{"id":1470,"date":"2025-03-24T13:06:40","date_gmt":"2025-03-24T19:06:40","guid":{"rendered":"https:\/\/www.triplespacedagain.com\/wordpress\/?p=1470"},"modified":"2025-03-24T13:07:30","modified_gmt":"2025-03-24T19:07:30","slug":"saving-workers-comp-2","status":"publish","type":"post","link":"https:\/\/www.triplespacedagain.com\/wordpress\/?p=1470","title":{"rendered":"Saving workers\u2019 comp"},"content":{"rendered":"

November 2021, re-edited May 2022 and July 2024<\/em><\/h4>\n

by Merilee Dannemann, for the New Mexico legislature. This document is written and distributed solely by me and reflects only my individual viewpoint. <\/em><\/h4>\n

New Mexico\u2019s workers\u2019 compensation system is suffering from memory loss.<\/p>\n

Workers’ compensation involves a delicate balance.\u00a0 If lawmakers forget how that balance works, a stable and functional system could be eroded.\u00a0 It could become harder on injured workers, more costly to employers and damaging to the state\u2019s economy.<\/p>\n

Recent legislation (fortunately, not passed) has exposed the risk. I wrote this memo to provide a very basic overview of the system for legislators so that you will:<\/p>\n

    \n
  • understand why the system is worth saving;<\/li>\n
  • understand how to prevent the legislative mistakes that could undermine it.<\/li>\n<\/ul>\n

    The workers\u2019 comp system is based on a series of compromises, intended to balance the competing interests of employers and workers while leading to results that are mutually beneficial<\/u> to both.<\/p>\n

    Briefest possible summary<\/strong><\/p>\n

    (In case you don\u2019t have time to read the rest of this memo)<\/strong><\/p>\n

    The fundamental fact:\u00a0 workers’ compensation is a no-fault system and very different from the tort liability system.\u00a0 It is primarily a system to help injured workers without dispute<\/u> and secondarily a system of dispute resolution. The system is designed to consider other factors in the welfare of injured workers besides simply financial compensation.<\/p>\n

    New Mexico\u2019s current workers’ comp law is the result of the hard work and dedication of a devoted group of business and labor leaders, who worked together in 1990 to save this system and the economy of New Mexico.<\/p>\n

    The 1990 revision was designed to maintain a balance between the rights and responsibilities of employers and workers. \u00a0It was based on finding solutions that are mutually beneficial<\/u>, in situations that are often stressful and adversarial.<\/p>\n

    Every provision, every paragraph, in this law was put there for a purpose,<\/u> to correct a flaw that was damaging the system, to keep the system in balance and to improve fairness. This balance is not obvious from a superficial reading. \u00a0If one such provision is undone, it could throw the whole system out of balance.<\/p>\n

    Almost all the people who participated in 1990 are now retired. The people currently in the system may not know the history. \u00a0\u00a0That is why I wrote this document (see my bio statement at the end).<\/p>\n

    MEET \u00a0WORKERS\u2019 COMP<\/strong><\/p>\n

    Workers sometimes get hurt at work.\u00a0 The workers\u2019 comp system is a method of handling work-related injuries that is orderly and predictable, so that people know what to do, and that is both efficient and compassionate.<\/p>\n

    The workers’ compensation system is NOT a modified version of tort law.\u00a0 It is different, based on a different set of principles.<\/p>\n

    Our New Mexico statute says the mission of our workers\u2019 comp system is \u201cto provide quick and efficient delivery<\/u> of indemnity and medical benefits to injured workers at a reasonable cost to employers.\u201d<\/p>\n

    Workers receive prompt medical treatment and, when necessary, money in place of wages.\u00a0 Most return to work as soon as the doctor approves.<\/p>\n

    Employers pay all the costs through their insurance. Workers pay zero — no deductibles or copays.\u00a0 But the costs are not infinite. They are controlled in a number of ways.<\/p>\n

    \u201cQuick and efficient\u201d is very important.\u00a0 Medical care is quick and efficient only if there is no dispute about who is paying for it.<\/u> Workers\u2019 comp assures medical providers that the bill will be paid.\u00a0 A work-related injury is covered, period.<\/p>\n

    \u201cReasonable cost to employers\u201d is also very important.\u00a0 Insurance premiums are a drain on employers\u2019 resources\u00a0 — money that does not pay wages or grow the business.<\/p>\n

