CHAPTER 7: Workers' Compensation

The industrial revolution occurred neither suddenly nor at the same time in all parts of the world, but by the mid-ninteenth century it has brought a profound and irreversible change to western society. Life changed forever as the industrial age began about one hundred and fifty years ago and as it has continued in accelerating fashion. The new marvels in transportation, manufacture and personal convenience were, however, accompanied by severe disruption and displacement of the human social fabric and by deleterious effects on public health.

Among these public health effects were a plethora of crushed bodies, torn limbs, blinded eyes and blighted lungs caused by the workingman's exposure to the new and harsh physical, chemical and psychological hazards of the factory. This was a time for quick investment and rapid expansion of industry, the introduction of new manufacturing processes, mechanization and long working hours. Accident and illness prevention measures at the workplace were virtually non-existent with the result that industrial injuries were both frequent and severe.

At the turn of the century, the sole recourse for the disabled worker was the common law principle that holds an employer responsible for the injury or death of a worker caused by the employer's negligence. In order to benefit from common law, the worker had to bring suit against the employer and, if the suit were to succeed, the worker had to prove that the employer had been negligent and caused the injury. This was predictably long, difficult and expensive. Few workers could afford to undertake legal action on their low wages and they were also confounded by legal delays and the employers' use of defenses such as contributory negligence by the victims, the assumption of risk by workers accepting a job and negligence by fellow workers. Judges tended to take the side of the employer when an industry was vital to the prosperity of a community. The only practical alternative for the disabled worker who had a family to support was to take to begging on the streets.

This state of affairs brought forth the recognition by a few social pioneers that workers who were injured at their job needed a more effective and efficient system of compensation in order to give them a chance to survive. This recognition took practical form in 1884 when the first version of what developed into today's workers' compensation system was introduced in Germany.

In the first ten years of the 20th century, special employer liability laws were adopted by many states, but not until 1911 did the first workers' compensation law come into being on the North American continent. Canadian laws followed this initial U.S. venture four years later. A profound change had occurred, for not only did the injured worker not have to prove that the employer had been negligent, but the worker was now spared the cost and time of the common law trial.

Today, there are over seventy legislated workers' compensation programs in North America. They are found in all fifty states and the District of Columbia and the ten Canadian provinces plus the territories and areas under federal jurisdiction in both countries. European, British Commonwealth and the majority of industrialized nations also have workers' compensation systems, some of startingly unique design and properties.

This chapter is intended as a review of the principles and main characteristics of the North American workers' compensation programs to serve as an aid to the occupational physician who must deal with the problems of the injured worker and coincidentally act as an advisor to employers.

The Principles of Workers' Compensation Law

Workers' compensation was founded on the basis of providing a compulsory "no-fault" form of insurance for workers injured in the course of employment. It included a requirement that employers as a group pay all premiums and compensation as a cost of doing business and workers surrender their access to the courts to bring suit against the employer for negligence. In summary, the essentials of workers' compensation law are:

  1. Workers are automatically compensated for injuries or illness sustained at work regardless of fault,
  2. Employers pay the insurance and compensation costs on a pooled basis, and
  3. Workers are obliged to participate and automatically surrender their right to take legal action against their employer for negligent acts.

In forgoing their right of access to the courts, workers were expected to receive prompt income and medical benefits for work-related injury, and to rid themselves of the problems of court delays, legal costs, the necessity to prove negligence and the uncertainty of outcome. Employers, on the other hand, would no longer face the possibility of being assessed high settlement or restitution costs, since these costs were to be pooled and assessed outside of the personal injury litigation system. In addition, the public good would be served by relieving government and charitable organizations of the cost of supporting uncompensated disabled workers, and employers would be encouraged to minimize the occurrence of workplace accidents and injuries.

The fundamental principles that underlie the many workers' compensation systems and programs have evolved over the years since the concept was first introduced in North America. Because so many independent jurisdictions are involved and because tremendous socio-economic changes that have taken place since 1910, significant variations in virtually all aspects of workers' compensation are found from place to place. It is essential therefore that physicians and occupational health administrators have a clear understanding of the workers' compensation law, regulations and current system of operation in the particular jurisdiction in which they function.

Workers' Compensation Law

In several U.S. states, employers have the right either to accept or to reject the state workers' compensation system. However, in opting out of the system, employers are prohibited from using the defenses of contributory negligence, assumption of risk and negligence of fellow workers in defending themselves against worker suits for injury. By far the vast majority of states and all of the Canadian provinces require employers to accept the law on workers' compensation and to provide the cost of compensation.

Most states require employers to obtain their own insurance. This may be through self-insurance or through commerical insurance firms on a private or employer group basis, depending on the state law. Self-insurance is permitted in most jurisdictions, but is primarily of use to large corporations who have sufficient financial resources and the legal and medical staff to manage it sucessfully. Such companies have the advantage of being able to deduct the amounts paid out in compensation as business expenses for tax purposes. In Canada, self-insurance by companies is not permitted.

