WORKERS 'COMPENSATION
Major Topics
overview of Workers' Compensation Historical Perspective Workers Compensation Lagislation Modern Workers' Compensation Workers' Compensation Insurance Resolution of Workers' Compensation Disputes Disabilities and Workers' Compensation njuries and Workers' Compensation Monetary Benefits of Workers' Compensation Medical Treatment and Rehabilitation Medical Management of Workplace Injuries Administration. and Case Management
Cost Allocation Problems with Workers' Compensation Spotting Workers' Compensation Fraud and Abuse Future of Workers' Compensation Cost-Reduction Strategies.
- OVERVIEW OF WORKERS 'COMPENSATION
The concept of workers 'compensation developed as a way to allow injured employees to be compensated appropriately without having to take their employer to court The underlying rationale for workers' compensation had two aspects (1) fairness to injured employees, especially those without the resources to. undertake legal actions that are often long. drawn out. and expen-siva: and (2) reduction of costs to employers associated with workplace injuries fog. legal. image. and morale costs), Workers' compensation is.
intended to be a no-fault approach to resolving workplace accidents by reha-bilitating injured employees and minimizing their personal losses because of their reduced ability to perform and in the labor market.1 Since its compete inception as a concept. workers 'compensation has evolved into a system that pays out approximately $ 70 million in benefits and medical costs annually The national average net cost of workers' compensation in the manufacturing sector is almost $ 6 per $ 100 of payroll.
Workers compensation represents a compromise between the needs of employees and the needs of employers. Employees give up their right to seek unlimited compensation for pain and suffering through legal action. Employers award the prescribed compensation (typically through insurance premiums) regardless of the employee's negligence. The theory is that in the long run both employees and employers will benefit more than either would through legal action. As you will see later in this chapter, although workers compensation has reduced the amount of legal action arising out of workplace accidents. it has not completely eliminated legal actions.
- Objectives of Workers' Compensation
Workers' compensation laws are not uniform from state to state. In fact. there are extreme variations. However, regardless of the language contained in the enabling legislation in a specific state. workers' compensation as a concept has several widely accepted objectives: Replacement of income Rehabilitation of the injured employee Prevention of accidents Cost allocation 2 The basic premises underlying these objectives are described in the follow ing paragraphs.
- Replacement of Income
Employees injured on the job lose income if they are unable to work. For this reason. workers' compensation is intended to replace the lost income ade quately and promptly. Adequate income replacement is viewed as replacement of current and future income (minus taxes) at a ratio of two-thirds (in most states). Workers' compensation benefits are required to continue wen if the employer goes out of business.
- Rehabilitation of the Injured Employee
A basic premise of workers' compensation is that the injured worker will return to work in every case possible. although not necessarily in the same job or career field. For this reason. a major objective of workers compensation is to rehabilitate the injured employee. The rehabilitation program is to provide the needed medical care at no cost to the injured employee until he or she is.