Today’s post concludes the four-part discussion of the ‘Fedealization of Workers’ Comp’. And we’ll go out not with a bang, but rather a whimper…
There have been a couple of relatively recent developments that appear to have excited some concern that the Feds (e.g. Congress, HHS) are pursuing a plan to insert themselves deeper into work comp.
One occurred in November of last year, as Rep. Lynn Woolsey (D-CA), chairwoman of the Workforce Protections Subcommittee, called a subcommittee hearing on “Developments in State Workers’ Compensation Systems.”
The subcommittee hearing highlighted criticisms of the 2007 Sixth Edition of the AMA Guides to Permanent Impairment and what several witnesses identified as a trend toward shifting costs away from state workers’ compensation systems onto federal medical and disability programs – Social Security Disability Insurance and Medicare – and private health insurance plans. Several folks testified about various aspects of the issue, the hearing concluded, and nothing more has come of this.
I don’t see this one-day hearing before a subcommittee as terribly significant or portentous.
More recently, Sen. Susan Collins, R-Maine, asked the Government Accountability Office to start looking into possible waste, fraud and abuse in federal workers’ compensation benefits.
The federal government pays benefits to about 49,000 federal employees under the Federal Employee Comp Act (FECA).
What got Sen. Collins interested was the news that the U.S. Postal Service was paying workers’ comp to 132 employees who were at least 90 years old — decades after they should have retired. In my admittedly cursory research, I couldn’t find any provision in FECA that ends payment of benefits at a specific age, so this may well be entirely legitimate.
Collins asked GAO to audit FECA and find out how long people stay on the program, how many recipients receive benefits well past retirement age, and how the program compares to state workers comp plans. She also asked GAO to check workers’ comp records against the government’s list of deceased employees and payroll to find anyone who may be “double dipping,” or getting benefits and a paycheck at the same time, or who may still be receiving benefits after death. FECA doesn’t have any caps on how much benefits one can draw, or other cut-off periods, which Collins said makes it especially susceptible to fraud.
I’d suggest that this kind of publicity makes it unlikely anyone would consider the federal system one we should move to.
Finally, the President’s National Commission on the Deficit’s final report mentioned workers comp exactly once, and then only in passing. In a section on medical malpractice reform, the Commission noted that “Among the policies pursued, the following should be included: 1) Modifying the “collateral source” rule to allow outside sources of income collected as a result of an injury (for example workers’ compensation benefits or insurance benefits) to be considered in deciding awards…”
I would draw your attention to the wording, specifically “For example”. I’d suggest this one parenthetical mention of workers comp is not suggestive of any larger agenda.
Conclusion
The various ‘indicators’ that some point to are at best mischaracterizations of separate and very distinct issues – concerns about FECA; single big, one-time problems; coverage for workers employed in extra-state occupations; and/or political maneuvering to help constituents (Libby and Black Lung).
Why there won’t be a major Federal effort to co-opt or insert itself into workers comp:
1. Congress has many, many bigger issues to deal with, and workers comp is most definitely NOT a big issue.
2. There’s no traction for the issue; no political constituency wants a major fix, and folks from both political poles like it just the way it is.
3. Likely determined and motivated opposition from stakeholders
4. No one in Washington wins by reforming/addressing workers comp – and things only happen in DC if someone wins.

This morning we’re back at it. Now that we’ve talked about the political landscape, reviewed the OSHA Act and National Commission and discussed the progress, albeit rather minor, of workers comp in the several states, it’s time to dive into the myriad events that have convinced some that the Feds are just about to land their black helicopters atop your local Workers Comp Commissioner’s Office and take over the whole shebang.
Or, as I will argue, NOT.
Since 1974, there have been a few Federal actions that impact workers comp, and a few more that to some indicate some nefarious plot on the part of the Feds to take over WC.
Title X
Perhaps the best known example was back in the early days of the Clinton administration. Comp was originally part of the Clinton reform package, known as Title Ten, which essentially integrated the delivery – but not the financing – of work comp medical care.
