How workers’ compensation works

RALEIGH — There are two bills in the legislature (HB 709 and SB 544) that will reduce workers’ compensation benefits to injured workers, abolish their rights to physician-patient privacy and make it easier for insurance companies to cut off benefits. Although there is a possibility that representatives for employers and those for employees will reach a compromise in the near future, in order to understand the significance of these changes it is helpful to understand some history and how the Workers’ Compensation Act works.

I teach workers’ compensation law at N.C. Central University, and on the first day of class we always discuss the March 26, 1911 Triangle Shirtwaist Company fire in New York City in which 146 young women died because the fire doors were locked. Many of them jumped to their deaths from the 11th floor, as horrified spectators watched from below. No compensation was paid for their deaths.

After this event, New York passed one of the first workers’ compensation acts in the United States. Many states followed, and North Carolina eventually passed a law in 1929. The theory behind it remains the same: In exchange for quick but limited benefits to the injured worker, the employer got immunity from civil liability for the full extent of the injury.

In determining limited benefits, the act provides that the injured individual get two-thirds of the weekly wage earned prior to the injury as long as disability continues, all reasonable medical bills related to the injury are paid and if a body part has been permanently injured, additional payments can be made. The wear and tear of the human body is like the wear and tear of a machine. Each body part is assigned a certain number of weeks of compensation if permanently damaged.

Under this system, what would be the payment if your left ring finger were amputated in a machine? You would get 25 weeks of benefits ($9,615.75 for a 20-year-old earning $30,000 per year). That is not much for having a physical deformity for the next 60 years or so and for not being able to wear a wedding ring on that finger. Total loss of the hand is 200 weeks. Total loss of the foot is 144 weeks, etc.

This system applies equally to young and old alike. Also, there is no compensation for physical pain or emotional suffering. One lady had her hair caught in a machine and a portion of her scalp was ripped from her head. She got disability benefits but nothing for pain.

If you are totally disabled from work, weekly benefits are fixed on the date of injury and never increase. Twenty years after the injury, you will still be getting the exact same weekly benefit. To appreciate the economic effect of that fixed amount, think about the price of gasoline or the price of a movie ticket 20 years ago.

What about immunity for the employer? How does that work?

In 2010, a 17-year-old boy was working on a large machine that would shred pallets to make mulch. He became entangled in the machine and was drawn through the crushing chamber, and his remains were found on the discharge side of the shredder. A safety bar had been removed, and the employer was cited with 11 violations, including the failure to properly train the employee.

Because of workers’ compensation immunity, the family of this young man was prohibited from bringing a civil claim against the employer. At the end of the day, the employer got immunity, and the family got limited benefits of 400 weeks of compensation, plus funeral expenses of $3,500.

The bill pending in the legislature allows disability benefits to stop after 500 weeks (approximately 9.5 years), even if the employee is still disabled. There are some exceptions (for those paralyzed or for those who have brain injuries, etc.), but, otherwise, after 500 weeks, benefits simply stop.

What happens to the individual who is still disabled? Will he or she magically become employable? Think about a highly skilled nurse, age 45, making $25 an hour who falls while lifting a patient and has had multiple surgeries, without success, and now has chronic pain and significant lifting and standing restrictions. At age 55, will she be able to find employment? Not likely.

If her benefits are cut off, will she starve? Probably not. She will no doubt fall into a taxpayer-funded safety net called Medicaid, Medicare or Social Security Disability. It is a classic case of cost-shifting from the insurance industry to the taxpayer.

Why would the legislature shift the burden for some of the most seriously injured individuals away from the insurance industry and make the public pay that debt? If a compromise cannot be reached, you may want to ask your state representative or your state senator that question.