the state that has attempted to interpret the language of section 18 as you interpreted in your letter of the 1st.

"Your construction of section 18 is unquestionably erroneous. The intention of the legislature, and the interpretation given to the meaning of that section by the courts and the private parties who are working under the law, is practically unanimous that the purpose of the section is to give every man whose injury requires it medical care up to an amount of $200 or during the period of ninety days.

"The only 1 reason that the clause was put into the law provided for the order for the additional $100 was to prevent physicians from making exorbitant charges. The case in question does not constitute one of the exorbitant charge cases. Dr. B has simply charged you the regular rates for medical service in this county.

"In the sixth place, I intimated in the last paragraph of my previous letter that I do not believe that your company can afford to permit this case to go to trial. Your attitude is so entirely out of harmony with that of the other insurance companies of the state that your company can receive nothing but condemnation for the fight that it is making in this matter. Your local agents fully realize that as a financial proposition your company will suffer an injury entirely out of proportion to the $64 it may possibly save by going to trial in this case.

"I am writing you entirely in a friendly spirit and I hope that the differences of opinion between us may be cleared away, but I do not believe that there is any argument that you can bring forth which can change our opinion of your attitude in this case. I have handled this case myself and have been entirely familiar with every detail of it for several months, and your interpretation of the law in your last letter cannot change my interpretation of either the facts or of the law. I hope that you will see your way clear to telegraph your local agents to pay this account without going to trial." The case went to trial and the insurer lost.

Case No. 6. The sixth case we cite illustrates another type of injustice. Employers sometimes refuse to pay their injured workmen compensation due them, and the injured have to start an action to recover their compensation and the cost of medical care. If the court's decision is not handed down within 100 days of the date of injury the court is unable to allow more than $100 medical benefit to the employe. A typical case is that of Henry Klepperich vs. Village of Cologne, Carver county. Klepperich was village marshal and was so seriously injured while helping a crew plow up a street that the court awarded him total disability compensation for 27 weeks and partial disability for the balance of 300 weeks. The court_said that he "was compelled to incur a reasonable expense," "to employ physicians and surgeons and to go to the hospital," "of more than $200, which were furnished and provided within ninety days after said accident occurred, but no application having been made to the court during said ninety days to require the employer to furnish such additional, medical, surgical and hospital treatment as were reasonably necessary, the plaintiff can only recover a sum of $100 for such medical and hospital treatment."

The case of Felix Klimek vs. The Town of Two Rivers, where the injured incurred expenses of $127.35, but the court could allow only $100, is another typical case. These two cases both happened to be against municipalities, but the same thing of course occurs with private employers and insurers.

GUARANTEES OF COMPENSATION.

One of the most serious defects in our law is its failure to guarantee the payment of compensation due. A workman may get a judgment in the courts and be unable to collect a cent because his employer has nothing on which to levy. Or he may secure an agreement of settlement from his employer, duly approved by the court, by which the employer agrees to pay a certain amount per week for a period of weeks, and if the employer dies intestate, leaves the state, has no property in the state, goes into bankruptcy or otherwise defaults in payment, the workman loses the balance of his compensation and has no recourse.

We called attention in our last biennial report to the case of Walter Korposki vs. Charles Koester. Korposki lost his leg near the hip. He obtained a judgment for $1,090, but was unable to collect a cent because Koester had no property on which to levy.

On March 16, 1916, Mrs. Joe Wells was terribly burned in the Dairy Lunch restaurant at Bemidji. She was hurt at 2:15 p. m. A fellow employe attempted to throw a pan of gasoline that had caught fire out of the door and threw it all over Mrs. Wells. At 7 p. m. the same evening the employer sold the business. He immediately left the state. Since he was not a resident of Minnesota and had no property in Minnesota, it was impossible to secure jurisdiction over him.

The hospital bills alone in the case ran far over $200, and the injured was entitled to a large amount of compensation. But we could not even serve legal papers upon the employer because he had "skipped the state," and all efforts of our department, aided by the Illinois Industrial Commission, failed to induce him to recognize his duty in the matter.

