Moore: Nixon Administration's Study on Federalizing Workers' Comp

Monday, January 10, 2022 | 0

I have written many times on prepping for the federalization of workers' comp. The President Nixon administration’s efforts to possibly make workers' comp a federal insurance program was unknown to me at the time I wrote many of the federalization articles.

James Moore

Thanks to WorkCompCentral, Prof. David Torrey and John J. Burton Jr. for bringing up an old governmental study of recommendations on what to do about comp in the early 1970s. The 50-year-old study shows that some of the state laws were not adequate in covering injured workers.

The public domain study can be accessed here.

I recommend at least downloading the introduction and executive summary. One can see that workers’ comp has come a long way since the study was published.

The study’s recommendations to the Nixon administration

The study made 19 recommendations. I am not going to cover them all. I will cover the recommendations that were not followed by all the states, and the possible reasons. Please note that I am writing from the point of carriers, self-insureds and employers:

• Employers shouldn't be exempt from workers’ compensation coverage because of the number of their employees. Many states have a minimum number of employees requirement. Having a sole proprietor or microcompany pay workers' comp premiums may push that company out of business — not a good move for entrepreneurialism.
• Total disability benefits should be paid for the duration of the worker’s disability, or for life, without any limitations to the dollar amount or time. See the next bullet point.
• No statutory limits of time or dollar amount for medical care or physical rehabilitation services for any work-related impairment. Having no-limit benefits would cause a spike in insurance rates, as carriers would have to cover huge unknown benefits for which they have received no premium. For example, in North Carolina, a state Supreme Court decision (1994) held that all claims have lifetime medical benefits. All the big insurance carriers started pulling out of the state. The legislature expediently passed new laws to limit the length of time that a claim could be reopened.

Almost all states complied with the other 16 recommendations with few exceptions. I also agree with the other recommendations.

The major unmentioned recommendation, plus one error

The study recommended that the Nixon administration not federalize workers’ comp programs if the states would enact the recommendations.

Do you see the big error that dates this report? The title has "workmen’s compensation" instead of workers’ compensation. That phrase would be castigated nowadays.

I have often said that workers' comp has stayed the same forever. Now that I look at the concerns and recommendations that states have enacted since the Nixon administration study, I see that some positive changes have occurred over the last 50 years.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.