to a death benefit, and
thereafter to allow a life pension to the injured workman for his own
support. It was considered that in the case of a person who has lost
70 per cent of his physical efficiency he has 80 per cent of earn
ing power left, and therefore would need only a 10 per cent wage pen
sion for life to make out the 40 per cent necessary for his support.
For the person 80 per cent disabled it was assumed that he would
need a 20 per cent life pension in addition to the 20 per cent of earn
ing efficiency therefor and for 90 per cent disability a life pension
of 30 per cent. I f the disability be total and permanent the injured
person requires 40 per cent of his average weekly earnings to provide
for himself for the remainder of his days. The California schedule
was based upon the foregoing assumptions and conclusions, and we
may say that it has given satisfaction so far.
The actual work of administering the permanent-disability rating
schedule is intrusted to the permanent-disability rating department
in charge of a rating expert and a medical examiner. This depart
A. H . NAFTZGER.
69
ment rates on an average of 2,000 cases a year. The ratings are ordi
narily made upon the information contained in the injured work
man’s application for rating and the doctor’s reports filed with it.
For the purpose of checking the reports they are reviewed by an
assistant medical director in Los Angeles and San Francisco. The
purpose of this control by the medical examiners is threefold: First,
to see that the case shouid not be sent in for rating until such time
as the physician in charge of the case has decided that it has reached
a permanent stage and that further improvement is not to be ex
pected, either through treatment, surgical procedure, massage and
manipulation, or various therapeutic methods, or by use ; second, to
see that the disability described in the reports includes all the dis
abilities arising from that injury; third, to see that the description
of the disability is definite and adequate enough for purposes of
rating. This control is accomplished directly by examination by
the assistant medical director in the San Francisco office and by the
assistant medical director in the Los Angeles office. When a report
is submitted a letter is sent to the injured man, if within a reasonable
distance, asking him to call for examination, and the report of the
attending physician is either approved or a supplemental report
made.
In those cases too far away from our offices for personal examina
tion, cards are sent to the injured men giving them a description of
the injury as described by the reporting physician. The injured
workman is asked to describe in his own words the nature and extent
of the permanent disability. Where there is a discrepancy between
the injured man’s statement and the doctor’s statement, the doctor
is then asked for definite information on the point at issue.
When the case has been approved for rating by the medical di
rector it is referred to the rating expert to determine the proper
percentage of permanent impairment. The case may be rated
directly from the schedule. Most of the time it has to be rated
by approximation on the description of the most similar injury
given in the schedule. Most of the latter classification can be rated
by precedent. Some cases, however, require the exercise of con
siderable judgment and these cases are referred to an advisory
rating committee of three members, one of them representing the
medical department. The original of the letter, stating what the
rating is, is sent to the insurance company or employer paying the
compensation, and a copy is sent to the injured man.
It has not been found advisable to encourage employers and in
surance carriers to apply the rating schedule without being viseed
by the rating department of the commission. There exists a margin
of discretion in most cases, resulting from a consideration of the
nature and extent of the injury.
When dissatisfaction exists with the rating made by the schedule
it is usually because of an inaccurate statement of the nature of the
injury. For this reason a statement should be made by a competent
and painstaking surgeon, or else checked by one of our assistant
medical directors.
The value of the schedule in determining controversies may be
gathered from the fact that there were some 2,000 cases rated during
the last year and not over 2 or 3 per cent of the ratings made in
70
CALIFORNIA SYSTEM OF RATING DISABILITIES.
formally by the rating department have been appealed to the com
mission for formal adjudication by the introduction of testimony.
The degree of disability in each of these cases, involving the effect
of age and occupation, as well as the nature of the injury, would
have required hundreds of hearings at great cost, and would have
cost the parties concerned thousands of dollars in litigation expense.
The C h a ir m a n . The next discussion will be on the Federal system,
by Charles H. Verrill, commissioner, United States Employees Com
pensation Commission, of Washington, D, C,
COMPENSATION OF PERMANENT PARTIAL DISABILITIES UNDER THE
FEDERAL COMPENSATION ACT.
B Y C H A R L E S H . V E R R IL L , C O M M I S S IO N E R , U N IT E D S T A T E S
E M P L O Y E E S * C O M P E N S A T IO N
C O M M IS S IO N .
The Federal compensation act was passed September 7, 1916,
becoming effective on that date. The commission, however, was
not organized until late in March, 1917, so that the actual operation
of the act was delayed until that date. The committee of experts
that drafted the bill which, with slight changes, became the present
law believed they had prepared “ probably the best law in the
world,” one which would serve as a model for future State legislation.
The committee in drafting the law had studied the compensation,
laws not only of the various States but of all foreign countries, with
the purpose of working out a model law suited to the conditions of
this country, and especially to the conditions of Federal employment.
The Government establishments to which the law was to,apply rep
resented a comparatively stable force of employees likely to grow in
number slowly and steadily through a long period, a condition espe
cially favoring the maximum return to Government employment of
a large percentage of those permanently disabled but able to follow
some occupation.
When the law came into operation those favorable conditions
which the drafting committee saw no longer prevailed. All Govern
ment establishments were rapidly expanding because of the demands
of the war; new establishments were being created; old establish
ments were rapidly increasing their employees; many men were
employed at occupations with which they were not familiar; not a
few were employed regardless of physical defects and of some of the
infirmities o f age. With the end of the war a reduction in Govern
ment activities and employment has resulted, and the force will
gradually return to perhaps one-half its maximum number. As a
consequence, however, of the conditions of employment which have
revailed during the past three years, the Federal compensation act
as been applied to conditions which were unforeseen and which were
not considered when the act was drafted. The experience of these
years can hardly be considered a fair test of its applicability to nor
mal conditions. All this must be borne in mind in judging whether
the law in practice provides adequate compensation for permanent
partial disabilities.
The Federal compensation act provides for compensation in the
case of permanent partial disabilities—
(1) During total disability, compensation at the rate of two-thirds
of the wage at the time of injury, with a maximum compensation of
$66.67 a month.
(2) During partial disability compensation at the rate of twothirds of the difference between the monthly pay at the time of the
E
71
72
COMPENSATION UNDER THE FEDERAL ACT.
injury and the monthly wage-earning capacity after the beginning
of partial disability. For determining earning capacity the com
mission may require the employee to make affidavit from time to
time as to his earnings.
(3) If a partially disabled employee refuses to seek suitable work,
or refuses or neglects to work when suitable work is offered, no com
pensation can be paid during such period of refusal.
(4) The wage at the time of injury in all cases controls the rate of
compensation, except for minors or persons employed in a learner’s
capacity, for whom an increase may be assumed from time to time
according to the probable increase in wage-earning capacity. Also,
in the case of aged claimants a decrease may be assumed after a time,
based on probable decrease in wage-earning capacity.
The basis of the compensation under this law in the case of perma
nently partially disabled employees is, then, decrease in earning
capacity as compared with wages at the time of injury. In practice
the permanently disabled employee is considered entitled to monthly
compensation as long as there is loss of wages due to injury. If there
is no wage loss, no compensation is paid even though there be a
serious permanent disability, such as the loss of a hand, a foot, or an
eye. The mere physical result of the injury is not compensated, since
there is no provision for the payment of a fixed amount or for fixed
periods in case of dismemberment or other permanent disability.
Earning capacity has been construed by the commission variously
according to the circumstances of the individual case. As a general
rule, if the employee is or has been working, his actual wage is taken
for the purpose of determining the current disability compensation.
This rule has been applied to the great majority of cases. If the em
ployee is deemed able to do some work but has failed to secure it after
a reasonable time, then the present earning capacity has been esti
mated by the commission, taking into consideration all of the circum
stances. This applies to a very few cases only. If, in the judgment
of the commission, a lump-sum settlement is best in the interest of
the employee or for administration reasons, then necessarily earning
capacity has been estimated according to the commission’s judgment
of the probable average earning capacity during life, taking into
consideration all of the circumstances. This method, also, has been
applied to a very few cases only.
The theory upon which this type of law seems to be based, as ap
plied to employees of the Federal Government, is that the employee,
if having a permanent partial disability, will probably be taken back
at his former place of employment, and in his former occupation, or
will readily be placed in another occupation, and that his earnings
from time to time can be easily ascertained. If it were possible in all
cases, or in the majority of cases, for the employee when having a
permanent partial disability to be assigned to the kind of work best
suited to him at his former place of employment and given full
opportunity to advance, this theory of the law might work out satis
factorily. Before the war, when Government employment was com
paratively stable and a very large proportion held positions under a
tenure continuing during efficiency, and during the war, when the de
mand for labor was greatly in excess of the available supply, many
permanently disabled employees were returned to employment with
out difficulty. At that time crippled and elderly and somewhat in-'
CHARLES H . VERRILL.
73
firm employees obtained positions without difficulty because there
was not a sufficient labor supply of able-bodied men. With rapidly
diminishing Government employment, it is now much more difficult
to place Government employees when disabled, and the difficulties
will increase as employment continues to diminish.
In the case of some disabilities and some occupations, reemploy
ment is difficult if not impracticable. The unskilled workman,
as the common laborer or longshoreman, of limited intelligence and
with a serious foot or leg disability, is very difficult to place, as the
number of possible jobs suitable for such cases is very small, with an
oversupply of applicants even without considering those disabled by
accidents of employment.
Another example of the disabled man difficult to place in Govern
ment work is the letter carrier who has been for years in carrier
service and suffers a serious foot or leg disability. It is not always
possible to place him at a desk or a sitting job, especially if attached
to a small office. The structural-iron worker with a foot or leg dis
ability can not be placed at his former occupation, as such a disability
makes him unfit for a job which requires climbing, and there are
practically no jobs in the trade which do not. In this trade any
serious fall, even if not followed by a permanent disability, is said
to make a man useless for future work, as he loses his confidence and
the nerve which is essential above anything else.
The law", in basing compensation upon wages at the time of injury,
seems to make an assumption that the permanently disabled em
ployee, unless a minor or learner, could not expect to improve his
wage or occupation; that the unskilled laborer would always remain
unskilled; that the skilled laborer would never advance in wage.
This, of course, assumes a limitation of opportunity wholly incon
sistent with American experience, as the average man or woman
increases his earnings up to 35 and often up to 40 years of age.
A law of this type is incomplete and inadequate to meet the
demands of justice and good public policy unless supplemented by
provisions for training the employee when taken back (placement
training) or for vocational reeducation. Such a provision, if reason
ably liberal, would give the employee an opportunity to advance in
spite of permanent disability, and m some cases at least would open
up opportunities beyond the wage rate and beyond the thought of
the employee before the occurrence of his disabling injury.
A table printed at the end of this paper shows for all dismember
ments and other permanent partial disabilities which had been closed
by December 31, 1919, the average duration of compensation and the
average amount of compensation paid. It must be borne in mind in
considering these figures that under this type of law it is not possible
to say that any permanent disability case is ended until it is closed by
a lump-sum settlement or by death.
The merits and imperfections of the law as applied in practice will
best be understood by an examination of a number o f illustrative
examples. These examples have been chosen to show how the law
has worked when applied to a variety of serious cases.
Case 38206 is an amputation of the right hand just above the wrist joint, the result
of a crushing injury while working under an elevator. The employee, a fireman
laborer, 46 years of age, was at the time of injury, September 30, 1918, employed in a
Government building at $55 a month. A period of total disability for work of 30
74
COMPENSATION UNDER THE FEDERAL ACT.
days resulted, during which the employee was allowed leave with full pay, returning
to his former work at his regular rate of pay. In consequence, he was not entitled
to any compensation for loss of wages or for the permanent disability. The medical
and hospital expenses, including an artificial arm and the cost of procuring the arti
ficial arm, amounted to $243. As the employee seems to have been able to perform
the duties of his position, it is probable that he will never be entitled to claim further
compensation from the commission, except for the repair and replacement of the
artificial arm.
Case 73387 is an amputation of the leg half way between the knee and ankle. The
employee, a clerk engaged in office work in the Postal Service, was totally disabled
for 63 days following his injury of May, 1920. He received leave with full pay for
24 days and was then paid compensation for 36 days’ loss of wages in the amount of
$80. He returned to the same work and the same rate of pay as at the time of injury,
after which no compensation was paid. The cost of medical and hospital service
was $291.60, not including the cost of an artificial leg of $100. The case is one where,
on account of the kind of work and the long period of the employee’s service, it is
unlikely that there will be any further disability for which compensation will be
claimed. The negligence of a third party, a railroad company, was the cause of the
accident, and a demand accordingly was made upon the railroad company for dam
ages, and a settlement was secured by the payment to the employee of $3,500. Under
the provisions of the compensation act the employee, in view of this payment, must
reimburse the commission for benefits received and will not be entitled to receive
any compensation from the commission or any medical and hospital services until
compensation at the regular rate and medical and hospital services had been due
the employee for an amount sufficient to exhaust the sum recovered by him from the
railroad company.
Case 13754 is an amputation of one joint of the ring finger and two joints of the middle
finger of the left hand. The employee, an unskilled laborer, 43 years of age, was at the
time of the injury, October 26, 1917, employed in a Government establishment at $65
a month. The period of total disability for work, 29 days, resulted in compensation
amounting to $37.55 and medical and hospital expenses amounting to $43. The
employee then returned to work in the same establishment and at the same rate of
pay, whereupon compensation terminated. The employee, while at the time of
injury working temporarily as an unskilled laborer, had given up his trade as a cigarmaker for this Government employment out of a desire to assist in time of war. He
was also a violinist and had made a practice of playing after regular working hours in,
an orchestra, thereby earning an average of $300 a year. The amputation of two fingers
of the left hand made it impossible for him to follow either his regular trade of cigarmaker or his auxiliary occupation of violinist.
Case 42252 is an amputation of the leg above the knee; the employee, a colored boy
17 years of age, was at the time of injury, September 30, 1918, a laborer at Muscle
Shoals, Ala., at $2.40 a day. After a total disability period of 97 days and later of 24
days he was reemployed at the same work with somewhat increased pay, during which
time no compensation was paid. After working for the Government in this position
for 165 days his work terminated and, being unable to secure work, he then received
total disability compensation for a period of 127 days, amounting to $387.20. Employ
ment which he was able to secure was then irregular and compensation was again paid
for a period of 167 days, to the amount of $215.53. From this time regular work was
secured as a laborer in private employment and compensation ceased. Medical and
hospital treatment was furnished by Government physicians and in a Government
hospital without any charge against the compensation commission. An artificial leg
was furnished at an expense for the leg and transportation to secure the leg of $116.98.
Case 69446 is an amputation of the left arm just above the wrist. The employee, a
boiler maker, 29 years of age, was at the time of injury, February 5, 1920, employed in
a Government navy yard at $6.40 a day. A period of total disability for work of 204
days resulted, during which $440 compensation was paid. The employee returned to
work for a few days at the same rate of pay as formerly, and then was given a job as
acetylene welder learner at $4.32 a day. While at this work he receives $28.26 a
month compensation for loss of wages as a permanent partial disability, but expects
full rating as a welder in about nine months. Medical service was by Government
physicians and hospital expenses cost $66, not including cost of artificial arm and
hook.
Case 34915 is an amputation of the fingers of the right hand, except the index finger
and the thumb, the amputation including a part of the metatarsal bones. The em
ployee, 24 years of age, was at the time of the injury, September 23, 1918, employed
as a skilled laborer in one of the munitions plants of the War Department at $3.25 a
CHARLES H . VE KRILL.
75
day. As the employee was engaged on inspection work, he was absent from work
only four days, compensation being paid for one day, amounting to $2.17. From
that time to the present the employee has been employed in various positions under
the War Department, receiving a rate of pay somewhat higher than that at the time of
injury. For this reason no compensation has been paid except for a single day shortly
after the injury. The employee has now been informed that his work will terminate
September 30. The medical and hospital expenses in connection with this case
amounted to $43.50. The employee, upon learning that his employment would
terminate, made inquiry in regard to the possibilities of vocational training, the
matter having been called to his attention not long after his injury. An inquiry
discovered that a course such as he desired in automobile repair work could be secured
in a, Rhode Island institution with free tuition., and arrangements have accordingly
been made for such a course. During the period of vocational training the employee
will be rated and compensated as a temporary total disability case. No additional
money allowance can be made, however, because of the expenses incident to the
vocational training. As the limit of compensation is $66.67 a month, and as the
employee has a dependent wife and child, a long period of training would not be
possible under this arrangement.
Case 27192 is an amputation of the leg half way between knee and ankle. The
employee, 32 years of age, was at the time of the injury, May 13, 1918, working as an
oiler on an Army transport at $75 a month, plus subsistence at $21 a month. A total
disability period of 210 days followed, 6 days of which were paid as leave, compensa
tion to the amount of $294.63 being paid for the remaining days. He then worked in
private employment 16 days and no compensation was payable. He was then unable
to secure work and was compensated for 68 days, receiving $144.84. A period of
employment without compensation then followed for 441 days, followed by total
disability because of inability to secure employment of 101 days, receiving compen
sation of $211.20. The first medical and hospital treatment was given in an Army
hospital, for which no charge was made against the commission. Afterwards medical
and hospital services and an artificial leg were furnished, costing $297.
This employee, through a misunderstanding because at the time of injury employed
on an Army transport, was authorized to begin vocational training as a beneficiary of
the Federal Board for Vocational Education, but the allowance from the Federal
Board for this vocational training was terminated when an investigation disclosed
that the claimant was a civilian employee. He then applied to the Compensation
Commission for some arrangement which would permit him to continue his vocational
training. An investigation showed that he desired training as a mechanical engineer,
that he had had the necessary preparatory work, and had made a beginning at the
course so that the work could probably be completed in two and a half years. He
had also won in a competitive examination a scholarship entitling him to free tuition.
He was found to be a person of such character and habits that a lump-sum settlement
could be made with confidence that the payment would be used for the purposes for
which it was intended. A lump-sum settlement was accordingly made on the basis
of a 50 per cent disability, the payment amounting to $6,562.56.
Case 36821 is an amputation of the second, third, and fourth fingers of the right
hand, with an ankylosis of the thumb and the finger in a flexed position, so that the
hand was considered practically useless. The employee, 34 years of age, was at work
as a machinist in a navy yard at the time of injury, September 25, 1918, at $5.36 a
day. After a total disability period of 55 days, compensation amounting to $113.34,
he was reemployed at the navy yard at $5.92 a day at machinist’s work which he could
readily do. A transfer of work resulted in dissatisfaction, indifference, and inefficient
service, and he was in consequence reduced to the position of a machinist’s helper at
$4.64 a day. He thereupon resigned his position at the navy yard, being apparently
dissatisfied because he had not been advanced in grade along with some other machin
ists, as he believed would have been done had he not sustained an injury. Following
his resignation he did not claim compensation for some monthg, and all the circum
stances were not reported to the commission. Under the provisions of the law, the
employee at this time was not entitled to compensation in view of the fact that he had
refused suitable work when furnished. Some six months later he applied for a lump
sum settlement, stating that he had been unable to secure any thing but the most
irregular work at a low wage, while able-bodied men at his trade were receiving $7 a
day or more. Definite information as to the amount of work performed and the earn
ings was not furnished, although demanded. While compensation was not payable
following the refusal to continue at work in a position offered at the navy yard, it ap
peared to the commission that the continuance in such employment as a machinist
with a useless right hand could only be temporary, and that any attempt to secure
76
COMPENSATION UNDER TH E FEDERAL ACT.
private employment would result in extremely irregular work and low wages, calling
for the payment of permanent partial disability compensation for an indefinite period.
As the special purpose of the employee’s request for-a lump-sum settlement was in
order that he might establish himself in business, in automobile repair work, at which
he had had experience and for which he had some qualifications, a lump-sum award
was made on the basis of a 50 per cent disability, the settlement calling for the payment
of $6,763.94.
Case 4607 is a case of bilateral flat foot, resulting from a fracture of the os calcis of
both feet, due to a fall on a cement floor. Amputation of one foot to improve condition
was advised, but not accepted. The employee, 39 years of age, was a laborer at the
timeof injury, March 19,1917, in a Government naval station at $60 a month. Because
of several operations and unusual conditions, total disability compensation was paid
for 1,122 days, amounting to $1,565.79. The employee, because of lack of any quali
fications for skilled labor, and the degree of disability, could not secure employment.
The employee’s wife, because of the low rate of compensation ($40 a month), and lack
of any resources,endeavored to supplement-such compensation by working, and devel
oped tuberculosis. Application was made for a lump-sum award in order that the em
ployee might establish a restaurant and cigar stand. His qualifications for such an un
dertaking were only fair and settlement was at first refused. It appeared, however,
that continued refusal and an insistence on continuing compensation at $40 a month
imposed a standard of living which gave the wife no chance of recovery and allowed
the employee himself merely to maintain existence. It was considered that a lump
sum award would give the employee a chance to make good and the wife a chance of
recovery, and if eventually expended or dissipated, the wife would by that time have
improved, or if not, would have died, and the employee would stand a better chance
of earning at least a living. A lump-sum award was accordingly made on the basis
of a 60 per cent disability, amounting to $4,448.45. Medical expenses of $281.91
were paid. Medical treatment was in Government hospitals a part of the time, but
not at the beginning.
Case 71898 is an infection of the right index finger, resulting in a straight, stiff
finger. The employee, a young woman of 22, was at the time of the injury, February
10, 1919, employed as a kitchen helper with the Army in France at 7.50 francs a day
plus 6 francs for subsistence. A period of total disability of about eight months
resulted, during which the employee was cared for in a hospital in France. Total
disability compensation was paid during this period. When discharged from the
hospital as recovered the employee married and came to this country to live. She
did not desire to enter wage-earning employment, but preferred to remain at home
and do the work of her own household. A lump-sum award was accordingly made
on the basis of 8 per cent disability.
These examples strikingly illustrate certain respects in which the
law is in some instances inadequate to satisfy the demands of justice.
These may be briefly enumerated as follows:
(1) Compensation is based on w^ages at the time of injury. Thus
the law does not authorize any allowance to be paid for—
(а) Increases in wages which come to all other workers due to
changes in cost of living and general wage advances. (See case 4607.)
(б) Increases in wages which every worker of average capacity
may expect to continue up to 35 and even to 40 years of age, or later.
(See case 34915.)
(c) Increases in wages which the worker injured in a casual or
temporary occupation at a low wage would receive if he could return
to his usual one. (See case 13754.)
(d) The loss which a worker suffers when injured so as to result in
complete disability for an auxiliary occupation w^hich may have been
of decided economic value to him. (See case 13754.)
(2) The law penalizes and tends to discourage improvement by
reducing compensation as earnings increase. It does this although
putting the whole burden of reeducation or improvement upon the
employee himself.
(3) No provision is made for vocational training. (See cases 34915
and 27192.)
77
CHARLES H . VERRILL,
(4) No compensation is paid for bodily injury. (See case 38206.)
(5) Determining loss of earnings, especially with irregular and
shifting employment, is attended with great practical difficulty.
(6) The cost of administration will necessarily be high because of
the necessity of following up and investigating many cases of per
manent partial disability.
(7) As a result of the difficulty of following up cases and a lack of
understanding of rights on the part of the employee, a considerable
number will fail to make claim and to secure their rights.
(8) The system will tend to keep the thought of the possibility of
securing further compensation always before the mind of the em
ployee—an undesirable and harmful influence.
The time during which total disability compensation has been paid
up to the present time has probably been unduly long, longer than
it should be when the number of casual and aged workers is reduced
and when Government establishments have returned to normal con
ditions of employment.
It is believed that the most serious defect of the compensation law
at the present time as applied not only to permanent partial disa
bilities but to all awards is the low maximum rate of compensation
fixed in 1916, and no longer sufficient to meet the necessary expenses
of living. In temporary disability cases the present rate of compen
sation does not meet more than 40 per cent of the wage loss due to
injury, considering all classes of employees, and not more than onethird of the wage loss of classes of skilled employees, such as workman
in navy yards and in the Postal Service, for example, two services
which contribute a very large proportion of the total number of
compensation claims. The hardships of present conditions would be
greatly relieved if the law could be amended so that the basis of
compensation would be the wage which the employee would have
received if he had continued to be employed instead of the wage at
the time of injury, and if the maximum compensation which may be
paid was fixed at $120 a month, or even $100 a month, instead of at
$66.67 per month as under the present law.
P E R M A N E N T P A R T I A L D IS A B IL IT IE S , B Y L O C A T IO N O F D I S A B IL IT Y , O C C U R R IN G
S E P T . 7, 1916, T O D E C . 31, 1919, A N D C L O S E D B E F O R E D E C . 31, 1919.
D I S M E M B E R M E N T S (in c lu d in g su r g ic a l a m p u t a t io n s ) .
[In cases w here lu m p -su m settlem e n t has been m ad e th e w age loss given here covers on ly th e period for
w h ich m o n th ly com p en sation w as p aid before lu m p -su m settlem e n t.]
A v era g e aw ard.
M em b er.
E y e .........................................................................
B rea st....................................................................
L e ft arm a t shoulder....................................
R ig h t arm at shoulder................................
L e ft forearm ......................................................
R ig h t forea rm ..................................................
L e ft h a n d , n o t otherw ise c la ssifie d .. .
R ig h t h an d , n ot otherw ise classified.
Num
ber o f
cases.1
10
1
1
43
1
3
1
1
1
5
11
A ver
age
d ays
d ura
tion.
A w ard.
75 2 $6,955.74
77
157.80
359 3 7 ,5 7 4 .1 7
4 3 ,1 9 3 .4 7
’ 548’
800.17
137.03
76
1 ,6 0 5 .5 4
167
2 ,9 8 4 .9 2
143
A ll
cases.
$ 161.76
157.80
2 ,5 2 4 .7 2
Cases
of in
fection.
$ 299.32
157.80
42.4 7
800.17
137.03
321.11
271.35
1 Italic figures at left of colum n show n u m b e r of cases o f in fection .
2 In clud ing lu m p -su m settlem ent of $2,045.27.
3 Includ ing lu m p -su m settlem ent of $6,802.73.
4 L u m p -s u m settlem ent.
W age
loss, all
cases.
$ 1 0 ,15 4.9 7
3 32 .64
3 ,8 6 1 .2 6
1 ,3 0 4 .2 4
197.38
2 ,5 7 4 .4 9
5 ,5 3 3 .1 9
Num
ber of
nonc om p en sated
cases.
4
1
COMPENSATION UNDER T H E FEDERAL ACT.
78
P E R M A N E N T P A R T IA L D IS A B IL IT IE S , B Y L O C A T IO N O F D I S A B IL IT Y , O C C U R R IN G
S E P T . 7, 1916, T O D E C . 31, 1919, A N D C L O S E D B E F O R E D E C . 31, 1919— C ontinu ed .
D ISM 17M BEH M EN TS (including surgical a m p u ta tion s)—Concluded.
A v era g e aw ard.
M em b er.
Num
ber of
A ver
age
days
dura
tion.
Leffe th u m b , n ot otherw ise classified .
R ig h t th u m b ,, n ot otherw ise classified
L e ft t h u m b , d ista l p h a la n x .....................
R ig h t th u m b , d istal p h a la n x .............. „
L e ft t h u m b , p r o x im a l p h a la n x .. . . . .
R fg M t h u m b , p ro x im a l p h a la n x .........
L e ft in d e x finger, n o t otherw ise
classified ..........................................................
R ig h t in d e x finger, n o t otherw ise
classified ............................. ..........................
L e ft in d e x finger, d istal p h a la n x .........
R ig h t in d e x finger, d istal p h a la n x .. .
L e ft in d e x finger, m id d le p h a la n x .. .
R ig h t in d e x finger, middlfe p h a la n x ..
L e ft in d e x fingerrp r oxim al p h a la n x ..
R ig h t in d e x finger, p ro x im a l p h ala n x
L e ft m id d le finger, n o t otherw ise
classified .........................................................
R ig h t m iddle fing er, n o t otherwise
classified.........................................................
L e ft m id d le finger, d ista l p h a la n x .. .
R ig h t m id d le finger, d ista l phalaaax..
L e ft m id d le finger, m id d le p h a l a n x ..
R ig h t m id d le finger,, m id d le phsJanx.
L e ft m id d le finger,.proxim al p hala nx
R ight m iddle finger, p ro x im a l pha
la n x ....................................................................
L e ft ring finger, n o t otherw ise classi
fie d ................................. .. ................................
L e ft ring finger, d istal phalanx.............
R ig h t rin g finger, d ista l p h a la n x -----L o ft rin g fin g er, m id d le p h a la n x .........
R ig h t rin^ finger, m id d le p h a la n x .. .
L e ft rin g ringer, p r o x im a l p h a la n x ..
R ig h t ring finger, p ro x im a l p h a la n x .
R ig h t Tittle finger, n o t otherw ise
classified - ......................................................
L e ft little finger, d ista l p h a la n x ..........
R ig h t little finger, d ista l p h a la n x ____
L e ft lit tle finger, m id d le p h a la n x -----R ig h t lit tle finger, m id d le p h a l a n x ..
L e ft lit tle finger, p ro x im a l p h a la n x . .
R ig h t lit tle finger, p ro x im a l p h ala n x
Le ft th u m b an d one finger.......................
R ig h t th u m b an d one fin g er..................
L e ft t h u m b an d tw o or m o re fingers. .
R ig h t th u m b an d t w o or m ore fingers.
L e ft tw o fin g ers..................................... .
R ig h t t w o fingers....................................
L e ft three fingers.....................................
R ig h t th ree fingers.................................
L e ft four fingers.......................................
R ig h t four fingers....................................
T h ig h .............................................................
L e g ...................................................................
F o o t, n ot otherw ise c lassified..........
M etatarsals..................................................
G ie a t to e, n o t otherw ise classified ___
Great to e , one p h a la n x ............................
Great to e , m o re th a n one p h a l a n x ..
Lesser to e , n ot otherw ise c la ssifie d .. .
Lesser t o e , one p h a la n x .....................
Lesser t o e , m ore th a n one p h a la n x .. .
Great to e and lesser to e or to e s ...........
T w o or m ore lesser t o e s ............................
T o t a l.
A ll
cases.
$159.58
113.34
1 .5 80.0 1
> 4 ,5 8 8 .3 9
3 5 4 .0 0
8 2 4 .5%
110.01
85 .1 3
45 .8 4
102.06.
5ft
31
39
84
1 ,1 4 8 .1 3
3 ,0 8 2 .1 9
86.76
4 2 .8 4
67 .54
146.78
75.56
8 3 .2 7
351-26
265.97
1 .1 8 2 .9 2
5-, 676.90
9 ,6 8 2 .1 8
744.91
1 .5 1 3 .1 2
2 ,2 7 2 .4 6
5 .7 0 6 .6 6
46
166.12
55.37
44.45
427.68
157
26
37
35
37
67
335.37
2.4 4 7 .0 1
4,4 8 1 .3 7
889.90
799.06
811.56
335.37
40.78
58.19
63.56
61.47
101.45
335.37
142.23
211.67
57 .34
76.83
145.00
468.00
5 ,5 8 0 .3 0
10 ,280 .92
1 .7 8 4 .2 6
l r558.68
1 ,3 0 6 .6 9
54
574.10
82.01
120.91
1 ,1 2 0 .3 9
67
140.01
1 ,3 1 8 .6 7
1 ,9 9 0 .2 3
58 8 .6 5
217.41
347.02
589.58
140.01
48.84
56.86
98.11
43.4857 .8 4
98.26
48
21
27
33
42
36
62
63
41
50
80
43
48
45
65
56
105
175
257
267
240
90
46
65
69
41
81
75
67
8ia.93
59.00
100.00
loa.oo
997.26
252.21
423.83
481.16
374.09
172.31
521. 44
453. 28
435.16
007.03
370.47
036.65
501.10
978. 40
614. 24
292. 64
643.12
433. BO629. 24
524. 48
514. 61
440.06
217. 33
737.09
250. 68
173. 34
32 .1 7
40.39
52.98
43.74
46.76
78.15
104.29
64.75
87.03143. 86
74.08
77.63
8 3 .5 2
88.95
102.37
161. 58
928. 62
1 ,2 0 4 .8 3
543. 08
524. 48
168. 29
199.13
99 ,8 3 8 .7 5
88. 01
108.
115.
62.
173.
113.
109.
67
81
67
34
80
01
102.02
1 ,0 4 9 .4 9
183.84
34 3 .2 0
3 ,2 1 4 .9 7
3 ,3 1 9 .0 7
1 ,4 1 8 .7 4
612.76
573-16
939.13
100.72
276.48
2 .4 1 8 .6 7
2 .4 7 9 .2 7
79-73
100.23
8."00
75. 56
15.58
103.07
1,3 01.5 1
527. 46
919.80
367.43
59.44
84.17
209.33
292.38
Num
ber of
n on com p en sated
cases.
$247.52
33 6 .8 0
3 .2 5 4 .6 6
7 ,8 0 4 .0 9
666.78
1 ,5 2 2 .5 7
79.56
36
961
$107.41
337.03
510.79*
2,6 1 2 .8 9
4.7 79.0 1
607.29
33
54
39
31
60
100
$159.58
56,67
45 .14
127.46
59 .00
63 .42
Cases
o f in
fection.
397.81
47
29
36
s In clu d in g lu m p -su m settlem e n t o f $2,018.63.
6 In clu d in g lu m p -s u m settlem e n t of $3,455.14.
Award.
W age
loss, all
cas^s.
12
12
*3
3
1
12
13
1
2
2
754. oa
935. 79
655.10
2.5 89.1 3
951. 72
877.53
869.76
1, 611.93
5 ,2 7 5 .3 5
7 ,6 2 8 .1 6
1.0 5 3 .6 8
1,7 14.3 4
1,363. 21
2 .1 3 3 .9 3
2 ,5 5 0 .9 2
6,120. 46
2,5 6 1 .1 1
1,195. 00
4,2 2 9 .8 6
971. 30
611.24
2,8 69.6 1
480.19
298. 08
2,496. 76
3,188. 22
159,769.71
* In c lu d in g lu m p -su m settlem e n t o f $6,248.12.
1
131
CHARLES H . VERRILL.
P E R M A N E N T P A R T I A L D IS A B IL IT IE S * B Y L O C A T IO N O F D I S A B I L I T Y , O C C U R R IN G
S E P T . 7, 1916, T O D E C . 31, 11>19, A N D C L O S E D B E F O R E D E C . 31, 1919— C ontinu ed .
l o s s
o f
F t n s r c n o ir .
A v era g e aw ard.
Num
ber o f
cases.
M em b er.
B rain ...............................
E y e ..................................
B o th e y e s .....................
In te r n a le a r .................
In te r n a l ears, b o t h ..
J aw .
S k u ll......................................................................
N o se .......................................................................
Face, n o t otherw ise c lassified ................
T w o or m o re parts o f face, one n ot
e , n o t other w ise c la s s ifie d ...
L u m b a r vertebrae.........................................
T h o r a x , posterior lu m b a r .........................
P e lv is, n o t otherw ise c lassified .............
A n u s , rec tu m or p er in eu m ......................
P en is......................................................................
Testicles...............................................................
H e r n ia .in g u in a l.............................................
Sacro, ilia c jo i n t .............................................
Scap u la ................................................................
C lavicle................................................................
R ig h t shoulder jo in t ....................................
L e ft sh ould er, general.................................
R ig h t sh ould er, general..............................
L e ft sh ou ld er....................................................
R ig h t sh o u ld er................................................
L e ft a r m ..............................................................
R ig h t a rm ...........................................................
R ig h t u pp er a r m ............................................
L e ft h u m eru s...................................................
R ig h t h u m e r u s................................................
L e ft h u m e ru s, low er en d o f .....................
R ig h t h u m e ru s, low er en d o f .................
L e ft e lb o w ..........................................................
R ig h t e lb o w ......................................................
L eft forearm ......................................................
L e ft ra d iu s.........................................................
R ig h t radius......................................................
R ig h t u ln a .........................................................
L eft radius and u ln a ....................................
R ig h t rad ius a n d u ln a ................................
L e ft radius, low er en d of...........................
R ig h t radius, low er en d o f .......................
L e ft u ln a , low er e n d o f...............................
R ig h t ulna,, u p p er en d o f ........................
L e ft radius a n d u ln a , low er en d o f . . .
R ig h t ra d iu s a n d u ln a , low er en d o f.
R ig h t radius a n d u ln a , u p p er en d o f - .
L e ft w rist............................................................
R ig h t w r is t .......................................................
A r m s , or on e arm a n d on e h a n d ...........
L e ft h a n d , n o t otherw ise classified—
R ig h t h a n d , n o t otherw ise c la ssifie d ..
R ig h t h a n d , back o f ....................................
R ig h t p a lm ......... : ............................................
H a n d s , b o th ......................................................
L e ft m etacarpal, on e....................................
R ig h t m e tacarpal, o n e ................................
R ig h t m etacarpal, m ore th a n on e____
Left, t h u m b , n ot otherw ise c la ssifie d ..
R igh t th u m b , n ot otherw ise classified.
L e ft t h u m b , p roxim al p h a la n x ............
R ig h t t h u m b , p r o x im a l p h a la n x ____
L e ft in d e x finger, n ot otherw ise classi
fied ...............................................................
8 L u m p -s u m
9 L u m p -s u m
10 L u m p -s u m
11 L u m p -su m
12 L u m p -s u m
is L u m p -s u m
80
A ver
age
d ays
dura
tion .
A w ard.
A ll
cases.
85
$315. 95
67 81 9 ,8 2 0 .28
16
14 .1 7
1.89. 34
38
18
8
11.11
Cases
of in
fection.
$ 1 57.98
200.20
$4 3.36
3 .5 4
4. 74
11.11
11.11
188
162
51
9 5,4 75. 44
353. 35
106. 68
1 ,8 2 5 .1 5
3 5 3.35
106. 68
27
374
184
346
133
2 8 .1 1
73 2.00
242.17
865.82
2,1 8 3 . 40
200. 76
28.11
732.00
242.17
432. 91
72 7.80
200.76
211.12
211.12
334. 46
684. 61
8 3 .6 2
228. 20
4 0 .0 0
154.52
302. 7Q
751.69
.4 6 1 .1 8
91.96
53.33
375.31
,890. 56
i, 189. 49
i. 076. 83
170. 01
9 5 .56
434.23
187. 92
243. 53
9 1 .96
53. 33
187. 66
236. 32
2', 06 3.16
1,538. 42
170.01
9 5 .5 6
46.67
504. 81
46. 67
252.41
989. 81
852.76
1,696.10
729.06
101. 56
277.79
840. 36
146. 67
147. 52
141. 40
284. 25
3 ,6 9 6 .1 0
145. 81
50. 78
138. 90
168. 07
146. 6*7
36. 88
148. 89
95. 56
:,8 4 6 .92
119. 04
74. 45
4 7 .78
258.08
119. 04
158
115
27
93
314
48
36
34
40
503.00
322.23
75. 56
648. 20
206. 68
[, 308. 40
157. 78
104. 45
605.71
748.93
L, 199. 76
697.27
147.58
104.45
125.75
161.12
75. 56
129.64
206. 68
3 27.10
157.78
5 2.23
151. 43
748.93
85.70
58.11
49.19
52 .2 2
52
448.71
89.74
121
98
50
130
10
255
135
123
61
28128
83
111
179
80
61
14
24
120
48
94
164
611
204
33
71
94
78
36
19
37
25
125
69
74
69
108
211.12
22.22
11.11
3 53.35
3, 886. 87
22.22
143.64
533.36
138.90
W age
loss, all
ca.es.
$500; 68
2 7 ,0 0 0 .2 5
3 9 .87
460.96
9 .8 4
3 8 .40
2,4 19. 68
842.44)
2 7 7 .4 4
4 9 .60
1 ,1 2 4 .0 0
368.00
1,795. 04
3,7 66. 59
316. 80
326. 36
608. 21
1, 839. 47
2 ,4 9 8 . 80
1,504. 38
2 .6 91. 78
145.20
8 9 .60
742.60
1,883. 80
1 ,6 5 8 .6 5
1 ,1 6 1 .9 5
266. 40
178.94
6 5 .0 0
1 34.40
676. 58
1 58.40
1 ,8 0 1 .1 6
2 ,1 3 4 .1 0
1,869. 66
1 ,2 8 5 .7 9
195. 21
692. 80
1.691. 92
285. 60
339. 00
48.89
289.52
199: 38
4 .1 2 7 .5 9
187. 20
2 7 .6 0
2 ,2 3 9 .5 6
660. 20
138. 75
1,230. 86
368. 64
2,6 99. 83
304.00
246. 56
1,376. 89
1 .3 8 1 .6 0
2 ,3 5 7 .1 2
1,3 8 2 .1 1
259.58
232.60
76.97
823.48
11. II
7 5.56
133.16
327.10
157.78
346.68
116.48
124.63
settlem e n ts w ith to ta l aw ards of $2,834.09 an d $6,524.57.
se ttle m e n ts w ith to ta l aw ards o f $4,740.01.
settlem e n ts w ith t o ta l aw ards of $2,258.07.
settlem e n ts w it h t o ta l aw ard s o f $3,076.83.
settlem e n ts w ith to ta l aw ards o f $3,886.87 an d $2,258.07.
settlem e n ts wit-h t o ta l aw ards of $974.36.
Num
ber of
noncom p en sated
cases.
80
C O M P E N S A T IO N
U N D E R
T H E
F E D E R A L
A C T .
P E R M A N E N T P A R T IA L D IS A B IL IT IE S , B Y L O C A T IO N O F D IS A B IL IT Y , O C C U R R IN G
S E P T . 7, 1916, T O D E C . 31, 1919, A N D C L O S E D B E F O R E D E C . 31, 1919— C onclu ded.
L O S S O F F U N C T I O N — C onclu ded .
A verage aw ard.
Num
ber of
cases.
M em b er.
R ig h t in d e x finger, n o t otherw ise
classified..........................................................
L e ft in d e x finger, d ista l p h a la n x ____
R ig h t in d e x finger, d ista l p h a la n x ___
L e ft in d e x finger, m id d le p h a l a n x .. .
R ig h t in d e x finger, m id d le p h a la n x ..
47
46
68
5
56
129
7
L e ft m id d le finger, n o t otherw ise
classified .........................................................
R ig h t m id d le finger, n o t otherw ise
classified .........................................................
L e ft m id d le finger, d istal p h a la n x ...
R ig h t m id d le finger, d istal p h a la n x ..
L e ft m id d le finger, m id d le p h a la n x ..
R ig h t m id d le finger, m id d le p h ala n x.
R ig h t
m id d le
finger,
p roxim al
p h a la n x ...........................................................
L e ft ring finger, n o t otherw ise classi
fied .....................................................................
R ig h t ring finger, n o t otherw ise
classified .........................................................
L eft ring finger, d istal p h a la n x ............
R ig h t ring finger, d istal p h a la n x .........
L e ft little finger, n o t otherw ise
classified .........................................................
R ig h t little finger, n o t otherw ise
classified.........................................................
L e ft little finger, d istal p h a la n x ......... .
R ig h t little finger, d istal p h a la n x ___
R ig h t lit tle finger, m id d le p h a la n x ...
R ig h t lit tle finger, p r o x im a l phala n x.
L e ft t h u m b an d one finger.................... .
R ig h t t h u m b an d one fin g er..................
L e ft t w o fingers..............................................
R ig h t t w o fingers.........................................
R ig h t three fingers.......................................
R ig h t four fingers..........................................
H i p .......................................................................
H ip jo in t .............................................................
T h ig h ...................................................................
P a te lla .................................................................
K n e e ....................................................................
A ll
cases.
Cases
of in
fection.
§2 ,1 1 3 .1 9
181.56
639.03
4.4 4
233.35
282.91
$84.52
90.78
127.81
4.4 4
23 3.35
9 4 .30
$89.24
90.78
169.91
348.73
69.75
106.12
708.99
840.41
77.73
122.83
48.00
160.53
76.40
77.73
61.42
48.00
53.51
105.66
1,5 5 4 .5 9
123.20
75.56
37 .7 8
139.23
34.00
46.67
54.01
Num
ber of
n oncom p en sated
$4 ,149 .57
452.85
1,1 4 1 .6 8
25 .00
525.40
1 ,3 7 7 .5 2
212.22
77.78
79.20
304.96
207.20
34.00
627.75
60.00
73.92
526.00
124.85
256.37
161.60
397.53
235.56
1 ,1 4 2 .0 8
432.16
222.41
369.78
2 .6 4 7 .7 5
27.85
34.00
46.67
227.83
20
23
84
32
91
73
23
45
94
33
35
155
335
211
49
132
198
35
198
274
108
401
172
226
173
172
125
175
230
145
35
23
55
247
241
...............................
T o t a l............................................................
A w ard.
W age
loss, all
261.05
Low er le g ...........................................................
F ib u la ................................................................ .
T ib ia .....................................................................
U p p e r en d o f tib ia ........................................
U p p e r en d of tib ia and fib u la ................ .
L o w e r en d o f tib ia an d fib u la ............. .
T ib ia an d fib u la .............................................
A n k le ...................................................................
F o o t , n o t otherw ise c lassified .............. .
T o p o f f o o t ....................................................... .
T a r sa ls............................................................... .
O sc a lis.................................................................
M etatarsals........................................................
G reat toe, n o t otherw ise c lassified . . .
G reat t o e , one p h a la n x ..............................
M alleolu s...........................................................
M u ltip le in juries............................................
S hell sh o ck ......................................................
N o se (d isfig u rem en t)................................ .
A ver
age
d ays
d ura
tion.
531
151.91
82.23
266.68
122.67
592.90
155. 57
104.16
166.66
1 ,4 7 8 .4 8
52. 89
71.11
1 ,3 82.4 1
643. 96
14 13,403.84
187.14
3 ,2 5 8 .4 5
8 ,6 8 3 .1 9
57.18
319.44
602.25
156.70
707. 51
2,0 68. 55
2 ,7 7 5 .2 6
3,190. 97
3,195. 89
268. 91
375.58
1,6 45.0 1
647. 58
214.19
44. 45
448. 75
2,1 57. 45
977.82
37.98
41.12
133.34
61.34
148.22
155.57
34.72
83.33
147.85
52.89
71.11
230.40
321.98
515.53
93.57
232.75
361.80
57.18
319.44
602.25
156.70
707. 51
295.51
346.91
290.09
319.59
268.91
375. 58
329. 00
215. 86
53.55
44.45
112.19
431.49
488.91
240.43
''6o'6o‘
74.00
281.34
192.00
902.29
268.91
102.23
8.6 4
12 2,998.88
22.22
120.00
88.11
173.60
2 ,4 2 8 .6 6
890.00
17 ,4 6 6 .3 2
296. 82
7.3 0 2 .4 6
19 ,411 .16
9 2 .40
516.20
1 .0 9 6 .0 0
241.92
625.56
3 ,2 3 3 .5 6
3 ,1 5 7 .9 3
5 ,5 1 3 .9 5
5 .7 90.0 1
9 7 .20
612.50
3 .2 1 8 .4 6
1,2 2 8 .9 9
403.11
115.00
950.41
3 ,6 2 9 .3 1
4 ,4 0 3 .3 3
187,945.76
43.29
14 L u m p -s u m settlem e n ts w ith total aw ards of $5,247.61.
The C tiA iR M A N . Is Mr. Archer here from New York? Is there
anyone here from New York who will take his place? [Mr. Archer
was not present.]
THE N EW Y O R K SYSTEM OF COM PENSATION FO R PERM ANENT
P A R T IA L D ISA B ILITIE S.
BY WILLIAM C. ARCHER., DEPUTY COMMISSIONER IN CHARGE OF BURELAU OF WORK
MEN’S COMPENSATION, NEW YORK INDUSTRIAL COMMISSION.
[This paper was submitted but not read.]
The New York system may be outlined as follows: The compensa
tion case, during the acute stage of the injury, is heard and compen
sation is granted to the date of hearing and continued for further
hearings at intervals whose length depends upon the character of
the injury and the certainty of the duration of the acute stage.
For instance, if it be known that the acute stage will continue for
at least 10 weeks, the award is made for some 6 to 8 weeks in advance
of the date of hearing and the case is brought to the calendar again
at the end of that time. When the permanency of result is obtained,
or, in other words, when the injured workman has recovered as far
as he will recover, then the case enters upon the state of permanent
partial disability.
The New York law divides permanent partial disabilities into
classes:
(1) The list of members or organs for the loss of which or for
the loss of use of which specific awards are prescribed.
(2) The same as the foregoing except that the disability is a
partial loss or partial loss of use, in which the commission is
authorized to award for the proportionate loss or proportionate loss
of use of such members.
(3) Serious facial or head disfigurements, in which the commission
in its discretion may make such awards as it may deem proper and
equitable in view of the nature of the disfigurement, but not to exceed
$3,500.
(4) All other cases, in which the measure of the award is twothirds of the difference between the old wage and the new, which
award is subject to the maximum limitations in the statute and
subject to review from time to time as the later wage may make
necessary.
In passing, two or three things of interest may be reported:
The award, except in the fourth subdivision above, is through a
recent amendment a vested interest and does not die with the claim
ant’s death.
The loss of 80 per cent of the vision of the eye shall be considered
to be equivalent to the loss of use of that eye, and the loss of
binocular vision shall be considered to be equivalent to the loss of
use of one eye. An operation for cataract is considered as produc
ing the loss of binocular vision.
The loss of any two of the following creates a condition of pre
sumptive permanent total disability: Hand, arm, foot, leg, eye.
When the acute stage is passed and the permanent stage is reached,
the case is ready for final adjudication. This is accomplished as
follows:
(1)
Permanent loss of any of the organs or members mentioned in
the specific schedule is determined at a hearing in which the claim260390—21------6
81
82
N E W YORK SYSTEM OF COMPENSATION.
ant is present, and a medical examination is made and a report of
such examination is filed. The award is then made accordingly and
is ordered to be paid in installments of two weeks each. Little or
no dispute arises in such cases, for the condition is more or less
apparent.
(2) Cases of partial loss and partial loss of use likewise go to the
calendar for final adjudication, at which time the various parties
in interest are represented. A medical examination is made, and
usually the medical examiner of the commission reports his opinion
of the proportionate loss of use. The claimant or carrier’s physician
may be present at the examination and the latter usually is present.
Parties then go before the presiding hearing commissioner and the
finding and decision is made. The hearing is more in the nature of
a conference, although sometimes witnesses are heard. The notes
of the hearing are taken by the stenographer whether it resolves
itself into a testimony case or a conference. The award when made
is paid in periodical installments. The calendar in which these
determinations are made is called the final adjustment calendar. It
is a special calendar for the purpose. The number of cases thus
handled was 6,311 for the year ending June 30.
(3) There is no rule to govern the amount to be allowed for facial
disfigurement, but in order that the practice may be more or less
•uniform most of such cases are referred to the commission itself
when more than one member is sitting. The exercise of this dis
cretionary power is wholly a matter of judgment, and it is conceiv
able that were these cases, which are relatively few in number,
heard by various commissioners sitting apart there would be wide
variance in the awards made. The claimant, of course, is always
present, and such cases are never testimony cases. Some consider
ation is given to the condition of the claimant. The impairment
of wage-earning capacity is the basis of awards, and it may readily
be seen that the same disfigurement of the face of a fair young man
or woman might be more serious than were it upon the face of a
grizzled veteran who had reached a permanent situation with his
employer and who might hold it despite the disfigurement.
(4) The cases of impaired earning capacity are not so hard to de
termine, although they may not be determined finally but have to
appear on the calendar from time to time when additional testimony
is taken with respect to the present wage.
All of this, however, is not so easy as the simple recitation of it
might indicate. For example, the eye cases are especially difficult,
for who can say that an adequate guide to practice has ever been
reached in this country, even among the oculists themselves, for
determining proportionate loss of use of vision. The administration
of compensation laws calls for a test to be made upon a new basis, one
other than that which formerly obtained. Then the ordinary test
was the ability to read. That test may be described as the reading
test. The railroads had a different test, including the color test and
the distance tests, but these tests were made for the sole purpose of
determining fitness for employment and it was not necessary to de
termine percentages. Reports to compensation commissions h&ve
been made usually according to the Snellen system, which is a read
ing test. Figures are used as symbols, such as 10/20, 20/30, etc.
W
IL L IA M
C.
A R C H E R .
83
The first figure indicates the distance in feet in which letters or words
are read which should be read in the number of feet indicated by the
figures on the other side of the line. These symbols by some strange
deduction are now often read as a fraction, the number before the
line being the numerator, and the number after the line being the
denominator. This undoubtedly would startle the author of the sys
tem. And yet I regard even this use of the symbols as better than
some other tables wThich have been prepared, whose absurdities are
patent. A new rule needs to be devised which shall give large con
sideration to the industrial requirements of the eye. And by all
means an award should be made where there has been a cataract
operation. This operation produces incoordination of vision and
renders one of the eyes more or less useless as a vocational instru
ment, and this is especially so since it makes the remaining eye the
dependable eye. I will say in passing that I have seen a table pre
pared by some ophthalmological society and emanating from Chicago
which I regard as woefully defective and not at all a safe guide to
use in compensation practice. I have seen arguments to the effect
that much consideration should be given to the fact that insurance
carriers are willing to spend money for treatment of eye injuries, and
that because they are so willing that there should be a recognition
by straining a point to find some degree of useful vision if possible.
I can not see the matter in this light and it seems to me that it is
vicious in principle. The injured eye is entitled to a cure if possible,
and money should be spent to secure the services of the very best
oculists to this end. These oculists should not be tempted to over
state the degree of remaining usefulness nor to cultivate or reward
the patronage of the insurance companies. I will say that it is my
conviction that the best rule for determining the matter of propor
tionate loss of vision is as yet an open question and of such very
great importance that it requires solution.
I wish that four or five of the leading oculists of the country
should be made members of a committee of which the other mem
bers were industrial commissioners, and that after full considera
tion a new rule should be promulgated and presented to the various
jurisdictions. Such a rule would likely prove of great benefit.
In determining the proportionate loss of use of members from a
vocational standpoint I would counsel the exclusion of so-called
medical expert testimony. I would not exclude the advice of the
commission’s trusted medical expert, but I would not allow even him
to become the judge in the matter. I would not exclude from con
ference on the subject any representative of either party in interest,
but I would never allow the physicians to become the judges of
proportionate loss of use. Let them describe the condition present,
the parts involved, the degree of the involvement, and let them
pronounce on any other phase of the question that their education
and experience qualifies them to speak about, but when it comes to
their saying that a certain hand has lost one-third of its use or onehalf of its use their judgment may be no better than the judgment
of a passing drayman who might be called in to give his opinion in
the matter. Indeed, I think the latter would be the better wit
ness if he be a man of sound judgment and fair mind, for he knows
what a hand is expected to do. To admit freely so-called expert
84
N E W
Y O R K
S Y S T E M
O F
C O M P E N S A T IO N .
testimony is only to invite confusion, for it is well known that if
one expert with a certain opinion can not be found another can.
It certainly never was intended to become a hair-splitting matter,
but rather should it always remain a practical, open-handed, honest
estimate of degree of loss. The award periods prescribed for the
loss of members was a very arbitrary designation made in the dark.
It is absurd, therefore, to think that there can be a scientific refine
ment of findings such as that there has been 0.287 of the loss of use
of a foot.
In the New York jurisdiction, when cases are being heard on
proportionate loss, they are usually heard one at a time (with others
excluded from the room) in order that there may be no psychologi
cal development among a large number of people whose cases are
waiting to be determined and in wThich hopes might be raised beyond
reasonable awards. I think that these decisions should be arrived at
in a friendly open conference, in which everybody speaks his mind
without being overawed by formality of procedure. But such an
adjudication may often give the bystander the idea that it is done by
compromise, notwithstanding the element of compromise may be elim
inated. The skill of the hearing commissioner, who has heard thou
sands of cases, will enable him to make up his mind quickly, and he will
thus be able patiently to allow the parties to seem to come together in
the judgment. In cases in which members have been given a manipu
lative treatment to restore function, as, for instance, baking and mas
sage, the final determination should not be made too early after the
cessation of treatment, for the seeming restoration of function tem
porarily gained is often later lost. Nor should such cases be closed
against all rehearings, but left open for review if justice demands
it or if unforeseen developments arise.
Some of these cases should be paid in a lump sum at the time of
final adjustment, and especially is this true where the neurotic ele
ment is present. In such cases of neurosis the expectation of money
is often a chief trouble. Sometimes in the New York jurisdiction
the idea of finality is given to the claimant in a neurotic case, in
which the carrier m an aside is made distinctly to understand, and
the minutes so record it, that the case is not closed and will be or
may be looked into again. These cases are extremely difficult and o f
growing importance with all commissioners as their experience is
extended.
As a final word, let me enter a solemn protest against all efforts
to harmonize each case with all the others or to bring about a deadly
routine of procedure. The whole compensation question is an in
tensely human question, no two elements of which are alike, and the
human elements vary greatly. There should always remain much
freedom of action in order that the requirements of the particular
case may be met. It would be difficult to lay down a rigid rule with
respect to lump sums and their relations to final adjustment cases.
On paper one case may look like the next one, and yet in one a lump
sum should be given and in the other it should not be given. I say
this because there is a tendency to dogmatize, and there are those
who are impatient until all impressions are cast in the same molcE’
The C h a i r m a n . We will proceed to the discussion of the Oregon
system. Mr. Ferguson is not here, but his place will be taken by
W. A. Marshall, of the Oregon commission.
OREGON SYSTEM OF COMPENSATION FOR PERMANENT PARTIAL
DISABILITIES.
BY J. W. FERGUSON, COMMISSIONER, OREGON INDUSTRIAL ACCIDENT COMMISSION.
[R ead by W. A . M arsh all, chairm an, Oregon In d u stria l A ccid en t Com m ission.]
In Oregon injured workmen suffering permanent partial dis
abilities are entitled to compensation during temporary total dis
ability, the monthly payments ranging from $39 to $97.50, depending
upon marital condition and wages, and after the period of temporary
total disability are entitled, in addition, to awards for permanent
disability, such compensation being also in the form o f monthly in
stallments, and according to a fixed schedule contained in the act.
This schedule provides for payments o f $32.50 per month for
periods ranging from 6 months for the loss o f a little finger to
96 months for loss of an arm.
With but few exceptions, awards in the more serious cases of per
manent partial disability are made only after personal examination
by one o f the physicians of the medical department. This method
tends to secure more uniform awards for the same disabilities, re
veals cases where further treatment is indicated before awards for
permanent disability should properly be made, brings out valuable
information in cases later becoming available for rehabilitation, and
affords opportunity to explain to the injured worker details as to the
basis o f the award and any’ other information desired. Where
claimants are called in for examination for this purpose, traveling
and other expenses are paid by the State fund.
In other permanent partial cases, where the claimants reside in
distant or isolated parts o f the State, awards have been based upon
the description of disability furnished by local physicians. Here an
unsatisfactory condition arises, not only in some cases of amputation,
but particularly where the disability consists of partial loss o f func
tion. Notwithstanding attempts to furnish to the examining physi
cians the basis upon which awards are made, the great variation in
description o f disability furnished the commission results in a lack of
certainty on the part of the board as to the proper award to be
made. This experience has resulted in adoption o f the policy to
have as many of these cases as possible examined by the members o f
our medical department for the purpose o f determining the degree
o f permanent disability and thus greater uniformity in awards for
similar disabilities.
A problem is also experienced in cases where injured workmen
leave the State without the knowledge or approval of the commis
sion and where permanent disability develops. In these cases diffi
culty is had in determining the period of temporary total disability,
ag well as the degree o f permanent disability. O f all cases o f this
kind under the Oregon law, it can be said that in not a single instance
have the members o f the board been certain that the worker has not
85
86
OREGON SYSTEM OF COMPENSATION.
been overpaid or has received less than provided by the act. As a
result, we are discouraging injured workmen leaving the State before
it can be determined that no further treatment is necessary and
before the period of temporary total and the degree of permanent
disability are established.
Relative to awards for loss o f vision, the commission in Oregon
has followed the practice of making awards on the basis of the
Snellen tests, using the percentage method, and estimating loss with
out correction. Where loss o f vision in one eye is 90 per cent or
more, allowance has been made for entire loss of sight of the eye.
Conferences with eye specialists of the State reveal many different
opinions on these matters, and as the general subject of eye injuries
is to have a prominent place on the program at San Francisco, the
members o f our commission look forward to the discussion with great
interest.
In amputation cases, artificial limbs are provided in addition to
other compensation benefits, and our physiotherapy departments are
also available for the treatment o f stumps in amputation cases prior
to the securing o f artificial limbs.
It is in these cases of serious permanent partial disabilities that
provisions intended to aid the injured worker undergo severe tests.
With every case presenting a set of facts differing in some important
detail from other cases, the provisions o f compensation laws must,
indeed, be varied in order that everything be done to assist the worker
in meeting his problem in the best possible manner.
The Oregon law provides that the commission may, in its discretion,
pay to the injured workman a lump sum equal to 50 per cent of the
present worth of future payments and then reduce the future pay
ments proportionately. Where a lump sum is requested by a work
man having a serious permanent disability, the commission requires
the workman to furnish information as to the purpose for which
the lump sum is desired. Upon receipt o f this information an in
vestigation is made by a field representative specializing in this work
and a report is submitted to the board, with recommendations.
Among the reasons that have been advanced for asking lump sums
were requests for the purposes o f buying homes, paying off mortgages,
or improvement assessments, the purchase of cigar and candy stores,
restaurants, and other small business enterprises, tracts of land, live
stock, auto trucks, autos to be used as jitneys, and also to enable the
injured workmen to return to their home States or the old country,
or to bring wives and children to the United States.
Where information indicates the payment of a lump sum does not
promise to be for the benefit o f the worker, the request is denied,
and this action is also taken when it appears the request for a lump
sum has come because o f the interest o f someone other than the
injured workman.
The commission finally laid down the rule relative to lump sums
that it would follow the course here outlined as to seripus disabilities,
but that in cases o f minor impairments which do not force a change
o f occupation or are not likely to result in a dependent condition it
will not be so exacting. In the more serious cases, however, it ,re
gards the provisions o f the law giving it discretion as placing upon
it the duty o f paying lump sums only in those cases where such a
course is clearly in the interest of the handicapped workmen.
J . W . FERGUSON'.
87
While the payment o f lump sums appears to be helpful in a small
proportion o f serious injuries, vocational reeducation is available in
other cases where indicated. This feature, however, is treated at
length in another paper by an associate.
No attempt will be made here to discuss the proper basis upon
which a schedule o f compensation for permanent partial disabilities
should be erected. In fact, it is questionable whether, with the ex
perience so far developed under compensation laws, adequate in
formation is now available. The increased number o f States afford
ing assistance to permanently disabled workers in the way o f vo
cational reeducation is also a factor that must be considered in de
termining a just schedule, and, generally, there is need o f our know
ing more o f the actual experience of permanent partial cases after
awards have been made and the workers undertake the task of
gaining a livelihood in a handicapped condition.
Mr. M a r s h a ll (commenting on the last paragraph o f Mr. Fergu
son’s paper). I think that is true and originally was indicated by
Mr. Hookstadt, but I apply that to so many features of our com
pensation, where we said the law was upon the presumption, and
upon the theory, and upon this and that; what we ought to know, it
seems to me, is to find out what has become of that fellow and how
he has gotten along; and really, with the exception of some investi
gation, some o f it made here in California, we don’t know. We are
not sufficiently informed. We can theorize all we want to, but the
final test will b e : What has been the history of that case after it has
left your hands?
The Chairman. The discussion of this subject will be led by Mr.
Carl Hookstadt, United States Bureau of Labor Statistics. As you
probably know, Mr. Hookstadt has during the last year made rather
an exhaustive study o f the systems in different States, not taking
the figures prepared by the commissions, but visiting the different
commissions; and I am sure we all appreciate the interest the bureau
has taken in compensation matters. We are glad to know that, under
the able guidance of Mr. Stewart, Mr. Meeker’s successor, the same
policy will continue.
Mr. C a r l H ookstadt, of the United States Bureau of Labor Sta
tistics. The information I have gained through the study of this
year, I will leave for to-morrow. When a man suffers temporary
disability, either bruise, or laceration, or burn, or fracture, we can
readily determine his wage loss; but what is his wage loss in case
he loses an arm, or a leg, or an eye? Nobody knows. The States are
guessing; some of them have made some investigation— California is
one of them—to determine what becomes of the cripple and what his
wage loss is. As a rule we don’t know. In my opinion, the loss of a
leg, or an arm, or an eye, is a great deal more serious than is provided
for by the State schedules. Some men have told me in all seriousness
that the permanent loss o f an arm, for example, is more or less a bless
ing in disguise. That is, it brings out latent reserve force that would
not have come out if the man was normal, and they cite the old
example o f the man who lost his arm and became a bank president.
Sweeping conclusions are drawn from exceptional and isolated cases.
The thousands of crippled men who do not become bank presi
dents but become shoestring vendors are ignored.
SYSTEMS OF COMPENSATION FOR PERMANENT PARTIAL DISABILITY
IN THE UNITED STATES AND CANADA.
BY CARL HOOKSTADT, EXPERT, UNITED STATES BUREAU OF LABOR STATISTICS.
One of the serious weaknesses in our workmen’s compensation legis
lation has been the treatment of permanent partial disabilities.
With the exception of California no State has undertaken to formulate
a scientific system in which the amount of compensation provided is
based upon the probable wage loss resulting from the injury. The
several schedules adopted in the United States vary greatly as to
the amount of benefits provided. Not only do there exist great
variations among the various States as to the amount of compensa
tion for the same injury, but the compensation provided for different
permanent disabilities within the same State bears little relationship
to the respective economic severity of those disabilities. For exam
ple, there is no legitimate reason why 150 weeks’ compensation should
be granted in New Mexico for the loss of an arm and 416 weeks’
compensation for a similar injury in Oregon. Similarly the granting
of compensation for 45 weeks for an index finger and only 150 weeks
for an entire hand in Texas takes little account of the relative reduc
tion in earning capacity. Therefore it seems highly desirable for
the States and Provinces to undertake a scientific revision of perma
nent disability schedules in the hope of obtaining a closer correlation
between permanent disabilities and the wage loss resulting therefrom.
In the present paper I shall attempt to evaluate the several systems
which have been adopted in America and to point out what seems to
me the essentials in an adequate and scientific plan.
Two general methods of compensating permanent partial disabili
ties have been adopted in this country. According to one method
the compensation is based on the percentage of wage loss occasioned
by the disability, payments continuing during incapacity, but usually
subject to maximum limits. Under this plan the injured employee
receives compensation for temporary total disability during the heal
ing period, and after his return to work a percentage of the wage loss,
if his subsequent wages are less than those received at the time of the
injury. The right to compensation for partial disability, however,
terminates in most States after a period of time, usually after 300
weeks. The second method is the adoption of a specific schedule of
injuries for which benefits are awarded for fixed periods, the pay
ments being a percentage of wages earned at the time of the injury.
The number of injuries specified in the schedules varies in the differ
ent States but provision is generally made for the loss of an arm,
hand, leg, foot, eye, fingers, and toes and parts thereof. Six more or
less well defined plans have been adopted in the United States and
Canada, based upon one or both of the foregoing general principles.
These plans I have arbitrarily designated by the name of one of tlie
jurisdictions having such a plan.
CARL HOOKSTADT.
89
FEDERAL SYSTEM.1
Under this system no compensation is paid for permanent disabil
ity as such. Compensation is paid for temporary total disability
until the injured employee is able to return to work and then for par
tial disability based upon his actual wage loss as long as such wage loss
continues.
The supposedly desirable feature of the Federal plan is that the
amount of compensation paid is based upon the actual wage loss in
each case. There are, however, numerous objections to this sys
tem, making it probably the least desirable of all the methods now in
operation. Some of these objections are as follows:
( 1 ) No compensation is provided for the loss of a member as such.
Most persons sustaining the loss of a major member suffer a serious
handicap not always shown in their wages. Such a person’s expenses
are probabfy greater than those of the normal person and in addition
he suffers many inconveniences and hardships not experienced by a
normal fellow worker.
(2 ) Compensation for partial disability is based upon the difference
between the wages received at the time of his injury and those re
ceived upon his return to work, but this wage difference does not
necessarily represent his reduction in earning capacity or actual wage
loss. Wages may have increased since his injury. Consequently,
although he may receive the same or even greater wages than he did
at the time of the injury, such wages may be considerably less than
those he would be capable of earning were it not for his disability and
less than the current wages commanded by the occupation in which
he was injured. Thus he suffers an economic handicap because of
his injury but receives no compensation therefor. Furthermore,
the wage level is constantly on the increase, which means an everincreasing actual wage loss not mitigated by compensation.
(3) It must not be forgotten that a man who sustains a serious
permanent disability is handicapped for the rest of his life. He may
return to work at the same or even a higher wage than he received
at the time of the injury and such increased rates may be enjoyed
for five or even ten years. It is quite probable, however, that sooner
or later the man will change his occupation or be discharged and either
be unable to find employment or be forced to accept employment at a
reduced w~age. Theoretically, unless the law contains a maximum
limit, he will then be entitled to further compensation. However,
he may have left the locality or may have forgotten or never known
his rights under the law. He makes no claim for renewed compensa
tion and consequently suffers an injustice. Thus the purpose of the
compensation law is defeated.
(4) Workmen, as a rule, are not thoroughly familiar with their
compensation rights nor do they know how to obtain them. Unless
application is made to the commission the latter does not know the
actual conditions and assumes that the workman’s compensation
rights have been satisfied.
( 5) Under this system it will be necessary for the commission to
keep every permanent disability case alive on its books until the
deatji of the injured workman, thus creating a considerable amount
of administrative work.
1 Adopted by Arizona, New Hampshire, and the United States Government.
90
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
( 6)
Most of the States do not grant compensation for partial dis
ability after a certain period, usually 300 weeks. If after the expira
tion of this period the workman develops an incapacity or is unable
to find employment by reason of his disability, he is not entitled to
compensation under the law.
N E W YO RK SYSTEM.2
This plan provides for a schedule of injuries for which compensa
tion is to be paid for certain definite enumerated periods, compensa
tion being based upon the wages received at the time of the injury.
No compensation is paid for temporary total disability, the amount
provided in the schedule being in lieu of all other payments. The
amount of compensation is uniform for each type of disability, neither
age, occupation, nor subsequent loss of wages or earning capacity
being taken into account.
The advantages of the New York plan are its simplicity and definite
ness. However, there are two serious criticisms against this system.
In the first place no compensation is paid for temporary total dis
ability. It frequently happens that a workman may be totally
disabled for one, two, or even three years because of a fractured arm
or leg wiiich becomes ankylosed and later develops into a permanent
disability. As a result, his compensation, which was intended to
cover his loss of earning capacity due to the permanent disability,
has already been consumed, and he therefore receives nothing for
the permanent injury. Another objection to this system is that it
does not take into account variations in degree of readaptability of
different employees, nor does it consider the length of time that
disabled workmen must carry their handicap. The degree of
readaptability, which depends upon age, occupation, experience,
training, and mental capacity, generally varies greatly with different
employees.
OHIO SYSTEM.3
This system is identical with that of New York, except that
compensation is also paid for permanent total disability during
incapacity. It is therefore an improvement over the New York
plan.
MASSACHUSETTS SYSTEM.4
The Massachusetts plan is a combination and modification of the
three foregoing systems. Compensation is paid for temporary total
disability during the healing period and thereafter for partial dis
ability if the injury has resulted in an actual reduction in wages.
In addition, compensation is paid for certain definite periods enumer
ated in the schedule. These schedule periods are much smaller (50
weeks for all major disabilities and 12 weeks for all minor disabilities)
than the schedules of the New York and Ohio systems.
The objections to the Massachusetts plan are similar to those
enumerated under the Federal system. It has one advantage,
however, over the latter because it provides specific compensation
for the loss of members irrespective of loss of earnings.
2 Adopted by Alabama, Alaska, Colorado, Delaware, Hawaii, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maryland, Michigan, Minnesota, Montana, Nebraska, New Mexico, New Y o rk ,’ North
Dakota, Oklahoma, Pennsylvania, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
a Adopted by Connecticut, Idaho, Illinois, Missouri, Nevada, New Jersey, Ohio, Oregon, South Dakota,
Utah, Vermont, Washington, and Wyoming.
« Adopted by Massachusetts and Rhode Island.
91
CARL HOOKSTADT.
CALIFORNIA SYSTEM.
California is the first State to undertake the formulation of a really
scientific system for compensating permanent partial disabilities.
Under the California compensation law the industrial commission is
authorized to establish a schedule of permanent disabilities based
upon (1) the nature of the physical injury, (2) occupation, and (3)
age. In accordance with this authorization the commission has
issued such a schedule, which has been outlined in the admirable
paper by Commissioner Naftzger. In brief the California system is
an attempt accurately and scientifically to correlate compensation to
loss of earning capacity for each disability under various industrial
conditions. Great credit is therefore due the California Industrial
Commission.
Objections have been raised to the California system because it is
too theoretical. My criticism against the system, however, is not
that it is too scientific, but that it is not scientific enough. The
totality of the economic or wage loss resulting from a permanent
disability depends ( 1 ) upon the degree of impairment of future
earning capacity, and (2 ) upon the life expectancy of the workman,
i. e., upon his age at the time of the injury. The degree of impair
ment of earning capacity will depend upon the workman’s adapta
bility, which again will depend upon the nature of the disability, the
mentality (education, experience, training) of the workman, age,
occupation, and whether the workman must change his occupation
and also whether he must seek a new employer.
In the California system certain important factors have been disre
garded entirely while others have, in my judgment, been emphasized
too much. In the first place, the injured worker’s experience, train
ing, and education, or what may be termed his “ mentality,” has been
practically ignored. A workman’s power of readaptation, after an
injury, probably depends more upon his mentality than upon his
age, occupation, or disability. A man well educated and highly
trained, whether he be a bookkeeper, machinist, or engineer, is much
better able to adapt himself to new conditions than a stevedore or
an unskilled common laborer; and this irrespective of whether the
disability is due to the loss of an arm or leg. On the other hand,
when a stevedore, say, especially at an advanced age, meets with a
serious injury it makes little difference what the particular nature of
the disability is; the man is practically through. The following
tabular statement shows the number of weeks’ compensation allowed
under the California schedule for the loss of an arm and leg for several
specified occupations:
N U M B E R O F W E E K S ’ C O M P E N S A T IO N A L L O W E D F O R S P E C IF IE D O C C U P A T IO N S A N D
A G E S U N D E R T H E C A L IF O B N IA S C H E D U L E .
F or loss of m ajor arm betw een
e lbo w and sh ould er a t—
L o ss of leg at or ab ove knee
a t—
21 years.
41 years.
81 years.
21 years.
221
223
231
229
242
251
i 455
277
263
278
i 449
i 417
O ccu p ation .
Steved ore or la b o rer.................................................
Stru ctural-steel w orker...........................................
M a c h in ist
B o o k k e e p er....................................................................
...................................
181
181*
178
165
41 years.
201
201
193
133
61 ye ars.
224
224
208
101
1 A p p ro x im a tely . In asm u ch as th e schedule rating is over 70 per cen t, com pensation is paid during life.
I t was necessary, therefore, to reduce the life pension at th e decreased rate to num b er of w eeks at th e full
rate, using th e A m erican E x p erien ce M ortality T a b le.
92
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
An analysis of this table shows several important weaknesses in the
California system. It will be noted that for the loss of the major
arm sustained at the age of 61 years, 263 weeks' compensation is
granted to a stevedore or laborer, 278 to a structural-steel worker,
449 to a machinist, and 417 to a bookkeeper. In other words, the
less the adaptability and consequently the greater the loss of earn
ing capacity, the smaller the amount of compensation. If it is the
aim of the schedule to correlate compensation to wage loss the
amounts should be reversed. The loss of an arm by a stevedore or
structural-steel worker at the age of 61 practically ends his industrial
career. These men should certainly receive larger amounts than
those provided for a bookkeeper or machinist, who, because of their
presumably better education and training, will find it more easy to
adapt themselves. Again, at the age of 61 the loss of a leg by a
stevedore or structural-steel worker is just as serious (in my judg
ment more serious) as the loss of an arm, yet the California schedule
provides more compensation for the loss of an arm than for the loss
of a leg. The loss of either at this age, from the economic viewpoint,
is an extremely and equally serious matter. Furthermore, the loss
of a leg is surely as serious industrially to a stevedore or structuralsteel worker at the age of 61 as the loss of an arm to a machinist at
the same age. But under the California schedule the stevedore or
structural-steel worker receives only 224 weeks’ compensation,
whereas the machinist receives 449 weeks— over 100 per cent more.
Again, to give a life pension to a machinist who loses an arm at the
age of 41 and not to give a life pension to a stevedore who sustains
a similar disability at the age of 61 seems the height of inconsistency.
A second criticism against the California schedule is that it pre
supposes standardized permanent occupations. It is assumed;that
the particular occupation engaged in at the time of injury is the work
man’ s regular permanent occupation, and compensation is paid on
this assumption. I believe this assumption to be unsafe. Hundreds
of thousands of workmen have no regular occupation, and this is
especially true of the more hazardous occupations, such as lumbering,
stevedoring, and the iron and steel industry. An analysis of accident
reports received by industrial commissions shows that a large pro
portion of the workers had engaged in a number of different occupa
tions within a year or two prior to the injury. Manifestly, therefore,
it is unjust to compute the amount of compensation, as is done in the
California schedule, on the basis of the effect of the injury upon the
earning capacity of the workman in a particular occupation when
this occupation is not his regular one or when he has no regular occu
pation. But even if it were true that workmen have permanent
standardized occupations, this plan would still be subject to criticism
on the ground that it ignores the mentality factor in the workman’ s
power of readaptability.
The third criticism against the California schedule, and perhaps the
greatest weakness in the whole system, is that it does not take into
consideration the length of time that the workman must carry his
handicap after the injury. In other words the age factor, except in
so far as it Effects adaptability, is neglected for all disabilities trader
70 per cent. In fact the whole underlying principle of the California
permanent disability schedule is predicated upon the assumption
CARL HOOKSTADT.
93
that it is possible for all partially disabled workers completely to
rehabilitate themselves. Thus Mr. Naftzger in his paper says: “ It
is considered that this period of time [i. e., the compensation period
provided in the schedule! will in the average case be amply sufficient
for the purpose of rehabilitation. For example, if a man has a 10 per
cent disability it is considered that at the end of 40 weeks he will have
accommodated himself to his injury and will have regained his old
standard of earning efficiency.” On the same assumption, a man
suffering a 50 per cent disability will have regained his old standard
of earning efficiency at the end of 200 weeks. It will require a longer
time to rehabilitate one’ s self at 40 than it will at 20, and at 60 than
it will at 40; likewise the rehabilitation period will vary with different
occupations and with different disabilities; but for all disabilities
under 70 per cent it is assumed that sooner or later the man will
rehabilitate himself and regain his former standard of earning
efficiency at all occupations and at all ages under 75. Such an
assumption is absolutely fallacious. It may be desirable, for the
moral effect upon the disabled men themselves, to assume in dealing
with them that everyone can be completely rehabilitated, but to base
your compensation schedule upon such an assumption is extremely
undesirable and unjust.
It is desirable and necessary that the probable impairment of
earning capacity resulting from a given disability should be ascer
tained and such impairment should be expressed in percentage of
total disability. Once having ascertained the probable impairment
of earning capacity the compensation rate should be applied for the
remainder of the workman’s life. Obviously the percentage of
disability increases with age and since adaptability decreases in the
same ratio, the California plan is correct in increasing the percentage
with age. It neglects, however, the important fact that the degree
of disability, such as it is, continues for life.
BRITISH COLUMBIA SYSTEM.5
Under the British Columbia law the compensation board has
formulated a schedule of permanent partial disabilities similar to
the California plan, but with several important exceptions. The
amount of compensation is based upon loss of earning capacity and
is expressed in percentages of total disability. In arriving at this
percentage of disability two factors have been taken into considera
tion: ( 1 ) Age, and (2) wage. Unlike California, the occupational
factor has been ignored. The purpose of both the age and wage
factors is to measure the degree of adaptability. According to the
British Columbia plan, compensation increases with age on the
assumption that the ability to adapt one’s self to changed condi
tions after the injury decreases with age. On the other hand, com
pensation decreases with wage on the theory that the greater the
wage the greater the mentality of the worker and consequently the
greater his adaptability to meet changed conditions.
The British Columbia plan is probably the most nearly adequate
a^vl the nearest approach to a scientific system of compensating
permanent partial disability yet developed in America. In the
&A d o p t e d b y British C o lu m b ia an d O ntario.
94
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
fhst place the attempt is made to ascertain the probable reduction in
earning capacity expressed in percentage of total disability; com
pensation for this percentage is then paid during the life of the work
man. It is recognized that the handicap resulting from a permanent
injury will continue through life. In the second place the percentage
of disability is based upon the ability of the injured workman to
rehabilitate and adapt himself. This power of adaptation de
pends upon two factors, age and mentality, including experience*
training, education, etc. The mentality factor is supposed to be
represented by the wage received. While the British Columbia
board is to be commended for recognizing the fact that mentality
plays an important partin the ability of a permanently disabled work
man to adapt himself, present wTages, however, are not an accurate
index of mentality. The effect of supply and demand, unionization,
and the trend toward standardization of wages by,trades makes it
practically impossible accurately to correlate wages with skill and
mentality. This is the greatest weakness in the British Columbia
system. I believe, however, that wages are a safer index of adapt
ability than occupation.