In addition to the individual state workers' compensation laws, the U.S. Federal Compensation Act (FECA) exists to govern the compensation for must federal employees. The Federal Employers Liability Act, Veterans Benefits Administration, the Black Lung Act, the Social Security Administration Disability Insurance Program, and the Longshore and Harbor Workers Act provide varying types of compensation for injured workers, although they are not primarily workers' compensation legislation. In Canada, the Government Employee's Compensation Act, administered by Labour Canada, covers federal workers.

Workers' compensation is administered by a commission or board and/or the courts in the U.S. All workers' compensation in Canada is administered through workers' compensation boards. These organizations are responsible for supervising and insuring compliance with the compensation act and regulations, the investigation of worker claims, supervision of medical care and rehabilitation of workers, management of all premiums, administrative and compensation funds, and the collection and analysis of occupational injury and illness data.

Worker Coverage

Although the concept of workers' compensation could be made applicable to all workers, there is no jurisdiction in which all workers receive automatic coverage. Most workers' compensation legislation specifically excludes coverage of certain types of work, most commonly agricultural employment, domestic help and casual labor. Other exclusions vary, but workers are usually allowed to self-enroll on a voluntary basis. U.S. coverage includes about 90% of all wage and salaried employees.

The Canadian provinces and some states permit individual employers to be covered, but others exclude employers who have less than a stated minimum number of employees.

All jurisdictions provide workers' compensation coverage for working minors. Some pay special benefits in case of injury to minors and have stiff penalties applied to employers whose young workers suffer work-related injury.

Compensable Injuries and Illnesses

For many years after its introduction, workers' compensation was preoccupied with claims for physical injury. The early factories of the new industrial age were minefields for the unwary, with unguarded gear wheels, shafts, belts, blades and exposed electrical wiring in great abundance. Burns, fractures, amputations and crush injuries were extremely common and clear to all. On the other hand, occupational illnesses tended to develop slowly over many years with cause and effect being less clear. Only gradually did the majority of occupational diseases receive recognition by workers' compensation authorities. Even today, acceptance of some occupational disorders is confined to only a fraction of jurisdictions. The long latency of some diseases, the relative significance of a particular disease to the local economy and the availability of trained occupational physicians, all affect the acceptance of an industrial disease by compensation authorities.

Disorders labelled as "ordinary diseases of life", those which are not peculiar to the workers' own occupation, are not recognized for compensation. Examples of the former are diabetes, sinusitis, and rheumatoid arthritis. However, some diseases that have until recently been considered as ordinary diseases of life, notably coronary artery disease and mental illness thought to be associated with stress, are being accepted for compensation in some jurisdictions when workplace circumstances warrant.

Recognition and acceptance of an injury or illness by the workers' compensation authority as being affected by or caused by the working environment is the first hurdle that faces the claimant. The claim for compensation must be made within the legislated time limit. These time limits vary enormously in U.S. jurisdictions, from a low of 60 days after injury to five years after the last workplace exposure to the hazard. In some cases there is no limit for specified diseases and at least one state will make the time limit excusable in certain circumstances. Canadian workers' compensation authorities set a claim time limit which varies from six months after injury or death to five years after the last employment. One province will excuse the limit in special circumstances.

Funding of Workers' Compensation

As previously noted, one of the original principles of workers' compensation was that the employers should pay the entire cost of the service. This principle is still followed, albeit with modifications, in today's organizations.

In the U.S., workers' compensation premium rates are set on the basis of each industry's injury/illness experience. Experience data are compiled annually by the National Council on Compensation Insurance, each state then sets the specific experience rates for the employers operating within its border. Canadian rates are set annually by each provincial workers' compensation board by class of risk for each industry at a rate to meet expected payments for injuries and illness occurring during the year. In both countries the basic annual cost to a company is calculated by multiplying the assessable rate by 1/100th of the company's payroll. Some jurisdictions apply additional rate factors that relate to the industry's or company's accident record in the preceding year or set number of years, or to the actual compensation costs incurred by injured workers and employed by the company.

Occasionally, workers who sustain an occupational injury or illness while employed move to another state before initiating a claim. Although most workers' compensation laws are extra-territorial (claims can be made in one jurisdiction for disabilities sustained in another), the administration of such cases depends on the specific circumstances, including the place of employment, the workers' principal residence and the employer's place of business.

Compensation Benefits

Workers' compensation was originally intended to provide for the injured worker's loss of earnings and medical treatment. Following the two world wars, rehabilitation medicine took on new importance and the techniques of the specialty became increasingly effective. To the medical aspects of physical rehabilitation were added the newly developed fields of social, vocational and mental rehabilitation. These were included as part of the workers' compensation benefit packages so that today worker benefits take three basic forms: cash for disability, medical care and rehabilitation.

