The laws and philosophies that inform the North Carolina workers’ compensation system evolved tremendously over the past century and a half. Innovations in industry, changes in the cultural zeitgeist, and demographic shifts have all played a significant role in moving and shaping the law. To understand the implications of current North Carolina workers’ compensation practices, it’s helpful to take in this historical perspective.

To get that perspective, though, we must dial way back. The concept of insuring workers against damages resulting from injuries and lost wages dates back literally thousands of years. In 3000 B.C, Chinese employers instituted one of the very first recorded systems of workers’ compensation. Around 1750 B.C, Babylonians spontaneously evolved similar kinds of protections for workers. Both the Roman and Greek empires developed elaborate systems as well — not only for workers’ compensation but also for life, health, and even disability insurance.

Flashing forward to more modern times, we can see the genesis of many of North Carolina’s workers’ compensation traditions in the 19th century, when so-called “heavy industry” began to flourish in the United States. Starting in the mid 1800s and continuing through the early 1900s, laborers had only a puny right to compensation (by modern standards). Many historians argue that it wasn’t until the first decade of the 20th century that a legitimate system of worker protection was put in place. This movement was driven by a handful of charismatic labor rights advocates, among whom was none other than President Teddy Roosevelt. At Roosevelt’s behest, in 1908, the U.S adopted the Federal Employers Liability Act, the first federal law designed to protect those who labored in the hazardous environments. The publication of Upton Sinclair’s 1906 best-seller, The Jungle, likely also did much to stir public sentiment about ongoing violations of workers’ right. In The Jungle, Sinclair described in vivid detail the plight of factory workers at meat packing plants. On not infrequent occasions, workers would fall into sausage making vats and becomes sausage themselves!

More Web Resources:

Workers’ Compensation, A Brief History by Lloyd Harger, Division of Workers’ Compensation for state of Florida

The History of Workers’ Compensation Laws, By Christopher Earle, eHow.com

Workers’ Compensation System, Author: Kelly L Allen, MD, Regional Medical Director, IMX-Medical Management Services, EMedicine

1. Waiting too long to go to a doctor.

The longer a claimant waits before seeing a physician about his or her North Carolina workers’ compensation injury, the more dubious his or her claim may be perceived to be. After all, an employer or an insurer can always argue that the injury or impairment occurred after the fact (e.g. when the claimant was not at work) and therefore that the claim should not be allowed. Moreover, delaying treatment can result in exacerbation of the underlying problem. For instance, if you suffer a wrist sprain and fail to treat it, the favoring that results from that injury can lead to secondary “downstream” injuries.

2. Failing to read fine print of your North Carolina workers’ compensation benefits agreement.

Insurance companies are cagey. They can stipulate that claimants meet with rehabilitation specialists, job search consultants, and other intermediaries as a condition of receiving benefits. Claimants may also be required to make themselves available at certain hours, check in with agents, and deal with what can be overwhelming logistical requirements. That’s why it’s so important to vet the fine print. Ideally, this process should fall to an experienced North Carolina workers’ compensation attorney.

3. Speaking with an adjuster or other insurance company representative before speaking with a North Carolina workers’ compensation lawyer.

In the wake of your injury or illness, you may want to “get through” the paperwork as quickly as possible, so you can rest and heal. However, comments made to insurance company representatives can jeopardize your potential settlement. Don’t jump the gun.

4. Playing down an injury or illness.

Good employees don’t like to complain. They want to appear tough, persistent, and diligent in the face of adversity. There is something to this philosophy. But if you’ve been seriously or even mildly injured at work and you fail to attend to it, an array of problems can follow. First of all, mild problems can get worse. For instance, carpal tunnel syndrome or thoracic outlet syndrome can cripple people, notwithstanding mild initial symptoms, such as tingling in the fingertips and soreness in the forearms.

5. Conflating workers’ compensation claims with lawsuits.

A lawsuit and a North Carolina workers’ compensation claim are not the same thing. You can file a claim even if your employer did nothing wrong (i.e. wasn’t negligent, careless, et cetera). The burden of proof required to collect a claim is much lower than the burden of proof you’d need to win a lawsuit.

Web Resources

thoracic outlet syndrome

what is a North Carolina workers’ compensation “claimant”?

It’s no secret that North Carolina workers’ compensation claims have decreased precipitously over the past three years. In 2006, claims dropped 2%. In 2007, claims dropped another 2%. And in 2008, claims dropped a whopping 4.4% — on top of those declines. This rapid drop coupled with sobering projections put out by the North Carolina Rate Bureau has inspired insurance companies to request a 9.6% decrease in North Carolina workers’ compensation premiums. Employers in the state and government overseers of benefits programs alike appear pleased with this request. One survey estimates that in-state businesses could save nearly $120 million if the Department of Insurance allows the decrease. The burden of setting the final rate falls to State Commissioner Wayne Goodwin. A spokesperson for the DOI applauded the request, saying “that’s a good thing for businesses in North Carolina.”

An NC state representative, Sherry Melton, also approved. “There isn’t much bad to say,” said Rep. Melton, about a decrease in North Carolina’s workers’ compensation rates. Notwithstanding, she argued that the system could be further refined to bring “costs and rates down even lower.”