ESSENTIALS OF AN ADEQUATE SYSTEM.
An adequate compensation system for permanent partial dis
abilities should have the following essentials:
First. All permanent disabilities should be compensated. Com
pensation should not be limited to a few major disabilities, as is the
case in Pennsylvania and Delaware. Furthermore, all degrees of
permanent disability should be compensated. The compensable dis
abilities should not be limited to amputation cases or complete loss
of use, as is the case in Ohio and Massachusetts.
:
Second. Full and adequate medical, surgical, and hospital treat
ment should be furnished every injured worker, the cost o f which
should be borne by the industry. It is absolutely unjust to limit the
amount o f such service. Such limitation simply means either that
the medical profession must bear a part of this burden or that the
injured employee will have to pay for the service out of his meager
compensation benefits.
Third. Compensation should be paid for temporary total dis
ability during incapacity in addition to the payments for permanent
disability, which are supposed to represent the injured workman’s
subsequent economic handicap.
Fourth. The amount of compensation for permanent partial dis
ability should be based upon and represent the probable reduction in
earning capacity or wage loss. This wage loss depends upon the
workman’s readaptability, which in turn depends upon his age,
occupation, experience, training, and especially upon his mentality.
Fifth. Compensation should be adequate. The compensation pro
vided for major disabilities in the present State schedules probably
represents less than one-half, perhaps not more than one-third, of
the wage loss resulting from such disabilities. It is of little avail to
try to ascertain for each occupation and age the correct relationship
between the various injuries and their respective wage loss if the
whole compensation scale is grossly inadequate. A system which
provides for a flat and uniform amount of compensation, if this
CARL, HOOKSTADT.
95
amount in general adequately represents loss o f earning capacity,
is much more desirable, in my opinion, than a more scientific and
flexible system which is, as a whole, inadequate. It should also be
emphasized that the handicap resulting from a permanent disability
is permanent and will continue during the workman’s life. It is
advisable, therefore, first to ascertain what the probable economic
handicap o f a given injury will be and then base the amount of
compensation on the fact that such a handicap is permanent.
Sixth. The amount o f compensation should be certain, definite,
determinable in advance, and should not depend upon loss of earn
ings in individual cases. In brief, the permanently disabled work
man must not be penalized for his ability speedily to rehabilitate
himself. To do so would discourage successful rehabilitation work
and would place a premium upon malingering.
Seventh. Provision should be made for adequately compensating
second injuries. One of the consequences of workmen’s compensa
tion laws, possibly unforeseen at the time of their enactment, is the
adverse effect of such laws upon the employment of physically de
fective workers. When a one-eyed workman loses the second eye in
an industrial accident he is totally disabled for life. I f the employer
is required, under the law, to pay compensation for permanent total
disability in such cases he will feel considerable apprehension about
employing such men. On the other hand, if the employee is to re
ceive compensation for the loss of one eye, regardless of the result
ing disability and loss of earning capacity, he will be inadequately
compensated and the purpose of the compensation act will be par
tially defeated. Several States attempted to meet this problem of
discrimination by permitting physically defective employees to enter
into an employment contract whereby they might waive their right
to compensation for injuries due directly to their physical defect.
Undoubtedly under this scheme many defective workmen are given
employment which would be denied them if the employer were to
assume the liability resulting from a second injury. Such a plan,
however, leaves the handicapped workman unprotected in case of a
subsequent accident. As far as he is concerned, the compensation
law is to a great extent a dead letter, and in case of injury he will be
thrown upon public charity or the generosity of his employer.
Another method aiming at the prevention of industrial discrimina
tion against cripples is to prohibit insurance companies from charg
ing employers higher premiums in case they employ disabled men.
Minnesota recently enacted a law embodying such a provision. The
weakness o f this scheme is that it does not cover self-insured em
ployers who, because of the direct relationship between accidents
and compensation costs, would be more inclined to practice discrimi
nation than insured employers.
A simple and adequate remedy for this situation lies in the creation
o f a special fund out o f which the additional compensation may be
paid. New York was the first State to establish such a fund and
thus relieve the employers of the extra liability. The New York law
provides that in case of a second major disability the employer shall
be held liable only for the second injury, but the injured employee
shall be compensated for the disability resulting from the combined
injuries. The additional compensation is paid out o f a special fund.
96
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
This fund is created by requiring the employer to contribute $100 for
each fatal accident in which there are no persons entitled to compen
sation. Seven other States 6 have recently followed the example set
by New York, and enacted similar provisions. Wisconsin, however,
raises the special fund by requiring employers to pay an additional
$150 in case an employee sustains a major permanent disability.
These plans of taking care of the extra compensation liability through
a special fund insure substantial justice to both employer and em
ployee and remove one potent factor o f discrimination.
Eighth. Every disabled workman should not only be paid the
statutory compensation benefits and be functionally restored as far
as possible, but should also be vocationally rehabilitated and replaced
in desirable employment. The cost of rehabilitation should also be
borne by the industry. Until recently disabled workers have been
paid their compensation benefits and then allowed to shift for them
selves exactly as they would have done prior to the enactment o f
compensation laws. Fortunately, the war focused attention upon
the problem. In the attempt to restore the war cripple the plight
of the industrial cripple was also brought into relief. Massachusetts
in 1918 was the first State to provide for a rehabilitation department;
since then nine other States,7 the United States Government, and sev
eral Provinces of Canada have followed suit.
D ISCU SSION .
The Chairman. The subject is now open for general discussion.
The question of eye injuries and the question o f permanent partial
disability will fit in nicely with this subject, and if anybody wishes
to discuss them, it will be in order.
Mr. A. J. Ptllsbxtry, commissioner, California Industrial A cci
dent Commission. I scented trouble as soon as I found out what Mr.
TIookstadt’s subject was. We have discussed this problem before
and have never reached any agreement. Now, I am willing to admit
at the start that our system is not complete, It is not all we hoped
to make it. It was made theoretically to begin with, and yet with a
very careful study o f perhaps 1,200 occupations, with all the in
formation we could get from all the countries in the world. We
tried to get a reasonable, rational basis for compensation for per
manent injuries. W e knew that it was defective, not so much in the
particulars that Mr. Hookstadt mentioned as in some others. The
schedule is now in process of revision, and we hope to have something
after the 1st o f January which will be very much more perfect, after
having had seven years o f experience. There is one thing I can say
for it. It has saved tens, perhaps hundreds, of thousands o f dollars
which would have been spent in trying to prove in each particular
case how much each particular kind o f injury disabled and what the
wage loss was, and had we not tried something o f this kind, and
had to decide on the record o f each case, we would have had to decide
differently where the same injuries existed under the same condi
tions, because the records wouid not have been the same. W e have
6 M assach usetts, M innesota, N orth D akota, Ohio, Oregon, U tah, and W isconsin.
7 C a lifo rn ia, Illin ois, M innesota, N evada, New Jersey, N orth D ak ota, Oregon, Pen n
sy lv an ia , and Rhode Island.
DISCUSSION.
97
had many such cases from our State, and generally when we have, it
has been because of a faulty description o f the nature and extent of
the injury by the medical authority, whoever it was, who gave us the
description. We have approximated pretty closely to the require
ments o f each particular case. We have taken in the age, assuming
that the boy has the world before him and he can adapt himself to
a new occupation if he wants, but that the man o f 75 is too old a dog
to learn new tricks. It is true the boy carries his injury a long time,
but what would Mr. Hookstadt do with the dead people? They will
be dead forever. Would you have the compensation go on as long
as they have any heirs living? They have lost out forever. No. It
is on the basis o f the reasonable time it takes to rehabilitate. L eft
to themselves it does take a good while to rehabilitate. We have not
kept as good track as I wish we might have, as I hope we shall, o f
what has become of all the men injured. But you will not find any
o f our people who have been compensated under our law selling lead
pencils on the streets of this city. Those who are got their injuries in
some other State.
The mentality problem is one which it seems to us can not be
taken into consideration, because there is no way o f getting at it.
How are you going to make a test o f what Mr. Hookstadt’s mentality
is, except to get his whole history from the department at Washing
ton. Or as to any of the rest of us, how can you determine what the
mentality is ? That is a condition which can not be met. I know our
schedule, when it comes to old age, is rather extreme. There is one
other factor that Mr. Naftzger did not mention that we do consider,
the ability to compete in an open labor market. We think if we have
an eye injury case come before us, it is our fault and not the fault
o f the law if we do not fit the compensation to the need. We take
into consideration the age of the man, his ability to adapt himself
to occupations—that is, the need that he has for an eye in that
occupation, the ability to compete in the open labor market, and
wage. Now, it is true that his wages have to be fixed as of the time,
unless he is under 2 1 ; then we boost it to what it would be when
he becomes 2 1 . But it must be settled once and for all, and not
brought up eternally, so it is better to fix it. The insurance com
pany has to know what its liability is. It can’t be changed and
cases reopened every two or three or five years during the period.
W e have some things that have to be arbitrary and that is one. But
if we can have the change we are trying to get, and if our supreme
court holds level on the law, we shall get the rehabilitation outside,
to help these people, all of them, to get back their earning capacity,
and I think our theory is sound that with all these injuries— 500 o f
them or more, from the crown of the head to the sole of the foot—
all these people who are at least normal, not subnormal, will, under
a system o f reeducation, within a reasonable time, develop an earn
ing capacity in some form o f industry, which in most cases will not
involve a lower standard of living. Now, there are certain cases
that are so serious that they ought to have life pensions, there is no
question about that, to help them out; but in normal cases we will get
them back without a loss or lowering of standard. We have always
hoped this system would be supplemented and we are doing it to a cer
tain extent, though handicapped by the fact that the constitutionality
26039°— 21-------7
98
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
o f our rehabilitation act has been attacked; but straighten that out,
and I believe, having nearly seven years o f experience now, we shall
soon be in position to know exactly how long these compensa
tions, as a rule, need to be carried in order thoroughly to rehabilitate
the men’s earning capacity.
I thank Mr. Hookstadt for the compliments paid to us. We have
struggled wTith the problem and are still struggling with it, and I
think perhaps another year— at the next meeting o f this associa
tion— we shall be able to report to you an amended, revised section,
but I doubt whether we shall be able to do that on the basis o f men
tality, and I don’t think we shall be able to do it on the basis of
computing the length o f time a boy o f 16 must get along with some
lost fingers, when he can adapt himself in six months or a year to an
occupation where he will earn just as much as he did before.
Mr. M a rsh a ll. I would like to ask you, Mr. Pillsbury, from what
source does the fund you intend to use under this rehabilitation law
come?
Mr. P i l l s b i j r t . We asked the legislature to impose a tax of $350
in all cases where employees are killed and leave no dependents.
We got that idea from New York. It costs us just as much where
an unattached man is killed as it does where a man with a family
is killed, in the same proportion, and that goes in. Mir. French and
I got through the first legislature o f 1913 a law carrying that pro
vision in effect, but the governor pocketed it, because he was advised,
by the attorney general that there was no way o f making the State
a dependent in default o f other dependents, as the State would be
the heir in default o f heirs to his property, and so it wTas dropped.
But in the Newman case in New York they imposed $100 for the
benefit o f these persons who have second injuries, who lost one eye
in employment one time and another eye another time, and the New
York law upheld the constitutionality, and we got busy^ at once
to use the same idea for the purpose o f getting a rehabilitation fund.
We have between 30 and 50 now undergoing rehabilitation, but the
constitutionality o f that act is before the supreme court, and we don’t
know just where we stand and can’t do all the things we want to
do at this time.
M r. M ackey. There can not be any question about the constitu
tionality o f the rehabilitation act, but the question may be raised as
to the source o f your revenue; but I think you need have no fear in
that respect, because we looked it up very thoroughly in Pennsyl
vania and made the same recommendation to our legislature, but
the legislature did not pass it; not, however, because it was ob
sessed with the idea it was not constitutional.
I would like to ask something in reference to the morning sub
ject— I would like to ask along the line of the question I indicated
this morning, Mr. Kingston. What is your legislative authority for
graduating your compensation for loss of an eye in accordance with
the percentage o f loss? I am interested to know just what your
authority is under your law, because we want to correct a very bad
law.
Mr. K ingston. I may answer that by saying that there is no lim
itation whatever upon the discretion o f the board; the board is
entirely responsible for administering the law without any limita
DISCUSSION.
99
tion whatever except the 66f per cent. There is no other limitation or
restriction as to how much we shall give this or that man, nor as to
how we shall arrive at the particular disability in any particular case.
Mr. M ackey. The question I am interested in is what is the lan
guage o f your act—giving you authority to make any award for the
loss o f an eye or the loss of vision at all ? Our act provides we can
make an award for a given number o f weeks for the loss of an eye.
There is no authority there for us to graduate that award for the
percentage of loss of vision. We must have the loss o f the eye to
award 125 weeks. I f a man has lost a percentage o f vision, not
reflected in earning capacity, we can make no partial disability award,
but we would be very glad to get such an act— giving us a certain
percentage o f compensation for each percentage o f loss o f vision.
Mr. K ingston. I should think it would be very unfortunate if
there were any attempt in legislation to define that in so many words.
The best way, it seems to me, is to vest your administering board with
discretion to determine all these matters.
Mr. M ackey . That is what I want to know.
Mr. K ingston. I will give you a copy of our law.
Mr. Mackey. Your legislature vests in you the power to determine
the degree of loss of vision in an eye ?
Mr. K ingston. Absolutely.
Mr. M ackey. That is what I want to know. I want to ask a
question now of Mr. Pillsbury. What is your authority in your
act for you to adopt such a schedule as you have been discussing as
to permanent partial disabilities ?
Mr. P illsb u ry. The legislation gives our commission power to
make a schedule, but itself determines how many weeks’ compensation
shall be given for each per cent o f injury there is, making 100 total.
Mr. M ackey. Giving you power to determine the percentage ?
Mr. P illsb u ry . Yes. We do that, taking into consideration the
occupation, the nature and extent of the injury, and the ability to
compete in the open labor market. Those are the factors. We apply
all those factors in each case. We made a schedule which we thought
when we started in any employer or insurance carrier could use as
well as we could. It so happened that when they did use it they
never, as far as I know, overestimated the nature and extent of the
injury, and we found a great many cases where they underestimated
it. Therefore we make all the arrangements ourselves and have the
description of the injury gone into in our office, and, as far as possible,
have the injured persons themselves come to our office in San Fran
cisco or Los Angeles to be gone over by our medical advisers, and
have the extent of their injury set out clearly. That is being done
in most cases. Still we have certain ones all over the State, certain
physicians, whom we can rely on to be careful and accurate in their
descriptions. We may have, for instance, a report come in of fingers
off, but nothing said* about ankylosis. It makes a great deal o f
difference whether we get a full, accurate description, or only partial
description. Our experience has justified us in requiring ratings to
be made. The commission has the authority to determine the per
centage of disability, but the law specifies that for each per cent o f
disability there shall be paid four weeks of compensation.
100
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA,
There is just one fault with our schedule; one thing our law handi
caps us about. In making up the schedule an allowance was made
for the time ordinarily required to recuperate from temporary dis
ability, but there are cases where a man has a very serious injury.
For instance,, two men with crushed ankles— they fall off the same
scaffold; one of them gets well right away and has an ankylosis in
his ankle, and he gets a certain disability rating of so many weeks.
Now, the other man has a complication; he has scepticemia. Some
thing gets into the wound and that keeps him in bed for six months.
He comes out as good as the other man, but he gets only the same
compensation. I f the temporary compensation outlasts the permament, our law gives whichever lasts the longest; but what we want
is to add onto the temporary disability, where it is prolonged, a re
habilitation period to exceed the temporary disability. Otherwise
these people come out with no means at all for rehabilitation, be
cause they spend all that time in the hospital; and there are cases
o f that kind where we have no power to do them justice.
Mr. George H. F isher, commissioner, Idaho Industrial Accident
Board. With the permission of my associates I wTould like to refer to
a concrete case with reference to eye injuries, and do it for the pur
pose o f information just to see what would be the consensus of
opinion as to what would be done under similar conditions. Our
law has a section setting forth a schedule for specific injuries or losses
to members o f the body—so much for an eye; the loss o f sight is
100 weeks; by enucleation, 120 weeks; loss of an arm, so much;
loss of a leg, so much. After this is all given there is a closing
section which says, “ In all other cases in this class compensation
shall bear such relation to the amount stated in the above schedule
as the disabilities bear to those produced by the injuries named in
the schedule.” We have had the experience in one case of eye in
jury, and that is what I want to ask about— what experience have
the different boards had in the use of glasses for the correction o f
sight? We had a case o f diplopia—by the way, it happened since
prohibition has been in force. This unfortunate workman was left
with that condition. The insurance carrier provided him with the
proper treatment, and eye specialists gave him glasses that restored
his sight to normal with the use of the glasses. The insurance car
rier then questioned as to whether or not there should be any com
pensation. There was no loss of vision when the glasses were used.
However, when the decision of the board was made—that is, the
approval of the board was given to the estimate of the loss of vision
or of injury by the specialist who considered the case— there was no
objection raised on the part of the insurance carrier to paying the
award. Eegardless of the fact that there was no loss o f vision
when the glasses were used, the specialist’s estimate was that the
loss was one-third—that is, the injury was equal to the loss of onethird o f the vision of the eye— and hence he was awarded something
like $400 for the reason that the loss of sight of one eye is, as I stated,
100 weeks, and the maximum is $12 , I think. The individual was
satisfied with the award.
W hat is the experience of the industrial accident boards with
reference to any appliances that restore function, this being a con
crete case of the eye? Perhaps you have had experience of this
particular nature,
DISCUSSION.
101
Mr. W. P. Monson, commissioner, Utah Industrial Commission.
The Utah board has a provision similar to that of Idaho. It pro
vides, however, for crutches and artificial limbs or glasses; but where
the doctor’s report says one-third loss o f vision, we would make the
award one-third of the number of weeks, or one-third of the total
loss given in the specific schedule of losses. It is a loss to the indi
vidual, and he buys his glasses. O f course, we are interested in him,
and would urge him to patronize an oculist and correct his vision for
his own good, and would not lose sight of the man after the award has
been made. We feel that there is a loss of function, and the com
mission of Utah is given power by the legislative act to cover just
such situations as that; and we have done in every case just what
Mr. Fisher says is being done in Idaho.
Dr. Regan. I would like to ask the gentleman i f the injury caused
a distinct turning of the eye? Did it turn in or out, or anything?
Mr. Fisher. I do not know whether the report gave it. Did I
tell you how the discovery was made that it was diplopia ? During
the convalescence of the patient in the hospital a friend came in to
see him. The light was turned on, in a globe in the room, and he
asked his friend to turn out one of the lights, as it was a little too
strong for the eye.
Dr. Regan. Was it a head injury?
Mr. Fisher. Yes.
Dr. Regan. Were the glasses very heavy?
Mr. Fisher. I think not.
Dr. Regan. Did the glasses correct it?
Mr. Fisher. Yes; the vision was normal after the glasses were
fitted.
Dr. Regan. It seems to me that was diplopia from refraction and
not from injury. We have people who are perfectly healthy and
who do not need glasses, and a sudden illness, say, for instance,
pneumonia, will lay them up and the eye muscles will never come
back. For the same reason, you can all see, a man o f 45 or 46 needs
a pair of glasses to read; he occasionally goes to 47 without, and then
if he has a little sickness he will have to put on glasses, and he thinks
the sickness has caused the glasses. That is not so at all. It is
simply that the muscular apparatus of the eye o f a normal indi
vidual sometimes holds its point quite long. In a case of this kind,
to have caused the diplopia it must have been a central lobe injury
to one o f the nerves, and if that were true glasses would not correct
it and the eye would be lost, because it would be in the same category
as a traumatic cataract, i. e., although the eye would be able to see,
double vision would occur. P * * I f a man had an injury from
hemorrhage or from concussion, it doesn’t seem to me he would get
a diplopia from that that glasses would overcome. They merely cor
rect temporarily. It seems to me it was simply a refractive error
there that the man’s injury brought on—had nothing to do with the
central lobe or the muscular apparatus.
Mr. Fisher. The question of the previous condition was thoroughly
discussed, and while there might have been a suspicion of that, there
was no proof of it. I wanted to bring out the method o f compensa
tion for loss o f sight when there was no loss. Under the law as read,
102
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
we feel, as a board, we have authority to prorate for the impairment
o f function, and when the opinion of the specialist was to the effect
there was one-third impairment, i. e., impairment equal to one-third
the loss of vision, we thought we were doing the proper thing to
award for that.
The Chairman. I think the point is not what caused this injury;
the point is, are you going to give him credit for glasses? Mr.
Monson says they don’t give any credit for vision.
Mr. Lee. W e adopted the same rule under our old law, but at the
last legislature we said we would not take into consideration correc
tive lenses. I was interested in this discussion about the schedule. I
confess, with all due respect to my friends with ability to read figures
and make schedules, I confess I am a little at sea in figuring these
different conditions of life. You have to go to the legislature and
get what you want. You may have your ideas about it, and the more
complicated you make them, the more trouble you are going to have.
Our friend says a stevedore ought to get more or less than a machinist,
or a machinist ought to get more than a stevedore. You ought not
to take that into consideration or give the stevedore or machinist
more. Added to that, you throw in the mentality, and the commis
sion ought to sit there and judge it all. Either that or you have got
to have the legislature say by what rule you are going to measure
this. When you get into this question of measuring everything by
fine rules and having the legislature give them to you, you have to
run the hazard, first, as to whether you have the right arrangement;
second, as to whether you have the ability to go before the legisla
ture and get it approved.
When we are continually running to the legislature and admitting
our inefficiency, we are lessening our influence with the legislature
and our ability to get the things we need to carry on this work. So
I say, when we are discussing the question of schedules, I agree with
the gentleman from the Dominion of Canada; first have a solid
foundation on which to work and get as much discretion in the hands
o f the commission as you can, in order that it can apply the schedule in
each individual case and mete out justice in all the cases. That’s the
premise this commission ought to build upon and not the fancy views
o f different persons engaged in trying to work out a system of
schedules that will correct all the ills that unfortunate workmen have
to bear. Therefore, I say I believe that California will find before
long that the stevedore on the wharf will find out he ought to get
more than the machinist, and then,will commence rows over legis
lation, and you will get a very peculiar product. You may say that
is common, ordinary talk, but it is true. We all have the same ex
perience. The more you complicate vthis workmen’s compensation,
the more you try to specialize on it, or course, the more difficulty you
are going to have. I don’t know whether they will have that ex
perience here, because everything good under the sun is in California,
almost. They have their own little world here and get along pretty
well. When we butt shoulders in the Eastern States we can’t get
away with these things, but they may out here, because they are sort of
isolated and have everything good under the sun, aimost. We
would like to take some o f it away with us.
DISCUSSION.
103
The C h a i r m a n . Mr. Lee was formerly of the Maryland Legisla
ture, so he knows whereof he speaks.
Mr. K ingston. I appreciate the compliment paid to our system in
Ontario. At the same time, no one appreciates more than do we
in Ontario the weaknesses of our system; but we are looking for more
light and looking to improve our law all the time. As to the table re
ferred to as adopted by Ontario, I hate to have the impression go
abroad that we are married to that. It is something that we use as a
guide, but I should hate to put it out as the last word in a permanent
partial disability rating schedule. It is true we do consider that
the high-wage man will more readily adapt himself to new con
ditions than the low-wage man. I think as a general principle
you all accept that, but there is not one of 3^011 who can not
take an individual case and prove that such a statement is wrong.
At the same time I believe that in the main the high-wage man will
more readily adapt himself to a new occupation, more quickly re
habilitate himself and get on a working basis than the low-wage man.
As to the difference between young and old men, our system makes
no difference as to the pension they shall receive, but it amounts to
this, that we use the life expectancy table when we come to find the
present worth o f that pension. That is the only difference we make
between the permanent partial disability awarded to the young man
and to the old. The same system, I understand, is used in Nova Scotia
and other Canadian Provinces.
The Chairman. What do you say about the glasses ?
Mr. K ingston. I would say, first, that in what Mr. Fisher has
stated I can hardly believe we have the whole story o f that eye. I
can not believe that a man with a genuine case o f diplopia can have
his trouble entirely corrected by the use o f glasses. I f an injury,
however, is of such a nature that it amounts simply to this, that it
has compelled a man who formerly was able to get along perfectly
well without glasses to wear glasses in the future, we would say
it is a case for a minimum award, and give him $100 or $150. I f it
were a genuine case of diplopia, so that the man must wear something
over the eye, we would treat that eye as if it were an eye with the
lens removed— or successfully operated on for a cataract. In either
case, the eye is o f very little practical use to the man, and we would
rate the injury on a 12 per cent basis. Have I answered your ques
tion?
Mr. Fisiier. It doesn’t make any difference whether I stated the
case correctly or not. I want to know the opinion of the accident
boards in regard to eye trouble, whether diplopia or something else,
when corrected by the use of glasses.
Mr. K ingston. I f an accident compels a man to wear glasses he
ought to be compensated for his loss. It may be, however, that he
is at that time of life the doctors speak of, around 45, 46, 47, or 50,
when he ought to wear glasses anyway, and the accident has just
wakened him up to the idea, or has impressed upon him the necessity
of wearing glasses. Had he consulted an eye specialist before the
accident he probably would have been advised that he should wear
glasses. These are factors which enter into the consideration of
these cases. It is obvious, o f course, that such a case should be treated
104
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
differently from that of the man who has suffered a real injury com
pelling him to wear glasses. This large question of rating permanent
partial disabilities is one that comes home very forcibly to every one
o f us. I attempted four years ago at the convention at Columbus
to compare the various jurisdictions that had compensation laws at
that time. I took five or six specified injuries— one to the eye, one
to the arm, one to the leg, one to the thumb, one to the index finger,
and one for permanent total disabilit}^— simply to see, in terms of
real money, how the various jurisdictions were providing for such
injuries. The spread in amount between the State paying the most
and the one paying the least was simply amazing, yet there are none
o f you but will readily admit that an arm in Maryland is just as
valuable as an arm in New York, and the man in Oregon will prob
ably think as much of his eye as the man down in Alabama. The
difference, of course, is almost entirely a question of legislation.
We are all limited more or less by legislative provisions that control
the boards’ discretion, and our awards must be limited accordingly,,
and until we get away from those statutory limitations we are never
going to see anything like uniformity in permanent partial disa
bility rating schedules. I hope the time will come when each juris
diction will have its administering board vested with discretion to
rate all these cases in accordance with its judgment. We are ap
pointed to administer these laws, because presumably we are con
sidered to have some knowledge of the subject; at least we are ex
pected to acquire technical knowledge and all possible light 011 the
subject as our work develops.
No one ought to be better fitted to provide a. correct rating schedule
than members of compensation boards and their technical assistants
who are studying the subject day in and day out, and if this discus
sion reaches anywhere, I hope it will induce some of us to go back
to our legislatures and impress them with the importance of getting
away from these statutory schedules, which outlived their usefulness
long ago, and of getting to a place where those who are administering
the law will be given the widest possible discretion. Much has been
said as to whether the wage basis at the time of injury ought to be
the final basis for compensation or whether it should increase from
time to time according to the wages the man might have earned had
he not been injured. In Ontario we calculate compensation on the
basis of the average earnings at the time of injury. We feel that
probably that is the safest procedure. There are times when wages
will increase, then again they will drop. During recent years, how
ever, there has been a gradual rise, and in so many cases the men
have said, “ Had I not been injured I would have been able to earn
considerably more money than the basis on which you are awarding
compensation.” I think on the whole it is the fairest to take as the
basis the average wages at the time of the injury, because that in
most cases is so easily ascertainable. I do not know where we would
land if we tried to vary the bases according to the times, because
what would have happened must vary so much, depending on locality,
and it would often involve the taking of an enormous amount o f
evidence to determine what the new wage basis should be.
There is another point which perhaps does not arise in the States,
where you are limited by your statutory schedules. That is as to the
multiple value o f certain injuries. To rate the loss for one finger
DISCUSSION*.
105
is easy enough, but if a man loses two fingers the sum of the ratings
for those two fingers is not the correct measure o f his loss. There is
a multiple that ought to be taken into consideration. Take the loss of
four fingers. The sum of the rates for each o f the four fingers is
surely not commensurate at all. They have a certain way o f calcu
lating multiple loss in British Columbia. We have quite a different
scale in Ontario. We say for two injuries of this sort we will add
the sum o f the two fingers, plus one-fourth; if three injuries, add the
sum of the three, plus one-third; and for four, the sum of the four,
plus one-half; and in a rough way we arrive at what we call a fair
amount. In British Columbia, for two injuries they take the sum
o f the two plus 50 per cent; for three, the sum of the three plus 100
per cent; and for four, the sum o f the four plus 150 per cent.
Another great question, of course, is that of rehabilitation o f the
injured worker. In Toronto wre are hoping soon to arrive at the point
where we will be able to take a man who has been seriously injured
and apply some o f the rehabilitation measures which have been so
successfully adopted as the result o f the war. We have not got any
where yet with that, but we are reaching the point where we are
very seriously considering the matter, and I hope before another con
vention date comes along we may have something to report.
On the question of second injuries, or injuries following preexist
ing disabilities, as mentioned by Mr. Hookstadt, I appreciate the
difficulty which the States having individual liability systems are
under in this respect. In the jurisdictions having exclusive State
insurance systems, 'such as Ohio, Oregon^ Washington, and the
Canadian Provinces, it is easy to establish an emergency fund simply
by appropriating a small percentage of the total assessment, and I
do not see why such a fund should not be made available to take
care o f the additional burden in these cases which someone must pay.
It is not fair, in my opinion, that the employer who is good enough to
employ a one-armed man or a one-eyed man should burden either
himself or the class of employers to which he belongs with a total
permanent disability loss in the event of such man losing the remain
ing arm or eye. The particular industry should of course bear the
loss arising from the last accident, but if this loss superadded onto
the existing disability produces total disability, that is an emergency
or special case, to be treated under some such fund. This idea, de
rived I think from the Italian law, o f making a special charge in
every death case where there are no dependents, is not a very
scientific way o f providing an emergency fund. The best way, it
seems to me, particularly where the boards have the assessing power,
is a small uniform assessment, or a percentage of the total assess
ments, amounting to whatever may be required to make provision for
such cases.
The Chairman. Mr. French has handed me a paper just received
in the mail from Mr. Archer, of New York, on the New York system
o f dealing with permanent partial liability. Inasmuch as the hour
has nearly arrived for adjournment, this paper will not be read but
will be considered as presented at this session, given to the secretary,
and contained in the report of the meeting to-day.
I wish some of you would answer Mr. Fisher’s question instead o f
trying to convince him he made a mistake in his decision. He wants
106
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
to know if a man has received an injury and lost a certain percentage
o f vision, and that can be corrected by the use o f glasses, do you pay
him— do you give him credit for it ? W hy don’t you answer it ?
Mr. K ingston. Certainly we would.
Mr. Gardiner. We give a man credit for that, when a man receives
an injury, irrespective o f correction, and the insurance company or
the employer is asked to provide artificial means o f correction.
There is no more reason for not doing so than if a man lost a leg and
an artificial limb was provided for him so he could get around.
There isn’t any more reason because he is furnished the artificial leg,
thus giving him means o f navigation, that he is not to be paid for the
injury.
Mr. M ackey. I don’t know that the decision o f this board, from
the standpoint o f the employer and the insurance carrier— it was very
modest to what we did in Pennsylvania. Compensation in Pennsyl
vania follows an injury, and we give compensation for the result o f
that injury, irrespective o f what the person needs, and which may
be procured, for temporary restoration. He couldn’t receive any
compensation, say, for broken glasses; therefore we would give the
man compensation for loss o f the eye, or 125 weeks. The same way,
we had a peculiar case. We gave compensation for the loss of an
eye where there was no injury to the eye whatsoever, but the man
received a burn searing the tear duct, so that the eye was constantly
inflamed. He was a miner. That eye was rendered absolutely use
less. Unless it was covered moisture was constantly flowing from the
eye, and as a miner he had lost the use of his* eye, and we compen
sated him for the total loss o f the eye.
Mr. W i l l T. K ir k , commissioner, Oregon Industrial Accident
Commission. In Oregon we do the same as in Maryland. We pay
for the loss o f vision uncorrected, on the basis o f being uncorrected by
glasses. But I want also to amend the suggestion of Mr. Lee relative
to permanent partial disability rating, to hold it down to simplicity.
I believe that is the valuable thing with compensation laws, to hold
them to simplicity, instead o f making them difficult and intricate. In
Oregon the law provides for the loss o f an arm, or leg, or foot, or
more, and gives the commission complete discretion to fix the percent
age o f loss in lesser injuries. I f one loses 30 per cent or 40 per cent
of a member, the commission has power to determine that by the ex
amination o f physicians to determine the per cent of loss. It seems
to be a simple method, and I would like to see simplicity followed.
We have in our law another provision which I think is excellent and
would like to mention, the provision which says the commission shall
not make a final settlement in any case until it has done all it can to
restore the man to as near normal condition as possible. This gives
the commission authority to employ restoration methods, and it
seems only what the worker is entitled to in case of injury.
Mr. Fisher. I wish to express my appreciation for the assistance
given by those who have spoken on this subject. It is said that
everything comes to him who waits. We waited and got informa
tion from a sufficient number o f boards. I wanted it for future
guidance.
DISCUSSION.
107
Mr. Gardiner. I would like to ask Mr. Kirk, of Oregon, a question.
What do you do in your State or commission where, for instance,
there is a dispute as to the percentage of loss of use, whether it be
the eye or any other member o f the body, with the insurance com
pany’s doctor—you have a commission?
Mr. K irk . Y es.
Mr. Gardiner. Supposing the insurance carrier’s doctor brings in
the statement that there is 75 per cent loss of use of the hand. The
injured man feels that that is not just; that he has not an equitable
allowance there; consequently he takes it to his own doctor, his
family doctor, and he disagrees with the insurance company’s doctor.
Then coming to us we suggest that he have a neutral physician, and
a neutral physician comes in with a report that does not agree
with the other two.
Mr. K irk . Use one of your own.
Mr. Gardiner. That, of course. We have to be satisfied with the
reports in the case, but I wondered what you would do in the ad
ministration of the law under the commission.
Mr. K irk . In Oregon, of course, we don’t have the insurance com
panies. We have a State fund and don’t have the insurance com
panies interested. We make a practice, wherever the man is at all
accessible, to call the man in for examination by our own physician.
I f the man is dissatisfied with his report and brings in a report from
his own physician that the disability is greater, we usually do this:
We say, “ W e wTill send you to a board of three neutral physicians.
You can sclect one, and we will select the others, and we will abide
by the findings of those doctors.” When that report comes in we
make the award on that. Sometimes it is not necessary to have three.
W e will send him to some competent surgeon in the State and abide
by his report. In our State, if the man is still dissatisfied he has
the right to take it to the court for jury trial.
Mr. Lee. We have a doctor, and when the other doctors disagree
we say to our doctor, “ Look this fellow over. Don’t talk to the in
surance doctor nor to the claimant’s doctor. You look him over and
tell us what you think.” When he gives us his opinion, we come
pretty near deciding what he says, no matter who disagrees. But
half the time all these doctors disagree each with the other, so they
can’t get mad when we disagree with them. But we come pretty
close to doing what our doctor says about it, We expect him to give
use correct advice; otherwise we would get another doctor.
Mr. P illsb u ry . It seems to me there is a little confusion. It seems
to me what we want doctors for is to tell us what ails a man. A ll
we ask of the doctors is that, and sometimes they disagree and we
have to get a good many of them before we get it thrashed out as to
what is the nature and extent of the injury. We don’t ask them to
use their judgment as to what this man can do. That’s our business.
But when doctors disagree as to the nature and extent we sometimes
send the man to the best expert we know in that particular line and
his report goes into the record and it will be determined on that, or
our own doctors examine him. But that’s all we have the right to
ask of the physicians and surgeons—to tell us the nature and extent
o f the disability.
108
COMPENSATION SYSTEMS IN UNITED STATES AND CANADA.
Mr. Hookstadt. Just one brief point. I explicitly stated it was
a minor matter, where you have a complicated graded schedule,
whether you pay the stevedore more than the bookkeeper, or vice
versa, if both are inadequately compensated. The point I make is
that our partial disability schedules are grossly inadequate. Now, in
Oregon they pay 416 weeks for the loss of an arm ; in Maryland, 200
weeks; in New Mexico, 150 weeks.
Mr. Lee. How much a week?
Mr. Hookstadt. Whatever the schedule says. Weeks, after all, is
the basis of comparison. My point is that if Oregon’s 416 weeks
is correct, then Maryland’s 200 is certainly inadequate and New Mex
ico’s 150 is more inadequate.
The Chairman. I think the time has arrived to close the meeting.
The meeting to-night will be held at 8 o’clock in this room. I
trust you will all be here and be here promptly.
[Meeting adjourned.]
,
MONDAY SEPTEMBER 20—EVENING SESSION.
CHAIRM AN, W IL L J. FRENCH, PRESIDENT, I. A . I. A . B. C.
BUSINESS MEETING.
The Chairman. It was decided at this morning’s meeting that we
would take up very briefly the business meeting at this time. I
shall appoint the following committees:
Com m ittee on resolutions (fiv e ).— W illiam A. Marshall, F. W . Armstrong,
Thom as F. Konop, Robert E. Lee, and W. P. Monson.
Com mittee on nominations (th ree).— George A. Kingston, H arry A. Mackey,
and John P. Gardiner.
Com m ittee on credentials (fiv e ).— Dr. James J. Donohue, Chester E. Gleason,
George D. Smith, Fred W . Llewellyn, and H. C. Myers.
The chairmen of those committees will please take note and call
the committees together.
The chair wishes to call attention to Article X o f the constitu
tion, which states:
Amendm ents.— This constitution or any clause thereof may be repealed or
amended at any regularly called meeting of the association. Notice o f any
such changes must be read in open meeting on the first day o f the conference,
and all changes o f which notice shall have thus been given shall be referred
to a special committee, which shall report thereon at the last business meeting
o f the conference. No change in the constitution shall be made except by a
two-thirds vote o f the members present and voting.
According to that, any changes should be submitted this evening.
I shall call on our secretary-treasurer pro tempore, Charles H. Verrill,
of Washington, D. C., to read his report as secretary-treasurer.
R E P O R T OF TH E SE CRETARY.
The International Association o f Industrial Accident B oards and Commis
sions now includes the follow ing 35 active mem bers:
United States Em ployees’ Compensation Commission.
United States Bureau o f Labor Statistics.
Industrial Accident Commission o f California.
W orkm en’s Compensation Commission o f Connecticut.
Industrial Accident Boards o f H aw aii (counties o f Kauai, Maui, H awaii, and
H on olulu).
Industrial Commission o f Illinois.
W orkm en’s Compensation Service o f Iowa.
Department o f Labor and Industry o f Kansas.
Industrial Accident Commission o f Maine.
Industrial Accident Commission o f Maryland.
Industrial Accident Board o f Massachusetts.
Industrial Accident Board o f Michigan.
Department o f Labor and Industries o f Minnesota.
Industrial Accident Board o f Montana.
Industrial Commission o f Nevada.
Departm ent o f Labor o f New Jersey.
New Y ork State Industrial Commission.
Industrial Commission o f Ohio.
Industrial Commission o f Oklahoma.
Industrial Accident Commission o f Oregon.
Department o f Labor and Industry o f Pennsylvania.
109
110
BUSINESS MEETING.
Industrial Accident Board o f Texas.
Industrial Commission o f Utah.
Industrial Commission o f Virginia.
Industrial Insurance Department o f Washington.
State Compensation Commissioner o f W est Virginia.
Industrial Commission o f W isconsin.
Department o f Labor o f Canada.
W orkm en’s Compensation Board o f Alberta.
W orkm en’s Compensation Board o f British Columbia.
W orkm en’s Compensation Board o f Manitoba.
W orkm en’ s Compensation Board o f New Brunswick.
W orkm en’s Compensation Board o f Nova Scotia.
W orkm en’ s Compensation Board o f Ontario.
Departm ent o f Public W orks and L abor o f Quebec.
Four active members— the Department o f Labor and Industry o f Kansas, the
Industrial Accident Commission o f Maine, the Industrial Commission o f Nevada,
and the Industrial Commission o f Virginia— have been added since the last
annual meeting. The Tennessee Departm ent o f W orkshop and Factory In
spection joined the association last year and paid dues for the year ending
June 30, 1920, but owing to conditions o f their w orkm en’s compensation act
w ill be compelled to w ithdraw the membership for the present. W yom ing is
rejoining the association, having dropped its membership after the last annual
meeting.
The United States Em ployees’ Compensation Commission, the United States
Bureau o f Labor Statistics, and the Departm ent of Labor o f Canada are
exempt from the payment o f annual dues.
The follow in g are associate m em bers:
Idaho Industrial Accident Board.
Ontario Safety League.
W orkm en’s R elief Commission o f Porto Rico.
Republic Iron & Steel Co., Youngstown, Ohio.
One o f these associate members, the Ontario Safety League, has joined since
the Toronto convention.
Dr. R oyal Meeker, who had served as secretary-treasurer o f the association
for several years, resigned his position as United States Commissioner o f Labor
Statistics on July 31, 1920, to accept a position w ith the newly organized Inter
national Labor Office, at Geneva, Switzerland. In anticipation o f this event he
had before submitted his resignation as secretary-treasurer to the executive
committee, which thereupon elected me to act as secretary-treasurer tem porarily
until definite action could be taken at the annual meeting o f the association.
The selection o f Commissioner Meeker as secretary-treasurer o f the associa
tion was a very happy one and was, it is believed, profitable both to the Bureau
o f Labor Statistics and to this association. It is one o f the im portant functions
o f the Bureau o f Labor Statistics to study workm en’s compensatioa legislation
and the operation o f the various laws. Commissioner M eeker’s duties as secre
tary-treasurer enabled him to keep in very close touch with the compensation
administration in the various States and m aterially facilitate the studies o f
workm en’s compensation which he wTas called upon to make from time to time.
In view o f this function over which Commissioner Meeker presided the pro
ceedings o f the annual meetings have been regularly published by the bureau
as one o f its bulletins. This also has been helpful both to the association and
to the bureau. The arrangement has permitted the circulation o f the papers
o f the proceedings to those persons who, from correspondence w ith the Bureau
o f Labor Statistics, are known to be keenly interested in the operation o f w ork
men’s compensation laws.
The proceedings o f the Toronto meeting have been ju st issued by the Bureau
o f Labor Statistics as its Bulletin No. 273, and copies are available fo r members
who desire them at the headquarters here in San Francisco. The delay in the
publication o f these proceedings has been due largely to the delay in submission
o f some o f the papers. A large proportion o f the papers were available in
proof and were distributed at the Toronto meeting, but a small number were
greatly delayed and Commissioner Meeker did not feel w arranted in closing the
publication until these papers were finished.
A large number o f the papers o f the present meeting have been printed in
tem porary form as was done last year and are available fo r distribution. The
large number available now is certainly a subject o f congratulation. A few
papers which w ere furnished too late fo r printing and a few w hich w ere not
REPORT OF THE TREASURER.
in
furnished at all are, o f course, not available, but w ill be included in the pro
ceedings when printed.
R espectfully submitted,
C h a r le s H. V e r r ill, Seoretary-Treasurer.
September 8, 1920.
R E P O R T OF TH E TR E A SU R E R .
BALANCE AND RECEIPTS.
1919.
Sept. 18. Balance on hand (bank deposits, Liberty bonds, and postage
and telegraph fund, including 77 cents in stam p s)_______ $1,580."30
23-^6. Alberta W orkm en’s Compensation Board, annual dues, 1920_
50. 00
Tennessee Department o f W orkshop and Factory Inspection,
annual dues, 1920_________________________________________
50. 00
Iow a W orkm en’s Compensation Service, annual dues, 192050.00
Oct 10. W est Virginia W orkm en’s Compensation Commissioner, an
nual dues, 1920_____________________________________________
50.00
11. Nova Scotia W orkm en’s Compensation Board, annual dues,
1920________________________________________________________
50. 00
13. New Brunswick W orkm en’s Compensation Board, annual
dues, 1920___________________________________________________
50. 00
18. Minnesota Department o f Labor and Industries, annual
dues, 1920____________________________ _____________________
50.00
Connecticut W orkm en’s Compensation Commission, fourfifths annual dues for 1920 (on e-rift li paid in August,
1919)_______________________________________________________
40.00
Interest on Liberty bonds____________________________________
14. 89
20. Ontario Safety League, associate membership dues, 1920__
10. 00
Nov. 3. Ontario W orkm en’s Compensation Board, annual dues, 1920_
50. 00
W isconsin Industrial Commission, annual dues, 1920______
50. 00
Oklahoma Industrial Commission, annual dues, 1920_______
50. 00
7. Massachusetts Industrial Accident Board, annual dues, 1920_
50. 00
11. Montana Industrial Accident Board, annual dues, 1920_____
50. 00
M ichigan Industrial Accident Board, annual dues, 1920_____
50. 00
50. 00
12. Utah Industrial Commission, annual dues, 1920_____________
17. Ontario W orkm en’s Compensation Board, tax on $50 check__
2. 06
19. Ohio Industrial Commission, annual dues, 1920_____________
50. 00
24. Kansas Departm ent o f Labor and Industry, annual dues,
50. 00
1920________________________________________________________
28. M aryland Industrial Accident Commission, annual dues,
1920________________________________________________________
50. 00
Dec. 1. California Industrial Accident Commission, annual dues,
1920________________________________________________________
50. 00
Illinois Industrial Commission, annual dues, 1920___________
50. 00
5. W ashington Industrial Insurance Commission, annual dues,
1920________________________________________________________
50. 00
17. New York State Industrial Commission, annual dues, 1920__
50. 00
2£. Oregon Industrial Accident Commission, annual dues, 1920__
50'. 00
26. H aw aii Industrial Accident Boards (counties o f K auai,
Maui, H awaii, and H on olulu), annual dues, 1920_________
50. 00
1920.
Jan. 1. Interest_______________________________________________________
9. 24
10. Virginia Industrial Commission, annual dues, 1920________
50. 00
13. Nevada Industrial Commission, annual dues, 1920___________
50. 00
Apr. 15. Interest on $700 Liberty bonds_______________________________
14. 87
June 25. W est Virginia State compensation commissioner, annual
dues, 1921__________________________________________________
50.00
Republic Iron & Steel Co., annual dues, 1920 and 1921______
20. 00
30. Minnesota Department o f Labor and Industries, annual
dues, 1921___________________________________________________
50. 00
July 1. Interest_______________________________________________________
13.29
3. Virginia Industrial Commission, annual dues 1921_________
50. 00
7. Ontario W orkm en’s Compensation Board, annual dues, 19%L_
50. 00
Maine Industrial Accident Commission, annual dues, 1921__
50. 00
8. Pennsylvania Department o f Labor and Industry, annual
dues, 1920___________________________________________________
50. 00
17. W isconsin Industrial Commission, annual dues, 1921_______
50. 00
112
BUSINESS MEETING.
July 20. C alifornia Industrial Accident Commission, annual dues,
19 21______________________________________________________
21. Ontario Safety League, annual dues, 1921____________________
22. M aryland Industrial Accident Commission, annual dues, 1921
23. Manitoba W orkm en’s Compensation Board, annual dues,
1920 and 1921______________________________________________
27. Montana Industrial Accident Board, annual dues, 1921_____
W ashington Industrial Insurance Department, annual dues,
192 1
Aug. 2. Nova Scotia W orkm en’s Compensation Board, annual dues,
1921________________________________________________________
Idaho Industrial Accident Board, annual dues, 1921________
Connecticut W orkm en’s Compensation Commission (onefifth annual dues fo r 1921 sent by F. M. W illia m s)________
3. Connecticut W orkm en’s Compensation Commission (onefifth annual dues fo r 1921 sent by C. B. Chandler) _______
4. Connecticut W orkm en’s Compensation Commission (onefifth annual dues fo r 1921 sent by J. J. D on oh u e)__________
6. Pennsylvania Department o f Labor and Industry, annual
dues, 1921___________________________________________________
7. Oregon Industrial Accident Commission, annual dues, 1921_
9. Connecticut W orkm en’s Compensation Commission (onefifth annual dues fo r 1921 sent by George B eers) ________
Alberta W orkm en’s Compensation Board, annual dues, 1921_
10. New Jersey Department o f Labor, annual dues, 1920 and
1921________________________________________________________
16. Illinois Industrial Commission, annual dues, 1921___________
Connecticut W orkm en’s Compensation Commission (onefifth annual dues fo r 1921 sent by E. T. B u ckingh am )____
19. Ohio Industrial Commission, annual dues, 1921_____________
23. Nevada Industrial Commission, annual dues, 1921___________
H aw aii Industrial Accident B oards (counties o f Kauai,
Maui, H awaii, and H on olulu ), annual dues, 1921________
28. Oklahoma Industrial Commission, annual dues, 1921________
Sept. 8. Unexpended postage fund------------------------------------------------------T ota l___________________________________________________
$50.00
10.00
50. 00
100. 00
50. 00
50.00
50. 00
10. 00
10. 00
10.00
10. 00
50. 00
50. 00
10. 00
50. 00
100. 00
50. 00
10. 00
50. 00
50. 00
50. 00
50.00
2. 29
4, 226. 94
DISBURSEMENTS.
1919..
Oct.
Nov.
Dec.
Mar.
Apr.
June
July
Aug.
Sept.
Postage and telegraph fu nd__________________________________
3. Dominion Regalia Co. fo r badges, seventh annual meeting__
Miss Ethel M cFarlane, honorarium fo r services perform ed
in connection w ith seventh annual meeting_______________
7. Geo. A. Kingston to pay the M acomb Press fo r w ork done in
connection w ith seventh annual meeting___________________
20. Postage and telegraph fu n d__________________________________
M. T. W aggaman, secretarial and other services____________
E. M. Taylor, stenographic and other services______________
Royal Meeker, honorarium ___________________________________
8. T a x on $50 check from Ontario W orkm en’s Compensation
B o a rd ______________________________________________________
11. Gibson Bros., printing letterheads and bills__________________
20. A. G. Newall Co., reporting seventh annual meeting________
22. E. M. T aylor, stenographic and other services_______________
26. Postage and telegraph fund__________________________________
13. Gibson Bros., letterheads____________________________________
7. E. M. Taylor, stenographic and other services_______________
1. E. M. Taylor, stenographic and other services_______________
6. Gibson Bros., printing 200 bills______________________________
24. Postage and telegraph fu n d _________________________________
24. Gibson Bros., printing program s_____________________________
8. E. M. Taylor, stenographic and other services_______________
'
5.66
36.00
20. 00
42.
10.
25.
28.
300.
65
00
00
20
00
2.
37.
317.
5.
10.
17.
8.
3.
4.
5.
29.
8.
06
25
50
20
00
50
00
60
50
00
50
00
915. 62
RHPORT OF THE TREASURER.
113
Sept. 8. Balance (bank deposits, Liberty bonds, and postage and
telegraph f u n d ) ____________________________________________$3, 311. 32
Total______________________________________________________
4 ,2 2 6 .9 4
Respectfully submitted,
C h a r le s
S e p te m b e r
8
H.
V e r r ill,
&ecretary-Treasurer.
, 1920.
Mr. V e r r ill. The balance now on hand, according to this state
ment, is $3,311.32. It should be said, of course, in explanation of
this large balance, that the principal payments which the associa
tion is required to make, payments incidental to the annual meet
ing, will have to be made within a short period following the meet
ing, so that the balance at the beginning of the year is perhaps a
better indication of the real excess of resources over obligations
than the present balance.
Mr. K i n g s t o n . I think it is usual, upon receipt of the treasurer’s
report, to refer that to an auditing committee, to report at a later
business meeting of the association. I move you appoint such a
committee.
[The motion was seconded and carried.]
The Chairman. The chair will appoint Commissioner Clark, of
Ohio, Dr. Donoghue, of Massachusetts, and Dr. Thompson, of
Oregon.
The next business on the program deals with what is supposed
to be the response of the president to the speech of welcome to be
given by the governor, but the governor was here this morning and
delivered his speech of welcome, so that part of the program will
necessarily have to be omitted as far as the governor is concerned.
Nevertheless, as president I can assure you that the Industrial Acci
dent Commission of the State o f California is extremely glad to
welcome each delegate and each visitor and the ladies some of
the delegates and visitors have brought with them to San Fran
cisco. We believe we have a city well worth visiting and that you
all think that already, and hope that, as the governor stated this
morning, when you return home you will be extremely anxious to
come to San Francisco again, perhaps not merely as a visitor but
as a permanent resident. That is the usual program adopted by our
eastern visitors.
26039°— 21-------8
THE TREND OF WORKMEN’S COMPENSATION—A GLANCE AT
COMPENSATION HISTORY, PAST AND PRESENT.
BY W ILL
J. FR EN CH , PRESIDENT, I. A. I. A. B. C. AND C H A IR M A N ,
D USTRIAL ACCIDENT CO M M ISSIO N .
C ALIFO RN IA I N
The seventh annual convention of the International Association, in
session in San Francisco from September 20 to 24, 1920, is note
worthy because it completes the first 10 years of compensation history
in the United States and Canada. Just 10 years ago, in 1910, the
famous Ives case was decided in New York, right after the enact
ment o f the first compulsory law. The outlook was dark at the time
when that law was declared unconstitutional. Elective compensa
tion came into existence all over the land to meet the New York
court’s objection to compulsory compensation, to be quickly followed
by amendments to State constitutions to permit of the more complete
method.
Those o f us who have seen the development of the compensation
idea from its birth to its present lusty state recall with what fear
and trembling we awaited the decisions of State supreme courts.
The main question to be decided was whether the new progressive
step in the relation of men to industry would be considered superior
to so-called property rights. It was not long until the new day
was ushered in and court after court added to industry a legitimate
cost—some interest in and care o f those men and women who con
tribute so heavily that business may carry on.
Facing this new decade it is advisable to indulge in retrospection.
Having done this, we should set our faces toward the coming days
and determine upon consolidation of past gains, to the end that
justice may be firmly established.
It is not my purpose to spend time in citing the numerous deci
sions o f past years. That would be a task, indeed. Practically each
compensation State has had to have its law passed upon by its su
preme court, and time forbids an analysis beyond that given in the
opening paragraphs. The work and need right at hand are more
important, especially when it is remembered the roll o f honor now
numbers 52 or more compensation jurisdictions in the United States
and practically all of the Canadian Provinces.
I .— LEGISLATIVE
DEVELOPMENTS IN WORKMEN’S COMPENSATION
MATTERS.
A.
The most important recent legislative development of work
men’s compensation legislation is in extending the benefits of com
pensation acts to include vocational reeducation and rehabilitation o f
men disabled in industry. Earlier legislation included only a per
centage of wages to an employee while temporarily disabled, or a
sum of money computed according to various methods for permanent
disability. The responsibility of the State ended when the money
was paid the workman, and but little supervision followed to de114
WIIX, J, FEEHOH.
115
termine whether the benefits would be applied in such a way as to
improve the earning capacity or economic position o f the crippled
worker.
One o f the great benefits derived from our recent war experience
has been the development by the United States Government o f plans
for reeducating and rehabilitating soldiers and sailors crippled in
service, and the lessons and experience being developed by the Fed
eral Vocational Board are now being applied under workmen’s com
pensation acts to the rehabilitation o f men disabled in industry.
In the industrial rehabilitation act, recently passed by Congress,
Federal financial aid is now afforded the States if they will partici
pate in relieving crippled workmen. This work properly belongs
with industrial accident boards and commissions, as they are more
closely in touch with industrial injuries than any other agency o f
the State to which the expenditure o f funds for this purpose may be
intrusted.
Without waiting for the industrial rehabilitation act, a number of
States, notably California, New York, Massachusetts, Illinois, Penn
sylvania, New Jersey, Minnesota, and Oregon, have proceeded inde
pendently to provide for reeducation o f injured workers. In some
States a State appropriation is made available for this purpose. In
others a State appropriation, to be united with the Federal appro
priation Mnder the industrial rehabilitation act, is now being pro
posed. In others, the imposition upon industry o f the burden of
rehabilitating injured employees under the provisions o f the compen
sation acts has teen adopted upon the theory that the burden o f re
habilitation is as much an industrial charge as that o f paying the
older forms o f compensation. In all States the money raised for re
habilitation is put into a special fund to be expended by the proper
State authority, under wide discretionary powers, similar to those
exercised by the Federal Board for Vocational Education, instead o f
being awarded to employees by specific statutory direction.
I can cite California best in this respect because o f my natural
familiarity with the law here. The last legislature enacted a law that
provides that in case o f the death o f an unattached man, a man who
leaves no dependents, there shall be paid into a special fund the sum of
$350- We asked the legislature for more than $350, and for different
purposes, but as is not uncommon among legislatures, we did not get
all we asked for, so we are now working on the plan that gives us $350,
and quite a sum o f money has been accumulated, I am sorry to say, be
cause it represents so many deaths, and out o f that fund men are be
ing trained in this State at this time. We have for instance, at the
State farm at Davis men who are learning scientific methods of
farming, poultry raising, and fruit growing. We have men study
ing at our business colleges in San Francisco and in the city o f Los
Angeles, and men who are learning new occupations, such as watch
making and engraving, and other occupations that men can learn with
out having to use all the faculties, all the physical faculties, they did
prior to injury.
It is to be hoped that with the Federal aid now offered each State
will proceed promptly to exert its full powers for relief along this
new line. To give a crippled employee money for his physical loss
and turn him loose upon the State without restoration o f earning
116
T H E TREND OF WORfCMEN’s COMPENSATION.
capacity is nearly as bad as to do nothing whatever for his injury.
To restore him to useful earning capacity and citizenship by wisely
planning his reeducation is a service almost as useful to society as
that rendered by earlier workmen’s compensation acts in their
entirety.
B. Is not the next legislative development in compensation matters
indicated by the foregoing? I f the rehabilitation of crippled em
ployees is important, why is it not equally important to provide for
the establishment of earning capacity of widows and minor children
where the father and breadwinner of the family is killed by indus
trial injury? At present the death benefits allowed in industrialaccident cases provide only for bare subsistence o f the family for a
limited period of time. The dependents are left to their own re
sources without more than bare subsistence, in the development of
earning capacity, and this without the guidance of the former head
o f the family. Would it not be well to consider the expansion of re
habilitation to include these classes o f dependents?
C. Another important development in recent legislative activity
is the creation o f a fund for general compensation purposes based
upon a payment by the employer or insurance carrier to the State
o f a specified sum o f money where an employee is killed by industrial
injury, leaving no dependents. The sum thus assessed varies, I be
lieve, from $100 to $1,000 in different States adopting this type o f
law. The primary purpose of such legislation is, of course, to raise
a fund to be disbursed for useful compensation purposes. Usually
such fund is devoted to the reeducation and rehabilitation of em
ployees crippled in industry.
Apart from the purpose for which such funds are disbursed, the
method o f raising the fund by itself performs a useful service. I f
an employer must pay a heavy death benefit where an employee is
killed who leaves dependents surviving him, and escapes with a nomi
nal liability if there are no dependents, an economic tendency is in
evitably created toward discrimination against married men or those
having families dependent upon them for support. The imposition
o f a liability upon the employer in death cases where there are no
dependents, to be used for general compensation purposes, tends to
equalize the employer’s liability and thus to check any possible dis
crimination o f this nature. Furthermore, the imposition of such
liability is an excellent method of uniform assessment upon em
ployers for general compensation purposes, such as rehabilitation,
welfare work, or support of the industrial accident board or commis
sion, which purposes could not be accomplished by specific benefits
direct to injured employees or their dependents.
D. Some tendency is noted in recent legislative matters indicating
a possible swing toward more compulsory and monopolistic State
funds. This is, o f course, resisted bitterly by stock and other private
insurance carriers. Recent investigation o f State funds, such as
that just reported by Miles M. Dawson, sh*ow monopolistic State
funds to be singularly economical and efficient in operation, giving
better results than even private companies or competitive State
funds. This topic is worthy of more extended consideration else
where.
E. In several Eastern States legislative changes have recently been
made, either by new legislation or by restoration olearlier provisions
W IL L
J.
FRENCH.
117
which had been repealed, to put an end to direct settlement o f com
pensation claims between insurance carriers and compensation benefi
ciaries. In investigations conducted by Jeremiah F. Connor in New
York and by the New York commission there has been shown a
startling underpayment of compensation benefits by insurance com
panies during the time when settlements in nonlitigated cases were
not checked by proper State authorities. Naturally, much difference
o f opinion exists in different States as to the best way to secure this
inspection and approval of settlement. The New York commission
believes that its present method of oral hearing o f every injury,
whether contested or not, is, in the long run, more expeditious, eco
nomical, and effective than the checking o f written reports. The
Massachusetts commission apparently believes that its method of
checking payments upon written reports is equally expeditious, with
less labor and disturbance of the parties. Doubtless much discus
sion will develop during the present convention as to the merits o f
the respective systems.
F.
Another legislative development which should be more in evi
dence than it is, is the extension of workmen’s compensation acts to
broader coverage o f industries. A ll laws which are limited to extrahazardous and hazardous occupations should be extended to all
industrial occupations, without regard to extent of hazard.
Limitations to employments having more than five employees
should be dropped, as an employer in a regular business with less
than five employees can just as easily procure insurance as a larger
employer. It was failure to appreciate the fact that the obligation
o f workmen’s compensation acts is essentially an obligation to in
sure employees, rather than an obligation to discharge liability to
injured employees, that led to this restriction of coverage. In prac
tically all States farm labor is still excluded, and without reason,
except the failure of the agricultural classes of the community to
grasp the real principles and economics of compensation legislation
and their political strength in the legislatures. Have not the agri
cultural classes become sufficiently educated by this time to work
men’s compensation acts to drop their opposition and to realize that
agricultural labor is entitled to the same protection as every other
form of industrial labor? In many ways farmers are now beginning
to realize through shortage o f labor that farm labor must be made
more attractive in order to compete successfully with the demand for
labor for manufacturing and town and city industries.
II.— JUDICIAL DEVELOPMENTS.
Not much that is new is to be noted in judicial developments in
the past year except as regards maritime workers. The main con
stitutional points involving validity of workmen’s compensation have
now been thoroughly settled by decisions of the Supreme Court o f
the United States, notably, New York Central Railway Co. v. White
(243 U. S. 188, 196), in which fundamental principles of compensa
tion were upheld.
The five-to-four decision during the past year in Arizona Copper
Co. v. Hammer (39 Sup. Ct. Rep. 553) is somewhat disturbing, in
asmuch as it intimates that a minority o f the court are perturbed
by some matters which we had thought were agreed upon unani
118
TH E TREND OF W O R K M E N *S COMPENSATION.
mously. Probably the minority o f the court in the Hammer case
do not intend to recede,from the principles unanimously agreed upon
in New York Central Railway Co. v. White (243 U. S. 188, 196).
Dissimilarity between the Arizona compensation act, which is neither
fish, flesh, nor fowl, and the New York law, approved in the White
case, is doubtless responsible for this division of opinion.
As indicated in the Hammer case, the court has yet to pass upon
the constitutionality of the workmen’s compensation acts which
apply to all employments instead of being limited to extrahazardous
or hazardous employments. But, as a matter o f common sense,
it would seem that the observation o f Mr. Justice Pitney in the Ham
mer case that “ employers in nonhazardous industries are in little
danger from the act, since it imposes liability only for accidental in
juries attributable to the inherent dangers of the occupation,” would
seem decisive. Expanding the learned justice’s statements slightly,
every industry is hazardous if injuries can occur in the course of
and arise out o f its operation; hence, every industry to which a
workmen’s compensation act can apply is constitutionally o f suffi
cient hazard to warrant the application of the law.
In general, greater liberality in construction o f constitutional ques
tions in favor o f compensation acts is now apparent on the part of
the courts. Courts have to be educated like other members o f the
community, only sometimes more so. This process o f education has
now resulted in the appellate courts dropping an apparent air o f
hostility to workmen’s compensation acts as new and socialistic
legislation, which seems to have characterized some o f their earlier
decisions.
One o f the most pleasing of recent expressions of liberality is con
tained in the decision of the Supreme Court o f California in City
and County of San Francisco v. Industrial Accident Commission (60
Calif. Dec. 36). Such language as the following: “ It is no small
matter for one branch o f the Government to annul the formal exer
cise by another and coordinate branch of power connected to the
latter, and the court should not and must not annul, as contrary to
the constitution, a statute passed by the legislature, unless it can
be said o f the statute that it positively and certainly is opposed to
the constitution,” betokens an aroused sense o f greater responsibility
by the courts in such matters.
The case just quoted is one in which an award o f compensation
to a widow o f a hospital steward, who died o f influenza contracted
in the hospital during the recent influenza epidemic, was held to
come within the provisions o f the compensation act and of the State
constitution, and thus the interpretation that the word “ in ju ry”
includes occupational diseases was firmly established.
Another decision involving a liberal construction of the com
pensation clause is that o f the United States Supreme Court in Newr
York Central Railway Co. v. Bianc (40 Sup. Ct. Rep. 44), in which
the United States Supreme Court upheld the highest court o f New
York in holding that disfigurement may properly be the basis of an
award o f compensation without regard to immediate loss o f wages.
This decision takes a broad and liberal view of the purpose o f com
pensation legislation to ameliorate the more remote as well as imme
diate consequences o f industrial injury.
W IL L J . FRENCH.
119
III.— JUDICIAL AND LEGISLATIVE DEVELOPMENT.
Under this heading is classed a recent action by the United States
Supreme Court and the Federal Congress with respect to redress of
injuries occurring in maritime commerce and interstate commerce
by rail. The history of this matter may not be amiss to explain the
present situation. As to injuries sustained by railroad employees
in interstate commerce, the matter was for many years governed by
the negligence laws of the various States. In 1906, induced by de
mands o f railroad employees for better protection against injuries
and the slowness of the States to improve their labor laws, Congress
enacted an improved negligence statute known as the first employ
ers’ liability act. This statute largely eliminated the common-law
defenses and increased the liability of the railroads to their em
ployees. Although still upon a negligence basis, no compensation
law having at that time been adopted in the United States, the law
was an improvement over the then existing situation. Unfortunately,
Congress undertook to make this statute apply to all employees of
railroads engaged in interstate commerce, without regard to whether
the particular employee was engaged in interstate commerce or not.
This law was held unconstitutional by the United States Supreme
Court in the First Employers’ Liability Cases (207 U. S. 463), upon
the ground that its application to railroad employees not at the mo
ment o f injury engaged in interstate commerce was a transgression
upon the power of the various States. The second employers’ lia
bility act o f 1908 corrected this by limiting its application to em
ployees o f interstate railroads who were engaged at the moment of
injury in interstate commerce business of the railroad. So construed,
the law has been held valid. (Second Employers’ Liability Cases,
223 U. S. 1 .)
Except for the objections of the Supreme Court in the earlier
opinion, the later statute is practically identical with the former.
The Federal act, while admirable as an improved negligence stat
ute, is, o f course, wholly out of date at the present time, the States
in their passage o f workmen’s compensation acts having far exceeded
the relief afforded by the Federal Government by this statute.
The great need now is to give railroad employees the same protection
under workmen’s compensation acts as employees in the more liberal
States enjoy. This can be done either by the repeal o f all Federal
legislation on the subject, leaving railroad interstate employees to the
protection o f State laws, necessarily divergent, or by the enactment
by Congress o f a uniform Federal compensation act for railroad
employees in interstate commerce. The disadvantage of the first
suggestion is that the compensation laws of many States are still
inadequate and in a very few nonexistent, so that in some States
railroad employees would be worse off than at present. The disad
vantage o f the second course is that it does not bridge the gap be
tween the injuries sustained by railroad employees in local commerce
and in interstate commerce, thereby continuing the same confusion
as at present exists between State and Federal tribunals. I f a uni
form Federal system is to be adopted, it should apply to all railroad
employees, without regard to interstate commerce at the moment of
injury. This, Congress can not do under the decision of the United
120
TH E TREND OF W O RKM EN *S COMPENSATION.
States Supreme Court in the First Employers 5Liability Cases, before
quoted.
A practical solution eliminating much of the difficulty would be
for Congress to enact a uniform Federal measure applicable to em
ployees of railroads in interstate commerce, with a provision that
the different State compensation boards and commissions should have
concurrent jurisdiction with the Federal courts in'determining suits
arising under it. Such concurrent jurisdiction is now given by the
Federal act to the courts of the different States in negligence cases
arising under the Federal act. This would have the advantage, at
least, o f having a border-line case triable in the same tribunal under
either law. In the event the tribunal applied the wrong law, i. e.,
applied the State compensation act when the Federal compensation
act should have been applied, the only result of a reversal would be
to correct the decision. The employee would not be thrown out of
court and forced to bring an independent suit in a different tribunal,
as is the result at the present time if suit be brought before the State
board when it should have been brought in the courts under the
Federal act2 or vice versa.
A more distressing situation is presented with reference to injuries
sustained by maritime employees. Originally most of the maritime
States having workmen’s compensation acts claimed jurisdiction over
maritime injuries, and these claims were sustained by the supreme
courts in such States. (Jensen v. Southern Pacific Co., 215 1ST. Y.
514; North Pacific S. S. Co. v. Industrial Accident Commission, 174
Calif. 346, 357.) Both decisions were reversed by the United States
Supreme Court in Southern Pacific Co. v. Jensen (244 U. S. 205),
in which it was held that the State compensation laws could not, in
the absence o f act of Congress, apply to injuries otherwise under the
admiralty and maritime law o f the United States. Thus, as with
interstate commerce, conflicts between State and Federal authority,
without significance in themselves, were allowed to defeat substan
tial justice.
To remedy this situation Congress enacted the so-called 66Johnson
amendment,” approved October 6, 1917, affirmatively authorizing the
application o f State workmen’s compensation acts to maritime in
juries. This in turn was declared unconstitutional this spring by
the United States Supreme Court, again by a five-to-four decision,
in Knickerbocker Ice Co. v. Stewart (40 Sup. Ct. Eep. 438, 485),
the court holding that even Congress could not permit State com
pensation acts to encroach upon any portion o f the field covered by
the Federal maritime law. Objectionable as this decision is deemed
to be by most liberal-minded lawyers and by persons engaged in
administration of workmen’s compensation laws, as well as by the
maritime workers themselves, this decision is the law o f the land, and
permanently forecloses any further relief to maritime workers from
State laws. The only recourse is Federal legislation.
During the past few months Congress has stepped into the breach
in the endeavor again to remedy the situation. As yet it has not
accomplished the essential purpose to be gained, but" it gives clear
indications that it is moving in that direction. In March of this
year an ill-advised statute was enacted providing that the dependents
o f any seaman killed outside the 3-mile limit should be entitled to
W IL L J . FRENCH.
121
have action for damages in the Federal courts. Previous to this
time a right of action for death was allowed in admiralty only
where given by a State statute.
One of the anomalies of the Jensen and Stewart cases is that the
Supreme Court allows the enforcement of State statutes giving a
right of action for death based upon negligence but disallows such
enforcement o f State compensation acts for death. The act of
March, 1920, here referred to, supersedes State-created rights of
action for death and substitutes a Federal negligence statute in place
thereof. By what species of fallacious reasoning this Federal statute
is limited to actions on the high seas instead of applying to the
whole field o f maritime injuries, including the loading and unload
ing o f ships at wharves, it is impossible to tell.
A somewhat better step was taken by Congress when, on June 5
of this year, the Jones bill, relating to the American mercantile
marine, was approved. By section 33 of this law, the Federal em
ployers’ liability act, applicable to railroad employees in interstate
commerce, is extended to cover seamen. Why it was not extended to
cover stevedores as well as seamen is a mystery. At the present
time, however, sailors are receiving the rather antiquated relief of
the Federal railroad statute, which is better than nothing.
A uniform workmen’s compensation measure was introduced in
Congress three years ago by Senator Johnson, o f California, at the
request of the organized seamen, but failed of passage. For the last
two years this bill has been resting with the United States Shipping
Board, awaiting its approval or disapproval before introduction.
After the decision of the Stewart c
’
p this year, Senator
Jones, of Washington, presented
provisions above
described, extending the Federal railroad act to seamen. This
brought forth from the Shipping Board an immediate approval x>f
the uniform Federal compensation act. It was too late to insert
such measure in the Jones bill at this session, and the matter went
over with the temporary relief above described.
At the present time a number o f organizations are working upon
a uniform Federal compensation act for seamen, principally the
organized maritime workers and the American Association for Labor
Legislation. In view of the fact that the Republican platform this
year declares for such measure for all maritime workers, and the
Democratic platform likewise, limited, however, to persons engaged
in loading and unloading ships (why the Democrats did not grasp
the real nature of the situation has not been disclosed), speedy action
by Congress is looked for at the next session. The International
Association can assist materially in gaining this protection to mari
time wwkers. In view of the fact that maritime workers and rail
road employees in interstate commerce are at the present time linked
together in the Federal employers’ liability act by section 33 o f the
Jones bill, it would seem propitious to have the proposed Federal
compensation act apply to both in the same measure.
The most important provision which can be suggested, apart from
the usual compensation provisions, is that the boards and commis
sions of the different States should be given concurrent jurisdiction
with the Federal courts to enforce the proposed Federal statute. I f
a railroad employee or seaman in a border-line case brings suit in
122
TH E TREND OF W O R K M E N *S COMPENSATION.
the United States courts when he should have sued before the State
board under the State law, or vice versa, at the present time his just
claim is likely tcf be entirely defeated, because he made a mistake in
suing in the wrong court. Concurrent jurisdiction, so that the
employee can sue before the State board under either law, is neces
sary to avoid this conflict.
The C h a i r m a n . We will proceed now to the regular program, deal
ing with industrial rehabilitation. The first speaker is Commissioner
C . E . Gleason, of the Massachusetts Industrial Accident B oard; the
subject, “ Industrial Rehabilitation.”
INDUSTRIAL REHABILITATION.
P R A C T IC A L RESULTS OF R E H A B IL IT A T IO N IN M ASSACH USETTS.
BY CH ESTER E. GLEASON, M A S S A C H U S E T T S IN D U STR IA L ACCIDENT BOARD.
From the foundation o f the industrial accident board, now called
the Department of Industrial Accidents of Massachusetts, individual
members of the board have been interested and engaged in rehabilita
tion. In the board meetings the subject has been discussed for years,
for it was soon realized that the mere payment of pecuniary benefits
to the disabled of industry did not discharge in fu llth e debt o f
society to the crippled man. After the expiration o f tlie compensa
tion period the injured man must, of necessity, attempt to take his
rightful place as a workman. Just to the extent that he fails in his
attempt will he reflect discredit upon insurance or industrial methods.
Wanton waste consists in creating a scrap heap, whether it be of
material or o f unutilized human effort.
In 1915 Dr. Francis D. Donoghue, medical adviser of the board,
made a special investigation in Europe of rehabilitation needs and
methods. In the third annual report of the board, covering the work
for the year 1915, Dr. Donoghue makes a report o f his studies, and
says in part: “ In Massachusetts alone in the course o f a year the per
manent partial injuries cause a small army o f workingmen to be added
to the list of permanently unemployed, at a cost not far from one-half
million dollars annually.” This cost finds its way into the insurance
rate, which in the last analysis goes into the cost o f production of the
commodities which labor makes and the public purchases. The recla
mation of the injured o f war was designed not only from a humani
tarian standpoint, but from an economic need to conserve man power.
While this kind of work was done by board members from the begin
ning, the efforts were unorganized and no definite achievements could
be recorded except in individual cases.
Early in 1918 an agitation was started for concrete legislation oil
the subject, resulting in the passage on May 28, 1918, o f chapter 231,
General Acts of 1918, creating the vocational training division. A
director o f the work was put in charge in October, 1918, and the
division organized—the first of its kind in the United States.
The experience of the division has been limited to 20 months. The
work was, o f necessity, somewhat experimental in character and had
to be built up slowly in order to avoid the dangers of overexpansion
and the reaction which comes from an attempt to carry out plans not
based upon proper fundamental principles, developed by actual test
and trial.
The division has studied and dealt with 416 cases, of which number
273 represent individuals who have been given more or less training
and placed in remunerative jobs. The average age of those dealt
with exceeded 40 years. They had been out of employment for an
average period o f more than one year, thus presenting a new problem
123
124
INDUSTRIAL REHABILITATION.
in rehabilitation programs. No such collection of cases has been
dealt with by any other similar bureau in any part of the country.
In addition to the numbers above there have been 450 cases, a
record of which has been made in the division, but in which the in
dividuals worked out their own destiny, with advice merely; that is to
say, they secured their own jobs, either by their own efforts or through
the efforts of their friends or through the efforts o f the insurance
companies. Many of these are improperly placed, and as soon as
there is a slackening of the present high demand for labor they will
probably be forced back for further consideration along some ex
pedient lines.
The division started its work upon the assumption that its results
should be more lasting than those that could be obtained by the
ordinary employment bureau. In other words, it was determined by
the director that the employment bureau of itself, without any at
tempt at common-sense placement, would prove of little value not
only to the individual, but to the employer and to the Common
wealth. As support for this conclusion the United States Govern
ment found that the free employment service could not function
properly in handling the handicapped.
During a labor shortage it is easy for the employment bureau to
pile up records indicating its ability to connect men with jobs, but,
as a matter o f fact, it is nothing more nor less than a sort of indus
trial job exchange, where a man is put in touch with a job without
any regard to his fitness for it and without any regard as to whether he
would in the end prove a satisfactory employee. This method can
never be o f great service to the community, or at least this is the
conclusion reached by our director after an investigation of the
operation o f such bureaus. It rather promotes misfits than other
wise, and it has been said that the private bureaus increase rather
than decrease labor turnover by reason of the fee system, which is
inclined to encourage the man leaving one job after a few months
to accept another position with a slight increase of pay in order to
secure another fee for the bureau. This is not a statement based
upon definite facts, but is merely mentioned in order to indicate
the weakness of such an attempt to deal with the handicapped.
On account of the small size of the appropriation made by the
general court for carrying on this work it was assumed that the
legislature intended that the work should be in the nature o f planting
seed rather than of gathering fruit. Intensive rather than extensive
cultivation o f the idea and a development of a plan which could be
applied to a larger program were evidently the purpose behind the
legislation.
The New England method o f doing business is apparently based
upon this fundamental principle of a practical success which is to
begin in a small way and determine those things that are worth
while before attempting a large program. In this way the failures
resultant from overexpansion of theories can be and are avoided.
The test of work of this character is whether the men make good at
the jobs, and the longer they stay after being once placed the greater
the success, provided, of course, the man secures the right kind of op
portunity with increased pay. We do not count pay as being a meas
ure o f success; it is rather the contentment o f the man and also his
ability to please himself and his employer in his work.
CHESTER E. GLEASON.
125
That such work is practical is evidenced by the fact that a great
many insurance companies have been interested in rehabilitation
and reconstruction programs, and have found it profitable to add to
their staffs persons who will attempt not only to secure jobs, but also
to secure the right kind of jobs.
It is natural that the insurance company should be skeptical in
regard to this character o f work and feel that it would be wiser to
await the final conclusions. In other words, they would be impressed
by a few successful cases and upon these cases as examples could
build real programs. W e believe that their attitude along this line
is correct.
The States o f California, Illinois, Indiana, New Jersey, New York,
Pennsylvania, Wisconsin, and Oregon have adopted rehabilitation
programs since Massachusetts took the initial step.
It may be said in passing that we have never had any printed docu
ment which we could send out. The plates have been prepared for an
illustrated pamphlet, but in view of the fact that the work of the
division was ahead of the annual report o f the board it was not
thought wise to incorporate it in the last year’s report. A chapter
in the forthcoming report will give a summary of results thus far
accomplished.
This work must, of necessity, be guided by educational principles,
even though in our opinion it can not properly be connected up with
existing educational systems and institutions unless they are radically
changed. The division has attempted the education o f employer
groups as to the necessity of more attention to the handicapped man.
We conceived it to be the duty of a State department or division to
confer with and counsel employers as to how they might cooperate
on such a large work.
A ll the sanitation can not be done by the State board o f health. Its
chief function is to educate the people as a whole how to adopt
sanitary methods in their own daily lives and such wTork is o f the
utmost practical importance; in fact, the more thoroughly such educa
tional work is done the better will be the results.
Rehabilitation is applied common sense based upon special knowl
edge o f the capacities and incapacities o f the injured man for work,
and frequently the employers can do this better than anyone else, yet
they should have some central State office where information as to
latest methods can be obtained and counsel as well as assistance given.
Such service is provided in agriculture, animal husbandry, preven
tion o f accidents, fire prevention, charities, mothers’ aid, education,
etc., and rehabilitation programs should give the same service.
The division has collected a vast amount o f pertinent information
relative to the possibility of employing various types o f handicapped
men. It was necessary to back up the opinion o f the director to the
effect that no regular charting o f jobs could be done. At considerable
trouble the division made analyses of the physical requirements for
particular jobs. These studies are o f practical value in eliminating
waste motion in sending men to jobs unfit for them.
In addition to this work the division attempted to ascertain the
present status o f the handicapped men who are employed in indus
try. It was deemed advisable to find out what they were and are
doing o f their own accord. To do this, blanks were sent to manu
126
INDUSTRIAL REHABILITATION.
facturers to ascertain which employed handicapped labor and which
did not, and what each handicapped man was doing in industry.
