Dissatisfaction with existing workers compensation programs seems to be the norm these days. Employers are fed up with the costs of the programs, the sense that they provide incentives for employees to make false claims or to exaggerate real claims, and the bureaucratic process for claims resolution, among other issues. Employees are frustrated by the process for pursuing claims and the compensation schedules. As a result, the majority of states are considering changes to their workers compensation programs.
A few states have gone further than merely tinkering at the margins and have allowed employers to opt out of state workers compensation programs entirely. These opt-out programs alter the social compact that has driven workers compensation programs since the early 1900s—that is, that employers will provide employees who experience work-related injuries or illnesses with compensation for medical expenses and lost wages in exchange for protection from lawsuits and pain-and-suffering and punitive damages. Is this new model a more efficient way to compensate employees for work-related injuries and illnesses or is it shifting the burden to address these injuries from employers to employees and the public? A recent investigation by NPR and ProPublica sheds light on these programs and raises these questions.
Workers compensation reform will continue to be a focus for state legislatures. Perhaps opt-out programs should be part of the solution. But before states opt for opt-outs, they should understand what those opt-out programs involve and consider what minimum standards should exist for employer programs and who should be responsible for enforcing those standards.