Cash Benefits

Four types of case benefits can be awarded, the choice beind dependent upon the particular types of disability that the worker claimant has. Disability may be temporary or permanent in nature. For example, a simple fracture will almost invariably be a temporary disability; by contrast, an amputation would be permanent. The temporary and the permanent disability would each be either partial or total in extent. Two examples that illustrate this could be severe lung damage resulting in total disability, the worker being unable to do work of any kind; and loss of vision in one eye which would be a partial disability.

The distinction of an injury as temporary or permanent is based on the question of the possibility of complete recovery on a medical or physiological basis. Whether a disability is partial or total is a matter of the residual functional ability of the individual in relation to the workers' ability to perform marketable work.

In summary, the four types of disability under the workers' compensation classification are:

  1. Temporary total. The disability is total, but recovery is expected.
  2. Permanent total. The worker will remain unable to undertake gainful employment.
  3. Temporary partial. The disability is only for one or several functions and recovery is expected.
  4. Permanent partial. There is a permanent loss of one or several functions. Work is possible, but the workplace may need to be modified or a new line of work undertaken.

There is a parallel between this classification and that used by occupational physicians in summarizing individual fitness-to-work assessments (chapter 12). Each serves a similar purpose: communication in summary form of an individual's ability to perform work.

The amount of cash benefit payable to a worker is usually based on a percentage of the prior normal weekly wage. All states and the Canadian provinces have both a maximum and minimum limit on the weekly benefit. Some states also place a ceiling on the number of weeks or the total amount of cash benefit or both, but no Canadian province limits the total amount payable. Benefit time limitations in Canada are the actual duration of a temporary total disability and life for permanent total disabilities.

Adjustments may be made to cash benefits when they are paid to dependent survivors or when cost of living changes occur. Almost all states provide an automatic annual adjustment of maxiumum benefits which is based on the state average weekly wage. Adjustments may also be made if a worker has violated safety regulations, but these are not universal.

Cash benefits for partial disabilities may be made according to a fixed schedule or may be based on a percentage of wage loss or of total disability. A fixed schedule system presumes loss of wages. Most states pay a cash benefit in addition to the scheduled amount. Fixed schedules are not used in Canada, each case receiving individual assessment using medical impairment ratings as guideline.

Benefits which may accrue to the survivors of a deceased worker include burial allowances and a percentage of the worker's wage. The latter is usually paid to a surviving spouse until remarriage and to children until they reach a specified age.

The post-injury period until cash benefits begin varies in each state from one to seven days. Most compensation agencies provide a retroactive adjustment to the actual date of injury if the disability continues beyond a certain threshold period.

In North America, medical and hospital benefits are almost unlimited. All jurisdictions provide prostheses. Canada's universal medical insurance system is administered by each province. Although the medical resources utilized in this medical care system are available to and are used by workers' compensation claimants, the provincial public health insurance and the workers' compensation system are regulated, funded and administered separately.

Workers have a basic right to refuse any recommended medical care or procedures. However, workers' compensation authorities take the view that a worker who is uncooperative in his medical or rehabilitative care risks cancellation of his benefits.


As previously stated, the rehabilitation aspect of workers' compensation has become an increasingly import part of the compensation benefit package. The result is that in many jurisdictions workers' compensation is an innovative leader in rehabilitation, for it is in the interest of both the system and the worker to achieve the greatest possible degree of recovery in the shortest possible time.

Rehabilitation has been defined as the process of assisting an individual disabled from any cause to achieve a maintainable maximum level of functional independence in relation to self, family, home and community. Although workers' compensation is concerned with the rehabilitation of workers disabled from occupationally related injury or illness, the definition remains applicable.

If the objective of rehabilitation is to get the disabled worker back to meaningful work as soon as possible, then two requirements must be met. First, the rehabilitation process must begin as early as possible. Second, the process must be sustained until the worker has reached a level of recovery at which he has functional independence. This implies that a link, however tenuous, should be maintained between the newly disabled worker and his place of work beginning as soon as possible after injury. It may be necessary for the employer to prepare the workplace for the worker's eventual return by installing functional aids to assist and maintain his or her efficiency and safety at work or by finding an alternative position. Such supportive measures must not be planned in isolation, but should be discussed with the disabled worker and the health care providers. In many jurisdictions, funding is available to employers from workers' compensation or other agencies for worksite modifications to assist the disabled.

Traumatic injury imposes a psychological burden on the individual which may be more troublesome and longer lasting than the actual physical damage. A post-trauma syndrome has been recognized in which the worker is depressed, anxious, fearful and suffers severe sleep disturbances. Depending on the individual's view of the injury, this condition may quickly be overcome or may persist for a long time, sometimes for the remainder of life. It is capable of changing a worker's personality, so that a previously well-adjusted and affable person becomes withdrawn, irritable, suspicious and disinterested in former pursuits. By all objective measures, the original physical damage may have been repaired and full functional ability restored, but the worker may continue to insist that it has not, that he or she still is unable to function as before. Even when the individual appears to accept having been restored to full function, he or she may become hypochondriacal and complain of a number of unrelated health problems which never seem to resolve. Sometimes the workers' frustrations may concentrate on the rehabilitation agency and its personnel so that he or she becomes persistently dissatisfied with their services.