The replies were studied and tabulated. From them we learned that
to secure a crippled man merely a job or to force him to accept a
job dependent upon the good will of his employer means in many
cases a “ pension ” for the man or “ pocketing him in some nonessential job and by this method forcing him to become an object of
enforced philanthropy.
Rehabilitation does or should begin at the bedside of the injured
man. There is no sharp line of demarcation between inability to
work and restored ability. There is strong need for practical advice
and cooperation along known lines of success with nurses, schools o f
occupational therapy, and social-service workers in hospitals and
after-care work. To inculcate practical methods in this kind of effort
the division has studiously worked with and visited schools o f occupa
tional therapy and classes in employment management from which
come the field workers most likely to reach the injured man before
his mind has hardened against work.
A t first the ideas of the division were slow to take root and the
near-medical seclusiveness o f the professional worker made it difficult
to get a practical turn to the curative shop work, but this summer the
School of Occupational Therapy, under our advice, is attempting, at
great expense to a few enthusiastic clinic-working girls and teachers,
to try out the plan in the Sloyd Trade School. Several insurance
companies are much impressed and have paid $50 fees in each case
sent as a subject for the experiment. The plan sounds good—the only
question that remains to be answered is whether the methods em
ployed will be worked out so as to get away from the hospital laziness
so easily acquired. However, from such efforts practical knowl
edge o f vast importance is obtained.
By the Fess-Kenyon Act the United States Government has under
taken to encourage the work o f rehabilitation on the part o f the
States by granting a limited subsidy for certain purposes on condi
tion that an equal amount be appropriated by the State. This plan
properly relieves and assists the State in assuming the duty o f dealing
with injured foreigners and the migratory workman.
In our work we have sought to educate the public to an apprecia
tion o f the economic value o f utilizing the residual functions of the
handicapped man. This is o f utmost importance and the division
has been most successful along this line. We find that it pays to
teach the public as well as the injured man and his employers how
they can serve each other to mutual profit. B y this method many
men secure jobs without coming to us for assistance. Some o f the
most notable instances we have encountered have been cripples in
spired to apply for work by reading o f the success of others similarly
handicapped. The publicity given to cases o f successful employment
o f injured men often inspires an employer to try out the plan in his
own workshop.
As a result of our experience in this work during the past 20
months, we have found that the work should be approached along
four steps, one following the other:
First. We attempt, if possible, to get the man back on his old
job. We hope that he can do this himself. It frequently becomes
CHESTER E. GLEASON.
127
necessary to make some readjustments at the job, and perhaps a
short period o f training is necessary on the job.
Second. I f the man can not be placed on his old job, then we
attempt to work out something in a job allied to the old one; that is,
any job where his previous experience can be used as a basis for new
skill on the new job. In this particular division of the work it
becomes necessary at times to work out a brief period o f training,
mainly to get the man back into the habit of work and to disclose
to him the fact that his handicap is not so serious as he thinks it is.
Third. I f we can not get the man back on his old job and can not
get him into a new job allied with the old job, it becomes necessary
to work out some entirely new proposition for him, and in many cases
this can be done without training, and merely by suggesting, through
a fund o f experience, such positions as can be found to fit the man,
and later which the man can be made to find himself. But there
are particular cases where the man must be trained specifically for
the job. When this becomes necessary, we try to take the most direct,
short-cut way to connect the man up with the job. We do not
attempt any culture training or any general education. The job
is simply to put the man at once in some work that he can do. In
order to accomplish this, it becomes necessary to give him a small
amount of preliminary acquaintanceship with the job. Unfortu
nately, there is no institution prepared to do this at present. No
school can do it, and our possibilities o f work are very much nar
rowed by the fact that it is not always easy to influence an employer
to undertake the training of a man for a new job who has been
handicapped on some other job. This is not to be wondered at, in
view o f the intense competition between employers engaged in simi
lar lines o f effort, and because of the necessity, under modern con
ditions, o f the utmost efficiency, if any business corporation is to
continue to be successful.
Fourth. I f the man can not be placed on his old job, or retrained
for it, can not be given one closely allied to it, or trained for one,
and can not be placed directly into a new job through some short
course o f training for adjustment, and if he meets the requirements
which are to be taken into consideration in each individual case,
then it may become necessary for the benefit of society, as well as o f
the man, to give him some extended vocational training. In this last
division we presuppose that the man has abilities that are worth
training, and that when he secures this training he will have attained
that degree o f skill in work which will make him more efficient than
he would have been without the training, and so much more efficient
that he can pay good dividends upon the cost o f the training by his
productive effort with such functions as remain.
Finally, it may be said that the policy of the board has been to
keep its vocational work along sane and practical lines, with a defi
nite, paying job for each handicapped man as the goal, and placing
as little weight as possible upon the methods by which this goal is
attained.
This gives a running story of our wTork. We do not claim to have
solved the problem or to have any patent ideas for success. Our
aim has been to be suggestive and helpful in our humble way.
I have posted on the wall a series of photographs and forms used
and collected by our division, with a brief description o f interesting
128
INDUSTRIAL REHABILITATION.
cases, with the hope that some suggestion may be gained for the
good o f the cause.
I have not attempted to give the final plans of our division because
the whole subject is being studied by a special commission made up
o f the commissioner of education, the commissioner of labor and
industries, and the chairman of our board, which will report to the
next general court.
Our policy has been one o f study, experiment, test, and trial, with
the hope that our results may be combined with the accumulated
achievements of other jurisdictions and the sum total thus obtained
fused into a well-grounded, workable scheme, which will make each
handicapped man—
“An independent, self-supporting, self-satisfied, and employer-
satisfying social unitP
The Chairman. A s a break in the program the Chair will suggest
at this time that we see the moving picture that was made in behalf
of the California Industrial Accident Commission as a result of the
association with the commission of Elmer M. Shunk. Mr. Shunk is
a young man who years ago lost both of his. hands, and you will see
on the screen examples o f what a man can do who is thus seemingly
seriously disabled, and yet you w ill agree, I think, at the conclusion
o f the picture, which will only take a few minutes, that there isn’t
much that most of us can do with two good hands which Mr. Shunk
can not do without any hands at all.
[At this point the moving picture was shown.]
The Chairman. Y o u may be interested to know that Mr. Shunk,
who is with us this evening, will tell you for a few minutes o f his
work, and will pass around some articles which he has made com
pletely in a wood-working establishment in this city. The safety
department o f the commission has the custom of sending up the blanks
which have to be filled out as to name—take, for instance, an ele
vator permit or boiler permit that has a blank line for the name of
the owner or lessee or employer to be inserted; it is sent up as a
matter of course for Mr. Shunk to fill in, mainly because he can
write so plainly that there is no misunderstanding as for whom the
permit may be intended. That is an art in itself. I have great
pleasure in introducing to you our associate on the commission, Mr.
Elmer Shunk, whose work deals with the work which we have be
fore us o f industrial rehabilitation.
Mr. E lm er M. S h un k, of the California Industrial Accident Com
mission. I have some work here of wood cutting. This work was
completed after the pictures were taken. I will pass the woodwork
around and you can look at it. The first is a picture frame I made.
You saw me operating the steering gear of the automobile. This is
a steering gear I made for myself. I made my own drawing, cut
my notches where my arm fits in. I can steer the automobile with
one arm just as well as a man can with one hand, and have the other
arm free to shift g^ars. This is a little souvenir piece o f work, what
I call a shaving mirror. The mirror can be turned in any position
you wish. I have also some specimens of my penmanship.
I find in reeducation work the biggest thing we encounter is the
mental attitude of the injured man. I f it can be overcome and the
man satisfied that there is a chance for him to succeed in life, his
ELMER M . S H U N K .
129
reeducation problem is very easy. Reeducation, in my opinion, is
not completing the business; that is by proper placement. I f you
merely give the man education and do not get him the work he will
probably get in somewhere where he would not make a success.
Therefore I think there should be a placement bureau in connection
with reeducation departments.
I think this picture will give you an idea of reeducation, although
it was very easy in the picture. But some of those problems were
very hard to solve in the beginning. For instance, the first time I tied
a necktie it took me five hours. The first time I tied my shoe was
when no one was around and I had to tie it. I didn’t time myself,
but it took me somewhere around three-quarters of an hour. Vari
ous other problems I accomplished when I had to, when there was no
one around. After succeeding with a few of these things, I made up
my mind I could succeed in doing anything anyone with fingers did.
The Chairman. I think you will agree with me that Mr. Shunk’s
contribution made a very entertaining and instructive break in our
program. There are several speakers to follow, and the Chair wishes
to announce that the policy o f this international association is that
papers that are printed and are available for the delegates and
visitors, as they are here at the outside table, shall not be read at
these sessions. A man who is on the program may summarize his
paper or add to it or comment on it in any way he deems best, but
in order to save time and in order to have a better representation, the
Chair will have to decide that papers can not be read this evening or
at any following session. That policy was adopted at either the
last conference or the conference before.
The next speaker comes to us from the State of Oregon, Com
missioner W ill T. Kirk.
2GQ390— 21------- 9
INDUSTRIAL REHABILITATION IN OREGON.
BY WILL T. KIRK, COMMISSIONER, OREGON INDUSTRIAL ACCIDENT COMMISSION.
In approaching the subject o f industrial rehabilitation in Oregon,
which has been assigned to me, I appreciate the fact that I am en
tering a new field o f endeavor on the part o f the industrial accident
commissions, and our opinions of to-day may be changed by our ex
periences o f to-morrow. As a matter of fact, we entered upon this
work in Oregon with very few preconceived notions and were free to
form our opinions as we progressed in experience.
Industrial rehabilitation had a very happy inception in our State.
In the fall o f 1919, when the cost o f living was daily proceeding on
its flight to the skies, our commission was in receipt o f letters from
many claimants protesting against the inadequacy o f the compensa
tion payments. The matter was taken up with the governor, who
decided to call a special session o f the legislature to meet the situa
tion. A committee o f 15 was appointed to make recommendations
to the legislature. This committee consisted o f five men selected
by the employers’ organization, five selected by the State Federation
o f Labor, and five selected by the governor to represent the State at
large.
When this committee met it easily disposed of the main question
by recommending a flat increase of 80 per cent in all compensation
payments. A member o f the labor group then proposed a law pro
viding for the vocational rehabilitation of industrial cripples. His
proposal met with the unanimous support of the committee. A bill
was drafted and presented to the legislature, which passed it without
a dissenting vote. This bill authorized the industrial accident com
mission to set aside from its funds the sum of $100,000 for the pur
poses o f the act and to add to that fund
per cent o f its monthly
income. The bill is very brief, consisting of five short paragraphs,
and gives the commission broad powers to formulate its own rules
and regulations for the vocational rehabilitation o f the men coming
under its jurisdiction.
EMPLOYERS AND W ORKERS COOPERATE.
With such a favorable beginning and with no strings attached to
hinder our operations, if the commission does not make a success
o f the undertaking it will not be due to fault o f the law. The same
unanimous support which was given the law at the beginning has been
shown throughout our brief experience. We have had occasion to go
to the employers for cooperation, and have met with a favorable
response every time. We have gone to the labor organizations for
help and have received the same friendly support.
As this work is new to nearly all o f us, I feel justified in discussing
details o f organization and procedure which otherwise might be tire130
WILL#
t . k ir k .
131
some. My purpose is to discuss points which will interest those
who want to see the inside, who want to get a close-up view, of what
we are trying to do. It is such points which interest me when I
have opportunity to gather information about the work of other com
missions.
The Oregon commission has its work segregated in three depart
ments. One department takes care of the auditing, bookkeeping,
and the work connected with the collection of the contributions to
the industrial accident fund, as our State has an exclusive State
fu n d ; another department takes care of the claims for compensation,
and the third department handles the statistical work. Our com
mission has three members, so each commissioner is assigned to a
department, in which he specializes. The commission as a whole
retains full jurisdiction and control over the work of all departments,
but with each commissioner giving especial attention to the work
of his own department we find the work is more closely supervised
than it could be if all three commissioners were trying to direct all
three departments,
ALL BED TAPE CTTT OUT.
The work of vocational rehabilitation naturally fell to the claim
department and became the subject of my particular study. My
previous experience in the newspaper field taught me the value o f
simplicity and direct methods, and gave me a lasting prejudice
against anything which resembles “ red tape.” So you will find no
red tape connected with our vocational rehabilitation work. We
have sought simplicity, and our experience proves beyond doubt that
it pays. We did not begin the job by devising a multiplicity o f
forms and blanks and reports and other material which would be
wilder the minds o f the men we sought to aid and make them think
they were being invited into a mesh from which they might never
become extricated. We prepared a simple questionnaire and for
warded it to the men we deemed eligible for consideration for re
training. This questionnaire contained no complicated questions,
but could be easity filled out by a boy in the fifth grade at the public
schools. No other forms or blanks were prepared in advance, as we
decided it would be better to wait until the need arose and then pre
pare the form that would fit the exact need. This method of pro
cedure has caused no delays in our work and has enabled us to
adhere to our plan o f simplicity.
After the questionnaires were sent out we employed Prof. Frank
H. Shepherd, head of the department o f industrial education at the
Oregon Agricultural College, as director and adviser for the men.
We were extremely fortunate in securing the services o f a man who
has had such a varied experience as Professor Shepherd in trades and
industries. He is a genius in his line and we are glad to give him
much credit for the smooth manner in which the work is progressing.
Our vocational rehabilitation law became effective January 17,
1920. On March 8 the first group of men were assigned to courses
in vocational schools, and at least one man entered school March 9.
You will see by this that no time was consumed in winding or un
winding red tape. A fter the return o f the questionnaires our prac
132
INDUSTRIAL REHABILITATION IN OREGON.
tice has been to fix a day for interviewing and advising with the
men. An appointment is made for each half hour of the day, and the
men are cautioned to be prompt. A t first a considerable percentage
of the men did not respond to our appointments, but now that they
have begun to find out the work the commission is doing we nearly
always have full and prompt attendance. The commission reimburses
them for their traveling expenses. Prof. Shepherd and I sit down
with each man and discuss with him his individual problems relating
to his physical handicap, his family situation, his past experiences as
a worker, and his desires and inclinations under the conditions now
confronting him. Without fail we endeavor to lead him to make his
own choice o f a new vocation, pointing out to him the advisability
of using his past experience, if possible, as a foundation upon which
to build.
HANDICAPPED MEN M AKE OWN CHOICE.
One case will illustrate the futility o f persuading a man to under
take training in a trade for which he has no liking. This young man,
who was injured while employed in a logging camp, had been a sol
dier and spent some time in the Hawaiian Islands, where he became
infatuated with the music of the steel guitar. He wanted to study
music. W e did not enthuse over his suggestions and discussed voca
tions which we thought were more practical. He could not make up
his mind, so wTe suggested that he talk the matter over with his
parents, as he was a young fellow in the twenties and not married.
He returned later, saying he had decided to go in for auto mechanics.
We entered him in an automobile school and assumed that his prob
lem was settled. A week later he called at the office with a decidedly
worried look on his face. Inquiry brought out the fact that he had
attended school four days.
“ I don’t like that work,” he said, “ but I want to do what you folks
think is right, and, if you say so, I will go through with it. I think
o f the music, and that is what I like.”
We told him that a good musician was much more to be desired
than a poor auto mechanic, and that we would make some inquiries
as to the prospects in the field of music. I might add that because
o f his injuries he could not raise his arms to a level, so there was
considerable limitation as to the trades he might take up. But
aside from this, his infatuation for music was genuine. Our in
quiries convinced us that it would be practical for him to take up
the study o f the steel guitar with the idea o f becoming a demon
strator o f stringed instruments in a music house, and we approved
a course in music for him. He is now putting in eight hours a
day on his music and is making good progress. W e believe at the
end o f a year he will be prepared to earn his living as a musician,
and o f course his earning power will increase as he acquires more
skill with the instrument. I f he had taken a course in auto mechanics
at a dozen trade schools he no doubt would still have made a failure
as a mechanic because of his dislike for the work. I asked him why
he decided to take up auto mechanics in the first place, and he said
his father had persuaded him that it would be better than devoting
his time to music. He said his father did not believe a man could
make a financial success in life in any business in which he did not
have to use arithmetic, and he was opposed to a musical career.
W IL L T. K IRK.
133
EMPLOYER HELPS SOLVE PROBLEM.
One of the most difficult cases we have had from the standpoint
o f feeling confident that a proper course has been mapped out for
a man’s successful retraining was included in the first group we
interviewed. This man is less than 30 years old and had lost his
right arm in a boiler explosion in a lumber camp. He had always
worked in the woods and the mills, and was unusually timid when
associating with men outside of his customary environment. In one
of the questions on his questionnaire he was asked to give his first
and second preferences for a new vocation. The question was left
unanswered. I saw him, incidentally, before the time set for his
formal interview and sought to draw from him some idea of his plans
and ideas for the future. So far as I could learn he had absolutely
none. He seemed to be still dazed from the shock of his m isfor
tune. His employer had shown a keen interest in the young man’s
welfare, so I invited him to be present with Prof. Shepherd at the
time o f our interview. The employer came and was of material
assistance in planning for the man’s future, because the young man
himself was like clay in our hands, ready to be molded into any
form we might think best. But behind his timidity and apparent
lack of ability to make a decision for himself he showed a bright
mind and mental capacity.
“ Tom has always worked around machinery,” the employer said,
“ and I think he should stick to machinery now. When I go to buy
a piece of machinery I can do business much more satisfactorily with
a salesman who knows all about the machine than I can with one
who does not know the machine and who can not explain about the
various parts o f the machine or answer my questions. As Tom knows
machinery I believe he could make a machinery salesman out o f
himself.”
Tom agreed to do his best. The next day he entered a business
college in Portland and will put in seven months on a commercial
and banking course. This is preliminary work, giving him some
knowledge o f business customs and procedure and practic.es. This
fall he is to enter the Oregon Agricultural College to take a special
course in machinery and salesmanship. We estimate that it will
take about 18 months to complete his retraining and prepare him for
a new job. We reminded him of his timidity and pointed out that it
would be necessary for him to overcome it. His employer purchased
for him a membership in the Y. M. C. A. and advised him to mingle
with men as much as possible. When later he enters the vocational
department of the agricultural college we plan to obtain living quar
ters for him in a clubhouse, where he will be thrown into intimate
contact with other students. At this time, o f course, we can not say
what the final outcome will be, but the young man is making good
progress in his work at the business college. Prof. Shepherd keeps
in weekly touch with him and all the other men who are now taking
vocational training courses and helps them over any difficulties which
arise.
NO BEATEN PATHS TO FOLLOW.
There are no beaten paths to follow, and no two men present the
same problems. A ll seem different, and if a vocational rehabilitation
134
INDUSTRIAL, REHABILITATION IN OREGON.
law is to meet the situation, those administering it must indeed have
authority to devise their own plans for meeting each new situation as
it arises. A case in point is that of a young Scandinavian whose
back was broken in a shipyard accident. He is paralyzed from the
waist down and has lain on a cot in a Portland hospital for 16
months. His attending physician had given up hope of doing any
thing beneficial for him. He was left to lie on his back or ride in a
wheel chair the rest of his life. We sought relatives or friends who
might make a home for him, but he had none, and the commission is
still paying his hospital bills. Prof. Shepherd and I went out to talk
vocational training to him. Before we could interest him in the
subject he wanted our assurance that we would have something done
fo r him that would make it possible for him to walk with the aid
o f crutches. He said if he could only walk with crutches he could
do something for himself.
I sent the surgeon who has supervision o f the Portland branch o f
our physiotherapy department out to the hospital to see the young
man, A fter a thorough examination he decided that it would be
worth while to make an effort to restore some function to the lower
limbs. We are now sending to the hospital each morning a trained
physiotherapist who is giving the man daily massage and manipu
lative treatments. These treatments have been going on for three
months and the nurse is very much encouraged. She believes that
she will get the man on crutches.
A fter the treatments were begun the man became much interested
in vocational training, and as a result o f his talks with P tof. Shep
herd and a stud;y of the reading matter furnished him he selected
mechanical drawing, drafting, and designing as a profession he
could master. In order that he might take up the work at once
under as favorable circumstances as possible we had a specially de
signed table built to fit over his wheel chair. He was provided with
instruments and material and Prof. Shepherd is the instructor.
When he gets a little farther along we will arrange for an experi
enced instructor in that line o f work to give and supervise his les
sons; and when he can get around better he will be in position to
take up a complete course in mechanical drawing, drafting, and de
signing. There is no question about his becoming a competent
draftsman, and we are hoping that we will be equally successful in
putting him on his feet with the aid o f crutches. I f nothing else is
accomplished we will feel that a great work has been done under the
Oregon rehabilitation law.
Some o f the hard nuts to crack are found in solving the problems
o f injured men who have had no schooling. W e have one man who
was barely able to read and write and to count his money when he re
ceived an injury while employed as a sheet-metal worker, which left
his wife and five small children in a precarious financial condition.
He will never return to manual labor. Our solution for his case was
to give him sufficient education to enable him to hold down a job as
storekeeper, checker, or timekeeper. As his fellow employees dis
played an interest in him we conferred with the chairman o f the
shop committee, who was in position to speak for the employer in
this instance, and we were told that a job as timekeeper or store
keeper would be open for him as soon as he was fitted for it. We
W IL L T. K IR K .
135
took the case up with the business college and arranged for a special
tutor to give the man instruction in English and arithmetic and the
rudiments o f bookkeeping, with the object in view of fitting him for
the particular job we have in mind. The man began his studies at
the school the next day and he will make good,
USES EXISTING TRADE SCHOOLS.
In carrying on this work the commission is using the facilities at
hand. W e are using the vocational and trade schools now estab
lished in the State when they offer a course that meets the needs of
the particular man, and when they do not we go out into the indus
tries and find a place where the man can get the training he wants,
or, as in the broken-back case before cited, we make such special ar
rangements as will meet the situation. Our purpose is to put the
job over and we are not particular about the instrumentalities used
as long as the handicapped individual gets the training which will
fit him for earning a living for himself and dependents. We have
had the heartiest cooperation from the trade and vocational schools
and so far have had but little difficulty in finding means for pro
viding the training desired. A man with a badly crushed leg wanted
to learn the trade of a vulcanizer, and as there is no school in our
State giving such instruction, I placed him as an apprentice in a
large vulcanizing shop in Salem and he has learned the trade. While
he was learning the trade he drew no wages from his employer and
we provided for his living expenses.
Every case emphasizes the point I have endeavored to make, that
it is necessary to consider the problems of each man separately. The
whole procedure should be as simple as possible, so the men will feel
that you have a real interest in their welfare and possess a sincere
desire to help them. In practically every case the questions involved
are definitely settled and the man so advised at the time of our inter
view. This makes it possible for those who so desire to enter upon
their vocational course immediately after they have made a decision.
We encourage the men to bring their problems to us and permit us
to advise with them and help them to solve them. •
A t this time our experience is too young to enable us to discuss
results, but I can safely say that if nothing more had been done than
to put new hope in the hearts of discouraged men and to restore
courage to wives and other dependents, the expenditure of $100,000
originally set aside in Oregon for the vocational retraining of handi
capped men would have been well worth while. Men whose future
outlook was discouraging indeed are now filled with new life, enthu
siastic in their work, and determined to overcome their physical
handicaps by thorough preparation for earning power for the future.
The actual cost to the State so far has been comparatively little and
our original fund of $100,000 is constantly growing bigger.
FINANCIAL AID EXTENDED.
Up to July 1 we had sent questionnaires to 236 men who were
eligible for retraining. Replies were received in all but 62 cases.
We interviewed and closed without action 41 cases. In 62 cases
the questionnaires revealed that aid from the commission was either
136
INDUSTRIAL REHABILITATION IN OREGON.
not needed or not desired. Twenty-one men we placed were still
attending vocational schools. One man had completed his school
course. Two men dropped out of school before completing their
courses. Twenty-one men were preparing to enter school this fall,
and 26 cases were pending.
When a man takes up a vocational course our commission not only
pays his tuition and other school costs, but also provides for the liv
ing expenses o f himself and dependents. Practically all the men are
drawing compensation for permanent partial disabilities at the rate
o f $32.50 per month. To this the commission adds the following
amounts:
Single man, $30; total, $62.50 per month.
Man with wife, $55; total, $87.50 per month.
Man with wife and one child, $60; total, $92.50 per month.
An additional $5 per month is allowed for each child up to five
children, making a maximum allowance of $112.50 per month. A
dependent mother is considered the same as a wife.
These payments are made to the man who is employed as an ap
prentice the same as to the man who is taking a course in a school.
It must be recognized that all men arrive at an age when it does not
seem practical for them to reenter school, and their cases should be
considered from the standpoint of placement training. When we
entered upon this work we tentatively adopted the age o f 40 as the
dividing line and prepared a questionnaire for the men who were
40 or under and another for the men who were over 40. However,
the dividing line is not rigid, as we are free to do the particular
thing that will be best for the particular individual. For instance,
there is the ex-bartender who is past 40 and yet is one o f the most
enthusiastic and effective students we have placed in an automobile
school. For a number o f years before the days o f the big drought
he tended bar in Portland. When the saloons were wiped out, he
obtained a job in a fish cannery and eventually drifted into the ship
yards, where he lost a foot. When offered an opportunity for re
training he chose the trade o f auto mechanic and has now about
finished his course. He took to the work like a duck to water, and
the head o f the school reports that he will make one of the best
mechanics ever turned out o f the school.
WHO ARE ELIGIBLE FOR RETRAINING.
It was also left to the commission to determine who should be
eligible for retraining. We have tentatively laid down the rule that
all should be eligible who have lost 50 per cent or more of the use o f
an arm, a hand, a foot, or a leg, or sustained other permanent disabil
ity of equal severity. In some instances the injured man seems to be
getting along very well without outside assistance, yet because he
has the determination and pep to go ahead in spite o f his handicap
this should not operate to shut him out o f the benefits offered by the
rehabilitation law. He should not be penalized for his nerve and
enterprise, but, rather, if retraining will make his future more cer
tain, he should have the same privileges as the man who lays down
on the job after he is hurt. W e now have a case o f this type under
consideration. He is 24 years old and suffered an injury to his left
W IL L T. K IR K .
137
hand while employed in a sawmill. He is taking a theological course
in Willamette University, preparing himself for the ministry. He
is in the logging camps again this summer, trying to earn enough
money to put him through another year at school. Because he is
helping himself should we withhold our assistance ? Is the ministry
a vocation? Is he entitled to aid from the commission under the
rehabilitation law so as to make it easier for him to complete his
theological course? We think so.
As previously stated, we began this work in Oregon with a fund
o f $ 100,000. Up to July 1 we had expended the sum of $2,846.58,
segregated as follows: Transportation, $317.68; tuition, $555.11;
room and board, $859.90; financial aid to' dependents, $291; school
supplies, $52.60; employees’ traveling expenses, $170.29; salaries,
$600. On July 1 we had a balance in our rehabilitation fund o f
$134,061.05.
The cost is indeed small when compared to what it would undoubt
edly cost society in general if this retraining were not provided. Take
the case o f the broken back again. I f this man is not given a prepara
tion that will enable him to earn his living, society must support him,
as the pension he will draw from the compensation fund will not meet
his needs. Instead of being a dependent and a burden on society the
rest o f his life, in a few years at most he will be a producer and an
asset to the community. It is a work well worth while. It is a work
that grips one’s interest as one strives to aid the handicapped men to
find the proper solution for their problems, as one opens the door
which lets in the sunlight upon darkened minds and instills new
hope in discouraged hearts.
Before closing I think I should turn the spotlight for a moment
upon the other side of the screen. A ll the cases are not encouraging.
We find men who would rather be dependents than make the effort
to equip themselves to become self-supporting again. Their interest
is centered in the size of the cash payment they hope to get from the
commission. They argue that if they had a few hundred dollars in
cash they could make their fortune. They haven’t time for retrain
ing. It is useless to try to do anything for them, but, fortunately,
they are very much in the minority.
The Chairman. A paper was sent to me by Commissioner Lewis T.
Bryant, of the Department of Labor of New Jersey. I f there is no
objection the paper will not be read but will be ordered included in
the official proceedings of this meeting.
INDUSTRIAL REHABILITATION IN NEW JERSEY.
BT LEWIS T. BRYANT, COMMISSIONER, NEW JERSEY DEPARTMENT OF LABOR*
The legislature of New Jersey enacted at the 1919 session an act
providing for a rehabilitation commission, to be composed of the
commissioners of education, of agencies and institutions, and o f
labor, besides three citizens to be appointed by the governor, who
should be as follows: One surgeon, one representative of business,
and one representative of labor. These men were empowered to se
lect a director, to be in direct control of the administration o f the
act. Under the terms of the law regulating the conduct of this com
mission, a great deal of thought was given by them in determining
the best method o f rehabilitating all physically handicapped workers
of the State over 16 years of age with the exception of mental de
fectives and those whose vision is affected. The commission finally
determined that this work should be undertaken from a. threefold
standpoint, namely, physical reconstruction, vocational training, and
intelligent placement. It was decided that the best manner of ac
complishing these results was to coordinate the work o f rehabilitation
with the compensation administration and the employment service o f
the State. To this end industrial centers have been established in the
populous centers of the State, at which the compensation hearing
rooms, the rehabilitation clinics, and the employment offices are in the
same building. In some cases the financial assistance o f the munici
palities has been arranged.
Under the operation o f the compensation laws of the State of New
Jersey, all accidents not bringing the injured worker within the
scope of the act must be reported to the main office at the statehouse,
and the practice has been followed o f notifying the injured worker
o f the amount of compensation to which apparently he is entitled
and suggesting that he call at the nearest industrial center on the day
when the deputy commissioner of compensation will sit there, for the
purpose o f ascertaining whether the financial settlement enacted
under the statement of facts, which must be signed by the injured
worker and the employer or insurance carrier, is a correct compensa
tion for all injuries received. He is also advised that the State
surgeon will be in attendance at these meetings to determine whether
any improvement in his condition can be accomplished by means o f
reconstruction surgery. It is the purpose to have the surgeon advise
the deputy commissioner on medical and surgical questions arising in
determining the adequate amount o f compensation, and also to give
the petitioner the benefit o f the reconstruction surgery practiced
under the rehabilitation act. It is our further purpose to have at
these gatherings a representative o f the training section of the re
habilitation work, so that the problem of the return to industry o f
each injured worker may be studied by the expert and followed up
either by vocational training or intelligent placement of the worker
138
LEW IS T. BRYANT.
139
in the industry which he is physically, mentally, and by past experi
ence best capable o f filling. In determining the selection of occupa
tions, the advice of the rehabilitation surgeon is available in order to
decide upon a calling which he is physically able to follow. Our
plan therefore contemplates, first, the physical reconstruction of the
injured worker to the very greatest possible degree; secondly, the
giving o f such training as his mentality and social obligations will
permit; and, thirdly, the placing in such remunerative employment
as various handicaps will permit.
In determining this method of procedure, we found that in order
to secure satisfactory results it was advisable to have the facilities
for physical reconstruction immediately adjacent to the hearing
rooms, and we have therefore provided complete clinics at each of
the several industrial centers. The original one at Newark is the
only one which has been completely equipped at this time, although
two others are nearing completion, and arrangements are being made
for clinics in two additional cities, to be opened soon after the first
o f the year.
The Newark clinie is provided with all instruments of precision
for direct and differential physical diagnosis, a complete depart
ment for orthopedic and reconstructive surgery, consisting of the
follow ing: Physiotherapy, electro and mechano therapy, including
apparatus for functional reeducation, massotherapy, a department
o f roentgenology, a pathologic laboratory, an operating room, a
plaster of paris room, a dental department and a clinic ward, a
reception room, and an administrative office.
Under the New Jersey compensation law, medical aid is limited
to $50 for the first 28 days, except “ in severe cases requiring unusual
medical or surgical treatment or calling for artificial limb or other
mechanical appliances” the commissioner of labor may call for an
additional amount, not to exceed $200. In cases requiring secondary
or orthopedic operations or continuing treatment, arrangements
have been made in most cases for the employer or insurance carrier
to defray the expenses incident thereto, including the cost o f the
operation and the required aftercare, which expenses are substantially
returned in the reduced permanent disability of the worker.
The commission has made the proposition to the employers and
insurance carriers that where an operation is recommended by one
o f its surgeons, the aggregate cost of the operation and aftercare
to the employer or carrier must not be greater than what would
otherwise have been occasioned under the application of the com
pensation law, and if additional expenses are incurred, the difference
will be reimbursed from the rehabilitation funds.
We have had in the Newark clinic during the period from October
20, 1919, to August 31, 1920, 757 cases, in different classifications as
follow s: Treatment, 314; operative, 91; placement, 39; artificial
limbs and orthopedic appliances, 60; diagnostic (no rehabilitation),
253. Up to this time there have been no cases where the saving o f
permanent disability has not been sufficient to compensate for the
expense involved.
The chairman of the commission is Col. Fred H. Albee, the wellknown authority on orthopedic surgery, who, during the war, was
in charge of the surgical and medical administration of the Gov
140
INDUSTRIAL REHABILITATION IN N E W JERSEY.
ernment reconstruction base hospital at Colonia, N. J. The sur
gical work is under the immediate direction of Dr. John N. Bassin,
chief surgeon of the commission. There has not been a single death
or a single case of infection as the result of operations performed
in this clinic. The method practiced has been so well received that
there is now a demand for the institution of similar clinics in other
cities, and the employers and carriers are extending us their confi
dence and cooperation.
Little has as yet been done in the matter of vocational training,
as we believe the first obligation o f the commission was to provide
facilities for returning the worker as nearly as possible to the maxi
mum degree of health and efficiency. It is the purpose to closely
ally the vocational training and placement activities with the several
Federal, State, and municipal employment offices, which at this time
have a very close connection with the industrial life o f the cities in
which they are located.
We are considering the installation o f an apparatus for voca
tional therapy, and in addition, taking advantage of the existing
trade and technical schools of the State. We may install facilities
for elementary training in certain trades before endeavoring to have
the workers placed in shops on production.
With the exception of the physical side of our work, it is in
a more or less formative condition, but we are hopeful of good re
sults from the procedure we have under contemplation.
The Chairman. The next speaker we have with us is Oscar M.
Sullivan, director o f reeducation, Minnesota Department of Edu
cation.
INDUSTRIAL REHABILITATION AS CONDUCTED IN MINNESOTA.
B Y O S C A E M . S U L L I V A N , DIRECTOR OF R E E D U C A T IO N , M I N N E S O T A D E P A R T M E N T OF
E D U C A T IO N .
The outstanding characteristics o f the Minnesota system for in
dustrial rehabilitation of impaired workers have been determined by
two facts. The first is that the system has been the outgrowth o f the
workmen’s compensation activities of the State. To this is due the
close correlation with the work done under the compensation act.
To it is also due the general viewpoint on many things—the concept
that rehabilitation is essentially a phase, and an important one, of
social insurance. The second important fact is that the department
o f education has been recognized as the proper agency to have im
mediate charge o f the work. This accounts for the emphasis on
vocational rehabilitation as distinct from physical restoration, and
has reinforced the tendency to avoid features of a public relief nature.
On its administrative side the Minnesota work is a division under
the direction and control o f the State board for vocational education,
which in our State is identical with the general State board of educa
tion. The act required a plan o f cooperation wTith the department o f
labor and industries, to be effective when approved by the governor.
The organization was perfected so as to start operations July 1,1919.
For its part the State board for vocational education felt the work
to be o f sufficient importance and sufficiently different in nature to
warrant the employment of a director other than the regular director
o f vocational education. As the* department o f education desired to
associate in the work as closely as possible the department of labor
and industries, which has supervision over the administration o f the
compensation act, the plan was finally adopted of having in part a
joint personnel. Through the circumstance that the chief statistician
o f the department of labor and industries, who was the executive of
the compensation work, was also qualified to conduct educational
work, it wTas possible to appoint him as the director of the division
o f reeducation. The department of education then, under its agree
ment, lent him to the department of labor and industries to continue
his work in connection with compensation. The proper salary ad
justment was made through the department of labor supplying the
division o f reeducation with a placement specialist. A ll the em
ployees o f the division o f reeducation are directly under the control
of the State board, yet through their connection with the- depart
ment o f labor, the two just referred to, who constituted all o f the
staff except clerical help during the first year, are able to insure the
smooth working o f the agreement to cooperate, and in other ways
have advantages which they would not have had as employees o f the
department o f education only.
In connection with the cooperation between the two agencies, the
department of labor and industries and the State board for vocational
141
142
INDUSTRIAL REHABILITATION IN M INNESOTA.
education, a few of the articles in the plan o f cooperation between the
two departments may be of interest. The first two articles deal solely
with the joint employees in the two departments. Article I I I is as
follow s:
Tlie department o f labor and industries agrees to advise the division o f
reeducation and placement prom ptly o f all cases o f persons com ing to its
knowledge who have suffered injuries entailing impairment. The department
also agrees to provide the division o f reeducation and placement transcripts o f
such inform ation in compensation records as may be requested. The depart
ment further agrees to make through the members o f its staff any investiga
tions requested by the division o f reeducation and placement and distribute
such printed matter as the division may consider a desirable prelim inary, pro
vided such cooperative w ork shall be convenient to the regular course o f the
duties o f the department’s employees. In addition the department w ill have
its factory inspectors when they make their regular visits o f inspection ascertain
what opportunities in employment there are fo r handicapped persons.
Article IY deals with lump sums:
The department o f labor and industries agrees that when it is consulted in
regard to the advisability o f a lump sum in compensation cases involving
permanent impairments it w ill not take action until it has received th e advice
o f the division o f reeducation and placement. The board fo r vocational educa
tion agrees to permit the division o f reeducation and placement to make in
vestigations in such cases.
Article Y defines the duties on the part of the division o f reedu
cation :
The board fo r vocational education agrees that it w ill require o f the em
ployees o f the division o f reeducation and placement that they b e well enough
inform ed on the provisions o f the compensation law regarding m edical and
hospital treatment and prosthesis to give suitable advice to seriously in ju red
persons w ith whom they make early contacts. T h e board also agrees to perm it
members o f the staff o f the division o f reeducation and placement to make
investigations requested by the department o f labor and industries, provided
such cooperative w ork shall be convenient to the regular course o f their duties.
In order to give special agents o f the division o f reeducation testim onial
pow ers and qualify them to cooperate as ju st provided, the department o f
labor and industries agrees to appoint such special agents as special agents in
its service w ithout salary. The board further agrees that the division o f re
education and placement shall keep such records and supply such inform ation
relative to disabled persons as the department o f labor and industries may
desire fo r the completion o f any o f its studies on workm en’s compensation or
the econom ic condition o f the w orking classes.
Article V I is a general agreement of cooperation:
The board for vocational education and the department o f labor and industries
agree in general to cooperate in the w ork o f rehabilitation and to assist each
other whenever the service asked is germane to the w ork and not too great an
adm inistrative burden. In order to insure the harmonious w orking o f th is
plan o f cooperation and in general to advise in connection w ith the policies
pursued by the division o f reeducation and placement, an advisory com m ittee
is hereby created to consist o f the comm issioner o f education and one officer o f
the department o f education designated by him and the commissioner o f labor
and one officer o f the department o f labor and industries designated by him.
The first question which had to be faced by the division was the
general method by which the work should be carried on—should the
effort be made to promote something analogous to a central insti
tute, or should a few’ general classes in particular industries suit
able for handicapped persons be started at different points in the
State, or should the problem be treated as an individual one to be
cared fo r by the study o f individual cases, contracts with existing
schools, business establishments, or tutors? The decision was
OSCAR M . SULLIVAN.
143
promptly made that the last-mentioned method would be followed.
The standard was also promptly adopted that the attitude of the
division should be a dynamic one, not a passive one. It was not
enough to take the position that here was an opportunity which the
State was offering to its disabled citizens, and that if they did not
avail themselves o f it the fault was their own and showed that there
was no great need for the work. Rather the division took the posi
tion that by this legislation the State recognized that the security and
highest development of society required that all impaired persons be
vocationally rehabilitated to the fullest extent possible, and that
every reasonable effort should be used to induce the beneficiaries to
profit by what was offered them. The corollary was that a system
should be built up which would come the closest possible to insuring
knowledge on the division’s part of all persons impaired so as to be
vocationally handicapped, and that the division should undertake to
secure personal contact with each one. This was not so difficult,
so far as compensation cases were concerned. It was possible for
the director to secure a copy of the accident report in all dismember
ment cases, and in other cases to secure a notice at the time when
the fact o f permanent impairment developed. Outside the compensa
tion cases, however, the problem of securing prompt knowledge has
been a very difficult one. Circular letters to hospitals, insurance
companies, and labor, civic, and social-service organizations have
been helpful, but the surest results will come more gradually from
the personal contacts of the division’s employees with the agencies
referred to and the spread o f publicity as the scope of the work
increases.
The test of any activity is its actual accomplishments. The Min
nesota work has been in existence over a year, and it is quite natural
to expect a definite statistical report from it. Before any figures are
quoted, it should be stated that the success of a rehabilitation system
can not be measured in so short a period as one year. The biggest
task in the initial year of the work is*the early establishment of a list
o f possible beneficiaries and the making of personal contacts with
them. Out o f every five who are eligible for training it will be quite
the normal thing for only one to be willing to undertake training
immediately. Some who are interviewed and worked with for a con
siderable time will in the end refuse to accept the proffered educa
tion. Others will prove amenable to the advices o f the reeducation
agents but will postpone the beginning o f training. O f those who
take training during the first year only a limited number will finish
within that year, and these perhaps will not have been at work long
enough to give any criterion as to the success of their training. It
must be evident, therefore, from these considerations that any statis
tics of the first year of rehabilitation work are merely a token o f
what has been attempted and not any genuine measurement o f re
sults. With this preparatory statement, which is intended to be ex
planatory and not apologetic, we are ready to state that during the
year ending June 30, 1920, the division o f reeducation secured a
knowledge of 372 cases. O f this number a careful survey was made
in 281 cases. The number approved for training was 132. Those
approved for placement without training courses were 41, those who
were surveyed and found not eligible or not to require rehabilitation
144
INDUSTRIAL REHABILITATION IN M IN N ESO TA.
were 108. Those who were placed under reeducation were 75, and
those who completed the training within the year were 53. The
training given in the cases represented 31 occupations. The cases re
educated were classified, also, according to general class of disability,
as follows: Compensation cases, 35; industrial accidents other than
compensation cases, 7; all other disabilities, 33.
What has been said in regard to a statistical statement for the first
year o f such work applies, also, in connection with illustrative cases.
It is rather early to be certain that the particular training given has
been a success. The most that illustrative cases at such a time will
show is how certain problems were faced. One of the most responsive
cases which the division o f reeducation handled during the year was
its first case— one which had been on file at the labor department dur
ing the months which elapsed between the end o f the legislative ses
sion and the 1st of July. A young picture framer employed by a
department store had scraped his thumb on a piece of glass. In
fection had set in and he had suffered the loss of the use of his entire
hand and forearm. This was an easy case both as to guidance and as
to assuring future employment. The man had a taste for business
methods and clerical work, and was easily placed in training with a
local business college. The department store cooperated in prom
ising employment as soon as he was able to do anything in his new
line. Within a few months it was able to employ him, and he
changed over to the night courses to complete his training.
In another instance a member o f the State board of health re
ported a painter and carpenter in a small town who had suffered a
inal injury due to a fall from a ladder while painting a tank.
3 was not under the compensation act, but had been employed by a
railroad at the time, so received a substantial sum of money. At
the time he came to the notice o f the division his medical treatment
had advanced so far that he was able to be around and could do
lighter forms o f work. He took a course in vulcanizing and on
returning to his home town opened up a vulcanizing shop in con
junction with his son. Our follow-up report on this shows it to have
been successful.
A very interesting case, which is not yet completed, is that o f a
young Scandinavian who had always wanted to be an architectural
draftsman but had never had the opportunity to study for it. While
employed in a woodworking line he suffered the loss of a number of
fingers o f his right (major) hand, together with a considerable
degree of impairment of the arm. He was receiving compensation,
but not enough to support himself and his mother for any great
period of time. It was therefore necessary to get his support
assured before he could be started on any course of training. As
the young man was found to be reliable, arrangements were made
with the insurance company to pay in a lump sum a part o f the com
pensation, so that during the period of training he could have about
twice as much to live on as his compensation would have been in
periodical payments. The attempt was made at first to give him the
training in a public technical high school, as it was thought that
he could get along all right there in view of the fact that he was
not much older than the ordinary pupils. He did not progress fast
enough, however. He had become dissatisfied, and was found to
E
OSCAR M . SULLIVAN.
145
present such personal differences from the other pupils that it was
desirable to change his training. He was accordingly sent to a large
technical school, and has been progressing satisfactorily since. This
case was noteworthy both for requiring a special handling o f the
compensation phases and for demanding a very great amount of
personal service. Even after entering the young man in the adult
technical school it was found desirable to pay the institution an
extra amount to secure individual attention for him.
The problem of training for persons who live at points other than
the large cities, and who are not in financial circumstances that
would enable them to come to the cities which have training schools,
is a troublesome one. In one case which the division had of
this character the man was rather elderly and had a considerable
family o f children in school. He lived in a town o f 15,000, but the
closest city which had a training school in the line which he desired—
that of automobile mechanic— was 80 miles away. The reeducation
agent found that there were several garages in this town which
had a personnel well qualified to give training. The best of these
was chosen and a contract ifiade with it providing for monthly pay
ments by the State board in return for definite training along
specific lines for the applicant. The garage further agreed to pay
the man a definite sum for the work which he would do for it.
This helped to solve the maintenance problem, as the man had been
injured some years previously and was without means.
Another special type of case was that of a section hand who had
lost both legs in railroad work in another State under circumstances
which deprived him of any indemnity. He was not eligible for the
expenditure of tuition under our State law, but we arranged to give
him as good a grade of training as he would have gotten anyhow by
making arrangements with a small manufacturer of willow ware.
He learned the trade in six or seven months, was paid during the
entire time, and now has an occupation which at any time will net
him skilled wages.
Another o f our interesting cases is that of a young pressman who
had gone through the war unscathed. He had been over the top
seven times in France, but on his return quickly became a victim of
the industrial hazard. He lost all of his left hand except the thumb,
and there is a degree of stiffness in that. He has been given tempo
rary employment in a clerical capacity and is being trained as a fac
tory inspector.
An instance in which the division cooperated with a local society
for the blind presented the following circumstances. A blind man
who had only a very limited training was playing the violin in the
streets. The society feared that this would degenerate into a species
of begging, and requested the cooperation of the division of reedu
cation in providing him with a course in violin playing so that he
could be fitted for concert work. This was accordingly done, and
has been carried far enough so that we are assured the plan is a
success.
In helping the blinded miners of the State, the division has also
accomplished a much needed work. Here again it had the coopera
tion o f a private society, which had been contemplating the organiza
tion o f a broom shop in the mining country to employ the blinded
26039°— 21-------10
146
INDUSTRIAL REHABILITATION IN M IN N ESO TA.
miners, but bad found the financial problem too big. When it was
assured of a subsidy from the division for the training of men in
broom making it found the plan immediately practicable, and the
broom shop has accordingly been launched and is giving both train
ing and employment to these men who had been doing nothing but
vegetating.
Perhaps some discussion of the attitude of the division toward
some of the special phases and problems involved in rehabilitation
will be illuminating as to its operations. One problem about which
much controversy has centered is that of the relation of vocational
rehabilitation to physical restoration. It has been proposed by
some- rehabilitation advocates that any scheme for reeducating and
placing impaired persons should begin with physical restoration
and should provide the necessary medical care at the expense of the
State., There is a sharp difference in principle here which runs
through many other of the problems connected with vocational
rehabilitation. On the one hand, advocates of the State’s taking
immediate control of all elements of the work, and financial responsi
bility therefor, are not so much concerned with the relation of
their system to other systems in vogue in our competitive society
as with getting the work started soon and having abundant re
sources. The easiest and quickest means is a resort to taxation.
On the other hand, the opposing school believes that every step
should be related to existing social methods. It should be kept in
mind that we are not living in a socialized state, but in one which
seeks to continue the competitive system shorn of its extreme fea
tures; that the method of social insurance promises to be the safest
manner of dealing with social ills in contradistinction with the
method of. public relief, which has always been costly in its outlays
and harmful in its effects upon the recipients.
The Minnesota system, being the outgrowth of the workmen’s
compensation activities, has kept in mind the possibilities o f social
insurance, and has been careful not to launch practices which would
be an obstacle to the later developments in this field. Therefore,
the position has been taken as regards medical treatment that it is
not of itself a function for the reeducation work. Vocational train
ing of impaired persons is offered at the expense of public funds
because it is an educational activity, and it has always been the
American policy to encourage education in order to promote equality
of opportunity. Similarly, the matter of placement in suitable em
ployments is a public function.
But in the case of medical treatment following an injury no
sweeping classification can be made. Those cases which come under
the workmen’s compensation act are provided with medical treatment
at the expense of the employer. There is no longer any dispute that
the medical treatment under the compensation act should be com
plete, and by complete is meant entirely adequate to cure and relieve
from the effects of the injury as far as possible. The same session
of the Minnesota Legislature which passed the reeducation act
amended the compensation law so as to provide full medical treat
ment. As soon as this amendment went into effect the department of
labor and industries s§nt a letter to all the insurance companies and
self-insurers in the State pointing out that the intent of the change
OSCAR M . S U L L IV A N .
147
was that every seriously injured person should have the best grade
o f medical care available in the State, whether this included such
specialties as electrotherapy, hydrotherapy, occupational therapy,
remedial exercises, and the like, or whether it meant simply a good
grade o f ordinary hospital care. So, in relation to the compensation
cases, the work o f the division of reeducation as it touches the
physical side has been merely one of checking up the kind of care
given, and,. if it was not suitably reporting the matter to the depart
ment o f labor for appropriate action.
In eases outside the compensation act circumstances vary greatly,
but in no instance is it felt to be the duty o f the division of reeduca
tion to act in other than an advisory capacity. The work necessarily
gives its agents a fund of information along this line and at times
enables them to give advice o f great help. The principle thus laid
down is broad enough to cover occupational therapy also, except
that sometimes cases will arise where actual courses of vocational
training can be given during the period o f convalescence which will
also serve as a therapeutic agent. Thus far we have had only one
such case, but there will, no doubt, be others. A bricklayer who had
been in the hospital for three years as a result o f a severe spinal
injury had recovered sufficiently so that he was able to be about in a
wheel chair and could practice walking a little each day. It was
thought that he would be discharged from the hospital within a few
months and be able to get along without the wheel chair. As he
was o f an age and type for which reed work was a suitable vocation,
this was proposed to him and he accepted the plan gladly. A tutor
was accordingly sent into the hospital to start the training at once.
When he leaves the hospital he will be ready to step into a wellpaid job.
The answer to the question of whether the State should furnish
prosthesis is also governed by the principles given above. In the com
pensation cases this is provided by the employer as a part of the
medical expense. As a matter o f practice and cooperation with the
department o f labor,, the division o f reeducation follows up all the
dismemberments and sees that the proper prosthesis is furnished.
In other cases it also acts in an advisory capacity. I f the impaired
person is without means, it is a special relief problem to be met
according to the special circumstances in the case.
The view that maintenance should be furnished by the State during
the period o f reeducation has been pressed even more strongly per
haps than the demand for State action in any of the preceding
phases. It is argued that unless maintenance is furnished the pro
vision for training is barren and the work will be limited to a very
small group. So far as compensation cases are concerned, it is
alleged that the compensation is not adequate, and that additional
grants should be made either out o f taxation or out of some fund
raised indirectly under the compensation act. The analogy o f the
maintenance which the Government provides for soldiers undergoing
rehabilitation has been forcefully urged. It is forgotten that main
tenance is provided for the soldiers because they were Government
employees and that the ordinary civilian is not yet considered an
employee of the State under any social theory which is widely ac
cepted. I f the compensation act is not adequate, clearly the remedy
148
IN D U ST R IA L . R E H A B IL IT A T IO N I N M IN N E S O T A .
is not in a system of public relief but in so amending the compensa
tion act that it will be adequate. So far as the compensation cases
are concerned, we in Minnesota see no reason for raising the amount
necessary for maintenance during training by an indirect method.
Our department of labor and industries has recommended that the
permanent partial schedule in the act should be so amended that
each of the logical elements entering into permanent partial com
pensation will be accounted for. One of these elements is plainly
maintenance during reeducation. The man who suffers the loss or
impairment o f a member, and has to change his occupation, evidently
suffers a greater loss of time than the one who sustains the same
physical handicap and does not have to change his occupation. It
is logical, therefore, to make an award for the period of reeducation.
The law should take cognizance of the existence of the division o f
reeducation and should make this portion of the award depend
upon the division’s certificate •that the man is under training. I f
the maximum in the law is such that the ordinary periodical pay
ment will not be sufficient, this clearly is an indictment of the
maximum and not of the principle of compensation during retraining.
But it is argued that outside the scope of the compensation act
will be found great nnmbers of impaired persons who will be unable
to take training because they can not take care o f their maintenance
for any prolonged period. The best answer to this is that the divi
sion o f reeducation has not thus far found any cases o f impaired
persons needing reeducation which it could not get cared for through
some existing agency. In three instances, where the charities were
called upon to assure the maintenance, they had already been taking
care o f the man and his family. In other instances temporary em
ployment was found for the handicapped person and his training
given through an evening course. The great bulk of the men prefer
evening courses in any event. Most of those covered by the com
pensation act desire employment and evening courses even though
they are in receipt of their regular periodical payments. In other
instances the vocational training is placement training and carries
with it a sufficient wage to tide the handicapped person over the
period o f learning. So much for the question of experience.
Now, on the side o f principle, does not the same objection apply
as in the case where it was sought to aid through taxation what
should have been done through the compensation act? Is not the
proper solution for the problem a system of social insurance akin
to the compensation system but giving a coverage for all disabilities
happening outside the scope of the compensation act, both accidents
and disease, the cost to be divided among the employee, the employer,
and the public ? Could not such a system have an award for reedu
cation similar to the one which we propose for the compensation act ?
Such, at least, is the conviction of the writer. In Minnesota we
already have quite a large benefit-fund system o f voluntary origin.
The State has only recently taken cognizance of this system by re
quiring such funds to be licensed, thus bringing to light full infor
mation about them and making it possible at times to offer advice
in shaping them* We feel that even if there should not be any
rapid extension of State standardization to this field, it will be pos
sible to suggest a reeducation award to these funds and have the
principle adopted by a considerable number of them.
OSCAR M . S U L L IV A N .
149
On the question of whether books and equipment necessary to the
training course should be furnished by the State, Minnesota has
taken the position that these things are so distinctly educational, and
so clearly a part of the training, that they may be legitimately pro
vided. The State retains the ownership of the articles, however.
Sometimes the division of reeducation buys the articles directly, and
at other times they are made a part o f the contract with the school
giving the training. This has been particularly true in Y. M. C. A.
courses.
Methods o f placement have also been the subject of some varia
tion in planning. The division has excellent cooperation from the
public employment agencies in the State, which are operated by the
department of labor and are therefore under the same commissioner
as the compensation service. Nevertheless, we would not feel that
the placement for reeducation work could be satisfactorily accom
plished through a cooperating agency. This necessarily must be
under the rehabilitation service. At the same time the placement
should not be made too distinct from the other rehabilitation activi
ties. Very often the advisement agent who arranges the training
can attend to the matter o f placement more successfully himself
than by turning the case over to another person. Nevertheless we
have felt it to be a fortunate part of our system that we have had
a placement specialist, who has kept up a steady canvass of the field
and has made incidental placements previous to reeducation. Place
ment is an exceedingly difficult part o f the work and will often com
mand all the available energy that the rehabilitation service can
muster.
Research work is also a very important part of the activities of the
rehabilitation agency. A great deal of valuable information will,
of course, be secured and recorded through the ordinary operations o f
the service. The employment opportunities open to the handicapped
in any given district, however, will never be thoroughly known until
a careful study is made of the field. This calls for visits to typical
plants by members of the staff capable of making a study, and the
careful examination o f the various processes, with a view to discover
ing new opportunities. Through this method the Minnesota division
has added materially to the list of occupations it had learned of from
existing literature as being open to different types of handicapped
persons.
Since any rehabilitation service worthy of the name must be on
an individual case basis, a record system suitable to the needs of
the State must be devised. In Minnesota we have endeavored to
make ours complete but not too elaborate. I f anything, we have
sinned on the side of oversimplicity. Our records consist of a report
form— either the detailed one of the department of labor or the
briefer one, copies being placed at strategic points throughout the
State; an application form giving on one sheet all the essential details
o f the case; history card summarizing and continuing this; copy of the
compensation record, if there is one; medical certificates where neces
sary and where this is not covered under the compensation record;
contract with the school, establishment, or tutor giving the course;
monthly report on attendance and progress; and, of course, carbon
copies of all letters in the case.
150
IN D U S T R IA L R E H A B IL IT A T IO N I N M IN N E S O T A .
The question of eligibility is one o f the things which will present
most difficult problems to a rehabilitation service. Our law is a very
broad one, providing for the reeducation and placement o f any
person whose capacity to earn a living has in any way been destroyed
or impaired through industrial accident or otherwise, but even under
such a broad definition it has been necessary to decide on a number
o f definite policies. The law clearly covers persons who are dis
abled by accidents other than industrial, and by disease, as well
as those disabled by industrial accidents. One o f the first interpreta
tions that was necessary touched on the question whether a person who
has a congenital defect, or who has sustained an impairment due to ac
cident in his earlier years, was entitled to training on reaching work
ing age. In effect, the point was whether emphasis should be laid
upon the u re ” in “ reeducation.” The attorney general held that
this class o f persons was legally eligible, and we decided to train
them if their disability was such that it might be expected to be a
considerable vocational handicap, and with the reservation that as
applicants became more numerous, disabilities incurred after the
person had reached working age would be given preference.
Another matter o f policy which had to be determined related to
the reeducation o f persons who had been trained in State institu
tions, such as those fo r the blind and deaf, and who? nevertheless,
found themselves economically unsuccessful. After ascertaining that
our course had the approval o f the board in charge o f these institu
tions, we took the position that these persons were entitled to our
assistance both on their own account and because the experience so
gained would be valuable as a guide to the institutions in shaping
future training and as a guide to the reeducation service in its deal
ings with impaired persons o f the same type who received their
disabilities through industrial accidents.
An eligibility problem that appears in each case is the determina
tion o f when a given disability becomes a vocational handicap. In
practice it is extremely difficult to set up definite standards with re
gard to this. Very often the only evidence is subjective— the man’s
own feeling that he can not successfully carry on the occupation
in which he was engaged and his desire to take up something d if
ferent. W e have had compensation cases in which severe fractures
had been sustained and the physician had certified that there was
a complete recovery, that the member in fact was as strong, i f not
stronger, than it was before, yet the man had a positive feeling,
amounting almost to an obsession, that the member was weak and
that he was in great danger o f further injuries if he continued in
the same line. We have usually resolved these doubts in favor of the
applicant when there was any satisfactory evidence of disability.
In addition to the vocational handicap provision, our- law has
another condition for eligibility. This is that the disability must
have been incurred while the person was a resident or citizen of the
State. Under the attorney general’s ruling, a resident o f the State
is a person who has a fixed abode within the State o f a character
indicating permanency. There is no time requirement, therefore,
which has been a fortunate thing as it has enabled us to rehabilitate
persons disabled in Minnesota industries whether they had lived in
the State one year, or one month, or even only a few days. We were
OSCAR M . S U L L IV A N .
151
particularly glad o f this fact about six months ago when we had to
deal with the case of a young man from Illinois who had lost his
hand in a manufacturing establishment in Minneapolis. He had
been in the State only a month, but had come with the intention of
remaining, and, therefore, satisfied the provision of the law with
respect to residence. This was an instance of excellent cooperation
and early contact with the case. The insurance company notified
the division within a day or so after the accident, the director called
on the young man while he was still in the hospital, helped him to
fight down discouragement, and as soon as the hospital period was
over planned a vocational course in show-card writing. Until he
heard o f the reeducation act, it had been the young man’s intention
to go back to relatives in Illinois. Eventually another State would
have had to deal with his handicap, and would have found that his
condition had reached such a stage that the problem would be much
more difficult. As the matter stood, Minnesota was able to make
partial amends for the damage which one of its industries had
wrought.
On the other hand, our law has made us refuse the services of the
division to bona fide citizens of the State o f long residence who had
received their disabilities while resident in other States. The ideal
provision in a rehabilitation act would be one which combines these
two elements— giving care to those whose disabilities were incurred
in the State and to those whose disabilities were incurred elsewhere
but who had been for a year or some similar period citizens o f the
State.
So many States have had unfortunate experiences in connection
with cooperative relationships between departments, especially where
anything like a joint personnel is used, that an especial interest will
no doubt attach to our experience in Minnesota in this regard. The
cooperative plan has thus far functioned smoothly and has accom
plished even more than was expected of it. Both departments have
been deeply interested in the success of the work. At the department
of labor the first question has been the discovery of all cases that are
likely to be of interest to the reeducation division. In this, not only
the filing division but the statistical staff and the compensation agents
have participated. Many special investigations have been made at
times by factory inspectors and compensation agents, saving the
time of the reeducation staff and reducing its expenditures for travel.
Material assistance has also been given to the research work of the
division through inquiries by factory inspectors, when making their
regular rounds, as to handicapped persons employed and the types
’of work for which they are fitted.
At the department o f education the attitude has always been that
the other department was a moral partner in the work. A t no time
has there been a disposition to begrudge the close interweaving o f the
work since it seemed to be to the interest of the rehabilitation service.
On many occasions the data about educational agencies on file in the
department o f education were o f value to the reeducation staff, and
helpful advice on standards of vocational courses was always to be
had from the vocational division.
Thus far in its educational work the reeducation division has
utilized a great many more private schools than it has those sup
152
IN D U S T R IA L R E H A B IL IT A T IO N I N M IN N E S O T A .
ported by the public, chiefly because o f the fact that there were not
so many o f the latter giving the desired courses; that the public
classes were usually large, and that it was not so readily possible to
make some one person directly responsible for the training of the
division’s wards. Among the educational agencies with which con
tracts have been made are the State university, an endowed technical
school, private business colleges, schools of commercial art and show
card writing, and Y. M. C. A. educational departments. Some o f the
establishments in which placement training has been given are broom
shops, willow-ware factories, garages, shoe-repair shops, and metal
foundries.
A far-reaching system of cooperation has been built up among the
various social-service agencies of the State. First in importance,
since it covers the entire State, is the home-service section of the Red
Cross. Cooperation in reeducation work was made one of the pro
posed activities for chapters which went on a peace-time basis, and
in many instances where they had not gone on a peace-time basis the
central office at Minneapolis enlisted their good will in helping the
work. The central councils of social agencies in Minneapolis and
St. Paul were among the earliest to line up in offering to supplement
what the State could do, and in Duluth the social-service club took
upon itself the responsibility o f organizing the cooperation.' A d
visory committees have been established in St. Paul and in Duluth,
and one has been authorized in Minneapolis, but is not yet function
ing. The Duluth committee, strictly speaking, is one for the entire
county, and is of great importance, owing to the size o f St. Louis
County and the magnitude o f the iron mining and subsidiary opera
tions carried on there. Some o f the points at which help is given by
private agencies are in reporting cases that would otherwise not be
heard of, in providing maintenance where this is necessary, and in
focusing the required influences upon persons who need reeducation
but are refusing or postponing it. Cooperation has also been sought
from the leading agencies of the State dealing with the tuberculosis
problem, both public and private. As this is a very big field o f work
and as it presents difficulties of a special order, it has been necessary
to proceed slowly with it, and there are no results at present to be
recorded.
From another quarter, also, a very good grade of cooperation was
received. This was from the compensation insurance companies.
They readily took cognizance of the rehabilitation aspect o f com
pensation work and seem to have tried sincerely to further it. Re
ports were made of cases which had not previously been reported
to the laJbor department as involving any serious impairment, and
ready attention was given to the advice of the division in matters of
prosthesis. It has not been at all unusual for an insurance com
pany to authorize the division to select and order the prosthesis that
it deemed most suitable. At the time when the reeducation act was
pending in the legislature fear had been expressed by some that
there would be a tendency on the part of insurance companies to
raise compensation insurance rates on employers who gave work to
handicapped persons. Because this belief was widespread among
employers, an act was proposed and passed prohibiting the insurance
companies from so discriminating in rates, making it a misdemeanor
OSCAR, M . S U L L IV A N .
153
and providing for cancellation of license. It is doubtful whether
very many o f the companies have been guilty of this practice in
recent years. During the first year of the reeducation work only
two supposed instances of such discrimination were reported, and
both o f them turned out on investigation to be simply the assump
tion o f the employer.
Aside from conferences designed to set up direct methods of co
operation, considerable was done during the year in the way of
addresses before various organizations in order to give publicity to
the work and to the principle which it was sought to establish of a
fair chance in employment for the handicapped man. Among the
bodies so approached were civic and commerce associations, rotary
clubs, and central labor bodies. Eventually this phase o f the work
should reach every important civic body in the State.
In dealing with a great many types of the handicapped the divi
sion has not found the problem o f choosing a vocation an especially
difficult one. So far as the leg impairments were concerned, the pre
sumption in most of the compensation acts that these are less serious
vocational handicaps than the arm and hand injuries was found to
be true. A much greater number of occupations was found for
which this type of injured could be trained than for those having
arm and hand impairments.. In the last-mentioned type the choice
of vocation was found to be entirely too limited. This has been to
such extent the case that the general principle usually followed, of
recommending a new line closely related to the old one, has been
abandoned where the disabled person is young enough to profit by
intensive training, and we have had no compunctions whatever about
directing these cases to wholly different occupations where the stress
was upon headwork.
The blind have also been an extremely difficult type so far as range
of occupations was concerned. In theory there should be a great
many processes that they could do, since they have the use of both
hands. Practice in ordinary business establishments, however, mili
tates against them, and the lines in which they are in demand are
extremely limited. Both these problems should receive the special
attention o f research work.
Another very difficult type is the arrested tubercular case. It is
very probable that when the rehabilitation work becomes widely
known and well established there will be great demand for its service
in this connection. The solution of what occupations tubercular
cases should be trained for is one that will require careful teamwork
on the part of the reeducation service and the antituberculosis
agencies.
A factor which often makes a very great difference as to the re
habilitation possibilities of a given case is that of age. It has been
quite interesting to us to note how variable this factor has been. It
seems to be largely a matter o f psychology. Some men in the early
thirties have declared that they could not learn anything new and
have been unwilling to take courses. Others with whom we have
dealt have been eager applicants and ready pupils even though their
ages ranged in the fifties.
Another point upon which your association will want full informa
tion is what new light, if any, the rehabilitation activities cast upon
154
IN D U S T R IA L R E H A B IL IT A T IO N I N M IN N E S O T A .
the compensation work. We have found these reflexes to be even
greater than we had supposed. To begin with, they instill a new
attitude in those who are dealing directly with the compensation
aspects of the case. There is something else to think about besides
the question o f whether the man gets the amount of money pro
vided for him under the law. Each compensation agent finds he
has to answer the question when a case is presented whether it is one
which will require rehabilitation, and if so, what advice in the matter
he can give to the division intrusted with the work. By increasing
the human phase of compensation work as opposed to the legal and
formal the new activity has contributed to the forces that will keep
compensation work from becoming perfunctory.
The rehabilitation service also secures what so many compensation
acts at present lack—direct contact on the part of the State agency
with the medical service given in serious cases. Early knowledge
can be secured o f inadequate care and the chance given the ad
ministrative body to order corrections. The same thing is true in
regard to prosthesis. The rehabilitation service is in a position to see
that the artificial members provided are the most practical, not merely
a nominal compliance with the law.
A new principle is also introduced for the guidance of the adminis
trative body in granting lump sums. It is clear that in any such
award the effect upon rehabilitation should be considered and the
advice o f the reeducation agency sought. This will be found to pre
vent many o f the mistakes in connection with lump sums which have
occurred m the past.
In the way o f supplying data absolutely essential as the foundation
o f the permanent partial sections of the compensation act, the re
habilitation service will be found invaluable. For the first time
the State will have an agency which is actually going to find out
what becomes of the permanently disabled persons. In the course
o f years full information will be accumulated as to the effect o f given
disabilities, and it will be possible to readjust our permanent partial
indemnities in a scientific manner. Meantime certain principles
will be so strongly brought to the foreground that early action can
be taken in amending compensation acts to conform to them.
One is that no permanent partial schedule should penalize re
habilitation by reducing compensation when the man is rehabili
tated. Another is that the permanent partial schedule should not
only not penalize, but should reward reeducation by including a
definite grant of compensation to take care o f maintenance during
the period when the man is undergoing training. Other things
which are even now pretty well established in some States are that
complete medical service should be given and that prosthesis should
be furnished as a part o f the medical expense. Probably the exist
ence o f the rehabilitation activity will also have an effect in tending
to bring within the scope of compensation act some of the occupa
tions now customarily excluded. It will be more feasible for the
State to rehabilitate all when all have the same coverage for their
industrial accidents. The injustice of refusing compensation to the
man injured while operating a thrashing machine will be more ap
parent when it is seen that he will have to secure his maintenance
out o f a public or private relief grant, while the man who suffers a
OSCAR M . S U L L IV A N .
155
rsimilar injury in a manufacturing plant will get his maintenance as
' a matter of right out o f an insurance fund. The impropriety of
railroad men continuing outside the scope of compensation acts
will be clear from the difficulties that the rehabilitation service will
have in learning of the railroad accidents and the delays in taking
training that will ensue because of the reluctance o f men to take re
education while their claims are pending in court.
I f the experience of Minnesota is typical, the expense o f the
rehabilitation service will be largely a matter of overhead. It is so
distinctly case work and individual work that any system which
operates with a small overhead will be certain to give inadequate
service. It is probable that not more than 100 cases per year can be
handled by any one rehabilitation agent. The cost will, therefore, be
high as compared with educational activities for strictly normal per
sons. There will be a considerable expense for personal service and
supervisory work to be added to the usual tuition and educational
expenses. The proper comparison is not, however, with ordinary
educational activities. The measure o f the value o f a rehabilitation
service will be the ratio of the amount spent upon it to the amount
of increase in the productive power and earning capacity of its
wards throughout the rest of their lives. When the data becomes
available for such a contrast in relatively accurate figures, there will
be no question whatever as to the enormous value to society of this
new activity.
In addition to the change in the compensation act providing for a
reeducation award which the department of labor is proposing, the
division of reeducation plans to ask for very little new legislation
at the forthcoming session. The maintenance problem it proposes to
approach slowly with a view to being certain of the steps taken.
Two special funds— one to take care of maintenance in cases o f im
pairments due to automobile accidents and the other to take care o f
similar injuries due to hunting accidents—it believes can safely be
proposed at this time. The necessary money can be raised by a very
small addition to the license charge in each case, or allocation of a
part o f the present license fees.
Summarizing and stating more explicitly some of the things merely
implied in the foregoing, we believe the experience of Minnesota in
one year o f rehabilitation service has been sufficient to warrant us in
drawing the following conclusions:
(1) A rehabilitation service must actively seek out its beneficiaries,
not wait for them to come to it.
(2) The vocational advisement given to impaired persons at an
early stage in their disability is of the highest value, being in itself
a sufficient reason for the existence of the work.
(3) An adequate rehabilitation service must deal with individuals
and with wide varieties of personal service, and must, therefore, have
a large overhead expense.
(4) Extended research is needed in each community to discover
the occupations for which the various types o f handicapped persons
are fitted. Especial attention should be focused on extending the
list of occupations available for one-handed and one-armed persons,
the blind, and the tubercular.
156
IN D U S T R IA L R E H A B IL IT A T IO N I N M IN N E S O T A .
(5) A persistent campaign of publicity and education must be kept
up in order to insure opportunities in employment for the handi
capped.
(6) Compensation laws should be amended so as to correlate as
closely as possible with the rehabilitation service.
The C h a i r m a n . The next speaker is Mr. Layton S. Hawkins, chief
of the Division for Vocational Education, Federal Board for Voca
tional Education. It is fitting that we should hear from a Federal
representative. I take pleasure in introducing to you Mr. Hawkins.
V O C A T IO N A L
R E H A B IL IT A T IO N
IN D U S T R Y
OR
FOR
PERSONS
D IS A B L E D
IN
O T H E R W IS E .
BY LAYTON S. HAWKINS, CHIEF, DIVISION FOR VOCATIONAL EDUCATION, FEDERAL
BOARD FOR VOCATIONAL EDUCATION.
Before I discuss at all the provisions of the Federal industrial
rehabilitation act I should like to take just a moment to tell you
what the Federal Board for Vocational Education is and what work
it is doing besides the industrial rehabilitation work. The Federal
board was created by an act of Congress early in 1917, to administer
a Federal act known as the vocational education act. That act pro
vided an appropriation which started in with a million and a half
dollars and which increases annually until 1926, when it reaches a
maximum of seven and one-half million dollars a year, to be allotted
to the States on the basis of population for purposes of vocational
education. That money was allotted to the States under certain
conditions, the first condition being that the State through its legis
lative authority should accept the provisions o f the act. In other
words, the Federal act did not simply make a gift of so much money
to the State without any act on the part of the State, but made it
available for the State, should it desire to use that money, provided
the State accepted the provisions of the act through its legislative
authority. Besides accepting the act it was necessary for the State,
through its legislative authority again, to create or designate a State
board for vocational education, to consist o f not less than three mem
bers, the duties of said State board being to cooperate with the
Federal board in the administration of this Federal act in the State
which that board represented.
There was set up, then, a board representing the Federal Govern
ment at Washington, and in each State of the Union which accepted
the benefits of the Federal act a State board for vocational education
representing the State, and all of the work done in that State by
the use of this Federal money to be done under the direction of the
State*board for vocational education. In other words, the money
apportioned under the vocational education act was allotted to the
State for the use of the State in its program of vocational education,
under the direction of a State board created or designated by the
legislative authority of that State. Now in 1918 Congress passed
another act, known as the Federal rehabilitation act, which provided
an opportunity for rehabilitation to the men discharged from the
Army and Navy who suffered disability and had a vocational handi
cap. That work was given to the Federal Board for Vocational
Education, and that work the Federal Board for Vocational Educa
tion has done directly as a Federal function. You will notice that
there is a distinct difference in the administration o f the vocational
education act and in the administration of the Federal rehabilita-
157
V O C A TIO N A L R E H A B IL IT A T IO N .
158
tion act. In the first case the work is done and Federal money is
used by the State board for vocational education in each State. In
the second instance, in the rehabilitation of the disabled sailors,
soldiers, and marines, the money is used by the Federal Govern
ment directly for the education of the disabled sailors and soldiers.
In the first instance the Federal Government does not send any
money to schools or institutions within the State. The money is
sent to the State treasurer and is paid out upon requests of the State
board for vocational education.
In the second instance the Federal Government does make arrange
ments directly with the schools and other training agencies which
are training disabled sailors and soldiers. Payments are made to
them directly and all the cases are interviewed by a representative
o f the Federal board and all eases are passed upon by representatives
o f the Federal board.
Through an act o f Congress approved by the President June 2,
1920 (now known as the industrial rehabilitation act), the United
States has established the principle that the Nation as a whole has
a share o f the responsibility for the vocational rehabilitation of
physically disabled persons who are vocationally handicapped by
such disability.
At the same time the principle is established in this act that direct
responsibility for carrying on the work of vocational rehabilitation*
rests upon the States. This act does not provide for any direct ormization or immediate direction o f vocational rehabilitation by the
ederal Government or its agents, but does provide for a period of
four years substantial financial assistance to the States.
The sum appropriated by Congress is to be allotted to the States
in the proportion which their population bears to the total popula
tion o f the United States. Provision is also made so that the annual
minimum allotment to a State shall be $5,000. The appropriation
for the States for the current fiscal year is $750,000, and for each of
the three succeeding years $1,000,000. The law further provides that
each dollar o f Federal money must be matched by at least another
dollar to be expended under the supervision and control o f the State
board fo r the same purpose the Federal money is being expended.
The sums thus made available seem very small in comparison with
the size o f the problem, but with the Federal Government and the
States committed to the principle there can be no doubt about suf
ficient funds being provided once the program is under way and the
specific needs determined.
f
F E D E R A L ASFD S T A T E
A D M IN IS T R A T IV E
A G rE H C lE S.
The Federal administrative agency, designated by the act, is the
Federal Board for Vocational Education. This board was created
by an act o f Congress approved by the President February 23, 1917,
and consists o f seven members, four ex officio and three appointed
by the President. They are the Secretary of Labor, the Secretary
o f Commerce, the Secretary o f Agriculture, the Commissioner o f
Education, and three citizens who represent respectively the manu
facturing and commercial, the agricultural, and the labor interests o f
the Nation. The State administrative agency pTovided in the indus
trial rehabilitation act is the board designated or created by the
L A Y T O N S . H A W K IN S .
159
State legislature as the State board for vocational education to co
operate with the Federal board in the administration of the voca
tional education act.
HOW
STATES M A Y
SECU R E
ALLOTM ENTS.
In order to secure its allotment the State must accept the provisions
o f the act through legislative authority, and the State board must
provide a plan o f work for the State which is approved by the Federal
board. The legislative act of acceptance must—
1. Accept the provisions of the Federal act.
2. Empower and direct the State board for vocational educa
tion to cooperate with the Federal Board for Vocational Educa
tion in the administration o f the act.
3. Provide for a plan of cooperation between the State board
for vocational education and the State board, department, or
commission administering the State workmen’s compensation
act, if the State has such an act.
4. Provide for supervision and support of the work to be done
by the State board for vocational education.
5. Appoint the State treasurer as custodian for the allotments.
In any State the legislature o f which does not meet in regular ses
sion between the date of the passage of the act and December 31,
1920, the governor of the State may accept the provisions of the act
and the State be entitled to its benefits until the legislature o f the
State has met in regular session for 60 days.
The plan submitted annually to the Federal board for approval
must show—
1. The kinds of schools, classes, or arrangements for group
or individual instruction and schemes of placement for which
it is proposed allotments shall be used.
2. The plan of administration and supervision to be followed
by the State board.
3. The qualifications o f administrative officers, directors, su
pervisors, teachers, and other employees necessary for carrying
on the work.
4. The character and kind o f courses o f instruction.
5. The methods of instruction to be used.
6. Plans for training supervisors and teachers.
It is the duty o f the Federal board to examine these plans and
approve the same if believed to be feasible and found to be in con
formity with the provisions and purposes o f the act. The Federal
board must certify on or before the first day of January of each year
to the Secretary o f the Treasury each State which has accepted the
provisions of this act and complied therewith, including the amounts
which the State is entitled to receive. Once the plan for the State
is approved by the Federal board, the administration of the act in
the State is in the hands o f the State board for vocational education,
with the Federal law and the State plan as the plans and specifica
tions to guide the work.
B E N E F IC IA R IE S U N D E R
THE ACT.
It is the evident intent o f the Federal act that all individual cases
shall be handled by the State board where the case is located, and
that the specific determination of eligibility o f cases will be a mat
160
VO C A TIO N A L R E H A B IL IT A T IO N .
ter to be passed upon by the State board for vocational education.
It may therefore be assumed that the Federal board is expected to
adopt only general policies of eligibility for the guidance o f State
boards in administering the act within the States.
Section 1 o f the act states that it is the purpose of the act “ to pro
vide for the promotion of vocational rehabilitation o f persons dis
abled in industry or in any legitimate occupation, and their return
to civil employment.” This is a comprehensive provision, and would
seem to make eligible for receiving the benefits of the industrial
rehabilitation act any person who is or has been engaged in a legiti
mate remunerative occupation and is suffering from a physical disa
bility which is or may be expected to be a vocational handicap and
who is considered by the State board for vocational education as
able to be returned to a remunerative occupation after completing a
vocational rehabilitation course.
Section 2 of the act provides that “ the term 4persons disabled ’
shall be construed to mean any person who, by reason of a physical
defect or infirmity, whether congenital or acquired by accident, in
jury, or disease, is, or may be expected to be, totally or partially
incapacitated for remunerative occupation.”
No portion o f the appropriations made by the act may be used by
any institution for handicapped persons except for the special train
ing o f such individuals entitled to the benefits of this act as may be
determined by the Federal board. This is evidently intended to ex
clude persons who are committed to custodial, correctional, or penal
institutions, and persons who are physically or mentally incapable
of profiting from vocational instruction, or who are too young to
enter upon such instruction.
G U ID IN G P R I N C I P L E S .
The United States, and in fact, the world in general, has very little
experience on which to base a program of vocational rehabilitation.
Probably the largest experience is that coming from the efforts of
various countries to rehabilitate the persons disabled in the recent
war. The work o f soldier rehabilitation is widespread, and while
it has been impossible as yet to draw many general conclusions, there
is growing up throughout the country a body of experience which
will be most valuable in establishing and carrying out a program of
vocational rehabilitation for persons disabled in civil life. The
training agencies and the individuals who are taking part in the
program of soldier rehabilitation are gaining an experience which
in time can be and probably will be made use of in industrial
rehabilitation.
