There is a current bill before the Arkansas Legislature to abolish the Made Whole Doctrine. The bill would place insurance industry financial interests ahead of the interests of injured Arkansas workers.
Opposition Testimony Before the House Public Welfare and Labor Committee
My argument before the House Public Welfare and Labor Committee is that injured Arkansas workers are not made whole from workers’ compensation benefits. Injured workers only receive two-thirds (2/3) of their wages, and wages are capped at six-hundred ninety-five dollars ($695.00) per week in 2019. So if a worker is earning much more than fifty-thousand dollars ($50,000.00) per year, then they’re not even getting two-thirds (2/3) of their wages. Injured Arkansas workers do not receive compensation for pain and suffering or quality of life losses.
I’ve represented diesel mechanics and construction workers that have torn rotator cuffs in their shoulder and herniated discs in their spine who loved to hunt and fish. As a result of that work related injury, they cannot climb into their deer stand, they cannot pull a bow to deer hunt anymore, and they cannot cast with a fishing rod. They’re not compensated for these losses in workers comp. For the most part injured workers don’t get to pick their doctor. The insurance companies pick their doctor, and the insurance companies send case managers to the appointments that tell the doctor to do what they want them to do. So there are lots and lots of things that injured workers don’t get under Arkansas work comp laws.
It is a very small percentage of injured workers that can claim someone other than their employer was at fault for their injury. Sometimes an injured worker can make a claim against a product manufacturer for a defective product or piece of equipment. Sometimes a third party causes a truck wreck or car accident injuring the worker, and the injured worker can hire an attorney to pursue their full damages against whoever that wrongdoer is. However, the wrongdoer always defends by saying the worker was injured because of their employer for reasons such as, the employer didn’t properly train the worker or the employer didn’t properly maintain the equipment and that’s why it malfunctioned. So third parties always attempt to reduce their liability by placing blame on the employer. Damages are reduced by the percentage of fault placed upon the employer, and that’s why a lot of times the injured worker’s recovery from the third party is not a full recovery.
Current Laws and Judicial Processes which Determines Recovery
The way the current law works when we get a recovery from a third party is we attempt to work out an amicable resolution with the workers’ compensation insurance company at the same time. If we cannot resolve the issues amicably, we ask for hearing in front of an administrative workers comp law judge. Those judges are appointed by the Governor of the state of Arkansas, and we can put on evidence and the insurance company can put on evidence. The work comp judge can then decide a fair distribution of the settlement. If either party disagrees with the ruling, that party may appeal the work comp judge’s decision to the Workers Compensation Commission.
The Workers’ Compensation Commission is a Board of three Commissioners appointed by the Governor and it’s a do-over. The Workers Comp Commission can look at the facts and decide what’s fair and is the proper distribution of a settlement. If either party is unhappy with the Commission’s decision, they have the right to appeal that decision to the Arkansas Court of Appeals. The Court of Appeals can evaluate the settlement distribution. If a party disagrees with the Arkansas Court of Appeals decision, they have the right to petition the Arkansas Supreme Court to finally decide the fair allocation of the settlement. That’s how it works, and it’s equitable and fair. That’s the way it works today.
This bill flips the current law on its head, and it puts the insurance company’s interests ahead of the injured Arkansan. Under the proposed law, the insurance company gets paid before the injured worker is fully compensated. Whether it’s an insurance company or a self-insured employer, it does not matter. The injured worker didn’t choose for the employer to be self-insured. The injured worker did not get to force the employer to pay an insurance premium like my firm does. If someone on my staff gets hurt on the job, I turn the claim over to my insurance company. I ask my insurance company to take care of it, and I want my employees to be taken care of. If they can recover from somebody else, then I hope that they’re made whole.