A third notable case is that of Frank Geroy vs. Dell Buzzard. Geroy was injured in the service of Buzzard while cutting bolts in the woods. He lost the use of one of his fingers. Buzzard refused to pay compensation. Two different representatives of the department endeavored to bring about a settlement, and a third was finally sent up to draw a complaint and start an action, but Buzzard had had trouble with his wife and left home. The injured did not recover a cent.

This case illustrates another defect in our law besides the failure to guarantee compensation. Buzzard was in reality a sub-contractor for the Minneapolis Manufacturing Company, which cuts wood into bolts for the Minneapolis Bedding Company, but the contract was drawn in a way that apparently left no recourse except against Buzzard. Many of the laws make employers responsible to the employes of sub-contractors unless they see to it that the sub-contractor insures his men.

The case of Jones vs. Lauer illustrates another type of cases where the injured lose the compensation due them. Lauer was a blacksmith running a small shop where he employed but one man. Jones received an injury, which disabled him for about a month. His doctor bill was $12 and he had about ten days' compensation coming. All efforts of the department to collect the compensation were fruitless and the amount involved was so small that no lawyer could afford to undertake an action unless Jones would virtually pay the lawyer all that he recovered. Furthermore, Lauer did not care whether they got a judgment or not, because he said they could not compel him to satisfy the judgment anyway. Cases such as this have come to our attention repeatedly, where the amount of compensation due was too small to make a court action advisable, and yet sufficient to constitute a distinct loss to the injured.

Another difficulty connected with the collection of compensation occurs in the case of the foreign corporation temporarily doing business in the state. A typical case may be cited. A Chicago contractor was doing construction work in St. Paul. One of their men was seriously injured. Two months went by without any payment of compensation and in utter disregard of his demand for compensation. Some one appealed to the department. We found that the firm were about finished with their work in St. Paul and getting ready to leave the state. We telegraphed their Chicago office that unless we were advised within 24 hours that compensation would be paid we would file, an action and attach their property. Within 48 hours the injured had his money, but if complaint had been made to us two weeks later we would have been powerless.

We will make two general recommendations on this point: first, that the main contractor or employer be held responsible to the employes of subcontractors unless he requires the subcontractor to insure his employes against accident; and second, that some positive plan be incorporated into the law for guaranteeing every workman's compensation, regardless of whether the employer is insured or not.

There were compensation laws in force in thirty-one states and two

1

territories on December 1, 1915. In twenty-five of these thirty-three jurisdictions the employer is required to either purchase insurance to guarantee the payment of the compensation due his employes or demonstrate to some public authority his financial ability to pay the losses without insurance. (1) In the other eight jurisdictions-Minnesota, Alaska, Arizona, California, Kansas, Louisiana, Nebraska and New Jersey-there is no security whatever provided to insure that the workman will secure his compensation. A glance over this group of states listed with Minnesota will instantly call the attention of any person well informed upon compensation legislation to the fact that (with the exception of California) it is a group of states distinctly backward-almost reactionary-in compensation as well as all other forms of labor legislation. Minnesota cannot afford to continue longer with such a vital defect in her compensation act.

Ten of the states which safeguard the payment of compensation are states where the employer's election of the act is "presumed" as it is in Minnesota. When our law was enacted in 1913 it was the common belief in Minnesota that it would be impossible to couple a presumed election with a compulsion to insure. In other words it was believed that the state could not presume that an employer had elected to come under the act and then impose upon him the direct duty to insure his liability under the law.

But other states were not so timid. Colorado and Pennsylvania, where election is presumed just as it is in Minnesota, require every employer operating under the act to insure either in the state fund or an authorized insurance company, or to furnish the state proof that they can pay any compensation due and to furnish whatever bonds or securities for compensation may be demanded by the state. Connecticut, Illinois, Indiana, Iowa, Vermont, and Wisconsin-all of them states with presumptive elective laws -require the employer to either insure in an authorized company or to furnish proof of his ability to pay with such bonds or securities as may be required. Nevada and Oregon, also presumptive elective states, require the employer to carry insurance in a state fund.