Some of the States have already made a beginning in the field of
industrial rehabilitation through the workmen’s compensation com
mission or other State agency. The industrial rehabilitation act
specifically provides for use of such experience already gained or to
be gained in the future by requiring a cooperative arrangement
between the State board for vocational education and the State
board, department, or commission administering the workmen’s com
pensation act, if the State has such an act. This plan of cooperation
should provide for the close coordination of all o f the activities o f
L A Y T O N S. H A W K IN S .
161
both boards so far as they relate in any way to the problem of
rehabilitation.
Compensation and rehabilitation legislation are a part of a pro
gram of social legislation, and as such should be complementary and
closely coordinated, not only in drafting legislation, but in the ad
ministration of the same.
A ll of the experience which is available indicates—
1. That the agency in charge o f the work should adopt the
policy o f going after the man and getting information to him
concerning the opportunities for vocational rehabilitation,
rather than of waiting for the disabled person to come to the ad
ministrative agency and prove his case.
2. That the case method is the only feasible way o f handling
the problem.
3. That advisement, training, and placement is a continuous
and continuing process.
4. That neither formal school classes, as at present organized,
nor placement without training, will solve the problem, but that
many if not the large majority of cases require individual train
ing.
STATEM ENT
OF T H E
PROBLEM .
The problem may be summarized as follow s:
1. To get in touch with the possible beneficiaries under the
act.
2. To determine those who are eligible to the benefits of the
act and award training.
3. To provide a systematic method of personal advisement to
prospective beneficiaries.
4. To provide suitable training for those who accept the
award.
5. To continuously advise and supervise all cases through
training, including placement.
6. To keep accurate records which may serve as a basis for
guidance ol TI persons who are engaged in the work in the
State and in otlier States.
The working out of such plans will involve establishing relation
ships with various social agencies in the State which deal with dis
abled persons. For example, the State compensation commission,
labor department, public health service o f the State, hospitals (public
and private), Red Cross, labor organizations, chambers of com
merce, and other State and civic bodies.
In many instances it will be necessary to secure more support in
order to enable the disabled person to take advantage of training.
Information concerning possibilities of vocational rehabilitation
under the act will need to be widely disseminated. The activities
incident to rehabilitation therefore cover much wider fields o f social
endeavor than the mere educational and training activities. In
undertaking to provide rehabilitation for the disabled adult a State
needs to coordinate all useful agencies within its borders to secure
successful cooperation so that the end sought by this legislation may
be realized.
26039°— 21-------11
VO C A TIO N A L R E H A B IL IT A T IO N .
162
Broadly speaking, the problems o f rehabilitation group themselves
around three stages in the restoration of the individual from the
time of injury to successful employment:
Stage 1. Physical and mental rehabilitation.
Stage 2. Education and training.
Stage 3, Placement, including follow-up.
P H Y S IC A L A N D
M E N T A L R E H A B IL IT A T IO N .
As the result of the work o f the Federal Government in dealing
with disabled soldiers, and as a result o f the work of a few public
and private hospitals and sanatoriums, and the State agencies which
have attacked the problem, occupational therapy—that is, those
activities which promote physical and mental restoration o f the
injured person—has received in the last six years a tremendous
impetus. The success o f training courses will in many instances
depend upon the thoroughness with which the therapeutic work has
been conducted, especially when such work is for the purpose o f
restoring the function o f muscles and limbs. It is quite within the
realm o f possibilities for well-equipped hospitals so to organize a sys
tem of shops that the two ends of functional restoration and vocational
training may be carried on coincidentally. Modern hospitals, espe
cially those which deal with large numbers of u industrial accident ”
cases, are equipping themselves to conduct work in occupational ther
apy. A series o f shops as suggested above will provide opportunity
for functional restoration and the best possible vocational advisement
based on concurrent industrial operations which may be organized in
“ try-out” courses. Such try-out courses may have a distinct value
as vocational guidance and prevocational courses, and there can be,
under the best possible management, no clear-cut distinction between
some o f the activities heretofore classified as occupational therapy,
vocational guidance courses, prevocational training, or preoccupational activities.
It is important that at the earliest possible moment during the
period o f convalescence the volunteer or paid representative o f the
State board acquaint the victim o f accident or disease with his possible
rights under the laws o f the State regarding compensation and re
habilitation. It is equally important that every effort be made to
acquaint him with the accomplishments o f other men suffering from
similar disabilities. This work will have a tendency to counteract
the almost inevitable discouraging effects o f industrial accidents.
The purpose should be to inspire in the disabled man the belief that
by availing himself o f the resources provided by the State, he may
overcome the effects of disability. I f this mental state can be in
duced, and the hospital has organized activities in the manner sug
gested above, it will be a relatively simple matter to induce him to
participate in the activities for which provision has been made.
Through the cooperation o f the hospital authorities and the agents
o f the State board, looking toward an employment goal, the man
can be assisted to make a wise choice of an occupation, and the
hospital training made to contribute to that end. A training course
can readily be planned, and the whole round o f activities from voca
tional advisement to employment can be a continuous process of
rehabilitation.
L A Y T O N S. H A W K IN S .
163
The question has frequently arisen as to the place of “ general
education ” in a scheme o f rehabilitation. General education has a
place in the training course for many men, because the degree of edu
cation which they have at the time of disablement does not provide
a sufficient foundation to permit of vocational training for an occu
pation which can be followed to advantage by the man. For example,
for many reasons one of the most difficult cases to rehabilitate is that
of the illiterate man who had prior to his disability manual strength
as his greatest asset in the general labor market. I f this asset is re
moved by industrial accident or disease he suffers from a double
handicap—illiteracy and lack of skill. He can not compete with the
skilled worker in the general labor market, and his ability to com
pete with others has been removed because of his disability.
The determination of the occupational goal, in the light of all
the information that can be seeured during the period of hospital
treatment, taking into account the man’s previous education, his
previous occupational experience, his ambitions, desires, and family
circumstances, are included in what is commonly known as vocational
advisement.
Broadly speaking, information collected as the result o f activi
ties during the period of convalescence will be valuable in propor
tion as it is based upon directed experience in organized “ try-out ”
courses. Whatever engages the man’s interest and keeps him from
being discouraged is a proper therapeutic measure, and has a legiti
mate place, but all activities from the vocational rehabilitation
standpoint must be judged by the manner in which they contribute
to a vocational aim and purpose. At this time few hospitals are
organized to give training courses which can be classified as voca
tional. This is a development for the future. All well-advised
attempts in this direction, however, should be encouraged, and the
results of experiments carefully weighed and made available for the
information of State boards and other hospitals.
The State board should seek the cooperation of the many agen
cies which can contribute to the development of a plan of vocational
advice to convalescent men. I f the determination of the occupa
tional goal can be arrived at by the time the man is ready to be dis
charged from the hospital, or so far recovered from injury that he
may begin training, a great advance will have been made over our
present methods of dealing with the industrially disabled. This
decision will affect the whole subsequent life of the disabled person.
It is important, therefore, that the one who assists a disabled per
son to reach so important a decision (the vocational adviser) should
be responsible to the State board, which in turn is responsible for
vocational rehabilitation. Preferably the adviser should be the per
son who will follow the man through his training and employment.
Nothing is more confusing to a disabled man than conflicting advice
regarding his future. The direction of medical and surgical care
o f an individual case is intrusted to one person as long as the case
requires medical treatment. It is equally important that the direc
tion of the vocational rehabilitation of an individual should be in
trusted to one responsible person. Persons interested in the welfare
o f a disabled man should recognize the responsibility of the voca
tional adviser in relation to vocational rehabilitation just as they
recognize the responsibility of the physician for physical rehabili
164
V O C A TIO N A L R E H A B IL IT A T IO N .
tation. There need be no fear that a responsible adviser will attempt
to determine autocratically what a disabled person shall do. A per
son big enough to hold the position will know enough to call expert
consultants to his aid just as the physician does in his field. The
competent adviser does not choose a vocation for a disabled person.
He does assist the disabled person to choose a vocation which satis
fies the ambitions of the disabled man himself and at the same time
is feasible for him to follow.
E D U C A T IO N A N D
T R A IN IN G .
A man must know his occupational goal before he can attain it.
Training will be most effective and pointed when his whole thought,
energy, and ambition are tied up in thorough preparation for a
specific job. With many men it will at the outset be difficult to state
in terms o f a specific job the occupation for which training is to be
given, but such a selection should be made before training is begun.
During the initial stages o f training in such cases consideration
should be given to such modification or changes as may be found nec
essary as the training develops. In most cases it should be possible to
make the determination definite enough so that changes in the selec
tion of a specific job will be changes within a given occupation.
Such definition of objective puts purpose, definiteness, ambition, and
enthusiasm into the training. The entire range o f studies, opera
tions, in fact all the elements o f the training course, can be judged
in the light o f their bearing upon the job for which the man is pre
paring. These are fundamentals o f real vocational training.
Training or “ job preparation ” for the particular vocation in mind
may be had in school or on the “ jo b ” or both. I f in school, great
care must be taken to make certain that the course of study really
affords job preparatory training. It is equally important if the
training is given on the job that care be exercised to see that the man
is really being trained rapidly and intensively to meet the demands
o f the occupation, and not being retarded in his training because o f
production. Under no consideration should every rehabilitation case
be regarded as first a school case and then a placement training case.
Disabled men often discover their vocational training needs on the
job to better advantage than in the school.
Formal courses as laid out by institutions, commercial, trade,
agricultural, and others, must be adapted to specific “ job prepara
tion.” When men are to be trained on the job, occupations must be
analyzed in terms o f “ jobs,” the elements of the “ job,” the skill
necessary to perform the “ job,” and the training necessary to develop
the skill. In all training a course which will lead to satisfactory
placement in the job must be planned and supervised. Only by such
analysis, planning, and supervision will it be possible for the adviser
o f the man (the agent of the State board), or the disabled man
himself, to become quickly aware of training which is being incor
rectly directed, or is not in line with the advisement or actually de
manded by the conditions o f employment. Such analysis if followed
will further show the feasibility of the training originally mapped
out for the man.
The factors determining the probable effectiveness o f any train
ing plan which may be proposed as a means of assisting the person
to attain his objective are:
L A Y T O N S. H A W K IN S .
165
1. An instructor who is himself competent in the occupation
and who in addition can guide and direct the trainee in acquiring
the essential knowledge and skill required for successfully fol
lowing this occupation.
2. A course of instruction which includes provision for acquir
ing all the essential knowledge and skill o f the occupation.
3. An arrangement o f the course in a series of progressive
steps from easy to difficult.
4. Surroundings and equipment for instruction so controlled
that attention can be focused at first upon learning and gradually
transferred to actual employment conditions.
5. The length of the course (in hours) proportionate to the
amount of skill and degree of knowledge required by the occupa
tion and instruction* Time divided so as to secure these to the
trainee.
6. Provision for a transition into employment.
The following may be outlined as the task of the State board in
training a disabled man to overcome a vocational handicap and re
turning him to civil employment:
1. To follow up the advisement and make arrangements for
starting the training for the job for which the man is to be
trained. A t this time the kind and amount of training to be
given should be determined approximately.
2. To supervise the training both as to quantity and quality,
in order that—
(a) The man may get purposeful intensive training.
(b) The State board may have information on which its
administrative acts may be based.
3. To place the man in suitable employment in his chosen
occupation which, in the majority o f cases, should be the job on
which he has received placement training.
4. To keep in touch with the man until the State board is
sure beyond a reasonable doubt that he is a success on the job.
PLACEM ENT.
Training may be considered as completed when the trainee is able
to earn wages equal to those paid to other workers; in the same type
o f job. Vocational rehabilitation is not completed until the trainee
is placed in the job for which he has been trained and it has been
demonstrated that he can hold it in competition. Training men for
jobs which they can follow only under sheltered or controlled conditions is not the aim o f vocational rehabilitation. In special cases o f
such severe disablement that a man can at best be only a partially
competent worker special employment conditions are justified and
should be sought. Sound advisement will always have in view the
final placement o f the disabled man in a job under normal com
petitive conditions. Usually the advisement and training wTill be
successful for an adult in proportion as they take into account his
present abilities and desires built upon his previous experience and
efforts.
The State board for vocational education is charged w~ith the
direct responsibility for placement of the disabled persons who have
been trained. At the game time these boards should make every
166
VO C A TIO N A L R E H A B IL IT A T IO N .
attempt to secure the cooperation of other agencies engaged in place
ment work and organizations interested in or knowing about possi
bilities of placement for these men. Such agencies would include
public employment agencies, employment managers’ associations,
labor organizations, volunteer societies and organizations, as well as
individuals who can be interested in the rehabilitation of the dis
abled. The training and return to employment of disabled persons
is a social movement and should be so regarded by administrative
boards in charge of the work.
The passage of the Federal industrial rehabilitation act and the
provision for State boards to administer this work in the various
States offers an opportunity to coordinate all of the efforts wThich
have thus far been made into a national organized movement. State
boards for vocational education have a large responsibility and with
the work wisely directed society should receive a large return for the
investment which it is making.
DISCUSSION.
The C h a i r m a n . There are three speakers in the discussion.
Thomas F. Konop, of the Wisconsin Industrial Commission, will
speak for F. M. Wilcox.
Mr. K o n o p . After listening to sueh interesting talks upon a subject
that is so new, I can have very little to add. From a practical stand
point and results we know very little about the subject. Up to the
present time we have had mostly talk and very little done. But it
took a whole lot of talk before we adopted workmen’s compensation
acts. We thought for a long time that they were inapplicable to
American industry. Like all great forward movements, the subject
of rehabilitation will undoubtedly be much discussed in the future,
not only by the public-spirited but by legislators and politicians as
well. I do not need to tell this audience that it is an important work,
a humanitarian work; that it is a great forward movement—a step
in the right direction. I do not know of any movement in the past
or to come that will do more good, bring more cheer to the unfortu
nate, alleviate discontent and pay more in dividends to the public
than the work of rehabilitating the unfortunate cripples. The work
of rehabilitation of the disabled soldiers of the late wrar is progress
ing with some success, and we are learning more and more about this
movement, and these experiences will help us in the work of rehabili
tating the industrial and congenital cripples.
Up to the present very little or no effort has been made by Federal
or State authorities to reclaim and rehabilitate those whose misfor
tune it has been to become maimed or crippled either by accident or
through disease. These unfortunates have been abandoned to society.
They have become objects of charity, both public and private. They
have been stricken from the list of the world’s producers—a bur
den to themselves, to their relatives, and to society. The little
that is now done under our compensation act to help the industrial
cripple is indeed small when compared to what can be done by proper
rehabilitation work. Rehabilitation work must go farther than
medical and surgical aid and payment of compensation. It must do
more than the mere replacing of the cripple in industry. To these
must be added training, both mental and physical, and proper super
D IS C U S S IO N .
167
vision. Under present compensation acts the injured are furnished
medical, surgical, and hospital treatment and paid fairly liberal
compensation. But that is not enough. The injured has suffered a
sort o f a mental shock; his whole mental attitude has been changed,
A sort o f a fear comes over him. He thinks that he has lost his use
fulness and will be unable to earn a living for himself and depend
ents. He fears being thrown upon public charity for support. Con
fidence in himself has gone. There is nothing that a man loves more
than independence— the feeling that he is mentally and physically fit
to go through life a self-supporting man, a doer and producer for
himself and family. It is here where rehabilitation work must com
mence. It is during this period of convalescence, when the injured
is liable to let himself get into a hopeless state o f mind, that a public
representative of this work must come into personal contact with the
patient. The patient must be impressed with the fact that the power
and wealth o f the Government is back o f him ; that it is interested in
him; that it is the Government’s desire to reinstate him in active
industrial life, fit him for work again, and make him self-supporting.
There are really five stages in proper rehabilitation work: (1) Com
petent medical and surgical treatment; (2) personal contact for
mental adjustment; (3) proper training; (4) proper placement; and
(5) supervision.
The first is now provided under our compensation laws, the sec
ond will necessarily require a considerable force o f field men, and
for the third proper institutions for training must be provided, and
for this many existing institutions can be adapted. The fourth can
be done by the field men and our public employment bureaus, and the
fifth by the administrative staff and the field men. It is readily seen
that the work is in a large measure individual work. It will require
a great number o f public servants, and hence liberal appropriations.
Before the work can become successful and merit public support it
must be made general, as general as education now is. In most o f
our jurisdictions, if not all, compensation laws do not apply to farm
labor. In Wisconsin— and that is probably true in other jurisdic
tions— we are shy on statistics on the kind and number o f cripples
on the farms. These unfortunates on the farm undoubtedly get
along better than others, and we find less o f dependency and charity
among them. However, in order to impress our many farm legis
lators with the importance o f this work we must show by facts and
figures that we will also reach the cripples on the farm and make
our work general. Our departments must get after these facts and
be able to show the legislatures what can be done to help all. In
Wisconsin we are just beginning to gather this information.
Although the work appears hardly possible o f proper achievement,
the number o f individual cripples who will require rehabilitation
work will not be so large. Take, for example, Wisconsin. In the
past five years— 1915, 1916, 1917, 1918, and 1919—there was a total
o f 73,190 compensable industrial accidents reported (this, o f course,
does not include accidents that are not compensable, such as farm
labor and employees where there are less than three men). O f
these 73,190 accidents reported 904 were fatal cases, 32 permanently
totally disabled, and 4,743 permanently partially disabled. O f these
4,743 only a small portion o f them are really in need o f rehabili
tation work, Taking the more seriously permanently disabled, those
168
V O C A TIO N A L R E H A B IL IT A T IO N .
with the loss of arm, hand, and all fingers, and possibly adding to
this three fingers of one hand, loss of the thumb and two, three, or
four fingers, and loss of the foot or leg, would probably be the only
ones who would come in for rehabilitation work. O f course some o f
those who are not permanently totally disabled would also come
in for the work. That would mean that in Wisconsin out o f 4,775
permanently disabled there would be only 1,451 with the more
serious permanent disabilities who would require more or less re
habilitation work. That would mean that for the past five years in
Wisconsin only 30 per cent o f the permanently disabled in industry
would come in for rehabilitation work.
Now, as to the papers that were presented here. We certainly
appreciate the exhaustive discussion of this subject by Mr. Hawkins.
ITe probably knows more about the subject than all the rest of us
put together. He has given us a fund of valuable information that
we needed, and I am sure we will try to follow his leadership and
direction.
I think that we must all take our hats off to Oregon, which has
made such a wonderful start in this work. Mr. Kirk says that his
legislature appropriated $100,000 for this work and tied no strings
to the appropriation. Those of us who have had any experience in
trying to get money from legislatures know that this is a very liberal
appropriation. The Legislature of Oregon should be commended
for the way in which it took hold of this subject. I think that in
the instances cited by Mr. Kirk Oregon is doing real rehabilitation
work. The commission is carrying out fully the five stages of the
work that I have mentioned. I am glad to note that it is making
use of existing trade schools and that it has the cooperation o f em
ployers in this work. From what we know o f Oregon it will not only
succeed but will lead in this work.
I was very much interested in Mr. Gleason’s paper. I can not
agree with Mr. Gleason’s criticism of the employment service. I f
what he says is true of the employment service in Massachusetts it
is indeed a sad commentary on the employment service in that State.
In Wisconsin we have been making a special effort in our employ
ment offices properly to place workmen, and wTe have succeeded fairly
well. Quoting from Mr. Gleason the following w ords: 64The test
o f work of this character is whether the men make good at the jobs,
and the longer they stay after once being placed the greater the suc
cess, provided, of course, the man secures the right kind of opportu
nity with increased pay. We do not count pay as being a measure o f
success; it is rather the contentment of the man and also his ability
to please himself and his employer in his work ”—I am satisfied that
Massachusetts has been doing proper and judicial placement work,
rather than rehabilitation work. They have been simply doing one
o f the things necessary in this work. I think that if this work is
to be a success the emphasis must be placed on the training and re
education of the cripples for industry. Reeducation should be not
only for operations but for particular trades and occupations. I
was glad to hear Mr. Sullivan discuss this subject. There are some
things, however, about which I do not agree with Mr. Sullivan. I
do not believe that the department o f education, which has charge
o f our academic schools, should be recognized as the proper agency
to administer this great work. I think this work, to be properly ad
D IS C U S S IO N .
169
ministered, must be administered by the industrial accident boards
and the boards of vocational education acting together. The cases
cited by Mr. Sullivan of the picture framer, the painter, the young
Scandinavian at the technical high school, and the garage man
exemplify real rehabilitation work. The case of the young Scandi
navian at the technical high school shows that this training and re
education of cripples can not now be done in our existing elementary
schools and high schools. This o f itself is proof that the depart
ment o f education, which has control over these schools, is not the
proper department to take charge of this work.
I confess that in Wisconsin we have done very little rehabilitation
work; practically none. The State board o f vocational education,
however, has a field man in its employ on this work, and the indus
trial commission of the State has a woman in its employ on this
work. They cooperate readily in this work, but, as stated before, we
are just beginning. Thus far our State has not accepted benefits
under the Federal act. The industrial commission and the State
board o f vocational education have the matter up with the governor
at the present time, and we will probably accept the provisions of the
act before the legislature meets in January.
The C h a ir m an . I want next to present a man who has a peculiar
place in this program, in my opinion, and I have the best reason in
the world for calling on him now. Judge A. E. Graupner, attorney;
o f the California Industrial Accident Commission, has made a close
study o f the question of industrial rehabilitation. He is engaged at
this time in fighting a case against our rehabilitation act before the
Supreme Court, and his research has been as thorough as it possibly
could be. But the thought I have in mind is this, that when war was
declared Judge Graupner entered the officers’ camp, and it wasn’t
very long until he was over in Franee, and on the fighting line at the
Argonne he fell severely wounded. The first report we received was
that it was likely that he would not come back to us. Fortunately,
while his injury was serious, after some months he was able to return
to this city, where he is well known, and to-night we have him with
us, seemingly in excellent health, but not in as good health as
before; he made a tremendous sacrifice for us, and for every man,
woman, and child who respects the principles for which America
stands. In paying tribute to Judge Graupner in this respect I feel
I am doing it for everyone present, and with pleasure I present to
you our judge.
Judge A. E. G raupner, attorney, California Industrial Accident
Commission. I want to compliment Mr. Hawkins on his frank state
ment concerning the Federal Vocational Board, and I want to im
press upon you the lesson his words should carry to you. As a
legioner, I became the trouble shooter for the American Legion in
California, and from the time I was discharged from the hospital
here in San Francisco I have been the one to whom those men who
were disabled and who were dissatisfied with the vocational training
board have been sent. In the months running from May of 1919 to
January 1 o f this year I think my figures show the handling o f
some 151 cases. Since the first of this year my figures are some
thing like 38 cases, the decrease being due to the complete change
in the Federal vocational training viewpoint. At first it was the
170
V O C A TIO N A L R E H A B IL IT A T IO N .
educator’s point of view which projected itself onto the wounded
man. That gradually became tempered, but still, as Mr. Hawkins
said, there were three fields o f action in dealing with the injured man.
In taking up rehabilitation on the industrial side, my feeling is
that we must consider rehabilitation merely as compensation, as the
highest and ideal form o f compensation; that is compensating a man
in the truest sense, placing him back where he is a useful citizen once
more. We owe it to the man and we owe it to the Nation, as every
man in this Nation is a potential asset of the Nation. I f we don’t
consider him, then we are untrue to our Nation. In the next place,
we must look upon the man, as has been said, as a problem, each man
to be dealt with and handled individually, and perhaps this is the
most difficult feature o f our rehabilitation work.
In the first place the man’s confidence must be obtained. In the
second place it must be discovered exactly what he wants, and, re
gardless o f terms used, to find in exact terms what he thinks he can
do and what he wants to do and as nearly as possible set him at that
work. There are men, o f course, who desire to fly to the moon and
lack wings even to leave the earth, and of course we are going to
have a difficult time with those men. W e must do this work with
sympathy, and do it as compensation work. Those are the two big
factors.
Now just one word about an administering body. I might say
much concerning the bill Mr. Hawkins discussed. I have my fears
about some o f the operations o f that bill when it comes to the desig
nation by a State legislature o f the exact nature o f the committee
that shall cooperate with the Federal Government. But be that as
it may, whether the action on the part o f the State legislature
be wise or unwise, there is to my mind no body in any State
having an industrial accident commission as well situated to ad
minister compensation to the individual as the industrial accident
commission; first, because the industrial accident commission, if it
is worth anything at all, has the confidence o f the m en; the employee,
the employer, and the insurance carrier all .know it. The industrial
accident commission has the statistics concerning that man’s rating,
it has the surgeon’s reports concerning his injury, it has the complete
history, and it can get contact at less overhead expense. Here is the
situation. A man was wounded and treated in the Government
hospital. His entire record went to Washington, and was lost there.
He came to the insurance bureau for compensation. He was rated,
and on to Washington went those records. He came for vocational
training and had to undergo a complete examination and rerating.
There was a good deal o f expense there. That expense should be
saved so that the funds o f the States can be used for the giving o f
this new compensation, rehabilitation to the individual, and the in
dustrial accident commission in administering these laws in the
various States can save very much of that overhead by handling the
industrially crippled.
There is another item that must be considered, and that is that the
industrial accident commissions, through their safety departments
and various other departments, are making a comprehensive study
o f employment placement. They are in contact with the employers,
and to my mind the greater part o f the rehabilitation work can be
D IS C U S S IO N .
1711
handled by them, because they know the employer. And so, to con^
chide a rather hasty argument, I will say that I believe that the
administration, as far as the industrial cripple is concerned, should
be and really belongs in the hands of the industrial accident com
mission, beeause economy and efficiency are served thereby.
The C h a ir m an . The last speaker is Dr. C. B. Connelley, commis
sioner o f Pennsylvania.
Mr. C. B. C onneijley, commissioner, Pennsylvania Department o f
Labor and Industry. I wish that many people in this country had
heard these papers to-night. It seems to me that the States, after
all, have a certain specific function to perform and will do it in their
own way. Massachusetts believes it is almost impossible to have any
school in Massachusetts train any of these cripples. Mr. Kirk has
an entirely different idea o f it. But much good will come from what
we have heard to-night. In Pennsylvania we have five distinct loca
tions where we try to get the cripples back into life and into occu
pations. I believe what Mr. Kirk has said, that i f we do not look
upon this thing as charity we will be able to get somewhere very
much sooner than we would ordinarily.
W e have to begin with the illiterate, one who can not read or
write in his own language—he is a common laborer—and we have
to take that person and re-create him. To give you an idea of just
what we have here in Pennsylvania, the age groups o f 396 who have
registered with the bureau are of interest. O f the total o f 396 reg
istrants, 70 are under 21 years of age, 104 are between 21 and 30, 85
are between 31 and 40, 67 are between 41 and 50, and 70 are over 50
years o f age.
The problem in Oregon is different from that in New Y ork; the
problem in Pennsylvania is different from that in Massachusetts;
the problem in California is different from that in Wisconsin; but
when you consider what we are trying to do here* it means much
for the advancement o f this great country o f ours. We had the
employment managers meet with us in Pennsylvania to see what
we could do with these crippled men in placing them again. We
knew enough of the schools, because we are functioning with
the department o f education. W e knew considerable of the SmithHughes bill, because we were parties in that, and for 10 years tried
to get the legislators at Washington to see what we were doing; the
work Mr. Hawkins told you o f to-night and which, as the good judge
told you, is something that is going to reconstruct this whole educa
tional industrial system of ours. We asked the men in Pennsyl
vania who were employing men if they wouldn’t take it upon them
selves, after these men came out o f the hospital back into the shops,
to help in placing them again, and they agreed to do that.
We have so many men who have to have artificial limbs, arms, etc.
We were careful not to give these people always just what they asked
f o r ; we wanted them to take a certain amount o f responsibility. I f
the men lose limbs the corporations and firms for whom they worked
now buy limbs for them; but when we began the injured ones
bought them themselves. We believe that while the responsibility
is on the State, the people who are paying for it are the corporations,
and that we can do too much for some o f these people. We can not
172
V O C A TIO N A L R E H A B IL IT A T IO N .
do too much for the soldiers, but we believe they should be taught
that we will help them if they will only help themselves.
I am sorry there are not more people in the United States who
know just what the rehabilitation act means. I am sorry that they
do not know that what we are striving for is the re-creation of these
people who have been injured, but if we can get the safety-first movement in the public school system o f the United States, and have it
understood just what it means, and have the cooperation, as we have,
o f the Federal Government, it will not be long until this institution
o f ours here will come into its own and be recognized as a savior of
humanity in the United States.
The C h a ir m an . Is there any further business to come before this
session ?
Mr. G ardiner. May I take a couple of minutes to make a statement
in connection with this rehabilitation?
The C h a ir m a n . Can you confine it to two minutes ?
Mr. G ardiner. Yes. Before I ever had any connection with the
labor department I entered the service of the Great Northern Rail
road Co. as machinist in 1898, and came in touch with an industrial
cripple with his arm off at the elbow, who had been given occupation
by the Great Northern officials, with a sufficient wage to support his
family until he had educated himself on a particular machine, where
for 10 years he had been paid full machinist’s wages. Another was
a man who was paralyzed from the hips down. He was given a
chance by the company to educate himself in air-brake work. He
received instructions from the man, whom he later succeeded, who was
in charge o f the air-brake room and who also gave instructions to men
in handling air brakes on equipment. That was before industrial
education or rehabilitation was thought of.
The C h a ir m a n . To-morrow, at the conclusion of the morning
session there will be a picture taken of the delegates and visitors, in
Union Square Park, right across Powell Street.
I f there is no objection the session will adjourn.
TUESDAY, SEPTEMBER 21—MORNING SESSION.
CHAIRM AN,
GEORGE A . KINGSTON, COMMISSIONER, ONTARIO W O RK M EN ’ S COM
PENSATION BOARD.
COMPENSATION COSTS.
Mr. F r e n c h . The chairman of this morning’s session is Mr. George
A. Kingston, of the Ontario board. Mr. Kingston has the advan
tage o f having attended these sessions, I think, more frequently than
any other member of the International Association. The association
was formed in the city o f Lansing, Mich., by, of course, a very small
group, and the first real convention was held in Seattle, in 1915, and
ever since that time Mr. Kingston has acquired and fully developed
the convention habit. We are certainly glad to have him take the
trip from Toronto, because his experience and ability in our particu
lar line of work have made him one o f the leaders in compensation
history. Those who attended the Toronto convention will always
remember the way Mr. Kingston handled that gathering and the
splendid entertainment he was the means of furnishing us.
The C h a ir m a n . The first item on the morning program is a paper
by Mr. Downey, special deputy of the Pennsylvania Insurance De
partment. Mr. Downey is not here, but I may explain that his paper
takes the form of a report of the committee on statistics and com
pensation insurance cost, one of the standing committees of the Inter
national Association. His paper is printed, and while there is a good
deal o f table detail in it, those of you who wish to go into that matter
will have the opportunity of doing so by reading his paper, which
will, o f course, be published, in the convention proceedings.
173
METHODS OF COMPARING COMPENSATION COST.
S i x t h r e p o r t o f t h e c o m m i t t e e o n s t a t i s t i c s a n d c o m p e n s a t i o n in s u r a n c e c o s t .
BY E. H. DOWNEY, COMPENSATION ACTUARY, INSURANCE DEPARTMENT OP PENNSYL
VANIA.
[This paper was submitted but not read.]
Ease and diversity of social experimentation is commonly thought
by the admirers of a federal system of government to be one of its
outstanding advantages. Successful experiments, so it is claimed,
will be widely imitated while those that prove disadvantageous will
expend their untoward results within a restricted area. Whatever
be the merits of this theory, its practical working is admirably illus
trated by the workmen’s compensation system 01 the United States
and Canada. Every known form of insurance and every imaginable
diversity in the scale of benefits are somewhere being tried within the
confines o f North America. It only remains to make this super
abundant experimentation fruitful by providing facilities for the
comparative study of results.
A comparative study of compensation cost in different jurisdictions
and under different plans of insurance should throw much light upon
the questions: What is a reasonable scale of benefits ? What is the
most effective administrative organization ? Which is the most effi
cient type of insurance carrier ? To serve these several uses, the com
parative study must comprise at least the following four analyses:
(1) Total cost of the compensation system;
(2) Cost of compensation insurance;
(3) Administrative as distinguished from insurance cost;
(4) Compensation benefits in relation to wages lost on account of
industrial injuries.
Obviously, such a comparison can be made only upon the basis
of uniform statistical ana accounting methods. Much of the work
of your statistical committee for the past several years has converged
upon this problem, and the standard tabulations recommended o y
that committee, if consistently earned out, would afford the data
requisite for intelligent comparisons. It is the object of the present
paper not to propose further statistical tabulations, but merely to
outline in some detail the analyses needful to a comprehensive view
of compensation cost.
1. T O T A L COST OF C O M P E N S A T IO N S Y S T E M .
The entire cost of the compensation system consists in the benefits
paid to injured workmen and their dependents (including the cost
of medical care), the expenses and profits of insurance carriers, the
analogous ^expenses of noninsured employers, and the cost of adminis
trative supervision on the part of the State. No comparison of
compensation cost in different jurisdictions which leaves any of these
elements out of the account can be either adequate or conclusive.
174
E, H. DOWHEY.
175
Yet it is perhaps not too Bruch to say that a full statement of com
pensation cost is nowhere disclosed by the published records of any
State or Province in North America. Even the gross amount of
compensation benefits incurred in any given period is known for
comparatively few jurisdictions. Some States give full returns for
insurance carriers, omitting the experience of noninsured employers,
which is commonly from one-fourth to one-half of the total; others
omit all medical and hospital costs; others, still, publish the amount
of compensation awarded within the year irrespective of the year
of occurrence of the injuries for which the awards are made. The
overhead expenses of private insurance carriers are published by
some half dozen States; the analogous expenses oi noninsured
employers are nowhere a matter of record. Administrative costs,
lastly, are published in some detail by a few boards and commissions,
but are a wholly unknown quantity in those States which are blessed
with court administration. In short, the present state of public
records is such that any attempt to compare gross compensation
cost as between any two jurisdictions, however conscientiously made,
will yield only conjectural results.
2 . COST OF C O M P E N S A T IO N I N SITUA N C E .
The cost of compensation insurance is to be distinguished, on the
one hand, from the benefits paid to injured workmen and their
dependents and, on the other hand, from the cost of governmental
administration. Neglect of these obvious distinctions has befuddled
many attempted comparisons of insurance costs.
From a social standpoint the crucial question is the relative
efficiency of different types of insurance carriers, which in its cost
aspect resolves itself into the relative cost of paying the same benefits
and performing the same insurance services. Insurance cost, in this
sense, is the difference between premiums and benefits, commonly
spoken of as the expense ratio. To compare expense ratios, how
ever, it is first of all necessary to obtain an accurate measure of both
premiums and benefits.
Compensation insurance is primarily a means of securing the
payment of compensation benefits and of distributing the cost thereof
among insured employers. Most insurance carriers, in addition,
undertake to investigate and adjust compensation claims, to make the
actual payments, and to promote industrial safety by inspections
and propaganda. The several types of insurance carriers— stock,
mutual, and State fund— differ among themselves in the degree in
which these services are performed, in the sources from which their
revenues are drawn, and in the expenses imposed upon them by
their methods of doing business. Private insurance companies,
whether stock or mutual, derive their whole revenue from premium
income,8 are usually subject to tax, and are burdened with heavy
competitive expenses. State funds, whether competitive or monopo
listic, are tax-exempt and often receive a substantial subsidy from
the State; monopolistic funds are further favored by exemption from
the very heavy selling costs imposed upon all competitive insurers.
Participating carriers, lastly, including State funds, return to their
8 Investment earnings, of course, bulk large in the income of insurance companies, but the investments
themselves are derived ultimately from premium income.
176
M E T H O D S OF C O M PA R IN G C O M P E N SA T IO N COST.
policyholders, in the form of “ dividends/’ any excess of premium
collections over actual requirements. Any fair comparison of
insurance costs must evidently take account of these differences and
must reduce the premiums of the several forms of insurance, as
nearly as may be, to a common denominator.
(a) The cost to the public of stock-company insurance is repre
sented by premiums less taxes.9
(b) The cost of mutual insurance (including reciprocal and partici
pating stock-company insurance) is represented by premiums less
taxes and dividends to policyholders. For the present purpose an
earned surplus which is indubitably held for the benefit of policy
holders is to be accredited to dividends.
(c) The cost of State-fund insurance is represented by premiums,
less dividends to policyholders, plus any subsidy received from the
State.
In the case of several monopolistic funds such subsidy is to be
distinguished from the cost of administering the compensation act,
apart from State insurance.10 Where no separation of functions is
made in the published accounts the cost of compensation adminis
tration may perhaps be taken as a fair offset to the premium tax
paid by private insurance companies.
Against the premiums as thus ascertained are to be set the benefits
paid or payable by insurance carriers. Here, again, pains must be
taken to secure comparable figures.11 The more severe disabilities
and costly claims mature slowly so that those incurred in any given
year can not be ascertained with much accuracy until the lapse of a
considerable time. Even on matured losses a period of four or five
consecutive years is necessary to give representative results.
Furthermore, private insurance companies state their losses, other
than life pensions, at terminal values; i. e., without discounting
future payments for interest and mortality. This method of state
ment, as a matter of course, considerably exaggerates the amount of
compensation, particularly in the low-benefit States. Any accurate
comparison must reduce all losses to a uniform present-value basis by
the use of standard interest, mortality, and remarriage tables.12
The difference between benefits incurred and premiums earned,
when ascertained upon a uniform basis, constitutes the true cost of
compensation insurance. It is obvious from' what has been said
as to the lack of uniform statistical and accounting methods that 110
exact comparison can at present be made as among the several types
of insurance carriers. Roughly, however, it may be said that the
expenses and profits of stock companies, after deducting taxes,
will average, over a period of years, about 35 per cent of premiums,
or 60 per cent of benefits. The corresponding expense ratio of repu
table mutual companies13 varies from 15 to 20 per cent of premiums
9 State and Federal taxes range in different jurisdictions from 2J to 5 per cent of premiums. A fair
average is 3^ per cent of stock-company premiums.
Compare Downey, Audit of the Ohio State Fund, p. 48.
ii The tabulations of premiums and losses compiled from the annual statements of insurance carriers and
disseminated by such publications as “ B e s t s ’ * and the “ Spectator” are simply crude misinformation.
A2 The several mortality tables in use for computing compensation annuities—the American Experience
Table, the British Healthy Male? Table, the Danish Survivorship Annuitants’ Table, and the Carlisle
Table—all differ markedly among themselves. Probably the General Population Mortality Table, con
structed from the United States Census, would be more suitable for the purpose than any of the foregoing.
The interest rates used for compensation reserves are likewise variously taken at 3, 3|, and 4 per cent.
13 Some mutual companies show an expense ratio as high as 40 per cent of premiums, but this is to be
attributed to exploitation of the mutual plan by insurance promoters.
E. H . DOW NEY.
177
or from 25 to 33 J per cent of benefits, and the management expenses
of State funds ranges from 5 to 15 per cent of premiums and from 6
to 25 per cent of benefits. Stated in other terms, the overhead cost
of carrying $1 in compensation benefits is about 60 cents by the stockcompany plan, 25 or 30 cents by the mutual insurance plan, and
something less than 10 cents by the plan of compulsory State in
surance. How far these wide discrepancies in expense ratios are
offset by a difference in insurance services is, in the present state of
statistical records, mainly a matter of opinion. It does not appear,
however, from any evidence in hand that the private insurance com
panies are more liberal in the settlement of compensation claims or
more prompt in the making of payments thereon or more secure
against ultimate insolvency than the compulsory State funds.
To employers the most interesting comparison of insurance costs
is that between net premium rates. Within a single jurisdiction
such comparisons are readily made and are a legitimate selling argu
ment. As between different jurisdictions, however, a fair com
parison of premium rates is next to impossible. In the first place, the
published or manual rates of private insurance companies are sub
ject to increase or decrease by merit rating, with decreases decidedly
preponderating. The amount of such decreases, and consequently
the ratio of effective to manual rates, varies markedly from juris
diction to jurisdiction. Thus in Pennsylvania the correspondence
between manual and effective rates is much closer than in New York,
whereas in Illinois there is scarcely any definable relationship be
tween manual rates and the rates actually collected. In the second
place, the classifications are by no means uniform even as between
private insurance carriers and still less so as between monopolistic
and private insurance carriers. Manifestly no fair comparison can
be made between the Pennsylvania rate of $3.85 for stevedoring
and the New York rate of $27 for stevedoring, n. o. c., because the
Pennsylvania rate covers all longshore employees, whereas the New
York manual provides a half-dozen rates, from 79 cents to $27, all
applicable to the same employees on the same job. Furthermore,
the distribution of premiums as between stock and mutual com
panies, and the mutual dividend rate, vary from State to State and
from one industry to another, which variations are not disclosed in
the published reports of any State. Lastly, the scale of compensa
tion benefits is different for every State and for every class of in
jury, in so much that no ready conversion of one to another is at all
ossible. For all these reasons premium rate comparisons between
tates as commonly made are calculated rather to mislead than to
inform. The object sought in such comparisons— to show the saving
effected by one type of insurance as against some other— is far more
accurately and more readily attained b}^ the method of expense
ratios already explained.
E
3. A D M I N I S T R A T I V E A S D IS T IN G U IS H E D
F R O M IN S U R A N C E COST.
Under whatever system of insurance, the State commonly provides
some sort of tribunal for the adjudication of claims and exercises
some supervision over claim payment and over the direct settlement
of those claims which do not come before a public tribunal for formal
adjudication. Many States further undertake to supervise the rates
26039°—21------12
178
M E T H O D S OF C O M PA R IN G C O M P E N S A T IO N CO ST.
and reserves of private insurance carriers. There is also commonly
some attempt, at least ostensibly, to compile statistics of industrial
accidents. These functions are here subsumed under the rubric
“ Compensation administration/7 The cost of compensation admin
istration as so defined is nowhere large in proportion to the volume
of compensation payments— probably from 2 to 5 per cent of com
pensation benefits. The precise cost, however, is nowhere readily
ascertainable.
Administrative costs include the salaries of officials and employees
engaged in compensation administration, traveling expenses incident
thereto, rent, heat, light, postage, telegraph, telephone and express
charges, office equipment, supplies, and printing. Where, as is often
the case, office space, heat, light, janitor service, equipment, supplies,
and printing are not charged to the specific appropriation of the ad
ministrative board or department, the fair value thereof should be
approximated or the exclusion of these items clearly noted in the pub
lished reports. Court costs are likewise to be taken account of— a very
considerable, even if unascertainable, item in those jurisdictions which
rely upon common-law courts for the adjudication of compensation
claims.
Accounting methods of the several States are so extrelnely diverse
and so many items of expenditure are habitually omitted from the
published reports that comparative statements of administrative cost
are little to be trusted. Even were all expenditures known, com
parisons would be worse than useless without a clear analysis of the
administrative work actually performed. In direct cost to tax
payers, court adjudication without any administrative supervision
of claim settlement, as in Alabama, is doubtless cheaper than any
effective administration— as it is also indubitably more productive
o f unconscionable settlements and of wholesale short changing in the
payment of claims. By the same token, the administrative board
which most nearly approaches the faineant ideal of common-law
courts will make the most favorable showing in point of minimum
expense. To serve any useful purpose, in short, administrative
accounts must exhibit the volume and quality of work performed as
well as the itemized cost thereof— the number of cases disposed of and
how, the number of claims disallowed and why, the number of hear
ings postponed, adjourned, or appealed, the amount of attorneys ’ fees
approved, the usual time required for the adjudication of an ordinary
disputed claim, and, above all, the effective waiting period, or length
of time elapsed upon an average between the occurrence of a com>ensable injury and the actual commencement of payments. For this
atter purpose a frequency distribution of waiting periods, as well as
the weighted average for different insurance carriers, will be highly
useful. It is a singular fact that this vital matter of promptness of
claim payment has been consistently ignored in the heated conten
tions over the relative merits of State and private insurance. The
fragmentary and scattered data heretofore published14 appear to indi
cate that the record of all insurance carriers under this head— stock,
mutual, and State funds— is intolerably bad but that noninsured
employers bear the palm for willful neglect, delay, and short changing
of claimants.
{
14 For Illinois, in the Annual Reports of the Industrial Accident Board; for Ohio, in Audit of the Ohio
State Fund; for Pennsylvania, in Monthly Labor Review of U. S. Department of Labor.
E. H . DOW NEY.
4 . C O M P E N S A T IO N B E N E F I T S I N
R E L A T IO N
179
TO W A G E S L O S T .
Compensation benefits under different laws may be compared either
for thepurpose of measuring the relative adequacy or inadequacy of the
benefits themselves or for the purpose of determining proper relative
insurance rates. Comparison of benefits wTith respect to adequacy is
of deep social significance but has heretofore received little attention;
comparisons for the purpose of insurance rate making or of exhibiting
or explaining differences in insurance cost are extremely common
and controversial.
The common method of making such comparisons, down to a very
recent date, was the theoretical “ law differential/7 which purported
to show the relative cost of compensating 100,000 accidents in an
assumed ustandard7' distribution of severity of injury.15 Law
differentials so obtained, expressed in the form of flat multipliers,
have been applied indiscriminately to all industries, and have been
made the basis, not merely of comparison between compensation
acts as a whole, but of innumerable insurance rate computations.10
The fallacies of this method are too obvious and too generally
admitted to require extended discussion. No 2 compensation
acts, among the 50 or more in the United States and Canada, stand
in uniform relationship as respects death benefits, permanent total
disability benefits, permanent partial disability benefits, minor dis
memberment benefits, temporary disability benefits, and medical
benefits. The nominal percentage of wages, the weekly and total
minima and maxima, the waiting period, the basis of compensation
for death and permanent disability, the period for which such
compensation shall continue, the time and money limits upon medical
aid— all vary widely and erratically from State to State in such wise
that no conversion multiplier which holds for one class of injuries will
hold for any other. As between New York and Pennsylvania, for
example, the aggregate ratio of benefits is probably in the neighbor
hood of 2 : 1. But the ratio of death benefits is more nearly 1.5 : 1;
of permanent total disability benefits, 4 : 1; of specific indemnities
for loss of hand, 2.4 : 1: for loss of eye, 2 : 1 : of medical benefits,
perhaps 1.1 : 1.
A flat or average law differential is thus necessarily a composite of
dissimilar ratios and will hold only for those industries which con
form to the “ standard” distribution of accidents with respect to
severity of injury. But no given industry does in fact conform to
this standard. A glance at the accompanying table will show the
extreme divergence of representative industries in the proportion
of each kind of benefits to total compensation cost. Since the ratio
of benefits as between any two States— e. g., New York and Penn
sylvania— is different for each class of injuries and since the severity
distribution of injuries is different *for each industry, no composite
ratio which is true for the aggregate of all industries will hold for any
given industry. Since, moreover, the industry distribution of the
15 Th© “ Standard Accident Table” for this purpose was constructed by Dr. I. M. Rubinow, and the fin
ished method of “ law differentials” was mainly his work. An earlier computation, by very similar
methodsr based upon Wisconsin experience, was published by the present writer and Mr. S. Bruce Black
in the August, 1913, Bulletin of the Industrial Commission of Wisconsin,
io If, for example, the “ law differential" for Pennsylvania is 1.35 and for Ohio 1.85, the method assumes
1 85
that the compensation cost per $100 pay roll for any industry under the Ohio law is
or 1.37 of the
cost experienced under the Pennsylvania law.
180
M E T H O D S OF C O M PA R IN G C O M P E N SA T IO N COST.
two States is very different, a flat differential computed upon a theo
retical standard distribution of industries is true for neither. Theo
retical law differentials, in short, however computed and for what
soever purpose used, are a delusion and a snare.
l.-P R O P O R T IO N OF EACH KIND OF BENEFITS TO TOTAL COMPENSATION
COST, PENNSYLVANIA COMPENSATION INSURANCE EXPERIENCE, 1916-1918.
T able
Percentage attributable to—
Industry classification.
All industries...................
Anthracite mining...........
Bituminous mining.........
Stone quarrying...............
All manufacturing...........
Blastfurnaces...................
Rolling mills.....................
Iron foundries...................
Machine shops..................
W oolen manufacturing...
Silk manufacturing..........
Brick manufacturing.......
Glassware manufacturing
Building construction___
Masonry n. o.c.................
Carpentry n .o .c ..............
Structural-iron erecting..
Department stores...........
omitted).
Total
compensa
tion cost.
Death
Major Tem
and
perma perma porary
Medical
nent
bene
nent
disa
fits.
disa bility.
total
disa bility.
bility.
$2,724,709
49,661
263,689
22,477
1,166,432
10,410
78,437
34,690
75,441
35,273
49,919
26,107
20,895
170,399
10,715
15,854
3,575
57,320
$19,853,597
1,369,461
4,783,283
416,580
6,962,619
172,138
552,514
308,157
505,951
113,943
48,897
238,761
55,709
2,042,345
184,574
257,976
179,775
78,035
23
16
16
17
32
Pay roll
exposed
(000
21
26
30
39
31
40
20
54
19
18
30
15
29
The so-called “ experience differential” 17 is but a refinement upon
the theoretical law differential and is subject to much the same
weaknesses, though not to the same degree. By this method death
and permanent total disability benefits are taken at the average value
developed by the experience of the State and industry for which
insurance rates are to be projected while other benefits are compared
by means of a complex calculation which may be briefly expressed as
follows:
f N e w Y o r k p a y ro ll X P a • pu re p r e m iu m 18
N e w Y o r k losses
________________P a. losses________________
P a. p a y r o l l X N . Y . p u re p re m iu m .
These two computations are carried out for each of a selected group
of representative industries and the mean of the two composite ratios,
or some, correction thereof or approximation thereto, is selected as
the true law differential or “ conversion multiplier” for all industries
deemed to be analogous in respect to the severity distribution of
injuries. Such conversion multipliers may be computed separately
for each class of benefits or two or more kinds of benefits may be
lumped together. In either case the resultant multipliers are used
to convert the losses experienced in one State to the level of benefits
obtaining in the other.
17 The experience differentialmethod was suggested as far back as the general rate conference (augmented
standing committee) of 1917 by Messrs. A. H. Mowbray and S. Bruce Black. It was first applied by the
Pennsylvania Compensation Rating and Inspection Bureau in 1918. The method has since been devel
oped and refined by Messrs. A. H. Mowbray, W. W . Greene, George Moore, and others, and was applied
by the National Council on Workmen’s Compensation Insurance of 1920 in the general rate revision.
is Pure premium= - *osses .
pay roll
E. H . DOW NEY.
181
Detailed criticism of this method of comparing compensation, costs
would be out of place in the deliberations of this body and would
far overpass reasonable bounds. Suffice it to say that the method is
inapplicable to permanent partial disabilities and is inadequate for
the comparison of either temporary disability or medical benefits.
It is inapplicable because the rates and periods of compensation
allowed by different acts for the several classes of permanent partial
disabilities; as loss of arm, hand, leg, foot, eye, or fingers, bear no
constant ratio 19 and because the frequency distribution of these
injuries is different for different industries, injuries to the eye pre
dominating in quarries, coal mines, and foundries, injuries to the
hand in bake shops, laundries, and woodworking establishments,
finger injuries in paper box and sheet metal ware manufacturing.
(See Table 2.) Tiie method is inadequate even for medical and
temporary disability benefits because the conversion ratios for these
benefits under different laws vary with wage levels and with the
frequency distribution of disabilities in respect to duration. The
true conversion multiplier for any class of injuries as between different
scales of benefits is not the same for anthracite as for bituminous
mining, for iron foundries as for steel foundries, for carpentry as for
concrete work, for drivers and chauffeurs as for retail stores. The
method of experience differentials breaks down in practice because
it necessarily assumes a composite or average ratio, the same for
all or for many industries, whereas the true ratio is specific to each
industry.
T able
2 .—FREQUENCY DISTRIBUTION OF PERMANENT PARTIAL DISABILITIES,
PENNSYLVANIA COMPENSATION INSURANCE EXPERIENCE, 1916-1918.
Industry.
Per cent of all major permanents involving loss or
Major
loss of use of—
perma
nents per
1,000
com
pensable
accidents.
Arm.
Hand.
Leg.
Foot.
Eye.
All industries............
Anthracite mining__
Bituminous mining..
Quarrying..................
All manufacturing...
Baking........................
Rolling mills..............
Steel foundries...........
Machine shops...........
Planing mi 11s.............
Building construction
50
43
45
68
47
5
50
54
66
22
40
Pennsyl
vania.
’
Loss of arm....................................................................................
Loss of hand..................................................................................
Loss of leg......................................................................................
Loss of foot___^............................................................................
Loss of eye.....................................................................................
215
175
215
150
125
New York.
312
244
288
205
128
Ratio.®
2.41
2. 32
2.23
2.28
1.71
19The specific indemnity periods (number of weeks) for enumerated major permanent disabilities in
the New York and Pennsylvania acts compare as follows:
aHaving regard, to wage limits
182
M E T H O D S OE C O M PA R IN G C O M P E N SA T IO N COST.
There is but one reasonably accurate method of comparing compen
sation cost under contrasted scales of benefit: By actually applying
both scales to the accident experience of the same industry m the
same jurisdiction. If it be desired, for example, to ascertain the
probable cost of compensation for bituminous coal mining in Penn
sylvania under the New York scale of benefits, it would be neces
sary to make an individual valuation, under the New York scale, of
the deaths and permanent disabilities experienced in the bitumi
nous mines of Pennsylvania20 and to make a similar valuation of
temporary disabilities and minor permanents distributed into wage
and duration groups. For medical benefits, lastly, the effect of the
differing time and money limits would have to be evaluated from a
eost-per-case distribution, such as recommended in Table 5 of your
committee on statistics. The same procedure applied to the aggre
gate accident experience of Pennsylvania would give a measure of
the total difference in cost between the two scales of benefits. Th q
ratio so obtained, however, would not hold for particular industries
nor would the reciprocal of this ratio hold for the aggregate accident
experience of New York.
The statistical method of benefit comparison is so laborious and
involves so much detailed analysis- that it is not likely to be em
ployed unless for the purposes of some special study or for insur
ance rate making. Insurance companies have hitherto resorted to
unscientific and inaccurate short cuts because they have been un
willing to compile intelligible statistics of their own experience.
If, however, compensation insurance rate making is ever to be
placed upon a scientific footing, detailed statistical analyses of
accident experience can not be avoided.
Comparisons of compensation insurance cost and of benefit scales
for mere rate-making purposes have played a part in public discus
sions altogether disproportionate to their real importance. From a
social standpoint the decisive fact of any compensation system is
not its aggregate nor its relative cost, but the relationship of the
benefits paid thereunder to the economic loss imposed upon wage
workers by reason of industrial injuries. To make good this loss is
the professed object of the compensation system; for any short
coming therein low insurance rates are, socially considered, but a
poor recompense.
To the wage earner and his family the direct cost of an industrial
injury is the wage loss during disability plus the cost of medical and
hospital care. In case of death or permanent disability neither
wage loss nor the capitalized value of earning can, it is true, be ac
curately ascertained. Wages of the same individual fluctuate from
time to time and periods of unemployment are of uncertain incidence.
Nevertheless, just as earnings at the time of injury are made the basis
of compensation, so the same earnings will serve for an approximate
estimate of wage loss.
For this purpose wage loss on account of temporary disability may
be taken at the number of weeks’ disability times the average weekly
earnings of the injured. For death or permanent total disability,
wage loss may be taken at the present value of the average weekly
20 A very competent actuary, taking the actual dependency and wage distribution of 800 fatalities in
Pennsylvania coal mines, estimated the average increase in death benefits by the compensation act amend
ment of 1919 at 10 per cent. An individual valuation of the same cases showed that the actual average in
crease was only 5 per cent.
E. H . DOW NEY.
183
earnings of the injured for his working life expectancy. The wage
loss on account of permanent partial disability may be estimated
by applying the scale of severity rating recommended bv your com
mittee on statistics.
It will not be claimed that such a computation is meticulously
accurate. It will, however, give a standard gauge of the adequacy
of compensation. By applying such a computation to the accident
experience of a given jurisdiction and comparing the total with the
compensation paid or payable for the same accidents we will obtain
an index of the adequacy of the compensation system in that juris
diction and this index will be directly comparable" with the like index
for other jurisdictions. If such a computation should give an index
of compensation to wage loss equivalent, say, to 0.40 for New York,
0.30 for Ohio, and 0.20 for Pennsylvania, these three index numbers
would give at once a useful comparison of compensation cost and a
measure of the inadequacy of compensation benefits in each of these
States. It could be fairly said, not only the benefit scales of these
three States, taken as a whole, stand in the ratios to each other of
40, 30, and 20, respectively, but that each and all fall greatly short
of reasonably adequate compensation.
I am convinced that your association could do nothing of broader
public usefulness than to establish such a standard gauge of ade
quacy. State officials, employers, legislators, and the public have
been very complacent with respect to the American compensation
system. The public press, as also most discussions of the subject,
leave the impression that the nominal percentage of wages expressed
in the compensation acts represent the actual relationship between
compensation and wage loss. So in the legislative hearings in Penn
sylvania it was repeatedly emphasized that the act of 1915 aimed to
divide the cost of industrial accidents equally as between employers
and employees and the amendments of 1919 were objected to on the
ground that the nominal 60 per cent would increase the employer’s
share to three-fifths. The bold fact is that on any reasonable esti
mate of wage loss the benefits payable under the Pennsylvania com
pensation act of 1919 will amount to not more than 20 per cent of
the economic cost of industrial accidents, to say nothing of occupa
tional diseases. The individual wage earner and his family in Penn
sylvania still bears, not one-half, but four-fifths, of the wage loss in
cident to industrial injuries. Even in New York, industry pays
much less than half of the direct economic loss imposed by work
injuries upon wage earners. These facts should be brought forcibly
before the public. And nothing will make the facts so vivid as a
tabulation of compensation in relationship to wage loss.
Whether the compensation insurance cost for bituminous coal
mining is 3 per cent, 5 per cent, or 10 per cent of wages is of very little
social importance. The effect upon the retail price of coal will be
nearly negligible in any event. But whether the victims of coal-mine
accidents are to be thrown upon their resources or provided for
through an adequate compensation system is a matter of high pub
lic moment. It is time to shift the interest of public administrative
bodies from the comparative cost of different plans of insurance to
the adequacy of compensation benefits.
The C ha ir m an . The next item on the program will be a paper by
Mr. Hookstadt, of the Bureau of Labor Statistics, at Washington, on
184
M E T H O D S OF C O M PA R IN G C O M P E N SA T IO N COST.
“ Service, security, and cost under different systems of compensation.”
Mr. Hookstadt has gone very exhaustively into the different systems
of the various jurisdictions comprising this international association.
And I don’t suppose there is any other man here, or in touch with the
work in the United States or Canada, who is able to put his finger
here, there, and everywhere on the weaknesses of our various compen
sation systems. As I say, he has made a very special study of this,
and we are to have the benefit of some comparisons which he will
make in this morning’s paper.
COMPARISON OF COMPENSATION INSURANCE SYSTEMS AS TO
COST, SERVICE, AND SECURITY.
BY CARL HOOKSTADT, EXPERT, UNITED STATES BUREAU OF LABOR STATISTICS.
P U R P O S E OF T H E I N V E S T I G A T I O N .
For the past three or four years the Bureau of LaDor Statistics
has received numerous requests from State legislators and others
for information regarding the relative merits of different types
of insurance under workmen's compensation. Heretofore the bu
reau has been unable to furnish such information. The bureau
began in 1919 an investigation of compensation insurance systems.
The field work of this investigation has just been completed. The
points upon which information was particularly sought were the
relative costs, security, and service of the various types of insurance
carriers. The question of costs included both cost of insurance and
the cost of administration. The question of security covered security
both to employers and to injured workmen. As regards service,
three tests were taken into consideration, viz, (1) promptness of
compensation payments, (2) adequacy or liberality of payments,
including liberality of interpretation of the laws, and (3) accident
prevention work.
SC O P E A N D
M ETHOD.
The investigation covered 21 States and 2 Canadian Provinces, as
follows:
E x c l u s i v e S t a t e f u n d s . — B r itish C o lu m b ia , N e v a d a , N orth D a k o ta , O h io, O ntario,
O regon, W a sh in g to n , W e s t V ir g in ia , an d W y o m in g .
C o m p e t i t i v e S t a t e f u n d s . — C alifornia, Colorado, Id a h o , M a ry la n d , -M ich ig an , M o n
tan a, N e w Y o r k , P e n n sy lv a n ia , an d U ta h .
S t a t e s h a v i n g n o S t a t e f u n d s .— Illin o is , In d ia n a , M assachusetts, M in n eso ta, an d
W iscon sin .
The industrial commission of each of the above States and Prov
inces was visited. The records and procedure in each State were
examined and studied first hand. Particular attention was given
to the following subjects: Accident reporting; claim procedure and
method of compensation payments; method of handling permanent
partial disabilities; formulation of insurance rates; auditing of pay
rolls; computation of reserves; merit rating; and declaration of
dividends. A few of the States had made special studies or had
tabulated data which were utilized to some extent by the bureau in
its investigation. The Illinois, Michigan, and Pennsylvania commis
sions had made studies relative to the promptness with which comensation payments had been made by the different insurance carriers,
n New York the Connor investigation furnished pertinent informa
tion. Most of the information, however, was obtained directly from
the books and records of the commissions.
Every State and Province visited gave me access to all its material.
The present report is only tentative. It is not complete. The
investigation was completed only a month ago, and there has not
been time to tabulate and arrange and correlate in full the amount
of information received.
f
185
186
C O M PA R ISO N OF C O M P E N SA T IO N SY ST E M S.
D E S C R IP T IO N
OF F U N D S.
It might be advisable to describe the various State funds. There
exists a general lack of information as to what State funds are,
what they are doing, and how they are doing their business. The
State funds are of two general types, the exdusive State fund and
the competitive. Nine exclusive State funds were studied. These
vary somewhat among themselves. Ontario, British Columbia, and
Washington are of the same type. In these both compensation
and insurance are compulsory. No private insurance or selfinsurance is permitted. rJevada and Oregon are a little different
in that compensation is not compulsory but elective. If the em
ployers in tuese States elect compensation, they must insure with
the State fund. Neither private companies nor self-insurers are per
mitted. Ohio and West Virginia permit self-insurers to do business,
but private companies are excluded.
There are nine competitive funds. Of these six are under the
supervision and jurisdiction of industrial commissions which admin
ister the funds. In some of the competitive States— for example, in
Montana— the fund is an integral part of the commission; in other
States the fund is practically independent, as it is in California.
In States in the latter class the commission formulates the general
policies of the fund and then appoints the manager and grants him
relatively complete control of the fund; in the former the commis
sion retains greater administrative control over the fund. Two
State funds (Idaho and Michigan) are under the jurisdiction of
insurance departments. The Pennsylvania State fund is under a
specially created board, which appoints the manager and has charge
of the fund.
A statement should be made as regards the amount of business
written by the several State funds. The stock companies in general
wrote about $91,000,000 in premiums during 1919. This figure was
arrived at by Prof. Whitney, of the National Workmen’s Compensa
tion Service Bureau. It does not include quite all of the stock
companies, but approximately $91,000,000 was written by them last
year. The mutual companies wrote $27,000,000,21 and the State
funds wrote $33,000,000. The premium income of the State funds,
if written at the stock-company rates, would be larger than that,
because their premium rates are usually lower than the stock com
pany rates. The stock companies, therefore, wrote 60 per cent of
the business; the mutuals, 18 per cent; and the State funds— taking
them as a whole, competitive and exclusive— 22 per cent.
The amount of business written by the competitive State fund
varies in the different States. It ranges from 4 per cent in Michigan
to about 49 per cent in Montana. The average of all the competitive
State funds is 13.2 per cent; i. e., they write 13. 2 per cent of the
insurance business in the competitive States. California wrote about
35 or 36 per cent last year, and I understand it has gone up to about
40 per cent. Pennsylvania and New York, the next largest funds,
write about 12 per cent. These figures are only approximate but are
sufficiently accurate for present purposes of comparison.
Two or three of the State funds have very considerably increased
their premium income since their establishment. The California fund
21 Data furnished by Mr. E. S. Coggswell, manager National Association of Mutual Casualty Companies.
CARL H O O K ST A D T .
187
has grown very much, and so has the Montana fund. The New York
and Pennsylvania funds have increased somewhat, but the others have
remained about stationary. The fact that some of these write very
little of the compensation business is due to various causes. One
reason is that they have not sufficient employees to go out and get
business. Among some State funds, it is the avowed policy of those
in charge not to solicit business, but simply to take whatever comes
to them. They would have the State fund function as a sort of last
resort to take the business not wanted by the other companies, and
consequently they have no particular interest in increasing the size
of the fund. In one State, from all available evidence, it seems that
those in control of the fund are more interested in its failure than in
its success. Then, too, in most of the States the fund must meet the
continual hostility of private insurance carriers. These are some of
the reasons which account for the lack of progress of some of the State
funds.
G E N E R A L C O M P A R IS O N O F S T A T E F U N D S W I T H
P R IV A T E IN S U R A N C E .
I wish next to compare in a general way State funds with private
insurance carriers. .But in order that the comparisons between
different States and between different types of insurance may be
accurate, it is necessary to take into account several factors, Among
the more important of these are the following: Variations in the pro
visions in the various laws; methods of procedure; methods of wage
payments in the different localities; the size or area of the State; and
the nature of the industries.
Moreover, it is practically impossible to compare State funds as a
whole with stock companies as a whole, with mutual companies as a
whole, or with self-insurers as a whole, for the reason that there are
such great variations within each type of insurance. Some of the
State funds are more efficiently managed and give better service than
any other type of insurance carrier. On the other hand, some of the
State funds are badly managed and give poorer service than other
types of insurance. As examples of the best funds, I would cite Cali
fornia for the competitive fund, and Oregon, Nevada, and British
Columbia for the exclusive State funds. At the other end of the line
I would cite Idaho and Michigan for the competitive fund and West
Virginia for the exclusive fund. The same variations, however, exist
within the stock companies. I find some stock companies performing
very good service, but there are others that do not. The same may be
said of the mutuals and the self-insurers. There are self-insurers who
pay full wages, even giving more than the law specifies. Other selfinsurers do not. So it is difficult to compare one type with another
type. I would say, however, that on the whole, comparing the best
State funds with the best insurance carriers, the State funds are
superior. They are certainly superior as regards cost; they are equal
as regards financial security; and they are a little better as regards
service. I shall take up those points more in detail later on, but
before doing so I wish to present a few general impressions received
as a result of my investigation.
Problems peculiar to competitive system.— Certain problems con
front commissions in competitive insurance States which do not
exist under an exclusive State fund system; In the last analysis
a comparison of different types of insurance carriers resolves itself
188
C O M PA R ISO N OF C O M P E N SA T IO N S Y ST E M S.
into a comparison of exclusive with competitive systems. From an
administrative standpoint a competitive State fund is not much dif
ferent from a private insurance company. Under an exclusive fund
system the commission does things. There are no technicalities to
nurse, no interminable squabbles, no long delays waiting for the insur
ance companies to report on a case, no wasting of the commission’s
time in long drawn out hearings. The commission simply ascertains
the facts from reports and investigations and then awards compen
sation. In a competitive State the commission, instead of doing
things, sees to it that somebody else does the work. The commission
supervises, follows up, and checks up the insurance carriers who are
supposed to make the payments. It takes almost as much time and
costs as much money and requires as many employees to do the
follow-up work, if it is to be done adequately, as it does to do the
work originally.
Under a competitive system the commissions are inclined to govern
their administrative practices and to propose statutory amendments
to suit the convenience o f insurance carriers and employers rather
than the interests of the injured workers. For example, you heard
Mr. Pillsbury say, in discussing the California partial disability
schedule, that the schedule must be definite; otherwise, the insur
ance companies would not know what rates to charge. You see
that emphasizes that point. W e are inclined to forget that a
compensation law is a workmens compensation law. It is not an
employers’ compensation law, nor a physicians’ compensation
law, nor an insurance companies’ compensation law, nor a com
pensation law for the benefit of those •who administer the law.
It is for the employee, and the interests of everyone else should be
subordinated. Yet these questions continue to crop out, “ How will
this affect the insurance company? If we don’t have a definite
provision in the law, we can’t do this or that.” Under the exclusive
State fund it does not make any difference. Rates can be increased or
decreased to meet contingencies as they arise and nobody is seriously
affected. As an illustration, Oregon this year increased its benefits
30 per cent. This was a flat increase, retroactive, and applied to all
persons receiving compensation benefits at the time. The addi
tional cost was met, I believe, out of the surplus of the fund. But
had there been no surplus the commission might have increased its
rates. This could not be done under a competitive system, because
the premiums were collected on the basis of the former benefits.
Again, under the competitive plan you have a dual system of ad
ministration. In an exclusive fund State, accidents are reported to
the commission only; under a competitive system, accidents are
reported by the employer to the insurance company and also to the
commission. Furthermore, under the latter system both the in
surance company and the commission must receive and investigate
compensation claims, which results in unnecessary duplication of
effort. In discussing the question of getting prompt and uniform
accident reports, compensation commissioners argue somewhat as
follows: “ The insurance company wants its accident report first.
We don’t need it right away. We can’t expect the employer to make
reports to two different bodies or at two different times; therefore,
we don’t require it.” Again, you see it is the idea of serving the
employer or the insurance company. The interests of the workman
CARL H O O K ST A D T .
189
are subordinated. These problems— these difficulties of adminis
tration— do not exist under an exclusive State fund system. While
the exclusive State fund systems have their problems, which they
have by no means solved, they do not have this additional insurance
problem which the competitive States have.
State’s assumption of liability.—Another point to bring out is that
in some of the exclusive fund States, especially the Canadian Provinces
and Washington, the State assumes responsibility for compensation
payments in case of accident. If an accident occurs within the
industry covered by the law, the State pays. It gets its premium
later or in advance. The workman does not lose out because the
employer has not paid his premium. Of course, in most States, if
the employer has not insured, the employee can bring suit for dam
ages, but m many cases a judgment is valueless.
Public-service ideal.—Another thing which impressed me was the
public-service ideal that I found in so many of the States. We may
talk of the evils of politics in State administration, but nevertheless
one finds a large proportion of State officials and employees imbued
with a high sense of public service. The commissions may not
always do their work properly; they may be inefficient— some of them
are; but, after all, there is an ideal to follow, to serve one’s fellow
man, to serve the employee. I was impressed with that, in spite of
all the inefficiencies, or many of the inefficiencies, I found.
Politics.— One of the factors which militates against efficiency of
administration in industrial commissions is our system of partisan
political appointments. The personnel of commissions is constantly
changing with the change of political administration. In the State
of Washington, for example, there have been 17 commissioners since
the creation of the commission in 1911. This continual change in
>ersonnel prevents a continuity of policy. Commissioners frequently
lesitate to undertake important and constructive policies when their
probable tenure of office is only three or four years. Furthermore,
this change in personnel affects not merely the commissioners them
selves but th§ entire staff of the commission. Another manifestation
of this political system is the interference on the part of large and
influential employers with the duties and policies of the commission;
for example, the employer in order to prevent the commission from
carrying out its policy will appeal to the governor or other political
authorities, who, in turn, will diplomatically suggest to the commis
sion to go a little slow in taking drastic action against the employer.
As a result the commission, because it is a part of the political admin
istration, will hesitate to antagonize influential employers.
Membership of industrial commissions.— An industrial commission
or board should be composed of at least three members representing
both employers and employees. The single commissioner in my
opinion is undesirable. Every person has certain idiosyncrasies and
pet theories or “ hobbies,” and it is undesirable to subject interpre
tations of important legislation and the rights of citizens to such
individual peculiarities. In case of a board— say three members—
the idiosyncrasies of individual members are ironed out and more
substantial justice secured.
Judicial review.— It is desirable, on the whole, that the com
mission’s decision in compensation cases should be subject to
limited review by the courts. Such judicial review will have a tend-
!
190
C O M PA R ISO N OF C O M P E N S A T IO N S Y ST E M S.
ency to check the assumption of autocratic methods on the part of a
commission or commissioner. Especially is it desirable to have a judicialreview where the commissioners have long term or life appointments.
Inadequate appropriations and salaries.— Probably the greatest
handicap suffered by State funds and industrial commissions is inade
quate appropriations and salaries. An industrial commission can not
perform its functions properly nor furnish adequate service if it does
not have sufficient appropriation to carry out its work and if the sala
ries provided are so low that high-grade employees can not be re
tained. The Industrial Commission of Ohio and the State Insurance
Fund of New York have been particularly handicapped in this re
spect. In fact most of the State commissions serve as recruiting
ground for private employers and especially the private insurance
companies. Great credit is due those employees who, because of
their interest in the successful and efficient administration of the
fund or commission, remain in the public service although able to
command double their salary in private employment.
C O ST.
As already noted, State funds as well as private insurance com
panies, vary greatly among themselves as regards efficiency in man
agement. However, certain legitimate comparisons can be made
between the two types of insurance. I shall first take up the ques
tion of cost— cost to the State, to the employee, and to the emplo yer.
In order to obtain accurate comparisons, however, it is necessary to
distinguish between the accident cost, on the one hand, and the com
pensation cost of those accidents, on the other. One must also dis
tinguish between cost of administration, cost of insurance, and cost
of compensation benefits. We must say what we mean by cost.
Cost to State.— The total cost to the State depends on two factors—
the amount of the benefits and the cost of administration, i. e., how
much it costs to put those benefits into effect. Ordinarily when we
speak of cost to the State, we mean administrative cost. In com
paring the administrative cost of one State with another, we must,
of course, take into account the number and variety of functions
performed, since some State commissions are engaged in more
activities than others. It is also necessary to have all the items of
expense included. For example, in some States the reported admin
istrative expenses include rent; in others, they do not. Then, too,
if we wish to compare the total administrative expense of one State
with another, we must take into account the administrative ex
penses of insurance carriers, including the State funds. Suppose,
for illustration, we wish to compare the administrative cost of the
exclusive States of Ohio, Ontario, or Oregon with the competitive
States of, say, Pennsylvania or California. In the first group of
States the total cost will be shown by the expenses of the commis
sion; but in the second group of States the total expenses of ad
ministering the compensation act will be the administrative expenses
of the commission, plus the administrative expenses of the State
fund, plus the expenses of the insurance companies, to say nothing
about the expenses of the self-insurers. The difference between the
two totals represents the difference in administration costs under
exclusive and competitive systems.
In order to bring out forcefully the difference in the cost o f ad
ministering a compensation act under the two systems I havo
CARL H O O K ST A D T .
191
prepared the following table which shows for specified States the
administration expenses of the industrial commissions, the State
funds, and the stock insurance companies. The purpose of column 1,
showing approximately the number of employees subject to the com
pensation acts, is to indicate the volume of business performed in each
State. Column 2 shows the actual expenses of the commission for
administering the compensation law; column 3 shows the actual
administrative expenses of the State funds; column 4 shows approxi
mately the administrative cost to the stock insurance companies. The
stock-company figures were obtained by applying an average expense
ratio of 37| per cent to the earned premiums as reported by the
^National Workmen’s Compensation Service Bureau for the year 1919.
Although the stock expense ratio varies in the several States, ranging
from 35 to 40 per cent, the application o f a flat 37^ per cent will give
results sufficiently accurate for the present purpose. In fact, for the
total expenses of all private insurance carriers these figures are an
understatement, since they do not include the expenses o f mutual
and reciprocal companies, which were not available, nor do they
include the expenses incurred by self-insured employers. The admin
istration expenses for the commissions and State funds are all for the
year 1919, except for the following, which are for 1918: Ohio com
mission, Ontario commission, Idaho fund, Pennsylvania commission
and fund.
EXPENSES OF COMPENSATION ADM INISTRATION IN SPECIFIED STATES.
Estimated
number of
employees
subject to
act.
State.
Exclusive fund States:
Washington...............
Oregon........................
Nevada.......................
Ohio............................
West Virginia...........
British Columbia___
Ontario.......................
Competitive fund States:
California....................
Idaho......................... .
Montana.....................
Colorado.................... .
Michigan....................
Pennsylvania............
New York..................
Maryland.................. .
Private insurance States:
Massachusetts...........
Indiana..................... .
Illinois........................
Wisconsin..................
191,458
98,910
24,746
1.008,813
212,812
90,000
390,000
611,941
50,119
56,826
137,. 157
597,585
2,149,867
2,503,020
188,433
1,109,134
502,729
871,890
405,009
Commission.1
F und.1
Stock com
panies. 2
2
3
4
$172,816.93
138,902.31
32,778.66
279,596.00
80,422.64
70,705.53
152,235.82
175,270.10 $319,125.11
15,542.06
21,160.45
3 27,000.00
3 56,598.19
61,550.94 **29,’ 936.'60 ’
239.587.95 242,170.56
422,447.07 213,800.40
3 63,914.99
159.854.95
27,928.62
4 119,296.85
36,855.11
Total.
5
$172,816.93
138,902.31
32,778.66
279.596.00
80,422.64
70,705.53
152,235.82
$2,088,426.43
108,522.50
69,855.25
280,493.09
1,246,371.32
4,384,702.17
8,750,610.47
753,168.21
2,582,821.64
145.225.01
96,855.25
337,091.28
1,337,858.86
4,866,460.68
9,386,857.94
817,083.20
2,642,002.31
1,166,299.23
2,757,497. 28
880,825.02
2,802,457.26
1,194,227.85
2,876,794.13
917,680.13
1 Figures do not include expenditures for accident prevention, except New York State
fund.
2 Figures include expenditures for accident prevention.
Inspection expenses about 2
per cent of earned premiums.
3 Includes expenses of State fund.
4 Includes expenses for administering the conciliation and arbitration act (approximately $10,000).
A glance at
administrative
ance systems.
the latter run
State fund of
the foregoing table shows the enormous difference in
costs between the exclusive and competitive insur
The former are stated in thousands of dollars, whereas
into millions. For example, compare the exclusive
Ontario ($152,000) with the competitive insurance
192
C O M PA R ISO N OF C O M P E N SA T IO N SY ST E M S.
State of California ($2,582,000) or the exclusive State fund of Ohio
($279,000) with the competitive insurance State of Pennsylvania
($4,866,000) and the private insurance State of Illinois ($2,876,000).
A comparison of the number of State employees required to ad
minister the compensation act under the different insurance systems
may also be of interest. The following tabular statement shows the
number of employees in specified exclusive fund States, competitive
fund States, and States having no State funds. The figures are for
the year 1920, except for Pennsylvania and Illinois, which are for 1919.
N UM BER OF STATE
EM PLOYEES ENGAGED IN ADM INISTRATION OF COMPENSATION ACTS IN SPECIFIED STATES.
State.
Exclusive fund States:
Ohio............................. ..............................................................................
Oregon.......................................................................................................
W ashington...............................................................................................
West Virginia...........................................................................................
Competitive fund States:
California...................................................................................................
Pennsylvania............................................................................................
Michigan....................................................................................................
New York..................................................................................................
Private insurance States:
Illinois.......... ...........................................................................................
Massachusetts..........................................................................................
Wisconsin ................................................................................................
Commis
sion em
ployees.
Fund em
ployees.
214
119
89
42
67
126
28
263
57
83
22
Total.
214
119
89
42
237
85
16
173
304
211
44
436
57
83
22
It will be seen that the number of employees in States haying ex
clusive State funds is relatively smaller than in the competitive fund
States. This is the logical thing to expect because the former States
do not have a dual system of administration. Furthermore, it re
quires nearly as many employees to administer the compensation act
in States having no State funds whatever, if the work is to be done
adequately, as it does in the exclusive fund States.
Cost to workmen.— Let us take up the cost to the workman. In
the first place, we must distinguish between the accident cost and the
compensation cost. By accident cost I mean the wage loss resulting
from the accident. How much of this accident cost does the em
ployee bear and how much does the industry or the employer bear?
Most of the laws, as you know, provide that the compensation shall
equal a certain percentage of the employee's wage received at the
time of the injury. This percentage ranges from 50 to 66§. No
one, however, should for one moment believe that the injured work
man actually receives 50 per cent or 66§ per cent of his wages.
Practically all of the States, in addition to the percentages, have
weekly maximums beyond which the amount of compensation can
not go. This not only limits the amount of compensation still further
but virtually vitiates and nullifies the percentages. For example, it
is absurd to speak of a State paying 66 § per cent of wages, as is the
case in New Jersey, when the. same law also provides a weekly maxi
mum of $12. Therefore, instead of receiving 60, 65, or 66§ per cent
the injured workman actually receives only 20, 25, 30, or 35 per cent
of his wages. These weekly maximums are unjust to the workers
and should be wiped off the statute books or at least raised to a
sufficient level to enable the workman to sustain himself while inca
pacitated.
GAEL H O O K STA D T.
193
I have compiled a series of four tables which show, for several
specified occupations, the effect of the weekly maximum in reducing
the statutory percentages in the several compensation States.
Table 1 shows the weekly maximum for each of the more important
industrial States. It also shows the standard union wages, as of
May 15, 1920, received in the following occupations: Bricklayers,
carpenters, machinists, molders, painters, plasterers, sheet-metal
workers, and structural-iron workers. These weekly wages are com
puted from the union wTage scales as regularly published by the
Bureau o f Labor Statistics of the United States Department o f Labor.