Example of the Negative Impacts if Made Whole Doctrine is Abolished
I’ve got one example that I wanted to do the math. If you are fatally injured on the job, your spouse is entitled to thirty-five percent (35%) of your wages (your average weekly wage). So let’s say the fatally injured worker earns twelve dollars ($12.00) per hour. Let’s say there was a shortage of workers at the construction site. The foreman instructed the new employee up on the roof despite lack of training, and let’s say there is an allegation the product was defective resulting in the fatal accident. A claim is then made against the manufacturer of the defective product. As you might expect the manufacturer defends the claim arguing that the employer failed to train the fatally injured worker and the employer failed to maintain the product pursuant to recommendations in the owner’s manual.
Back to work comp, the fatally injured worker’s average weekly wage is four-hundred and eighty dollars ($480.00). Under Arkansas work comp law, the surviving spouse is only entitled to thirty-five percent (35%) of the average weekly wage. She’s certainly not made whole by thirty-five percent (35%). That’s one-hundred and sixty eight dollars ($168.00) per week. For this example, I used four-hundred and fifty (450) weeks which is a number frequently used in work comp cases. If the surviving spouse is paid one-hundred and sixty-eight dollars ($168.00) per week that totals seventy-five thousand six-hundred dollars ($75,600.00). That’s approximately eight-thousand seven-hundred dollars (8,700.00) per year. I’ve left children out of the example to keep it simpler. Under the example, there’s one-hundred forty thousand dollars ($140,000.00) or the other sixty-five percent (65%) of benefits that the workers comp insurance company is not required to pay.
No one can live on one-hundred sixty-eight dollars ($168.00) per week. This survivor would have no choice but to apply for government benefits. Under the example, the surviving spouse makes a product liability claim against this manufacturer for defective product. Let’s say after years of litigation with all kinds of expensive experts such as engineers, human factors, and medical, the manufacturer offers one-hundred forty thousand dollars ($140,000.00) to settle the claim. At this point the surviving spouse does not want to risk going to trial and receiving nothing. In Arkansas, if a jury finds the employer to be fifty percent (50%) at fault, the surviving spouse receives nothing. The surviving spouse has to pay the cost of collection which includes attorney fees and litigation costs out of the settlement.
Obviously, the surviving spouse could not pay the hourly fee or retainer that the insurance companies pay. Let’s say, after the cost of collection is paid, ninety-thousand three-hundred sixty dollars remain ($90,360.00). Arguably, the survivor would not be made whole. If the insurance company disagreed, the insurance company could ask for a hearing in front of a worker’s comp judge. The insurance companies don’t like this option, because they did not spend a penny or expend any effort litigating against the product manufacturer. The insurance company has nothing at risk forcing the case to trial. If the surviving spouse loses, it’s no sweat off the insurance company’s back. All of the risk going to trial is placed on the surviving spouse and her attorney. The insurance company knows that their employer’s negligence usually leads to smaller recoveries.
These are the reasons the insurance industry has proposed to change the current law. The insurance company wants all of the advantages. Under the proposed law, the insurance company gets paid back sixty two thousand dollars ($62,000.00), and the surviving spouse only gets thirty-one thousand dollars ($31,000.00). The proposed bill would flip the script on current law, and the surviving spouse would not even receive one-half (1/2) of their damages. In contrast the insurance company would receive more than eighty percent (80%) of their money back plus they’d be keeping the insurance premiums they were already paid to take on this risk.
Springdale, Arkansas Workers’ Compensation Attorney
Big business is constantly looking for ways to protect themselves at the detriment of the worker. I fight daily for hard working injured Arkansans. If you need help with your work comp benefits and other legal issues, such as product liability, car accidents, or truck wrecks, contact my law office today at 479-361-3575 to speak directly to me about your workers comp and other legal needs. The sooner I can start working on your case, the faster you can start collecting your benefits.
The Law Office of Jason M. Hatfield, P.A. represents injured workers from all over Northwest Arkansas including Fort Smith, Springdale, Fayetteville, Rogers, Bentonville, Berryville and Harrison.