North Carolina employers currently pay out over $1.4 billion annually in premiums, and both workers and employers alike have complained in the past that these excessively high premiums stunt growth and lead to less effective and efficient care for injured workers. The insurance rate request will not impact all employers in the state. State and Federal government employees, for instance, won’t be impacted, nor will about 25% of small and medium sized businesses that self insure.

Charlotte Observer, Workers’ comp rate may fall, September 3, 2009

WRAL, Workers comp insurance rates could drop, September 2, 2009

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North Carolina Rate Bureau

Wayne Goodwin

1. Settling a North Carolina workers’ compensation claim without assessing the true value of that claim.

Even if a claimant has sustained a relatively minor injury, such as soft tissue damage to the pad of the thumb or shin splints from lifting heavy objects, he/she may be ultimately entitled to collect North Carolina workers’ compensation benefits for an entire lifetime. It’s a fact of human psychology that people tend to over-emphasize the difficulties associated with acute injuries and underestimate the difficulties associated with chronic injuries. Thus, particularly when it comes to chromic injuries, claimants tend to undervalue their claims.

2. Thinking that the insurance company is on your side.

Insurance companies are in business for one reason and one only reason only — to make money. To stay competitive, insurers go through rigorous processes to shave costs and minimize payouts to policyholders. In other words, the insurance company exists in large part to DENY as many claims as it can get away with. This isn’t to say the insurers are malicious. But they are most assuredly NOT working for you (even if individual associates appear sympathetic and helpful.) To that end, if you volunteer information about your condition — even by saying relatively innocuous things like “I’m feeling better this week” — your statements can be manipulated, taken out of context, and leveraged against you in the future.

3. Signing an incomplete agreement within the insurance company.

Let’s say the insurance company agrees to settle. If so, the claimant will receive what’s known as an “agreement to pay” from an adjuster. This agreement can be quite complicated, so it’s often in claimants’ interest to have it examined by a competent North Carolina workers’ compensation attorney. Not all of your injuries may be included on the form. For instance, perhaps you hurt your arm AND suffered a finger sprain. If the agreement only stipulates that your arm was injured and you do not correct the form, you may not be able to recoup any costs associated with the treatment of your hand.

4. Even after your claim has been accepted and approved, insurers can still investigate you.

Often North Carolina workers’ compensation claimants feel that they are “in the clear” after settling successfully with insurers. However, this can be a serious mistake. Insurance companies often reserve the right to investigate claims even after they have been processed and paid out, particularly claims for chronic disabilities. Indeed, insurers have gone to incredible lengths to retract, amend, or otherwise renegotiate claims, including, for instance, secretly videotaping claimants.

5. Believing that you can choose from an indefinite number of healthcare providers.

North Carolina workers’ compensation rules limit your choice of providers. An employer or an insurance company may offer you a choice of physicians from a pre-selected list. Once you choose a doctor, it can be very difficult and time consuming to “deselect” that doctor and find someone else… without risking your benefits.

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North Carolina Industrial Commission

workers’ comp insurance adjuster

On September 15th, Governor Perdue signed amendments to the North Carolina Professional Employer Organization Act intended to aid businesses who use PEOs to handle their North Carolina workers’ compensation and other benefits.

The NC Senate and House passed SB 1029 unanimously. The bill’s passage may hold implications for businesses associated with the state’s more than 143 professional employee organizations (PEOs), which function (ideally) to free up employer resources, expand opportunities, and improve both the quality and cost efficiency of benefits packages.

How might the legislation impact day to day North Carolina workers’ compensation claims? At this moment, it’s too early to predict. On the one hand, if the bill helps employers reduce costs and improve/expand benefits, obviously workers stand to gain. In addition, theoretically, the more that small and medium sized business owners outsource their administrative and other work relating to North Carolina workers’ compensation to PEOs, the more uniform the state’s standards will be; this uniformity, too, should benefit workers.

On the other hand, as with any piece of legislation, hidden problems may lurk. For instance, the expanded power of PEOs may disincentivize some employers from obtaining higher caliber private North Carolina workers’ compensation benefits packages. Also, if PEOs gain too much power, argue some, than they can make self-interested decisions that could have less than ideal downstream consequences for workers.

All that said, given the general enthusiasm for the bill — advocates for employers and advocates for workers who might need North Carolina workers’ compensation alike seem relatively pleased by the legislation — industry watchers seem cautiously optimistic that it could succeed in reducing costs, cutting red tape, and generally improving benefits.

Reuters, North Carolina Passes Professional Employer Organization Act, September 15, 2009

Insurance Journal, North Carolina Updates Professional Employer Organization Requirements, September 15, 2009

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What is a PEO?

NAPEO

According to an El Paso, Texas news report from June 30, 2009, an El Paso man has been convicted and sentenced for trying to scam the US Postal Service via a fraudulent workers’ compensation scheme.

Attorneys, workers, employers, insurers and others interested in North Carolina workers’ compensation issues have closely followed the case of former postal worker, José Barraza, who accepted over $54,000 in workers’ comp payments before getting busted for his activities. After being clued into the possibility that Barraza had faked an injury to his arm, investigators videotaped him throwing a football, taking out trash, and otherwise using what turned out to be his perfectly healthy arm.