Most o f these occupations are in the building trades. Moreover, the
figures show wage rates rather than earnings, and can be criticized
for this reason. I do not know what the actual earnings are. The
weekly figures given were derived by multiplying the standard mini
mum hourly rates by the minimum hours per week. It has been
assumed that the workers were employed on full time the whole
year, which o f course is not true for the building trades. On the
other hand, the actual hours wTorked per week and the actual wage
rates were probably greater than the minima upon which the com
puted weekly wages were based.
T able
1.—COMPARISON OF STATU TO R Y W E E K L Y M AXIMUM COMPENSATION AND
ST ANDAR D W AG ES RECEIVED IN 1920 B Y SPECIFIED OCCUPATIONS.
Standard wages received in 1920.
State and city
Statu
tory
weekly
maxi
mum.
Brick
layers,
Ma
chin
StrucCar
ists, Mold Paint Plas Sheet- turalmetal
pen manu ers,
ers. terers. work iron
ters. factur iron.
work
ers.
ing
ers.
shops.
/ i $12.00
Alabama (Birmingham)................. \ 2 15. oo \$44.00 $33.00 $37.68 $38.40 $38.50 $33.00 $44.00
20.83 * 55.00 46.77 39.60 38.72 46.77 50.00 49.50
California (San Francisco).............
55.00 49.50 34.56 38.40 55.00 55.00 44.00
10.00
Colorado (Denver)...........................
44.00 44.00 38.40
38.50 44.00 38.50
Connecticut (New Haven).............
14.00
(3)
1 12.00 | 55.00 55.00 44.00 50.40 55.00 55.00 55.00
Illinois (Chicago).............................. /\ 2
15.00
$44.00
49.50
44.00
46.77
55.00
Indiana (Indianapolis)...................
Kentuckv (Louisville)....................
Louisiana (New Orleans)...............
Maryland (Baltimore).....................
Massachusetts (Boston)..................
13.20
15.00
18.00
18.00
16.00
55.00
50.60
44.00
56.25
44.00
45.00
35.20
36.00
39.60
40.00
36.00
(8)
38.40
36.00
43.20
43.20
39.84
38.40
45.02
43.20
40.00
33.00
33.00
39.60
40.00
38.50
44.00
45.00
49.50
40.00
44.00
35.20
44.00
35.20
44.00
55.00
44.00
44.00
55.00
44.00
Michigan (Detroit)...........................
Minnesota (Minneapolis)................
Nebraska ( Omaha)..........................
New Hampshire (Manchester)___
New Jersey (Newark).....................
14.00
15.00
15.00
10.00
12.00
55.00
55.00
55.00
49.50
65.00
44.00
44.00
49.50
49.50
44.00
52.80
39.60
40.80
24.00
36.00
48.00
47.25
40.80
34.80
42.24
55.00
44.00
44.00
35.20
44.00
55.00
49.50
49.50
49.50
55.00
55.00
44.00
44.00
20.99
44.00
55.00
38.50
50.60
44.00
49.50
New York (New York)...................
20.00
55.00
55.00
Ohio (Cleveland).............................
15.00
113.49 } 55.00
Oregon (Portland)................ ........... /\ 2
22.50
12.00
49.50
Pennsylvania (Pittsburgh)...........
14.00
50.60
Rhode Island (Providence)...........
49.50
55.00
44.00
39.60
44.00
43.20
37.50
38.72
42.24
43.20
41.27
45.02
(3)
45.00
49.50
44.00
49.50
39.60
52.27
55.00
49.50
50.60
40.00
49.50
55.00
44.00
39.60
44.00
49.50
55.00
49.50
44.00
44.00
55.00
11.00
Tennessee (Memphis).....................
15.00
49.50
Texas (Dallas)..................................
55.00
16.00
Utah (Salt Lake City)....................
45.00
12.00
Virginia (Richmond)......................
/
16.92
Washington (Seattle)...................... \ 2 12.12 } 55.00
55.00
14.63
Wisconsin (Milwaukee)..................
44.00
44.00
49. 50
34.08
44.00
37.40
48.00
38.40
42.00
36.00
38.72
36.00
44.28
(3)
42.00
38.40
38.72
44.00
44.00
44.00
31.20
40.00
37.40
44.00
49.41
55.00
33.00
50.00
3S.50
44.00
44.00
44.00
42.24
44.00
32.40
44.00
44.00
49.50
44.00
49.50
44.00
1 With no dependents.
26039°— 21------- 13
(3)
C3)
2 Maximum with dependents.
(3)
8 No scale given.
194
C O M PA R ISO N OF C O M P E N SA T IO N S Y ST E M S.
In Table 2 is shown a comparison of the statutory and actual per
centages of wages received for 1920 in the occupations enumerated
above.
T able
2.—COMPARISON OF ST A T U T O R Y AN D ACTU AL PERCENTAGES OF W AG ES
RECEIVED AS COM PENSATION, FOR 1920, B Y SPECIFIED OCCUPATIONS.
Actual percentage weekly maximum compensation is of
wages.
State and city.
Statu
tory
percent
age.
f
1 50.0
2 60.0
65.0
50.0
50.0
i 5a 0
2 65.0
Ma
chin
Sheet- Struc
ists, Mold Paint Plas met al turalers,
man
ers. terers. work iron
ufac iron.
work
ers.
turing
ers.
shops.
Brick
layers.
Car
pen
ters.
1 27.3
34.1
37.9
18.2
31.8
i 21.8
2 27.3
1 36.4
2 45.5
44.5
20.2
31.8
1 21.8
2 27.3
1 31.8
2 39.8
52.6
28.9
36.5
i 27.3
2 34.1
1 31.2
2 39.1
53.8
26.0
(3)
1 36.4
2 45.5
41.7
18.2
31.8
1 21.8
2 27.3
1 27.3
2 34.1
42.1
22.7
36. 4
1 21.8
2 27.3
127.3
2 34.1
42.1
22.7
29.9
i 21.8
2 27.3
2 29.8
1 31.2
2 39.0
44.5
18.2
36.4
1 21.8
2 27.3
Indiana (Indianapolis)....................
Kentucky (Louisville)....................
Louisiana (New Orleans)..............
Maryland (Baltimore)....................
Massachusetts (Boston)..................
55.0
65.0
60.0
66.7
66.7
24.0
29.6
40.9
32.0
36.4
29.3
42.6
50.0
45.5
40.0
36.7
(3)
46.9
50.0
37.0
30.5
37.6
46.9
40.0
37.0
33.0
45.5
54.5
45.5
40.0
34.3
34.1
40.0
36.4
40.0
30.0
42.6
40.9
51.1
36.4
24.0
34.1
40.9
32.7
36.4
Michigan (Detroit)...........................
Minnesota (Minneapolis)................
Nebraska (Omaha)..........................
New Hampshire (Manchester)----New Jersey (Newark).....................
60.0
66.7
66.7
50.0
66.7
25.5
27.3
27.3
20. 2
21.8
31.8
34.1
30.3
20.2
27.3
26.5
37.9
36.8
41.7
33.3
29.2
31.7
36.8
28.7
28.4
25.5
34.1
34.1
28.4
27.3
25. 5
30.3
30.3
20.2
21.8
25.5
34.1
34.1
47.6
27.3
25.5
39.0
29.6
22.7
24.2
66.7
36.3
66.7
27.3
/ 1 24. 5
(4)
\ 2 40.9
60.0
24.2
50.0
27.7
40.4
27.3
1 30.7
2 51.1
30.3
31.8
46.3
40.0
1 34.8
2 58.1
(3)
(3)
47.3
34.7
1 32.7
2 54.5
26.7
(3)
44.4
30.3
1 30.7
2 51.1
24.2
35.4
38.3
27.3
1 27.3
2 45. 5
23.7
35.0
40.4
27.3
1 30.7
2 51.1
30.2
31.8
40.4
27.3
1 27.3
2 45. 5
27.3
31.8
25.0
34.1
32.3
35.2
1 15.7
2 27.5
39.1
22.9
39.1
38.1
33.3
1 17.8
2 31.0
40.6
24.8
(3)
38.1
31.3
1 17. 8
2 31.0
(3)
25.0
34.1
36.4
38.5
1 17.3
2 30.3
25.0
30.4
29.1
36.4
1 13.8
2 24. 2
39.1
38.0
25.0
34.1
36.4
28.4
1 15.7
2 27.5
25.0
34.1
32.3
27.3
1 14.0
2 24.5
45.1
33.3
Alabama (Birmingham)................. \
California (San Francisco).............
Colorado (Denver)............................
Connecticut (New Haven).............
f
Illinois (Chicago).............................. \
New York (New York)...................
Ohio (Cleveland)..............................
Oregon (Portland)............................
Pennsylvania (Pittsburgh)...........
Rhode Island (Providence)...........
Tennessee (Memphis)......................
Texas (Dallas)...................................
Utah (Salt Lake City)....................
Virginia (Richmond)......................
Washington (Seattle)......................
Wisconsin (Milwaukee)...................
50.0
60.0
60.0
50.0
2
20.0
30.3
29.1
26.7
/ 1 12. 6
(4)
\ 2 22. 0
65.0
26.6
1 With no dependents.
2 Maximum with dependents.
'- 2 & S
» No scale given.
4 A flat monthly pension not based on wages.
In Table 3 is shown a comparison of statutory and actual percent
ages of wages received by structural-iron workers for specified years.
It also shows the increase, if any, in the weekly maximum from 1916
to 1920, and the increase, if any, in the statutory percentage between
1916 and 1920. It also shows, after applying the weekly maximum,
the percentage of wages actually received as compensation in the
CAJfcL H O O K ST A D T .
195
T a b l e 3 . — COMPARISON
OF S T A T U T O R Y AN D ACTUAL PER CEN TAG ES OF W AGES
RECEIVED AS COM PENSATION B Y STRUCTU RAL-IRO N W O R K E R S F O R SPECIFIED
YE A R S.
Statutory per
centage of com
pensation.
Weekly maximum
compensation.
State and city.
1916
Alabama (Birmingham)................
California (San Francisco).............
Colorado (Denver)..........................
Connecticut (New Haven)...........
Illinois (Chicago).............................
1920
1916
J 2 $12.00
\ 3 15.00 } (1)
20.83
65.0
10.00
50.0
10.00
14.00
50.0
r
2 1 2 .0 0
12.00 \ 3 15.00 | 50.0
C)
$20.83
8. GO
1920
Per cent of wages actually re
ceived as compensation.
1916
1917
/ 2 50.0
0)
\ 3 60.0 } (1)
65.0
63.1
63.1
50.0
29.1
25.9
50.0
36.4
50.0
/ 2 50.0 } 40.1 ; 2 39.5
\ s 65.0
\ 3 49.4
1919
1920
0)
34.4
2 31.2
3 39.0
/ 2 27.3
\ 3 34.1
42.1
22.7
23.9
*21.8
3 27.3
47.3
2&.0
Indiana (Indianapolis)...................
Kentucky (Louisville)...................
Louisiana (New Orleans)..............
Maryland (Baltimore)....................
Massachusetts (Boston).................
13.20
12.00
10.00
12.00
10.00
13.20
15.00
18.00
18.00
16.00
55.0
65.0
50.0
50.0
66.7
55.0
65.0
60.0
66.7
66.7
42.9
54.5
36.4
43.6
36.4
40.0
45.5
36.4
43.6
46.3
35.3
34.1
54.5
27.3
45.4
24.0
34.1
40.9
32.7
36.4
Michigan (Detroit).........................
Minnesota (Minneapolis)...............
Nebraska (Om aha)........................
New Hampshire (Manchester)__
New Jersey (Newark).....................
10.00
11.00
10.00
14.00
15.00
15.00
10.00
12.00
60.0
66.7
66.7
50.0
66.7
35.0
40.0
35.0
35.0
43.6
39.6
35.4
39.0
37.9
10.00
50.0
50.0
50.0
50.0
50.0
(4)
(4)
(4)
25.5
39.0
29.6
22.7
24.2
New York (New York).................
Ohio (Cleveland).............................
15.00
20.00
66.7
66.7
66.7
68.7
51.4
39.0
/ 2 37.7
(5)
\ 3 60. 0
60.0
36.4
50.0
36.4
49.6
34.1
2 33.7
3 56.2
32.5
33.0
39.0
34.1
2 23.6
3 39.3
27.3
34.4
50.0
60.0
60.0
50.0
C1)
59.5
39.6
0)
221.0
3 36.7
28.6
45.5
35.4
24.6
2 15.7
3 27.5
35.5
41.6
10. CO
12.00
10.38
Oregon (Portland)........................... /\ 2
3 17.31
10.00
Pennsylvania (Pittsburgh)...........
Rhode Island (Providence)..........
10.00
Tennessee (Memphis).....................
0)
15.00
Texas (Dallas).................................
Utah (Salt Lake City)...................
(*)
Virginia ( Richmond).....................
0)
/ 2 6.92
Washington (Seattle)..................... \ 3 12.12
Wisconsin (Milwaukee).................
9.75
1 No law.
3 With no dependents.
15. GO
13.49
3 22.50 } (5)
12.00
50.0
14.00
50.0
2
11.00
(*)
15.00
16.00
60.0
12.00
2 6.92
312.12 }
14.63
3 Maximum with dependents.
4 No scate given.
0)
C)
(5)
65.0
33.0
31.2
31.3
C1)
50.5
C1)
C1)
/ 2 25.2
(5)
\ 3 44.1
65.0
35.5
40.4
27.3
27.3
3 45.5
27.3
31.8
2
25.0
34.1
32.3
27.3
2 14.0
3 24.5
33.3
5 A flat monthly pension not "based on wages.
In Table 4 is shown a comparison of statutory and actual percent
ages of wages received under each compensation act in 1920 for
weekly earnings of $25, $30, $35, and $40.
T able 4 .—COMPARISON OF ST ATU T O R Y AN D ACTUAL PERCENTAGES OF W AGES RE
CEIVED AS COMPENSATION U N D E R STATE COMPENSATION ACTS FOR SPECIFIED
W E E K L Y EARNINGS IN 1920.
State.
Per cent
pro
vided for
in law.
Per cent actually received by man
earning per week—■
$25
$30
ooc
code
ooc
odd
50. 0
65. 0
40.0
50. 0
65. 0
33.3
$35
$40
Alabama............................................................................... /
\
Alaska..,........................ ....................................................
Arizona..................................................................................
California.........................................................................
Colorado..............................................................................
i 50. 0
2 60. 0
50.0
50. 0
65. 0
50.0
1 34 3
2 42. 6
50i 0
50. 0
59. 5
28.6
130.0
2 37.5
50.0
50.0
52.1
25.0
Connecticut..........................................................................
Delaware...............................................................................
46. 7
50.0
50.0
40.0
42. 6
50. 0
50. 0
50.0
40.0
34.3
50.0
48.0
60.0
51.4
60. 0
GO. 0
40. 0
34.3
5&0
48.0
i 40.0
1 34. 3
i 48.0
i 50. 0
2 65.0
2 42. 6
*5a 0
3 60.0
44.0
55. 0
52.8
37. 7
42. 6
60.0
60.0
50.0
50.0
42. 6
60.0
60. 0
50.0
42.9
65.0
60.0
2 Maximum with dependents.
35.0
37.5
30.0
45.0
30.0
130.0
2 £7.5
33.0
37.5
37.5
37.5
G e o r g ia .,................................................................................................
Hawaii...........................................................„......................
Idaho.....................................................................................
Illinois................................................................................... \f
...................................................... .........
Indiana
.................
Iowa....... .................................................. ..................... .......
Kansas...................................................................................
Kentucky.............................................................................
i With no dependents.
196
T
C O M PA R ISO N OF C O M P E N SA T IO N S Y S T E M S .
4 . — COMPARISON OF ST A TU T O R Y AN D ACT U AL PER CEN TAG ES OF W A G E S R E
CEIVED AS COM PENSATION U N D E R STATE COM PENSATION ACTS FOR SPECIFIED
W E E K L Y EAR N IN G S IN 1920—Concluded.
able
State.
per cent actually received by man
earning per week—
Per cent
pro
leuiui
l law.
$25
Louisiana............
Maine...................
Maryland.............
Massachusetts___
Michigan..............
60.0
60.0
66. 7
66. 7
60.0
Minnesota...........
Missouri................
Montana..............
Nebraska.............
Nevada................
66.7
66.7
50.0
66.7
ah
DU. n
U /
\
50.0
66.7
50.0
66. 7
66.7
New Hampshire.
New Jersey.........
New Mexico.........
New York...........
North Dakota.. . ,
$30
$35
60.0
60.0
66.7
64.0
56.0
60.0
50.0
60.0
53.3
46.7
51.4
42.6
51.4
45.7
40.0
45.0
37.5
45.0
40.0
35.0
60.0
60.0
50.0
60.0
i 60. 0
2 75. 7
40.0
48.0
48.0
66.7
66.7
50.0
50.0
41.7
50.0
i 55.4
2 63.1
33.3
40.0
40.0
66.7
66.7
42.6
42.6
35.7
42.6
i 47.5
2 54.1
28.6
34.3
34.3
57.1
57.1
37.5
37.5
31.3
37.5
1 41.6
2 47.3
25.0
30.0
30.0
50.0
50.0
50.0
50.0
i 45.0
2 75.0
40.0
23.3
42.6
50.0
i 38.6
2 64.3
34.3
20.0
2 56.3
30.0
17.5
35.0
30.0
27.5
37.5
40.0
Ohio......................
Oklahoma...........
Oregon.................
66.7
50.0
/
/{*)
a\
Pennsylvania___
Porto Rico..........
60.0
50.0
60.0
50.0
i 54. 0
2 78. 0
48.0
28.0
Rhode Island___
South Dakota___
Tennessee.............
Texas....................
Utah.....................
50.0
55.0
50.0
60.0
60.0
50.0
48.0
44.0
60.0
60.0
46.7
40.0
36.7
50.0
53.3
40.0
34.3
31.4
42.6
45.7
Vermont..............
Yirginia...............
Washington........
West Virginia.. .
Wisconsin...........
50.0
50.0
50.0
48.0
i 27. 7
2 48. 5
48.0
58.5
i 32. 3
2 55. 4
61.5
55.0
66.7
41.7
40.0
i 23.1
2 40.4
40.0
48.8
i 26. 9
2 46.2
51.3
55.0
66.7
35.7
34.3
i 19.8
2 34. 6
34.3
41.8
1 23.1
2 39.6
43.9
55.0
66.7
Wyoming............
United States___
British Columbia
Ontario................
1 With no dependents.
\
/
\
50.0
65.0
/
(*)
\
66.7
55.0
66.7
$40
37.5
45.0
1 33.7
31.3
30.0
1 17.3
2 30.3
30.0
36.6
1 20.2
2 34.6
38.5
55.0
66.7
3 A flat monthly pension not based on wages.
2 Maximum with dependents.
An analysis of these tables shows to what extent the weekly maximums nullify the statutory percentages. Probably no other factor
has been more instrumental in vitiating the beneficent purpose o f
workmen’s compensation laws than this weekly maximum. In New
Jersey, for example, a workman is supposed to receive 66| per cent
of his wage in case of injury. As a matter of fact, however, because
of the operation of the $12 weekly maximum, instead of receiving 66|
per cent a bricklayer and a plasterer receive only 21.8 per cent; a
structural-iron worker receives 24.2 per cent; a carpenter, a painter,
and a sheet-metal worker receive 27.3 per cent; a molder, 28.4; and a
machinist, 33.3. The effect of the weekly maximum in the other
States can be obtained by referring to the tables.
Table 3 brings out the significant fact that although the weekly
maximum and the statutory percentage have been increased in most
o f the States, yet because of the greater increase in wages the relative
amount of compensation received in 1920 is less than it was in 1916.
CARL H O O K ST A D T .
197
The weekly maximum in New Jersey was increased from $10 to $12
and the percentage of wages was increased from 50 to 66§, yet the
actual percentage received by structural-iron workers in 1916 in
New Jersey was 33 per cent, whereas the actual percentage received
in 1920 was only 24.2 per cent.
Furthermore, the percentages in the tables relate to temporary
total disability accidents only. In case o f permanent partial disa
bilities or in death cases the percentages would be still smaller.
Again, in computing the percentages the waiting periods were left
out o f consideration. It was assumed that compensation was paid
from the date of the accident. The wage loss suffered by the injured
workmen therefore is even greater than the percentages indicate.
In order to show the effect of the waiting periods upon wage loss, the
given wage percentages should be decreased by the following per
centages: A 3-day waiting period by 2.8 per cent; a 7-day waiting
period by 9.4 per cent; a 10-day waiting period by 14.4 per cent; a
14-day waiting period by 20.7 per cent.
As regards compensation cost as distinguishqd from accident cost,
Oregon is the only State in which the workman is required to pay a
portion of the compensation. In this State he is required by law to
pay 1 cent for each working-day, which amounts to about 9 or 10
per cent of the total compensation costs. In all of the other States
the employer at least pays the compensation provided in the law.
However, in many of the Western States the employer has been able
under the contract hospital system to place a large part of his com
pensation cost upon the workman. Under this contract system the
employer enters into an agreement with a contract hospital whereby
the latter is to take care of his accident cases. The workman is
usually charged a dollar a month or more, which is deducted from
his wages and turned over to the hospital. This dollar a month
frequently pays for the entire cost of the medical service. Thus the
employer is relieved of a part of his burden, which is shifted upon
the workman. Another, and in my opinion unnecessary, burden
which the employee must bear is the payment of attorney's fees. I
believe that every injured workman should receive his compensation
without any cost to him whatever. It should not be necessary for
him to employ an attorney. Nor should he be required to attend a
lot of hearings, wasting his time and the time of other witnesses.
Cost to employer.—A comparison of compensation costs to the
employers under different insurance systems and in different juris
dictions is difficult of determination. There are two ways of ap
proaching the problem: (1) By comparing insurance rates and (2) by
comparing expense ratios. I tried to make a comparison of rates
but gave it up because of the difficulties involved. There are too
many complicating factors involved which affect the comparability
of the result.
First. There is the difference in benefits. No reliable factor has
yet been produced which will measure accurately the difference in
benefits.
Second. Variations in classifications. You may say that a coal
mine is a coal mine whether located in Pennsylvania, Ohio, or
Washington. But a comparison of the manuals in the various
States will disclose the fact that even a coal-mine classification does
not mean the same thing in every State. In addition, you have
198
C O M PA R ISO N OF C O M P E N SA T IO N S Y ST E M S.
the problem of interpretation and application of the classification
with which to deal.
Third. Identical industries or classifications vary considerably as to
hazard in different States.
Fourth. Because of the operation of merit-rating schemes in
vogue in most States the manual rates are not the rates actually
charged.
Fifth. Even if the foregoing difficulties have been solved and
comparable rates obtained, one does not know whether the insurance
companies are actually writing business at those rates unless the
State keeps strict supervision over rates. In half of the States no
supervision is exercised.
Sixth. The policy of State funds and other insurance carriers
differs as to dividends and reserves. Among some it is the practice
to set the rates high enough to allow the return of dividends and to
build up a comfortable reserve and surplus. Among others the rates
are barely adequate to cover the cost of the current accidents.
Therefore, a comparison of manual rates in one State with the
manual rates in another State does not get one very far.
The other method of comparing costs to employers is by means of
the expense ratios of the insurance carriers. Final compensation
insurance rates are the product of two factors: (1) The pure premium
factor, which represents the actual loss cost, and (2) the expense
loading factor, which represents the earner’s administrative expense
for putting the benefits into effect. Here one can arrive at certain
definite facts. The pure premium factor, i. e., the actual cost of
accidents per $100 o f pay roll for each industrial classification, is of
course, the same for all carriers for rate-making purposes. The
expense factor, however, varies with the type of insurance and
reflects the difference in costs of insurance administration. The
difference in the expense ratios of stock companies, mutuals, and
State funds, therefore, represents the relative cost of compensation
insurance to the employer under the different insurance systems.
For the employer a comparison of costs under a stock company, a
mutual, or a State fund becomes then a simple mathematical cal
culation.
The expense ratios of stock companies vary from ,35 to 40 per cent,
the average being about 37|; L e., for every dollar of premiums
collected by stock insurance companies 37 \ cents goes for expenses
and profits. The expense ratio of the mutuals ranges from 15
to 20 per cent.
The competitive funds average about 12J per
cent, ranging from 6 and 7 to about 15 per cent. The exclusive
State funds range from 3 per cent—less than 3 in Ohio— to about
7 or 8 per cent.
Using one figure only, the average expense
ratios are as follows: Stock companies, 37J per cent; mutual com
panies, 20 per cent; competitive State funds, 12\ per cent; and
exclusive State funds, 7-J per cent. Applying these percentages to
the premium income you will get a comparison of the cost to the
employer. I should say that, had every compensation State possessed
an exclusive State fund and had all employers carrying compensa
tion insurance insured therein, it would have saved these employers
in the year 1919 at least $30,000,000. In other words, it costs the
insured employers of the United States an extra $30,000,000 to
CARL H O O K ST A D T .
199
insure in stock and mutual companies. These figures are obtained
simply by applying the difference in expense ratios to the total
premium income. Of course, I have been assuming that they have
the same type of service. Now, I want to take up—Mr. Chairman,
how much time have I left?
The C h a i r m a n . Y ou have already spoken an hour. I hope I will
be forgiven for not having checked Mr. Hookstadt. He has been
letting the light in on all of us in a way that I am sure has been ap
preciated, and I hope there is unanimous consent to let him go on
with what he has to say.
Mr. H o o k s t a d t . I will be brief. I had no idea that I had spoken
an hour. I have spoken of cost. Now I shall take up service.
s e r v ic e
.
A second factor in the comparison of compensation insurance
systems is service. However, it is difficult to measure service
because it does not easily lend itself to statistical proof. Three
tests, however, may be applied: (1) Promptness of payment; (2)
adequacy or liberality of payments, including liberality in inter
preting the laws; and (3) accident prevention.
PROM PTNESS OF P A Y M E N T S .
The data showing promptness of payment were taken from the
actual cases taken from the files of various industrial commissions
for the years 1917, 1918, and 1919, being distributed as evenly as
possible among the three years. The information recorded included
date of the accident, date of receipt of accident by commis
sion or fund, date of doctor’s report and workman’s claim and date
such reports were received, date of agreement or award, and date of
first payment. The results were tabulated and comparisons made by
State and type of insurance. In some of the States I wras unable to
obtain the date of first payment because the commissions kept no
record thereof. In such States I tried to obtain, if possible, the date
of the compensation agreement or the date of the commission’s award.
Howrever, in most States the date of first payment was available.
In order that accurate comparisons may be drawn from the data
it will be necessary to take certain factors into consideration.
(1) The length of the waiting period must be taken into account.
No payment is due until one week after the expiration of the waiting
period. It is not fair, however, to subtract the entire waiting period
from the average time between the date of accident and date of first
payment, as shown in the tables. No payments can be made until the
necessary reports of the accident have been filed with the commission
or insurance carrier, and this takes a certain length of time. In fact,
a study of the promptness with which accidents are reported in the
several States shows that the length of the waiting period seems to be
a negligible factor. For example, in Massachusetts, which has a 10day period, accidents are reported more promptly than in any other
State.
(2) A second factor to be taken into account is the practice in the
several States as regards frequency of wage payments. In the Far
West it is customary among many employers to pay monthly; in the
200
COMPARISON" OF C O M P E N SA T IO N S Y S T E M S .
Middle West, biweekly; and in the East, weekly. Since compensa
tion is supposed to be in lieu of wages, the first payment ordinarily is
not made until the next regular pay day. Thus the frequency of wage
payments will to a certain extent affect the promptness of compensa
tion payments as shown in the table.
(3) A third factor is the size or area of the States compared. In
the East the States are small, the population compact, and communi
cation easy and rapid; whereas in the Far West the States are large
and the population sparse. Other things being equal, one should
expect more prompt payments in Massachusetts or Ohio than in Cali
fornia, Nevada, or British Columbia.
(4) A fourth factor to be considered is the nature of the industry.
In the East, where manufacturing predominates, the industries are
usually large, compact, and within easy reach of postal and telephone
communication. In the Far West, again, many of the industries,
such as lumbering or mining, are located in out-of-the-way places
where communication is difficult.
The number of cases upon which the averages were based should
also be taken into consideration. In some of the States I examined
1,000 or more, while in others the number was less than 100. The
number of cases taken depended upon the accessibility of the records
and also upon the type of State. In the competitive-fund States a
larger number of cases was necessary in order to compare the differ
ent types of insurance in the State. In the exclusive-fund States such
comparison was not necessary and consequently the number of cases
was smaller. The averages of States in which the number of cases is
under 100 should be used cautiously; deductions drawn therefrom
are by no means conclusive, but are indicative in the light of other
information.
Bearing in mind the foregoing factors, let us see how the several
insurance systems in various States compare.
The following table shows the promptness of compensation pay
ments by different insurance carriers in certain States arranged in
ascending order. This table is a summary of a more detailed table
(facing p. 210). The table includes only those States in which
data as to first payments were obtainable; whereas the larger table
contains also the States in which only data regarding promptness of
awards and agreements were available. Column 2 shows the number
of cases examined. Column 3 shows the waiting period for each
State as of the year 1919. Column 4 shows the average (median)
number of days elapsing between the date of accident and date of
first payment. That is, in one-half of the cases the first payment
was macie before the number of days specified, and in the other half of
the cases the first payment was made after that date. Columns 5
and 6 show the percentage of cases in wliich the first payment was
made within 4 weeks and 7 weeks, respectively, from the date of the
accident. Columns 7 and 8 show the percentage of cases in which
no payment had been made at the end of 11 and 13 weeks, respec
tively, after the accident. In the case of Illinois and Michigan,
the commissions had made an independent investigation,, and
their results are incorporated in the table. In all other cases the
figures are based upon records as found in the files of the commissions.
CARL H O O K ST A D T .
201
PROMPTNESS OF COM PENSATION PAYM ENTS B Y D IF F E R E N T INSURANCE CARRIERS
IN CER TAIN STATES, AR R AN G ED IN ASCENDING O R D ER .
Insurance carrier.
1
Average
interval
(median)
Num Wait
between
ing
ber
date of
pe
of
accident
riod
cases.
and
date
(days).
of first
payment
(days).
2
California (State fund)..........................................
Idaho (self-insurers)..............................................
Oregon (State fund)........... .................................
Michigan (stock companies)................................
Michigan (self-insurers)......... - .............................
404
190
403
187 I
153 |
Maryland (State fund)..........................................
Indiana (insurance companies)...... ...................
Nevada (State fund)..............................................
Utah (State fund)..................................................
British Columbia (State fund)...........................
172
90
204
49
Idaho (insurance companies)..............................
Illinois (stock companies)1.................................
M ontana (self-insurers)........................................
Montana (State fund)............................................
Michigan (State fund)..........................................
446
4
3
Per cent of
Per cent of
cases in which cases in which
first payment
no payments
was made
had been made
within —
at end of —
4 weeks 7 weeks
after
after
acci
acci
dent.
dent.
5
6
11
weeks
after
acci
dent.
7
13
weeks
afteracci
dent.
8
7
7
0
7
7
26
26
28
34
34
58.1
54.2
54.1
40. G
30.1
83.8
81.0
87.1
78.6
67.3
6.3
6.7
2.7
7.4
11.8
4.1
5.7
1.7
5.8
7.2
14
7
7
3
3
35
35
36
38
41
38.3
43.3
29.9
36.8
15.2
69.7
66.7
77.5
75.5
76.2
13.8
13.2
4.4
12.2
8.4
9.6
8.8
3.4
10.2
5.1
7
7
14
14
7
41
44
45
46
48
28.4
62.7
17.5
12.6
is. 3
7.9
13.3
60.1
61.2
53.2
11.8
10.6
33.4
8.4
8.2
33.4
49
49
51
52
54
9.1
12.2
51.3
51.2
17.4
23.2
12.9
14.6
41
7
10
7
7
10
9.8
44.2
24.4
19.5
Illinois (self-insurers)1..........................................
21
Colorado (State fund)............................................
Ohio (State fund)................................................... 1,000
West Virginia (State fund).................................. 184
207
Montana (stock companies).................................
7
10
7
7
14
54
54
55
59
65
19.1
8.1
7.6
6.7
42.9
44.7
35.8
31.0
19.2
25.7
32.6
36.2
9.6
17.8
21.1
26.1
7
7
80
84
4.5
0.0
24.9
18.7
50.4
56.2
38.0
50.0
Washington (State fund).....................................
Colorado (insurance companies)........................
Illinois (mutual companies)1..............................
Illinois (interinsurers)1........................................
Colorado (self-insurers)........................................
Idaho (State fund)........................... .....................
Michigan (State fund)2..........................................
US
704
355
30
308
82
176
16
1 Arithmetic average. Includes all cases for 1919. Computations made by Illinois Industrial Commission.
2 Computation based upon investigation by Michigan Industrial Accident Board.
An examination of the above table shows that State funds have the
best record and also the worst. Second, it shows great variations in
each type of insurance carrier. Third, it shows that self-insurers,
whom one w~ould naturally expect to pay promptly, are just as slow
in paying compensation as the casualty companies or State funds.
Fourth, it shows an unconscionably long delay on the part of all
carriers. Fifth, it effectively answers the argument of the insur
ance companies that they are more prompt in making compensation
payments than the State funds.
Of the six exclusive State funds, three (Oregon, Nevada, and
British Columbia) have a better record as regards promptness of
payment than the average private insurance company. In the other
three States (Ohio, Washington, and West Virginia) the reverse is
true. In most of the cornpetitive-fund States payments are made
and claims handled more promptly by the State fund than by other
insurance carriers. Moreover, it should be noted that the two com
petitive funds having the poorest records are not under the jurisdic
tion of compensation commissions, but are under the supervision of
insurance departments.
202
C O M PA R ISO N OF C O M P E N SA T IO N SY S T E M S .
Mr. L ee. Can you tell us why that is?
Give us a reason. That
is, what I am primarily interested in is the way in which you would
correct that.
Mr. H o o k s t a d t . Yes, I can give you my ideas on that, and I will
eventually, but not to-day. It will take too much time. At present
I am only stating the facts as I found them. Later on I hope to
have some remedial suggestions to offer.
Probably the fairest and most convincing method of comparing
State funds with private carriers would be to compare the best in each
class. Let us, then, compare the competitive fund of California and
the exclusive fund of Oregon with the Liberty Mutual Co. of Massa
chusetts. I am sorry Mr. Black is not here to read his paper. The
company Mr. Black represents (the Liberty Mutual) is generally
conceded to be one of the best managed companies in the United
States. Mr. Black in his paper compares the Liberty Mutual with
the Ohio fund as regards promptness of payments. In this com
parison Ohio appears at a disadvantage. At the time no other
comparative data were available. But now let us compare the
Liberty Mutual, as shown by Mr. Black’s own figures, with Cali
fornia and Oregon. Please bear in mind that the area o f Massa
chusetts is small and the industries compact. Both California
and Oregon are large States, and in each State lumbering is one
o f the principal industries. It takes a longer time to obtain re
ports and to make payments. Under the circumstances one would
expect to find much better results in Massachusetts. But what are
the facts? The percentage of cases in which the first payment
had not been made within 6 weeks22 are as follow s: Liberty Mutual,
20 per cent; Oregon State fund 18.9 per cent; California State
fund 22.1 per cent. Oregon, in spite of its large area, had a better
record and California almost as good as the Liberty Mutual. Now
take the percentage of cases where the first payment had not been
made within 10 weeks: The Liberty Mutual, 6.3 per cent; the
Oregon fund, 3.9 per cent; the California fund, 6.5 per cent. Again
Oregon lias a much better record and California equally as good
as the Liberty. There you have a fair test, it seems to me, and it
shows that the best State fund has a better record as to promptness
of payment than the very best insurance company.
This long delay in making payments is due, at least so far as the
State funds are concerned, to a number of causes. In the first place
employers and physicians are not always prompt in reporting
accidents. It is more difficult still to <jet the workmen to report
their cases. In fact much of the delay is the direct result of the failure
of the workmen to make claims. Then, too; the commissions must
partially share the blame because they have inadequate follow-up
methods or because their procedure is too complicated. Further
more, several of the funds whose record is bad make no attempt to
pay compensation promptly. Many of the commissions and funds
are also handicapped in that they have an insufficient force to handle
the claims properly and to make the necessary investigations.
22 In case of the Liberty Mutual 40 days should be substituted for 6 weeks.
CAKL H O O K ST A D T .
203
A D E Q U A C Y OR L IB E R A L IT Y OF P A Y M E N T S ,
A second test of service is the adequacy or liberality of compen
sation payments, including liberality of interpretation of the acts.
Are the benefits as provided in the laws actually being paid or is
there a tendency among insurance carriers to fight compensation
claims, to resort to technicalities, to make settlements for less than
the law provides, to make understatements as to the severity of in
juries, or to make no offer of payment, hoping the injured workman
will neglect to press his claim ? These questions do not readily lend
themselves to statistical proof. The most reliable method of attack
ing the problem would be to make an investigation of a certain num
ber of actual cases in each State and ascertain just what was done.
Because of limited means such a study was not made by the bureau.
Several States, however, have made such investigations. Among
these are the Connor investigation in New York and a study of
insurance companies made by the Industrial Commission of Illinois.
First let us take up the State funds. In most of the State fund
States it is the policy of the commission to be liberal in making awards
to claimants. Where the State fund is under the jurisdiction and
supervision of the industrial commission, the latter seldom allows a
State fund to appeal from the decision of the commission to the
courts, whereas self-insurers and private insurance companies, of
course, have such right of appeal. Again, the commissions are in
clined to disregard legal technicalities and even to resort to extra
legal means to award compensation in meritorious cases—practices
which are estopped when the insurance carrier is a party in the case.
As so well said by Commissioner Pillsbury, State funds are warm
blooded financial institutions whereas private insurance carriers are
cold-blooded institutions.
Not all of the State funds, however, have adopted the policy of
liberal interpretation. Three State funds (West Virginia, Washing
ton, and Michigan) seem to have interpreted the compensation law
more in the interest of the employer than of the injured workman.
In Washington the commission in rendering decisions against the
workman has been repeatedly overruled by the courts. Moreover, in
this State the procedure relative to claim payments is so hed ged about
with formalities, many of which seem unnecessary, that the injured
workmen suffer as a consequence. In West Virginia, of 183 cases
selected at random I found that 19 per cent received only the weekly
minimum of $5, 28 per cent received less than $7, 40 per cent received
less than $9, and only 32 per cent received the maximum of $12.
Most of these cases represented coal miners and were for the year 1919.
These absurdly low weekly compensation amounts were due to two
causes: (1) To the peculiar interpretation the commissioner has
placed upon this provision of the law, and (2) to the fact that
in many cases no thorough attempt was made to obtain the actual
wages of the worker. The commissioner determines the weekly
wages by dividing the actual earnings for stated periods of 2, 4, 6, or
12 months by the number of weeks actually worked in those periods.
For example, if an employee worked only five days in a two months’
period his earnings for these five days would be considered his earn
ings for two months. Only wages earned from other employers in
the same or similar industries are taken into account. The com
204
COMPARISON OF COMPENSATION SYSTEMS.
missioned requests the last employer to furnish the workman’s wages
from other employers, stating in his form request that unless such
wage data are received the workman will be given the minimum
compensation. In Michigan the State fund is under the supervision
of the insurance department and of a board of directors representing
the policyholders of the fund. The fund is not only exceedingly
slow in making compensation payments, but is constantly at odds
with the industrial commission over the proper handling of its claims.
So much for State funds. It is a practice of insurance com
panies, when criticizing State funds, tacitly to assume that pri
vate carriers, if not altogether perfect, at least can not be charged
with the faults which they attribute to State funds. Such an assump
tion is contrary to the facts. In practically every State investi
gated the commissioners expressed dissatisfaction with the prac
tices of the private insurance companies. They charged many of
the companies with taking advantage of technicalities, with un
necessary delay in reporting accidents and in making payments,
and with making incorrect reports and evading payments. In fact,
in one competitive fund State the chairman of the commission stated
that if all the insurance carriers were like the State fund the com
mission with its present staff of employees could administer the
compensation acts of three States as easily as it now does one State.
Two important investigations—one in New York and one in
Illinois—have brought out certain facts regarding the practices of
insurance companies. In New York, at the request of the governor,
Mr. J. F. Connor last year made an exhaustive investigation into the
management and affairs of the New York Industrial Commission.
This investigation made public several highly significant facts.
Among the most important of these was the large number of under
payments of compensation claims on the part of the employers and
insurance carriers, particularly self-insurers and stock companies. Of
1,000 unselected cases of direct settlements 114 were found to have
been underpaid. This underpayment amounted to $52,279.84, or
$459 per case. The total underpayments on the basis of the 1,000
cases would amount to $1,400,000 annually. An analysis of the 114
cases shows that the private stock companies and the self-insured
employers were especially guilty of this “ short-changing ” practice.
The following table shows the average amount originally paid by
direct settlement and the additional amount awarded after investi
gation and rehearing, classified by type of insurance:
A V ER AG E AM OUNT O R IG IN AL L Y PAID B Y DIRECT S E T T L E M E N T IN 114 COMPEN
SATION CASES AND AVE R A G E A D D IT IO N A L COMPENSATION A W A R D E D ON
R EH EAR IN G .
Type of insurance.
Stock insurance companies................................ .....................................
Mutual insurance companies........................................................................
Self-insurers................................... ..................................................
Total....................................................................................
Number
of under
paid cases.
Average
Average
amount
additional
originally
compen
paid by
sation
direct
awarded on
settlement. rehearing.
79
6
29
$114
29
157
$383
61
747
114
120
459
CARL H O O K ST A D T .
205
The Illinois Industrial Commission has legal authority to examine
into the operation of casualty insurance companies doing business in
the State. Under this authority the commission has investigated
seven or eight companies. Some were found to be all right. Others—
four companies in particular—were found to be very bad. One of
these companies was a reciprocal, one was a mutual, and two were
stock companies. The following is a summary of the reports of the
commission’s investigator. Permission to make use of these reports,
which are in typewritten form, was granted to the bureau by the
industrial commission.
Reciprocal company.— The commission found that the total working
staff of one reciprocal company consisted of an attorney in fact and
one part-time female employee. The books had not been posted for
six months. The company had a deficit of $19,578. Lump-sum
settlements had been made without the approval of the industrial
commission. The rates charged were too low for safety. No acci
dent prevention work had been done. Of 27 unpaid claims 12 were
over three months due and some six or eight months. The investi
gator found 110 cases of underpayment, the maximum underpayment
being $102.50. One hundred and eighty-one cases needed investiga
tion; most of these were either permanent partial disability or inde
terminate temporary disability cases. Nothing had been paid in
most of these 181 cases.
Stock company A .—After examining into the conditions of this
company the investigator reported to the commission as follows:
I find th a t w here c om p e n sation has b e e n p a id in ju re d e m p lo y e e s there has b e e n
no p ic a y u n ish sh a v in g of th e a m o u n t p ro v id e d b y th e w o rk m e n ’s c o m p e n sa tio n a c t,
b u t there h a v e b e e n nu m erou s cases w here com p e n sation w as d u e an d n o t p a id .
* *
*
Y o u w ill note in m ost of th e m a d isp o sition n o t to p la y fair w ith th e in ju re d
e m p lo y e e an d to take ad v an ta ge of te c h n ica litie s an d a v o id p a y m e n t on th e flim sie st
of e xcu se s.
I n j u s t ic e to th e pre se n t c la im m anager i t should b e stated th a t sin ce J u ly 1, w h e n
he assu m ed charge of c la im se ttle m e n ts, there has b e e n a d e c id e d im p r o v e m e n t in th e
h a n d lin g of these m atters, b u t his predecessor seem ed to th in k th a t i t w as a ll rig h t to
a v o id p a y in g c om p e n sation if he co u ld “ g et a w a y w ith i t . ”
T h e h o m e office of th e
c o m p a n y w as aw are of th is state of affairs and in som e cases c o m p lim e n te d h im for h is
in g e n u ity in a v o id in g p a y m e n t.
I n several cases se ttle m e n t contracts h a v e b e e n draw n u p an d signed b y the in ju re d
e m p lo y e e s an d p a y m e n t m a d e in a lu m p su m w ith o u t a n y order from th e com m ission
an d w ith o u t filin g th e s e ttle m e n t con tract w ith th is office.
T h e u su a l e x c u se g iv e n
in these cases to the h o m e office w as th a t th e lo ca l c la im m anager k n e w th a t th e c o m
m ission w ou ld n o t a p p rove su ch a s e ttle m e n t.
T h e h o m e office ac q u ie sc e d in th e
h a n d lin g of su ch cases, an d n o t on ce d id th e y ad v ise th e c la im agen t th a t su ch a p ro
cedure was w rong, b o th from the lega l an d m oral v ie w p o in t.
The following cases were taken from the investigator’s report as
exemplifying the practice of this company as regards its settlement
of claims:
Case N o . 1. A b o y h a d lost four fingers b y a m p u ta tio n .
“ T h e o n ly reason g iv e n
for n o t p a y in g com p e n sation w as th a t no w ritten c la im w as m a d e w ith in s ix m o n th s. **
Case N o . 2.
“ D e lla H -------- w as e m p lo y e d b y th e D --------- L u n c h Co.
D r. W --------- , in
h is report to th e in suran ce c o m p a n y , states th a t th is e m p lo y e e has lost th e use of the
first p h a lan g e an d offers th e gratuitous a d v ic e th a t after she goes b a c k to w ork she w ou ld
forget a ll a b o u t th e com p e n sation for loss of u se, a n d , further, he b e lie v e d th a t the
in d u stria l com m ission w ou ld u n d o u b te d ly aw ard her for such loss of use if th e case w as
b rou gh t before it . ”
T herefore n o th in g w as p a id her e x c e p t for te m p o ra ry total d is
a b ility .
Case N o . 3.
T h e c la im a g en t of th e in suran ce c o m p a n y had re q u ire d th e in ju re d
e m p lo y e e to sign a re c e ip t for $120 b u t p a id h im o n ly $1Q0, “ an d a d v is e d th e h om e
office th a t h e sa v e d th e e x p e n s e o f an a rb itration a n d , in a d d itio n , $2 0 b y n o t g o in g
before the com m ission ^ i t h th is s e t t le m e n t .”
206
C O M PA R ISO N OF C O M P E N SA T IO N SY ST E M S,
Stock company B .— With respect to this company the commission’s
investigator reports that the local adjuster was overzealous to serve
the company’s interests. The investigator discovered 64 cases of
underpayment, the maximum underpayment being $330. The
insurance company had not been reporting its accidents or filing
compensation receipts. The following two cases were taken from
the investigator’s report:
C ase N o . 1 . A n in ju re d e m p lo y e e h a d lo st an e y e on w h ic h a cataract h a d form ed .
T h e lo ca l ad ju ste r w rote to th e h o m e office as fo llo w s: “ I w ill e n d e a v o r to d ispose of it
in th e b e st m a n n e r possib le w ith o u t le ttin g i t go to th e in d u stria l b oard if w e can arrange
to k e e p i t from d o in g so. ”
T h e h o m e office r e p lie d as fo llo w s: “ I n o te t h a t th e i n
ju re d p ro b a b ly h a d a sm a ll p ercen tag e o f v isio n before th is a c c id e n t.
T h is m a y b e a
dangerous case to p e r m it to go to th e b o a r d .”
Case N o . 2.
T h e fo llo w in g le tte r w as se n t b y th e a d ju ster to th e h o m e office: “ F or
y o u r in fo rm a tio n w ou ld state th a t th is in ju re d d id n o t return to w ork for th e assu red ,
an d w e are n o t tra cin g h im u p to see if h e is w ork in g a t th e p re se n t ti m e , as w e d o n o t
w ish to stir u p a c la im . ”
Mutual company.— In its investigation of one mutual company the
commission reports that said company was unduly technical in the
settlement of claims; furthermore, that the company sought the
assistance of its assured employers in hushing up cases. Average
wages were found to be incorrectly determined. There were found
17 cases of underpayment, the maximum underpayment being $21.
Twenty-six cases were questionable and needed investigation. In
many of these 26 cases the company denied liability. In one case
involving concussion of the brain the insurance company doctor
wrote to the company as follows: “ I would again suggest that if it
were possible for B------ & Co. to discharge him after he had worked
awhile I am sure it would be advisable.”
In view of the foregoing facts it is difficult to regard seriously the
contentions of private insurance companies that they furnish better
service than do the State funds. Nor are the above conditions
peculiar to Illinois and New York. Similar investigations in other
States would undoubtedly disclose a similar condition.
Prof. Whitney states that “ the stock and mutual companies both
spend about 7 per cent of the premium for claim adjustment, the
monopolistic State funds spend only 1 or 2 per cent,” while some of
the competitive funds spend 3 or 4 per cent. Prof. Whitney further
states that “ the greater economy of monopoly can not explain the
whole discrepancy between the cost of adjustment under private in
surance and under a monopolistic State fund. The balance of the
’
1
1
!i *
claim adjustment can
* * * The work_
^ „ _
_ _
_ ____ ;o but he should get it
_ ____
prom ptly.” All of which is very true. But the conclusions r r o f.
Whitney draws from the foregoing premises are hardly justified by
the facts. He says:
H o w e v e r , I do n o t k n o w of a n y reason for th in k in g th a t a n y p art of th e 7 p er ce n t
th a t is sp e n t b y the sto c k com p a n ies an d m u tu a l c om p an ies is w aste d .
I a m in c lin e d
to th in k th a t these are th e v e r y carriers w h ic h c a n b e tru sted to g iv e e x a c t ly th e
p roper e m p h asis to th is p a r t of th e w ork. W i t h th e m th e te n d e n c ie s tow ard e c o n o m y
o n th e one sid e an d tow ard thoroughness on th e oth er are b e tte r b a la n c e d th a n u n d e r
m o n o p o listic S tate con trol, w here th e te n d e n c ie s are stro n g ly in th e d ire ction of narrow
e c o n o m y an d p e rfu n ctory tre a tm e n t.
From the insurance company's point of view the expenditure of 7
per cent for claim adjustment may not be wasted. But from the
CARL H O O K STA D T.
207
social or employee’s standpoint the amount expended is not neces
sarily a true test of service performed. How much of this 7 per
cent is spent in the interest of the employee and how much is spent
to defeat the employee’s interests? The Illinois and New York
investigations show that as far as some insurance companies are
concerned the inclination to dispense justice is not particularly strong.
A C C ID E N T P R E V E N T IO N .
The third test of service is the quantity and quality of effective
accident prevention work performed by the different types of
insurance carrier. In this department o f compensation administra
tion both industrial commissions and State funds are weak. Most
of the compensation commissions are not authorized by law to do
safety work. Moreover, unfortunately, many commissioners take
no interest in accident prevention, holding that their functions are
primarily judicial. As regards competitive State funds New York
is the only State in which one of the regular functions of the fund is
accident prevention. California performs excellent safety work, but
this work is done by the industrial commission apart from the State
fund. In some of the exclusive State funds the industrial commis
sions have undertaken comprehensive safety campaigns. In most of
the compensation States, however, the accident prevention work—such as it is— is done by other State departments, usually the
factory inspection department.
On the other hand, many of the private insurance companies have
well-organized safety departments and are doing excellent safety
work. However, it is difficult to measure the effectiveness of the
safety work actually performed because there are few reliable statis
tical data showing reduction in accident severity rates. Frequently
the inspection work of the insurance companies is done for competitive
purposes. That is, much of their inspection is done to get or keep
business irrespective of whether or not it results in actual reduction
of accidents.
S E C U R IT Y .
The third test for comparing compensation insurance systems is
security— security to both employer and employee. When an em
ployer in good faith insures his risk in a responsible authorized in
surance company he should be protected against further liability.
But, on the other hand, the employee should not be deprived of his
compensation benefits through or because of the insolvency of the
employer or the insurance carrier. The employees’ interests are
paramount and should be given first consideration.
Stock insurance companies.—The security or solvency of private
stock companies depone1 ^ 1
1
'
jurance rates and
second upon sufficient
under the strict
supervision and regulation of the State. No company can long
maintain its solvency with inadequate rates. Under stress of
cutthroat competition the temptation to reduce rates below the
safety level becomes too great to resist. State regulation is nec
essary to maintain the solvency of the insurance carrier and to
protect the compensation rights of injured employees. But not
withstanding these obvious facts nearly one-half of the compen
sation States make no provision for rate regulation.
Small
208
C O M PA R ISO N OF C O M P E N SA T IO N SY ST E M S.
wonder then that such a state of affairs has resulted in several dis
astrous failures during the past three or four years. The failure of
such companies as die Guardian Casualty & Guaranty Co. of Utah,
the Casualty Co. of America, and the Commonwealth Bonding & In
surance Co. of Texas resulted in thousands of dollars of unpaid com
pensation claims, In those States in which the law held both the
employer and insurer individually liable these losses had to be met
by the employers. In other States, in which employers are relieved of
further liability when insured, the injured claimants were the suf
f e r e r The Legislature of California appropriated between $60,000
and $70,000 of public money to pay in full the larger claims of injured
employees because of the bankruptcy of the Commonwealth Bonding
& Insurance Co. of Texas. Many smaller claims have not yet been
taken care of. Whether the State should, as maintained by some, either
guarantee the solvency of insurance companies authorized to do
business or make good the losses directly out of the State treasury
where such insolvency is due to lax insurance laws or their adminis
tration is not here discussed. By no means, however, should the
injured employee be permitted to suffer.
Mutual companies .—The provisions as to the adequacy of rates
and reserves for stock companies should apply also to mutuals. In
certain States, however, mutual companies, because of their lower
expense ratio, are allowed to issue rates lower than those demanded of
stock companies. As to the advisability of this practice insurance
actuaries differ. Employers insured in mutual companies, however,
are subject to assessment in the event that the losses exceed the
premiums. The mutual plan, therefore, seems to offer a greater
degree of security to the employee and a less degree to the employer
than stock companies. No large mutual company has failed as yet.
State fu n d s .—Not a single injured employee has lost one cent of
compensation through the financial failure of State funds, either
competitive or exclusive. The nearest approach to this condition
was m Washington in the case of a powder explosion, the first year the
act became operative. One large powder manufacturer questioned
the constitutionality of the act and refused to pay his premium
into the fund. Until the constitutional question was decided this
one classification was temporarily insolvent, with the result that the
dependents of the workmen killed in the explosion were delayed in
receiving their compensation benefits.
The question of failure or insolvency is practically inconceivable
as far as the exclusive State funds are concerned. If the premium
income is insufficient to meet the year’s losses it is only necessary to
increase the rates. This is also true as regards the funds in some of
the competitive fund States. In other competitive fund States, New
York for example, the employer when insured in the fund is relieved
of all further liability. The fund therefore becomes the employee’s
sole protection. Nor does any State having such a fund assume lia
bility in case of the fund’s insolvency. On the contrary, some of the
States specifically disclaim liability beyond the amount of the fund.
Since no State fund has as yet become insolvent the policy of the
State as regards compensation claims in the event of the fundi’s in
solvency can not be ascertained. However, its probable attitude
may be seen from the experience in California where, as already
noted, the legislature of the State appropriated over $60,000 to pay
CARL
HOOKSTADT.
209
claims resulting from the bankruptcy of a private stock insurance
company.
Some of the competitive funds are not required to and do not
report their experience to the State insurance department as private
companies must. It is maintained, moreover, that because their right
to reject undesirable risks is circumscribed by law, State funds
should have greater freedom than private insurance companies with
respect to rates. It is further contended that the power of super
vision over rates, if exercised by a hostile insurance department,
could hamper if not actually put a State fund out of business.
Self-insurers.—Practically all of the compensation States except
those having strictly exclusive State funds permit employers to
carry their own risk subject to such safeguards as the law may pre
scribe. About one-half of the compensation laws require selfinsured employers either to furnish proof of solvency or to deposit
such security as is required by the compensation commission or insur
ance department. In other States they must deposit security in
addition to furnishing proof of solvency. Few 01 the State com
missions, however, require deposit of security in every case. They
hold that it is not necessary in the case of large companies with
unquestioned assets. The filing of mere financial statements, how
ever, showing the assets and liabilities, is an insufficient guaranty
of ability to meet long-continuing payments or to withstand a catas
trophe successfully. The financial statement of a Wisconsin selfinsurer showed net assets of $5,000,000, yet the concern shortly
afterwards went into the hands of a receiver.
Experience as to self-insurance has been reported to the bureau
by the compensation commissions of 21 States. In 15 of these
States no self-insured employer has failed or gone into the hands
of a receiver; 3 States reported one failure each and 1 State reported
two failures, but in all these cases the compensation claims were paid
either by the receiver or through security which had been deposited.
Only 2 States reported failures— 1 small concern in each State—
which resulted in several claims being unpaid.
While the security record of self-insurers has been excellent, this
favorable experience may be due in part to good fortune or pure
chance. It is also quite possible that compensation commissions
are not always cognizant of every failure of self-insured employers,
because such failures may not be reported to them. This was
actually the case in Illinois. In such cases the injured claimant
usually consults an attorney, who takes the matter before a bank
ruptcy court and the commission remains in ignorance of the facts.
SELF-INSURANCE.
Most of the comparisons made heretofore were principally between
private casualty companies and State funds. 1 wish now to re
view briefly the self-insurers, i. e., those employers who under
certain conditions are permitted to carry their own risks. The selfinsurance privilege is usually limited to the larger employers.
Probably the greatest social benefit derivable from self-insurance
is the impetus it gives to accident prevention. Self-insured employ
ers at least have a strong incentive to prevent accidents because there
exists a more direct relationship between their accidents and com26039°— 21------14
210
C O M P A R IS O N O F C O M P E N S A T I O N
SY STEM S.
pensation costs. They are also in a position to pay compensation
promptly but, strange as it may seem, their record in this respect is
no better than either the State funds or private companies.
One important objection to self-insurance is that it introduces
the incentive to deny or pare compensation claims, since the total
accident cost to the employer is dependent not only upon the number
and severity of his accidents but also upon the cost of those accidents.
Consequently, if he can evade payment or reduce the amount he will
thereby reduce his total accident cost. Many self-insured employers
do not resort to such practices. They pay not only what the law
specifies but some even pay full wages during disability and furnish
unlimited medical service. However, I am informed by a number
of industrial commissions that many self-insured employers take
advantage of their peculiar position under the law to evade their
just compensation obligations. Some of these employers will make
a great show of generosity as regards temporary disabilities, but
suddenly develop a niggardly or technical spirit in case of major
permanent disabilities or other costly injuries.
Probably the most important objection to self-insurance is that
it makes the employer practically the final arbiter in the settlement
of compensation cases. The unwillingness of the employees to
antagonize their employer through fear of losing their jobs will many
times prevent them from appealing to the industrial commission.
This latent power of intimidation possessed by self-insured employ
ers, though they may be entirely just, effectively inhibits injured
workmen from seeking redress from the commission. The commis
sion, moreover, since it obtains its information from the accident re
ports of the employer, is not in a position to judge the merits of the
case unless the injured employee brings the matter to its attention.
SITMMAHY CONCLUSIONS.
Cost.—The cost of compensation insurance to employers under dif
ferent insurance systems may be indicated by their expense ratios.
The average expense ratio of stock companies is approximately 37+
per cent; of mutual companies, about 20 per cent; of competitive State
funds, about 12f per cent; and of exclusive State funds, from 5 to 7\
per cent. Under an exclusive State fund, therefore, the cost to em
ployers would be 30 per cent less than under stock insurance and 12J
per cent less than un der mii tual insurance. The total saving to insured
employers of the United States, if all were insured in exclusive State
funds, would be over $30,000,000 annually. This figure is obtained
by applying the differences between the expense ratios of the exclu
sive State fund and stock and mutual companies to their respective
annual premiums.
Service,—As regards service comparisons are difficult because of
the great variations among different insurance systems. As to
promptness of payments there is little to choose among the different
types of insurance carriers. Some of the State funds have the best
record while some have the poorest. The same thing may be said
with respect to stock and mutual companies. However, a com
parison of the best managed State fund with one of the best managed
private companies shows that the best State fund is more prompt in
its payment® than the best private company. Another significant
CO M P AR IS O N O F C O M P E N S A TIO N IN S U R A N C E SYSTEM S AS T O P R O M P TN ESS IN C L A IM P A Y M EN TS AND P R O C ED U R E.
STATES HAVING EXCLUSIVE STATE FUNDS.
Oregon.
Period (in days).
1 to 7............ .
Interval
between
date of
accident
and date
of ap
proval of
award.2
Interval
between
date of
accident
and date
check
mailed.
Interval
between
date of
accident
and date
of first
pay
ment.
Ohio.
Interval
between
date of
accident
and date
of hear
ing.2
1,000
West
Virginia.
118
cases.
308’
cases.
cases.
1S4
cases.
Per ct.
Per ct.
Per ct.
Per ct.
Per ct.
Per ct.
1.2
13.4
18.9
20.6
16.6
10.4
6.0
4.5
3.7
.7
1.2
.5
.5
2.0
10.3
17.6
0.8
5.9
8.5
21.1
21.2
16.7
9.8
8.8
3.9
3.4
2.0
16.9
22.9
4.2
5.9
3.4
1.7
.8
2.5
3.4
1.7
“ T o'
3.4
1.7
T otal..
99.9
100.0
4.2
4.9
14.0
15.9
12.3
11.7
1.1
7.0
13.1
13.3
Per ct.
1.9
4.3
5.3
8.2
65
Per ct.
1.1
8.1
21.2
34.5
44.7
54.0
61.5
17.,3
25.7
25.7
38.5
38.5
i Data compiled by State industrial commission.
Per ct.
1.3
3.8
46
Per ct.
20039°—21. (To face page 210.)
P e r ct.
0.5
99.6
Per ct.
10.1
Per ct.
i -4
1.7
4.8
6.5
25.1
21.7
9.9
9.0
6.5
100.5
Per ct.
13.5
Per ct.
100.1
Per ct.
12.9
14.8
18.4
22.9
28.7
cases.
99.9
4.1
1.5
Per ct.
5.1
7.6
8.4
49
cases.
100.0
99.8
10.1
8.2
59
3.4
4.4
4.4
6.4
704
cases.
3.9
1.4
8.7
7.9
55
1.7
2.2
2.7
3.9
4.6
207
cases.
.6
1.7
12.8
49
Claims unpaid or set
tlements not made
at end of—
13 weeks............. .
12 weeks...............
11 weeks...............
10 weeks...............
9 weeks...............
355
cases.
2.1
5.8
4.5
3.6
1.9
7.8
1.9
1.9
1.3
4.2
9.1
23.1
39.0
51.3
63.0
71.1
Fund. Private.
12.1
8.1
41
0.8
6.7
15.2
36.4
53.3
76.2
80.4
86.3
Fund.
1.4
3.9
9.3
7.5
36
2.0
12.3
29.9
51.0
67.7
77.5
86.3
90.2
Self.
3.3
10.3
6.5
3.8
.5
10.2
0.5
7.6
19.0
28.2
35.8
44.5
50.5
21.1
24.4
32.6
42.9
49.4
Interval
between
between date
date of Interval
of accident and date
accident
of receipt of first pay
and date
ment.
of
voucher.2
Stock.
2.8
1.1
2.0
10.0
9.0
7.7
9.2
10.6
5.8
4.8
5.3
45
Per ct. Per ct. Per ct.
1. 4
3.1
7.9
14.4
39.5
61.2
71.1
80.1
8.2
9.6
10.7
13.5
20.0
0.5
2.4
6.7
12.0
22.0
31.0
38.7
47.9
26.1
31.4
36.2
42.0
52.6
1.3
5.1
13.3
27.6
46.2
60.1
72.0
77.8
8.4
9.8
11.8
15.5
22.0
4.1
14.3
18.4
12.2
18.4
8.1
21
6.1
38
Per ct.
*. 1
18.4
36.8
49.0
67.4
75.5
75.5
77.5
10.2
10.2
12.2
20.3
22.3
Califor
nia.
Interval between date
of accident and date
of award.
Interval between date
of accident and date
of first payment.
Interval
between
date of
accident
and date
of first
pay
ment.
Fund. Private.
Self.
Fund.
Fund. Private.
82
cases.
41
cases.
172
cases.
15
cases.
90
cases.
37
cases.
Per ct.
Perct.
Per ct.
Per ct. Perct.
Per ct.
Self.
2.7
4.8
14.3
9.5
14.3
23.8
4.8
4.8
4.8
4.8
4.1
9.8
Interval
between
date of
accident
and date
of first
Pay
ment.
2.9
14.3
“ 2*6'
2.0
8. J
2.0
Idaho.
Maryland.
Colorado.
Fund.
14.3
18.6
13.9
11.9
5.8
6.5
3.7
2.0
1.4
4.4
1.7
1.0
1.3
2S
14.6
33.5
54.1
70.7
81.1
87.1
91.6
95.3
Interval between date
of accident and date
of first payment.
!•
0.5
7.1
11.4
9.2
7.6
8.7
6.0
6.5
10.3
Utah.
Montana.
Interval
between
date of
accident
and date
of
voucher.2
204
cases.
15 to 21..........
22to 28..........
29to 35..........
36 to 42..........
43 to 49..........
50 to 56..........
57 to 63..........
64 to 70...........
71 to 7 7 . . . . . .
781 o 84.-.___
85to 91...........
92 to 121........
122 to 1 5 1 ....
152 to 182___
183 and over.
Claims paid of sett l e m e n t s made
Within-*
2 w eeks.*,...........
3 weeks.. . . . . . . . .
4 weeks.................
6 weeks.................
6 weeks.................
7 weeks.................
8 weeks,...............
9 weeks.................
Interval
between
date of
accident
and date
of ap
proval of
award.2
Wash
ington.
403
cases.
8to 14............
Median (In days)....
British
Colum
bia.
Nevada.
STATES HAVING COMPETITIVE STATE FUNDS.
3.7
8.5
12.2
12.2
14.6
6.1
10.0
6.1
3 .7
3.7
4.9
6.1
7.3
4.9
4.9
10.0
4.9
19.5
11.6
23.8
12.8
9.3
9.3
5.2
7.0
3.5
.6
1.7
2.3
5.2
1.7
1.2
1.7
10.0
7.3
12.2
2.4
4.9
14.6
4.9
1.2
100.2
54
100.3
100.5
49
54
Per ct. Per ct. Per ct.
4.8
19.1
28.6
42.9
42.9
57.2
57.2
9.6
14.4
19.2
43.0
43.0
* Check mailed 2 days 1ater.
3.7
12.2
24.4
36.6
51.2
57.3
67.3
14.6
19.5
23.2
26.9
33.0
4.9
9.8
19.8
24.7
44.2
54.2
61.5
19.5
19.5
24.4
26.8
39.0
99.8
35
Per ct.
2.9
14.5
38.3
51.1
60.4
69.7
74.9
81.9
9.6
12.1
13.8
14.4
17.9
6.7
6.7
33.3
3.3
11.1
20.0
20.0
26.7
‘ *6*7
16.6
5.6
2.2
6.7
13.3
13.3
2.2
1.1
2.2
1.1
1.1
100.0
31
9.9
40
2.7
29.7
27.0
16.2
2.7
2.7
2.7
2.7
2.7
2.7
4.4
5.5
5.5
7.7
14.4
These 2 days have been added to the median.
4,093
cases.
478
cases
840
cases.
Per ct. Per ct. Per ct.
Per ct.
Per ct. Per ct. Per ct.
y
0.6
2.8
1.1
5.1
6.8
8.5
5.1
9.1
6.8
3.4
6.2
6.2
15.3
9.1
9.7
8.1
10.8
13.5
16.2
18.9
First Second Third Largest
largest largest largest
stock
stock
stock mutual
com
com
com
com
pany. pany. pany. pany,
cases.
99.9
“*5*4
35.1
62.1
78.3
81.0
81.0
Fund.
404
cases.
6.8
6.8
2.7
All in
sur
All
ance self-in
car
surers.
riers.
19 0
cases.
80
446
cases.
3.1
12.3
13.0
12.6
13.0
8.7
7.4
5.4
4.9
2.0
1.8
3.1
5.4
3.4
1.8
2.0
41
16.8
21.1
16.3
12.6
6.8
7.4
5.8
3.2
0.6
3.4
4.5
9.6
16.4
24.9
30.0
39.1
38.0
44.2
50.4
53.8
60.6
3.1
15.4
28.4
41.0
54.0
62.7
70.1
75.5
12.6
15.7
17.5
19.5
24.4
11.4
25.2
21.5
10.9
8.9
5.9
5.4
2.2
2.6
2.6
2.1
1.7
.2
1.7
.5
2.7
.2
.5
.5
1.0
.2
99.8
09.6
.5
.5
.5
26
Per ct. Per ct. Per ct. Per ct. Per ct. Per ct.
6.7
13.4 ‘ ***3*3’
14.4
46.7
41.1
66.7
61.1
80.0
93.3
77.7
93.3
83.3
100.0
85.5
Interval between date
of accident and date
of hearing.
Fund. Private.
16.8
37.9
54.2
66.8
73.6
81.0
86.8
90.0
5.7
6.2
6.7
7.2
9.8
26
Perct.
12
125
cases.
16.7*
2.4
4.8
8.8
8.0
14.4
8.8
10.4
9.6
8.0
13.6
1.6
5.6
5.6
100.0
100.2
63
73
74
Per ct. Per ct.
8.3
25.0
33.3
50.0
16.7
16.7
33.4
50.1
2.4
7.2
16.0
24.0
3S.4
24.8
32.8
42.4
52.8
61.6
0.1
1.8
1.3
2.9
9.0
11.0
15.5
13.8
11.0
9.2
6.2
5.5
3.5
2.9
14.4
13.4
10.9
6.5
5.9
4.6
2.9
4.6
7.0
12.
12.
12.
11.
22.2
100.1
0.1
0.2
38.9
5.6
5.6
3,587
cases.
Per ct. Per ct. Per ct. Per ct.
11.1
5.6
4.0
58.1
4.1
4.6
6.3
6.5
8.2
18
cases.
5.6
8.3
16.7
8.3
16.7
16.7
16.7
11.4
36.6
69.0
77.9
83.8
89.2
91.4
Self.
100.0
59
6.0
12.8
1.3
8.3
11.8
13.3
11.4
10.0
8. G
7.7
5.6
4.4
2.9
11.2
16.8
16.8
33.4
33.4
33.4
72.3
83.4
153
186
cases.
90
cases.
Per ct. Per ct.
Per ct.
Per ct.
Per ct. Per ct. Per ct. Per ct. Per ct.
0.7
0.5
1.2
Per ct.
Per ct.
Per ct.
Per ct.
0.5
3.2
12.3
24.6
16.6
13.9
7.5
4.8
1.6
5.9
2.1
.5
1.1
2.1
.5
0.7
3.3
7.8
18.3
19.6
6.5
0.3
3.0
.5.7
9.6
9.0
12.2
13.1
9.3
6.0
5.1
4.5
5.7
0.2
0.9
6.3
11.7
9.0
16.2
10.5
7.5
7.8
4.8
4.8
4.2
•.2
3.6
15.5
21.0
17.6
15.9
7.5
5.1
3.4
2.4
1.7
26.4
33.6
3.3
“ 3.*3
6.7
3.3
13.7
17.2
6.9
10.3
3.4
3.4
3.4
6.9
13.7
16.7
3.4
10.3
‘ io.’ o*
13.3
13.3
13.3
3. e
100.0
99.7
99.5
48
49
35
Per ct.
Per cl.
10.0
6.7
100.0
100.1
99.9
100.2
100.2
99.9
99.9
64
63
12.2
16.8
19.7
24.3
30.2
* The periods are 1 day less than those given in the margin.
14.5
17.4
21.8
27.4
35.1
16.7
22.4
26.9
32.0
38.0
16.5
20.7
25.5
30.3
38.1
0.2
.4
4.0
19.5
40.5
58.1
74.0
81.5
5.8
7.5
13.3
18.4
20.0
” *3.*8*
1.0
0.9
7.2
18.9
27.9
44.1
54.6
62.1
3.1
9.4
99.4
4.8
3.9
0.3
3.3
9.0
18.6
27.6
39.8
52.9
C2.2
1.4
3.6
13.0
14.5
15.2
9.4
12.3
5.1
5.1
4.3
2.9
1.4
4.3
.7
2.2
3.4
3.4
12.6
50
2.8
7.5
19.3
19.8
9.4
9.0
5.7
5.2
2.4
3.8
1.9
1.4
4.7
2.8
138
cases.
12.5
13.7
8.1
8.7
3.7
3.7
3 .1
3.1
3.1
2.5
1.2
1.2
1.2
2.4
14.0
16.9
20.4
25.9
32.1
160
cases.
187
cases.
14.3
0.1
1.4
9.7
21.5
34.8
46.2
56.2
64.8
Self.
16
cases.
1.8
2.9
11.9
24.7
39.1
52.5
63.4
69.9
Stock.
29
cases.
12.7
59
212
Fund.
Interval
between
date of
accident
and date Interval between
receipt date of accident
and date of first
made
out.
payment.
30
cases.
1.3
0.1
1.4
7.4
18.4
21.6
34.4
33.9
46.9 ' 47.7
58.2
58.7
66.4
67.9
14.3
17.5
cases.
Self.
Interval
between
date of
accident
and date
agree
ment re
ceived.
414
cases.
10.9
0.2
2.0
9.0
21.6
Stock. Mutual.
Interval between date
of accident and re
ceipt of first pay
ments
334
cases.
335
cases.
Per ct. Per ct. Per ct. Per ct. Per ct. Per ct. Per ct. Per ct.
5.6
5.6
5.6
Fund.
2.0
55
Interval between date of acci
dent and date agreement re
ceived.*
Fund.
12.0
CO
Massachu Indiana.
setts.
Michigan.
Interval
between
date of
Interval between date of accident and dato of approval of accident
agreement.*
and date
of first
pay
ment.
Fund.
2.7
2.7
40
Pennsylvania.!
New York.
Self.
17G
cases.
PRIVATE INSURANCE STATES.
3.3
3.3 ’ “
13.3
26.6
39.9
53.2
53.2
56.5
33.4
33.4
33.4
36.7
43.4
i3.*7
30.9
37.8
43.1
51.5
54.9
58.3
17.1
20.5
20.5
34.2
41.1
35
Pet Ct. Per ct. Per ct.
2.1
3.3
4.3
10.8
5.7
1 .7
30.1
49.9
59.3
68.3
74.0
79.2
11.3
12.7
14.6
18.4
20.8
18.7
33.2
4S.4
57.8
70.1
75.2
10.8
12.2
15.1
19.4
24.5
6.2
12.5
18.7
6.2
6.2
*25.*6'
12.5
12.5
84
Per ct.
33.7
46.2
59.9
6.2
76.7
80.4
18.7
37.4
37.4
68.0
6.1
9.2
12.3
15.4
19.1
50.0
50.0
56.2
62.4
62.4
“ T i'
2.6
0.5
2.7
17.7
27.4
23.1
5.9
4.8
6.5
2.2
2.2
.5
.5
.5
2.7
.5
1.1
1.1
100.4
100.1
99.9
34
34
11.1
9.8
4.6
3.3
3.3
3.3
1.3
2.0
Per ct. P er ct.
3.7
16.0
40.6
57.2
71.1
78.6
83.4
85.0
5.8
6.9
7.4
9.5
15.4
For example, 1 to 14 days should read 1 to 13 days; 15 to 21 days should read 14 to 20 days, etc.
4.0
11.8
30.1
49.7
56.2
67.3
77.1
81.7
7.2
8.5
11.8
15.1
18.4
1.
4.
25.
12.
6.
6.
10.
7.
4.
4.
99.8
29
35
Per ct.
3.2
20.9
48.3
71.4
77.3
82.1
Per ct.
5.5
31.1
43.3
50.0
56.7
66.7
74.5
78.9
88.6
90.8
5.4
5.9
6.4
6.9
9.1
8.8
11.0
13.2
16.5
20.9
Period (in days).
1 to 7.
8 to 14.
15 to 21.
22 to 28.
29 to 35.
36 to 42.
43 to 49.
50 to 56.
57 to 63.
64 to 70.
71 to 77.
78 to 84.
85 to 91.
92 to 121.
122 to 151.
152 to 182.
183 and over.
Total.
Stock, <
44
Mutual,*
51
Self, <
54
Reciprocals, <52
Median (in days).
Claims paid or s^tt le m « n t s madd
within—
2 weeks.
3 weeks*
i weeksi
5 weeks*
6 Weeks*
7 weeks*
8 weeks.
9 weeks.
Claims unpaid or set*
tlements not made
at end of—
13 weeks.
12 weeks.
11 weeks.
10 weeks.
9 weeks.
CARL
HOOKSTADT.
211
fact developed by the investigation is that self-insured employers,
whom one would expect to pay promptly, are no more prompt in
this respect than either State funds or private carriers. As regards
liberality of payment most of the State funds are more liberal in this
respect than either stock or mutual companies. As regards accident
prevention some of the private companies are doing excellent safety
work whereas few of the State funds have done any effective safety
work.
Security.— Thus far no injured workman has lost one cent of com
pensation because of the insolvency of State insurance funds, nor has
any large mutual company become insolvent. On the other hand,
there have been several disastrous failures of private stock companies
during the last three or four years. These failures have resulted in
hundreds of thousands of dollars in unpaid claims. As regards selfinsurance, the experience of 21 States has been reported to the United
States Bureau oi Labor Statistics. In 15 of these States no selfinsured employer has failed or gone into the hands of a receiver;
3 States reported one failure each and 1 State reported two failures,
but in all these cases the compensation claims were paid either by the
receiver or through security which had been deposited. Only two
States reported failures—one small concern in each State—which
resulted in several claims being unpaid.
The Chairman. I think you will agree that if we got nothing else
from coming to this convention, it has been worth while to come
here and learn what Mr. Hookstadt has told us as to our various
failings in his very excellent talk this morning. We look forward
with a good deal of interest to receiving the written report which
I understand will follow, embodying what he has said and the sta
tistical proof of these statements.
Tlie next item on the program this morning is a paper by Prof.
Whitney, manager of the National Workmen’s Compensation Serv
ice Bureau, of New York.
COST, SERVICE, A N D
SEC U R ITY U N D ER V A R IO U S SYSTEM S OF
IN SU RAN CE.
B Y ALBERT W . W H IT N E Y , GENERAL M ANAGER, N AT IO N A L W O R K M E N ’ S COM PENSATION
SERVICE BUREAU.
I assume that we are trying to discover what form of insurance
carrier has the greatest social value—that is, what carrier can give
the greatest service at the least cost. The matter must therefore be
discussed wholly from the standpoint of the public.
The subject is a difficult one at best, but much that has been said
and written on it has certainly only added to the confusion. I do
not believe, for instance, that anything is to be gained by a direct
comparison of rates. The conditions under which the rates are ap
plied are so different that such comparison is misleading. Further
more it goes without saying that any figures based on income and out
go are wholly misleading.
As a basis for a comparison that will have a value we must analyze
the cost into its elements. Here we are met by the fact that, the
figures of most of the State funds are not obtainable, partly because
no separation of the elements of cost has been made, and partly be
cause the expenses are intermingled with the expenses of the com
missions. Figures are obtainable for the stock companies and for
the mutuals, and for such of the State funds as report their experi
ence to the State insurance departments.
There is one element of the cost that can be dismissed with the
least possible mention; that is the pure premium cost. The last word
has been said for the immediate present on this subject in the revision
of rates that has just been completed by the National Council on
Workmen’s Compensation Insurance; this revision has been made on
the basis of twelve and a half billion dollars of pay-roll exposure.
The experience of many carriers in many States has been reduced to
a common basis, and combined. The results, representing the com
bined judgment of so many carriers and so many commissions, may
be taken to be a true picture of pure premium cost.
Any variation from this standard pure premium cost must be due
to (a) insufficient exposure; (b) differing local conditions; ( c) selec
tion of risks; ( d ) improvement of risks; or (e) inequitable settle
ment of claims.
The mutuals have in general had a loss-ratio experience that is
more favorable than the average. This is doubtless due, for the
most part, to selection; they have been able to attract risks that
showed a favorable experience.
State funds can scarcely take advantage of selection; certainly the
monopolistic State funds can not do so, and as their accident pre
vention service is weak or nonexistent, a loss-cost, in their case, that
is consistently less than normal must presumably imply unfair settle
ments, unless it can be shown to be due in some legitimate way to their
212
ALBERT
W .
W H IT N E Y .
213
peculiar way of doing business; similarly, an abnormally high losscost must indicate an excessive liberality. Briefly, my contention is
that loss-cost is something that should be the same for all carriers,
and where it is not so the situation calls for an explanation, an ex
planation, however, that should not be difficult to find.
The really difficult and actually disputatious part of the problem
has to do with that part of the premium that goes for expense—that
is, for cost other than loss-cost.
I am able to give herewith through the courtesy of the New York
Insurance Department advance figures for the premiums and ex
penses on the country-wide experience for calendar year 1919, of the
stock companies and mutual companies entered in New York State;
these are from official Schedule W figures; the figures have not been
audited, however.
For the stock companies the earned premiums were $85,599,230, the
expenses incurred $33,107,541; expressed in percentages, the total
expense ratio was 38.68, of which the claim expense was 7.22, the in
spection expense 2.08, taxes 3.63, home-office expense 8.72, and acqui-.
sition expense 17.03; for the mutuals the earned premiums were
$18,649,005, the expenses incurred $3,672,010; the total expense ratio
was 19.69, of which the claim expense was 7.11, the inspection expense
2.25, taxes 2.06, home-office expense 5.10, and acquisition expense 3.17.