These psychological problems inevitably have a deleterious effect on the individual's attitude toward work and toward family and friends. These important providers of psychological support often have difficulty inadjusting to the disabled worker and his or her changed attitudes, but their reaction is important to the workers' recovery.

Clearly, the rehabilitative process in work-related disability is far more complex than simply repairing a fracture or teaching a worker to walk with aid of a cane or artificial limb. The World Health Organization's definition of the three main areas of rehabilitation includes:

  1. Medical Rehabilitation
    The process of medical care aims at developing the functional and psychological activities of the individual and, if necessary, his or her compensatory mechanisms, so as to enable him or her to attain self dependence and lead an active life.

  2. Social Rehabilitation
    That part of the rehabilitation process aimed at the integration or reintegration of a disabled person into society by helping him adjust to the demands of family, community and occupation, while reducing any economic and social burdens that may impede the total rehabilitation process.

  3. Vocational Rehabilitation
    The provision of those vocational services, including vocational guidance, vocational training and selective placement, designed to enable a disabled person to secure and retain suitable employment.

The World Health Organization's approach is global. At the state or local level these components of rehabilitation tend to fragment into responsibilities of separate agencies. It is therefore not possible to describe those rehabilitative services which a typical workers' compensation organization provides because there is no "typical" pattern. Some, as is the case for most Canadian workers' compensation organizations, have their own rehabilitation centers with a variable mix of medically oriented programs (physiotherapy, prosthetics, remedial and recreational therapy, work assessment, etc.) and vocationally oriented programs (vocational rehabilitation, psychological services, drug and alcohol abuse counselling, occupational therapy, etc.). Other jurisdictions contract out for some or all of these services.

The Claim - Compensation Process

The procedure by which a workers' claim becomes a benefit package differs with each organization, but all follow the same basic steps. The worker or a representative submits a claim the validity of which is investigated. Should the claim be considered valid, the worker's residual disability is assessed and a decision is made as to the compensation entitlement. Should the claim be declared invalid or if the amount or type of compensation awarded is felt by the worker to be inappropriate, he or she may follow an appeal procedure.

The Claim

Although a worker may be assisted or guided by others, such as a physician, it is the worker's responsibility fundamentally to initiate a claim for compensation. In most jurisdictions, the employer is required by law to report any workplace health-related incident that results in a worker or workers having to leave work for a specified length of time (often a minimum of one to three days) or accidents which result in any of a listed category of injuries. OSHA has uniform requirements for all business to report injuries. Penalties for employers who fail to fulfil their obligation to report vary from five to one thousand dollars or, in a few states, one hundred dollars a day and imprisonment for up to one year. Physicians are also required by law in all jurisdictions to report all suspected occupational injuries and illnesses.

Standard forms are commonly used in each jurisdiction for the initial claim. The mandatory form for physicians used in California is reproduced in Figure 7.1. This provides the claims office with the basic information on which to base their follow-up and assessment. These forms frequently include input from the employer on the facts of the incident and may also include a statement from the treating physician. However, lacking such forms a worker or the worker's next-of-kin can still initiate a claim by means of a personal letter or by personal appearance at a claims office.

It may be a legal requirement for an employer to keep a record of all accidents as they occur at the worksite and it is a wise employer who is diligent in doing so. Injured workers or their survivors may, for a number of reasons, delay submission of a claim and it can be difficult for either the worker or the employer to recall with any degree of accuracy what took place at the time of the accident.

There are, however, time limits within which a worker must file a claim. There are also time limits in which the worker must notify the employer that he or she has suffered an injury or illness. In the U.S. the time limit for making the employer aware varies from immediately to one year. In some states and in Canada there is no limitation. Workers must file their claim within 60 days after injury in some states, but up to eight years after injury in others. In some states filing may be up to 25 years after the workers' last exposure to ionizing radiation. In Canada, time limits for filing are also variable but to lesser degree, ranging from six months to three years post-injury or death.

Medical treatment and various forms of rehabilitation are often underway well before a claim has been submitted. Provided that the worker has alternative means of financing this initial care, the delay in workers' compensation benefits because of late filing or the agency's continuing investigation of the validity of the claim may not be significant. However, for many injured workers, early reception of cash benefits is essential and, for this reason, prompt filing and efficient investigation procedures are vital.

        *                                         *
        *    Figure 7.1        NOT  READY  YET    *
        *                                         *

Figure 7.1 Doctor's First Report of Occupational Injury or Illness, form as used in California.

Once the claims department is satisfied that a legal basis exists for compensation, the treatment and rehabilitation process can be continuously funded according to the prescribed benefit schedule. For a longterm disability, periodic reports on progress will be required from the professionals involved.


