Diagnosing and Curing the Ailing NJ Workers' Compensation System

On the eve the NJ Senate's investigation into New Jersey's workers' compensation system, the question lingers on how to evaluate its health. New Jersey has always had a very large and very dedicated workforce A recent newspaper series by Star-Ledger reporters Dunstan McNichol and John P. Martin revealed that the system is serious flawed and that it is in need of a "complete overhaul."

The State has a history of being a heavily industrialized state with a huge legacy of pollution from asbestos to petrochemical. Dr. Irving J. Selikoff, of Paterson, NJ, began his landmark studies on asbestos workers in New Jersey. In 1911, almost a century ago, NJ adopted an administrative system known as workers' compensation and it was the intent of the Legislature to provide a speedy and cost effective system of delivering statutorily defined benefits to injured workers while passing the costs onto the consumers of products and services.

This will be the first major evaluation of the workers" compensation system in 30 years. The last one resulted in a fraud report from the NJ State Commission of Investigation and subsequent statutory change.

Much has changed from the past. In 1911 modern medicine was unknown and so were the diseases that it now treats. The program"s benefits were meager and the conditions eligible for compensation were few and far between. More Americans have died from occupational disease in the United States of America in the past 40 years than in all wars dating back to 1776. Hearings on S.79 before the Subcomm. of Labor and Human Resources of the Senate Comm. on Labor and Human Resources, 100th Cong. 1st Session, S.Hrg. 100-56, pt. 1, at page 1 (1987). Collateral benefit programs did not exist: major medical insurance, long term disability, social security and pension programs.

We are experiencing a struggling economy today. Former Labor Secretary Robert Reich stated, Fifty years ago, when over a third of the American workforce was unionized and most big industries were oligopolies, it was fairly easy for unionized workers to get higher wages and benefits without putting any individual company at a competitive disadvantage. The higher wages and benefits were merely passed on to consumers in the form of higher prices or came out of profits that would otherwise go to investors. Today, though, most companies are in fierce competition because new technologies combined with globalization have destroyed the old oligopolies and allowed many new entrants.

Today the workers' compensation process is confronted with the complexity of the causal relationship of new diseases to synergistic occupational exposures to complex substances as well as traumatic events. Multiple bureaucratic benefits programs that are not formally connected burden the system with claims and liens. Revenue is limited by fewer manufacturing facilities and it is more costly to provide medical treatment and pharmaceutical protocols that result in miraculous recoveries as well as serious and fatal unfortunate results. Benefits must be paid out longer since the average person has a greater life expectancy, ie 1911, 50 yrs of age and 2007, 78 years of age.

As in medicine, one must look at both subjective complaints and objective findings to guide its evaluation of the workers' compensation system. One can hear the cry's of injured workers "Waiting in Pain," and of the injured workers and the families of those who did not survive the compensation system. Stories of frustration and outrage are reported in the press. Testimony to the NJ Senate will come from the stakeholders who have economic interests in the system and those who are organized representatives of those who are unable to speak any longer. Those voices must be heard and evaluated. It is important to heed to words and wisdom of all and evaluate them in the context of self-motivation.

The compensation system has been portrayed as, 'a dead elephant in the room,' and one that fails to carry out the legislative intent of 1911. Professor Emeritus, John F. Burton, Jr., of Rutgers University of the School of Management and Labor Relations, describes the NJ system as, "It's kind of a sleepy system, that is, not particularly worker-friendly."

Unlike The Constitution, the workers' compensation act deals not in the theoretical and vague general concepts of Democracy. The compensation act is a document, which within its four comers, speaks with certainty, specifics and details.

The program has failed because under the present system the Legislative intent cannot be carried out. One cannot drive a 1911 model car on the NJ Turnpike today. Workers' Compensation should be viewed in that context, and not as a cash cow for any interest parties.