The expense ratio varies from apparently less than 3 per cent in
the case of the Ohio State fund to an average of 39 per cent in the
case of the stock companies. This startling difference needs ex
planation.
I should like to be able to take the expense items up one by one and
determine what each ought to be in order to secure the most satis
factory results from the workmen’s compensation system. Unfor
tunately the problem is so involved that such definite, categorical
results can not be expected. I believe, however, that this is the
proper line of attack, and I shall make an attempt at such an analy
sis, even though the results may be inconclusive and otherwise open
to criticism.
First, the distinction must be recognized between conditions under
monopoly and conditions under competition. In general, the ex
pense of operation under a monopoly should be less than under com
petition ; this applies to certain elements at least of the cost of work
men’s compensation. The stock and mutual companies both spend
about 7 per cent of the premium for claim adjustment; the monopo
listic State funds, on the other hand, spend only 1 or 2 per cent.
Aside from the partial, but I believe significant, explanation of this
which I shall offer, this is to be accounted for by the greater econo
mies in adjustment which can be effected by having all the business
under a single control. Competition costs money.
The greater economy of monopoly can not explain the whole of
the discrepancy between the cost of adjustment under private in
surance and under a monopolistic State fund. The balance of the
difference is explained by the fact that proper claim adjustment can
not be made for 1 per cent of the premium or for anything like it.
The claim adjusting o f the Ohio State fund is done mostly by cor
respondence, under which a high degree of justice can not be pro
duced; furthermore, the delay m making settlements has been very
great. A niggardliness that fails to provide for thorough and
214
COST,
S E R V IC E , A N D
S E C U R IT Y
OF IN S U R A N C E .
prompt elaim adjustment can not be defended. The workman should
not only get what he is entitled to, but he should get it promptly.
Every da}?' of delay in the payment of compensation counts up as a
heavy discount against its value.
It is not strange that claim adjustment should be expensive.
Claim adjustment is the act of dispensing justice. The cases that are
to be adjudicated are multitudinous and technical. Justice can not
be done without thorough and expert investigation. It is not dis
creditable that money should be spent for this; it is discreditable
that it should not. It is even better that some money should be
wasted than that the injured man should not receive what is due him.
However, I do not know of any reason for thinking that any part
of the 7 per cent that is spent by the stock companies and mutual
companies is wasted. I am inclined to think that these are the very
carriers which can be trusted to give exactly the proper emphasis to
this part of the work. With them the tendencies toward economy
on the one side and toward thoroughness on the other are better
balanced than under monopolistic State control, where the tendencies
are strongly in the direction of narrow economy and perfunctory
treatment.
I notice that the California State fund has spent over 4 per cent
and the New York State fund has spent 8J per cent in adjustment.
I understand, however, that its adjustments are not satisfactory to
the New York State fund itself and that the expense for this item
will be increased. We seem justified in saying that at least 6 per
cent should be spent for adjustment under the conditions that obtain
in general if it is to be done properly; this is under competition;
under monopoly the amount should be less.
The second element of expense is the expense of inspection, in
cluding the expense of rating bureaus, For both stock and mutual
companies this is about 2 per cent. Every cent of this money is well
spent and not only brings its return in lowered rates to the assured,
but, in what is more important, saves lives and limbs for the worker.
This element of insurance cost should be increased rather than dimin
ished; it might be made twice as great and still have the highest
social value. This is the field in which the monopolistic State funds
are most notably weak. So far as I know their service is negligible.
In the matter of taxes the stock companies pay 3| per cent and
the mutuals 2. The only State fund, so far as I know, to pay taxes
is the California State fund, to which the credit is due of having
voluntarily put itself upon a tax-paying basis for the sake of equity
and competitive equalit}7.
It is an injustice to the taxpayers of a State to have its State fund
exempted from paying taxes; it means only that the burden which
the State fund’s policyholders should bear along with all others is
shifted to the shoulders of the general taxpayer. There may well be
some difference between the tax rate of the stock company and the
mutual, to represent a levy upon stock-company profits. I f the fig
ures are right, however, the difference indicated above is too great.
The home office expense of the stock companies is nearly 9 per
cent and of the mutuals 5. This difference is accounted for partly
by the fact that the stock companies are more careful in their audits
and partly by the expense to the stock companies of keeping track
of commissions and other agency matters. This latter element prob
ALBERT
W.
W H IT N E Y .
215
ably amounts to as much as 3 per cent. The home office expense of
the competitive State funds is comparable with that of the mutuals.
I can not see why the home office expense of a monopolistic State
fund should be appreciably less if its business is to be handled with
efficiency.
We now come to the item of acquisition cost, that element of cost
that differentiates the carriers operating through agents from those
that deal directly with the assured. The difference in acquisition cost
between the stock companies and the mutuals is about 14 per cent.
To this should be added the 3 per cent difference in home office ex
pense, which is due to the cost of the agency system. This makes
a difference of IT per cent in all that arises out of the agency system.
The mutuals have some acquisition expense, as do also the com
petitive State funds; I understand that the New York State fund
is planning to spend more for acquisition by inaugurating a system
under which its auditors are made use of for solicitation purposes,
From the foregoing analysis it is evident that there are two out
standing lines of cleavage between insurance carriers. Each of
these differences needs discussion, not only from the standpoint of
expense but from the standpoint of service.
First, there is the question of monopoly versus competition. On
one side are the monopolistic State funds, on the other’the stock com
panies, the mutuals, and the reciprocals.
Second, tliere is the question of agency versus nonagency. Here
the line is not drawn quite sharply, but in general we have the
stock companies against the rest of the field,
The more fundamental and the more important of these questions
is that of the relative advantages of competition and of monopoly.
The monopolistic State funds are operating at a lower expense than
either the stock companies, the mutual companies, or the competitive
State funds. Is this sufficient justification for monopoly ?
This part of the question breaks up into two parts: First, a com
parison of competition with monopoly as it actually works out in
existing State funds and, second, a discussion of competition versus
monopoly under the best conditions. My belief is that in actual prac
tice the present monopolistic State funds are seriously sacrificing not
only justice, but social well-being in general, in the desire for economy.
The State funds are not doing justice to the injured, either in the mat
ter of correct distribution or prompt distribution of compensation;
they are not doing justice to the assured, either in correctly deter
mining his rate or in helping him to improve his hazard; they are
not doing justice to the taxpayer^ for they are saddling him not
only with the expense of taxes which their assured do not pay, but
with the expense of the industrial commission, which in some other
States, such as New York, is borne by the companies, and hence
indirectly by the assured.
I f a monopolistic State fund were to undertake prompt and thor
ough claim settlement, inspection of risks, payment of taxes, effective
auditing and equitable determination of rates, it would greatly in
crease its expense, but it would also greatly increase the value of its
service to the assured and to the public.
So much for things as they are. Now let us deal with a hypo
thetical State fund which has not sacrificed social efficiency to
economy. Such a State fund should be able to operate more eco
216
COST,
S E R V IC E , A N D
S E C U R IT Y
OF
IN S U R A N C E .
nomically under monopoly than under competition. Is competition
still worth while under such circumstances? Competition is ad
mitted to be an expense; is it an expense that is justified? We must
be able to show concrete results or competition is condemned on the
ground of its cost.
The determination of this question depends upon the matter that
is to be the subject of monopoly. I suppose none of us would desire
to see the mail service as a whole handled competitively, although
competition governs minor contracts even here. Nor should we de
sire to see the taxes collected by private enterprise. On the other
hand, only the most thoroughgoing socialists would desire to see such
a business as selling shoes taken over by the State. The proponents
of State monopoly in the field of workmen’s compensation base their
case upon the contention that workmen’s compensation insurance is
closely analogous to a tax, particularly in view of its compulsory
character. I f this contention could be substantiated the argument
for a State monopoly would be strong.
The supporters of State monopoly have been led into the error of
thinking that workmen’s compensation insurance is a simple thing
involving only an elementary type of fiduciary relation. This ap
pears not only in their general attitude as aforesaid but in the naive
actuarial principles that they have embodied in their laws. Nothing
could be further from the truth. Workmen’s compensation is not
simple; it is not simple either in the conception of social justice upon
which it is based, nor in its practical implications, nor in its latent
possibilities. The development of these implications and possibilities
should not be left to bureaucratic control; there is needed the clash
of many minds; methods should be tested in the crucible of com
petition.
Insurance is not a simple idea; it is not only complicated in actual
practice but it is complicated in its possibilities as a social force.
It is a system by means of which the solidarity of interests that is
found in socialism can be secured without the evils of socialism and
without a sacrifice of the benefits of individualism. Is it desirable
that the development and use of such an instrument should be put
under the control of a State monopoly or of any kind of monopoly?
Workmen’s compensation itself is based upon a new theory of
justice, a revolutionary theory of justice that substitutes actual social
need for an academic theory of individual fault. Need we be sur
prised if in cutting ourselves loose from the old justice we find impli
cations that we had not foreseen? Can we, in fact, stop with a con
ception of a justice of restitution—must we not entertain the larger
conception of a justice of prevention? It is not enough for justice to
work out an amelioration of the past; it must make a better future.
This thought has been developed by Mr. Louis Bartlett, the mayor of
Berkeley, in an article on “ The newer justice ” in the September At
lantic Monthly, in which he says: “ * * * Justice is not merely the
enforcement of rights by the courts. It is not a matter of merely
remedying past conduct or redressing wrongs that have been com
mitted. It should consist also in ordering life so that injuries do
not occur.”
All this is latent in the concept of workmen’s compensation. But is
this imaginative field, teeming with possibilities of the highest social
ALBERT
W .
W H IT N E Y .
217
significance, to be turned over for development to the stupidity of a,
bureaucratic control ? It is precisely this larger requirement that has
made workmen’s compensation not a fit subject for a monopoly. It
is precisely here as a matter of actual practice that the monopolistic
State funds have made their most signal failure. They have visual
ized workmen’s compensation in its most matter-of-fact, unimagina
tive form, as purely a problem of collection and distribution. Even
in this field they have dispensed a poor type of justice both to the
assured and to the injured. The tendencies in the monopolistic sys
tem are all toward narrow economies which quite fail to see the re
quirements of the larger and finer justice. The monopolistic State
funds have totally overlooked the opportunities for the development
of workmen’s compensation on its preventive side.
There is nothing of greater importance in the field of practical
social philosophy than the imaginative will to develop all the possi
bilities that are latent in our institutions. We want not merely the
direct effect; we want the indirect effects. We want not merely the
undertone; we want the overtones as well. We want not merely the
primary product; we want the by-products, so far as they are good.
I doubt if we realize how many of the most important elements of
our life are secondary. Happiness itself is not primary; it can not
be had by striving for it; it is a by-product of work. The modem
development of industry has shown that the best results can not be
secured unless industry is looked at as only a part of life in general.
The solution of the industrial problem brings with it safety, sani
tation, good housing, clinics, playgrounds, vocational education,
entertainment; in fact, almost all the elements of life.
As a matter of fact, it has been the interest in safety that has to a
considerable extent opened up this field; and to a considerable extent
the development of safety as a by-product of workmen’s compensa
tion has been due to the insurance companies.
The private insurance carriers with some of the competitive State
funds are spending more than a million dollars a year in the develop
ment of the larger idea of justice. I refer particularly to the de
velopment and administration by bureaus of a rating system that
shall do supreme justice to the assured, and that shall at the same
time operate to reduce the hazard. They are spending far more in
their own offices in developing the statistical, actuarial and engi
neering background.
I presume you may all be familiar with the merit-rating systems
that have been developed by the private insurance companies, but,
as a matter of record, may I briefly explain them? John Jones de
sires a rate upon his machine shop. It is not sufficient to predicate
his rate solely upon the hazard of the class. That must be the basis,
to be sure, but there are good machine shops and bad machine shops.
Partly as a matter of pure justice, partly as an incentive to improve
conditions, partly as a sheer competitive necessity, it is necessary to
develop a system by which John Jones shall obtain a rate that will
measure his own individual hazard. This has been done by the suc
cessive application of two plans, first, a modification of the rate by a
schedule of credits and debits upon the result of the physical inspec
tion of the individual plant, and, second, by a still further modifi
cation on the basis of the actual experience of the risk. These plans
218
COST,
S E R V IC E , A N D
S E C U R IT Y
OF
IN S U R A N C E .
are called schedule rating and experience rating. The}7 were origi
nated by the stock companies (and later developed by the National
Council) as a competitive necessity. It was necessary to make right
rates, for otherwise the business could not be held against the com
petition of carriers that were free to charge any rates they pleased
and against the tendency to self-insure. It is safe to say that no such
system would have been developed under a monopolistic State fund.
I'he nearest approach is a crude experience rating which is used in
Ohio, but which is far from producing equitable results. Merit rat
ing is an example of expert technical work which is the product of
competition.
I scarcely need to point out the important effect of merit rating
upon accident prevention. A tangible economic incentive is given
to the assured to improve his risk; and the practical effect has been
the spending of millions of dollars by the assured in accident pre
vention, all of which and more too is returned to him in the form of
lowered rates; society is the gainer by the saving of thousands of
lives and limbs.
This is only one of various opportunities for social betterment,
which an imaginative treatment of insurance will discover. Another
such field, which has been scarcely touched, is rehabilitation. I wish
that this association might take the initiative in bringing about a con
ference between its members and the insurance carriers in order to
discover how to amend the compensation laws so as to offer an eco
nomic inducement for the development of rehabilitation. I f there
is an opportunity under the law—that is, if the return of the injured
man to work is recognized in a reduction in compensation to be paid—
tbe insurance companies will bring the force of rehabilitation into
action and produce an economic gain to the worker, to the assured,
and to society. Under a monopoly there is little incentive for this.
With the second general question, the relative merits of agency
versus nonagency, and the relative merits of the various forms of car
rier in particular, I have much less concern with. In common with
every other good citizen, I am desirous of seeing those institutions de
velop and flourish that will produce the greatest social well-being. I
do not presume to know what those are; I do not presume to know the
needs of the world. I not only prefer to leave this matter to be
decided by competition, but I suspect that this way of deciding it has
the advantage of being a fundamental social process.
The stock companies have at present, and have always had, the
great bulk of workmen’s compensation business. The mutual com
panies and the competitive State funds are, however, making a signal
advance and an interesting and significant competitive situation has
arisen. In this I have every reason to believe that the public is
competent to decide what it wants if it is given the opportunity to
exercise its choice.
The question as between the stock companies and the mutuals is
perfectly clean-cut. It is simply this: Is there a difference of 19 points
between the value of stock insurance and the value of mutual insur
ance?
It is highly desirable that these two types of insurance should
coexist, for they represent two opposite tendencies and their com
petitive influence each upon the other is wholesome. With all due con
ALBERT
W.
W H IT N E Y .
219
sideration for the fact that some mutuals are operating more expen
sively than others, and that some are giving better service than others,
and for the fact that some stock companies are giving poorer service
than others, the fundamental distinction nevertheless between stock
insurance and mutual insurance is as follows: Mutual insurance
makes its appeal to the desire for economy; it is essentially a cheap
insurance and is sold to those who are willing for the sake of making
a saving to accept a somewhat inferior grade of protection. Stock
insurance is sold, or should be sold, on the basis of its quality. Its
protection is not only superior but it is carried directly to the assured
through an agent; it should carry with it in every way a superior
service. It is wholly desirable that the tendency toward cheapness
and the tendency toward high quality should be continually holding
each other in check. The tendency on both sides should be in the
direction of producing sound insurance and good service at a reason
able price. Insurance must not be made so good that the price is
excessive; it must not be made so cheap as seriously to affect its
quality. It is the function of the employer by the free exercise of
his choice to decide where the balance shall lie, and he should be
aided in this choice by having the advantage of the fullest oppor
tunity to ascertain the facts.
The competitive problem for the mutual is whether its dividend
will offset the lower quality of its protection and service; the com
petitive problem for the stock company is whether its superior pro
tection and service will offset its increased cost.
Insurance in general can not be sold without solicitation, and the
agency system is the concrete recognition of that fact. The situa
tion in the field of workmen’s compensation is, however, peculiar
because of the fact that this form of insurance is virtually compul
sory. To a very considerable extent, however, even here the solici
tation by the agent is a social assets and even a necessity if insurance
is to be made universal; but yet in this field particularly the agent
is left with the serious problem of showing that he can give a service
that will represent the difference in cost arising out of the agency
system. The competitive problem for the agent is therefore one of
service. Can he so impregnate his business with service that it is
worth the difference in cost? The verdict is to be given by the
public. I f the verdict is against the agent he will either lose his
business or he will have to accept a lower fee.
In closing, and at the risk of seeming academic, may I say a few
words of a more general nature? I venture to say that the world
is more in need of ri^ht processes than of results. The world is
full of actual accomplishment; much of it is bad. Wealth is being
piled up by processes, many of which do not stand up under the
test of social justice; nor can all the accomplishments of labor be
justified on the grounds of social right.
Germany built up a wonderful system of social and industrial
prosperity, including the most elaborate system of social insurance
that has ever been developed, but her life and culture was founded
on a false basis and the structure has fallen. There is one way to
avoid revolution and that is by giving free opportunity for evolu
tion. Evolution is that gradual growth that is controlled by a per
petual contact with reality; that is, the actual needs of the world;
2 2 0
COST,
S E R V IC E , A N D
S E C U R IT Y
OF IN S U R A N C E .
revolution is that sudden and cataclysmic adjustment that becomes
necessary when the forces that normally control are prevented from
acting.
Competition is one of these forces. Competition is an ever-acting
force, which selects what is worth keeping and eliminates the rest.
When this force is not allowed to act systems grow up which are out
of line with the world’s needs. They must then be gotten rid of, but
this can be done only by the exercise of other forces of a disruptive
nature. Economic force is slow but it is more sure than political
force. I f under fair and open competition one particular type of
insurance can drive the others from the field or if under such condi
tions a balance is found, the result has significance and permanence.
The creation of a State monopoly means little; an institution that
has come in through political action can also go out through politi
cal action.
Competition is not wholly good; for instance, it is expensive, but
any expense or loss of efficiency that is the result of stopping to
plumb up our work with the world’s needs is not a loss in the long
run.
Some of the other effects of competition are evil; these must be
eliminated; the regulation of competition should be one of the im
portant functions of the State.
This brings me to the question of competitive State funds. A
State fund can be run well; I have the greatest admiration for the
best of them, the California State fund. Every citizen must rejoice
at the fact that a State has been able to administer a trust with such
intelligence and integrity. Few States, however, under existing
political conditions could be so successful.
I can not believe it desirable that States in general should enter
this field, provided proper results can be otherwise secured. I believe
it is in general better for the State to act as regulator rather than as
competitor. My own feeling in this matter goes far back to the
springs of human life. Surely the essence of life is not wholly or
even mostly in concrete, tangible accomplishment; it lies rather in
the experience and character that are wrought out of living. That
State is doing the best for its citizens which gives them not the most
highly perfected world in which to live but the richest opportunity
for work. To be specific, I believe that, unless there is some very
good reason to the contrary, the work of developing such a business
as workmen’s compensation belongs to the citizen and not to the
State, not alone because he should be able to do it better, but because
he has a right to play the game for its own sake; is not this the
essence of democracy %
The C h a i r m a n . The next item on the morning program is a paper
by Mr. S. Bruce Black, of the Liberty Mutual Insurance Co., of Bos
ton, Mass. Mr. Black is not here, but his paper is available, and I
am afraid we will not have time to have it read this morning. With
your permission I will direct that it be embodied in the records of
the convention.
M U T U A L IN S U R A N C E.
B Y S. BRUCE
BLACK,
VICE PRESIDENT AN D AC TU A R Y , LIB ER TY MUTUAL INSURANCE
CO., BOSTON, M ASS.
[This paper was submitted but not read.]
Mutual insurance is the oldest form of insurance. In 1696 the
“ Hand in H and/’ a mutual fire insurance company, was organized in
England. It prospered as such continuously until 1905, when, with
assets of $15,000,000, it combined with another insurance company.
In 1752 the first American insurance company, u Philadelphia Contributionship,” was organized, with Benjamin Franklin as a director,
to write fire insurance on the mutual plan. In 1759 the first life insur
ance company in America was formed, also on the mutual plan. These
two companies are still doing business. In 1887 the first American
liability insurance company was formed, and on the mutual plan, and
it is still doing business successfully. It was not by accident that the
earliest insurance business was done on the mutual plan. Insurance
is mutual in principle. It is cooperation among individuals or cor
porations for protection against losses from happenings unpredictable
as to time or extent, or both.
Early in the development of commerce there was the need of pro
tection from losses of the sea. Then there developed the need of
protection against losses by fire; and so on.' Very naturally, indi
viduals and firms cooperated to achieve mutual protection. To-day,
as always in the past, individuals and corporations are cooperat
ing through countless associations for a variety of purposes. It
was wheQ mutual insurance companies had demonstrated that insur
ance could be conducted as a business that persons with money to
risk saw in insurance a chance for profit and stock companies came
into the field, and, let it be added, with entire propriety.
Mutual insurance is not an experiment, neither from the standpoint
of age nor size. As everyone knows, the great bulk of life insurance
is written by mutual companies. The giants in the insurance busi
ness, such as the New York Life, Metropolitan, the Equitable, the
Prudential, and the Northwestern, are all mutual companies. Who
has not heard of the factory mutual fire insurance companies of New
England, which have been for three-quarters of a century an essential
part of the manufacturing development of New England, and which
have extended their operations throughout the East and Middle West
until it is said that 90 per cent of the improved factory risks east of
the Mississippi are insured in these so-called “ factory mutuals” ?
These companies are noted for their direct savings to policyholders
through economical administration, but much more noted as leaders
in the elimination of fire hazards.
You are particularly interested in compensation insurance. Most
of the mutual companies writing this class have been organized since
the passage of the compensation acts, while most of the stock com-
now writing this class had been previously writing employers’
f>anies
iability insurance, or so-called negligence insurance, for many years.
221
222
M UTUAL
IN S U R A N C E .
In spite of this, and in spite of very restrictive laws in man3r States,
restrictive as compared with the laws regulating stock companies,
mutual companies have been extraordinarily successful. In 1913
something like 12 mutual companies wrote less than $2,500,000 in
compensation premiums; in 1916 there were about 40 such companies
writing around $7,500,000, while in 1919 the same number wrote over
$26,000,000 in compensation premiums.
In States where mutual companies began with the beginning of
compensation insurance they now write a large share of the total
business. For example, in Massachusetts out of a total of $13,500,000
premiums written in 1919, six mutual companies wrote $6,500,000,
while the balance was divided among 21 stock companies. In per
centage the mutuals wrote in 1919 47 per cent of the total business
of the State, as compared with 26 per cent in 1916 and 19 per cent in
1913.
Time has tested the principle of mutuality in insurance. That it
has been found to be sound is proven in the success of mutual com
panies in all lines of insurance. The success of mutual compensation
carriers would indicate that hi this field mutual companies are to
become as prominent as in life insurance. The efficacy of any form
of compensation insurance carrier is tested by three criteria:
L The certainty and promptness with which it gets to the injured
employee the benefits to wThich he is entitled by law.
2. The ability of the company to reduce the likelihood of injuries
to employees of its assureds and to mitigate the serious results of
injuries when suffered.
3. The accomplishment of these results as economically as is
possible without in any way lessening the ability of the carrier to
produce such results.
The certainty of payments, assuming, of course, a willingness to pay,
depends primarily upon the financial security back of the contract
that the insurance carrier has to sell. The laws of our States and the
administrators of those laws presume that any carrier licensed to do
business is financially able to fulfill its contracted obligations, for it is
upon this assumption that a license is given, But, unfortunately,
not all companies, even though licensed, have been able to pay their
just claims, and in many States there are injured employees and de
pendents of injured employees wrho have failed to get all, or even a
part sometimes, of the benefits to which they are entitled; and in
many States employers are paying benefits to injured employees
which insurance carriers had contracted to pay, but have been unable
to fulfill their obligations. Do not think for a moment that these
failures have been mutual companies, as stock companies would have
you infer.
So it is that the injured employee and the employer are vitally
interested in the security behind the insurance contract. Among mu
tual companies, as among stock companies or among State funds, or
among interinsurers, some companies are much larger and stronger
than others. But as a class, size for size, mutual companies offer
greater security than the other kinds of earners. Mutual carriers of
compensation insurance are almost without exception possessed of
substantial surpluses for the meeting of unusual losses; they operate
on a basis whereby they return dividends up to 30 per cent of the
annual premiums-earned largely from savings in the cost of adminis
S. BBUCE
BLACK.
223
tration, and this margin is available, if needed, to pay losses. Then,
almost without exception, mutual companies reinsure themselves
against catastrophic losses. The maximum insurance retained by the
company does not as a rule exceed $50,000.
Let us illustrate by an example: The Liberty Mutual of Boston had
net premiums in 1919 of over $5,000,000 and a surplus of over
$800,000. It has regularly returned a 30 per cent dividend to its
policyholders, and this dividend is largely savings in the cost of
administration, money spent and not saved by stock companies. In
addition it carried reinsurance against any catastrophe over $50,000,
so that the largest catastrophe could have added but 1 per cent of its
premium to the loss ratio. Supposing during that year, due to inade
quate rates, a very high accident rate, or for any other conceivable
reason, the losses of the company should have doubled. What re
sources would have been available to pay such losses? We would
have, first, our surplus of $800,000, and, second, we would have had
30 per cent of our premiums, or $1,500,000 which we returned as
dividends, which we could have used to pay losses, making available
$2,300,000 with which to pay the unheard of and inconceivable thing
in so large a company— a doubling of the losses; and we would
have paid the losses and still have had some surplus. If, with the
same surplus, we had had $10,000,000 in premiums, we would have
had available for increased losses $3,800,000, and with $25,000,000
in premiums we would have had $8,300,000 for increased losses.
Now, for a stock company with $5,000,000 of premiums to have an
equal amount available to pay losses would require a capital and
surplus of $2,300,000, and of 35 stock companies writing compensation
insurance reported in the Spectator Handy Chart for 1920, only eight
companies have a combined capital and surplus of this amount.
Now, if this stock company with such a capital and surplus of
$2,300,000 writes $10,000,000 in premiums, it would still have only
$2,300,000 available, while the mutual used as an illustration would
have $3,800,000. The margin of saving that a mutual company
makes over the cost of stock companies and returns in the form of
dividends is with its surplus a very real guaranty to the injured
employee that he will get the money to which he is entitled.
It should be added that in most States mutual and stock com
panies are required by law to maintain reserves on the same basis,
and all States should require companies of whatever kind to be on
the same reserve basis. There is another feature of mutual insurance
that should be discussed in this connection, and that is the liability
to assessment. State laws require a certain capital—often less than
$200,000—before a stock company can write workmen’s compensation
insurance. With this capital the company may proceed to write
any volume of premiums, no matter how large. On the other hand,
mutual compensation carriers frequently have surpluses many times
the capital required of a stock company, and in addition have the
protection of the dividend margin, and an assessment liability
usually equal to once the annual premium.
The Liberty Mutual, to illustrate, with over $5,000,000 in premiums
in 1919 and a surplus of $800,000, and dividends of 30 per cent of the
premiums, has in addition $5,000,000, which, if ever needed, which is
inconceivable, could be made available. There is no stock company
that has behind it for each dollar of premium, which represents the
224
M UTUAL
IN S U R A N C E .
exposure to loss, the ability to pay that this mutual has. And as the
company grows the dividend margin over the assessment liability
increases in like proportion. Some of the States have enacted legisla
tion which would permit a mutual having a surplus equal to the
capital and surplus required of a stock company to eliminate the
assessment liability. There is no reason why a mutual company
maintaining the same reserve as stock companies should be required
by law to be much stronger financially than stock companies. Is
there any reason why all companies, stock or mutual, or any other
kind, should not be placed upon the same footing ? Finally, mutual
and stock companies have been writing compensation insurance for
eight or nine years. What is the record of certainty of payment of
losses ? The record fails to show a single instance where a mutual
company has not been able to pay every compensation claim in full.
There is, it is true, the case of a very small mutual company which
was poorly managed and discontinued business after a year or so,
but every injured employee received his full compensation from the
insurance company.
Unfortunately the same can not be said of stock companies. In
Massachusetts alone two large stock companies have failed in the past
five years and have been forced to go out of business entirely. For
tunately the many injured employees of one of these companies have
been protected by the bond which that company was required by
law to furnish the State of Massachusetts as a condition precedent
to doing business. In other States, however, without this protec
tion, either the employers insured by this company have been paying
the claims or the employees have lost out entirely. In the case of
the other company there was not the protection of a bond, and to
this day the many claimants have received only a percentage of the
benefits provided by law.
Thus far the comparison has been chiefly of mutual with stock
companies. There are two other forms of insurance that may be
briefly touched upon. Interinsurers are writing compensation insur
ance in some sections of the country. Interinsurance exchanges are
not corporations, but individual employers who insure each other
by employing a manager on a commission basis. The surplus of the
exchange, ordinarily much smaller than the surplus of mutual com
panies of equal size, is substantially the only protection offered out
side of the premiums themselves. There is a limited liability to
assessment, but the exchange itself is not liable, and the claimant
must sue each individual member of the exchange for his share of
what is due the claimant.
There are two kinds of State funds—competing and monopolistic.
Ordinarily they charge rates less than other carriers and return very
small or no dividends; besides the State usually assumes no liability
whatever, so that the usual State fund does not equal in security the
usual mutual company. It must be granted that a monopolistic
State fund does give a substantial guaranty of payment of all claims
of injured employees. It may be insolvent to-day, but because it
has a monopoly it may next year collect enough more in premiums
to make up this year’s losses. So long as it has a monopoly it is in a
position to charge whatever premiums it may find necessary, and the
employers must pay. Of course, this is hardly equitable, for em
ployers of to-day may pay less than their just premium, and other
S.
BRUCE
BLACK.
225
employers in the future may pay excessive premiums to make up
such deficiencies. Some fraternal life-insurance societies have found
it necessary to do this, but having no monopoly they can not compel
to-day’s policyholders to pay the premiums that should have been
paid by other policyholders in years gone by. There is no guaranty
that the States will continue such monopolistic' funds, but if they are
discontinued it is reasonable to assume that suitable provision will
be made, if necessary from the general taxes, to insure all claimants
getting their compensation.
Much time has been devoted to this discussion of the certainty of
payment, for the first requirement of any form of insurance is that it
insures, and I believe that no form of insurance meets this test
better than mutual insurance. Accident boards and commissions,
representing as they do both employer and employee, are also
interested in prompt paying of compensation benefits—payment of
the benefits that the law contemplates without undue litigation and
all that that implies. There are several ways of payment of com
pensation benefits. One way is to assume that an accident is not a
compensation case until a claim is made, bj waiting for the injured
to come for the benefits to which he is entitled. Another way is to
assume that every accident constitutes a compensation case until it
is known that the man is no longer disabled, or that the injury is not
covered by the act; to search out the injured party and take the
benefits of the act to him. The carrier of insurance can await a
medical report on the degree of injury, can mail a compensation
agreement to the injured employee, and then forget him until the
signed agreement is returned. In this way it may be weeks after
the injury before any compensation is paid; and this is a cheap way
of doing business. It requires few claim investigators—a small
claim organization. It enables the carrier to maintain a very low
administration cost, one that looks good in comparison with other
carriers; but does it give the kind of service to which the injured
employee is entitled ? Is it the kind of service accident boards and
commissions want ?
On the other hand, the carrier upon receipt of notice of injury, if the
indications are that the injury is a disabling one, can send a repre
sentative to visit the employee at once to see that the proper medical
treatment is available, perhaps arrange to transfer him to a hospital
or arrange for a visit by a specialist, and the compensation agreement
can be explained and signed, and then when the compensation becomes
payable it can be paid. Tliis method may be more expensive than
the other method, but the Liberty Mutual insurance Co. believes it is
worth the difference. Stock companies have said of mutual com
panies that service costs money; therefore how can mutuals give claim
service and make the large savings they do in administration costs?
The answer is that the saving is not made at the expense of claim
service. The tabulated returns of substantially all carriers to the
National Council on Workmen’s Compensation during 1919 indicate
that mutual companies spend on the average 7.05 per cent of their
premiums for claim service and the stock companies 6.90 per cent.
State funds are particularly open to attack for their failure to give
the kind of claim service that produces promptness of payment. Dr.
Downey, than whom there is no more competent or impartial
2 6 0 3 9 ° — 2 1 ------- 1 5
226
M UTUAL
IN S U R A N C E .
authority, states in the report of his examination of the Ohio State
fund, the largest and best known of State funds, that 40 per cent of
the compensable accidents that occurred in May and 25 per cent of
those that occurred in April were still pending first adjudication,
with no compensation paid on the 23d of June. This bespeaks
unreasonable delay in the initial steps of compensation payments.
Unfortunately, figures of this kind are not available for all States. A
study of the accidents reported to the Liberty Mutual Insurance Co.,
from Massachusetts only, during the last six months of 1919 showed a
total of 2,857 compensable cases. Of these 20 per cent had not been
adjusted and payments begun 40 days after the date of injury, and 70
days after the (late of injury 6 per cent had not been adjusted and
payments begun. These percentages are believed to be fairly com
parable with the percentages reported for the Ohio State fund, if we
assume that the dates of the accidents referred to in the report on the
Ohio State fund are distributed uniformly throughout the months of
April and May.
Another matter of interest is that during 1919 the Liberty Mutual
Insurance Co. received a total of 49,932 compensation reports of in
jury to Massachusetts employees, and of this total only 75, or fifteen
one hundredths of 1 per cent, went to hearing before the industrial
accident board, and only 2 cases were appealed to the courts, and
both of these were decided in favor of the insurance company.
There is a very real reason why mutual companies are able to give
ood claim service. These companies are associations of employers.
Imployers have become very much interested in seeing that their
employees are paid promptly the benefits to which they are entitled
and there is the fullest cooperation with the company in accomplish
ing this.
It is this cooperation of employers that has been an important fac
tor in the success of mutual companies in accident-prevention work.
The recent report of the committee on industrial betterment, health,
and safety, oi the National Association of Manufactures states:
f
The participating company appears to be able to obtain the cooperation of the
employer in accident prevention to a greater extent than does the stock company. By
that cooperation the manufacturer is not alone lowering the net cost to himself but to
his fellow manufacturers, and he is reducing the time lost by his employees to an extent
that can not help but reflect itself in his production cost.
Like the factory fire mutuals of New England, the Liberty Mutual
and other mutuals have always believed the prevention of loss of im
portance second only to the payment for losses that could not be
prevented.
In the Ohio State fund “ the safety division is nonexistent/ ’ Dr.
Downey states in his report. That employers are interested in acci
dent prevention and are willing to pay for it is demonstrated by Mr.
Jeremiah F. Connor’s report on the New' York State fund, in which
it is stated that certain employers insured in the State fund sub
scribed to an outside specialized engineering service, for which they
paid an amount equal to 20 per cent of the premiums paid to the
State fund.
Perhaps it were better in analyzing the extent and character of
mutual service to present to you the features of the service rendered
its policyholders by the company with which I am most familiar.
We have developed a plan of accident control which emphasizes the
S. BRUCE
BLACK.
227
extent to which, a mutual company can obtain the cooperation of its
policyholders in practical accident prevention* It is not necessary
to give the details of the plan here to establish the value and efficiency
of the service; it is only necessary to point out the results obtained.
In Table 1 are shown 10 typical risks in as many different classes
of business. The accident rate is given in terms of the num
ber of accidents per 100 employees per 37-ear. The percentages
show the reductions effected. In nearly every case the accident
rate has been reduced below the normal for the industry. In some
cases the reduction in accident frequency has been from 50 to 85
per cent. For instance, one of our plants, not included in the
table, making wire products, recently went nearly three months with
out a single lost-time accident to the more than 2,000 employees; and
over a period of five months the only lost-time accidents reported
were from hernia due to lifting, or other causes which were not con
trollable by the company. All serious injuries, including even those
commonly attributed to carelessness, had been completely eliminated,
although a fair average for that plant during the first three months
in question would have been about 50 lost-time accidents. These
instances, of course, are exceptional. While we do not expect to
eliminate accidents entirely, by our plan of accident control we do
expect to reach the uirreducible minimum.” Our safety engineering
division fully expects to bring down the accident frequency in all our
plants below the normal average for the industry. Mr. David S.
Beyer, vice president and chief engineer of our company, estimates
that this plan of accident control has brought about the total reduc
tion of about 10,000 accidents per year in the plants insured by the
Liberty Mutual. Now, naturally, accident prevention is highly profit
able for the insurance company because it reduces the loss cost.
T a b l e 1.— REDUCTION IN ACCIDENT R A TE .
Wooden box manufac
turing #
Period.
First period .............................................................
Second period.............................................................
Third period..............................................................
Accident
rate per 100
employees
per year.
Per cent of
reduction,
compared
with first
period.
Accident
rate per 100
employees
per year.
33.3
27.2
10.4
18.3
68.8
1-2.7
8. 8
2.8
Paper manufacturing.
First period................................................................
Second period.............................................................
Third period..............................................................
12.3
5.6
3.3
54.5
73.1
Metal goods manufac
turing.
First period.............................................................. .
Second period.............................................................
Third period...............................................................
Machine shop.
18.8
9.4
9.4
50.0
50.0
Per cent ol
reduction,
compared
with first
period.
30.7
78.0
Textile manufacturing.
7.0
6.4
3.2
8.6
54.3
Wire rope manufac
turing.
48.0
18. 9
5.6
60.6
88.4
228
M UTUAL
IN S U R A N C E .
T a b l e 1.— R EDUCTIO N IN ACCIDENT R A T E —Concluded.
Textile manufacturing.
Rolling mill.
Period.
First period................................................................
Second period.............................................................
Third period...............................................................
Fourth period.............................................................
Fifth period................................................................
Accident
rate per 100
employees
per year.
Per cent of
reduction,
compared
with first
period.
30.3
18.8
5.6
2.1
2.1
38.0
81.5
93.1
93.1
Accident
rate per 100
employees
per year.
8.8
9.6
6.3
5.4
1.3
Per cent of
reduction,
compared
with first
period.
i 9.1
28.4
38.6
85.3
J
Magneto manufacturing.
First period.................................................................
Second period.............................................................
Third period...............................................................
Fourth period.............................................................
Fifth period................................................................ 1
Sixth period...............................................................
i
12.7
5.0
4.8
7 .1
2.5
2.4
60.6
62.2
44.1
80.3
81.2
Boot and shoe manufac
turing.
6.7
4.8
4.0
3.3
1.1
1.0
28.4
40.3
50.8
83.6
85.0
1 Per cent of increase.
How does the employer benefit ? You have got to satisfy him that
accident prevention is profitable. Our service is designed, broadly,
to (1) create an efficient, stable body of workmen; (2) keep them on
the job continuously and permanently; (3) make plant conditions
inviting and livable; (4) reduce accident frequency, thereby helping
to maintain a normal labor turnover. The employer profits:
(1) Through increased efficiency resulting from the elimination of
accident waste by retaining the full-time service of his employees.
(2) Through our employment, welfare, and sanitation service,
which assists employers to reduce labor turnover.
(3) Through the improvement in the basic insurance rate for his
industry, which results from a reduction in the accident cost.
(4) Through the direct reduction in insurance premium of his plant
which he secures under the individual rating plan— (a) by the in
stallation of safeguards, for which a credit is given, under the rating
schedule; (6) by improving the accident experience of his plant, which
gives a lower rate under the experience rating plan.
(5) Through the saving being returned to him in the form of divi
dends if he is insured in a company such as the Liberty Mutual.
Concretely, what has been the saving in premium cost, considered
from that angle alone ? The Liberty Mutual in 1919 saved its policy
holders over half a million dollars in premiums alone through schedule
and experience rating reduction. This was in addition to $1,300,000
returned in dividends. This gives some idea of the possibilities of
accident prevention work.
As for individual risks, note Table 2. Here are shown five repre
sentative plants, taken from different types of industries, character
istic of the policyholders of the Liberty Mutual. In each case is
shown the per cent reduction in accident frequency and the pericent
reduction in the basic or so-called manual rate—what is actually
the average rate for the particular industry. As you will note, the
S. BR U CE
229
BLACK.
premium cost has been cut from 10 to 50 per cent of the aver
age rate for the industry. Translating this into actual dollars,
take the cost of the wire-goods manufacturer. His premium, at the
average rate for the industry, is about $200,000 annually. Merit
rating, because of the splendid safety work that has been done, cuts
the collected premium to $100,000 annually. We believe these re
sults very much more than justify the cost of our accident-prevention
work. We believe these results can be very largely attributed to the
cooperation which we, as a mutual company, receive from our mem
bers, who own and control their company— cooperation which other
kinds of insurance carriers do not receive in like degree.
T a b l e 2.—REDUCTIONS IN ACCIDENT FRE QU EN C Y AND REDUCTIONS IN PREM IUM
RATES IN FIVE R E P R ESEN TA TIVE PLANTS.
Per cent of reduction in accident fre
quency compared with first period.
Industry.
Second
period.
Textile machinery manufacturing..................................
Machine shop............ ................ .........................................
Textile manufacturing.......................................................
Dyeing and finishing..........................................................
Rolling mill..........................................................................
18.5
57.4
i 9.1
i 2.2
38.0
Third
period.
45.7
67.4
28.4
6.5
81.5
Fourth
period.
59.0
38.6
32.6
93.1
Fifth
period.
93.1
Per cent
of reduc
tion in
insurance
rate.
20.7
11.2
21.2
34.6
50.8
i Per cent of increase.
In spite of accident-prevention work accidents happen. Mutual
companies in general and my own company in particular have long
appreciated that prompt and efficient medical and surgical service
reduces very materially the seriousness of the results of injuries.
With the beginning of our company we opened in Boston a surgical
department and put in charge of it the best surgeons available.
To-day v/e have surgical departments in important industrial centers
where we write business.
During the first seven months of 1920 over 35,000 treatments were
given in these surgical departments operated directly by the com
pany. We learned very early in our compensation experience that
the very best surgical service is much the cheapest in the end from
all standpoints. We have found that through our own surgical
departments we can give better and prompter service to injured
workers than through outside agencies. In addition to the surgical
departments operated directly by the company, it has installed, in
over 250 of the larger plants insured by it, first-aid rooms in charge
of registered nurses, with doctors on call, or calling regularly, or
continuously on the job, depending on the size of the plant. Through
this medical and surgical service we are also able to assist disabled
employees in returning to profitable employment. This is humanita
rian work, but it is also good business. Although the initial cost is
high and it may increase the administration costs, it reduces the
aggregate cost of accidents and results in a saving to the employer
and;to the employee, through reduced insurance costs.
We now come to the final criterion— economy of administration.
The high cost of private insurance constitutes the sole argument
for State insurance, whether competing or monopolistic. It is
230
M UTUAL
IN S U R A N C E .
well known that stock companies require approximately 40 per cent
of the compensation premium to pay the administration cost. With
the high commissions paid to the managers of interinsurance exchanges
this form of insurance does not have a materially lower administration
cost. Mutual companies operate on an entirely different basis than
stock companies and have a very much lower overhead cost. In
Massachusetts compensation insurance has been written for over
eight years and stock and mutual companies are now well estab
lished. The average ratio of expenses, including taxes, to earned
premiums in 1919, was 38.5 per cent for stock companies and 15.1
per cent for mutual companies.
An analysis of the various items of expense indicates that during
1919 the stock companies spent 7.3 per cent of their premiums for
claims service and for safety service; 14.6 per cent for general home
office expenses, including State and Federal tax; and 16.6 per cent
for acquisition of business. Mutual companies, on the other hand,
spent 6.9 per cent for claims service and for safety service; 6.4 per cent
for general home office expenses, including State and Federal tax;
and 1.8 per cent for acquisition of business. The Liberty Mutual
during the year 1919 spent 9.5 per cent for claims and safety service.
You will note that mutuals are spending about as much for claims and
safety service as stock companies, but much less for home office
overhead, and only a fraction as much in the acquisition of business.
Here is the essential difference between the mutual companies’ plan of
doing business and the stock companies’ plan. We pay no commis
sions to agents for soliciting business. We do all our business direct
with the employers through our full-time salaried representatives.
Our saving is not at the expense of service, but chiefly through the
elimination of the broker and agent. And because we are mutual
companies all the savings made through the reduction of losses and
economy in administration belong to our policyholders, and are
distributed to our policyholders in dividends. Thus the Liberty
Mutual Insurance Co. and at least one other mutual company have
regularly returned 30 per cent dividends, which represents a saving
under stock-company costs of from 23 to 30 per cent, this variation
being due to the fact that in some States we charge 5 or 10 per cent
more than stock-company rates. Mutual insurance does, therefore,
offer to the employer the opportunity of buying insurance at cost
and without the high administration costs of stock insurance. But
how does mutual insurance compare with State insurance ? Unfortu
nately, analyzed expense figures for many of the State funds are not
available. The Pennsylvania State fund, on all business excluding
coal mining, had, according to the report of the Pennsylvania insur
ance department, an expense ratio of 12.5 per cent in 1919. This is no
doubt typical of similar funds. The difference in the cost of such
State funds and well-managed mutual companies is accounted for in
expenses of taxes and in claim and accident prevention expense.
No doubt the administrative cost of the monopolistic Ohio State
fund is low, but this economy may be at the expense of the workmen
of the State of Ohio if the fund is unable promptly to pay its claims
and is unable actively to engage in safety work. Any saving in
administrative cost may be much more than offset by higher insur
ance costs due to losses that might be reduced by more comprehensive
service. I firmly believe that if the actual cost of administration of
S.
BRUCE
BLACK.
231
State funds is lower than that of well-managed mutuals it is chiefly
because mutual companies are spending larger sums of money to
obtain prompt payment of claims and the reduction of losses through
accident prevention work. Dr. Downey states in his report of the
Ohio State fund:
Economical management, however, is not simply a matter of expense incurred;
account must be taken as well of the service performed. Viewed from this broader
standpoint, it is past question that the expenses of the Ohio fund have been kept
below the level of reasonable efficiency. Bona fide economies in the elimination of
selling costs and of competitive duplication account for much the greater part of the
saving above referred to; but there- have been also some fictitious savings at the sacri
fice of legitimate and necessary services. Some of the functions properly pertaining
to compensation insurance are neglected altogether; others are inadequately per
formed.
Mutual carriers of compensation; by their nature and as demon
strated by experience, offer security unexcelled by any other class of
carriers. Because mutual companies are in themselves an expression
of cooperation among employers, they are able, as is demonstrated
by results accomplished, materially to reduce the number of accidents
through accident-prevention work, and to minimize the effects of
injuries that are suffered through prompt and effective surgical
service, and then to get to the injured worker the compensation to
which he is entitled with a minimum of delay and litigation.
Finally, mutual insurance is conducted at cost, and through direct
dealing between the company and its members the cost is a fraction
of stock insurance cost, but the low cost is not accomplished at the
expense of service. For those who desire such service, and we believe
all employers do, mutual insurance offers real protection at the lowest
cost consistent with 'such service, and it retains that fundamental of
progress and efficiency— competition.
The C h a i r m a n . We come, now, to Mr. Fellows’ paper—Mr. C. W«
Fellows, manager of the California Compensation Insurance Fund.
C O M P E N S A T IO N C O S T S .
BY C. W. FELLOWS, MANAGER, CALIFORNIA COMPENSATION INSURANCE FUND.
In the assignment sent by Dr. Meeker the writer is directed “ to
prepare a paper on the general subject of compensation costs, giving
clearly, completely r and concisely the leading features of the Cali
fornia State compensation insurance fund, also full information as
to its operation and results as to service, security, and cost.5’
That is a rather large order. The general subject has had the
attention of students of economics, of logicians, theorists, actuaries,
and public investigating bodies, the results being very marked dif
ferences in final opinions and conclusions as to comparative costs
under the various plans for compensation and for insuring com
pensation risks. That many of these conclusions have been influenced
by personal interest is quite apparent. Political expediency also has
had its part in some of the deliberations. The most intelligent studies
seem to demonstrate beyond the question of a doubt that in pure cost
of collecting and disbursing compensation benefits the monopolistic
State insurance funds have much the best of the argument as to
economy. Whether or not there is a final saving which justifies so
radical a departure from older established methods of meeting ad
versity through insurance, and what dangers in bureaucratic control
may lie beyond our immediate horizon, are questions which may not
be susceptible of any unalterable conclusion from our comparatively
short compensation history in this country. It must be admitted, also,
that a mere comparison of cost for collecting through insurance and
disbursing through indemnity does not go the full length in estab
lishing comparative actual costs to employers or to communities.
No simple comparison of overhead percentages to premiums or to
benefits paid can be a true index to relative costs. That the State
insurance fund of New York has been able to operate upon an ap
proximate overhead of 7.5 per cent of premiums loses its significance
when it is frankly admitted that its service has been sadly handi
capped through inadequate appropriations for office and field staff.
There is one point in connection with differences in costs which
seems so apparent as to defy illusion, i. e., that there is no justifica
tion whatever for the wide variation in costs between nonparticipating
corporate insurance companies and mutuals and competitive State
funds which provide equally satisfactory, if not superior, claim and
inspection service. From even a most cursory examination of the
figures, the economic waste involved in the competitive system of
acquiring premiums through agents and brokers on commission
is glaringly evident, especially in States where insurance against
compensation risk is compulsory. A closer examination will show
that the system referred to also promotes misclassification of risks,
rank discrimination in adjustment of claims, favoritism toward
large premium payers, and unreliable statistics upon which to
compute rates for the future. That these abuses will be present!‘to
some extent under any competitive system goes without saying, but
232
C.
W .
FELLOW S.
233
they are surely multiplied under agency and brokerage practice. No
matter how much beyond reproach the intentions of a company and
its officers may be, the system means divided control of these ele
ments with agents and brokers and a multiplication of the abuses.
In a paper covering the history of the California State compensa
tion insurance fund entitled “ An adventure in State insurance,” Hon.
A. J. Pillsbury, of the California Industrial Accident Commission,
refers in the following words to the repeated claim of insurance com
pany representatives that the companies could conduct the business
more cheaply than the State: “The writer is inclined to agree with
the proposition that private enterprise can do business more cheaply
than the State, but that it will not do it as cheaply as the State if it
can avoid it.” The records show that the companies have not oper
ated as economically as the State funds, and perhaps the natural
growth in premium volume through increasing pay rolls has blinded
them to the need for retrenchment.
Without claim to the possession of any second sight, the writer
long ago predicted that unless corporate insurance companies
changed their method of operation materially they could not con
tinue indefinitely to compete in the field of workmen’s compensation
insurance. The inroads made by the mutuals and competitive State
funds upon what these companies have considered their exclusive
and rightful “ heritage ” are an unmistakable sign that this is true.
Conservatively estimated, the State compensation insurance fund
of California is to-day carrying 40 per cent of the insured compen
sation business of the State. Its net premium writings in the year
1919 were approximately 35 per cent of the total for all carriers,
and the business of the fund for the current year will probably
exceed $4,000,000 in premiums. The California fund is probably
carrying a larger percentage of the business of its State than is car
ried by any other competitive State fund in this country. This may
be due in a large measure to certain natural advantages in the law
and in political conditions.
The insurance fund of New Zealand furnished the inspiration for
a fund of the same general character in California, and provision
for it was contained in an enactment by the California Legislature
of 1913. Known as the workmen’s compensation, insurance, and
safety act, this law became effective on January 1, 1914. About
October 1, 1913, the writer, then located in Los Angeles and not
affiliated with any particular political party, was surprised to re
ceive an invitation to visit San Francisco and confer with the
members of the commission looking to a possible appointment to the
management of this State insurance fund, then generally looked
upon as a new kind of “ animal ” about to make its entry into the
already crowded and somewhat quarrelsome insurance “ pasture.”
Acceptance of the invitation for a conference was finally decided
upon, but after considerable deliberation and with many “ reserva
tions.” At the opening of the interview the commissioners (three
in number) almost immediately embarked upon a sort of crossexamination with the intent (quite proper, of course) of bringing
out^the antecedents, business history, and qualifications of the “ ap
plicant.” The “ reservations ” being still most strongly in mind, the
“ applicant ” had the temerity to halt the proceedings long enough
to ask a question on his own account. That question was, “ What
234
C O M P E N S A T IO N
CO STS.
political influences will be brought to bear, and will the manager be
free to select an organization of capable insurance talent without
regard to politics ? ” Assurance was immediately given that politics
would be allowed to play no part in the operation of the fund.
Keeping the faith in that particular has, in the writer’s opinion, done
much to insure the success of the fund. Much, of course, must con
tinue to depend upon the attitude of mind of those making up the
personnel of the commission and fund management.
The legislature having appropriated $100,000 as a working capital
for the fund, and the commission having an additional sum available
for preliminary expenses prior to the date the fund became a legal
entity, the executive office in San Francisco and a branch in Los
Angeles were ready for business on January 1,1914. Approximately
$5,000 of the preliminary expense fund was sufficient, and the original
appropriation of $100,000 has never been touched, the fund having
now paid interest to the State thereon for several years.
The California workmen’s compensation, insurance, and safety act
made provision for the industrial accident commission to assume
jurisdiction over the affairs of the fund “ as fully and completely
as the governing body of a private insurance carrier might or could.”
One of the commission’s primary functions was to establish the
premium rates, It became apparent long before the law took effect
that the only reliable statistics upon which even a reasonable guess
might be made were those in possession of the Workmen’s Compensa
tion Service Bureau, accumulated from employers’ liability experi
ence. A decision was quickly reached that the fund should adopt,
at. the outset at least, the standard rates published by that bureau,
the profits earned, if any, to be returned to insured employers
through dividends.
There was no statutory provision at that time for approval of rates
as to adequacy, and several carriers, which were not members of the
bureau, immediately began a drive for business at material reductions
from the bureau rates. Despite this competition, which continued
for over two years, and the rather widespread abuses of the rate
manual by the company members of the bureau, the fund adhered
strictly to the published rates, and in competition with about 30
carriers it wrote approximately 11 per cent of the total business the
first year, leading its nearest competitor by $144,000 in premiums.
The net premiums of the fund during this first year (1914) were
$547,161.24. During that year a complete organization was estab
lished, including claim, inspection, and pay-roll a-uditing depart
ments, and an aggressive campaign for business was engaged in—
principally through direct-by-mail solicitation, personal solicitation
being at first largely confined to the large centers, i. e., San Francisco
and Los Angeles. The total overhead expense of the fund for that
year was 12.65 pei* cent of earned premiums.
The reserve law then in effect provided for setting aside for losses
a reserve of 75 per cent of 1914 earned premiums, less losses and
loss expenses paid, and as the estimated actual losses (using liberal
estimates for outstandings) were only approximately 39 per cerit, a
considerable portion of the profit was tied up in reserves for. the
average three and one-half year period required by law. While this
gave the fund an excellent bulwark to windward, it also limited the
amount which could be immediately returned to policyholders and
C.
W.
FELLOW S.
235
placed in surplus. The only amount available was the difference be
tween 100 per cent of the premiums earned plus interest and the
reserve of 75 per cent plus expenses other than claims. At the end
of the year a flat dividend of 15 per cent of earned premiums was
declared to all 'policyholders except those who had paid only the mini
mum premium. When the reserves for that year were released four
years later a second dividend was paid in cash to these same policy
holders, bringing the total return to approximately 34 per cent.
This arrangement for initial and final dividends has been continued
for subsequent years until, for the year 1919, the initial dividend
declared was increased to 17.5 per cent. Since the first year the fund
has steadily increased its lead over all competitors—writing in the
year 1919, $3,251,974.25 in premiums.
For security to policyholders the fund has had the original appro
priation, full legal reserves, a substantial additional surplus at all
times, and the added protection of hidden profit contained in the
excessive loss reserve. This legal loss reserve is now 70 per cent of
earned premiums, less losses and loss expenses paid. Satisfactory
reinsurance not being available, the fund restricted its writings to
a considerable extent the first year. Marine hazards, explosive manu
facturing establishments, and other risks containing an apparent
element of catastrophe possibility were refused entirely. Under
ground mining risks were accepted only for liability limited to
$10,000 in any one disaster. With the exception of explosive manu
facturing, aviation, and vessels with large crews, these restrictions
were removed at the end of the first year.
Contrary to the claim of competitors that the damage-suit pro
vision in their policies provides a needed additional protection to
employers, there is not an instance on record where any California
employer has been subjected to one penny of loss through having
selected the fund as his insurance medium. On December 31, 1919,
the fund held a surplus of $1,606,222.84 over and above legal reserves
and all liabilities. In the matter of claim service and prompt com
pensation payments the fund must rest its case upon its showing
of rapid growth in patronage, the voluntary expressions of satisfac
tion contained in its files, and what the recent investigation under
taken by Mr. Carl Hookstadt may have disclosed. I f it has fallen
short in this particular the management can not attach any blame
to statutory or budgetary restrictions, as it has not been handicapped
by any limit upon its expenditures for claim adjustment.
The operations of the industrial accident commission proper and
those of the State compensation insurance fund are separate and dis
tinct. All expenses of the fund are paid from premiums exactly
as in the case of a private insurance carrier. These expenses include
salaries, rents, travel, telephones, telegraph, postage, stationery, fur
niture, supplies, etc., also a tax of 2 per cent upon premiums, equiva
lent to the State tax upon the premiums of other carriers. The fund
is exempt from Federal taxes only, and this item is easily offset by
the expense entailed in the daily reports required under the pre
audit system of the State board of control, the correspondence, rec
ord keeping, and reports required by the State civil service commis
sion, and the detail involved in passing all funds through the State
treasurer and controller,
236
C O M P E N S A T IO N
COSTS.
The industrial accident commission carries on a continuous and
comprehensive safety campaign throughout the State, employing’ a
force of capable safety inspectors, but in that work it in no wise
gives any special attention to risks covered by the fund. The fund
maintains its own safety-inspection organization, and the writer
confidently believes that its service in that department is equally as
ood, if not superior, to the best maintained by any competitor. Aside
rom assistance rendered insured employers through inspection to
the end that maximum credits under the schedule-rating system may
be obtained for physical safeguards, the inspectors of the fund pay
particular attention to unsafe conditions not furnishing any part
of the basis for credit and debit rating. During the year 1919, 1,740
separate-risk inspections were made and 5,589 defects were disclosed
concerning which recommendations for correction were made. The
inspection department has also assisted in the organization of a large
number of comprehensive safety campaigns in various industrial
plants and has continually kept in touch with these organizations
through attendance at the safety committee meeting and with written
criticisms and suggestions.
The writer believes it can be fairly said that the State compensa
tion insurance fund of California has no natural advantages over
competitors in the matter of expense which are not more than offset
by disadvantages. Despite this, its total overhead for the calendar
year ending December 31, 1919, amounted to only 10.64 per cent of
premiums earned, or less than one-third the average overhead of
corporate companies. Its commanding lead in premium volume has
been attained without the competitive aid of a favorable rate dif
ferential such as enjoyed by other representative funds in open com
petition. Only during 1918 and a part of 1919, when company
members of the National Workmen’s Compensation Service Bureau
arbitrarily increased their rates by 5 per cent above those legally
approved, has the fund had even a temporary competitive rate ad
vantage; nevertheless, each year of its operations has been marked
by steady advance in its proportion of the total business.
It is obviously impossible to measure in dollars or percentages the
inherent advantages and disadvantages referred to, but, assuming
that claim and service costs should be fairly even, the difference
between the 35 to 40 per cent overhead of corporate competitors and
the 10 to 11 per cent expended by the fund indicates clearly that there
is need for some radical movement toward economy in corporate
insurance practice.
The Insurance Federation of California made a strenuous but
unsuccessful attempt at the last session of the legislature to secure
the passage of a bill to separate the fund from the jurisdiction of the
industrial accident commission. It' was strongly insinuated that the
commission had favored the fund in its judicial capacity, and the
slightly lower than average loss ratio of the fund was pointed to as
an indication that the fund was “ short changing” claimants. We
know that the difference in loss ratio could be easily accounted for
by the fact that the figures used included the premiums of cut-rate
companies; that discriminations were generally indulged in by?the
companies at the instigation of agents and brokers; and that the
company figures covering earned premiums were unreliable because
of manual and pay-roll auditing abuses.
f
C.
W.
FELLOW S.
237
The abuses mentioned do not constitute all of the unfair competi
tion to which the California fund has been subjected. Agents and
brokers representing insurance companies throughout the State have
been permitted and often encouraged to circulate most malicious
falsehoods concerning the fund, its dividends, financial stability,
service, and protection. That some of these statements are born of
ignorance rather than dishonest intent does not modify the effect
materially when a representative of the fund is not on the ground to
disprove them. While it is impossible to measure the addition to
the fund’s acquisition cost chargeable to these tactics of competitors,
it must be appreciable.
The difference in cost to employers between State and corporate
insurance in California is a matter of some public concern, but it
directly affects only employers themselves, and its extent is being
constantly modified through absorption of the business by State
funds and other participating carriers. Meantime, it can not be said
that all of the economic waste involved is a distinct loss to the State
as a whole, because a considerable part of the greater cost of nonpar
ticipating insurance finds its way into local trade channels through
expenditures of the commissions earned by agents and brokers, al
though more productive activities on the part of many of these
agents would constitute an economic improvement.
It must be admitted that some agents perform a useful service to
employers in arranging proper pay-roll segregations, policy cover
age, etc., but quite as often the agent or broker, doing a compensa
tion business as a side line, is totally unfitted intelligently to advise
or assist an employer in arranging the insurance contract. This
fact is plainly indicated by the record of cases wherein employers
have been held liable while the insurance carriers escaped through
some technical construction of the policy prepared upon erroneous
datfi furnished by the agent. However, these conditions are rapidly
correcting themselves through supervision and competition, and they
are of small moment in comparison with the larger compensation
problems deserving the attention of the association.
In reporting discussions and tentative conclusions of this asso
ciation’s committee on statistics and compensation insurance cost
at a meeting in New York last fall, Dr. E. H. Downey, chairman,
gives some very interesting personal observations, in addition to
setting forth at some length the difficulties of making any satisfac
tory comparisons between the costs of various insurance systems.
Quoting from Dr. Downey’s report: “ The most important feature
in the compensation act is not its cost, but the relationship of the
benefits paid thereunder to the economic loss imposed upon wage
workers and their families by reason of industrial injuries.” Re
ferring to the Pennsylvania act of 1920, Dr. Downey says, in part:
“ The individual wage earner and his family actually bear in this
State probably four-fifths of the wage loss incident to industrial
injury.”
Even should Dr. Downey’s estimate for Pennsylvania be a gross
exaggeration, which is unlikely indeed, we know that most of our
compensation laws fall far too short of fulfilling their professed
design, and that some of them at least approach the point in their
inadequacy where they do little more, in comparison with the old
238
C O M P E N S A T IO N
COSTS.
system, than furnish protection for employers and insurance car
riers against heavy damage liabilities.
Considering that the entire cost of compensation is almost negligi
ble when added to the final product and passed on to the ultimate
consumer, what a small matter of public concern indeed is this differ
ence in cost between various forms of insurance when compared wTith
the needs for uniformity, adequacy, and closer supervision in our
compensation systems. 1 might say this supervision should be paid
for by the insurance carriers and the self-insurers. I see no reason
why self-insurers should be exempted from contributing to such
supervision.
The C h a i r m a n . The next item on the program is a paper by T. J.
Duffy, chairman of the Ohio Industrial Commission. Mr. Duffy is
not here and has not prepared a paper, but this convention would not
seem to me to be quite the convention it ought to be without some
contribution from Ohio on the program. Mr. Clark, a member of
the Ohio board, is here, and with your permission I am going to
ask Mr. Clark to take the place on the program assigned to Mr.
Duffy for a few minutes.
Mr. J. D. C l a r k , commissioner, Ohio Industrial Commission. Mr.
Duffy did not know that he had a paper. He said to me that he was
on for some discussion. I am sorry he is not here. I should like to
have had him meet the reader of the last paper. I refer to the gen
tleman from New York. I came on just a few moments or a few
hours’ notice and decision, coming to learn only and to get the view
point of the men who are doing the kind of work that I am doing
in the best way I can.
When I heard the paper from the gentleman from Washington,
the first paper of the morning, I was amply repaid for the four days
crossing the continent and the four days returning. When I heard
the next paper I heard the familiar note to which we are accustomed
in Ohio, and such as I have heard in many of the conventions that I
have attended. I saw the opposite poles and the two visions of
men, the one, as I feel it, looking toward the rising sun; the other
looking toward the setting sun. Mr. Whitney and I never will
agree as to workmen^ compensation. We certainly will not agree
on that crude system of actuarial work in Ohio. I think we do
agree, but he will not admit it in his paper. I think he knows
Mr. Watson well, and I think if Mr. Watson had been here he would
have left a paragraph or two of his paper out when he talked about
the crude system we have of actuarial work in Ohio. I liked the
note and the tone of the paper that tried to picture us as altruists
and not as commercialists.
I have for 25 years been a member of a great fraternal body that
meets annually and discusses the problems of insurance—the Na
tional Fraternal Congress of America, which deals with 9,000,000
men along another line o f insurance. I believe that the people of
this country have problems that are not commercial; have problems
that are purely social; have problems that are to be worked out in
the spirit of altruism only. I dissent from the idea that the unfortu
nate workmen of America are to be the subject of profit for private
insurance companies—at least not longer than is necessary to work
out a proper system. They should be dealt with as brethren rather
J.
D.
CLARK.
239
than as men from whom anyone is to profit. I certainly dissent from
the idea that the Ohio commission is conducting a work that sacri
fices justice to economy. I believe there is no more liberal commis
sion in the world in its views of the rights of the workingman than
you will find sitting in Ohio. I am proud of the record—and
ashamed of it too—that Ohio has had to conduct its business on a
cost of 2.14, because of the niggardliness of the legislature, referred
to by the gentleman from the Labor Bureau. But despite that handi
cap, we go along. I am certain that in the work of the Ohio com
mission, that last year handled 167,000 claims, and a little more, will
be found a smaller percentage of rejections than in most of the
States. I agree with all that has been said, that there ought to result
from this convention a constructive policy which will reach the legis
lative bodies of the States.
It seems to me, as I have listened since yesterday evening, that the
great field represented by this convention eventually will be so organ
ized as to be a real force; that we, as commissioners of the several
States, will not have to act alone and dependent upon the legislature
for the things that ought to be done in all of the States. I agree
that we ought not have the operating costs that some of us have. I
am not criticizing any commission that has spent more, provided that
money has been spent for the benefit of the workman only. In Ohio
we are running a commission for the workmen. Our interests are
with the workmen, not with any others. In Ohio we feel that society
has a certain debt. We believe the State of Ohio should pay the ex
penses of this commission. We believe that society is relieved of
enough of the burden that it would otherwise have to carry to give a
liberal appropriation for the work that we are trying to do. We are
not running, and so long as the commission is constituted as at present
we will never run, that commission on the niggardly plan, or on the
economy plan, nor forget that justice to the workman is the highest
ide&l of every commission. We have had a struggle there. We have
had no political interference such as some have suffered from. With
the exception of two years of the history of the commission, we have
had from the beginning the support of a governor under whose aus
pices this commission was really founded; six of the eight years
of our commission we have had under one of the most loyal friends
workmen’s compensation ever had, and had all executives stood by
their commissions as has the governor of Ohio during these years,
there would to no commission complaining of political interference.
DISCUSSION.
Mr. K o n o p . Mr. Clark, I would like t o ask you a question or two.
As I understand, you are spending so much a year.
Mr. C l a r k . I have the annual report in my grip in typewritten
form merely, but altogether I think our expense this year was the
appropriation secured at the last session. The amount was $376,000.
Mr. K o n o p . Does that include expenses of accident prevention and
safety in your State ? Do you conduct that department ?
Mr. C l a r k ."* A very efficient department, I will say to the gentle
man from New York. I wish Mr. Leigh were here to have heard the
discussion.
240
C O M P E N S A T IO N
COSTS.
Mr. K o n o p . You are certainly doing a whole lot for little money.
We are spending over $200,000 in our State, and I dare say the in
surance companies of the State are spending—I don’t know how
much—but close onto $1,000,000 for accident prevention, and we do
very little. We can but scratch the surface. I f it was not for the
fact that the insurance companies, with their inspectors, cooperate
with us I think we would do very little accident prevention with the
money we get from the legislature; so I think for the $379,000 you
are certainly doing more than I think we are doing anywhere under
God’s sun.
Mr. C l a r k . We are not having the help of the corporations in
Ohio. We are playing the game lone handed.
Reference was made here on the service question to the time of
payment. That has been the great bane of our department; but the
explanation of it has been—and I don’t want this to be lost—the ex
planation of it has been very largely in the contested claims that
have come under what is known in our law as section 22 cases, which
are carried by the insurance companies. We have hearings on four
days in the week, and we have more contests on Wednesday—section
22 day—than any other day of the week, week in and week /rnt, the
year round. So when it comes to a question of the insurance com
panies supporting the commission, we don’t find that in Ohio, for some
reason.
Another thing, we adopted a new system of blanks a few months
ago, which was originated in the commission, and, as shown in the
report for three months, we have reduced the time for three thousand
and some claims, taken indiscriminately in testing out the blanks, of
the first payment to 15 and a fraction days; so we think we have
accomplished something in that line.
The C h a i r m a n . We must get on with the program. The next
item is a paper by Mr. F. M. Williams, chairman of the Connecticut
Board of Compensation Commissioners. Mr. Williams is not here,
but his associate, Dr. Donohue, is here, and will take the place as
signed to Mr. Williams on the program.
D r . D o n o h u e . It is interesting to know the stand most of us take
depends very largely upon where our salary comes from. I suppose
the same thing applies all around. I will say in my own case my
salary does not come from any particular interest in any special form
of insurance, so I suppose the position I take will be very indifferent.
I haven’t any speech to make. I assume M r . Williams was to cover a
period of 10 to 15 minutes. He wrote a paper which will practically
cover that time, and I will read the paper which he has prepared.
SERVICE, SEC UR ITY, A N D COST UN DER D IFFE R E N T SYSTEM S O F
CO M PEN SATIO N .
BY F. M. WILLIAMS, CHAIRMAN, CONNECTICUT BOARD OF COMPENSATION COMMIS
SIONERS.
[R e a d
by
D r.
Jam es
J.
D onohue,
C o n n e c t ic u t
B oa rd
of
C o m p e n s a tio n
C o m m is s io n e rs . I
Any discussion of service, security, and cost under different sys
tems of compensation which can at all come within the limits neces
sary on this occasion must of necessity be a mere outline. From an
examination of the program for this meeting, it is assumed that each
of the six State officials requested to write on this subject will be
expected to give a skeleton of the system in vogue in his State, with
the reasons for its adoption and such statements as seem to him to
commend that system.
The Connecticut act was passed in 1913 and has been amended in
many important respects at each biennial session of the legislature
since that date. It originally consisted of parts designated as A, B,
and C. Part A was in substance an employers’ liability act, Part B,
a workmen’s compensation act, and Part C dealt in detail with the
formation of employers’ mutual insurance companies to carry the
compensation risks of its members. Various amendments relating to
compensation insurance generally have been added and are now
known as Part D.
As Connecticut is well known to be an insurance center and many
of our manufacturers are more or less familiar with insurance, it was
assumed that Part C would be an important feature, but it is notable
that not one mutual company has ever been organized under its pro
visions. This shows emphatically that the employers of Connecticut
have not felt the need of any such organizations, but have been en
tirely satisfied either to take policies in some one of the insurance
companies licensed to do business in the State, or to become selfinsurers. A great number of the larger employers of labor doing
business in the State have become what is known as self-insurers.
That is to say, they have satisfied the commissioner having jurisdic
tion of their ability to pay directly to the injured workman or his
dependents the compensation provided, and received a certificate to
that effect good for not to exceed one year from date and subject to
be revoked at any time if changed conditions make this course seem
proper. In issuing these certificates great care is used. The problem
is very different from that involving credit to a retail merchant for
perhaps 60 or 90 days, or the question of discounting a bank note
for a like period, with the probability of one or two renewals. A
death claim ordinarily calls for payments extending over 6 years, and
any serious injury always involves the possibility of payments extend
ing for 10 years. Under our district system, in a State small in
geographic area personal knowledge of different concerns is possible.
It has thus far resulted that only two concerns to whom this privilege
has been extended have met with trouble.
2 6 0 3 9 ° — 2 1 -------- 1 6
241
242
S E R V IC E ,
S E C U R IT Y ,
AND
CO ST
OF
C O M P E N S A T IO N .
There were two concerns, with a small number of employees, that
went into the hands of a receiver. Neither one became bankrupt, and
by commuting all claims against them and presenting them as pre
ferred claims to the receivers they were promptly paid and no in
jured workman, or his dependents, has thus far been unable to collect
what was due him.
The licensing of insurance companies to do a compensation busi
ness in the State is in the hands of the insurance commissioner, a
department entirely distinct from the compensation commissioners,
and ably and conservatively managed. Only one company so
licensed to do business has gone on the rocks, and as far as the writer
is informed no injured workman or his dependents have met with
any loss from this source. At the present time 27 such companies
are so licensed; o f these 3 are Connecticut companies and 24 are
either European companies or companies organized under the laws
of other American States. The insurance department and the com
pensation department have always been in entire harmony, and an
additional safeguard is given by a statute providing in substance that
when any insurance company licensed to do business in the State is
conducting its business improperly, is dilatory in investigating claims
and making adjustment, or fails to comply with the procedure laid
down for it by the compensation commissioners, they may make ap
plication to the insurance commissioner to suspend or revoke the
license of the offending company, which he, after notice and hearing,
is authorized to do. It has never been necessary to act under this pro
vision ; a suggestion that such action might be necessary has been made
in a few instances and has always been sufficient to correct any im
proper conduct.
Another feature of the act producing a marked improvement on
the “ service ” feature of the subject under discussion consists of
provisions whereby solvency or amount of security put up by selfinsurers are not the only factors to be considered, but the attitude
of the company in question is also to be considered, and no matter
how strong a company may be financially, if its conduct toward
those having just claims against it is dilatory, evasive, or unfair,
it may, on proper steps being taken, be deprived of its status as a
self-insurer. The great majority of the self-insurers and the in
surance carriers who transact the bulk of the business in the State
never have to have their attention called to these provisions. They
want to be fair and they want to act promptly.
In one of our earlier reports some statistics were given as to the
length of time ordinarily elapsing between the date of an injury
and the date o f the first compensation payment. Those statistics
have not been revised in any subsequent report; hence are probably
quoted to-day as representing present conditions in the State. They
are not, however, applicable to present conditions. The original
waiting period under our act was 14 days; this was subsequently re
duced to 10 days; now it is 7 days for minor injuries, and where
the injury results in incapacity for over four weeks there is no
waiting period.
One of the principal essentials of “ service ” is promptness.
Whenever a man receives a severe injury, he is taken at once to a
hospital; if he has a family who are suffering for want of ready
F.
M.
W IL L IA M S .
243
funds, either a representative of the employer makes advance pay
ments to care for their necessities, or a member of the family or a
friend will call it to the attention of the commissioner having juris
diction, who will see that prompt action is taken.
This commission is not a statistical bureau. The commissioner of
labor statistics and factory inspection is, very properly as we think,
a separate department. Such statistics as we gather from time to
time are contained in the reports which have been made to the
governor. These are made bienially, and the last one covers the
years 1917 and 1918. During these two years the self-insurers and
insurance carriers paid out to injured workmen or the dependents of
those who had died from industrial accidents $3,082,719.05.
What the actual cost to the employers of labor was we have no
means of knowing, and it is no part of our duties to try and find
out. Our duties are to administer the law and see that the injured
man gets the proper treatment to restore him, and gets the sums to
which the law entitles him, and, if death results, that his lawful
dependents receive that to which they are entitled. The figures for
1919 and 1920 are not available; judging from the number of volun
tary agreements submitted and the number of hearings held, it is
probable the figures will show a very great increase over any previ
ous term.
The records of the insurance commissioner’s office show that in
1918 companies doing business in Connecticut collected as premiums
$2,580,377.76; in 1919, $2,992,342.58; paid out in 1918 $1,234,674.63;
in 1919, $1,436,582.93. No more significance can be attached to these
figures than to recently published figures stating that something over
half a million dollars was paid into the North Dakota State fund
in the first year of its operation and $103,055 disbursed in the shape
of awards and expenses.
Of course it is obvious to anyone having the slightest knowledge
of the subject that the difference does not represent the profits of the
companies. A Connecticut premium paid in 1918 may, and no doubt
will, represent a series of payments spreading over each year up to
and including 1928. It is to be hoped that the companies make a
profit, for if they do not they can not afford safe insurance for any
great length of time. It has quite recently been discovered that a
railroad can not do business indefinitely and provide adequate equip
ment and pay good wages unless it gets an income considerably in
excess of its fixed charges. It has also been discovered that when a
railroad ceases to function in an adequate manner it is not alone or
even principally its stockholders or bond owners who suffer, but the
community generally.
It is to be hoped that the policy of unduly restricting and “ regu
lating ” insurance companies will not be carried to an extent where it
will have to be discovered that the same economic principles apply
to an insurance company that apply to a railroad. Free competition
among insurance companies will certainly prevent any undue ex
actions by them in the shape of premiums. It has already been
noted in this paper that 27 companies are licensed to do a compensa
tion insurance business in this State, and that Connecticut, great
insurance center that it is, is the home of only three of these com
panies. This is perhaps as cogent proof of the fact that competition
exists as can well be offered.
244
S E R V IC E ,
S E C U R IT Y , A N D
CO ST OF
C O M P E N S A T IO N .
A valuable feature of the service and security afforded by the sys
tem in vogue here is the careful and compulsory method for promptly
reporting accidents and the preparation of standard forms on which
all voluntary agreements are made. No agreement of this charac
ter is of any validity until it has been submitted to and approved by
the commissioner having jurisdiction. These agreements are gone
over and if not clearly correct an investigation follows and the de
tails fully ascertained. When the agreement is approved, a copy
is sent to each party, a copy is kept on file in the commissioner’s
office, and the original is filed with the clerk of the superior court hav
ing jurisdiction. The carrying out of the provisions of these agree
ments is enforceable by court order, or execution. In case of specific
injuries a form is provided to be filled out by the attending surgeon.
This minimizes the chance of mistake in agreements covering serious
injuries. A copy of the agreement form and a copy of the surgeon’s
form are annexed to this paper as being of possible interest.
Connecticut has never seen any reason to adopt a so-called State
insurance fund, either competitive or monopolistic. Where a com
petitive fund exists, insurance companies are frequently forbidden to
charge less than a certain premium, because otherwise the State fund
would get only the least desirable risks. This does away with com
petition to some extent. In the early days of compensation legisla
tion, conservative not to say “ reactionary ” people who had never
studied the matter were apt to bunch this class of legislation in with
such fads and fancies as those whom the late, lamented Roosevelt so
aptly called the 44lunatic fringe ” were wont to champion. To the
conservative or “ reactionary ” anything new was undesirable. To
another and numerically large class anything old was outworn and
needed changing. When the constitutionality of compensation legis
lation came to be passed on by courts of last resort, it was the prac
tically unanimous holding of the courts that it was a wise, just, and
valid exercise of the police power.
These acts were not upheld because the system was new; neither
were they rejected because they were new. No court has indicated
that these laws were valid because they could be claimed to have a
tendency to uphold socialistic theories. The subject of the consti
tutionality of compensation statutes is no longer of interest; it is
settled. State funds have also been held to be legal. The question
for each State to decide for itself is whether on the whole such a
policy is a wise one. It has not seemed to this State that it was a
wise policy for it to pursue.
A fundamental principle of compensation law is to have the indus
try bear the burden of the industrial loss and pass on this burden to
each ultimate consumer of the product of the industry in the shape of
a trifle of added cost.
The products of Connecticut industry have a practically world
wide market. The Connecticut consumers of the products of Con
necticut industries are but a small fraction of the entire body of
such consumers. No reason has yet been discovered why Connecti
cut taxpayers should be asked, bj the establishment of a so-called
State insurance fund, to assume this burden. To do so would add an
unnecessary element to the already staggeringly high cost of living.
No injured workman nor the dependent of any victim of industrial
injury would be in any way benefited by such a step.
F.
M.
W IL L IA M S .
245
The administration and enforcement of this important branch
of the law of the State is a governmental function. Our commission
in the exercise of its duties in making awards and approving or
disapproving agreements submitted deals directly with the pay
ment of very large sums of money. It is, of course, necessary and
proper for the State to pay the necessary expenses of such adminis
tration. So it has been for many years the settled policy of the
State to provide for a department to supervise the savings banks
and trust companies of the State. It has not occurred to anyone,
however, that this authorized or required the taxation of our citi
zens to provide a fund for maintaining the solvency of these insti
tutions. W e believe that government should concern itself solely
wdth governmental functions and leave those matters which can well
be handled by individuals or private corporations unhampered by
anything, except such necessary governmental regulations as are
requisite for securing a square deal to all concerned.
It would be manifestly improper for a member of this commis
sion unduly to praise its* own operations, but it does seem proper
to state that we have been so fortunate as to secure the favorable
comment of both the representatives of the labor organizations of
the State and the manufacturers’ association of the State on the
work of the commission since its inception. This circumstance is
mentioned chiefly because the result is largely due to the way in
wThich the board was originally constituted and has since been main
tained. The five members of the board are appointed, not elected.