The assessment of a claim for compensation requires the answer to two questions: can the injury or illness be said to be caused or aggravated by workplace events, and do the facts fulfill the requirements of workers' compensation law? The first question is, in large part, medical; the second is strictly legal.

Decisions concerning an injury's relationship to the worksite are based on a physician's report that an injury of a certain type has been treated and that recovery requires the worker to be off work for a certain period of time. This is supported by the employer's confirmation that an accident or toxic exposure affecting the worker occurred at the workplace on the date specified. The agency's experience over time enables the acceptance of simple temporary disability claims without further investigation.

For some claims of temporary disability and for all claims of permanent disability, the question is far more complex. The compensation authorities must be satisfied that a claimed permanent disability is indeed permanent. Total lifetime benefits in such cases commonly amount to thousands of dollars. Therefore, cases of severe disabling trauma (traumatic amputations, paralysis from falls, serious burns, etc.) are always thoroughly investigated and a great deal of medical advice is required on a continuing basis.

Increasingly, the adjudication process has involved ever greater participation by physicians as the recognition of complex occupational diseases has escalated. Many of these diseases, such as the pneumoconioses and heavy metal toxicities, have been recognized for some time as causing compensable disabilities. There are now a vast number of occupational disorders that are Newly recognized as occurring as a result of worker exposure to some of the many thousands of hazardous substances and processes involved in the manufacture of modern goods. Detection of these disorders not infrequently follows years of latency, making attribution to a specific workplace extremely difficult. This problem is compounded in a great many instances by the scarcity of available scientific evidence linking substance exposure with effect. Where this background evidence is weak, the compensation adjudicator naturally has difficulty in accepting the workplace as the cause of the disability and the claimant can become frustrated in his claim.

Disability Assessment

An injured worker who, despite treatment and rehabilitation, remains with a permanent disability, is assessed for the degree of his disability. The assessment is based on his clinical impairment and on the consequent loss to his earning capability (potential wage loss). Full functional disability, which is normally a disability which precludes the ability to undertake work for which remuneration is paid, is assessed as 100% disability. Lesser degrees of disability are given correspondingly lower degrees (i.e., below 100%).

Guides have been published for the clinical assessment of impairment, each jurisdiction using one or the other as its own reference. Some of the more commonly accepted are:

  1. The AMA Guide to the Evaluation of Permament Impairment, 2nd edition, 1984.
  2. Disability Evaluation and Principles of Treatment of Compensable Injuries, McBride, E.D.
  3. Evaluating Orthopedic Disability, Miller, T.R., Medical Economics Books, Oradell, N.J., 1979.
  4. Manual for Orthopedic Surgeons in Evaluating Permanent Physical Impairment, American Academy of Orthopedic Surgeons, Chicago, 1960.
  5. Injury Ratings: How to Figure Dollar Values in the U.S.A., Rattner, I.N., Crescent, N.Y., 1970.

Standard terminology used to describe levels of impairment are given in Table 7.1. The terms should always be used in making reports to worker's compensation boards, since their meaning is well-defined and understood. The terms can be used for musculoskeletal, pulmonary, cardiac, and other disorders, including sugjective complaints. Subjective complaints should always be clarified by a specific description of the actions or movements that precipitates the pain or discomfort, its duration, activities that can and cannot be performed because of it, and the means taken for relief or treatment.

Table 7.1. Standard terminology used to describe levels of impairment in making reports to workers' compensation boards, as defined by the California Workers' Compensation Institute.

  • Levels of Impairment
    1. "Disability precluding very heavy lifting" suggests that the employee has lost approximately one-quarter of his pre-injury lifting capacity. A statement such as "unable to lift 50 pounds" is not meaningful. The total lifting effort - including weight, distance, endurance, frequency, body position and similar factors - should be considered.
    2. "Disability precluding very heavy work" suggests that the employee has lost approximately one-quarter of his pre-injury capacity for performing such activities as bending, pulling, climbing or other activities involving comparable physical effort.
    3. "Disability precluding heavy lifting" suggests that the employee has lost approximately half of his pre-injury lifting capacity.
    4. "Disability precluding heavy lifting, repeated bending and stooping" suggests that the employee has lost approximately half of his pre-injury capacity for lifting, bending and stooping.
    5. "Disability precluding heavy work" suggests that the employee has lost approximately half of his pre-injury capacity for bending, stooping, lifting, pushing, pulling and climbing or other activities involving comparable physical effort.
    6. "Disability resulting in limitation to light work" suggests that the employee can do work in a standing or walking position with a minimum of demand for physical effort.
    7. "Disability resulting in limitation to semi-sedentary work" suggests that the employee can do work approximately one-half the time in a sitting position and approximately one-half the time in a standing or walking position with a minimum of demand for physical effort, whether standing, walking or sitting.
    8. "Disability resulting in limitation to sedentary work" suggests that the employee can do work predominately in a sitting position at a bench, desk or table with a minimum of demand for physical effort and with some degree of walking and standing permitted.

