In Adding Insult To Injury: How Kansas’s $155,000 Cap On Permanent Total Disability Benefits Sets Up Injured Kansas Workers For A Lifetime of Hardship, author Gabrielle Stein effectively explodes the fiction that a workers’ compensation “grand bargain” continues to exist in Kansas. Workers injured in the workplace in the United States because of the conduct of their employers—whether negligent or innocent—are limited to state-based statutory benefit recoveries in lieu of tort damages.
The exchange of benefits for damages is often imagined to be a grand bargain in which workers give up full legal damages in exchange for extremely limited statutory workers’ compensation benefits consisting of indemnity wage benefits and payment for medical expenses. This insulates employers from tort liability and is supposed to also inure to the benefit of employees, whose tort claims might be difficult to establish and might otherwise be subject to an “unholy trinity” of affirmative negligence defenses abrogating a negligence claim: contributory negligence, assumption of the risk, and the fellow-servant rule.
Of course, the unholy trinity would be ineffective to bar negligence claims under current law in all but four American states—which have since the mid-twentieth century moved on from “absolute” defenses to a comparative negligence system—so the conceptual underpinnings of workers’ compensation have been seriously undermined (if not rendered irrational). But Ms. Stein additionally shows that any pretense that the workers’ compensation bargain is at least adequate is silly in Kansas given an indemnity cap of $155,000 for a permanent total disability claim.
Imagine a young worker rendered permanently totally disabled at age eighteen. One need not be unusually proficient in math to realize that $155,000 for fifty years of lost work is a very bad bargain—one which any knowing worker would find unacceptable. The situation is especially repugnant when an obviously negligent employer is practically exonerated for its conduct under such a scheme. In most states, a permanently totally disabled worker is entitled to full workers’ compensation benefits for the rest of her working-age life The permanently disabled young worker in the hypothetical at the beginning of this paragraph would be entitled to indemnity benefits equivalent to roughly the state average weekly wage until age sixty-seven. The startling discrepancy is especially repugnant when an obviously negligent employer is practically exonerated for its conduct under such a scheme. The risk of a race to the bottom is real.
Ms. Stein provides real-world examples of how Kansas workers would be economically destroyed under such a system. She then explains in plain language the concept of a “cost shift.” (Pp. 405-10.) As I similarly and routinely explain in my torts and workers’ compensation classes, someone will pay for the cost of injury. If the injuring industry does not pay the cost, it will be shifted either to the injured worker and her family, or to taxpayers supporting the social security system. In other words, someone is going to pay, and the policy choice of who will pay is often concealed.
The author also shares some rather startling facts about the exceptional profitability of the workers’ compensation insurance industry. (Pp. 410-13.) The article is worth reading for that reason alone. According to the author, “[o]n a national level, National Council for Compensation Insurance (‘NCCI’) insurers raked in an underwriting profit of 14.6 percent in 2019. This percentage means these insurance companies used 85.4 percent of the premiums collected through workers’ compensation insurance policies to pay out claims and incurred expenses and then got to pocket the rest. This is the second-highest underwriting profit for NCCI insurance companies since the 1930s.”
The key point is that “[e]mployers’ workers’ compensation insurers are accumulating high underwriting gains largely because the number of claims being paid out by insurers have dramatically dropped. The dramatic drop is likely due to legislative and regulatory ‘reforms’ that have reduced or, in some cases, denied the compensability of workers’ compensation claims.” (P. 412.)
Ultimately, the article is about legislative supremacy. (P. 414.) May a legislature whittle workers’ compensation down to this extent, effectively exploding both workers’ compensation and tort in one fell swoop? In many states, the answer is “no,” because the state’s constitution limits the extent to which historic rights may be compromised. Kansas—and apparently four other states—renders its state legislature as supreme as old King George in this regard.
The central claim of the article is that the Kansas legislature should intervene on fairness grounds to correct the evisceration of worker injury rights. Yet, because it was the legislature that created the problem in the first place, an additional virtue of the article is that it provokes the reader to realize that a fairness-based legislative solution has not been effective (which for me has prompted more exploration of federal constitutional theories for rectification).
It would be a mistake, however, to assume that workers’ compensation was once “ok” but has been eroded since its golden age by a series of relatively recent predations. The original Kansas workers’ compensation act was hardly friendly to workers. In fact, it was horrible. For a permanently totally disabled worker it provided 50% of the injured worker’s preinjury average weekly wage as an indemnity benefit, compared to two-thirds provided under most modern statutes. Kansas also provided a mere fifty days of medical benefits, compared to the 100% employer-paid medical benefit for the duration of the injury that is provided for in all but a handful of states in present times. (Ch. 218, March 1911.)
All of this austerity existed in the historical era predating social security or the welfare state. The story of workers’ compensation from the perspective of injured workers is: it started out badly (but was better than nothing); it was improved through the 1940s and 1950s, and then went into a period of decline that was so severe it prompted a National Commission on Workmen’s Compensation in the early 1970s. It got a bit better in the late 1970s as the threat of federalization of the system was seriously contemplated; and then again (perhaps predictably) it went into decline.
The waves track thinning union density in the United States almost perfectly—Kansas has only been surfing those waves. But Ms. Stein ably reminds us how easy it is for workers’ compensation—the oldest body of employment law in the United States—to hit rock bottom unless the erosion is resisted.