It is clearly practicable to compel the employers of Minnesota to either insure, file proof of ability to pay or furnish bonds or security for compensation. Every insurance company in the state, as a part of this plan, should also be required to file with the commissioner of labor notice of every compensation policy they have in force in the state on July 1, 1917, and notice of every new policy written thereafter and of every policy cancelled, elapsed or terminated, so that an absolutely correct record of the compensation insurance in force in the state would be in the hands of the commissioner of labor at all times.

The second portion of the recommendations under discussion, namely, that all contractors be held liable for the compensation due the employes of subcontractors, has likewise been worked out in the laws of ten of the other states-California, Connecticut, Hawaii, Illinois, Indiana, Kansas, Massachusetts, Texas, Vermont and Wisconsin. California, Illinois, Kansas and Louisiana have worked the difficulty out more efficiently than the other states, and we would recommend the incorporation of either section 30 of the California or section 4 of the Kansas law into the Minnesota act. The California section reads as follows:

"Sec. 30. The liability of principals and contractors for compensation under this act, when other than the immediate employer of the injured employee, shall be as follows:

"(a) The principal, any general contractor and each intermediate contractor who undertakes to do, or contracts with another to do, or to have done, any work, shall be liable to pay to any employe injured while engaged in the execution of such work, or to his dependents in the event of his death, any compensation which the immediate employer is liable to pay.

"(b) The person entitled to such compensation shall have the right to recover the same directly from his immediate employer, and in addition thereto the right to enforce in his own name, in the manner provided by this act,

(1) The department does not deem it necessary to publish footnotes listing the names of the various states referred to. We will be glad to refer interested readers to other publications which furnish this information and which make it unnecessary for us to publish it.

the liability for compensation imposed upon other persons by this section, either by making such other persons parties to the original application or by filing a separate application: Provided, however, that payment in whole or in part of such compensation by either the immediate employer or other person shall, to the extent of such payment, be a bar to recovery against the other by any person entitled to such compensation.

"(c) When any person, other than the immediate employer, shall have paid any compensation for which he would not have been liable independently of this section, he shall, unless he caused the injury, be entitled to recover the full amount so paid from the person primarily liable therefor.

"(d) The liability imposed by this section upon such principal, general contractor and intermediate contractor shall be subject to the following limitations:

"(1) Such liability shall exist only in cases where the injury occurred on or in or about the premises on which the principal, general contractor or intermediate contractor has undertaken to execute any work, or when such premises or work are otherwise under his control or management.

"(2) Such liability shall not exist in the event that the immediate employer, or other person primarily liable for the compensation shall, previous to the happening of such accident, have taken out, and maintained in full force and effect, compensation insurance with any insurance carrier, covering his full liability for compensation to the injured person or his dependents. "(3) The commission may, in its discretion, order that execution against the principal, general contractor and any intermedaite contractor, be stayed until execution against the immediate employer shall be returned unsatisfied."

The Kansas section is as follows:

"Sec. 4. (a) Where any person (in this section referred to as principal) undertakes to execute any work which is a part of his trade or business or which he has contracted to perform and contracts with any other person (in this section referred to as the contractor) for the execution by or under the contractor of the whole or any part of the work undertaken by the principal, the principal shall be liable to pay to any workman employed in the execution of the work any compensation under this act which he would have been liable to pay if that workman had been immediately employed by him, and where compensation is claimed from or proceedings are taken against the principal, then, in the application of this act, references to the principal shall be substituted for references to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the workman under the employer by whom he is immediately employed. (b) Where the principal is liable to pay compensation under this section, he shall be entitled to indemnity from any person who would have been liable to pay compensation to the workman independently of this section, and shall have a cause of action therefor. (c) Nothing in this section shall be construed as preventing a workman from recovering compensation under this act from the contractor instead of the principal. (d) This section shall not apply to any case where the accident occurred elsewhere than on or in, or about the premises on which the principal has undertaken to execute work or which are otherwise under his control or management, or on, in, or about the execution of such work under his control or management. (e) A principal contractor, when sued by a workman of a subcontractor, shall have the right to implead the subcontractor. (f) The principal contractor who pays compensation voluntarily to a workman of a subcontractor shall have the right to recover over against the subcontractor."

