Alaska’s Fishermen’s Fund and 9 Other Interesting Facts about Workers’ Comp in the USA

| | Utilization Review

The modern workers’ compensation system in the United States has its roots in 19th Century Germany. Otto von Bismarck was the first Chancellor of Germany. By passing the Employer’s Liability Law of 1871 and Workers’ Accident Insurance in 1884, von Bismarck became the first state leader to create a system of government-run workers’ compensation.

Until 1871, employers were generally not held liable for worker injuries because the “assumption of risk” doctrine was exceptionally far-reaching. The thinking was that if a worker agreed to work in a position then the worker also agreed to assume any inherent risk it carried. Further, since no employer wanted an employee to be injured (and thus unable to work) it therefore made sense that employers would provide appropriate safety measures. However, with the dawn of the industrial revolution, many workers were no longer in a position to reasonably know and understand the risks.

In addition to changing work environments, von Bismarck had another motivation. 1860’s Germany was experiencing a very active Marxist and socialist movement. “Social protection” for workers was at the forefront of the socialist agenda. Being a shrewd politician, von Bismarck borrowed the social protection agenda from the Marxist and socialist movement and then outlawed the Social Democratic Party (the same movement).

Over time, other nations followed suit, including the U.S. In 1906 and 1908, Congress passed two Employers’ Liability Acts, which many believe to be the beginning of workers’ compensation in America. However, federal authorities believed the states should handle the brunt of workers’ compensation systems. In 1911, Wisconsin became the first state to pass comprehensive workers’ comp legislation, setting in motion the state-by-state workers’ compensation system we know in America today.

Because each state runs its own workers’ compensation system, rules and regulations vary quite a bit across the country. This can cause confusion for employers, insurance carriers, third party administrators (TPAs), and utilization review agents (URA) trying to cope with myriad different state statues and rules.

Here are 10 interesting differences between the states:

    1. Mississippi was the last state to pass workers’ compensation legislation. It wasn’t until 1948, just 67 years ago, that Mississippi introduced workers’ compensation coverage. Prior to 1948, an injured worker had to sue in Trial Court and prove the employer was negligent in order to receive benefits.

    2. In most states, special workers’ compensation boards handle workers’ comp claims. However, in four states – Wyoming, New Mexico, Louisiana, and Alabama – the claims go to state court. Instead of an administrative law judge, specializing in workers’ compensation, hearing a claim, it may be heard by a judge less knowledgeable about matters involving injured employees.

    3. If an employee loses a body part at work, the amount of compensation varies by state. For example, if a worker loses a hand in a punch press accident, the employee receives $141,719 in South Carolina but only $37,400 in Alabama.

    4. Most states offer lifetime benefits to permanently disabled workers, but Mississippi caps benefits at nine years.

    5. Employers in North Dakota generally pay the lowest workers’ compensation insurance rates.

    6. Employers in California generally pay the highest workers’ compensation insurance rates.

    7. Despite the problems of opioid and prescription drug abuse, 29 states have no guidelines or rules in place to address the issue.

    8. The state of Alaska has a Fishermen’s Fund, specifically dedicated to providing benefits to licensed commercial fishermen. Established in 1951, funding for the Fishermen’s Fund comes from commercial fishermen license and permit fees.

    9. Texas is the only state that allows employers to decline workers’ compensation insurance. Oklahoma allows an employer to decline to carry workers’ compensation insurance only if the employer provides an equivalent program approved by the state.

    10. Ten states use a system of independent medical review to ensure that workers receive reasonable and medically necessary treatment: California, Colorado, Georgia, Illinois, Montana, North Carolina, North Dakota, Oklahoma, Tennessee and Texas.

Clearly, workers’ comp rules and regulations vary greatly across the country. It’s no wonder that navigating the world of workers’ compensation can be difficult for parties involved in handling workers’ comp matters in multiple states. With the right tools and resources, employers, health care providers and utilization review companies can comply with state guidelines and achieve positive outcomes.


Tom Swiatek

As Assistant Vice President of Regulatory Services and General Counsel, Tom Swiatek draws on his experience as an insurance attorney on both the general liability side, as well as on workers’ compensation matters. As a Workers’ Compensation Section Member, Tom is leading the discussion with respect to the regulatory challenges and opportunities facing the workers’ compensation system.