An Ideal Workers’ Compensation System

At the start of each year, I like to revisit what the ideal workers’ compensation system should look like.   Reviewing an ideal system helps all participants understand where they fit into it, and encourages them to look inward to determine whether they are helping achieve the optimum system.

This view is not perfect, but it is a start. It is a very high-level view of the system. The challenges and flaws become far more apparent in the day-to-day trenches. There are more than fifty different workers’ compensation systems in the United States. Many of these systems diverge from each other and from what we might agree to be ideal.

The Ideal Workers Compensation System:

• The ideal system respects and appreciates all participants but should be designed to serve the two primary stakeholders: the injured worker and the employer.

• The ideal system encourages and mandates prompt reporting of all claims, prompt determination of compensability, prompt provision of scheduled benefits, and finalization of all claims within a reasonable timeline.

• The ideal system engages, encourages, and mandates the worker’s participation and involvement in working safely, engagement in their medical treatment, benefit provision, recovery, and return to work.

• The ideal system uses “evidence-based criteria” to determine whether a claim is compensable and appropriate medical care.

• The ideal system should be designed, organized, and managed, so that financial incentives maximize injury prevention, prompt benefit provision, injury recovery, and return to work. Incentives are not always penalties.

• The ideal system utilizes the same criteria to determine the compensability for all participants.

• The ideal system determines compensability and provides benefits consistent with the other states’ workers’ compensation systems.

• The ideal system promptly provides the appropriate and necessary medical care for the injured worker, enabling maximum medical improvement and optimum functionality.

• The ideal system provides legitimately injured workers with prompt provision of fixed and “fair” benefits within a no-fault system.

• The ideal system facilitates and encourages prompt return to work for injured workers. This may include light duties, modified duties, transitional return-to-work programs, alternative work duties, and permanent worksite accommodations.

• The ideal system provides an appropriate economic safety net for injured employees, allowing them to meet their primary financial obligations while temporarily disabled.

• The ideal system economically reimburses the injured worker for permanently losing a body part or its function. (To create consistency of this benefit throughout the United States. Ideally, every State and the Federal Worker’s Compensation system should use the same criteria to make this determination).

• The ideal system provides employers and co-workers with appropriate civil legal immunities (with few exceptions) through an exclusive remedy process. 

• The ideal system ensures that the system covers all workers.

• The ideal system should provide consistent benefits to all injured workers regardless of representation.

• The ideal system incentivizes, mandates, and encourages high attention to safety in the workplace by both the employer and employee.

• The ideal system recognizes, encourages, and builds a systematic coordination of benefits between workers’ compensation, group health, LTD, and STD benefits and other employer obligations such as FEHA, ADA, or any other Private, State, or Federal social welfare benefits or disability programs.

• The ideal system encourages precise, concise, timely, and accurate communication (in person, phone, fax, text, app, video) between all parties. It ensures that the injured worker is kept informed and engaged regarding compensability decisions, benefits provision, and the next steps and expected timelines of their claim.  

• The ideal system has specific, measurable goals and expectations for all participants. These goals should include compensability decisions and benefit provision by the claim administrators, timeliness of reporting by injured workers and employers, quality medical care by the medical community, prompt, accurate reporting by medical-legal physicians, timely decisions by Judges, and prompt case resolution. To achieve these goals, the ideal system captures the necessary data and information from the participants to determine cost trends and the information required to measure the goals and set expectations.

• The ideal system would result in the employers being economically competitive in the world market.

• The ideal system has appropriate oversight (administrative and Judicial) to ensure that all parts function according to the intent of the laws, rules, and regulations. Oversight also provides a safety net for continuing benefits in case of bankruptcy by the insurance carrier or self-insured employer.

• The ideal system does not tolerate fraud or abuse by any participant. It systematically identifies fraud and permanently removes fraudsters from the system.

And finally, the ideal system regularly reviews and adjusts its processes and mandates, to ensure it achieves its goals and objectives.