LUMP SUM SETTLEMENTS.

We would call the attention of the legislature to the fact that the first sentence of section 25 entirely defeats the purpose of the legislature as expressed in the second sentence of section 22. Section 22 opens as follows: "The interested parties shall have the right to settle all matters of compensation between themselves. But all settlements shall be substantially in accordance with the provisions of sections 13 and 14 of this act and shall be approved by a judge of the district court." The obvious purpose of this language is to compel the employer to pay the employe the amounts prescribed in sections 13 and 14. The employer is not only told that he must pay the amounts prescribed by the act but the district court is instructed to see to it that the employer's terms of agreement with the employe conform to sections 13 and 14.

It is clear that the settlement agreement must conform to the act. But after the employer and employe have agreed that the employe is entitled to "X" dollars per week and the court has signed the settlement as being in accord with the law, the employer may, under authorization of section 25, absolutely and entirely disregard that settlement agreement and settle with the employe for any sum that he can induce the injured to take. Sec

tion 25 provides that "the amounts of compensation payable periodically hereunder, * * * may be commuted to one or more lump sum payments, except compensation due for" death, permanent total disability or loss of hearing, an arm, a leg, a foot, a hand or an eye or any two of them. "These may be commuted only with the consent of the district court." Any temporary disability settlement, such as for fractured arms or legs; any settlement for loss of fingers or toes, or for body or head injuries, may be commuted to a lump sum on such terms as the employe can be induced to take. The revision of this section by requiring state approval of all lump sum settlements is imperative.

Sections 26 and 27 clinch the evil effects of section 25. Section 26 provides that all settlements for disabilities of less than six months' duration shall be final and not subject to readjustment, and section 27 that all lump sum settlements shall be final. Section 27 also provides a procedure for readjustment of the amounts of compensation when payable periodically for a period in excess of six months, but we are not discussing this point at this time.

After an employer or insurer has availed himself of section 25 and made a lump sum settlement for less than the amount to which the employe is entitled under section 13, he can turn to section 27 (if an effort is made to compel him to pay the employe the true amount due), which provides that all lump sum payments are final and defy the state to compel him to conform to the settlement made under section 22.

There is no justification for this portion of section 27. If the amount of compensation due any injured workman is determined by the state, and the state's authority tells the employe when he has had all that is coming to him the employer or insurer has all the protection he needs. He does not need the protection of a clause which makes "final" any lump sum settlement that he is able to effect with the injured. We should rely on an impartial authority's investigation of the facts for the employer's protection and not upon tricky language inherited from the old liability law and procedure.

The employe, on the other hand, should be able to reopen a case and secure additional compensation if he is able to demonstrate that he has actually been disabled longer than the period for which he was paid. Hundreds of cases have come to our attention where the payment of compensation has been stopped and the workman alleged a longer disability. In some cases the workmen's claims have been found to be unsound; in a much greater number they have proved their claim. In some of the latter group of cases the payments have been resumed. In others the employer or insurer has stood on his final release and refused to make additional payments.

The language should be stricken out of the act. No payment should be final except the payment of the last dollar due the workman. The attorney general's office, in an opinion rendered this office on July 22, 1913, says that the language used in sections 26 and 27, "abrogates the old rule that the payment of a less sum than actually due would not bar the recovery of the balance." Why should the debt owed by an employer to a landlord, a jobber, a railroad or any other creditor except his employe be good for one hundred cents on the dollar but the debt due his workman as a result of an injury be capable of being satisfied at a discount, the discount being secured sometimes practically by coercion, sometimes by smooth talking, sometimes by the flaunting of a roll of bills before the eyes of one not accustomed to seeing more than a week's pay? No one knows as well as this department does that the vast majority of employers and of insurance companies are giving the men every cent that they are entitled to, and that there are more employers who pay more than the law requires than there are who pay less. But it is just exactly that minority of unscrupulous adjusters that we want to deprive of the fences behind which they hide.

Section 26 is continuously and habitually disregarded by the employers and insurers, because it is to their interest to disregard it. The section is inconsistent with subsection "b" of section 13. Subsection "b" provides that