Politics bears no more upon its work than upon the work of our
judiciary. No change of our commission’s membership has been
made, except one made necessary by the illness and subsequent death
of one of our original number.
We have our individual political preferences and they are not and
never have been uniform. They do not enter into our work. While
most of our members were formerly somewhat active along political
lines, no one of us has made a political speech or taken an active part
in party politics since his appointment. Each of the five offices has
two young woman secretaries. They may be voters before this
paper is read, but they are not now, and their party proclivities, if
they have any, are unknown. A gltate fund, with the necessarily
larger number of clerks and assistants, would seem to have a tend
ency to work into a political field. We have no quarrel with the
system that anyone else sees fit to adopt, but are quite sure that for
our conditions our system has thus far proved itself adequate for
the interests of all concerned.
[See other side.]
Form No. 11-B.
WORKMEN’S COMPENSATION COMMISSION OF CONNECTICUT.
A greement
as to
C om pensation .
W e ,__________________________________________ o f ______________________ Street,
Post-office address___________________________________________________employer
a n d ___________________________________________________________________insurer
a n d ----------------------------------------------------------------o f ______________________ Street,
Post-office address _________________________________________________ employee
having reached an agreement in regard to compensation for an injury arising
out o f and in the course of employment and sustained by said employee in the
246
S E R V IC E ,
S E C U R IT Y ,
AND
CO ST OF
C O M P E N S A T IO N .
town o f ____________ o n _____________ _ from which incapacity resulted, beginning
o n ____________ , the nature of which is as follow s:
and for which said employee claims compensation under chapter 284 of the
General Statutes, as amended, agree with each other as follow s:
1. In case of total incapacity resulting from said injury (sec. 5351, as
amended) the employer is to pay and the employee is to receive the sum of
$______per week, beginning o n _____________ and continuing during the period
of such incapacity, but not for longer than the period provided by law, pay
ments to be made a t _____________________ ; Provided, if such incapacity ex
tends beyond a period of four weeks, compensation shall begin from the day
of the injury.
2. In case of partial incapacity resulting from said injury (sec. 5352, as
amended) the employer is to pay and the employee is to receive each week :
\a) Half of the difference between $______ (the employee’s average
weekly earnings before the injury) and the amount which the employee
is able to earn weekly after the injury, said payments to continue as
long as, because of said injury, the earning power continues less than the
aforesaid average weekly earnings, but in no case for longer than the
period provided by law or to exceed $18 per w eek; or,
(h) The employee’s earning power after the injury having been agreed
upon as $______the employee is to receive, in lieu of the sums provided
under subhead (a ) above, the sum of $______ weekly for a period
o f _____________________
3. In case of specific in j u r y (see. 5352, as amended) involving permanenttotal or permanent-partial loss or loss of use of a particular part, or particular
parts, of the body, resulting from said injury, the employer is to pay and the
employee is to receive, in addition to and at the conclusion of the payments
provided in paragraph 1 hereof, the sum of $______weekly f o r _______ weeks,
said specific injuries being:
4. The bills for medical , surgical and hospital services (sec. 5347, as
amended) are to be paid or assumed b y ______________________________________
Surgeons_________________________ —
Hospitals--------------------------------------------5.
The AVERAGE W E E K L Y EARNINGS AND W E E K L Y COMPENSATION (sec. 5353, aS
amended) hereinbefore agreed to, have been figured as follows:
F orm A. (Used when employee has worked 2 full calendar weeks or more.)
Age of em p loyee--------$________________ _________________ = $ _________________-5-2=$_________________
Total wages earned.
Number of weeks
Average weekly
Amount weekly
worked.
wage.
compensation.
F orm B.
(Used when employee has worked less than 2 full calendar weeks.)
Age of em ployee______
$________________________________________ -s-2=$________________________________
C u s t o m a r y w a g e i n l o c a l i t y for s i m i l a r w o r k .
A m o u n t w e e k ly c o m p e n s a tio n .
Witness our hands and seals a t ________________________ t h i s ________ day
o f ____________ 19 _____
In the presence of—
Witness-------------------- ------------------------- ---------------------------------------------- [ l . s.]
N a m e o f E m p lo y e r
Witness______________________________
______________________________
N am e
-------------------------------------------------------------------N am e
of
s.]
[L . S .]
In su rer
by------------------------------------------(I n d ic a te
[l .
o f e m p lo y e e
[L . S .]
o ffic ia l p o s it i o n )
This agreement, having been submitted, is approved this ______ day of
______________ 19—
COMPENSATION COMMISSIONER,
___________________Congressional District.
[ S e e o th e r s id e .]
(Make no marks or memoranda in space above.)
F.
M.
E xplanation
W IL L IA M S .
and
247
I nstructions .
(Not a part of the contract.)
It will be noticed that the agreement on the opposite page consists of five main
paragraphs covering (1) total incapacity, (2) partial incapacity, (3) specific
injuries, (4) medical services, and (5) average weekly earnings and compensa
tion. Please n ote:
(1) Paragraphs 4 and 5 of the agreement apply to all cases, and paragraph
1 to most cases.
(2) Paragraph 2 will also apply to a large percentage of cases, and the blank
space in subhead (a) for inserting the employee’s average earnings should
always be filled in. When this is done, the ordinary case of partial incapacity
is thereby automatically covered and no supplementary agreement will be
required. In those cases of partial incapacity which for any reason call for a
further agreement, subhead (5) may be used.
(3) No agreement falling under paragraph No. 3, having to do with specific
injuries, will be approved unless accompanied by Form No. 42, which is tjie
surgeon’s report to the commissioner.
(4) In figuring the average weekly earnings and weekly compensation under
paragraph No. 5, the following rules should be borne in mind (see sec. 5353,
General Statutes) :
(a) A “ w eek ” under the workmen’s compensation act is seven succes
sive days, not the six days of the ordinary working week.
(b) “ Form A ” is used only where the employee has been working for
the employer two full calendar weeks or more, and the sum to be put
over the words “ Total wages earned ” should cover the wages for the 2(>
weeks before the injury, if the employment has extended over that period o f
tim e; if not, it should, of course, cover only such a period of time as the
employment has covered.
(c) In arriving at the figures to be put over the words “ Number of
weeks worked,” a broken week at the beginning of employment and the
week in which the injury occurred are to be left out of account. So, too,
is any period o f seven consecutive days of lost time to be left out.
( d ) Pay for overtime or bonuses is to be included in the weekly w^ages
and added to the sum placed in the space over “ Total wages earned.”
(e) In case of an injury to an employee under 18 years of age, the
commissioner may add 50 per cent to the average weekly earnings in all cases
of total or partial incapacity running for 52 weeks or more, and in all
cases of specific injuries provided for in paragraph No. 3 of the agree
ment.
(5) In accordance with section 5348 of the General Statutes, as amended,
** the injured employee shall be entitled to full wages for the entire day of the
injury and said day shall not be counted as a day of incapacity.” The waiting
period begins with the first day of actual incapacity, not necessarily on the
day after the injury.
Form 42.
WORKMEN’S COMPENSATION COMMISSION OF CONNECTICUT.
S urgeon’ s R eport
to
C ommissioner .
In the case o f _____________________, an employee o f _____________________ ,
injured at _____________________ on _____________________ and attended or
examined by you, please fill out the following report:
1. I f there was an amputation, or amputations, indicate on the diagram
below with exactness the lines thereof. Give date, or dates, of sa m e__________
2. Aside from amputations, will there be permanent-total loss of use of any
part or parts? ______I f so, indicate, if practicable, on diagram.
3. Will there be permanent-partial loss of use of any part or parts? I f so, to
what extent, expressed in percentages? ______________________________________
Give approximate date at which improvement practically cea sed ______________
4.
Were there specific injuries to parts of the body other than those involved,
in the main injury above reported? ______ If so, how long, taken by them-
248
SERVICE, SECURITY, AND COST OF COMPENSATION.
selves, would they have caused total incapacity?
_______________
5.
Aside from the specific injuries hereinbefore reported upon, is the employee
in a less sound condition, or are any of his members in a different condition,
than before the injury? ______ If so, give full particulars on reverse side
o f the sheet.
Filled out b y __________________________________________________________ , M. D.
Address_________________________________________ D a t e ________________________
Office h o u rs _______________________________ Telephone n u m b er_______________
The C h a ir m a n . Mr. Marshall, chairman of the Oregon State In
dustrial Accident Commission.
SERVICE, SECURITY, AND COST UNDER THE OREGON
COMPENSATION LAW.
B Y W IL L IA M A . M A R SH A L L , C H A IR M A N , OREGON IND U STRIAL ACCIDENT C O M M ISSIO N .
I swore that I would not come to another one of these conventions
and follow the practice of blowing our own horn, as was the com
mon practice in some of our preceding conventions, but I want to
digress just to this extent. We have had a lot of theory and a con
siderable absence of fact, but I hope and believe the employers and
the workers of this country are going to have a part in directing in
jured workmen’s compensation and how compensation insurance
is to be handled, and if some of you gentlemen ignore that possi
bility, you may have a sad awakening. There has been much dis
cussion about socialism. There may be quite a difference in the con
ditions of these various States, but I want to say that in Oregon
the employers put over the compensation law, and they excluded the
casualty insurance companies from participating in the drafting of
the law; it was not the socialism of Europe or the worker, it was
the employers of Oregon, who decided they would lend their support
to draft an act along certain lines, because they gave thought to
economic waste in the system.
We have got to have more facts. The gentleman sitting next to
me was disturbed and astounded by some of the revelations made by
Mr. Hookstadt. Mr. Hookstadt has struck at the weakness of our
whole system. We don’t know the actual conditions obtaining—we
don’t know. And it is our place to find out, and that’s true in Ore
gon as well as in any other State. We ought to know more of the
history of these cases after they leave our hands. We ought to know
how long it takes after his injury before the workman receives the
money, and we ought to know how much of the total amount of the
premiums paid into the insurance fund reaches the pocket of the
workman, either through financial assistance or compensation benefits
of other kinds.
SERVICE.
Broadly speaking, workmen subject to compensation laws are in
terested in (1) adequate medical aid, particularly as to injuries that
may result in permanent disability; (2) the payment of compensa
tion as promptly as is possible, with a minimum of “ red tape ” or
expense; (3) liberal compensation during total disability and for
permanent disability; (4) appropriate treatment to restore func
tion, where possible, in cases apparently reaching the state of per
manent disability; (5) rehabilitation in serious permanent injuries,
either through placement or vocational reeducation, or both, or in
a small proportion of cases by payment of compensation in a lump
sum; and (6) adequate and certain provision for dependents in
event of fatal injury.
249
250
S E R V IC E ,
S E C U R IT Y , A N D
COST
OF
C O M P E N S A T IO N .
Although the provisions of the Oregon law contain limitations
as to surgical service and hospital accommodations, requiring
authority from the commission for the expenditure of more than
$100 in any case for either of these classes of service, in actual
practice the injured worker now receives full medical aid. As origi
nally intended, these provisions result in (1) placing before the
commission, when requests are made for authority to make addi
tional expenditure, information as to the condition of the injured
worker at that time, thus affording opportunity to the commission,
through its medical department, to be informed as to what further
treatment is proposed and as to what surgeon proposes to do the
work; and (2) these provisions also serve to safeguard the fund
against exorbitant bills for services.
Physiotherapy has come to be an important factor in Oregon.
The commission early recognized the need of furnishing some kind
of treatment in many cases where injured workmen, having been
discharged by surgeons, continued to experience pain and disability.
Starting with individual cases, where the injured workmen were
furnished hydrotherapy treatment at the expense of the commission,
the members of our board became convinced of the need of supple
menting the usual treatment by surgeons. As a result, two physio
therapy departments have been established and are being maintained
at the expense of the State fund. A separate staff, consisting of a
surgeon as supervisor and with trained aids, is provided by the com
mission for each department. The experience developed appears
amply to justify the judgment of our board in entering this field.
In addition to that, we have also started the work of placing in the
larger industrial establishments of the State plant nurses, responsible
directly to the commission and whose salaries are paid by the insurance
fund. In that connection, we also recently experimented by putting
plant nurses in two of the larger construction jobs, for the purpose
of securing the experience and determining whether that will be a
proper course to follow.
Another part of the service is the matter of rehabilitation. When
you secure legislative powers along the line of rehabilitation, it is
desirable to have the language as broad as possible in order to be
able to meet* the different conditions obtaining in each case. Aside
from this physical rehabilitation I referred to, we have three ways
now in which we can aid the worker who has received a permanent
disability. We have the matter of the lump sum where it is desirable.
Then, of course, comes the work of reeducation, in which we have
rather broad powers and apparently sufficient financial resources to
carry on successfully. Third, comes the matter of placement. I
might say that has resulted in strengthening, very much strength
ening, the act among our citizens, among the workers and employers,
because nowhere have we met anything but encouragement as to that
new development. Then, of course, second injuries are taken care of
by spreading the cost of extra liability caused by a second injury
over an extra fund, rather than charging it to the employer.
With the possible exception of medical service, we believe delay
in paying compensation to injured workmen causes more complaint
than any other feature of the entire compensation system. Our
efforts to secure improvement in this regard have included appeals
W IL L IA M
A.
M ARSHALL.
251
to employers, workmen, and physicians to send in reports more
promptly, and provision for monthly studies of the time required
to secure these reports and to pass claims through the department
for payment.
The most important development with reference to speeding up
work in our claim department came from the realization that it is
absolutely essential to have each employee handle but a small num
ber of claims before passing these claims on to the next employee
or department having some duty to perform in connection with
the claims. By this method we hope ultimately to arrive at our ideal,
the forwarding of a check to the injured worker within 24 hours
from the time of the receipt of the report that establishes the claim.
We also believe the making of a study each month as to the time re
quired in handling claims serves as a splendid check against the
commission or its employees becoming lax in this important matter.
Other changes made for the purpose of expediting payment have
been the securing of a revolving fund which permits the commission
to issue its own checks, and the policy of paying, as soon as necessary
reports are in, of one month’s compensation in all serious cases and
of two weeks’ compensation where the reports show the disability
will extend beyond that time.
Relative to the schedule of compensation, during the last year, be
cause of the increase in the cost of living, the governor appointed
a committee to consider an increase in benefits and then called a
special session of the legislature last January, at which time a fiat
increase of 30 per cent in all benefits was made, retroactive to the
first day of the preceding December and continuing until June 30,
1921. The governor’s committee, consisting of employers, workmen,
and taxpayers, is now considering the schedule to be put into effect
on July 1, 1921, and also other amendments to be placed before the
legislature next January.
One very interesting result of the increase of 30 per cent referred
to was that the increase applied not only to accidents happening after
action by the legislature, but also to all fatal, permanent total, per
manent partial, and temporary total cases occurring during the pre
ceding five and one-half years and where monthly payments were
being made by the commission. The result was that the commission
was required to set up from its surplus additional reserves for all
fatal and permanent injury cases, some of which had originated as
early as the year 1914.
The Oregon act differs from the laws of other States in that work
men are required to pay to the accident fund an amount equal to
1 cent for each workday, and also because the law contains no waiting
period. Our experience indicates that in 39 per cent of cases dis
ability does not extend beyond one week, and that for temporary
disability 46 per cent more compensation is being paid than would
be paid if the law contained an absolute waiting period of one week.
Another feature of compensation acts which has, so far as we are
aware, not been considered by way of comparison is the method
provided for determining the wage for the purpose of fixing com
pensation. In Oregon the monthly v/age is ascertained by multi
plying the daily wage at the time of injury by 26. In some acts
the method provided to ascertain the weekly wage, for example, is
252
S E R V IC E ,
S E C U R IT Y ,
AND
CO ST OF
C O M P E N S A T IO N .
to multiply the daily wage by 300 and divide by 52. It appears
that the application of this rule results in decreasing by about 4
per cent the amount of compensation to which the worker otherwise
would be entitled.
In our State the employer, workman, and physician report acci
dents independently of each other, and experience suggests the advis
ability of the workman having opportunity to initiate a claim and
having that claim go before the administrative body. Many acci
dents occur of which the employer or his representative has little
or no knowledge, and in some cases antagonism exists between the
worker and the person reporting for the employer.
SECURITY.
As insurance in Oregon is confined to the State fund, the security
of the injured workmen or their dependents as to payment of com
pensation lies in the adequacy of reserves and the character of in
vestments. The act requires the setting up of reserves in all fatal
and permanent disability cases where awards have been made, and
the investment of these moneys is restricted to such purchases as may
be made by savings banks under the State law. In fatal and perma
nent total cases life expectancy is the basis for estimating liability.
The fund for these cases is recomputed every other year, the liability
being reestimated upon the life expectancy in each case at the time
of recomputation.
In addition the commission estimates monthly, upon the basis of
experience under the Oregon law, the liability in unsettled cases. To
this is added a reserve of 30 per cent for fluctuation in experience,
and 50 per cent of the total of these two items must also be included
before the commission can credit any surplus to employers paying
into the fund.
In 1919 a catastrophe fund of $50,000 was established, and to
this is added monthly 1 per cent of the receipts. This fund is also
available for the payment of compensation in event of the de
pletion of other funds. An additional fund was established early
this year for vocational rehabilitation, and has increased from the
original $100,000 to $134,061.05 on June 30 last. At the end of our
last fiscal year, June 30, 1920, the State fund had admitted assets
of $4,439,297.80, and of this amount $3,973,729.75 represents the
reserves to cover all forms of liability.
COST.
In comparing the different forms of insurance, we believe the
true test of cost is found by ascertaining what proportion of the
premiums paid for insurance finally goes to the injured workmen
or their dependents in the form of compensation benefits. If this
test were applied, employers and workmen could themselves easily
determine the form of insurance most favorable to their interests.
In Oregon, under an exclusive fund system, where the operations
are scattered over a large area and the administrative expense is
somewhat greater because of this fact, claimants and their de
pendents have received in compensation benefits 92 per cent of all
moneys expended by the commission for every purpose.
W IL L IA M
A.
M ARSHALL.
253
Employers and workmen are coming to realize that under the
exclusive State-fund method of handling workmen’s compensation
insurance (1) there is no element of profit, and therefore no in
centive to discourage just claims or to be illiberal in making awards;
(2) that the elimination of the economic waste of agents’ commis
sions benefits both employers and workmen; and (3) where rep
resentatives of employers and workmen have opportunity, through
conference committees, as is now the practice in our State, to de
termine what changes or improvements are to be made from time
to time in the compensation law, it provides a splendid field of
mutual interest, not only as to details of the compensation law, but
also in the other important field of accident prevention.
SAFETY.
Now, the one remaining important feature, it seems to me, is the
matter of safety, accident prevention preferably, and I think that
work is properly divided into two parts, the physical safeguarding
and engineering and the educational work. We are working now in
Oregon on the theory that the best results will be accomplished by
first convincing the employer that it is good business to do effective
work along the lines of accident prevention. At the present time
there is a committee appointed by our governor, consisting of five
employers, five workmen, and five general taxpayers, which is work
ing over the various phases of compensation. They have had three
monthly meetings and will continue to meet each month until the
legislature meets next January. I think there are 14 different things
before them now, including what shall be the schedule of compensa
tion after June 30 next year; whether there shall be State aid and in
what form ; what changes are desirable along the line of rating and
along the line of merit grading; what changes shall be made along
the lines of safety. That whole development is most encouraging,
because men in the industrial field and other phases of life holding
widely differing views are meeting monthly at the same table and are
working out these problems, so that when they reach a solution, or
an agreement rather, they will go before the legislature and have
little difficulty in securing what they want.
The C h a i r m a n . We have one more item on the morning program.
We are to hear the gentleman who has come the farthest to attend
this convention. Mr. Armstrong, of Nova Scotia, has traveled over
5,000 miles from his home city of Halifax. He has attended every
convention of this association since he was appointed to the Nova
Scotia board, and with his address the morning program will be
concluded.
SERVICE,
COST, A N D
SE C U R IT Y U N D E R D IFFE R E N T
OF CO M P EN SA TIO N .
SYSTEM S
BY F. W . ARMSTRONG, VICE CHAIRMAN, NOVA SCOTIA COMPENSATION BOARD.
Workmen’s compensation legislation is an evolution from two old
common-law maxims: “ It is the duty of everyone so to govern and
regulate his own conduct that he shall not occasion injury to others,”
and “ Everyone is responsible for the acts of his agents.” These
maxims had a fine ringing sound to the uninitiated, but for the
workman who was temporarily or permanently disabled and ren
dered unable to earn a living for himself or family through the
negligence of his employers’ agents, or by a dangerous condition or
arrangement of the machinery or working premises for which the
employer was directly responsible, these maxims had no consolation
whatever. Everyone was bound by these maxims except the master,
and everyone was entitled to relief under them except the disabled
workman. He alone was deprived of any redress under the old
common-law defenses of “ assumption of risk” and “ common em
ployment.”
A step in advance was taken when the first employers’ liability
act was passed. When we reach the period of the introduction of
the first compensation act in Great Britain, in 1897, we find that
the idea was slowly gaining ground that the question of awarding
damages for personal injuries caused by some one’s misconduct or
fault was not the only point to be considered, but that the industry
itself should be considered responsible. The latter is now prac
tically accepted by all students as the foundation of the compensa
tion laws of to-day.
Most of our compensation acts provide that a workman must give
up his common-law rights as well as his statutory rights when he
accepts the benefits of the compensation act. The reason for the
taking away of .these rights is that the workman becomes entitled to
a measure of certain relief from the economic loss and that relief is
given him without delay. As each State enacted a compensation law
the idea that this was a matter which concerned thje welfare of the
'State seemed to be the underlying principle; and for that reason
compensation payments should not be limited to a fixed period or a
maximum amount but should be payable for life, and a widow should
be entitled to monthly payments as long as she lived, except in case
of remarriage; also that the allowance for a permanent disablement
should be paid monthly during the lifetime of the workman. This
would seem to indicate that the matter was looked upon as being in
the best interests of the State; that persons who had suffered an
economic loss through industry should not be looked upon as ob
jects of charity, but that it was the duty of the State to make provi
sion in some way for the loss which they had suffered.
254
F.
W . ARM STRONG.
255
When a legislature decided to enact a compensation act the princi
pal question with them and with the employers and workmen was
the scale of benefits wThich should be specified in the act. The ques
tion as to whether it was to be an exclusive State fund or State fund
and stock companies competing, or stock companies only, was one
with which the legislature did not concern itself very much. The
employer rather favored stock companies. The idea that there was
to be competition seemed to appeal to him. The workman was in
different, but was rather inclined to want a State fund, believing
he would be given fairer treatment than if he had to look to a stock
company. The legislatures were guided by these different arguments,
and in most cases permitted stock companies and State funds to
compete, although in some cases stock companies were allowed all
the business; but only in a few cases did they establish exclusive
State funds, and it was only in the working out of the system in
each particular State that the defects, if any, began to show them
selves. In States where there are stock companies only, quite an
agitation has been carried on for an exclusive State fund, and while
the legislatures have been willing to grant a competitive State fund
this has not been accepted. Also in States which have stock com
panies and State fund competing, efforts have been made, and are
being made at this' time, for an exclusive State fund. It would seem
from this that the great question must be between an exclusive State
fund and stock companies systems.
Just here I wish to state briefly and concisely the kind of a system
we have in the Province of Nova Scotia:
(1) It is an exclusive State fund, being administered by a com
mission appointed by the State.
(2) Every employer must report, and is liable, with few ex
ceptions, for such assessments as the board may levy for the purpose
of creating a fund for payjnent of claims. I f he does not report,
or does not pay his assessments, he becomes personally liable to the
board for the amount paid on account of any accident which may
happen to one o f his workmen.
(3) It is a monopolistic system—private companies are not al
lowed to do business in competition with the State board.
(4) Workmen are protected in case of accident if they are within
the operation of the act, even if the employer has not reported his
industry, or if he has reported his industry and has not paid his
assessment.
(5) Rates.—The board has full power of fixing the rates for as
sessments on the different classifications.
(6) Funds .—The board collects all assessments and has full charge
o f investments of all funds.
(7) Claims.—All claims are decided and payments made by the
board.
(8) Decisions.—The decisions of the board are final, except that
an appeal, by leave of a supreme court judge, may be taken on ques
tions of law. Questions of law are defined in the act. and are con
siderably restricted.
(9) Medical aid.—Medical aid is wholly under control of the
board, who pay all medical-aid accounts from the general fund
collected by assessments.
256
S E R V IC E ,
S E C U R IT Y , A N D
COST
OF
C O M P E N S A T IO N .
This, in a few words, gives the principal features of the Nova
Scotia act. It is modeled after the Ontario act, which in turn is
modeled after the system in operation in the States of Ohio and
Washington.
The merits or demerits of the exclusive State fund and stock com
panies systems must be determined by results, and these results must
show that on the whole the service given, the cost of such service,
and the security of payments must be better with one than with the
other.
Time will allow me to touch on only a few of the comparisons
which may be made between the different systems. I shall first take
up the question of payment of claims. This is, in my opinion, tho
most important duty in connection with the administration of com
pensation acts, and we must bear in mind that one of the chief argu
ments used as to why these acts should be passed is that if the work
man was entitled to compensation the money should be promptly
given him, so that he or his family should not suffer. Has this been
kept always in sight? We shall first see how claims are adjusted
under a stock-company system.
HOW CLAIMS ARE ADJUSTED UNDER STOCK-COMPANY SYSTEM.
When an accident happens to a workman in a State where the
employer is insured under a stock company, the employer usually;
reports the accident to the insurance carrier, and immediately the
whole machinery of the company is set in motion. Having its profit-,
making functions always in sight, it usually devotes its energies to
see that the amount paid is as small as possible. These companies
are not social-service bureaus or welfare leagues, but are organized
solely for the purpose of making money. They have their trained
men hardened to the work, whose duty it is to see that the claims are
pared down to a minimum. The workman thus finds himself at a
great disadvantage, and, unless he goes to a solicitor or attorney, he
has no person to take his part. The employer is brought into the
case, who may be depended upon to help the insurance company, as
he wishes as few cases as possible charged up against his business.
The doctor is usually sent for by the employer and paid by the in
surance company. In lhat way he is to be considered almost an em
ployee of the company. With this array against the workman, is it
any wonder that under a direct-settlement plan, or in any arrange
ment where the stock companies have to do with settlement of
claims, he is exposed to the risk of unfair treatment and does not
obtain the amount to which he is justly entitled? If the hearing is
before a board or other tribunal to determine the amount that should
be paid, the workman will think that he should have a lawyer or
some other person to appear on his behalf as against the trained rep
resentative of the stock company. If he employs any person to take
his case, it may be on a percentage basis, and, although some boards
have limited .the amount that should legally be paid, this is not suffi
cient protection. Why should the workman be placed in the posi
tion where he will have to employ any person ? In many cases hear
ings are postponed and other delays are made by the insurance com
panies with the only object of putting off payments which are justly
due. Can anything be done to remedy this state of affairs? I am
F. W .
ARM STRONG.
257
afraid that no improvement may be looked for as long as the State
allows the stock-company system to continue.
HOW CLAIMS ARE ADJUSTED UNDER STATE FUND SYSTEM.
When an accident happens to a workman in a State where the
employer is insured under a State fund, the employer is usually
required by the act to report at once to the board. The procedure
to be followed in making and completing claims should be as simple
as possible. As soon as a report of an accident is received, giving
information as to the name of the injured workman and also the
name of his employer, forms should at once be sent to both parties
with the object of getting them to tell the board, by answering cer
tain questions, how the accident took place. Reports are also re
ceived from the doctor who attended the workman and who is paid
by the board. These reports being sent direct to the board it will
be found much easier to settle cases without delay.
There is no question that if the injured workman can be made
to tell his own story about the accident, either by letter or by per
sonal interview, to the board or its officers, who are independent and
impartial, the claim can be adjusted much more quickly. In making
out reports it is not necessary for employer and workman to con
fer; in fact, I think it would be better in the preliminary stages
that they should not come together. The workman should be made
to feel that he is not looking to the employer for his compensation
but rather to the board. If the employer has any objection to the
claim or to the amount being paid he can take the matter up with
the board by letter, or can state the objection in his report. The
employer should be promptly notified of any payment made to the
workman, so that he can report to the board whether, in his opinion,
the injured workman should return to work, or if for any reason
he is not entitled to further payments.
A workman having a grievance should take it up with the board
direct and not with the employer. Should he go to the employer
in regard to the matter it is better for the employer to tell him that
the matter is in the hands of the board. It is not necessary that
the workman should seek the advice of a solicitor or attorney, or
that he should employ any person to look after his interests. With
the board trying to get at the facts and prepared to deal fairly with
him, there is no reason why any part of the compensation to which
he is justly entitled should be used to pay for advice or assistance
which he does not require. This manner of settling claims com
mends itself for the reason that simple methods are used, and every
thing is done to have the matter adjusted before any controversy
arises between the employer and the workman. At this time the
feeling between the workman and employer is perhaps not as cor
dial as it should be, and for this reason any system wiiich takes
away any matter which tends to create friction should commend
itself to persons interested in workmen’s compensation legislation.
Under a State fund system, with workman and employer report
ing directly to the board, 95 per cent of the cases are easily disposed
of. The remainder may require further information in regard to
date of lay-off and return to work; but not likely more than 2 per
2 6 0 8 9 ° — 2 1 -------- 1 7
258
S E R V IC E ,
S E C U R IT Y , A N D
CO ST OF
C O M P E N S A T IO N .
cent of all claimants will have to appear before the board or its
officers for a formal hearing.
The investigation in the State of New York showed the evils of
direct settlement; and although this method has been abolished there
direct settlements under stock companies are still carried on in other
jurisdictions, and no doubt similar conditions exist as found by
the New York investigation. But even with direct settlements done
away with, can any sound argument be advanced why a system
which will create friction between employer and workman, which
delays payments, and which causes a workman to pay out money in
order to get what he is justly entitled to should be continued; when
the State has said that a workman or his dependents are entitled to
certain benefits, why should it allow a company which is operating
for profit to come in between the State and ihe workman \
COST.
Regarding the matter of cost, there is a big economic question
involved and it is not clear why a stock company’s losses should be
about 50 per cent of its income, against anywhere from 92^ per cent
to 100 per cent under a State fundTand why the expenses of stock
companies are about 40 per cent of their income and State fund
expenses do not usually exceed 7^ per cent. I do not see how both
these systems can permanently exist side by side. Granting, for the
purpose of comparison, that the service given by both systems is
equally good and the service to the State can as well be performed
by stock companies as by the State fund, and that workmen receive
equally fair treatment, there still remains the great difference in cost.
I f there were no other reason than this, it would be enough to con
demn it from an economic point of view to a business man.
SECURITY.
The State is the guardian o f the rights of the people as defined
by the constitution, and they may add to, amend, or change same
as therein provided. It is also the duty of the State to protect the
people by safeguarding their interests, and once laws are passed it
is its duty to see that the same are enforced. The State has in many
cases taken away the rights o f the workman and has given him
others which are on the whole, we believe, more valuable; but in
some cases the security is not good.
The State has failed in its function when it has passed laws pro
viding for the payment of certain sums to a workman or his de
pendents and has not secured the payment of these amounts. We
know that stock companies have failed to make payments to work
men and their dependents. In some cases the employers had to pay.
In others the State made good the amount due. In others the loss
fell upon the workman or his widow and children. The argument
has been advanced by some that it is the duty of the State to guarantee
all payments provided under a workmen’s compensation act. As
suming that it is the duty of the State to safeguard the interests
o f the employer and give security of payment to the workman and
his dependents, what justification can there be for guaranteeing pay
ments which are due by stock companies which are operating for
F.
W .
ARM STRONG.
259
profit? Such a company may have paid large dividends for many
years, then later find itself unable to meet its obligations. Is it
proper or just that the State should then be called upon to make
good these payments? No good sound reason can be advanced as to
why the State should assume any obligations of these companies;
The employer is entitled to protection, and the workman and his
dependents are entitled to security of payments. The State fund
system offers the best solution. In Nova Scotia the power practically
of a taxing body is vested in the State board, and it taxes just the same
as any municipality would, but it taxes the industries, based on the
pay roll. Can any better security be given by way of continued pay
ments to women and children than the form which we have there?
The benefits of an exclusive State fund are:
(1) There is security to the workman.
(2) There is security to the employer when he has paid his assess
ments to the State fund.
(3) There is better feeling between employer and workman, be
cause the State fund assumes the payment of compensation.
(4) The industries of the State benefit by paying only a maximum
of about eight cents to get one dollar to the workman, against sixtysix and two-thirds cents by stock companies.
(5) The State benefits, because it will never be called upon to
make good payments which should have been made by stock com
panies.
(6) The employer is better satisfied, because he knows that every
dollar which he pays in assessments is to be used to pay claims and
legitimate expenses, which will not likely exceed 7-| per cent.
(7) The employee is better satisfied, because he feels that his
payments are in the hands of a board which has every reason to deal
fairly with him.
Can the stock-company system offer any benefits such as these or
that in any way can compare with them? The permanent system,
the one that will ultimately prevail, must give all benefits men
tioned here. Taking everything into consideration, can we come to
any other conclusion but that the exclusive State fund must be the
permanent system?
O f course, the point that I have tried to make in this paper is the
personal touch that comes between the board and the injured worker.
As Mr. Hookstadt has very well said, this is a workmen's compen
sation, and it is for the workman, and the workman must get fair
play from the commission every time. The Nova Scotia act has all
the earmarks of the worst kind of insurance in the world, monopo
listic State fund, compulsory, and all the rest of it. This, of course,
makes it the object of a good deal of criticism, but on account of be
ing a long distance away from the seat of the enemy, we don’t re
ceive as many knocks as the State board of Ohio. I am very sorry
that my friend, Mr. Watson, is not here. I would like to have
heard Mr. Watson on the question of the State versus the stock com
panies. He knows much about the business and how the attacks
have been made on the Ohio fund, and not only on the Ohio fund but'
the cowardly attack which was made by the insurance carriers against
Mr. Watson personally in regard to his war record. This stands out
as only one of the things that are done by the stock companies to
260
S E R V IC E ,
S E C U R IT Y , A N D
COST
OP
C O M P E N S A T IO N .
discredit State insurance. Now eventually, I believe, State insurance
will carry. It has got to come. It has got to be monopolistic, and
it must be compulsory. If, as Mr. Whitney states, this is going to
be evolution, I can’t see why the people in this country are prepared
to spend $30,000,000 a year more than they otherwise would spend
and let this evolution last for 15 or 30 years, when by competition
the State funds, where there are competitive ones, will be able to
drive out the others.
DISCUSSION.
The C h a i r m a n . I will ask Mr. Monson, of Utah, to open the dis
cussion on the subject of “ Service, security, and cost under different
systems of compensation.”
M r . W. P. M o n s o n , commissioner, Utah Industrial Commission.
The discussion this morning seems to hinge upon the question of
private carriers or the competitive system and the monopolistic State
insurance fund. I am a firm believer in the survival of the fittest^
and I believe the question will solve itself.
What has seemed peculiar to me throughout the discussion was
the statement or statements that a State insurance fund is admin
istered more economically, and yet in the statistics which have been
produced that the service under the system is anything but desirable
or what it should be. When we talk of service we should not take
into account altogether cost, or mere cost, as being the paramount
feature, because the line of demarcation is drawn tightly between
service and cost, and if we can eliminate the matter of cost by estab
lishing certain fee or certain premium bases for stock and State in
surance carriers, and then let the competitive field be along the line of
service, there will be a withdrawal from the field of those which
can not provide the service that the successful company will provide.
There is one thought that came to me to-day and it has been accen
tuated by the discussion with respect to the monopolistic State in
surance fund. It has always been a question with me, why, if it is
such a saving to the men of industry or the capitalists, they should
not be the ones who are working for it, urging it. I can not see why
labor organizations should be obsessed with the idea of having mon
opolistic State insurance funds so long as the obligations under the
law are administered by a nonpartisan industrial board. I f there
is but one fund, a State insurance fund, it appears to me that it is
apt to become a political bludgeon and be used in order to expand
prices or benefits. I may be wrong, but this is an hour for discussion.
I can see many advantages in monopolistic State insurance, where the
State would collect the premiums and administer the benefits under
the law.
Without doubt, State industrial insurance is more economical than
that of stock or mutual companies. The question which is worthy
to survive will answer itself in time. Between success and failure the
line of demarcation, with service on one end and cost on the other,
is drawn with precision. When impartial decisions are rendered by
industrial accident boards, making the benefits under all forms of
contracts uniform, a long stride has been made in solving the indus
trial insurance service problems. There remains only the cost to be
D IS C U S S I O N .
261
considered, and if established uniformly among carriers, competi
tion in service only will result, which is more desirable than com
petition in cost. Scarcely would an employer, through aristocratic
pride, pay higher premiums to a stock company than to a State in
surance fund, all else being equal. Competitive systems of industrial
insurance based on service will prove the law of the survival of the
fittest. In the last analysis that system which brings to the unfor
tunate workman in case of accident, or the unfortunate workman’s
dependents in case of death, the larger portion of premium assess
ments is bound to survive. It must survive. Often a premium, with
its ornate overhead decorations, is to the benefits paid what the
prince is to the pauper—they are not on speaking terms.
In considering a subject so vital to those engaged in industry it is
well to view the other side of the issue. What legislative measures
should be adopted to protect the employer and the public against
the malingerer—the artist at feigning injury—and the one who ac
centuates his misfortune? True, this is left largely to the decision
and discretion of accident boards and industrial commissions. Were
penalties provided by law against such, just as penalties are provided
against employers and surgeons who fail to respond to the require
ments of the statutes, there would be less time and money wasted on
such unworthy cases, and a more economic standard attendant upon
administering the law would obtain. Silence of legislative acts in
this particular is often considered the open door through which
industrial leeches enter, who suck the lifeblood of industry.
I f there is anything I abhor it is a leech, and there have been
cases come before the Industrial Commission of Utah where the
board has been united in disallowing the claim. One case, for in
stance, was that of a man who had been suffering, before he ever left
Poland, from a disease resulting in cysts under his tongue, and who
had the misfortune of rolling down a bank, of a 45-degree incline,
perhaps 50 feet. No bones were broken, but coming on simultane
ously with this accident was the acute stage of this cystic condition
under his tongue. Do you think we could get that man to go back to
work? Why, he thought the United States owed him a living. I
believe this is a problem of education of the foreigner rather than
of imposition upon the business men of our community, and, of course,
I believe the business men must educate them, just as I believe it is
the part of the insurance carrier to sympathize with them in their
misfortune, but to impose the burden upon industry in every in
stance we hardly think it is fair. We sometimes hear men say, “ Well,
I stand for the under dog.” I f we would stop to analyze that I be
lieve there would not be one here who would hold tenaciously to that
principle in all cases. I want to say that as long as the Almighty
gives me the breath of life I hope to stand for the under dog as long
as the under dog is right, and when he isn’t right, I won’t stand for
him.
I would like to say a word about self-insurance. I f there must be
self-insurers, specific regulations touching this class should be pro
vided by law, just as certain exactions are laid upon stock and mutual
carriers under competitive systems. The method in vogue in Con
necticut, requiring a yearly application for the issuance of selfinsurance certificate, is to be highly commended. Such measure re
duces overdeveloped self-interest to a minimum. Certain evils, now
262
S E R V IC E ,
S E C U R IT Y , A N D
C O ST OF
C O M P E N S A T IO N .
prevalent, must be abolished. To illustrate: A is killed at the plant
of B, a self-insurer. C, who is B’s adjuster and wants to render
service to justify his ample salary, negotiates a deal wherein the
widow of A enters suit against B, who confesses judgment in a sum
hardly approximating the commuted weekly benefits allowed her
under the compensation act. A ’s widow feels suddenly enriched
and invests in oil stocks or some other wildcat scheme, and before
six months have passed she is a ward of the State. Thus the very
purpose of the compensation act is subverted. Unless the oppor
tunities for such conduct are removed, there can be no good reason
for the self-insuring feature existing in any law. Under strict legal
regulation and the yearly certificate plan such abuses or other vio
lations would bring revocation of the self-insuring privilege.
Reform is needed everywhere in speeding up adjustments and
making prompt payments of compensation at regular intervals.
While failure to elect, on the part of dependents in cases of death, to
take compensation under the law often delays first payments, there
is still much room for improvement in this regard. Less hesitation
to accept statutory benefits would obtain if prompt settlements were
offered by insurance carriers and if the workman and his dependents
were made acquainted with their rights under the law, a duty in
cumbent upon the employer. At the next election we will vote for a
constitutional amendment providing that all deaths in industry shall
be settled for under the industrial commission’s supervision, instead of
leaving it open for the claimants to take a settlement in court.
The suggested use of the triplicate uniform agreement in all injury
cases will, in all probability reduce the number of cases that now go
to a formal hearing. That I take from the supplement to the paper
read by our friend from Connecticut. When an agreement between
employer and employee is required, the psychological aspect of the
situation changes, producing fewer disputes. The educational value
of such agreement can not be overlooked. The next factor in the field
of service after the securing of reasonable compensation at a time
most needed is the matter of rehabilitation and reeducation. Certain
injuries, with proper surgical care, can be remedied with a minimum
o f time lost. In this matter the service of the specialist is the most
economical, to secure which and to provide proper and close attention
reasonable fees should be provided. Utah had a medical fee schedule
which was absurdly low, and on the 1st of July a new fee schedule,
which was the result of cooperative labor on the part.of the industrial
commission and the Salt Lake County Medical Society, was sent out.
We took the minimum of their fee schedule in most instances. In
some it was even reduced. For instance, for small wounds not re
quiring anesthetization in the first treatment a fee of $5 to $15 was
provided. A case which came to our notice was that of a man who
was struck by an object on the forehead, necessitating three stitches,
and the bill came in for $15, which the new schedule specifically pro
vided for, and then there was a $2 treatment, 12 of them, subsequently,
making $24 for treatments besides the $15, $39 in all. The medical
society voted to join with us to establish better relations for the
benefit o f the injured workmen, and a committee was appointed by
the medical society, consisting of three of the foremost industrial
surgeons, who spend an hour or two of their time whenever called
upon by the industrial commission, without charge. Just before I
D is c u s s io n .
263
left Salt Lake City we had about 18 bills that exceeded the new
schedule, and we called the doctors in, to go over each bill separately,
and where possible we would ask the doctor whose bill we were con
sidering to be present. I remember there was one bill came from one
of the committee. It was the one I mentioned. When we asked what
should be done with the bill, he said, “ Cut it to $15,” and then we
passed it over to him to get his signature on it. He said,44This will
never happen again.”
A most healthy condition is disclosed in any State where compen
sation payments are few and the medical fees sufficiently high to*
secure the best treatment for injuries. I don’t mean by that there
should be a medical compensation law, but we believe the greatest
benefits are coming to a workman when he is placed under the
charge of a specialist who is paid a reasonable fee to give the proper*
treatment.
Reeducation, the placing of on© whose injuries wholly incapacitate
him to continue in the vocation to which he is accustomed in a new
and gainful employment, is a service to humanity. Instead of relegat
ing him to the human scrap heap, make him useful to society by fit
ting him for the struggle of life through teaching him to do pleasur
able as well as profitable work. The United States Government has
initiated a lead worthy of being followed by every State. Helping
one to help himself is the most charitable act possible. To this end
all legislative bodies, accident boards, and industrial commissions
are, or should be, vigorously working. Safety engineering should be
conducted under the supervision of the State industrial commissions.
They see the need for such service more clearly than is possible by
members of separate boards. Steps to remedy any unnecessary
hazard can be taken immediately as reports of accidents are received.
A new field, I am sure, will be opened in the future for social
engineering. It will be the right, aye, the duty, of captains of indus
try to place individuals of capacity for such work in charge of social
welfare organizations to reduce to a minimum local feuds and to
establish domestic tranquillity where discord and bitter feelings
abound. Then president of a very large railway corporation is
credited with saying that 85 per cent of the accidents occurring
among its employees are traceable to some domestic discord or worry.
A little attention diplomatically directed along the lines of social
supervision will result in a reduced accident list.
Here is an open field for the operation of women in industries where
women’s influence has hitherto been unknown. Her possibilities
are unlimited. She could instruct in home sanitation, in social be
havior, and attend upon and provide necessary care in sickness. The
workman would leave for work in the morning knowing all was well
at home. Worries would be dispelled and he himself would have
100 per cent of his mental and bodily capacity for service.
Mr. P i l l s b u r y . We started in the first place under the old Roseberry act. We studied all the insurance systems. Down in New
Zealand we found an idea, and we adopted the idea. The idea was
this, that an industrial accident commission could maintain a com
petitive fund, just to set an example to the other insurance carriers,
which they would have to follow or else the fund would get the busi
ness ; and I may say to you that no other than an industrial accident
264
S E R V IC E ,
S E C U R IT Y ,
AND
COST
OF
C O M P E N S A T IO N .
commission, which is daily engaged with settling controversies, with
its finger on the pulse of the public, can know just what a modem
insurance carrier needs to be. Now, there is a tendency with the stock
company to become a cold-blooded financial institution. But a com
mission having under its control a competitive fund, and seeing the
needs as they come daily before it at its hearings, knows that a warm
blooded financial institution is necessary in order to make compensa
tion a success.
Now, we have made the California fund a warm-blooded financial
institution. It is a financial institution. It doesn’t give away or
..throw away any money of the assured. It is careful of that. But
it does not stand upon every technicality. It meets the requirements
as they come, without very definite regard to strict legality. I f a
man has been lulled along and the statute, of limitations has run with
out any serious fault on his part, it is not pleaded. There are a good
many things we can not compel the other insurance carriers to do
directly that we do compel them to do indirectly, because the fund
does it, and if they don’t do the things the fund does the fund gets
the business. It took the other insurance carriers about four months
to get the idea, and their salvation, I believe, dates from about that
time. They began to do things in a better way.
There have been lots of times when I wished we had a monopoly,
when I wished the other fellows were out of the game, because nearly
all of our litigation has come from that source, which would thus
be avoided.
Now, anyone will tell you that private enterprise can do business
cheaper than the State. I believe it, but I also believe it won’t do
it if it can help it, and it hasn’t done it in this State. I think it will
have to. I was much impressed by the remark of the gentleman
just before that this thing will work out its own salvation. I have
told these insurance men time and again—they are bright young
salesmen: “ You are talking and using your influence to get business
for your companies and are getting 60 per cent of i t ; you can not
go up permanently against a proposition of the State compensation
insurance fund, which is furnishing identically the same coverage
for 33^ per cent less.” Of course, I think privately these young men
are wasting time selling insurance that costs money when they could
sell blue sky that does not, but they are selling it. But mark my
word, our policies are all participating. At the end of the year we
return a certain definite amount that was not needed. Dividends in
insurance mean you have paid that much too much for insurance.
No man is wise enough to know at the beginning of the year what
the premium ought to be. We haven’t had enough experience and
won’t have for years to come, but any bookkeeper can tell at the end
of the year what it ought to have been, and then we return as much
as need be, as much as we can and be consistent with the law, which re
quires us to keep reserves. So we have returned some 33^ per cent
right straight along, going on now for the seventh year. The State
ave us $100,000 to begin with. That is still invested in bonds,
'he only money it ever cost the State was about $5,000 to equip the
commission to start with, before the law went into effect. That
is the only money it ever cost, and yet while returning over 30 per
cent in the first six years we have made 207 per cent per annum on
f
D IS C U S S IO N .
265
the $100,000 capital the State gave us. I f we had not returned any
thing we would h^ve made 338 per cent per annum on the $100,000
that the State gave us, and yet during that time a number of insur
ance companies went out of business because they could not stand
the competition. All they have to do is to have a house cleaning,
get down to bedrock, cut themselves loose from the agencies, let one
another’s business alone.
As I stated a little while ago, employers, thickheaded as they are,
will not permanently pay these private insurance companies 30 to
33^ per cent more than our State compensation insurance fund stands
ready to furnish identically the same coverage for. Now, I can not
see any reason why we should change our policy. I feel like persist
ing that we are maintaining a model insurance carrier—model in its
treatment of the injured man, model in its treatment of the em
ployer, model as affects its financial integrity—to which the other
insurance carriers must accommodate themselves, approximate them
selves, or we get the business. The destiny of the stock companies
is in their own hands. We are not driving them out of business.
I hope the insurance companies have their housecleaning and stay
with us. I don’t like a monopoly. It is the deadest thing in the
world. I don’t like a monopoly of any kind. I want the competi
tion of the good old companies, which will make our men sit up and
take notice, keep alive, and they need our competition to make them
good. Their salvation, I think, depends on our maintaining a State
compensation insurance fund to set them a model, which they must
follow or we get the business. Now, that is the whole problem.
Mr. T. N o r m a n D e a n , Ontario Workmen’s Compensation Board.
In the paper of Mr. Whitney I noticed a few points I would like to
discuss. First, there was an exposition of monopoly versus competi
tion. The second point is “ Workmen’s compensation itself is based
upon a new theory of justice, a revolutionary theory of justice, that
substitutes actual social need for an academic theory of individual
fault.” The third one is ,66The tendencies in the monopolistic system
are all toward narrow economies which quite fail to see the require
ments of the larger and finer justice.” Using the third excerpt, it
might be said, conversely, “ Individually the tendencies in the com
petitive system are toward wide economies that do see the requirements
of the larger and finer justice.” Prof. Whitney himself stated this as
an argument in favor of competition. The fourth quotation is this:
“ This is only one of various opportunities for social betterment,
which an imaginative treatment of insurance will discover. Another
such field, which has been scarcely touched, is rehabilitation. I wish
that this association might take the initiative in bringing about a
conference between its members and the insurance carriers in order to
discover how to amend the compensation laws so as to offer an eco
nomic inducement for the development of rehabilitation.”
Please notice the next sentence. “ I f there is an opportunity under
the law—that is, if the return of the injured man to work is recog
nized in a reduction in compensation to be paid—the insurance com
panies will bring the force of rehabilitation into action.” Commer
cialized rehabilitation! I f the compensation is reduced the insurance
companies will aid in rehabilitation.
266
S E R V IC E ,
S E C U R IT Y , A N D
CO ST OF
C O M P E N S A T IO N .
I fail to be convinced by the specious reasoning in the second pa^e
of this treatise, in view of the Downey-Dawson report on the Ohio
State fund and the Connor report in New York, that justice was
secured to New York and was not secured to Ohio. I recommend
to the gentlemen prejudiced in favor of competitive insurance to
read those two reports and see how little they support the contentions
set forth this morning. I would like to ask Mr. Hookstadt a hypo
thetical question. Thursday Mr. Archer, Mr. Kennard, and Mr.
Andrus are going to discuss “ How to secure full legal compensation
to injured workers.” Mr. Hookstadt, under exclusive State insurance,
says as exemplified by Washington and Oregon, do you think it is
necessary to discuss how to secure full legal compensation to the
injured workman?
Mr. H o o k s t a d t . I should say yes and no. I f you mean by that
whether it is necessary to check up on the insurance companies or the
self-insurers, to see whether or not they are paying their compen
sation claims, I should say no. But if you mean by that the methods
of following up the claims and methods of ascertaining the degree of
disability, I should say yes.
Mr. D e a n . I meant the first. One other point. There was de
veloped this morning the difference between the Ohio and Ontario,
Nova Scotia, and British Columbia methods. In Ontario compensa
tion insurance means collective liability. In Ohio it means individual
liability. Under the Ohio system I understand that if an employer
has not a policy the Ohio fund does not pay the compensation to
one of his injured workmen. In Ontario the injured workman re
ceives his compensation irrespective of whether or not the workmen’s
compensation board has collected an assessment from the individual
employer, thus affording perfect security to any individual workman
under the act; that is, perfect assurance that he will get the compensa
tion to which he is legally entitled. As Mr. Armstrong said, com
pensation under such a system means that compensation is secured,
because behind it rests practically the taxing power of the Province.
The compensation to the injured workman is just as secure and as
everlasting as the Province is itself.
Last year I volunteered to explore into the statistical end of com
pensation costs, and I still adhere to the statement then made, in
spite of the fact that an effort was made to stifle publication, in which
effort the expression was used by an agency of the private companies,
and afterward denied, that “ the statements made by Mr. Dean were
palpably false,” and that agency then asked for an investigation by a
committee of this association on their own basis—schedule Z figures;
that is, to grant their premises and try to reach a different conclu
sion. I have only this to say: I made those statements after care
ful study and after carefully expressing every qualification and limi
tation on my data, as you may see by the report of the last meeting,
and I just want to add that if I had time, and if this meeting would
so permit, I should like to restate, underline, and emphasize every
statement made in the discussion of last year.
Mr. O s c a r M. S u l l i v a n , Minnesota Department of Labor and In
dustries. I wish to address myself solely to Mr. Whitney’s proposal
of commercialized rehabilitation. To me it is the jnost amazing pro
posal that has been made at any meeting of this association. I don’t
D IS C U S S I O N .
267
believe that the association should permit this session o f this year’s
conference to go by without making its attitude on that clear. It
seems to me that this is the auspicious moment; when the Federal
Government has appropriated money to further rehabilitation, when
eight States have taken action and others are to take action, it would
be most unfortunate if our legislatures were given the idea that there
was a different way o f doing this, a commercialized way o f doing
this, a way that would obviate appropriations on the part of the
State. We differ on a good many things, on the forms of insurance
and the kinds of benefits and things like that, but I do not believe
that there is any difference of opinion on the part of this body as to
whether rehabilitation is a function of the State or a function of a
private commercial agency, and, therefore, I wish to move that the
committee on resolutions be instructed to bring in a resolution cover
ing this point, stating the position of the association substantially
along this line, that we feel that vocational rehabilitation is a func
tion of the State and we feel that any changes in compensation laws
should not be in the direction of penalizing the workingman for
taking rehabilitation.
The C h a i r m a n . Is there a second to the motion ?
Mr. V e r r i l l . I wish to make the point that such a resolution is
wholly foreign to the practice of this association. I f Mr. Sullivan
desires a resolution to be submitted to the committee on resolutions
it might be proper, but to make a resolution that the committee on
resolutions should be requested to report a resolution is wholly con
trary to practice.
Mr. S u l l i v a n . I will change my motion so that the committee on
resolutions be directed to report, without any instructions as to the
nature of the resolution.
Mr. A n d r u s . The business should be transacted at the business
meeting. Mr. Sullivan has a perfect right to draw a resolution and
submit it to the committee on resolutions. We have no right to trans
act business except when the chair is present.
The C h a i r m a n . I think the objections are well taken. I believe the
business meeting is Thursday.
Mr. M a c k e y . The hour is late and I do not propose to speak on
this question, but I would like to have Prof. Whitney, if he desires,
close the discussion, but I am sure Mr. Sullivan’s suggestion for a
resolution is due to a misconception of the entire meaning of Prof.
Whitney’s idea. While I am on my feet, however, I would like to say
that in that particular in Pennsylvania we have had a good deal of
experience with the subject of insurance carriers. When we came
into existence five years ago the law which created our compensation
board provided for the creation of a State fund also, provided for the
creation of mutual companies under provision of a separate act, and
also gave the right to stock companies to do business in our State.
One of our first acts was to go over to New York to watch the
operation of the New York commission. The feeling was strong in
New York, and each side was hiring great spaces in the New York
dailies to tell the^public what frauds the other was and to call each
other bad names. So I drew a statement that the board indorsed,
that we as a board had no hand in the insurance game whatsoever;
268
S E R V IC E ,
S E C U R IT Y , A N D
C O ST OF
C O M P E N S A T IO N .
that we considered ourselves most fortunate that the functions of the
Pennsylvania board were purely judicial; and that we passed solely
on the legal questions that grew out of compensation; and we pro
claimed to the people of Pennsylvania that we had no interest in any
particular form of insurance, but that the sole interest of the board
was that the employers for the premium paid receive proper protec
tion, and that the employees receive their compensation promptly.
Now, after an experience of five years, I want to say to you that
I think if we could bring about that highly idealistic condition,
or if that highly idealistic condition could exist, whereby every em
ployer in the State was financially able to carry his own insurance,
that we would then be in a position absolutely to eliminate all forms
of insurance, because no matter what form insurance takes it is
really a menace to the proper functioning of a compensation law.
I am led to observe that because under our law the board is em
powered to grant exemptions from insurance to those who come be
fore the board and by proper financial showing demonstrate their
ability to carry their own risk and their ability to set aside a suffi
cient reserve to insure compensation for the present and the future.
In Pennsylvania we probably have 3,500,000 wage earners. The selfinsurers have on their pay rolls fully 70 per cent of those 3,500,000
wage earners. In that group of employers covering that 70 per cent
of our entire employees, the most idealistic conditions exist, and it is
right, because when there is the interruption of a representative of
the insurance carrier coming between the employer and the employee,
that introduces a commercial element and introduces a stranger and
is an interference. We hope by compensation first to bring about
the particular individual interest to promote safety, and next, to
promote the proper feeling and cordiality between the employer and
employee. During the last five years 300,000 workmen have sat
down with their employers and have executed, on an average of
19 days after the injury, 300,000 compensation agreements—exe
cuted without delay, because included in that 19 days was the 14 days’
waiting period.
Under the old common-law system one of the greatest evils was the
economic waste, that waste in the morale of the employee who was
forced to sue his employer and go to court, the marching into court
of the two hostile forces, and the delay in court. Out of the same
establishment came two hostile forces. The same morale could never
again be restored.
Now what is the result? Three hundred thousand people in Penn
sylvania, in peace and quiet, without delay and without cost and
without quibble, have had their compensation secured for them.
That condition has been brought about by the contact between em
ployer and employee, which alone can come about by negotiations
between them.
Shortly after 1916 we went down to Washington and had a con
ference on social insurance. We came back thoroughly impressed
with the idea that we were right, that we were going to give every
insurance company in our State that showed ability to carry loss a
chance. Mr. Whitney is entirely right when he says this thing should
be settled by social evolution rather than political revolution. There
will be a survival of the fittest. I heard a gentleman from Oregon
D IS C U S S IO N .
269
here yesterday say that from a legislature made up of farmers there
could be secured $100,000 for rehabilitation. I want to say that if
I was going before a legislature to pass a law that only a State fund
could do business in the State, I would want to go before a legisla
ture of farmers, because these people who are doing these other things
do not realize the practical condition we must face. We have to have
a legislature of farmers in Pennsylvania before we can do away
with stock-company insurance; otherwise we will have a large rep
resentation of lawyers, and among the lawyers we will have repre
sentatives of insurance companies. Therefore, it can not be by a po
litical revolution. It must be done by social evolution. It must be a
survival of the fittest; and if the old-line companies can not give the
service and if the State funds will give the service, there will be a
gradual public sentiment built up, and public sentiment will solve
it through the legislative office. Therefore, I do not think there is a
very great advantage for us who have to maintain a judicious as
well as judicial poise, who have to hold the scales of justice, who have
to pass upon the law, in allowing ourselves to become partisans at
this stage of the development of our law on any particular form of
insurance.
Prof. W h i t n e y . I want to say in regard to the remarks by the
gentleman from Ohio, all I said about Ohio was taken from the report
o f Mr. Downey and Mr. Dawson, and if you do not mind I would like
to read one or two things:
With respect to promptness of claim payment * * * the average interval
between accident occurrence and the first compensation payment is too long
and the instances of serious delays are far too numerous. * * *
That 40 per cent of the compensable accidents that occurred in May and 25
per cent of those that occurred in April should still be pending first adjudica
tion, and with no compensation paid on the 23d o f June bespeaks unreasonable
delay in the initial steps of compensation payment.
This unfortunate situation is due in large part to totally inadequate appro
priation. * * * The salaries are miserably insufficient to attract and
retain capable men for the responsible positions. The number of field agents
is wholly inadequate to make prompt investigations o f disputable claims. The
whole expenses of claim adjustment, for the fund and for self-insurers, amount
to less than 1 per cent of pure premiums. To anyone conversant with the
subject it needs no argument to show that compensation claims can not be
promptly or efficiently handled for any such cost.
Then with regard to the experience rating plan:
This highly ingenious plan was devised in its entirety by the present actuary
o f the fund. Its conspicuous merits are simplicity and universality o f appli
cation and the avoidance of extreme deviations from classification rate. The
outstanding defects are the excessive penalty for a single death or permanent
disability in the experience of a small employer, and the inability of a large
employer to obtain a rate to which his individual experience, as contradistin
guished from that of his classification, may fairly entitle him. Changes in
the experience rating plan, effective July 1, 1919, will meet the foregoing criti
cisms in part. * * *
Economical management, however, is not simply a matter of expense in
curred ; account must be taken as well o f the service performed. Viewed from
this broader standpoint, it is past question that the expenses o f the Ohio fund
liave been kept below the level o f reasonable efficiency. I f the claims division
is inadequately supported, the safety division is nonexistent. The industrial
commission, of course, enforces safety laws in factories and mines; but law
enforcement is quite distinct from the safety work customarily carried on
by compensation insurance. The merit rating plan already described, and its
accident prevention laboratory constitute the immediate safety actitivies of
the Ohio fund. The fund does not directly employ inspectors or safety engi
270
SERVICE, SECURITY, AND COST OF COMPENSATION.
neers, and unfortunately it does not have an adequate working relationship
with the inspection departments of the industrial commission. Risks are not
rated upon the basis of physical hazards.
I just wanted to read that to show I was only expressing what was
in this report of Mr. Downey and Mr. Dawson. Now, in regard to
the rehabilitation matter. This is a great surprise, that any criticism
should be found with that. It hadn’t occurred to me. I supposed
we were all at the point to have the whole thing commercialized.
That doesn’t mean it is only commercial, but it means you have got
commercial and economic interests back of the thing to help you.
My idea of the world is not something that is altruistic, not something
commercial, but a marvelous union of all of it. The history of the
progress of the safety idea shows that it has been from the commercial
idea, if I am not mistaken. I think this, in general, is the way it
was evolved. The first interest in it was very largely on the com
mercial side. I think the insurance companies are entitled to a great
deal of credit. It was their reduction of rates that first interested
the employer in safety. Then the employer pretty soon went on to
other things, scientific, etc. I have been attending the meetings of the
Safety Council for the last seven years, and I have seen the evolution
of it, and that is the way the thing has gone, pretty largely.
Now, that is the way we want to commercialize rehabilitation.
I had supposed that the ideal compensation law was one which based
compensation on the actual wages the man received. Now, then, all
I am proposing in regard to rehabilitation is that if a man is rehabili
tated, physically and occupationally, that will presumably increase
his earning power. Well, then, his wages should depend upon his
earning power, and when his earning power is increased I should
suppose we would all agree that he should not go on with the old
compensation and get his wages in addition. I can’t quite conceive
how it could be consistent with justice to have that condition of
affairs. His compensation should be based, to a very considerable
extent at least, upon his new earning power. Now, then, don’t you
see, if it is based on his new earning power, there is going to be a
financial incentive to get him back to work and the insurance com
pany is going to get behind this thing. I don’t feel any horror toward
the word “ commercialize.” Perhaps there is a difference in my
philosophy of life. In this world you can’t have the commercial in
terests in one corner, the altruistic in another corner, and religion in
another corner. That isn’t my idea. My idea is to have all work
together in the same world. I said in one place in my paper that I
thought one of the most important things in practical social phi
losophy was to see that you got everything working. That is the
objection I have to a State monopoly of insurance. I think it has
only about one-fourth of the insurance working. There is lots that
can be put to work besides disabled persons. There is the prevention
work. When an insurance company takes over the risk it ought to
take over practically all the interests of the assured. It ought to
take over the interest of prevention. Now, then, I want the insurance
companies to take over the interest of rehabilitation, but you can’t
expect them to do it on purely altruistic grounds. Surely nobody ex
pects that. That doesn’t prevent the State from getting into it,
but get the insurance companies into it also.
DISCUSSION.
271
Mr. C la rk . Speaking of Ohio, the report referred to and read
from is a report of two of the most eminent actuaries that the Ohio
commission could find. The report was made at the request of the
Ohio commission in anticipation of the meeting of a legislature that
had been elected largely as an antagonistic legislature, the purpose
of the commission being to call to mind from some other source than
its own interests what defects there were. I would like the people
here also to know that if the summary of this report had been read
it would have been a very different criticism than that which was
read, and I should like my friend to read the summary of that report.
Mr. Downey came and went through the commission from stem to
stem. Mr. Dawson, than whom there is no more reputable actuarial
authority, I presume, in the United States, reviewed and wrote an
opinion of his report, and the summary of that report, to my mind,
is one of the finest tributes to the Ohio commission. We got some
additional appropriation. We got our safety men back into the
work. We never had any help in Ohio from these other interests
that it is stated ought to be taking up this work. They have had
that field from the beginning of this commission until the law passed
some two or three years ago. There was no effort made along the
lines now suggested should be followed. I want to say that just what
has been read here from this report was distributed in circular form,
in bales in Ohio; and after this Downey report was made another
actuary was brought from New York by adverse interests and prowled
around the commission’s offices for some weeks and got nowhere. I
think it is only fair that the authority responsible for this report
be known as the Industrial Commission of Ohio.
From the experience of three years of hard work in Ohio and from
the experience of meeting, as I have, with these men—and there are
some mighty fine fellows among them, outside of our differences of
opinion on this one point—I am yet to be convinced that there is
any warmth to be had, any help to be had, by a continued coopera
tion with those who haven’t done the things they said ought to be
done, who haven’t cooperated in the way of rehabilitation, and I
have had some experience, like my friend from Pennsylvania, as a
trial lawyer for 25 years, and 1 started with the attitude of justice,
“ with malice toward none and charity toward all.” And I have
watched the employers and employees of Ohio cooperate year after
year in our own meetings, and I have never seen them in opposition
on any question, because I want you to know that the employers and
employees of my State work together on our plan of insurance. I
want you to know that the only opposition that has ever come to the
Ohio system since I have been connected with the commission has
come through the stock companies, which formerly wrote insurance
in our State. There wasn’t an amendment to our law at the last ses
sion that wasn’t thrashed out completely in conferences that lasted
all day and into the night between the manufacturers’ associations,
associations of the employers and representatives of the working
class. There isn’t a more harmonious class of men working together
in any S'tate for any movement than those men. I want you to know
that if my friend had read the last two or three pages of the report I
wouldn’t have made this speech.
The C h a ir m an . Mr. Hookstadt will now close the discussion.
272
SERVICE, SECURITY, AND COST OF COMPENSATION.
Mr. Hookstadt. I merely wish to state that rightly or wrongly I
am one of those who believe that the desirability of any institution,
of any line of conduct, of any system, is governed by results, and by
results only. There has been a lot of theorizing here to-day, a lot of
theoretical argument. Now, if it can be shown that one system fur
nishes better service, is cheaper, and provides greater financial se
curity than another system, as shown by the- facts, is not that system
desirable? Is not that the system that is best ? There has been much
discussion about the desirability of competition, as opposed to monop
oly. There has also been a great deal of talk about the “ survival
of the fittest.” However, monopoly in itself is neither good nor bad.
Competition in itself is neither good nor bad. It depends on the re
sults—on the facts in the case—and we should be governed by the
results if we are reasoning human beings.
The Chairman. Mr. French has an announcement to make.
Mr. F rench . The afternoon session will be at 2 o’clock. I want to
make two or three announcements, please. In the first place, every
delegate has not registered. I wish you would remember that. I
want to have the list accurate.
Senator Hiram Johnson had to leave the city and sent his regrets
for Thursday night.
By vote it has been decided we shall hold an informal dinner on
Thursday evening. The place and other necessary details will be
explained later. The trip to Tamalpais will take place on Friday.
Quite a number have signed up to take this very pleasant journey
to Tamalpais. Any delegate or visitor, or anyone here interested,
is cordially invited to attend either or both of these functions.
To-morrow morning your program is a visit to the hospitals. Now,
that is a little misleading. We have not planned a visit to hospitals.
We have arranged at 9 o’clock sharp to have an array of automobiles
extending for one or two blocks up this street, on Post Street, and
we are going to take all who come on a sight-seeing tour around the
city, through Golden Gate Park, past the Cliff House, through the
best residence sections, over the top of Twin Peaks, and to numerous
other places well worth visiting. Incidentally we will call at the
San Francisco Hospital on the way back, and you will see an excel
lent institution there. Dr. Emmet Eixford, perhaps the leading sur
geon on the Pacific coast, will speak a few words of interest as to our
work. We want everybody to come.
[Meeting adjourned.]
,
.
TUESDAY SEPTEMBER 21—AFTERNOON SESSION
CHAIRMAN, G. D. SMITH, CHAIRMAN, NEVADA INDUSTRIAL COMMISSION.
ADMINISTRATIVE— MEDICAL PROBLEMS.
Systems of Medical Service.
Mr. French. The chairman for this afternoon session is the chair
man of the Nevada commission, Mr. Smith. Mr. Smith has had a
wide experience in handling the work in Nevada, and of course is
intensely interested in the question of medical service.
The Chairman. We may have differing views as to the systems of
securing compensation, but I think you will all agree with me that
satisfactory service under workmen’s compensation law could not
be had without the invaluable aid of the medical profession in deter
mining the character of disability, and it gives me pleasure therefore
to preside at this session where medical systems under compensation
laws are to be discussed. Two of the speakers who are down for this
afternoon are unable to attend. Dr. Mowell has sent his paper, in
accordance with the practice heretofore followed at this session. I f
the secretary will include it in the proceedings of this session it
will not be read.
26039°— 21-------18
273
SYSTEM S OF M E D IC A L SERVICE.
BY JO H N W ILSON M OW ELL, M . D., C H A IR M A N , W ASH IN G TO N M ED ICAL AID BOARD.
When the workmen’s compensation act was first framed and sub
mitted to the legislature of 1911 it had as a part of the act written
into it at that time a medical aid provision for the payment of surgi
cal and hospital bills. However, the legislature eliminated this sec
tion of the act and passed a compulsory compensation act without any
provision for medical treatment to the injured.
During the period between 1911 and 1917 injured men were taken
care of at the direct expense of the injured workman, either by
monthly contributions in the form of contract or by paying his own
bill when injured. The injured men who were taken care of by
monthly contributions by contract were taken care of in a fairly satis
factory manner, but when no such provision was made it was often
difficult to procure medical and hospital attention, and sometimes im
possible, because of the fact that the man had no money to pay the
bill himself and the compensation was inadequate to care for his
hospital and surgical bills. As time went on it became more and more
evident that some form of medical aid was absolutely necessary to
provide efficient treatment for the injured workman.
The legislature of 1917 passed our present medical aid act as an
amendment to the workmen’s compensation act, but placed its ad
ministration under a separate board and made it the duty of this
board to see that injured employees receive proper and efficient treat
ment for their injuries, the expense of the same to be divided equally
between the employer and employee. In order to carry this into
effect they provided for two systems. One known as the 64contract
system,” whereby an employer may, with the consent of 51 per cent
of his employees, enter into a contract with a physician or hospital
for the care of his injured workmen. This contract must be approved
by the medical aid board, and the contractor shall receive 90 per cent
of the money contributed from such employer and his employees for
medical aid as payment for this service. After having made the
contract the employees of such employer must accept the services of
the contractor. In case they do not, they are required to stand the
expense themselves.
Second, it provided for what is known as the 44State’s plan.” That
is, all employers who see fit not to contract pay all of the medical
aid money into the medical aid fund, out of which all surgical, hos
pital, and other bills for injured workmen are paid. This system
gives the man a free choice of physician and hospital in the first
instance, provided it is within a reasonable distance of the place of
injury.
The medical aid act provides that a physician and surgeon be the
chairman of the board, and the board has delegated to him the power
of administering the orders, rules, and regulations that the board
274
SY STEM S OF M ED ICAL SERVICE.
275
has adopted, with the provision that where the policy of this board
is involved the matter be considered by the board prior to action on
same. This provision of the act makes it possible for the board,
should it desire, to take up the treatment of each individual case and
provide treatment consistent with its requirements, thereby achiev
ing results that would be impossible if the board were restricted to
the necessary limitations of a legislative act that did not provide
for administrative rules to be promulgated by the board. This is
one of the outstanding features of the law, because the board may
readjust its rules from time to time, if it becomes necessary for the
proper administration of the act according to its intent. This makes
it possible for the board to consider efficiency of treatment only. It
also gave the board the authority to make a fee bill for the payment
of surgical and hospital fees. By these rules the board has restricted
the free choice of physician to the first instance only.
I f the board finds that in its opinion the transfer of any bad case
will hasten its recovery or lessen the permanent partial disability,
the board reserves the right to transfer auch injured workman to
another place and under the care of some surgeon of its own choice.
This allows the board to take up reconstructive work, or postopera
tive work of any kind, which in its opinion is the greatest feature
in the medical aid act at present. We have been able to take cases
that were entirely unable to work because of some condition which
surgery would remedy, and by having this work done the claimants
were able to return to some gainful occupation and often with practi
cally no permanent partial disability at all. So in the State of
Washington when we come to compare the conditions under which
the workmen received medical and surgical attention prior to 1917
with the present method of handling these cases under the medical
aid act we can hardly compare them at all.
In the first instance a part of them received very inadequate at
tention. At present they all receive the best care that they can
receive in the particular locality in which they happen to be work
ing, and if that locality is not up to a high standard of treatment
the bad cases are transferred to where they will receive such care
and attention as their cases require.
The C h a i r m a n . It also appears that Dr. Hall, of British Columbia,
was unable to attend the session. So the first speaker this afternoon
will be Dr. Donoghue, of Massachusetts.
SYSTEM OF M E D IC AL SERVICE UNDER TH E M ASSACH USETTS
W ORKM EN ’ S COM PEN SATION ACT.
BY FR AN CIS D. DONOGHUE, M. D., MEDICAL ADVISER, M A SS A C H U SE T T S IN D U STR IA L
ACCID ENT BOARD.
From a most modest beginning the medical work of the Massachu
setts Industrial Accident Board has gradually developed until its
importance is now second to no other provision of the law, not ex
cepting even the compensation provisions. From a little section
dealing with the furnishing of medical and hospital services during
the first two weeks after the injury only, the law has been amended
until it now takes in every case of serious and unusual injury, pro
vides for reasonable medical and hospital treatment and medicines
for the full period of hospital care under the wise and broad inter
pretation given the “ unusual case ” provision of the law by the board,
and lately has been amended so that the board may, whenever in its
opinion such appurtenances are beneficial, order the insurer to furnish
and pay for artificial appliances and thus get the employee back into
industry within the shortest possible period of time.
In addition the medical sections of the law have been amended to
provide that the written report of the impartial physician shall be
admitted in evidence as a part of the record upon which a board
member may base his decision. This, in brief, is an outline of the
provisions of law in Massachusetts which have exalted from a hum
ble beginning the medical features of our law to a place among the
highest and most important sections of the statute.
The following are the sections of the law governing the medical
features:
Medical and hospital services (Part II, scction 5 ).— During the first two
weeks after the injury and, if the employee is not immediately incapacitated
thereby from earning full wages, then from the time of such incapacity, and in
unusual cases, in the discretion of the board, for a longer period, the associa
tion shall furnish adequate and reasonable medical and hospital services and
medicines when they are needed.
Right of employee to select physician other than one provided by associa
tion.— The employee shall have the right to select a physician other than the
one provided by the association, and in case he shall be treated by a physician
of his own selection, or whether in case of emergency or for other justifiable
cause a physician other than the one provided by the association is called in to
treat the injured employee, the reasonable cost of his services shall be paid by
the association, subject to the approval of the industrial accident board. Such
approval shall be granted only if the board finds that the employee was so
treated by such physician, or that there was such emergency or justifiable cause
and in all cases that the services were adequate and reasonable and the charges
reasonable.
Board may order insurer to provide and pay for artificial appurtenances.— In
any case where the board is of opinion that the fitting of the employee with an
artificial eye or limb or other mechanical appliance will promote his restora
tion to industry it may order that he be provided with such artificial eye, limb,
or appliance at the expense of the insurer.
Examination of employee by physician for board (Part I I I , section 8 ).— The
industrial accident board or any member thereof may appoint a duly qualified
276
FRA N CIS D. DO N O GH U E, M . D.
277
impartial physician to examine the injured employee and to report. The fee
for this service shall be five dollars and traveling expenses, but the board may
allow additional reasonable amounts in extraordinary cases, and the association
shall reimburse the board for the amount so paid. The report of the physician
shall be admissible as evidence in any proceeding before the industrial accident
board or a committee of arbitration, provided that the employee and insurer
have seasonably been furnished with copies thereof.
Fees subject to approval of board (Part III, section I S ).— Fees of attorneys
and physicians and charges of hospitals for services under this act shall be
subject to the approval of the industrial accident board. If the association and
any physician or hospital, or the employee and any attorney, fail to reach an
agreement as to the amount to be paid for such services, either party may
notify the board, which may thereupon assign the case for hearing by a member
of the board in accordance with the provisions of this act. The member shall
report the facts to the industrial accident board for decision, and the decision
shall be enforceable as provided by Part III of section eleven.
Hospital records as evidence (Part I I I , section 19). — Copies of hospital records
kept in accordance with the provisions of chapter three hundred and thirty of
the acts of nineteen hundred and five, as amended by chapter two hundred and
sixty-nine of the acts of nineteen hundred and eight, and of chapter four
hundred and forty-two of the acts of nineteen hundred and twelve, certified by
the persons in custody thereof to be true and complete, shall be admissible in
evidence in proceedings before the industrial accident board, or any member
thereof. The board, or any member, in its or his discretion, before admitting
any such copy in evidence, may require the party offering the same to produce
the original record.
The duties of the medical adviser embrace the systematization of
all the vast amount of medical information required under the work
men’s compensation act; advice with reference to all medical prob
lems ; supervision over the work of impartial examining physicians;
the direction of expert help and testimony in certain exceptional
cases; the outlining of the essential medical facts required to decide
whether disputed nonfatal and fatal cases are covered by law; and
the preparation of such cases impartially for hearing in order that
the provisions of the act may be made effective speedily and with
the least possible cost and annoyance to the parties in interest.
Appointment of impartial physicians.—The work of advising the
board on the appointment of impartial physicians is a duty of the
medical adviser, for the purpose of having a uniform system based
on expert knowledge of the requirements of the different cases that
arise, and permitting of the selection and training of physicians in a
manner that will insure impartial examinations and reports accord
ing to the technical requirements of the compensation law. As far
as possible, also, examiners are assigned to cases according to geo
graphical proximity to the residences of injured employees. In some
instances cases are of such nature that it becomes necessary for them
to report for examination in Boston or in some other large center
where the facilities for examination are better than in the immediate
locality where the employee resides. When this action is necessary
or advisable the expenses of the employee incident to the trip are
paid by the insurance company. In all cases the aim in selecting
physicians is to provide a man whose training and experience fit him
to examine and report expertly according to the special features in
volved in the case, not only as to past disability but as to future
treatment.
Reports of examinations by impartial physicians.—In connection
with the assignment of impartial physicians according to the nature
of the case and location, some interest may be attached to a brief
278
M ASSACH U SETTS SY STEM OF M EDICAL SERVICE.
statement of the process by which the impartial reports are handled
at the office. Upon receipt of impartial reports these are in all cases
first read by the medical adviser to make certain that the report prop
erly covers the necessary points involved in the case. Copies are
then made and sent to the employee, insurance company, and, in
some instances, to other persons who have a direct interest in the
case. The impartial examination is not related in any way to the
examinations which the insurance company is permitted by law to
have performed in its own behalf, by a physician appointed outside
the jurisdiction of the board. The impartial examination is to
assist the board and the interested parties in obtaining reliable medi
cal opinions which under the law have the weight of being entirely
separated from any direct interest in behalf either of the employee or
the insurance company.
Fatal cases.—Every insured fatal case that comes to the attention
of the board through an accident report, or otherwise, is referred to
the medical department in order that all necessary steps may be
taken to procure proper and adequate records, such as hospital re
ports, statements of physicians, and copies of autopsy reports when
these have been made. Informal opinions are stated in these cases,
to indicate the probable connection between injury and death.
Specified injuries.—Opinions are given, also, on the records in
cases in which there is a possible question of additional compensa
tion on account of amputations, reduction in vision to one-tenth of
normal, or other specified injuries such as may render permanently
incapable of use members of the body, including arms, legs, fingers,
toes, and phalanges.
Disputed medical bills.—Another important function of this de
partment here briefly described is the action taken upon disputed
medical bills. In case of dispute, although the physician has the
right to have a formal hearing, the practice in general is to endeavor
to adjust the matter if possible on the basis of an informal opinion
by the board based on the records in the case. In such cases the at
tending physician or the hospital is requested to submit a copy of the
bill in dispute, and to answer a form set of questions describing the
nature of the case and the treatment given. With this information
and the other records in the case, an informal opinion is given as to
the reasonableness of the bill on an industrial basis. Many cases are
settled in this fair and impartial manner, although neither side is
thereby prejudiced from having a formal hearing and decision based
on the evidence submitted.
Unusual cases.-—Another important and at times perplexing ques
tion with relation to medical attention is, What constitutes an un
usual case requiring the payment of medical and hospital bills be
yond the statutory period of two weeks? The reasoning of the
industrial accident board for the consideration and determination of
this question in each individual case according to the evidence is
epitomized in the following extract from the case of John Brady,
Brockton Hospital, Dr. Barrett v. U. S. Casualty Company:
The only case in which the question as to the right of a physician to the
payment of his bill for a longer period tban two weeks was before the
Supreme Judicial Court in this Commonwealth is Huxen’s case (226 Mass. 292).
