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the persons who conducted the examination and was spared the humiliation of a trial in a public court room.
During the entire time that this investigation was being carried on an attorney was besieging the woman for an opportunity to sue her case, and predicting the utter failure of the department's efforts. The widow, of course, got several hundred dollars more compensation than she could have obtained through the attorney, because she saved the attorney's fees.
Numerous trials of cases have been held by the department in just such a fashion, some of which have resulted in a decision that the claim was unfounded, but most of which have resulted in the collection of compensation without a lawsuit.
Section 18 throws two kinds of work upon the department. Disputes between doctors and insurers or employers over the doctors' bills are generally referred to this department rather than to the courts. Section 18 provides that “in all cases of dispute as to the value of the medical or hospital service rendered an injured employe, either party may require that the same, but before payment, shall be approved by the court but we have known of a single case where a dispute of this character has been brought before the courts. On the other hand a large number of them have been brought before this department and settled.
The other and more important duty imposed upon us by section 18 has been the securing of the second one hundred dollars of medical care. When an employe is injured so badly that it is apparent that he will require more than $100 worth of medical care and applies to the department to secure the second $100, the department's first move has been to request the employer or insurer to waive the court order and agree to pay the additional $100 without a court order. In more than 90 per cent of the cases this request is complied with. When they refuse the department prepares a complaint and starts an action in court to secure the order. There has never been a case where the department has failed to secure the order.
This brief summary gives but a slight idea of the amount and character of the "case” work performed by the department's workmen's compensation organization. The entire book could be utilized to retail simply the “interesting cases” that have been handled, some of which have been under the department's control for long periods of time and have required large expenditures of time and considerable money. But no practical purpose would be accomplished by such a recital and this is not a story book. Let it suffice to say that the department has assisted in more than fifty cases per week ever since the compensation act went into effect and has closely watched every settlement to see whether it conformed to the law.
We will now proceed to describe a system of administration which we believe would materially improve the efficiency and decrease the cost of operation of our compensation act.
Recommendations on “Administration of Compensation Act.”
This department is of course cognizant of the fact that many employes and employers are advocating the establishment of a state insurance law as a substitute for our present compensation law and that the recommendations found in this section of the report would be unnecessary if such a change was made. The department wants it clearly understood that in making recommendations for the improvement of the present law it is not taking ground either for or against state insurance. The legislature has said in section 24a of the compensation act that the labor commissioner shall “observe in detail the operation of the act throughout the state and shall make report thereof to each session of the legislature, together with such suggestions and recommendations as to changes as he may deem necessary or advisable for the improvement thereof." The department's duty as prescribed by section 24a is to make recommendations for such changes in the present act as it deems necessary or advisable if the legislature in its discretion decides to continue the present act in operation. Without taking any ground either for or against state insurance at this time the department will, therefore, proceed to make such recommendations for the improvement of the present law as it deems advisable. We also want it clearly understood that the department does not seek to oppose by this recommendation the creation of an industrial commission, such as that of Wisconsin, which would take the place of the present department of labor and also assume the administration of the compensation act and all other labor laws.
We recommend the creation of a bureau of workmen's compensation in the department of labor to have charge of: (1) the approval of settlements which do not involve disputes, and which are now approved by the district courts under the terms of section 22, but which would be approved by this bureau instead of by the courts, and (2) that the bureau shall also be empowered to arbitrate disputes between parties to a compensation claim, and that its determination shall in such cases become binding unless written notice is served on the bureau by either party of its refusal to abide by such decision within fifteen days after the parties have been notified in writing of the bureau's decision. This will require amendments of sections 22 and 24a. (3) Upon refusal by the parties to abide by the bureau's decisions the parties should be permitted to take the matter to the district court as a disputed case under section 30. In such case we recommend that the matter be tried by the court as an original action rather than as an appeal from the bureau's decision, but we believe it should be permissible for the parties to have the evidence taken before the bureau of workmen's compensation evidenced in court. Our recommendation aims to transfer to an administrative organization those parts of compensation law administration which are administrative in character and to leave with the courts those functions which are judicial in character. We would reduce the resort to the courts to a minimum by requiring the parties to appear in court only when they have disputes that cannot be settled in any other way.
Reasons for Recommendation. The first thing that we would say in connection with this recommendation is that it is not intended as a criticism of the district courts. It is true that at various times certain of the judges have made mistakes in compensation cases and that in some of these cases this department has felt that its duty required it to suggest to the court that it had apparently made an error. But these errors have been relatively few and when they have occurred the courts have nearly always been glad to correct them. Any form of administrative organization that we substitute for the courts will also make mistakes, and infallibility cannot be expected. · The courts have from the very first exerted themselves to administer the act in the spirit in which it was put on our statute books and have co-operated with the department of labor in a manner that has been most gratifying. We cannot express too strongly our appreciation of the spirit our judges have shown in their relations to the compensation act.