Although Barraza was arrested in Texas, his sentencing would likely have been similar had he been convicted of a North Carolina workers’ compensation scam. The US District Judge overseeing the case sentenced Barraza to pay back the $54,000+ he took from the US Postal Service and Department of Labor as well as a pay an assessment of $1,400. In addition, Barraza must serve out a 10 month prison sentence for committing fraud. Barraza was convicted by a jury of all 14 counts against him. But it is unknown at this time whether/how he will appeal the ruling. Following his jail sentence, Barraza will have to serve 3 years of supervised release.

Claims Journal.com, Former U.S. Postal Service Employee Sentenced for Work Comp Fraud, August 28, 2009

KVIA, Man sentenced for workers compensation fraud, August 26, 2009

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Workers’ Comp Fraud

El Paso, TX

On August 21, Reuter’s news agency reported that the American Insurance Group (AIG) won a significant battle against the National Council on Compensation Insurance (NCCI) regarding allegations that the insurer had defrauded workers’ compensation pools to the tune of over a billion dollars. The high stakes imbroglio between AIG and NCCI should ultimately have trickle down impacts on North Carolina workers’ compensation policy and process.

US District Court Judge Robert Gettleman ruled that the NCCI did not have standing to file the federal lawsuit against AIG. However, the judge did acknowledge that “there is no dispute that … the participating companies have standing to bring claim separately against AIG.”

The lawsuit alleged that AIG had deliberately understated its workers’ comp premiums so that it could keep costs down and that, as a result of doing this, the company could garner an unfair competitive advantage. AIG has been raked over the coals many times over the past months due to its widely criticized handling of $180 billion in federal bailout money. While Judge Gettleman’s ruling does not necessarily clear AIG of fallout from this workers’ compensation case – in North Carolina or elsewhere – it has bought AIG a bit of a temporary reprieve. And the ruling sent AIG’s stock price up by over 6%.

Reuters, AIG wins dismissal of $1 billion workers comp lawsuit, August 21, 2009

Bloomberg, AIG Wins Dismissal of Lawsuit Seeking $1 Billion, August 21, 2009

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AIG

NCCI

On August 20, the California Department of Insurance (CDI) reported that a Southern California resident named Joseph Baiden (56) had been arrested in conjunction with a massive workers’ compensation scam. Baiden, who surrendered to LA Superior Court, had an arrest warrant out on him stemming from allegations that he had deliberately underreported his workers’ compensation payroll numbers to reduce his insurance premiums. Over an eight year period, from 2001 to 2007, he allegedly cost his insurer, State Fund, around $1.4 million. North Carolina workers’ compensation insurers have taken notice of the case, and no doubt the outcome will dramatically influence local NC policies, procedures and safeguards.

The size and scope of the charges against Baiden have attracted attention from local and national media. The CA state insurance commissioner, Steve Poizner, broke the story personally. If the defendant is convicted of fraud, he could face up to 40 years in jail in addition to fines of well over $3.2 million. The California Department of Insurance has frozen Baiden’s bank accounts and seized five of his Southern California properties, including an exclusive estate in the posh Diamond Bar neighborhood.

One of the reasons why the CDI has come down so hard on the accused is that workers’ compensation fraud – whether it occur in North Carolina or elsewhere – pads costs across the employment spectrum. When insurers can’t collect premiums, they either raise rates or reduce service, thus creating a cascade of bad effects for employers and employees alike.

AP, Calif. man accused of cheating workers comp fund, August 21, 2009

Pasadena Star News, Diamond bar man suspected of fraud, properties seized, August 19, 2009

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Steve Poizner

California Department of Insurance

Last year, the Durham, North Carolina Police Department adopted the widespread use of the taser – a non-lethal weapon designed for what police technically call “force applications.” The purpose of this program was to encourage suspects to comply with officers without the officers having to brandish lethal force. In a story in the Herald Sun, Durham Officer Lt. John Shelton touted the taser program as a major success for Durham in terms of deterring escalations of confrontations between suspects and officers. One key downstream effect, according to Shelton, has been “lowering cost for workers’ compensation claims.” Since city police can use tasers to effectively to contain suspects more effectively, they need not pursue potentially risky maneuvers like high-speed chases through traffic or hand-to-hand combat. As a result, cop injuries are way down this year.

Since the implementation of this taser program, North Carolina workers’ compensation claims for local officers have dropped by nearly $0.5 million – from over $650,000 to just over $187,000. Assuming other police departments across the state implement similar programs, if one extrapolates the numbers, NC could see a reduction in North Carolina workers’ compensation payouts on the order of several million dollars annually. Not only will the state therefore save money, but also the savings can potentially fund other programs to reduce North Carolina workers’ compensation costs. Of course, it remains to be seen whether the taser’s utility in reducing injuries to officers is a long term effect.

The Hearld Sun, Taser use aids police, August 25, 2009

Journal Live, North police use Taser guns every three days, August 18, 2009

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Tasers

Durham, NC