    The statute left out a vital word:\u00a0 \u201cpredictable.\u201d\u00a0 For employers to stay in business, they MUST be able to predict their costs as much as possible.\u00a0 The cost of workers\u2019 comp insurance premiums is determined through science-based number-crunching that goes on behind the scenes.<\/p>\n

    About 20% of New Mexico covered workers are state, local and education public employees.\u00a0 That is taxpayers\u2019 money<\/u> budgeted by the legislature.<\/p>\n

    THE BIG TRADE:\u00a0 NO-FAULT AND EXCLUSIVE REMEDY<\/h3>\n

    The fundamental trade-off in the workers\u2019 comp system is that workers get the promise of no-fault<\/u> and employers get the promise of exclusive remedy<\/u>.<\/p>\n

    No-fault:<\/u> Workers’ comp guarantees that workers are covered no matter who or what caused the accident.\u00a0 Most accidents are at least partly caused by the injured worker himself<\/u>, so this protects the worker. The no-fault principle is basic to workers\u2019 comp.\u00a0 It assures that when an injury occurs, the employer\u2019s insurance will cover it, usually immediately with no dispute. There is no argument over whose mistake caused the accident.<\/p>\n

    Exclusive remedy:<\/u> In return, the system guarantees that when a worker is covered by workers\u2019 comp, the worker does not have the right to sue the employer in tort for that injury. The District Court literally does not have jurisdiction. \u00a0The case stays within the workers\u2019 comp system.<\/p>\n

    Worker advocates who understand the system will continue to defend the no-fault principle because it protects workers. Business leaders who understand the system will fight to preserve exclusive remedy because without it, costs become unpredictable and business becomes impossible. Again, this also applies to government budgets.<\/p>\n

    If you are a lawyer reading this, you are instantly thinking of exceptions.\u00a0 <\/u><\/p>\n

    Try this: workers\u2019 comp is a big square. Most cases fit inside that square. There\u2019s also a very large periphery around the square.\u00a0 Cases that don\u2019t fit inside the square land on or outside the periphery. That\u2019s where litigation happens. Whatever exception you can think of, that exception is probably addressed in statute or case law.<\/p>\n

    This memo focuses on what\u2019s inside the square, where most cases occur. If we started by talking about the exceptions, we would be distracted and never get to what is inside the system.<\/p>\n

    Because of the workers’ comp system, the vast majority of cases are handled efficiently, cost-effectively and without dispute.<\/p>\n

    THE DOCTOR<\/strong><\/h3>\n

    The doctor is the provider of medical care and also the critical decision maker in any workers\u2019 comp claim.\u00a0 The doctor decides, for example, when the worker is ready to return to work and what restrictions, if any, are necessary due to the injury. These decisions directly affect indemnity benefits that the worker may receive in future.<\/p>\n

    Back in the 1980s, there was a national saying that workers\u2019 comp was a system to determine whose doctor was the bigger liar. This was funny but unfortunately true at that time. \u00a0Doctors who treated injured workers were regarded as either \u201cplaintiff doctors\u201d or \u201ccompany doctors.\u201d Because the system was adversarial and so many cases were litigated, doctors were forced to be biased in favor of one side or the other. (Doctors\u2019 bills were unregulated so they could make a lot of money.)<\/p>\n

    An essential part of our reform was changing the rules so that doctors could simply practice good medicine.<\/p>\n

    BRIEF HISTORY<\/strong><\/h3>\n

    The modern history of workers\u2019 compensation begins with Prussian Chancellor Otto von Bismarck in the late 19th<\/sup> century. In the US, states started enacting workers\u2019 comp laws in 1911. New Mexico\u2019s first workers\u2019 comp law was enacted in the 1930s.<\/p>\n

    The no-fault doctrine has always been at the core of workers’ comp.<\/p>\n

    For many years in New Mexico workers\u2019 comp was unregulated. In a complex claim the worker would have to have an attorney. Cases were litigated in the district courts. This caused two major problems:<\/p>\n

      \n
    • Very long delays due to crowded court dockets. Delay in court meant hardship for injured workers as well as expense.<\/li>\n
    • Inconsistent results because every district judge interpreted the law differently.<\/li>\n<\/ul>\n

