From the Respondent: WORKERS' COMPENSATION REFORM An Attempt to Save the Goose that Laid the Golden Egg By Joseph H. Purvis The 1993 Arkansas General Assembly passed Act 796, an act to increase workers' compensation benefits for employees and to substantially restructure workers' compensation law to decrease the cost to employers. Background Workers' compensation was compromise Legislation enacted in the 1940's in Arkansas to strike a compromising balance in dealing with injuries to employees arising out of and in the course and scope of their employment. Under the system as originally formulated, all parties were to benefit. The employees were to benefit because where their injuries arose out of and in the course and scope of their employment, all of their medical bills would be paid, they would received 66 2/3% of their average weekly wage up to a maximum state cap, and would likewise receive payment for any permanent impairment that they received. All of this without their having to prove that someone else was at fault or the proximate cause of their damages. Employers would benefit in that they would be spared the expense in terms of time, money and worry of having to litigate injury claims through the court system and their potential exposure was generally far less than any recovery would be in tort law in that there would be no monies for pain and suffering, loss of consortium, mental anguish and the like. The Crisis Over the past ten years or so, a crisis has developed in the area of workers' compensation, not only in Arkansas, but throughout the United States. The crisis has resulted from a number of factors. First, a majority of workers' compensation acts call for liberal construction of the act in favor of the employee and appellate courts, in Arkansas and throughout the nation, have seized upon this and mightily expanded the definition of a "compensable claim路' during this period. Secondly, medical costs have skyrocketed. In addition to other fadors, it is a sad fact of life that a workers' compensation case is the only type of case a physician will handle which will guarantee that he will be paid 100% of his fee. While most states have provisions holding the respondent liable for only a "reasonable medical charge", the fact is
that most commissions and courts have
I been loath to call doctor's hands on any
fees. For a number of reasons, the medical costs on each claim have soared. Thirdly, workers' compensation fraud has soared throughout the country and is well documented by a number of expose shows such as 20-20 and 60 Minutes, Individuals have discovered that a workers' compensation case is the easiest of all to prove given the fact that the Act should be liberally construed in favor of the claimant. Unfortunately, many administrative law judges throughout the country have found it easier to take the path of least resistance and award full benefits even where there was no proof whatsoever other than the c1aimanrs own selI-serving testimony that he suffered an injury during the course and scope of his employment. The Initial Solution By 1986, the playing field in the area of workers' compensation had become so tilted in favor of employees, and claims and insurance premiums had grown so high, that employers and insurers were forced to take a drastic step. For the first time in anyone's memory, these groups banded together and applied pressure to the legislature and Governor to create some fundamental changes in the workers' compensation system as we know it. What ultimately resulted was a great compromise struck among organized labor, the Arkansas Trial Lawyers Association and respondents' groups which resulted in Act 10 of 1986. It was felt and agreed that this Act would do a great deal to lower costs and premiums. This Act altered somewhat the liberal construction of the Act and required the party having a burden of proof to meet that burden by a preponderance of the evidence, and provided that in making said determination, the judge would weigh the evidence impartially without giving benefit to either party. While Act 10 substantially raised workers' compensation benefits, it also provided that any determination of the existence or extent of any physical impairment should be supported by objective and measurable physical or mental findings. After the special session of 1986, employers felt most of the problems had been solved and that the playing field would be once again leveled.