The Act can no longer provide medical treatment in an efficient and effective manner consistent with the legislative intent to provide social remedial benefits through a liberal and summary social insurance program. Medical coverage has become acute in NJ and in other jurisdictions. Almost a majority of workers will soon be uninsured for major medical coverage. NJ should take the initiative, as other states have, to provide for universal health care. NJ should combine workers' compensation medical coverage with a universal employer based medical care program and have a single payer system. A single payer system will be cost effective, efficient and provide more appropriate delivery of medical care.

The workers' compensation system began in 1911 with the noble mission as a social remedial system providing an efficient and certain system of benefits to injured workers. Today, the system struggles to protect employees as the rapidly evolving landscape is demanding increased attention to reconsideration of an IHC system in light of the consequences of the program's costs and the consequences of being uninsured for healthcare benefits. The participants in the current program, including employees and employers , will require a more balanced and certain medical delivery system. The lack of healthcare coverage takes an enormous toll on the uninsured, which results in avoidable deaths each year, poorly managed chronic conditions, undetected or under treated cancer and untried life-saving medical procedures. An Integrated Health Care plan is a potential national shift to reduce costs so that a healthcare safety net can be maintained for workers and their families.

Full-time healthcare would save money. Instead of paying for two insurance plans  one to cover healthcare for injuries and illnesses on the job and another for injuries and illness off the job  businesses would buy one plan. As Roger Thompson, former director of Travelers Insurance Workers' Compensation Strategic Business Unit put it, the present system is like having two trains going down separate tracks and it doesn't make a lot of sense to have all the administrative costs to maintain these separate systems. R. McGarrah, "Full-time Healthcare for America's Working Families [Draft]," AFL-CIO (August 22, 2003).

The workers' compensation system began in 1911 with the noble mission as a social remedial system providing an efficient and certain system of benefits to injured workers. Today, the system struggles to protect employees as the rapidly evolving landscape is demanding increased attention to reconsideration of an IHC system in light of the consequences of the program's costs and the consequences of being uninsured for healthcare benefits. The participants in the current program, including employees and employers , will require a more balanced and certain medical delivery system. The lack of healthcare coverage takes an enormous toll on the uninsured, which results in avoidable deaths each year, poorly managed chronic conditions, undetected or under treated cancer and untried life-saving medical procedures. An Integrated Health Care plan is a potential national shift to reduce costs so that a healthcare safety net can be maintained for workers and their families.

In the short run, adopting such concepts, proposed by Senator Stephen M. Sweeney and Assemblyman Neil M. Cohen, would be a fine initial steps:

-prohibiting the future raiding of revenue on designated workers' compensation funds (CSR-60) should be enacted;
-swifter scheduling and use of continuous trials;
greater permanent, temporary rate and dependency [A-2499], benefits;
-rate increases [A-2498] should be enacted;
a review of judicial appointments as recommenced in the 1974 by the State Commission of Investigation report;
an enhanced in-service judicial training curriculum;

- exclusive jurisdiction of the Division of Workers compensation over medical fee disputes [A-2501];
 -a less burdensome Uninsured Employer Fund system to shift the responsibility to the State to locate and serve responsible parties and in the alternative to carryout the mandate of the Legislature to make payment to uninsured workers and asbestos victims expeditiously and even more swiftly in exigent cases;
-an independent oversight commission [A-2503] should continuously evaluate the status and progress of this system that handles trust funds and benefits valued at over $1.8 Billion dollars per year; and
-Data Match with the Centers for Medicare and Medicad Services to comply quickly with the Medicare Secondary Payer Act which was enacted decades ago.

By evaluating the health of the compensation system thorough an intensive analysis of both the objective findings and subjective complaints, the NJ Senate will have the opportunity to enact modern, creative and innovative solutions that will be able meet the present needs of the workers, the employers and taxpayers of State. The NJ Legislature has the opportunity to craft an up-to-date system that will cure the ailing and antiquated workers' compensation system and embrace today's needs and tomorrow's future and bring the State into a new century.