Who benefits?

Opting out and releasing

Another growing trend in workers’ comp is the idea of “compromise and release.” Also referred to as compromise settlements, this typically entails an agreement in which the injured worker receives a lump sum based on projected medical costs and loss of income. The payments do not continue beyond what was agreed on, Burton said, so a variety of entities like the idea. For example, in addition to lowering costs for many parties, employers no longer have to worry about liability, and workers’ comp agencies are able to close cases.

However, because compromise settlements effectively end the case, workers whose medical costs eventually exceed the original agreed-on amount are on their own. Many workers who rely on these agreements go through their payments and wind up needing public assistance, Burton said, citing study results.

A 2010 report from the W.E. Upjohn Institute for Employment Research, a Kalamazoo, MI-based nonprofit organization, stated that the increasing incidence of compromise and release settlements were part of the overall decline in worker benefits. Although compromise and release can be a desirable option in some situations, the report warned workers’ comp systems to be “more careful” about using the practice.

Two states provide employers with a choice on whether to be included in the state’s workers’ comp system.

For the past 50 years, Texas has had an opt-in workers’ comp system – employers choose whether they want to join. If they join, they are protected from tort claims from injured workers. However, employers that do not opt in are not protected from these lawsuits.

Oklahoma recently instituted a slightly different version – an opt-out system. Employers are automatically part of the workers’ comp system, but have the option to leave. Except unlike Texas, Oklahoma employers can opt out of the state workers’ comp system and still maintain their protection from tort suits, Spieler said.

Oklahoma employers that opt out of the state system must set up an alternative method of compensation for injured workers, which protects the employers from the tort claims. This system has not yet gone into effect, leaving stakeholders to wonder how it will work. “The opt-out is making many worried how it would affect workers’ compensation and safety,” Sengupta said.

Although Burton does not view two states adopting an optional system in the past 50 years as a “runaway trend,” he said Oklahoma’s plan could inspire other states.

“Oklahoma has got a lot of attention, and people are going to be looking at that and see what happens,” Burton said.

Future

While stakeholders wait to see how Oklahoma’s system pans out, efforts have been made to reduce employers’ costs while ensuring workers maintain their wages.

Return-to-work programs have received increased attention in recent years, for a logical reason: “If there are constantly workers injured on the job never coming back to work, then the premiums go up,” Sengupta said.

Nearly everyone believes appropriate return-to-work programs are a good thing for all involved, according to Spieler. Workers get back on the job and earn a salary, and employers save money on workers’ comp payouts. The problem, Spieler said, has been anecdotal evidence of employers pressuring people to come back to work in order to cut off the benefits.

Another issue is that return to work only pertains to a small number of injured workers. More than three-quarters of workers’ comp cases are medical-only, meaning the worker does not lose a day of work, according to Sengupta. The worker might have reduced hours or need a job transfer, but would not necessarily need a return-to-work program.

The costliest portion of the workers’ comp system is for workers with long-term, serious disabilities. Unfortunately, it is the area most frequently targeted for cuts, Boden said, but it also is the area with the greatest need for funding.

To ensure workers receive appropriate compensation, federal standards are necessary, Burton said. Considering that this was a suggestion he made 40 years ago in a congressionally requested report on the nation’s workers’ comp systems, Burton is not very optimistic it will occur. A federal system is even less likely, he said.

As injured workers struggle with obtaining adequate compensation, more people may apply for Social Security Disability Insurance. SSDI is a federal program that provides supplemental income to people with a disability that affects their ability to be employed.

The system has seen a sharp increase in benefits paying out – to the point where by 2016 tax revenues will be able to cover only about 80 percent of scheduled benefits, according to the National Academy of Social Insurance. Burton believes part of this problem may be that workers are finding it harder to get adequate compensation due to the changes states have made to their systems in the past couple of decades.