Asbestos Claims: The Decision to Use Workers’ Compensation and Tort

By Richard A. Victor

September 1, 1988 Related Topics: Other

Considerable controversy surrounds occupational disease claims, especially asbestos claims, in both workers’ compensation and tort. Many have serious questions about the adequacy and equity of compensation, high litigation costs, uncertain liability rules, and the cost and availability of insurance. Others express concern about the paucity of workers’ compensation claims relative to the large number of product liability suits in tort.

This study finds that over thirty-five hundred product liability cases were filed in Massachusetts as of 1985. In only about half of these did the attorneys file workers’ compensation claims, and in less than half of the filings were the workers’ compensation claims actively pursued. This reliance on product liability over workers’ compensation has led many to argue that the latter is failing as a remedy for asbestos workers. This is a special concern where state laws include restrictive statutes of limitation, definitions of compensable diseases, lower-than-usual benefit levels, and other provisions that bar or discourage long latency occupational disease claims.

Reform proposals have been introduced to improve state workers’ compensation systems for asbestos claims or to replace them with special federal occupational disease compensation systems. To assess the alternatives, policymakers must understand how workers’ compensation, product liability, and other compensation alternatives interact to influence the decisions of workers’ attorneys to pursue different remedies.

The study has important lessons for several policy debates.

Projecting the use of a federal system. The findings of this study indicate that two existing nonrestrictive workers’ compensation systems are not utilized fully, raising questions about whether a nonrestrictive federal occupational disease compensation system would be used any more heavily. A federal system is likely to contain features commonly associated with existing state and federal workers’ compensation programs—tort liens, attorneys’ fees that are lower than they are in tort, and indemnity benefits that are limited but certain. Use of a federal system also probably would be impaired as long as benefits paid by other programs—social security disability insurance (SSDI) and private benefits (health, disability, and pension benefits)—offset workers’ compensation benefits.

Removing restrictive provisions in certain states. In those states with restrictive provisions, our findings regarding Massachusetts and the U.S. Longshoremen’s and Harborworkers’ Compensation Program suggest that removing restrictions would encourage greater use of the system by some but not all potential claimants. However, one cannot simply use the number of tort filings as a basis for projecting this increased use.

Increasing the use of nonrestrictive workers’ compensation systems. Certain features of the Massachusetts system that discourage its use by asbestos claimants and their attorneys are shared by other states, which may want to consider changes. First, the need to join multiple defendants to determine responsibility for the "last injurious exposure" raises discovery and processing costs to the claimant’s attorney, discouraging the use of workers’ compensation. On the other hand, the alternative—responsibility on the last exposing employee—could place full liability on an employer with only token exposure. A second—liability among all exposing employers—may be faster, but it still requires multiple defendants with adversarial interests.

Second, the time, paperwork, and strategic disadvantages involved in workers’ compensation liens on tort recoveries discourage many attorneys from pursuing workers’ compensation benefits for clients. Yet, where employers rely on product manufacturers to produce safe products for the workplace, it may be unjust to place liability costs on these employers to the benefit of those manufacturers.

Third, occupational disease cases are more expensive for attorneys to handle than typical traumatic injury cases, and if fees are inadequate, claimants are going to have difficulty getting representation for their workers’ compensation cases. Consideration, then, might be given to allowing higher percentage fees in certain types of longlatency occupational disease cases. Those considering raising fees for occupational disease cases also should be willing to consider lowering fees for cases where demands on an attorney’s time and effort are less than average.

Asymmetric treatment of collateral benefit sources. The structure of most private benefit plans and of the SSDI program requires offsets against workers’ compensation benefits; that is, the benefits from these collateral sources often are reduced if the worker also receives workers’ compensation benefits. By contrast, none of these programs has offsets against tort recoveries, and the rules of tort law in most states require the judge or jury to ignore the presence of collateral sources when awarding tort damages. This asymmetry accounts in part for the tendency to bypass workers’ compensation. Incorporating offsets against tort awards or settlements in these other benefit programs would enhance the relative attractiveness of the workers’ compensation remedy. A change in the tort collateral source rule could have a similar effect.

Asbestos Claims: The Decision to Use Workers’ Compensation and Tort. Dr. Robert I. Field and Dr. Richard B. Victor. September 1988. WC–88–5.

Copyright: WCRI

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