  • Description of Pain
    1. "Minimal pain" constitutes an annoyance but causes no handicap in the performance of the particular employment activity.
    2. "Slight pain" can be tolerated but would cause some handicap in the performance of the employment activity precipitating the pain.
    3. "Moderate pain" can be tolerated but would cause marked handicap in the performance of the employment activity precipitating pain.
    4. "Severe pain" would preclude the employment activity precipitating pain.

    There are situations where an impairment has existed prior to the injury for which the worker claims compensation. The additional trauma not infrequently results in disability greater than the new injury would have produced had there been no previous impairment. In such situations, some states have the employer pay an amount equivalent to the benefit the worker would have received if the most recent injury had occurred without the presence of any previous impairment. Compensation for the combined injury is then paid to the worker from a so-called "second injury fund". In jurisdictions not having such a system, the employer is usually assessed then for the total disability. This latter arrangement has the unfortunate effect of discouraging employers from hiring disabled workers, a restriction which is detrimental to the rehabilitation process as well as to the disabled individual seeking work. These workers may be protected by the Rehabilitatio Act of 1973 and various state laws, however. Canadian jurisdictions, at least in theory, do not encounter this problem to the same extent as in the U.S. because compensation funds originate from pooled employer premiums and both federal and provincial human rights legislation prohibit employment discrimination on the basis of physical disability.


    Disputes about compensation are not infrequent and are becoming increasingly common. Dissatisfaction occurs for many reasons, but the situations most commonly encountered involve workers and employers who disagree with the compensation authority's decision on the injury-workplace relationship, workers who disagree with the assessed degree of disability or with the size of the cash benefit.

    Workers' compensation legislation invariably provides a mechanism for appeals by the worker and the employer. In the U.S. appeals are made by the plaintiff to a court. The specific court varies with the state jurisdiction. Compensation appeals in some states may only be made on the basis of compensation law, not on the medical facts of the case. Other states permit appeals on both grounds. The ultimate decision on cases most often is made by a judge or panel of judges. Only a few states permit juries to adjudicate appeals of this nature.

    In Canada, most appeals are dealt with by the provincial workers' compensation board's claim review panel or committee. Legal and medical aspects both are reviewed. The presence of legal assistants at the appeal depends on the provincial regulation as does the worker's access to his compensation file. Although the appeal hearings may be quite formal, there is understandably concern by workers and labor unions that the organization which assessed the allowable compensation in the first instance should not be judging the appeal.

    The Physician's Role

    The physician's role in the compensation process depends on whether one is situated inside or outside of the workers' compensation organization. If one is outside of the organization one will be involved in the medical treatment and rehabilitation of the injured worker and will also fulfill some of the regulatory requirements of the compensation system including the filing of required medical reports on the worker's condition. Physicians who are a part of the workers' compensation organization are usually involved in some aspect of claimant referral for examination or treatment and medical adjudication of disability.

    Most jurisdictions allow the worker-claimant to choose his or her own physician for medical care or assessment, but this freedom may be limited if the agency has questions or doubts about the accuracy of diagnosis or appropriateness of treatment. It is not uncommon for the insuring agency to have a staff of medical consultants who perform clinical examinations of claimants and to provide various aspects of rehabilitative treatment.

    Physicians, although certainly not responsible for awarding compensation, play a critical role in establishing diagnosis, assessing prognosis for recovery or for permanent or temporary disability, providing treatment and some aspects of rehabilitation and, in many instances, determining the degree of impairment. When providing medical care the physician will, in most instances, be required to submit progress reports on a continuing basis. These reports are used by the compensation authority to determine if benefits continue to be warranted. They are therefore of great importance to the injured worker.

    Most jurisdictions request the physician's opinion on the extent of clinical impairment. A description of the physical limitations which the worker has been found to have is normally required. Determination of the degree of disability is left to the adjudicator within the compensation authority, who bases the figure on the description of limitation provided by the treating physician or an assessing specialist to whom he or she has referred the claimant. The question of compensability and the amount of compensation must be left to the decision of the workers' compensation authority or to the courts. It is therefore vital that the physician be guided by objective clinical findings and not by the worker's subjective complaints.

    Current Problems and Future Possibilities

    Like all human institutions, workers' compensation boards suffer from imperfection and face many problems. Some of the problems are a product of the tendency for scientific knowledge to outstrip the human ability to match it with appropriate social change. Other problems are due to change within the social and economic structure. Some of these problems have caused workers and employers to question seriously the philosophic basis of the workers' compensation system.