      Predictability was impossible and this created a difficult environment for insurance companies. Difficult equals expensive.<\/p>\n

      In the 1980s, costs got out of control. \u00a0Insurance premiums became so high that thousands of New Mexico businesses could not get insurance. Most insurance companies simply packed up and left the state. The few that remained had to charge unacceptably high premiums.<\/p>\n

      Between 1986 and 1990 the law was amended every year in attempts to get costs under control. In 1986, the Workers’ Compensation Administration was created.\u00a0 The separate court was part of that law, to take jurisdiction over workers\u2019 comp litigation.<\/p>\n

      This court was intended to provide speedy access to litigation and to have judges who were specialists, who would give consistent rulings and make the system more fair and predictable. A mediation bureau was created, with mediation a mandatory first step.<\/p>\n

      New Mexico was the 47th<\/sup> state to create an administrative agency.\u00a0 (Governor Jack Campbell had tried to do this in the 1960s.)<\/p>\n

      In 1990, after the previous attempts had not solved the problem, the historic workers\u2019 comp task force was formed. There was a deal:<\/p>\n

        \n
      • There were only two votes, business and labor. No one else had a vote: not attorneys, doctors or the insurance industry.<\/li>\n
      • If business and labor could agree on a major revision of the law, speaker Raymond Sanchez and president pro tem Manny Aragon promised they would get the bill passed and Governor Garrey Carruthers promised he would sign it.<\/li>\n<\/ul>\n

        The task force met intensively through the summer of 1990 and created a reform of the law, which was passed in a special session in September 1990.<\/p>\n

        A few of the most important features: The law:<\/p>\n

          \n
        • created a method to authorize healthcare providers who would treat the injured worker, allowing for an orderly change of provider in case either side felt the provider was unfair or unqualified. It removed the incentive for doctors to be biased and \u201cdoctor-shopping.\u201d<\/li>\n
        • adopted formulas for calculating worker benefits, to replace the subjective decisions of judges. An old stereotype pictured injured workers walking into the courtroom with crutches, neck braces and so on, to impress the judge with how badly injured they were. This became unnecessary.<\/li>\n
        • established penalties for unfair claims practices, including fraud, by any party.<\/li>\n
        • set a cap for attorney fees. That cap has been almost doubled since its inception. The cap is an incentive to limit litigation to what is prudent and reasonable.<\/li>\n
        • established a medical fee schedule and other regulations on the cost of medical care.<\/li>\n
        • created incentives for both employer and worker for the worker to return to work. The law recognizes that return to work is beneficial for the physical and mental health of the worker as well as for its financial benefits.<\/li>\n
        • authorized a number of regulatory activities of the Workers’ Compensation Administration.<\/li>\n<\/ul>\n

          New Mexico Mutual was created so the state would have a homegrown insurance company. Initially New Mexico Mutual had some obligations to the state, including sharing data, but those are mostly concluded.<\/p>\n

          THE REFORM AS PROBLEM SOLVER<\/strong><\/h3>\n

          In the 1991 law (enacted in 1990, taking effect in 1991), every provision was intended to contribute to the goal of mutual benefit<\/u> and fairness to both worker and employer.\u00a0 Many provisions addressed specific genuine problems that directly affected injured workers and employers.<\/p>\n

          The reasoning behind these provisions is not necessarily documented. But lawmakers must recognize that these provisions exist for a reason and that in many cases, changing or eliminating them would bring those problems right back into the system,<\/u> making the system more expensive for employers and more difficult for injured workers.<\/p>\n

          Some of the solutions were less than perfect.\u00a0 The system could be improved if they were amended. However, amendment should only be done with an understanding of what the provision was designed to achieve, so the intent is preserved.<\/p>\n

          If you don\u2019t know the history, you don\u2019t know what those problems were. That is one reason for this document.<\/p>\n

          BUILT-IN INCENTIVES<\/strong><\/p>\n

          Workers\u2019 comp is filled with incentives, intended to encourage \u00a0employers and workers to behave in ways that are mutually beneficial.<\/p>\n

          The incentives are not written into the statute.\u00a0 They are built into the structure.<\/p>\n

          Some of the incentives to employers<\/u> are not in the workers\u2019 comp statute but in the structure of insurance premiums, which is an industry standard practice.<\/p>\n

