(Occupational Hazards asked Ed Welch, director of the Workers' Compensation Center at Michigan State University, for his observations on the forces shaping workers' compensation.)
Beginning in the late 1980s and through most of the 1990s, a series of state law changes or "reforms" have propelled workers' compensation in a path clearly different from its roots. Two recent articles [1,2] have argued that the primary result of these reforms has been to restrict the benefits available to injured workers. Some of the reforms admittedly have increased the efficiency of the system, improving it for both workers and employers; however, the net result appears to have strongly favored the reduction in employers' costs at the expense of benefits to workers.
Some of these changes actually reduced the rate of benefits; others restricted eligibility for benefits in certain cases, such as mental health claims or repetitive trauma disorders, while others reduced benefits by redefining how permanent disabilities are compensated. The result was a reduction in the benefits to workers.
These law changes and the publicity surrounding them have also changed attitudes about workers' compensation. In the early 1990s innumerable local and national news stories reported on claimant fraud in workers' compensation and the cheats who apply for workers' compensation benefits. This widespread adverse publicity clearly influenced managers, doctors and judges who make decisions about workers' compensation cases: When the facts in a given case are borderline or unclear, society's attitude affects how judgments are made.
This publicity also affects workers. Those who previously saw workers' compensation as an entitlement may now stop and think, "Do I want to be one of 'those' people?" A recent study conducted at Michigan State University  found that a surprising number of people who appear to be eligible for workers' compensation benefits don't apply.
The results of legal changes have been seen in the benefits paid to workers and the costs to employers. As individual benefit rates and eligibility for benefits increased, the total benefits paid and the costs to employers also increased. In fact, it was in response to increasing costs that many of the reforms of the early '90s were enacted, followed by decreases in losses and costs.
To what extent are the decreased benefits and losses attributable to the legal changes? There is no empirical evidence that answers this question, but since reducing costs was the goal of many of these reforms, it seems logical that, to some extent, changes in the law deserve the credit or blame for the reduced costs and the reduction in benefits.
There are other factors, as well. One of these is the reduction in the rate at which medical costs increase and more aggressive efforts by insurers and employers to control workers' compensation medical costs.
The frequency of injuries also has declined. We would all like to think that this is partly because of increased efforts by employers to prevent workplace injuries and illnesses. I believe that it is, although we have no way of measuring the extent of this effect. In this regard, remember that legal changes strictly limiting those disabilities that are considered compensable will result in an apparent reduction in the frequency of compensable disabilities without changing the number of actual disabilities.
There has also been a trend toward increased return-to-work efforts and other forms of disability management by employers, which have contributed somewhat to the reduction in costs and benefits.
Another important trend has been a growing awareness by employers that they have substantial control over their own workers' compensation experience. In the late 1980s, a group of us at Michigan State conducted a study  that compared the differences in workers' compensation costs between states to the differences experienced by employers within the same industries, within the same state. We found that the differences among employers within the same state were bigger than the differences among states. We also found that the differences were attributable to factors within the control of the employers: safety, disability management and the corporate culture.
In recent years, there has been an increased interest in safety among many (though not all) employers. In addition, there has been a shift to more realistic approaches to safety. Successful employers are more likely to apply a root cause analysis to a series of injuries, rather than blaming them on workers. Many plants that used to give prizes for not having a lost time injury now have a system that rewards reporting near-misses and identifying hazards.
Return-to-work programs have become extremely common, because of an emphasis on accommodating disabilities that was spurred by the Americans With Disabilities Act. There is still much room for improvement in return-to-work programs. While almost every large company claims to have such a program, some do not sincerely try to accommodate the needs of their injured workers. Others become trapped into giving light duty to injured workers and leaving them in those assignments without attempting to restore them to full duty. Over all, however, most companies are moving in the right direction in this area.
Research has also documented that if there is an open corporate culture and a company generally is a good place to work, people will be less likely to look for reasons to stop working. It is not entirely clear to me whether or not corporate America is making progress.
The realization that employers have substantial control over their own workers' compensation experience has led to a demand by business representatives for knowledge and understanding in this area, as well as a need to recognize those who are qualified professionals in workers' compensation.
This has been difficult because there is no medical society, bar association or other group to which workers' compensation professionals can turn for training or certification, partly as a consequence of the great diversity of practitioners' backgrounds in this area. The workers' compensation process depends on claims adjusters, rehabilitation counselors, safety experts, nurses, doctors, lawyers and many others. Within an employer, the responsibility for workers' compensation might be located in the risk management, legal, benefits or human resources departments. In professional associations, universities and society as whole, there are few places where all parts of workers' compensation come together.
At Michigan State University, we are attempting to help in this area. For some time, we have taught continuing education courses for employers, union officials, insurance people and others. We have now developed a certification program that includes a week of instruction and a written examination. Successful completion of this program will result in recognizing the individual as a Certified Workers' Compensation Professional (CWCP). We hope this program helps employers, insurers, unions and others gain and share knowledge about the best approaches to workplace injuries. To the greatest extent possible, we will try to emphasize the aspects of workers' compensation, such as safety and return-to-work, which, done well, benefit both employers and workers.
At the conclusion of "Compensation for Disabled Workers: Workers' Compensation," Spieler and Burton predict that the trend towards lower benefits and reduced costs will continue for the foreseeable future, and it seems likely that workers' compensation will continue in a more conservative direction.
At the same time, I am optimistic that there is a growing awareness among employers that the best way to deal with these problems is through safety and disability management.
These approaches reduce costs and at the same time, help workers. I believe that they also improve morale and ultimately enhance productivity and quality. Being an optimist, I even hope that these techniques that help workers and reduce costs will lower costs enough that benefits can be restored to some degree.
(1.) "Compensation for Disabled Workers: Workers' Compensation," Emily A. Spieler and John F. Burton Jr., in New Approaches to Disability, edited by Terry F. Thomason, John F. Burton Jr. and Douglas E. Hyatt, Industrial Relations Research Association, Madison, Wis., 1999.
(2.) "The Illusion of Efficiency in Workers' Compensation Reform," Martha T. McCouskey, Rutgers Law Review, Vol. 50, No. 3, Spring 1998, pgs. 657-941.
(3.) "Some Workers Don't File, On Workers' Compensation," December 1997, pages 1-4.
(4.) "Differences in Workers' Compensation Experience Among Michigan Employers," Rochelle V. Habeck, H. Allan Hunt, Michael J. Leahy and Edward M. Welch, Bureau of Workers' Disability Compensation (Lansing, 1988).…