Our criticism is not that the courts have been negligent, but that the courts are not able, from the very nature of their organization and functions, or their relations to the remainder of the state government, to provide the type of supervision needed by a compensation act. A compensation act requires centralized administration, and the courts are decentralized. It requires a body which has each case under a continuing scrutiny until it is completed, but the courts can note the facts only at the time when a matter is brought up for adjudication. It requires a form of administration which is in close touch with the state insurance department, attorney general's office and the factory inspection service. It requires a form of administration that is in touch with the administration of compensation laws in the other 31 states having such laws, and which can meet with the commissions and boards of these other states and discuss the complex problems brought forth by compensation legislation. The courts by their very nature are not adapted to this kind of work, and we believe that it is wiser to begin to
develop a permanent system of administration now than to wait until our problems have become so great that the present system has entirely broken down—as it will inevitably do with the steady increase in the number of
It has already become very difficult to keep track of what is going on, and is becoming increasingly difficult for the department of labor with the present organization to do the “follow up” work required to secure justice for the workman. The Minnesota law would be absolutely unworkable ir. Ohio, New York, California, Illinois, or any other of the more densely populated states.
In the second place, we do not believe that the approval of these settlements is a judicial function. The determination of a compensation award is not a judicial but an administrative procedure. A hearing to determine the amount of compensation due a workman is not a trial, nor a substitute for a trial. It is simply a business procedure for the enforcement of a contract created by the compensation statute. The compensation law says to the employer: "If you hire a workman you thereby contract to pay him the amounts specified by the compensation act if he is injured,” and it says to the workman: “If you accept employment with this employer you thereby contract to accept the amounts specified by the compensation act if you are injured.” When an accident occurs the doctor's certificate determines what classification the injury comes under, the pay roll determines the wage, and the determination of the compensation due becomes simply a problem in arithmetic. The court approval required by section 22 of our act is simply a checking up to see that the private individuals who were bound by this contract and who were liquidating the claims created by it figured up the weekly
rate of compensation correctly. Such work is not proper work for the courts for various reasons. In the first place such work is administrative, not judicial, and can best be done by an administrative office organized for this specific purpose. It requires an administrative organization which can go out and get information by interviews, affidavits, and personal observation concerning the detailed facts surrounding the employment and the injury, and which can keep the case under continuing observation. Our law provides in section 22 machinery to make sure that the settlement agreement when entered into is in accordance with the terms of the act, but its machinery for watching the case thereafter is decidedly defective. Compensation payable in periodical installments for an indefinite period and to terminate when the disability terminates always brings forward at some time or another the question: "Has the disability now terminated ?” Witness how this works out at the present time. A workman suffers a broken leg. His wages are $16 a week. His employer's insurer makes out a settlement agreement whereby he agrees to pay the injured $8 a week during his disability. The settlement is submitted to the court. It is according to law. It is approved and filed with the clerk of the court. A copy is duly sent to the labor commissioner. The insurer begins his payments. This case is now over and closed, so far as the court is concerned. The settlement has been signed, approved, and filed. Three months go by. One day an adjuster comes to the injured's home and says: “The doctor says you are well enough to go to work. Here is a final receipt. Sign it and we will give you your week's compensation.” “But,” the man answers, “my leg is not strong enough to go back to work.” “Well, you've got to sign up or you won't get this money. The doctor says you are well and we are not going to pay you any more. The injured must either sign or start a lawsuit—if he conforms to the law. More probably he will come to the department of labor to see what he can do in the circumstances.
Hundreds of cases have come to our attention, where men have been laid up for weeks after final receipts have thus been taken. In a majority of the cases when complaint has been made to the labor department the extra payments due have been obtained for the injured. In a considerable number of cases the labor department has turned down the complaint as unwarranted. In still other cases the workmen have lost their compensation in spite of our efforts. Many simply sign and never complain and suffer their injustice.
Now the point that we have in mind in discussing these facts at this time is that none of these things which occur after the approval of the settlement are known or can be known to the court. The only relief which the injured could be able to get from the court would be by starting an action to secure judgment. The only value the original settlement would be to him in this proceeding would be to show that his claim had been admitted and at what rate per week. He would have to prove the facts upon which he was basing his claim and his legal expenses and the cost of his medical witnesses would in many cases more than consume his compensation. His only relief is therefore valueless to him, because it would cost him more to exercise it than he could secure by it. The other side is therefore perfectly safe unless some other pressure can be brought to bear on them, and all that they stand to lose then is what they were obligated to pay anyway.