          Incentives to workers<\/u> are built into the benefit structure, to reward the injured worker for recovering and returning to work, getting a paycheck instead of workers\u2019 comp benefits.<\/p>\n

          Incentives only work if people know what those incentives are. For example, if employers understand that workplace safety will save them money, they are much more likely to maintain safe practices.<\/p>\n

          \u00a0<\/strong>Incentive — Prevent accidents<\/strong><\/p>\n

          The employer\u2019s incentive is in the cost of insurance. If you don\u2019t have accidents, your insurance is much cheaper.<\/p>\n

          The premium for a workers\u2019 comp insurance policy is set to match the risk of claims against that policy and the likely cost of those claims, based upon vast amounts of actuarial analysis, also called number-crunching.<\/p>\n

          The premium is determined by:<\/p>\n

            \n
          • the type of work done and how hazardous that work is, according to national averages (job classifications); for example, a lumber mill or an oil field operation costs many times more than office work;<\/li>\n
          • the number of employees and how much the employees are paid, as expressed by actual payroll; and<\/li>\n
          • the claims history of the company, expressed as an \u201cexperience modifier.\u201d<\/li>\n<\/ul>\n

            The experience modifier is essential to the system. A company with a history of more accidents, compared to its own industry<\/u>, has a higher experience modifier than one with fewer accidents.<\/p>\n

            Philosophically and ethically that is regarded as correct, because a business with lots of accidents is endangering its workers — again, compared to its own industry.<\/p>\n

            This creates a powerful incentive to employers to engage in safety practices, whatever that requires for the particular industry.<\/p>\n

            The incentive to workers is, first of all, getting injured hurts. That should be obvious.<\/p>\n

            When a worker is injured, the worker may receive indemnity benefits, a partial substitute for lost pay. Indemnity benefits are never as much as wages. That is an incentive to recover and return to work.<\/p>\n

            The great majority of cases are \u201cmedical only,\u201d which means the worker receives medical care, the case is resolved quickly and the worker goes quickly back to work.<\/p>\n

            Incentive\u00a0 — Return to work<\/strong><\/p>\n

            Another incentive to employers is to bring injured workers back to work when feasible and medically approved.<\/p>\n

            The incentive for the employer is in the structure of worker benefits. A worker who returns to work is paid wages rather than comp benefits. That reduces the cost of the claim, which reduces the experience modifier and the employer\u2019s future premiums.<\/p>\n

            There are also incentives outside of workers\u2019 comp, such as reduced disruption of the workplace and retaining the worker\u2019s knowledge and experience.<\/p>\n

            The incentive to workers is to recover and go back to work. For workers who must take time off work, workers\u2019 comp pays less than their wages. The system recognizes that many workers would have no incentive to recover if they were paid the same as their wages for staying home and doing nothing. Data gathered and reconfirmed over many years shows that workers who go back to work, even if not fully recovered, are able to resume normal life, while workers who stay home living on benefit checks develop all kinds of social dysfunctions and are much more likely to be miserable.<\/p>\n

            In some cases a worker who returns to work may be paid a combination of wages and benefits. To keep it simple, I will not explain the formulas here.<\/p>\n

            The coverage requirement<\/strong><\/h3>\n

            The workers\u2019 comp law specifies who is required to be covered. It includes almost all employers engaged in business, with the exception of certain very small businesses. The requirement was recently expanded by court decision to include farms and ranches.<\/p>\n

            I mention this briefly so legislators are aware of it and also aware that there are some issues affecting those very small businesses. In my opinion, small businesses would be helped by improvement in statutory definitions.<\/p>\n

            Governance<\/strong><\/h3>\n

            The governance of the system is primarily divided between two agencies, the Workers’ Compensation Administration (WCA) and the Office of the Superintendent of Insurance (OSI).<\/p>\n

            Part of the governance is in Chapter 52 of the statute.\u00a0\u00a0 The other part is in the state\u2019s insurance code, Chapter 59A, and the rules of OSI.<\/p>\n

            The WCA is led by a director appointed by the governor and confirmed by the Senate. The statute says the director shall be appointed for five years, intended to make the director a nonpolitical position, but that provision has been ignored since 1995.<\/p>\n