What you may not know (and I didn’t until Bob Laszewski told me) is exactly one (1) person in DC wanted Title Ten. Bill Clinton. No one else, not Ira Magaziner or Jay Rockefeller or Hillary gave two hoots about WC, but the big dog did. Title X was essentially removed by Ted Kennedy by rewriting it in such a way that it had very little impact on WC. And we all know what happened to the Health Security Act…
The Baca bill
In January, 2008 Congressman Joe Baca, Democrat from California, introduced House Resolution to form a National Commission on State Workers Compensation Laws. HR 635 was referred to committee but no further action has been taken. The same bill was also introduced in the 2009 and earlier this year Congress where it died in committee. The 2011 edition, entitled HR 623, has a handful of cosponsors – CONNOLLY CONYERS, FILNER, GRIJALVA, KILDEE, and STARK; it was referred to a sub Committee on March 4, and has not been heard from since… (sub Committees are where bills go to expire for lack of attention)
My sense is the Baca bill has received a lot more attention outside Congressional chambers than it deserves (and yes, I am one of the guilty parties. For some reason, organizations antagonistic to additional Federal involvement in workers comp see this as quite dangerous. Here’s SIIA – HR 623, introduced by Representative Joe Baca (D-CA-43), could open the door to a federalization of workers’ compensation laws.
Highly doubtful. And if it was passed, and a door was thereby ‘opened’, it would lead not to Federalization of comp, but to another door, and another door, and yet another, all of which would have to be successfully unlocked before Congress could move on to the next step in what would be a lengthy, highly contentious, and ultimately, extremely unlikely takeover.
That first door isn’t going to be approached, much less opened, even though it is a pretty innocuous one. Here’s what HR 623 says:
 The proposed bill would establish a 14 member national commission to review all states’ workers’ compensation laws, specifically to determine whether the workers’ compensation laws of each state provide prompt and equitable systems of compensation and appropriate and necessary medical care for work-related injuries. The commission will also study and evaluate whether it should make other recommendations to help ensure prompt and good faith payment of benefits and medical care to injured workers and their families.
Health reform – or the Accountable Care Act
There is no mention of P&C or work comp in President Obama’s platform or policy papers or other bills addressing reform – Senate bills (Finance, HELP) or House Committee reform versions or final bill (HR 3590) or reconciliation bill (HR 4872)
Senator Jay Rockefeller, Democrat from West Virginia, filed an amendment with the Senate Finance Committee designed to merge auto medical insurance, workers compensation and healthcare into the health coverage plan, but that was quickly dismissed.
There was one occupational illness remedy contained within the Act, ‘Libby Care’. Included in the reform bill by Sen Max Baucus (D MT), this provision covers medical care for people exposed to asbestos in Libby, Montana; not just workers, but anyone exposed to asbestos or vermiculite from the mines in and around Libby. Care for victims will be delivered under Medicare, with more flexibility for innovation and supplemental services/treatment
Libby Care is seen by some as a step toward federalizing workers compensation. It isn’t. Far from it. There are 1700 superfund sites, and any future ‘sites’ must be declared a National Public Health Emergency by Secretary of HHS. Libby is the only one with this designation. Moreover, there don’t appear to be any other sites that meet the criteria today and the requirements
Gulf spill
During the height of the clean up of the Gulf of Mexico oil spill, some claimed the Gulf Coast states would be unable to handle the huge influx of expected workers comp claims, thereby opening another door into potential nationalization of comp.
This didn’t happen, for two rather apparent reasons. First, anyone injured while working on the water side of the high tide mark would already be covered by federal law – the Jones Act. Second, there just weren’t that many WC claims due to the on-land part of clean up effort; the heavy hand of OSHA and the mandated precautions taken by the clean-up workers on the beach resulted in few workers comp claims. Of course, it’s possible the shore-side clean-up workers will have future workers comp claims due to the exposure to oil and dispersants.
The point here is the existing Federal regulatory and insurance infrastructure handled this situation rather well. While some may, and undoubtedly will, point to problems, limitations, and anecdotal frustrations, there’s no systemic issue here that would have been avoided by some big new Federal program.
Tomorrow, we’ll conclude this series,.