The time when a compensation claim requires public supervision is not nearly so much at the time when the original agreement is made and the attention of both parties is focused on the law as after that time. Very little, though some, crookedness, or error, has occurred in the making of settlement agreements, but much more has occurred after the cases have passed outside the courts' jurisdiction, and still more would have occurred if the labor department had not kept such a close watch on what was going on and expressed itself so vigorously when anything improper came to its attention. The courts cannot exercise that continuing supervision of the law's operation which is essential to the prevention of such abuses as these.
We have suggested that this work of supervision be assumed in nondisputed cases by the labor department because we are not prepared to recommend that a special commission be created for this purpose. Such a commission does not appear at this time to be needed and there is no general demand for its creation. The labor department can handle the work through a workmen's compensation bureau in the department. The reservation of the right of the parties to appeal from a decision of the labor department which either of them thought unfair or erroneous would prevent any injustices to either party.
As a result of the unfitness of our present legal procedure to straighten out these dispụtes occurring subsequent to court approval the workmen are continually bringing these cases before the labor department. It is noteworthy that the insurers and employers also frequently take the initiative in requesting that these questions be submitted to the labor department rather than tried out in court. It would therefore look as if he interested parties trust the department. As a result, this department has adjusted more than fifty of these disputes for each one that has been adjusted by the courts.
To illustrate with one typical case out of hundreds. An employer of over 2,000 men who does not carry insurance came to the department of labor with a workman who had suffered a permanent injury to his eye and said: “We have agreed with Mr.- that we will pay him whatever percentage of loss of an eye you say he is entitled to." The department thereupon took the man to a specialist, had his eye examined, received a written report from the specialist and determined the degree of injury, which determination was accepted by the parties. It cost the department $5 to have the man examined, and two hours' time of one department employe. The employer and the employe left the department's office friends, and the man went back to the employer's service.
If the injured had adopted the simplest procedure prescribed by the act and filed a petition with the court for appointment of a neutral physician it would have cost the parties far more than the $5 above referred to, would have taken some days or weeks to secure a determination, and would have engendered enmity between the parties. Court actions normally arise out of strife and arouse human hatreds, and any system of procedure which requires the parties to go into court stimulates hostilities, misunderstandings, and bitternesses. Such disputes and questions as can be decided by an administrative body ought to be so decided, although such a body might properly be permitted to assess the cost of necessary medical examinations against the parties. The department has found it necessary to call in the physicians in but a small percentage of cases however. Another type of case illustrates another phase of this same situation. A workman in some small town writes in that he has been injured and wants advice. The case is one requiring a personal visit. The department sends a deputy to interview the injured and his employer. He advises the parties of their respective rights and tries to effect a friendly agreement between them. If he fails he can only advise the workman to start a court action. The department is empowered under section 24a to represent the workman in such an action but in most cases finds it necessary to advise the injured to secure an attorney, because the department's force does not include an attorney, and the department would be false to its duty if it undertook to handle cases for the injured only to los em by its ignorance of court procedure and legal technicalities. The department therefore takes only those cases where the points at issue are relatively simple and there is no danger of losing the case by lack of legal knowledge and where it is sure that the injured is in the right. If, however, the department's deputy was representing an administrative body with some real power, he could thoroughly investigate the case, take the affidavits and arguments of the parties and submit the question for an official determination without requiring the parties to hire attorneys, go to court, or engage in any formal contest.
Another reason for centralized administrative supervision of settlements is that it would be far cheaper than the present system. A large amount of time is wasted by adjusters and attorneys waiting around the court houses trying to get their settlements before the judges for approval, and the salaries of these adjusters while thus idling represents a waste which must be met by the employers. A central administrative bureau could handle the whole work of approval at much greater speed and with far less expense.
The department, which has its inspectors and other representatives in all sections of the state, will be able to check up the facts in any cases at a minimum of expense and with a minimum waste of time, and to handle the great bulk of the work of approving claims by mail. If we can eliminate or reduce these wastes now incurred by the employers and insurers we can enable the employer to provide the present compensations at a decreased cost or higher compensations at insurance rates no higher than those at present in force. The expensive formal petitions necessary for presenting the facts in a compensation case to the court, which cost about thirty cents for each case adjusted, together with the clerk of court filing fees, represent another expense running into thousands of dollars a year, which could be very greatly reduced in the more simple forms that could be used by an administrative body.
Another very important advantage that would accrue from administrative instead of court approval of compensation settlements would be that injured workmen would get their compensation more promptly. Unnecessary delays are now altogether too frequent. Adjusters get around to see the injured when it is convenient for the adjuster. If the department of labor were approving claims it would exert itself to see that the workmen got their money when it was due, and not six, eight, or ten weeks after they were injured.
Two other administrative recommendations may also be made at this time; the first on the filing of settlements, and the second, on the witnessing of signatures.
FILING OF SETTLEMENTS. Section 22 of the act requires that all settlements, after approval by the court, shall be filed with the clerk of the district court. A filing fee