            OSI is headed by a superintendent appointed by commission dedicated to that purpose. OSI is responsible for most aspects of the regulation of insurance companies. Many features of workers\u2019 comp, such as the method of calculating premiums, are nationally standardized and come from the manual of the National Council on Compensation Insurance or NCCI, which has been adopted by OSI.<\/p>\n

            A few common questions<\/strong><\/h3>\n

            Near the beginning of this document, I mentioned exceptions. Here are a few.<\/p>\n

            Drug and alcohol: what if the worker was drunk or using drugs? <\/strong><\/p>\n

            That is the first question everyone asks. How to handle that situation has been debated for decades.\u00a0 The current provision, which is unsatisfactory, replaced a more unsatisfactory provision which replaced an even worse provision. There are no fully satisfactory answers on this one.<\/p>\n

            Why would a claim be denied?\u00a0 A couple of common reasons:<\/strong><\/p>\n

              \n
            1. There\u2019s a dispute about whether it happened at work or outside of work.<\/li>\n
            2. It was deliberately self-inflicted. This occasionally happens when a worker wants the money. I once received a phone call in which the caller asked, \u201cHow much can I get for a finger?\u201c<\/li>\n<\/ol>\n

              What if the employer was negligent?<\/strong><\/p>\n

              This is a no-fault system. The no-fault principle works both ways. The employer is protected by no-fault just as the worker is protected.<\/p>\n

              The employer\u2019s incentive to be responsible is cost.\u00a0 If the employer is careless and ignores safety, premiums will go up next year and the employer could be put out of business. This is one reason why it\u2019s very important for employers to be educated. Incentives only work if you understand them.<\/p>\n

              There is a standard for extremely egregious behavior by the employer, set by case law.\u00a0 In such a case, the worker might have a tort claim. Even then, workers\u2019 comp would act first to provide medical and indemnity benefits as long as it happened at work.<\/p>\n

              What if an outside party was involved?<\/strong><\/p>\n

              In such a case, such as an auto accident, workers’ compensation covers the injured worker first, so that immediate needs are covered.\u00a0 Litigation involving the outside party might take place after that.<\/p>\n

              This document has just scratched the surface of what is unique and essential about the workers’ compensation system.\u00a0 The system is worth saving.\u00a0 Thank you for reading.<\/em><\/p>\n

              A WORKERS\u2019 COMP VOLUNTEER?\u00a0 WHO WROTE THIS?<\/strong><\/h3>\n

              I worked for the Workers\u2019 Compensation Administration for 18 years in a number of policy and public information related positions.\u00a0 Among other responsibilities, I served for 10 years as staff to the governor-appointed Advisory Council on Workers’ Compensation and Occupational Disease Disablement and wrote several major agency publications. When I left state government, I chose not to abandon my knowledge by walking away entirely but have stayed informed and involved. I am not biased in favor of any interest group, but rather the wellbeing of the system.<\/p>\n

              If this were an issue like the environment or child advocacy, nobody would question an ageing volunteer. But a volunteer in workers\u2019 comp is an oddity. I\u2019ve been told I have no standing. Currently I write a newspaper column and I am the only journalist in New Mexico who regularly follows workers’ comp.<\/p>\n

              My \u201cstanding\u201d is that I spent 18 years educating the public about this system, contributing to making it better, and now I am devoting some effort to keep it on track. I\u2019m well over 70 years old and if I get tired of this, there might be no one to take my place.<\/p>\n

              This document\u00a0 is copyrighted. Readers are welcome to copy it or to share the link, with acknowledgement of the source.<\/p>\n

              The 2022 version of this document was printed and mailed to all legislators, at my personal expense with no expectation of financial gain.<\/p>\n

               <\/p>\n

               <\/p>\n

               <\/p>\n

               <\/p>\n","protected":false},"excerpt":{"rendered":"

              November 2021, re-edited May 2022 and July 2024 by Merilee Dannemann, for the New Mexico legislature. This document is written and distributed solely by me and reflects only my individual viewpoint. New Mexico\u2019s workers\u2019 compensation system is suffering from memory … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-1470","post","type-post","status-publish","format-standard","hentry","category-workers-comp"],"_links":{"self":[{"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1470"}],"version-history":[{"count":1,"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1470\/revisions"}],"predecessor-version":[{"id":1471,"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1470\/revisions\/1471"}],"wp:attachment":[{"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.triplespacedagain.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}