    In a century or so of existence the system has been successful in providing varying degrees of compensation to many thousands of injured workers and their next-of-kin. These workers and families have been spared the inconsistencies, delays and costs of relying on the regular court system. Employers have also benefited through the avoidance of bankruptcy due to imposed legal costs for negligence and personal damages plus sky-high insurance rates. Yet, despite these not inconsiderable accomplishments, workers' compensation organizations are facing the need for serious self-examination and possibly revolutionary change.

    The signs of problems are diverse and serious. Worker antagonism centers on the system's perceived unfairness, the observation that assigning compensation costs to employers on a pooled basis has not noticeably reduced work-related injuries or illness overall, treatment and rehabilitation delays due to oversubscription of available facilities, and coverage that is still not universal and is denied many workers at very high risk of injury in agriculture. The system has not kept pace with early recognition of occupational disease, technical advances in disability management or the conditions of a changing economic climate.

    One question increasingly being asked by critics is whether employers should enjoy absolute protection from suits for negligent acts which cause injury or illness to workers. Whereas liability law has evolved and progressed over the decades since workers' compensation law was first drafted, the latter has remained essentially unchanged. Liability law is now much more highly developed and has a vastly wider case law base than it had in the 19th century. Workers' compensation cases, shielded as many of them are from plea courts, have not developed to nearly the same extent.

    It is not surprising that workers in some jurisdictions recently have been bringing suit in increasing numbers against their employers, in defiance of workers' compensation legislation. Some suits have been brought because of problems previously mentioned, but others have been entered as a result of a search for justice, a belief that the negligent employer deserves punishment, and a desire to force the employer to take steps to protect other workers from the same disability. In Vermont and in two Canadian provinces (Newfoundland and Alberta) these suits have been allowed to proceed by high court decisions calling into question the conflict between the citizen's right to due legal process and the provisions of workers' compensation law and judging access to the courts as the higher good.

    U.S. case law has allowed children to sue the employer of their injured fathers for damages resulting in "loss of companionship and society", has allowed workers to sue their employer for damages due to fraudulent concealment of hazardous exposure, and has ruled that the portion of incapacity caused by any non-occupational factor is not compensable.

    In Canada, the Supreme Court of Newfoundland, ruled in a 1986 case that the province's Workers' Compensation Act violates section 15 of the Federal Charter of Rights and Freedoms when it prohibits injured workers from suing employers for negligence. Instead, the court recommended a system similar to that in the United Kingdom in which the right to tort action is retained in addition to normal no-fault compensation benefits.

    Organized labor is understandably apprehensive about such change. In addition to their reluctance to abandon the right to relatively rapid and relatively hassle-free litigation pathway in workers' compensation in favor of the more questionable and uncertain benefits of access to the slow and expensive tort system, it also fears the effect on worker unity which could result from workers suing fellow workers for negligence and the likely repercussion of employers suing workers for contributory negligence.

    The Newfoundland Supreme Court decision is being appealed to the Supreme Court of Canada at the time of writing, but one serious problem of having a combined no-fault compensation system and tort liability system is that employers will somehow have to fund both. This portends a dramatic increase in the costs required to operate a business and a corresponding increase in the bankrupty rate--particularly for small employers. On the other hand, injury and illness prevention measures in industry would undoubtedly be taken much more seriously than ever before.

    Injury and illness prevention is obviously a vital factor in keeping compensation and premium costs down. They are therefore of corresponding benefit to employer and worker. Yet, prevention has received scant attention by many workers' compensation organizations. One example is found in data collection. Illness and injury data has been routinely amassed by workers' compensation for decades. Its true value lies in its usefulness for planning approaches to prevention. By identifying industries with a high prevalence or incidence of accidental injury or occupational disease, it becomes possible to concentrate preventive actions where they are likely to do the most good. Use of workers' compensation data in this way is a relatively recent endeavour for many jurisdictions. Until recently the data was used until recently almost exclusively for the purpose of assigning industry-wide assessment rates.

    It is true that some workers' compensation organizations provide preventive services to workers and employers, including such benefits as publicizing safe and healthy work practices, provision of safety engineering counselling and occupational hygiene assessments of workplace hazards. These are sometimes coupled in the same agency with regulatory authority. However, in most jurisdictions the workers' compensation system remains primarily an insurance service, with occupational health and safety regulatory authority being the responsibility of a completely separate governmental agency.

    In times of general economic difficulty, there is inevitable resistance by employers and politicians toward increasing assessment rates for workers' compensation. Unfortunately, poor economic conditions do not necessarily coincide with lowered compensation costs. Employers have therefore tended to demand cutbacks in compensation benefits while organized labor has, at the same time, called for increased employer assessments.

    There is no question that many workers' compensation organizations are under severe financial pressure. The virtues of preventive measures at the workplace have already been cited in this regard. Another possible approach to controlling financial cost is to encourage employers to keep injuries down by rewarding those with good safety records. So-called "experience rating" schemes modify an employer's assessment on the basis of company's record of injuries or claims. A low average injury cost record thus results in a lower assessment; a record of high injury costs results in a raised assessment. Although the intent is to reward safe and health operations, it is not completely effective. It also violates the collective liability principle on which the workers' compensation system has been based. Courts may see this as a precedent toward departure from the system's fundamentals, thus encouraging the acceptance of worker tort actions.

