Nationalization – Federalization of Workers Compensation, or Not

Recently there has been some chatter on blogs and in the news about nationalization or federalization of workers compensation. Some writers think it would be a great thing, others think it would be a catastrophe, depending on the writer’s location on the political spectrum.

There has been talk of a federal workers comp system since 1970 when OSHA was created. The OSHA law created a special commission to study state workers compensation laws. When the study was completed in 1972, the commission did not recommend the nationalization of workers comp. The study did make many recommendations adopted by many states have.

The talk of federalization of workers compensation also arose from early on in the health care debate when 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. This proposal was opposed by the insurance industry and never considered by the Senate Finance Committee.

The people who are promoting federalization of workers compensation point to the problems arising from each jurisdiction having their own workers comp statutes. They point to the European nations with national workers comp. They believe one workers comp system would make administration of workers comp easier for everybody involved. The promoters of federal workers comp point out there is already federal workers compensation for employees covered by the Longshoreman and Harbor Workers Act, for employees of railroads and for federal government employees.

Last year during the debate on overhauling the health care system, the idea of the government being the sole insurer and provider of medical care was dropped early on in the discussion. However, when the health care overhaul bill was passed, it did include the Libby Health Care Plan. It is named after Libby, Montana, where asbestos was mined. The Libby Health Care Plan has Medicare controlling the delivery of medical services to those affected by asbestosis. The Libby Health Care Plan is seen by some as a step toward federalizing workers compensation.

During the height of the clean up of the Gulf of Mexico oil spill, some promoters of nationalization of workers compensation claimed the Gulf Coast states would be unable to handle the huge influx of expected workers comp claims. This reason for federalization of workers comp fell apart as (1) anyone injured while working on a clean-up boat would be covered by another federal law – the Jones Act, and (2) the OSHA mandated precautions taken by the clean-up workers on the beach resulted in few workers comp claims. It is unknown at this time if the clean-up workers on the shore will have future workers comp claims due to the exposure to oil and dispersants.

There is already a federal office for workers compensation in the Department of Labor. The Office of Worker Compensation Programs administers the federal workers comp programs for federal employees, for the Department of Energy and it contractors and subcontractors injured due to radiation exposure, for those employees covered by the Longshoreman and Harbor Workers Act, and the employees covered by the Division of Coal Mine Workers.

Some of the proponents of nationalization of workers comp envision the Department of Labor controlling all workers comp claims. Other proponents of nationalization of workers comp see a system like those used in the monopolistic states, for instance, Ohio.

Many of those opposed to the nationalization of workers compensation point to the problems and cost associated with the Longshoreman and Harbor Workers Compensation Act (LHWCA) – the largest federal workers comp program affecting private employers. The people who opposed the federalization of workers comp point out that under the LHWCA, the program is anti-employer because:

Whether you are for or against the nationalization of workers compensation, there are already significant in-roads in to state workers comp by the federal government. The Centers for Medicare and Medicaid Services (CMS) already require certain large workers comp claims to have a Medicare Set-aside Arrangement approved by CMS (the federal government).

While it is doubtful there will be a nationalization of workers compensation in the near future, it will continue to be a subject discussed by the plaintiff’s bar association and other liberal groups. The insurance industry will continue to oppose their elimination from the workers compensation business. The takeover of workers comp by the federal government will remain a subject for political discussion.

Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.
Contact: [email protected] or 860-553-6604.

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