In this case the court said: “ It is not in an ordinary case requiring longer
medical attendance that the discretion of the board may be exercised to
PBAlsTCIS D. D O N O G H U E, M . D.
279
charge this attendance to the expense of the insurer. It is only in unusual
cases that they may do so. There would be grave doubt whether a case where
the employee is able to go from his home in Cambridge to an office in Boston
could be so unusual as to be within the purview of the act.”
The word “ unusual ” is defined as follows:
“ Of a character, number, or size not usually met w ith; uncommon; infre
quent; rare.”
(Standard Dictionary of the English Language, Funk &
Wagnalls.)
“ Not usual; uncommon; rare.” (Webster’s Dictionary.)
“ Not usual; not frequent; not common; rare; strange.”
(Century Dic
tionary. )
The evidence shows that this case is unusual; that it is a case out of the
common run of cases, in view of the nature of the injury and the complica
tions following such injury. The usual case and the usual personal injury
arising out of the employment are those cases and injuries which require
ordinary medical treatment and care, and go along uneventfully to their
termination, and they may or may not require treatment for a longer period
than two weeks. These cases are not within the discretion of the board to
allow further medical and hospital fees after the first two weeks. A case
may be unusual because the nature of the injury, its particular location, and
its extensiveness necessarily entail a prolonged disability; that is, longer
than the usual. It may be unusual because of any interruption of convalescence
of such a nature as not to occur commonly in that particular class of cases,
and because it is likely, unless specially treated, to jeopardize the probability
of a speedy recovery from a medical standpoint and the employee’s early
restoration to his position as a wage earner. The employee’s status with
reference to his support of others is a factor which may be taken into con
sideration in determining whether a case is unusual. Under the usual classi
fication will come so-called minor injuries, minor amputations, uncomplicated
by sepsis, and all injuries or complications following them, the services of
specialists, special nursing, and hospital care. Under the unusual case classifi
cation may come major injuries, compound fractures, injuries followed by
sepsis, some major amputations and operations, serious pelvic and back
injuries, and injuries requiring special apparatus or the services of specialists.
This was a very serious injury; the employee was in a critical condition;
the stitches pulled out, and a secondary operation was necessary. The report
of the injury shows that the employee had a dependent mother. It was a case
that required hospital care and attention if the man was to recover at all,
and particularly if he was to be restored once more to any degree of efficiency.
Probably the greatest factor in the satisfactory carrying out of the
Massachusetts law has been its intelligent development along medical
lines.
Eliminating the 'professional witness.—The old form of contro
versy, by presenting witnesses for and against the claimant, so that
the man’s rights depended upon the weight of the evidence presented
at a hearing, has been materially modified by the naming of so-called
impartial physicians. It was found that the malingerer or fakir
in Massachusetts was almost an unknown quantity, and that when
a man came to the board with a claim, 99 times out of 100 it was a
fair claim. The question then arose of selecting doctors to examine
these claimants, with the idea that a specialist in restoration of func
tion was needed rather than a doctor who would say, “ Yes, the
man is disabled,” or “ No, the man is not disabled.” In the early days
of the act, insurance companies and employees did not avail themselves
to any large extent of the section in the law providing for the appoint
ment of impartial physicians. This was due chiefly to the fact that the
medical policy of the board had not been determined. With the ap
pointment of a medical adviser, in 1914, and the adoption of a medical
program providing, in part, for the appointment of specialists as
impartial physicians, there was a great increase in the demand for
impartial examinations.
280
M A SSACH U SETTS SY STEM OF M ED ICAL SERVICE.
It is, of course, manifestly impossible for the medical adviser to
examine all disputed cases, or even a small portion of them, and if
it were physically possible, it would be an extremely unwise, not to
say dangerous, thing to have any man placed in the position of
examining accident cases in conference, again to express his opinion
at a formal hearing, and then to insist to the full board that his
opinion was the end of the medical law and must be accepted. The
great success of the accident board has come from the utilization
of the best medical brains in the Commonwealth. Members of the
medical profession consider it an honor to serve as impartial examin
ers and are willing to make some sacrifice fully to preserve this
feature of the law.
One of the difficulties that the industrial accident board faces
constantly is to pass fairly upon the injuries of a man who chooses
his own doctor and who does not choose wisely, or the rights of a
man who is taken to a place which holds itself out to be a hospital.
The time will come when the State board of registration in medicine,
or some other State board, will supervise these hospitals, will check
up their results, and will indicate whether or not they should be
allowed to continue, and to what extent they will be allowed to go
in treating complicated cases.
From an administrative standpoint, the industrial accident board
is obliged to consider all doctors registered under the laws of Massa
chusetts as being qualified to practice. But you gentlemen know
better than I can tell you that there is much incompetency in the
treatment of fracture cases, and. the results in many cases do not
justify the payment of the sums of money charged for the treatment.
In this particular regard, we approach the old-fashioned commonlaw tort case, in which the worse the result, the greater the financial
return to the doctor—and sometimes to the lawyer and injured party.
Recently I was in a doctor’s office and looked over a group of
certificates, imposing and impressive in their display, one of which
certified that he had taken a course in anesthesia at a well-known
New York polyclinic; and a second certificate was so unique that I
copied the wording for future reference. Let me read it to you.
S c h o o l o f P a t h o l o g y an d O p e r a tiv e Surgery'.— This certifies that D r .--------has com pleted in a m ost thorough, p ractical, and scientific m anner th e pre
scribed course o f surgical operations, in cluding operative su rge ry on the
cadaver, and is thoroughly com petent to operate 011 the livin g.
S ign ed a n d
S ealed .
What are wTe going to do about it ?
I have outlined rather briefly, but as fully as need be, the medical
provisions of the Massachusetts act. They may not appear to be
as complete as those of some of the Commonwealths numbered among
the members of this organization. But this I may say, in all truth,
and in justice to the commission which has charge of the administra
tion and interpretation of our law:
Outside of a law providing specifically for complete medical and
hospital care for the full period of incapacity, the Massachusetts
law, as interpreted, by the members of the industrial accident board,
can not be improved upon. Personal attention to the necessities
of each case is given by board member and medical adviser, with the
result that in practically no case where expert treatment is required
or indicated does the employee go without it ; and with our present
F R A N CIS D. D ON OG H U E, M . D.
281
plan of making one complete job of the medical care and cure of each
incapacitated employee and getting him back into industry with the
least possible loss of time at a suitable job, we believe that we are
solving in a practical and economical way the problem of the man
whom industry has maimed and handicapped.
[Dr. Donoghue also discussed the subject informally as follows:]
The systems of medical service must vary, naturally, with the law
under which you work. The Massachusetts law is, as far as medical
service is concerned, a two weeks’ law, with the right in unusual
cases for the accident board to order further treatment.
Medical adviser.—With the advent of the medical adviser, who
acted for several years as a consultant to the insurance companies as
well as to the board, the insurance companies have taken over, I should
say, perhaps 80 per cent of accident cases and given full treatment.
That is, it was found by them as a matter of experience that a dollar
expended for adequate medical expense would return $2 in saving on
compensation costs. So that we have apparently a very high medical
expense in Massachusetts, but we preserve our workingman power-to
industry and to the State, and at the same time it makes a lower cost to
the insurance companies for compensation. There are certain things
about a medical system which are important and to which I should
like to call attention. One of the difficulties in an administrative
board is to get records that are adequate. The most difficult record to
get with any degree of adequacy and accuracy is the average hos
pital record. Hospital records in a large hospital are kept, as doctors
know, by the 46pup ” of the service. They are written up at his
leisure and are sometimes corrected by the man in charge of the
service where the treatment is given. It happens in many large
hospitals that records are not made until months after the house
officer has actually left the hospital. Records also are ambiguous or
obscure as to who made them, deliberately in many instances, to pre
vent the person with the first information being summoned or called
upon for his opinion. In other words, the comfort of a man holding
a position as surgeon or doctor in a large institution is looked upon
as superior to the life of an injured workman with a family of
dependents. It is an intolerable situation, and accident boards must
face it and must insist that something be done to change it.
In Massachusetts every death case comes before the medical ad
viser; we also have a system of medical examiners, so that a trained
man sees every case of death by violence or from unknown cause.
The report of the official medical examiner in Massachusetts has
been made by decision of the supreme court prima facie evidence as
to the actual fact, and it must'be disproved by the contesting par-,
ties. Now, in the beginning many cases, the close border-line cases,
slid by. In the days when alcohol was more plentiful the diagnosis
of alcoholism would appear in red ink, but underneath might be in
smaller letters or concealed in the body of the record u fracture of the
skull.” That putting in a record an abstract of a record has a great
many dangers and worked in the old days great injustice. Now, in
every case in which the record is not absolutely accurate we write
to the medical examiner of that district and ask if it was called
to his attention, and in the meantime we put an inspector on the
case.
282
M ASSACH U SETTS SYSTEM . OF M EDICAL SERVICE.
Impartial examiners.—We have a system of impartial examiners in
Massachusetts, and it was a real act that was passed for us by the
lawmakers, who are largely lawyers down our way, and they are no
farmers when it comes to making laws for our benefit, They made
these laws so that a member of a board untrained in medical facts ap
points a man in whom he has confidence to make a report in a case in
which two trained men have a dispute. Well, that can be one of the
most foolish things in the world or one of the best. You can conceive
o f commissioners who think well of a chiropractor and would hire him
to pass upon the expertness of two neurologists of high standing and
excellent training.
Now we read into that law that impartial examiners are not
simply for the purpose of determining whether or not a man is dis
abled, because practically every man who comes before our board
has a disability and that is why the dispute comes to the board.
These men are not malingerers, as some people have suggested. In
other words, they don’t make a conscious effort to deceive, but they
have fixed in their consciousness that the injury they received or the
condition they found themselves in after the injury is directly re
lated to their ability to go back onto the job. Their mentality is
not 100 per cent or they would not be holding many of the jobs that
they hold, but they know that they can not for some reason or other
get back into the working strife. Whether they are right or wrong
they are disabled, and there should be an impartial examiner to de
termine why the man can not get back; the diagnosis of malinger
ing is the diagnosis of the diagnostically destitute. These men have
something the matter with them. It may not be the thing they
think it is, but it is something definite and tangible that prevents
their prompt return to work, and therefore the medical adviser goes
over the papers in the dispute, makes an estimate of where the diffi
culty is and assigns that to a man competent to make a diagnosis in
the case, and after having made a diagnosis a method of curative
treatment is indicated. It is not as difficult as it seems to do that.
We have a lot of curative centers in Massachusetts. We are blessed,
or cursed, with lots of hospitals, of varying degrees and characters,
but if you pick out the best ones you solve a lot of your difficulties.
The State went farther than it ought to go, in my opinion. It
allowed the accident board to name an impartial physician, and the
report of that impartial physician, made upon evidence presented to
him by the man, by the insuring company, and by the board, is
admissible in evidence without the man being present. I have grave
doubts of whether that is a good thing. It is too much power, it
seems to me, to place in the board, to make affirmative evidence which
so vitally affects so many people.
Doctors’ bills.—A fee table is a good deal, to my mind, like these
diagnostic charts gotten out by the patent medicine men. It is
easy enough to look at the chart and prescribe pink pills for pale
people. Number 1 is such and such a thing, and number 2 is some
thing else, a fee of $25 for setting a Colle’s fracture, we will say.
There are some men that $25 is $30 too much for, and with other
men it doesn’t begin to pay for the skill and the result which is
brought about by skill. Fee tables are absurd. A crook can beat
the smallest fee table in the world, and a good man will not work
FRA N CIS D. DO N O G H U E, M . D.
283
under it. A doctor should be paid for adequate services; he should
not be paid for wliat' he does not do, but he ought to be paid for
adequate medical services a reasonable price, based upon what
everybody else is charging. In other words, I tell the doctors the
workman is giving up more than anybody else absolutely under the
law. He gives up 10 days to 2 weeks without pay, and he takes a
minimum amount of compensation after that. Fourteen dollars a
week, for instance, to a $40, a $50, or a $60 workman is an absurdity.
The employer of labor pays a premium which he collects from some
body, because he has no money-making machine, and the doctor
should give up a little something. In other words, he should meet
the situation as an industrial condition, and he should not be con
fronted with a fee table in industrial cases. There should be a
line of demarcation between average prices and what the doctor feels
is right and just in order to meet an industrial situation such as the
compensation law. Capital operations we vary. We do not believe
in big fees for doctors, because there should be no big fees in this
for anybody until the workman is more adequately compensated
than he is at present.
Hernias.—Of course, hernia, to my mind, rarely ever results from
an accident, from a single traumatism. It is the summation of
traumatisms upon a weakened condition, and the last manifestation
of it may occur when a man is coughing at home in the 16 hours
out of work just as likely as in the 8 hours he is at work. Of course,
the doctors recognize it as a source of income under some compen
sation laws. They find a hernia. They say, “ Do you remember a
day in the last so long [stated period] you strained yourself at work?5’
And memory is always good. As I look upon it, however, we might
just as well handle hernias under an injury law, which our law in
Massachusetts is, “ any injury arising out of the employment.” In
other words, it is the last manifestation. Lead poisoning is charge
able in Massachusetts to the place where the man got the last grain
of lead. To the last strain, which forced the rupture through, hernia
is chargeable in many cases. But let us look at it in a larger way. The
man with a hernia is a disability and a danger. He has a potential
value in the community, to the man he works for. The replacement
cost of that man is so much higher than curing him that it is an ab
surdity not to cure him, whether or not the employer is directly
chargeable with it. So, instead of having him come up for hearing,
and bringing in employer B or C or E, I take the position that if he is
willing to have the injury cured, charge it to industry A and save all
the cost of controversy for B, C, and E. On that basis we have asked
the doctors to take what some doctors call a low fee. We allow
$50 for an operation for hernia and for its treatment, and while we
may be stretching the law just the least bit we say it isn’t any more
trouble to sew up two hernias at once than to sew up one, any more
than it is no more trouble to tie six square knots than it is to tie three.
On that basis we get along pretty well. We are following up our
hernia cases and preserving the working capacity of those men, and
the insurance companies find it is the cheapest and easiest way to
handle the situation.
W itn esses .—Industrial accident boards do not want witnesses who
deal in terminology. They want something given to them they can
284
M A SSA C H U SE TT S SY STE M OF M EDICAL SERVICE.
understand. In one of the early days of the industrial accident
board there was a big hearing, five doctors appearing on one side,
with X-ray plates, four on the other. Five men thought that the
X-ray plates showed a rotation of the fifth lumbar vertebra so that
the transverse process impinged on the ilium; the other four did not
think it did. But the man had a lame back—he had strained his
back at work. So after the doctors got all through the board asked
my advice, and I said, “ Why not consider he has a strain of a
deficient back, to be compensated until they cure it?”—which is the
simple way of handling medical terminology.
The X-ray is the attempt of laymen to find something they can
tie to without regard to the medical profession. They say, “ Why,
the X-ray plate shows it.” The X-ray plate, when it shows some
thing, is valuable; but it is worth only about 10 per cent in a diag
nosis. Ninety per cent of the diagnosis must be made by a clinical
doctor, who knows how to take that 10 per cent and add it to the
90 per cent of his study of the human being and then make a diag
nosis. X rays should never be accepted at face value. There is
nothing in the world that is quite as deceptive as X rays. We have
had them now since 1896, and the interpretations of 10 years ago
sound like jokes to us now, and I am convinced that the interpreta
tions we are making now will be jokes to us in 10 years’ time. In
the meantime they serve a purpose and have a value, not conclusive
but helpful when read in conjunction with a clinical examination. I
do not believe airy X-ray man is competent to make a clinical diag
nosis from his X-ray picture if he does not know how to examine
the patient. The Massachusetts commission does not accept X-ray
pictures.
The C h a ir m a n . Dr. Thompson, of Oregon, will continue the dis
cussion of medical systems.
OREGON SYSTEM OF M E D IC A L SERVICE.
BY F. H. THOMPSON, M. D., MEDICAL ADVISER, OREGON INDUSTRIAL ACCIDENT COM
MISSION.
The Oregon system of medical service is similar to that of some
other States, but Oregon is probably the first State to put into active
operation a regularly equipped physiotherapy department. The
Oregon law, aside from administering a compensation fund, makes
provision for the prevention of accidents, this work being done in
conjunction with the State labor commission. But in case of acci
dental injury, covered by the act, the medical department aims to
care for the injured as completely as possible. This care will be
divided, for the sake of convenience of consideration, into four
general sections: First, primary care; second, proper aftercare; third,
reconstructive surgery; fourth, physiotherapy.
I believe that medical service, the character and type of it, will
depend very largely upon how well you have your medical depart
ment systematized. We endeavor in Oregon to get as early and com
plete report covering the case as possible. When the proper informa
tion has been had we want that man to have the best care that he can
get. We strive to get good primary care to the individual, whether
it be in a fracture case or an infection case, or what not.
Practically, the injured has the right of selection of his own phy
sician. This does not apply in hospital contract cases where the
contractor furnishes medical aid through a contract physician. In
Oregon the State law admits of such contractors, under certain stipu
lations. However, in cases where the contract physician has proven
to be incompetent by bungling of cases, the commission reserves the
right to demand his removal and his replacement by a competent
physician. I f refusal is given the contract may be canceled. Or, in
case the commission considers that the man is not receiving proper
care, it reserves the right to select a physician other than a con
tract physician for the completion of the care of the case; that is, to
transfer the man to a different physician, or to give him a list of three
or four physicians, capable and well qualified for that particular
type of case, and allow the man to select from the list the one whom
he desires to render the treatment. All medical care, even by these
selected surgeons, is done according to an adopted fee schedule.
I believe a fee schedule is quite a necessary thing in the handling of
compensation cases. Of course, the laws in various States and the
conditions under which the commissions must work differ. The sched
ules for the States of Oregon and Washington are identical and
accepted as standard for industrial surgery by the State medical so
cieties of the two States, respectively. This illustrates the thing I
advocated a year ago, the zoning of certain districts where there
is an overlapping of work. If they can work under the same sched
ule or same system, it will eliminate considerable controversy. The
285
286
OREGON SY STEM OF M EDICAL SERVICE.
fee schedule is such as reasonably to remunerate for competent care,
and very little complaint is ever raised—and none of serious import.
Every surgeon in the State is treated the same. The schedule is a
tentative one, in this respect: For a Colies’ fracture the fee, I believe,
is $35. Now, if that is a compound, infected fracture, that fee does
not hold, and if one has a case that has resulted in an osteomyelitis,
that case is going to be carried, through and the man paid for the
service rendered; but the fee schedule. is a basis upon which you
endeavor to treat each surgeon correctly and uniformly.
That brings up a question that came to my mind when Dr. Donoghue was speaking. It is not possible to provide that' in every part of
the State only a specialist shall treat a certain line of cases. We tried
that in eye injuries, as they did in Washington State. We said,
“ Every foreign body imbedded in the cornea must be treated by an
eye specialist or the surgeon will not be paid.” We find in our State
we have a great many isolated places, where it would be impracticable
to get such treatment. But if the case is prolonged, then the man is
sent in to a specialist. I f a case does not progress satisfactorily it is
reviewed by the commission, or a consultation ordered, and any
special care needed is provided. This is done in hospital contract
cases, also, at the expense of the person holding the contract. Radio
graphic service is paid for according to schedule, but excessive
and unnecessary duplication of plates is not tolerated. The Oregon
law provides for transportation and hospital and surgical
care and nursing. While ordinarily $250 is supposed to be
sufficient to cover the expense incurred in any ordinary case,
there is, in reality, no limit' to what may be expended for
the restoration of a workman, provided that before expending more
than $100 for hospital, $100 for surgical, and $50 for transportation
and other expense, the commission be consulted and its approval
for a greater expenditure obtained. This provision prevents an un
scrupulous surgeon from piling up an enormous bill without knowl
edge by the commission. This excellent provision makes possible
two very important features of the Oregon system, namely, recon
structive surgery and physiotherapy.
Because fractures are very common we endeavor to check up in those
cases fairly early, and we encourage radiography in such cases, with
an immediate mailing in to the medical department of those plates,
not just after the fracture, but after the reduction or supposed re
duction. Where injuries are in dispute we believe that we should have
stereoscopic X-rays, those that will be of real value, rather than a
simple flat plate.
There are many cases calling for reconstructive surgery. This is
especially true in maltreated fractures and soft-tissue injuries that
can have restoration of function by competent and well-timed
surgery. Many cases have been so treated under the Oregon com
mission with most gratifying results; for instance, a Potts fracture
that has been unreduced and united in vicious position, thus destroy
ing the proper relationship between the ankle mortise and astragalus
and throwing off center the weight-bearing line through the astrag
alus, or the similar disalignment of weight bearing in unreduced
fracture at lower third of tibia and fibula, or in a fracture in which
rotation of the fragment has occurred, and in ununited fractures,
F . H . T H O M P S O N , M . D.
287
also tendon contractures and peritendinous adhesions and severed
tendons that have not been sutured, or successfully so, and many
allied conditions. The commission in these cases selects the surgeon
for the particular work in hand and orders the injured man to report
to him for such care or operation as deemed best. Generally the man
is anxious for restoration, but there are exceptions. In the cases
that are not prone to accept restorative surgery, the disability award
is made on the basis of disability that one would reasonably suppose
to exist had the injured submitted to operation, and not on the basis
of disability existing without operation. The one object, of course,
of reconstructive surgery is to restore the injured to as nearly a
normal condition as possible and thus aid him in the strife for
existence. No permanent partial disability is awarded until all
possible restoration of function has been accomplished. This makes
essential the practice of physiotherapeutics.
The past experience in Oregon produced so many cases of fractures
too long splinted, in which periarticular fibrosis had occurred,
atrophy of muscles and muscle contracture, leaving ankylosed or
partially ankylosed joints, that it was believed expedient to try out
massage, physical manipulation, and electricity and hydrothera
peutics to see what results might be obtained toward restoration of
function. Accordingly, a great many cases with marked disabilities
were given such care, resulting in such marked and early improve
ment that it was deemed advisable to make a study of the work
being done in Army reconstruction camps. This study was carried
on by the writer and Commissioner Marshall, who, after seeing the
work that was being accomplished by proper and sometimes pro
longed aftercare, decided to recommend to the Oregon commission
the establishment of two fully equipped physiotherapy departments,
one to handle cases coming from the Columbia River Basin and the
eastern part of the State and one for the Willamette Valley and
the southern part of the State. This work was considered so impor
tant that the departments were fully equipped with hydrotherapeutic,
electric, and other equipment, and trained Army aids employed to
carry on the work, each department being under the direct super
vision of returned overseas service men who had had splendid ortho
pedic training and were familiar with the various angles of physio
therapy. With such organization all serious fracture cases, as
soon as union has occurred, are ordered to one or the other depart
ment for early- treatment, with the object in view of lessening perma
nent disabilities and shortening temporary time loss. Many perma
nent partial disability cases are such because too much time is allowed
to elapse before passive and active use. Contractions and fibrosis of
too long standing can not be completely overcome. The results have
been most gratifying. The surgeons throughout the State, with few
exceptions, are glad to have the aftercare off their hands, primarily
because theit* offices are not properly equipped for such treatment.
And again, the average surgeon is not fully posted in the methods of
proper' physical treatment in the aftercare of fractures and other
like conditions, for, as a rule, his main object is to secure a union in
good alignment, leaving nature and ordinary use to accomplish what
they will in the restoration of function. There was some objection
on the part of some surgeons, who imagined that the calling of the
288
OREGON SY STE M OF M EDICAL SERVICE.
patient for such treatment was a discredit to their work. This objec
tion, however, was overcome when the object of the treatment was
explained, Now, when a patient is called in for such treatment the
physician is sent a carbon copy of the order stating the reason for
calling the patient in. Again, this early review by the medical
department makes possible the detection of remediable deformities at
a sufficiently early state for correction. In every such case, or in
case the patient is transferred from one physician to another for
special care, the original physician, in case of fracture or other speci
fic condition, is paid in full for the care of the case, as per the com
mission’s fee schedule, and the special treatment is paid for in addi
tion. Of course, as far as physiotherapy is concerned, this work is
done by salaried, aids. The hospitals do not object to the establish
ment and conduct of these institutions, for they are essentially insti
tutions for follow-up or aftertreatment and involve ambulatory cases
only, and, under the Oregon law, when a case becomes ambulatory,
it is no longer a fit hospital case, and if the man remains at the hos
pital it is at his own expense, as the object of compensation is to pay
sustenance during the period of incapacity. In Oregon the hos
pitals care for the commission cases under a set fee schedule.
In our State and in Washington we do not permit open treatment
of any fracture cases unless permission is first obtained from the
commission. I think the physicians who have followed out results
of bone plates find that ultimately the plate causes an irritation and
more or less trouble one way or another, and because of the com
mission having direct control there is not going to be very much of
that work done. A number of times a physician out in the State
somewhere has written in and said, “ I have an oblique fracture and
I want permission to open that leg and put in a Lane plate.” Con
sent may have been given in one or two cases, but as a rule the case
is then transferred. The first physician, if he is not capable of
handling that case, is paid in full for that fracture as if it was a
simple fracture, and the case is transferred to one who is capable of
taking care of it and leaving the plates out.
To give some idea of the magnitude of the work I will say that at
present there is an average of 605 treatments per month given at the
Portland department and an average of 534 treatments given monthly
at the Salem department.
The Portland department is under the direct supervision of Dr.
Richard B. Dillehunt, dean of the University of Oregon Medical
School and a returned major from overseas service. The Salem de
partment is under the direct charge of Dr. C. A. Downs, who was a
captain in the overseas orthopedic department, and these men deter
mine what treatment shall be had, supervise the giving of such treat
ment, and determine when treatment shall cease. Permanent partial
disabilities are estimated by the chief medical examiner.
When physiotherapy has accomplished its work, the Oregon sys
tem goes a step further and gives its unfortunates who have suffered
major disabilities of a permanent nature vocational retraining. This
work is done only after the permanent partial disability award has
been made. The first law of nature is self-preservation. The ablebodied and strong mentally and pl^sically can well fulfill the law of
the survival of the fittest, but the less fortunate deny the declared
F . H . T H O M P S O N , M . D.
289
law that all men are free and equal and prove that the greater the
handicap the less possibility of successful strife in the commercial
world. This holds true in the world of industry. This intensely
economic, social, and humanitarian study and problem is, of neces
sity, boldly faced by the State industrial accident commission, and
it was deemed a wise provision to make it possible that the ones who
were most greatly handicapped might be placed on a little more
equal footing with the unhandicapped by being retrained to some
line of work that they could adequately perform. It is the belief of
the Oregon commission that the compensation law is a law not for
the employer only, and not to solve a sociological problem only,
but, primarily, is a provision to aid the man who has offered his
fingers or hands as a sacrifice on the altar of industry, and to make
it possible for those dependent upon him to meet at least the bare
necessities of life during the period of the incapacity of the bread
winner, and, if it be possible, surgically or educationally to restore
the injured to usefulness in some plane of active life. It has, there
fore, succeeded in securing the passage of amendments to the Oregon
act that virtually remove the limit of what it may do for an injured
wrorkman if by so doing it will restore him to proper earning capacity
and remove the possibility of himself and his family becoi?iijig
pendent upon the alms of the public.
Now, as to the question of hernia. Hernia, we originally believed,
as did our sister State, Washington, should be preceded by an acci
dent. Now, we pay for every hernia that occurs in the course of^ the
employment. I don’t think there is a doctor who would question the
fact that hernia is an evolution, and the appearance of the hernia is
only the final step of what has been taking place from a defective
closure of the internal ring from infancy, but after all, we are caring
for the man who is incapacitated during his employment. In Oregon,
while the statute is that hernia must be preceded by an accident, as
a matter of fact, we pay for every hernia that is shown to have oc
curred during the course of the employment, provided only the man
takes the one course by which he may hope for a permanent and com
plete cure—that is, an operation, and he must submit forthwith to it.
Of course, if a man has a good reason why he wants to wait for a
week or a month the commission may consent, but he can’t put it off
indefinitely. He can not say he will wear a truss, as that would not
cure him. He might go to California and be again paid for hernia
there and yet it would be the same one. He has that potential liabil
ity of strangulation, and so we demand that he be operated on, if he
receives compensation. On the question of preexisting conditions
affecting an injury, we have found this: I f a man has a supposed
strained back or what has been diagnosed as sacroiliac strain, very
frequently the prolongation of that is due to focal infection, bad
teeth, bad tonsils, or something of the sort, which, if cared for, the
condition will clear up. In many of those cases the commission has
paid for the care of the teeth or the enucleation of the tonsils in order
to get results, and it has gotten them in the majority of cases.
It it is a question of syphilis, which probably is not now con
sidered simply a venereal disease but quite a common and general
disease that can be contracted in many ways, we treat it as follows:
We have a case of nonunion of fractures, and we wonder why we
2 6 0 3 9 ° — 2 1 ------ 1 9
290
OREGON SY STE M OF M EDICAL SERVICE,
don’t get a union. I f no reason can be ascertained, we have a Wassermann or Noguchi made. I f we find the man is syphilitic, then the
commission pays for the treatment of that syphilis until such time as
we get a union of the fracture, and then the man is informed he must
pay for it himself if he wishes the treatment to continue. It is a
matter of economy, not only of the man’s earning power, but to the
commission as well in that case.
Briefly summarized then, under the Oregon law the injured man
has the free choice of his own physician, with the reservation that
the commission may select a physician to make a special examina
tion or give special treatment if the case justify it, thus reserving
to the medical department, ultimately, full control over selection
of physicians.
Reconstructive surgery is the rule, if properly indicated, and to
my mind is one of the greatest steps the commission has taken.
This I believe and know from actual observation of what can be ac
complished from such measures.
The Oregon system is certainly strong on physiotherapy as the
only proper procedure to shorten time loss and lessen permanent
partial disabilities.
When all that' is possible has been done for restoration of function
we advocate strongly vocational retraining for the injured workman
who has suffered a major permanent disability.
All work is done according to fee schedule and all hospitals are
paid according to fee schedule.
Ambulatory cases are considered nonhospital cases.
In cases of amputation temporary total disability is continued
until an artificial limb can be secured and the State commission pays
for the artificial limb.
The State Industrial Accident Commission of Oregon believes it
its duty to disseminate the principles of accident prevention and to
do everything possible toward restoration of the severely injured to
some phase of industrial usefulness. It is its hope and desire that the
administration of the medical department be so conducted as to be
most helpful to the industrially injured, most economical to society,
and most satisfactory to the employer.
DISCUSSION.
The C h a i r m a n . The discussion of the papers on medical systems
will be taken up by Dr. Gibbons, who has been associated with the
California commission as medical director for a number of years.
Dr. M. R. G ib b o n s , medical director, California Industrial Acci
dent Commission. I suppose that the visiting doctors have been in
spired in the same manner that we of California and this commission
have been by your presence here. We certainly appreciate the infor
mation and the help which you have given us, because your experi
ences are just exactly those that we are now going through. I think
that the men who have been my best supporters here—some of them
are here to-day—will think that what they are now hearing is very
familiar. We have tried to settle these things for ourselves, &nd
haven’t had much time to go beyond our own experience, but it is
almost uncanny the way in which it chimes in with all you are telling
D ISCUSSIO N.
291
us. Dr. Donoghue’s paper was very interesting from the standpoint
I have spoken of just now. Dr. Thompson’s remarks were of the
same character.
I think I can best take up some of the points that have been spoken
of and compare our own law and our own experiences. The Indus
trial Accident Commission of California/ initiates nothing with
respect to the treatment of injury cases, except through its State
compensation insurance fund; that is, as a commission it does not
take any active part in any treatment or assistance of treatment,
except to scrutinize results and call attention to defects. First of
all, our medical service is unlimited. It is given just as long as
treatment is indicated as a result of any accident or any injury.
Furthermore, our fees are unlimited medical fees. A doctor wrote
some time ago, asking what he should charge for a certain piece of
work. The man under his care had been caught in the circuit of a
65,000-volt high-tension wire while standing on a well casing. He
ultimately lost one leg and one arm and he had numerous thirddegree burns over his body, and he required amputations and a large
amount of skin grafting and dressings of a character very objection
able to make. The doctor’s letter was rather pathetic, saying he
had frequently lost his meal while in the midst of a dressing. A c
cording to our fee schedule his fee worked out to $3,400. He didn’t
et that much, because the employer was an accountant in San
rancisco and didn’t have that much to pay. He got $1,400. Our
law requires that the man is entitled to such medical, surgical, and
hospital treatment, including nursing, medicines, and medical and
surgical supplies, as may be required to cure and relieve him from
the effects of the injury. It also provides that the employee, if he
doesn’t care for his doctor, may have tendered one change of physi
cians, or he may get a panel of three, if there are three available
in his community, from his employer. I f he takes his own physician
when proper medical treatment is offered him by his employer he
is required to pay for it himself, but taking his own medical treat
ment does not jeopardize his indemnity.
I f the injury causes a temporary total disability, he is paid 65
per cent of his regular wages, unless that 65 per cent amounts to
more than $20.83 per week, as long as he is disabled. Theoretically
that can go on forever; practically, of course, it does not. When he
is able to earn some mone}7he gets 65 per cent of that he can not earn.
When it is determined he has a permanent disability he receives a
permanent-disability rating. For instance, if a standard man has
lost his major hand he will get a rating of 45 per cent. If he has
lost one eye and eyeball he will get 30 per cent. That is not strictly
true, but say, for the sake of argument, he will get 75 per cent disa
bility rating. For that 75 per cent disability rating he will get 65
per cent of his regular wages up to $20.83 a week for 240 weeks.
After that time he gets a small rating, a small indemnity, for the
rest of his life. For 70 per cent he gets 10 per cent of his wages for
the rest of his life.
,Dr. Donoghue has spoken of the impartial examiner. In California
we don’t designate him as an impartial examiner, and the law does
not provide for an impartial examiner, but we have arranged
through a species of metamorphosis for something very much the
f
292
SY STE M S OF M EDIC AX* SERVICE.
same thing. When at the request of the medical department infor
mation of an impartial nature is required, the industrial accident
commission appoints a special medical examiner. Reports of this
special examiner are made to the commission through the office of
the medical department, together with whatever comment is re
quired. Usually no comment is required. Most of the men know
the requirements of the commission and their reports need no in
terpolations. By the way, this information or special report is used
as part of the record and is used in the place of evidence. The medi
cal examiner is not required to appear before the commission.
In the matter of hernia we have arrived at very much the same
result. Perhaps we would describe it in a different way. Our only
effort is to see that it happened as it was claimed it did, and in the
employment of the employer. There must be evidence which we
can at least be excused in accepting as indicating that the condition
happened when the man says it did. I had a man come in to me
the other day who gave a history of having discovered a hernia.
That sort of a case can not be accepted as an industrial hernia, be
cause that may have been present before and not been discovered. He
discovered it casually. We require that the man must at least have
a cause for it, and those in his vicinity must have been aware that
something happened to him.
X-rays are required in all bone cases or cases of suspected bone
injury. They are not taken at their face value, by a great deal. I
have said a good many times that there are not more than a half
dozen men in the vicinity of San Francisco whose reading of an X ray I would take. We don’t take the readings ourselves, and we
don’t take anybody and everybody’s else, but we require them to
be taken by men of known experience, and the readings must come
from them. I don’t try to read X-rays myself, because I don’t be
lieve I am any better fitted than the average practitioner.
Dr. Thompson believes that the injured man has the right to his
own doctor. I believe theoretically that is right. But in our prac
tice we have found it hasn’t worked very well. I saw a great deal
of Army work, and I saw the men doing the Army work inspired
with patriotism. Certainly they didn’t have anything to lose by
giving the best they had in them to the soldiers, but I don’t believe
that the soldiers got out of it what they would have if they had been
private patients. That is rather a delicate subject, but I do think
that the injured man would do better if he could select his own
doctor. But on the other hand, I think that is not practicable. Cer
tainly it did not work out here. We have a great many osteopaths
and chiropractors, and we get some very bad results from allowing
the individual to select his own doctor. I firmly believe the best
result is obtained when he is required to accept the doctor whose
services are proffered by the employer.
Now, the California law requires that the employer shall furnish
the doctor. I f the employer has insured, then of course he has the
insurance company to look after the case, and the insurance company
has gone about the matter from a business standpoint. In tha.early
part of our work the insurance companies went about it in a very
businesslike way. They got the services of groups of doctors; but
the commission was opposed to this, because it thought it would not
D ISCUSSIO N.
293
produce results, but, quite the contrary, it did. I think the system
in vogue in 1914, 1915, and 1916, before the war, has now changed.
I think there is a very decided difference in the attitude of these
groups, and that the system may be dignified now by the name of
group treatment. I believe the kind of surgical treatment that is
now considered essential can only be produced in group treatment.
Our fees are such that the individual can not do his best work for
those fees. I f he is assured of a certain amount of this work he can
afford to do it. He can afford to specialize and afford to have equip
ment to meet the demands.
The questions of backs and infections strike us very near home.
About the question of syphilis we are extremely skeptical. Syphilis
is advanced as an argument why the man should not receive com
pensation with a great deal of regularity, and the commission de
mands that cure of the injury be effected in spite of the condition
of syphilis.
As to the question of open operations, in our first fee scheduler it
was said that the permission of-the party who was to pay the bill had
to be obtained before an open operation was permitted, Of course,
there are a number of men who specialize in this work, and we allow
the question to rest in that manner. Comparatively few operations
for these things have been done in this State, because we have not
looked upon it with any special favor.
In 1914, immediately after the law went into effect, we published
a fee schedule. Very shortly after that, within two or three months,
the first meeting of the State medical society took up that fee sched
ule, and while it was not adopted entirely it was tentatively adopted.
The members got very much worked up a year ago and a committee
of the State medical society decided to disrupt the whole thing and
do away with our fees. They appointed a committee, which met
frequently over a long period of time, and they called into consulta
tion representatives of the industrial accident commission, and finally
arrived at a fee schedule which was exactly the same as we had
provided before, except that they increased it by 25 per cent all along
the line. Our fee schedule, of course, represents a minimum, and a
component part of the schedule is the sentence, “ These fees repre
sent a minimum; fees higher than schedule will be allowed when
warranted by unusual difficulties or requiring an unusual amount
of time.” We do away with zoning by that phrase. The question
of mileage depends on how much it costs a man to produce a given
amount of work. After the first flurry in California we obtained
the confidence of the medical profession. We have now the confi
dence, I think, of practically everybody worth while in the State,
certainly no antagonism, and we have available for our special
examiners the very best men connected with the colleges. Many
of the men connected with the colleges are doing actual surgical
work on industrial accident cases.
Oregon and Washington provide physiotherapy as one of their
functions. California has no jurisdiction over physiotherapy and
occupational therapy, except that the commission now considers
occupational therapy, physiotherapy, and those things that go with
them proper treatment, that they come under the category of proper
medical and surgical treatment. While the commission does not
294
SY STE M S OF M ED ICAL SERVICE.
actually prescribe physiotherapy, it does scrutinize results and return
the cases for further treatment when cases to whom the proper treat
ment has not been extended present themselves to the commission or
come under its provisions.
The C h a i r m a n . Mr. Fisher, member of the Idaho Industrial Acci
dent Board, will conclude the discussion of the papers.
Mr. G eorge H. F is h e r , commissioner, Idaho Industrial Accident
Board. I think it might have been more interesting and perhaps more
educational to have confined the discussion of a subject of such
magnitude as that of medical systems to the medical fraternity.
I think in the consideration of these problems of compensation and
the medical systems connected therewith that we too often neglect
the viewpoint. I think it quite proper in discussing these problems
to take into consideration the conditions with which each State deals
For instance, we must consider the matter of area, geographical lo
cation, the population, the transportation facilities, in order to appre
ciate the laws and the systems of the various States. There are none,
perhaps, at this stage of progression who would not look back upon
the experiences of some of the States, upon the action of their differ
ent legislatures, with considerable regret.
In the paper of Dr. Mowell, of Washington, he has told us that in
1911 the legislature neglected to provide any medical system of
treatment whatsoever. That was lamentable, and that it remained
so for six years, until 1917, without any correction was quite inex
cusable, and when the correction did come it was only halfway, and
50 per cent of the expense was placed upon the injured worker.
However, did we understand the condition that prevailed in that
particular locality at that time we might have agreed that was the
very best that could have then been obtained, but the splendid sys
tem that has evolved and which is in vogue at the present time in
that State is certainly commendable. In reference to the medical
system and the law in the State of Oregon, one very splendid feature
that I observed was the reservation of right on the part of the com
missioner to remove the inefficient physician who had bungled his
case. I also noticed with considerable interest the very splendid
system that has grown up in Oregon with reference to vocational
retraining and the prevention of accidents, the safety division, also
the departments for reconstructive and restorative surgery, and the
different classes of therapy that they have. I also noticed this, that
the law may be quite unlimited, in so far as the State is favored
with a liberal industrial accident commission and a liberal medical
department, but there seems to be a chance that the injured work
man might not obtain medical treatment in excess of the limit because
of not making application for same at the proper time. However,
that would be the rare exception instead of the general rule.
The splendid system in Massachusetts, I think, is unsurpassed m
any State in the Union. I think perhaps it has one of the very best
systematized medical departments, very much specialized in detail,
and one very commendable feature that I noticed is the method of
obtaining the examination and reports of the impartial physici&ns
stationed geographically, for convenience, in the different portions
of the State. The medical system of Idaho, I think, bears investiga
tion. Idaho is a State of magnificent distances. I presume that the
D ISCUSSION.
295
entire New England States might be lost in Idaho, and in reaching
from one end of the State to the other we have to pass through the
States of Washington and Oregon. The interests are very much
diversified, great lumbering interests and the mining of lead and
silver are in the north, while the agricultural and stock-raising pur
suits, are in the south. Idaho has needed so much capital, so much
taxes for development, to build its roads, make its bridges, and make
it a place productive and attractive for its population, it has had but
little chance for financial help along other lines, such as a medical de
partment in the compensation board. At the present time we have no
medical department. However, the law is broad enough so that we
get by at the present time without any very serious inconvenience.
The law of Idaho is an unlimited law. There are many States that
are unlimited in certain respects, but I believe about six States are
unlimited completely. There are those that are unlimited as to costs
but limited as to time; there are those that are unlimited as to both
time and costs but that place part of the cost on the workman; there
are those that are unlimited in all these respects and yet sickness is
not covered.
Under the workmen’s compensation act in the State of Idaho, it is
incumbent upon the employer to furnish to the injured workman such
medical, surgical, and hospital treatment immediately after the acci
dent and for a reasonable time thereafter as may be required and re
quested by the injured workman. The industrial accident board
having the discretion to determine what would be reasonable treat
ment, it is thereby unlimited. There is a section of the law which
permits the employer and employee to enter into an agreement with
a contract hospital whereby the employee is furnished medical treat
ment for accident or sickness contracted while in the course of em
ployment, other than venereal disease and sickness as a result of in
toxication. The contributions of the employees must not exceed in
any case $1 per month, unless, within the discretion of the board, after
a hearing is specially called for that purpose it can be shown that
there is a reasonable need of a greater contribution. Recently this
matter of an increase came before the board upon a request of the
hospitals of the great mining and lumbering interests. The entire
board went to the city of Wallace and held a prolonged meeting with
all of the employers, with all of the doctors connected with the
hospitals, and with the representatives of the different workingmen’s
unions. It was unanimously agreed that the best service was none
too good, and it was perfectly agreeable and satisfactory that a raise
be made, so that at the present time there is a contribution from the
workmen of $1.25 per month, to which the employer adds 50 cents.
That arrangement was made in order that the best services might be
given. There seems to be no particular objection to the medical treat
ment given to the injured workmen throughout the State.
With reference to the workman choosing his own physician, there is
no objection on the part of any insurance carrier to this, for first aid
at least. The injured workman has the right and privilege to get the
very best and quickest aid that he can, and for him to remain under
the treatment of that physician is perfectly satisfactory with the in
surance carrier, unless it is very apparent that the treatment is not
proper. However, with a hospital contract it is different. Most of
the hospitals with which contract arrangements are made are in the
296
SYSTEM S OF M EDICAL SERVICE.
locality of the mining interests, which are mostly all self-insurers.
However, even if the injured workman is treated by the physician of
the hospital, if there is any ill-treatment or dissatisfaction, that may
be changed through an appeal or request of the board for its in
vestigation.
The Idaho law is, as you know, compulsory. We have the State
fund along with the casualty companies. The State fund, however,
is not under the control of the industrial accident board, other than
for the adjustment of its claims for accidents. It has an insurance
manager at the head of it who is appointed by the governor, the same
as are the members of the industrial accident board. There seems to
be splendid success in the adjustment of claims of compensation and
in the medical treatment given. No one knows better than the in
dustrial accident board that the law has its defects. However, it
passed one legislature without any amendment. I f the legislature
will be kind enough to listen to a few suggestions of the industrial
accident board we could suggest a few minor changes to make it more
workable.
I desire in closing to express on the part of our board appreciation
for the courtesy shown to Idaho, one of the baby States, one of the
more recent to adopt workmen’s compensation, in being given a place
for a brief discussion of any subject in this splendid conference.
The C h a i r m a n . The subject of this afternoon’s papers is now open
for general discussion.
Dr. D o n a l d M a c l e a n , chief medical adviser, Nevada Industrial
Commission. I am surprised that Mr. Donoghue’s ideas agree so well
with ours. I do not believe in X rays much, but they do have their
uses in this regard. I f a general practitioner knows that X-ray
pictures are to be taken and that those pictures will be submitted to
experts, either expert surgeons or orthopedists, he is a good deal more
likely to be careful than if he Hasn’t that held over him. In a State
like Nevada, which is sparcely populated, general practitioners are
apt to get a little careless, a little crude in their methods. So we
insist that X-ray pictures be taken of all fractures and submitted to
the industrial accident commission. I am frank to tell you that not
one per cent show anything, but they do help to make the men a little
more careful. Further than that, they have an influence upon the
workman himself, wTho may be more or less of a neurasthenic. He
thinks, “ I have a broken leg and it isn’t well.” You show him an
X-ray plate and say, “ It must be well; it doesn’t show.” As to fee
schedules, I am also in accord with Dr. Donoghue. I am not in ac
cord with fee schedules. We had one and submitted it to the State
medical society. We raised it, and still it isn’t satisfactory. With
the high-class man it bothers him. It is far better to let him make a
satisfactory fee in a lump sum and not be bothered with putting down
separate items, although we have a fee schedule and try to stick
by it.
I was very glad to hear Dr. Thompson take up a subject in which I
thought I was pioneer. We hold that when a man receives an injury
to his back and it is proven that because of some infection the
does not get well it is the duty of the employer to clear up that
infection. In other words, he has to get the man on his feet. In
the case of infected tonsils, teeth, appendix, or gall bladder, or even
DISCUSSION.
297
if the man has some venereal disease which predates the injury, we
claim it is the employer’s duty to clear up that condition so that the
man can be returned to normal. I thought we were pioneers in
Nevada in that respect. We hold the position that we do not care how
much money we spend so long as we return the man to work normal.
Speaking of an impartial medical referee, I do not know if there
is such a thing. We send a man to San Francisco and three special
ists examine him, and they do not agree. The reports come back to
us, and we submit them to a diagnostician and ask him what the man’s
condition is and what can be done for him. We want to cure the
man. Frequently we are told that to cure the man it may be neces
sary to give him a few hundred or few thousand dollars. If it will
cure him, I recommend that. If it would put a man on his feet, I
would recommend that to the commission.
I agree with Dr. Donoghr.e that there is no such thing as a malin
gerer. I frequently say, “ This man is a malinger,” but to cure him, to
get the idea out of his head, the commission has to give him some
money, and heretofore it has always given the money, with the best
of results.
Mr. M acke v. It is a rather cold thing, as Mr. Fisher said, for a
layman, even though he has had some experience in these matters, to
inject himself into a discussion of medical questions. I have had
some experience with doctors in Pennsylvania, and as a group they
are the most helpful and most detrimental agents to compensation
work I know.
«
In Pennsylvania I think we have one of the poorest written laws
in the whole United States, but in practice we have one of the best, for
the reason that our board does not place dependence upon the medical
gentlemen who are called by the contending parties before us. I
had a very long and varied experience in common police courts,
trying all sorts of cases, in which the so-called medical expert testi
mony was generally the storm center about which we orated and
which troubled the juries, and I learned there personally to disre
gard such testimony or to place very little weight upon it, because as
a practitioner, if I had a sufficient retaining fee, I could get almost
any kind of a medical opinion I wanted. So I took the experience
and that knowledge with me from the courts into compensation
work. It is the disinterested' medical expert who is the real fellow
behind this work, because, after all, when you come to the disposition
of compensation cases it depends in every case upon the right assess
ment of medical facts. Now, when I started out I thought that the
real theory behind compensation law was to give the employer the
right to select the physician, because his interest was such that he
would be impelled to select the very best. I am beginning to change
my mind on that. There are so many corporations which go out
and gather in by contract so many of the medical profession in so
many communities that we have the unfortunate spectacle, in my
mind, of the man’s own physician appearing in court and testifying
against him. I am beginning to feel that the medical profession is
sufficiently manned with able and honest men that we can venture
tW experiment at least of allowing the employee to go out and
select his own man, because while there may be some imposition, still
I believe the sum total of the general results will be far in favor of
298
SY STE M S OE MEDICAL. SEE VICE.
that system. T am sure that almost every injured man will do better
if he is allowed to select his own man, in whom he has confidence,
because, after all, this medical game is 75 per cent a confidence game
anyway.
The great bulk of our work at the present time is reviewing agree
ments. In Pennsylvania, since 1916 to the 1st of September of this
present year, there were executed between the employer and the
injured employee 300,244 voluntary agreements. I have taken the
position that when once an employer and employee enter into a
written compensation agreement that agreement is then under con
trol of our board. It is the primary instrument, its terms to be sus
pended, revived, or modified from time to time, as the status of the
parties changes. Therefore our work very largely at the present
time is to take care of the fluctuating conditions that develop under
those agreements, and we allow no such thing as a final receipt, an
absolute termination of the employer’s liability to pay, until the full
running of that period during which there might be a possible
change.
Now, you can understand that such a situation and the review of
those agreements present continually before our board petitions on
the part of the employer for the suspension of his liability on the
-ground that the employee has returned to work and there is a cessa
tion of disability. On the other hand, we have many petitions from
the employee, setting forth that he did go back to work, but there
has been a recurrence of disability and therefore asking that the
terms of the agreement be revived. It is a medical question entirely.
I haven’t got time and I attach too little importance to partisan
medical testimony to sit and listen to the doctors whom the em
ployee might bring forth or the employer might bring forth to
establish either one of those objections. When the case comes before
us we have our medical man, paid by the State of Pennsylvania, and
when we arrive at the point that we can’t believe him we will dis
pense with his services. We will say, “ Doctor, take this man and
look him over.” The doctor comes back in a few minutes and makes
his report. Of course, if there is any serious question about it both
sides have their doctors there, and the commission will go further
and perhaps appoint somebody else. The point I want to make is
this: The doctor is the big fellow in this work; the accuracy of the
medical testimony is the real basis upon which justice is going to be
done to the injured man, and also to the employer. I want to take
a little issue with the gentleman from Ohio in the statement he made
this morning, and I don’t think he meant it entirely when he said that
in Ohio they were administering the law for the workingmen only.
I do not think he meant that. We are administering the law for the
workman, for the employer, and for society at large, because they
all have a very large interest.
The medical men of the United States are trained men and I don’t
think we need fear the soundness of their judgments or the honesty
of their purpose. But I don’t think it is fair to the medical pro
fession to create a situation where it is necessary for the employee
to bring in a doctor and the employer to bring in a doctor, who i#ay
at least have to strain their consciences to become partisans. I think
we ought to get the power from our legislatures, if we haven’t it, to
select our own medical men.
DISCUSSION.
299
Dr. G e o r g e W . G o o d a le , of San Francisco, Calif. I ratlier beg
your pardon for obtruding my word in such a conference. I am
not identified with the commission here, or with any of the commis
sions. However, I take a keen interest in compensation law, and
have been devoting my time and my thought uninterruptedly for the
last seven years to this cause, wThich gives me an excuse for speaking
to you.
This law, as it works in California, and as it must work through
out the country, is medical, nine-tenths of it. The one great thing
for which this law was enacted was to make the workingman well
again, to give him the highest class medical and surgical treatment
and to see that he receives the same attention and the same care and
watching over as if he was a millionaire. The California law has
four purposes, and it is the practical working out of those purposes
that counts. In the first place, we have to see a man has the very
best surgical skill. In the next place we have to see that the rights
of the employee and employer are protected, that proper reports go
in so that the man can be paid his compensation, and that proper
reports go in upon his medical condition, so that the commission can
see whether he has received proper attention or not. Next comes
the rehabilitation after the medical and surgical part of the treat
ment of the cases is finished, and we must see that the man receives
all the different treatments which may be effective. Next, inasmuch
as the law of the State says that the employer and not the employee
is the one who appoints the physician, it is the province of the medi
cal society to see that the psychology of the employee is carefully
watched, and because of the mere fact that he is sent instead of
coming at his own volition to the doctor, he should be handled in
such a way that from the time he enters the doctor’s office until he is
discharged as completely or partially cured he will have every con
fidence in the doctor. I believe that organized medical-group treat
ment, not only in compensation but in general private practice, is
the solution of proper medical and surgical treatment. For one
doctor to take any case, prescription, back, fracture, etc., is far more
ancient than the old public liability law.
I believe that we are seeing the dawn of a new day in medical
treatment. Go to Rochester, Minn., and see the wonderful work
accomplished by the effective genius of two brothers. They have
taken a little town there and made it famous, simply because they
stand for a principle.
The only way you can get good work is by organized medical
societies. You must have central control, specialists, emergency
hospital service; you must have people trained in making your
reports; you must have rehabilitation, and the only way that you
can get them is by organized medical group treatment. The group
feature of surgical and medical practice is coming very strong. It
is up to you to see that the workingman gets the very best medical
service, and I would like to see this association give serious considera
tion to medical systems, and to the possibility of having group
competing against group for this work, which system will eventually
come.
The Chairman. The discussion has now exceeded the 30 minutes
we decided on originally, but Dr. Donoghue, of Massachusetts, re
300
SY STE M S OE M ED ICAL SEKVICE.
quested the privilege of taking up the thread of the discussion at
the end, and if you will bear with the chair, I will permit Dr.
Donoghue to conclude the discussion of medical systems.
Mr. C l a r k . ‘I want to thank the gentleman from Pennsylvania for
calling my attention to a blunder I seem to have made, if I said
“ workmen only.” I want the record corrected, if the record was
made. What I meant was “ workmen primarily.” That is what
comes from talking without thinking.
Dr. D o n o g h u e . I want to say a word about what the gentleman
from Pennsylvania said. Who hires the doctors ? Who searches the
community over to prove some absurd question? It is the lawyer.
If you could eliminate the lawyer you could eliminate the searching
of the community to find some man who would testify to something
that is nearly—not quite—true. I made the point before, that the
medical expert in court is in an unfortunate position, and the medical
profession as a profession does not take any back seat, as far as
honesty is concerned, with any other profession. The difficulties of
the profession are the same as the difficulties of the ordinary man.
They come from ignorance. The physician does not know all there
is in the world, but you expect him to know all about everything.
Medical experts in court are called upon to answer questions a lawyer
asks them. 1 have tried to do it for 20 years, and it is some job.
Here is a sample of what they put up to you, and it is a sample of
what they try on these boards: “ Doctor, would a blow upon the
breast cause a tumor? ” And I start off, trying to enlighten the court,
“ I f ’ by a tumor— ” “ No,” the judge says, “ You are old enough
to know how to answer a question.” I say, “ I don’t know what they
mean by a tumor.” “ Then,” he says, “ you can’t answer the question.”
And then they say the doctors don’t know.
And then, let us take the commissioners. The commissioners knock
the doctors more or less, I mean in a general way. What have the
commissions done to get medical opinions down to a tangible basis?
Eighty per cent of things medical men of equal training agree upon.
Twenty per cent are still in the air, because we are still learning, but
how many commissions here have the courage to furnish a decision
upon a medical case and say, “ We believe this is a fact” ? I would
like to see how many opinions you print, in all the States. You print
the decisions you think will get by and you pigeonhole all the others.
Usually you say, “ We are forced to decide this case upon the facts
presented.” California, when it gets a real opinion upon a real thing,
can quote it again, but the others don’t. You are still trying to de
cide on partisan medical opinion and naturally partisan medical
opinion doesn’t look very well. Printing a decision and comparison
would aid a little clearing up the situation.
This other thing, about the supermedical man who is going to boss
the entire medical profession of any given State—I don’t think he is
born yet. And I don’t think there is any medical adviser of any
State who can settle every question. The progress we have made
in Massachusetts has been made by taking the best brains of the
medical profession, and after all the medical profession knows more
about the medical profession than anybody else knows about it. I f
you put your best medical brain on your best case and let that man
solve it you are going to do a good deal better than by putting up a
D ISCU SSIO N .
301
superman, putting him on a pedestal, and because he says a thing is
so it has got to be so. I don’t think any medical man or commission
has got to the point yet where it has the right to tell the medical
profession how to treat cases. The medical profession knows how to
treat cases better than anybody else. They may need help in indi
vidual cases but they ought to be encouraged to get that help instead
of saying “ You don’t know how.” For instance my friend Thomp
son says Oregon does not' allow them to use bone plates. That is just
as absurd, in my mind, as saying they must not use medicine. Sup
pose the plate does cause trouble. You knew that in the beginning.
I f you have to undo part of it, probably 90 per .cent of what you
undertook to do you obtained. It is an absurdity.
I am not going to take up too much time, because I have been
warned. Back strains down our way are more or less seasonal. In
a certain type of man from a warm country, along about November
his back bothers him. He isn’t going to swing a pick in the winter,
and his back bothers him. He goes to an orthopedic man, and the
orthopedic man says, “ Yes; you have a bad back,” and puts on a
plaster cast, so he certainly is disabled all winter. During the war
the orthopedic man came in as the superman. Orthopedists, by
reasoning backward, have said that if they had seen the case first they
could have done a better job than the man who saw it first, but most of
them have no specific treatment at all. I do not want to minimize the
orthopedic man. He has a place, but he is not a superman to tell
the surgeon and everybody else how to treat all kinds of cases.
Mr. K in g s t o n . What do you say as to Dr. Thompson’s statement
about how they deal with hernias?
D r. D o n o g h u e . I will come back to that to-morrow afternoon.
Physiotherapy and vocational rehabilitation ought to be carried on
under medical supervision. They are now the playthings, more or
less, of hot-air artists and social-service enthusiasts. There isn’t
any use in trying to rehabilitate a man and put an artificial arm on
him if he has a sensitive nerve stump, but I have seen it tried. You
must have continuous medical supervision and not allow some rubber
or baker to tell the man what to do. In Massachusetts we have gone as
high as $600 in one case for fees, and that was a case of broken back.
Although we have a two weeks’ medical period, we have the provision
that in “ unusual” cases the board may accord additional medical
service, but I have some doubts whether the “ unusual” feature
should be extended to a single man remaining in the hospital who
is drawing his compensation. He wxould have to pay his board
somewhere. I am not sure whether he should not make some pay
ment after the first two weeks so as to equalize his benefit with the
benefit of the married man.
The C h a ir m a n . Meeting adjourned until to-morrow at 9 o’clock.
,
.
WEDNESDAY SEPTEMBER 22—AFTERNOON SESSION
CHAIRMAN, W IL L J. FRENCH, PRESIDENT, I. A . I. A . B. C.
BUSINESS MEETING.
The C h a i r m a n . First on the program is a business meeting. Re
ports of committees. Is there any committee ready to report?
Mr. V e r r il l . That, I suppose, calls for a report, at least brief, from
the standing committee on statistics and compensation insurance cost.
The committee has usually submitted a formal report each year.
This year I have not prepared a formal report, for two reasons.
What perhaps I might call the principal work of the committee dur
ing the year is presented in Mr. Downey’s printed paper, which was
a part of the proceedings yesterday morning. With regard to the
whole of the work of the committee, that will be presented in a
bulletin which is already in proof at the Bureau of Labor Statistics.
Dr. Meeker some months ago had a history and summary of the work
of the committee from its beginning prepared, taking the minutes of
the committee’s meetings and its annual reports as a basis. This
will include all the work of the committee, including its meetings of
the past year. As that will be available in the very near future, and
as it is so comprehensive, it has not seemed best to present a formal
report at this time of the committee’s work merely for the year.
I will review it briefly so that the scope of it may be seen.
The committee held two meetings during the year, each of two
days, one at Harrisburg early in December and one in New York
City in the middle of February. The subjects with which the com
mittee dealt and on which it reached a conclusion included the adop
tion of a new basis for accident frequency and severity rates. This
basis was the 1,000-hour basis instead of the 3,000-hour basis. It was
adopted for convenience, because it was thought what one may call
a decimal unit was better than the 3,000-hour unit, which suggested
a full-time worker on a 10-hour-a-day basis for a year, and the sug
gestion was a little bit unfortunate, because it was sometimes mis
understood that that indicated that that was the usual working year
and working day. Any rates on the old basis, of course, are easily
interchangeable or reducible to the 1,000-hour basis, and therefore
the change is not one causing anybody any inconvenience.
The committee also revised at one of these meetings the remarriage
experience table, which was included in its report of last year.
The other most important subject of the committee’s work, which
will be included in the bulletin which the Bureau of Labor Statistics
is printing, was a revision of the classification of industries. The
basis of this revision was the experience of the insurance companies,
which was obtained through conference with the Workmen’s Com
pensation Service Bureau, and the experience of rating bureaus tvith
which the committee was fairly closely in touch, especially through
302
B U SIN E SS M E E T IN G .
303
Dr. Downey’s work in Pennsylvania. That industrial classification
is considerably changed from the old one in the direction of classifi
cation and reduction of the number of classifications by eliminating
those which seem to be of no practical value, Another work of the
committee at its last meeting of the year was a revision of the so-called
standard report forms. The changes are not of any serious conse
quence and are, of course, presented by the committee as of value in
a suggestive way, rather than with any idea that any commission is
under obligation to accept them as limiting it in any way. The report
forms merely are supposed to represent the minimum requirements
which any commission would be likely to need.
The Chairman. Is there any other committee ready to report ?
Mr. K ingston. I do not rise to make a report of any committee, but
I wish with your approval, and of course it will have to be with the
unanimous consent of the meeting, to give notice nunc pro tunc of a
change in the constitution. This notice should have been given at
Monelay’s meeting, but it did not occur to us until to-day. The execu
tive committee now consists of the retiring president, the president,
vice president, the secretary-treasurer, and four other members,
making a committee of eight. It is thought the committee had better
be composed of nine. Then there is the other difficulty—we are
rather a far-flung constituency, extending from the Mexican border
to the North Pole, and from the Atlantic to the Pacific, and it is
rather a difficult task to get the members of the executive committee
together. The tendency has been to feel that the executive com
mittee heretofore has been rather undermanned. I am not proposing
a very large increase, but I do propose that the constitution be
amended to provide for five members in addition to the four who
are ex officio. I merely give notice of that now, and with unanimous
consent it can be considered at the final business meeting, which I
presume will be held to-morrow night.
The Chairman. I s there any objection to Mr. Kingston’s proposal
to increase the executive committee by one, in order to provide more
satisfactorily for a quorum? Hearing no objection, the matter will
be taken up, then, to-morrow night in the regular order of business.
Is there any further committee report ready ?
Mr. K ingston. May I mention to the chairman of the committee
on credentials that it would be very wise, I think, to have that report
presented. I was in hopes we might have it in the hands of the
members at to-day’s meeting, so that we might be able to see before
us “ who’s who ” of those present. It is a little difficult to carry
names and faces in one’s mind, but the more important thing to which
I wish to call attention is that of having that report presented so it
can be noted in the report of the proceedings. One of the things I
regret, on reading over the report of the Toronto convention, held
last year, is that there is no such report of a committee in the pro
ceedings.
Mr. Y e r r ill. You are in error. I think you will find it at the end
of the proceedings.
Xhe Chairman. Any further committee reports? Hearing none,
unfinished business comes next. Any unfinished business to report
and consider, Mr. Secretary ?
304
BU SIN E SS M E E T IN G .
Mr. V e r r i l l . I know of none.
Mr. Kingston. Should we not have a motion on record as to adop
tion of the minutes of the last meeting? It seems; to me that this
book which is available now for distribution embodies the report
of the last annual meeting of the association, and I think a motion
should go on record accepting this publication as the proceedings of
the last annual meeting.
The Chairman. Evidently some of the delegates have not read
such a book.
Mr. K ingston. I will make such a motion.
The Chairman. I s there a second ?
[The motion, that the printed proceedings of the Toronto conven
tion, as embodied in Bulletin No. 273 of the United States Bureau of
Labor Statistics, be approved and accepted as the official minutes of
the last annual convention, was seconded and carried.]
The Chairman. The chair has two or three resolutions. There is
a resolution submitted by Mr. W. H. Pillsbury, of the California
commission, dealing with the question of maritime employment as
related to workmen’s compensation, and another relating to railroad
employees. It is the custom to refer these to the committee on resolu
tions. If there is no objection, that will be done, unless you would
like to have them read now.
Mr. K ingston. I think they ought to be referred to the committee.
The Chairman. They will be referred to the committee. I have a
letter here from the Public Health Service, Washington, D. C. The
letter is written by Dr. Bernard J. Newman, the sanitarian in tem
porary charge of that department of the Public Health Service which
has sanitation under its jurisdiction, and the letter is a request for
the International Association to appoint a committee to assist in the
work of preparing standards relative to the sanitary code, or codes,
that have been enacted in various jurisdictions. I f there is no ob
jection, the chair would suggest that that letter be referred to the
incoming executive committee, because the plan outlined is one that
undoubtedly we will be anxious to further. It is asked of us that
we deputize three members to meet for the purpose outlined. Is
there any objection to the suggestion of referring it to the incoming
executive committee ? Hearing none, that will be ordered.
I have a telegram from Commissioner Fred M. Wilcox, of Wis
consin, asking to be remembered to the convention delegates and
expressing regret because he was unable to attend and have a part in
the discussions.
Here is a telegram from C. H. Younger, of Olympia, Wash., as
follows: [Flere the telegram was read.]
Those of us who attended the Boston convention will remember
with a great deal of pleasure Miss Eunice G. Anderson. Miss Ander
son then had charge of the compensation work in Wyoming. She
was an excellent delegate. Miss Anderson is now in charge of the
Historical Department of the State of Wyoming and sends her re
grets for her inability to be with us.
I have a letter here from R. M. Little, director of the Safety Ihstitute of America, in which he conveys his best wishes. Also a
letter from Edward F. Boyle, of New York, in which he expresses
BU SIN E SS M E E T IN G .
305
his regrets for inability to attend this convention. Is there any fur
ther new business ?
Mr. V e r r ill. There is one matter that should be brought to the
attention of the meeting, and possibly this is as good a time as any.
You have all seen the formal papers presented at this meeting. It is
assumed, however, that some persons who have submitted papers will
desire to make some minor revisions before the papers become a
permanent part of the proceedings. Now, anyone who wishes to do
that should submit his revisions without delay to the Commissioner
of Labor Statistics, at Washington. Of course, if his revision can
be made here and handed to Mr. Stewart or to myself the matter will
be easily taken care of. I f that is not done, any revision that it is
desired to make should be done without delay. The papers are in
the printing office. They were printed from type, and the type is:
standing, and to keep several hundred pages of type standing for a
considerable period is a serious embarrassment to the printing office.
It can not be arranged that the type will be kept standing for any
considerable time, so the revisions should be submitted without delay
Mr. K ingston. I think it would be well to answer these messages
that have been received from our friends who have not been able to
come but who have thought of us, and send a message of fraternal
greetings to them. I move a message of fraternal greetings be sent
by wTir© to the parties named a moment ago who have sent us these
messages. [Motion seconded and carried.]
The Chairman. I s there any further new business ? Hearing none,
the next order on the program is that of the medical question under
the title of “ Administrative problems.”
2 6 0 3 9 ° — 2 1 ------ 2 0
MEDICAL—ADMINISTRATIVE PROBLEMS.
CHAIRMAN, THOMAS F. KONOP, COMMISSIONER, WISCONSIN INDUSTRIAL
COMMISSION.
Mr. F rench. The chairman named for this particular session is not
with us—Chairman A. E. Spriggs, of Montana—and the chair has
extended an invitation to one of our new delegates, and yet one who
comes from an old compensation State. I should like to ask Com
missioner Thomas F. Konop, of the State of Wisconsin, to come to
the chair and preside over this particular session.
The C h a ir m a n . T o say that I appreciate the honor is not saying
enough. I feel it and I know it is an honor to my State to preside
over the deliberations of this convention. We had a beautiful ride
this morning, and refreshing, and I hope that this afternoon we
will have some spicy discussions, which will benefit us all. We all
had a fine ride and saw the beauties of San Francisco, and each and
all of us are thankful to Mr. French and his associates for arrang
ing this trip. The first number on our program is Dr. P. B. Magnuson,
medical director of the Industrial Commission of Illinois. I under
stand that Dr. Magnuson is not here.
ECONOM Y
OF
PRO PE R M E D IC A L
TREATM EN T.
B Y P A U L B. M A G N U S O N , M . D ., M E D IC A L DIRECTOR , IL L I N O I S IN D U S T R IA L C O M M I S S I O N .
[This paper was submitted but not read..]
In the October, 1919, issue of the Annals of Surgery there appears
on the first page an article by Dr. George W. Crile, of Cleveland,
entitled “ The good surgeon,” which seems to me to be so applicable
not only to war and civil surgery, but to the special surgery o f in
dustry, it is, by permission, being copied in part as a preface to this
article :
The surgeons and the pathologists who for four years have intensively
studied war wounds have formulated many theories of treatment— many ap
parently contradictory theories. Thus there have been presented the claims
of the value of various chemical agents against those of no chemical agent;
of moist dressings against dry; of heat against cold; of frequent dressings
against infrequent dressings and of no dressings against both; of sunlight and
of electric light against occlusions; of immersion against hot a ir ; of bacterio
logical control against clinical judgment; of vaccine toxine and foreign proteins
against normal reaction; of wound inoculation with harmless organisms
against wound sterilization; of isotonic against hypertonic solutions; paste
has competed with paste, bipp with ip, sap with both, and chromic paste
with all.
Does not this intensive study of infection in war wounds for this compara
tively short period equal and recapitulate the more leisurely study of infection
during the 30 years since Lister first proposed the carbolic spray? And is
there not slowly emerging from the present conflict of opinions the same fact
as that which emerged from the post-Listerian period— that the one agent of
successful surgery, whether war surgery or civil surgery, is the good surgeon?
This paper is written in the light of two years’ experience as
medical director of the Industrial Commission of Illinois and nine
years’ experience as chief surgeon of several large corporations, hav306
P A U L B. M A G N U S O N , M . D.
307
ing a great number of accidental injuries to care for every year. My
criticism is intended to be constructive, and it is voiced in a spirit
of helpfulness; if anybody’s toes are tread upon, it is not with the
intention of arousing the ire of those wounded, but with the hope
that the suggestions may result beneficially to the injured employee,
to the employer, and, incidentally, to the profession.
With the enactment of workmen’s compensation laws throughout
the country it became necessary for industry to adopt an entirely
different attitude toward injured employees. The old practice of
turning the matter over to the claim department to make the lowest
possible money settlement in cases where liability existed, or to the
legal department when suit was instituted, had begun to give way
before that all-powerful weapon, public sentiment, even before the
new theory that industry as a whole should stand the loss incident
to injuries to employees was enacted into law. Some o f the more
progressive and far-sighted corporations gradually adopted the
policy of administering first aid and furnishing surgical attention
when men were injured in their plants. At first this was done only
when the injury was caused through circumstances under which
there might be liability for damages. The next step was the shop
doctor, paid a certain fixed sum per annum, and then his services
were made available to all injured employees regardless of liability.
Then was born a new branch of the profession known as industrial
surgery, which even now is still in its infancy. This arrangement
justified the expense in that it kept employees at work more steadily
and frequently paved the way for a cheap settlement of a liability
case, This latter consideration tended to make the doctor an ad
junct of the claim department, a function which is exacted of many
of them in this enlightened day and age.
The practice of relying upon the plant doctor to obtain the con
fidence of the injured employee and thus make smooth the way to
a settlement was not, then, without justification. The employer,
while none the less morally liable, was not legally liable to furnish
medical and surgical treatment to injured employees, and when he
did furnish it, although not from philanthropic motives, wTho shall
say that he was not entitled to the benefit of intelligent, honest, co
operation on the part of the company doctors toward minimizing the
amount paid out in damages? Probably because there was no duty
devolving upon the employer to furnish medical and surgical assist
ance little attention was paid to the quality of such service as was
furnished, and the wonder is that this branch of the profession has
advanced to its present status, in view of the initial qualifications of
doctors at first employed. The term “ company doctor ” was one of
which no surgeon was proud. When the employer was in the market
for a doctor it was sufficient that the applicant had a license to
practice. No further inquiry was made as to his qualifications, and
from my experience I conclude that many employers now obtain the
services of their doctors in a similar manner.
By the terms of the workmen’s compensation acts in various States
the duty of furnishing necessary medical and surgical treatment de
volves upon the employer, and it does not suffice to employ a man
who is not competent to give the necessary medical and surgical
attention. Moreover, to furnish anything less than the best obtaina
308
E C O N O M Y OF PROPER M ED ICAL T R E A T M E N T .
ble is economically wrong, because the cost of medical service in any
serious case is an infinitesimal part of the amount the employer
might be called upon to pay, and any case might develop into a serious
case. It is not to be expected that the employer or an executive
in a corporation is capable of passing upon the qualifications of
applicants for the position of plant surgeon. In the very nature of
things such an employer must either “ go it blind ” or rely upon the
judgment of some person who knows as to the qualifications of his
doctor. It is very certain, however, that if such a man were in
need of a doctor for himself or a member of his family he would
come pretty near making certain that the doctor he employed was
qualified, and there is no real reason why he should employ a less
capable physician or surgeon to look after his employees than he
would to care for himself and family. Judging from what I know
of industrial conditions in the ‘State of Illinois there are very few
employers who know where their doctor was graduated, whether he
had an interneship in a first-class hospital or an assistantship under
a competent surgeon; whether he is a man of tact and force; and
whether he can handle men, not only employees, but members of the
claim department, who, by the very nature of their occupation, must
be suspicious of human nature in general as a rule. I do not mean
this as a stigma in any sense of the word, but a good claim man
must be “ from Missouri ” if he is a good man for his employer,
even though fair-minded, and I have found that most claim men
with whom I have come in contact are very fair-minded and willing
to do what is right if the matter is presented to them properly by
the medical profession.
The employment of a physician on this basis is a bad start, because
he comes in contact with employees more personally than, probably
any other head of department except an operating superintendent.
He must impress employees with his ability and his fairness if he
is to win their confidence. He must not let himself be involved in
the settlement of any claim as a claim adjuster; he must be the
friend of the men from the time they come to him until the time
they leave him, and inspire confidence in both the claim department
and the men. It requires a rare degree of tact to convince an em
ployee that the company doctor is interested only in his welfare
and not in the settlement of his claim at the cheapest possible figure,
and it is only when this has been well established in an industry
that the company surgeon becomes valuable.
I recall one surgeon who took charge of a large industry which
was perfectly controlled in its organization by the union, and within
a year of the time he took charge he had also been elected official
examiner for that union. This same man saved that company the
first year of his employment $20,000 in the claim department in spite
of the fact that the number of accidents increased 10 per cent over
the year previous; and as against 31 lawsuits filed the year before
he took charge there was one lawsuit filed the first year of his em
ployment. In almost 10 years he was on the witness stand only
twice for this corporation, and in both cases testified with such fair
ness and impartiality as to the man’s condition that although in one
case a $25,000 verdict was rendered against the company the attor
neys for the plaintiff settled the case for $6,000, because they said
P A U L B. M A G N U S O N , M . D.
309
the medical testimony was so conclusive in their minds that they did
not believe the case would stand appeal, and also said that they had
been misled by medical men employed on the plaintiff’s side of
the case to believe that the man was hurt more seriously than it
proved he was, and also because the reputation of the man acting as
surgeon was too great to be combatted by ordinary medical testi
mony. Within two years from the time this man left the employ of
this corporation there were three verdicts rendered against the
corporation for injuries—one of $11,000, one of $18,000, and one of
$24,000—not because the injuries were any more severe than many
treated before this, but because the results were so eminently bad
that all that was necessary was to show them to a jury. It would be
hard to convince this company at this time that a man with small
training was an economical man to employ.
It is because industrial surgery has been dragged in the mud for
many 3Tears, neglected and abused, and the doctor made a part of the
claim department, that men of large reputation will not as a rule
take upon themselves the guidance of the medical work of a corpora
tion, although the field is as mucli a specialty as treatment of eye
and ear conditions; the general surgeon does not as a rule have the
liking nor the mechanical ability to treat industrial cases. The
orthopedist, on the other hand, as a rule has not had the surgical
training, and surely industrial surgery involves acute surgical judg
ment as well as thorough knowledge of mechanics. Most men do not
care about the treatment of fractures, and when it comes to the
careful guidance which must be given recovery of injuries to tendons
and ligaments they are not interested enough to go into the details
of seeing that the man receives the proper treatment.
A well-equipped department of massage and electro and hydro
therapy should be an adjunct of every large industrial surgical insti
tution. Here we are up against the almost unsolvable problem of find
ing men who know how to give massage properly; who do not want to
break down adhesions by force during the first treatment; who do not
want to stretch muscles to the full limit at the first treatment; who
know how to increase circulation, to reestablish elasticity in liga
ments, to break up gradually adhesions in joints, to promote cir
culation and strength in muscles, to apply electrotherapy scientifi
cally in the treatment of traumatisms to nerves, and to mobilize
joints adjacent to fractured bones. We can find individuals who
know one of these subjects, but the individual who knows how to
apply all of them correctly is indeed a rare specimen.
I have advised massage in many cases and had the patient come
back in a number of weeks without any improvement whatsoever,
and upon inquiring into the kind of massage found that it con
sisted in the application of hot towels and the rubbing of the skin
or else the other extreme of too much force, with its consequent
setting up of traumatic inflammation by the too rapid breaking
down of adhesions, which produces pain and swelling and inhibits the
recovery rather than stimulates it.
The industrial surgeon must know, as well as surgery and me
chanics of the human structures, how and when to apply these treat
ments, and must see that his subordinates perform their duties prop
erly. As massage is given now it is a haphazard sort of treatment,
310
E C O N O M Y o r PROPER M E D IC A L T R E A T M E N T .
and certainly does not give us the results that it should under scien
tific management. We must have schools for the proper training
of individuals for this branch of work if industrial surgery is to
take its place in the ranks of specialties, where it belongs.
The question has been asked several times, “ What can we gain
by having a good surgeon oversee our work? Our work is so scat
tered that no one man can take care of all of it.” This is the case
in a great many instances where corporations have scattered
branches. Judging from wrhat has been accomplished, it would
seem apparent that the surgeon wTho knows what may happen in a
given industry can prepare a report blank which will cover all the
essential facts and bring to him the information which he must have
to judge whether a case is serious or liable to become serious, instead
of leaving it to the man who has had a comparatively limited ex
perience. For instance, construction work involves climbing on
scaffolding and ladders, from which men fall. I f a man weighing
160 pounds falls 20 feet and strikes the ground on his feet, it is a
fair assumption that he has received not only a sprained ankle, but
also probably a fracture of the os calcis of one or both feet, and,
judging from the cases that come before the Illinois Industrial Com
mission, most fractures of the os calcis go undiagnosed until after the
damage is done and repair is beyond possibility.
A fracture of the os calcis is a serious affair to a man who has to
climb or walk, because in a large percentage of cases the heel is so
carried upward and outward the plantar fascia is torn, the foot is
pronated, callus forms between the os calcis and astragalus, and
the man not only loses the lateral motion of his foot but has con
stant pain when walking or standing, from the pressure of the callus
on the tendons running under the external malleolus. The plantar
fascia being broken and the arch having lost its support, pronation
becomes more complete as walking is tried, and the man has a foot
which grows progressively worse with use and finally, in a large
number of cases, he loses from 50 to 90 per cent of the use of his foot,
which totally incapacitates him for any occupation that involves
climbing, walking on scaffolding or uneven ground. I f these cases
are taken in time and properly treated, the major part of this dis
ability can be averted, and the surgeon who prevents one of these
disabilities saves on this case alone a considerable portion of his yearly
salary, although it may be much better than the ordinary salary
paid industrial surgeons.
Back injuries are some of the most serious with which we have to
deal, and these injuries are practically never recognized by the sur
geon who sees only a few scattered cases. They are called strains,
and judging from past experience, most of these men are told to rest
for a few days and return to work, adhesive plaster strapping or hot
applications being used in the meantime. The competent industrial
surgeon should be an expert on the diagnosis of injuries to the spine,
and instead of allowing them to run along from week to week and
from month to month the men should be brought before the surgeon
in charge and proper treatment instituted before they become neu
rotics, which is not at all an unusual ending.
Shoulder injuries are probably as badly mistreated and poorly
diagnosed as any other joint injuries. We have in the shoulde
@FedFRASER