    Despite attempts by workers' compensation organizations to provide the most appropriate benefits to each injured worker, they are inevitably constrained by financial limitations. It is generally recognized that in North America, workers with industrial diseases are, on average, financially undercompensated. In addition, many occupational disorders are not recognized by some workers' compensation authorities until the disorder causes overt disability. Thus, a symptomless worker found on routine examination to have very early x-ray signs of silicosis and who is then medically advised to cease further exposure to rock dust, is unlikely to receive compensation even for job retraining because a worker without symptoms or functional impairment is not considered to be physically disabled. Nevertheless, it is clear that some hazardous substances may be absorbed by the body, produce no overt ill effects at low doses, and yet become deadly through gradual accumulation. Lead, mercury and ionizing radiation are examples of such hazards. The problem in such cases is the vague borderline between the low-dose physiological effects (which warrant exposure cessation) and the clinically and functionally overt disease which requires treatment. Treatment may well be least effective at that point. Should compensation in some form such as vocational retraining be provided earlier?

    There is also the problem of workers' compensation and so-called "lifestyle disorders" such as myocardial ischemia or infarction, hypertension, psychological stress disorders, pulmonary disease associated with secondhand cigarette smoke exposure, etc. To the extent that a work-related factor is involved, should workers with these disorders receive disability compensation? It is a moot question, but public pressure appears to be in favor and some workers' compensation agencies have been known to award compensation for lifestyle disorders such as these.

    The trend in cash benefits is to compensate on the basis of the actual wage loss for permanent disability rather than to use the physical impairment approach or projected loss of earnings. However, in some jurisdictions a hybrid blend of actual wage loss and projected wage loss is awarded. Whatever system is used, equitable compensation must be provided, otherwise injured workers will increasingly abandon the present system to pursue equitability in the courts.

    In recent years, numerous jurisdictional reviews have been held in the U.S. and Canada in an attempt to improve the system. Some authorities have introduced legislation to protect disabled workers from unjust dismissal and others have begun taking steps toward developing systems which combine workers, employers and rehabilitation specialists in teams to plan the job placement of disabiled workers.

    A 1972 evaluation by the U.S. National Commission on State Workmens' Compensation Laws concluded that state compensation laws were not as good as they should be and made 84 recommendations for improvement. Four years later the Inter-Agency Workers' Compensation Task Force, whose members come from various U.S. Government departments and agencies, found that existing workers' compensation programs needed to be reformed at the state level with the federal government providing monitoring of progress plus technical assistance. Both the state commission and the federal task force rejected proposals to replace the state workers' compensation programs by a single federal program.

    Large gaps in worker coverage still exist in North America, but it is conceivable that workers' compensation may eventually include all workers. Some see workers' compensation as part of a future universal medical care system for all citizens, whereas others perceive the future compensation organization as vastly improved, but still separate from any public medicare plan. The possibilities for the future are enormous. Much remains to be done.

    Further Reading

    Analysis of Workers' Compensation Laws. Washington, U.S. Chamber of Commerce, annual.

    Ashford NA, Andrews RA. Workers' compensation (Chapter 82). Environmental and Occupational Medicine, ed. Rom WN. Boston, Little Brown, 1983, pp. 907-912.

    Disability evaluation under Social Security: A Handbook for Physicians. Washington, U.S. Department of Health and Human Services No. (SSA) 05-10089, February 1986.

    International Classification of Impairments, Disabilities, and Handicaps. Geneva, World Health Organization, 1980.

    Kanner RE. Impairment and disability evaluation: An review (Chapter 6). Environmental and Occupational Medicine, ed. Rom WN. Boston, Little Brown, 1983, pp. 43-47.

    Ong JR. Workers' compensation (Chapter 7). Occupational Medicine: Principles and Practical Applications, ed. Zenz C. Chicago, Year Book Medical Publishers, 1975, 83-86.

    Petrie P. Workers' compensation at the crossroads. At the Centre (newsletter of the Canadian Centre for Occupational Health and Safety), March 1987; 10(1):1-3.

    Darling-Hammond L, Kniesner TJ. The Law and Economics of Workers' Compensation. Santa Monica, California, The Rand Corporation, Institute for Civil Justice, 1980.

    Worral JD, Appel D, eds. Workers' Compensation Benefits: Adequacy, Equity, and Efficiency. Ithaca, Cornell University, ILR Press (New York State School of Industrial and Labor Relations), 1985.

    LaDou J, ed. Occupational Health Law: A Guide for Industry. New York, Marcel Dekker, 1981.

    Richman SI. Why Charge? A look at the current system of disability determination and workers compensation for occupational lung disease. Ann Int Med 1982; 97:908-914.