Effects of Workers' Compensation Systems on Recovery from Disabling Injuries

James P. Robinson and John D. Loeser


Many observers have argued that disability systems have adverse effects on the people whom they serve (Harris et al. 2005; Atlas 2007; Gabbe 2007). The purpose of this chapter is to evaluate these claims, and consider ways in which disability systems might affect the behaviour of their beneficiaries.

Any discussion of the effects of disability systems is complicated by the fact that there are many types of disability, and many organizations that provide disability benefits. For example, some people (e.g. ones with C4 quadriplegia or severe mental retardation) require personal attendants or long term institutionalization because they cannot perform basic activities of daily living (ADLs). Others are able to perform basic ADLs, but are disabled in the sense that they are unable to work. Among work-disabled individuals, some have life-long disabilities, whereas others function in the work place for an extended period of time, and then develop medical conditions that disable them. These conditions might be results of their work activities (e.g. a logger who sustains a spinal fracture when a tree falls on him), or might be unrelated (e.g. a worker who has a myocardial infarction). Corresponding to the multiplicity of types of disability and circumstances under which people become disabled, there are several organizations that provide assistance to them. In the USA these include workers’ compensation (WC), programmes run by the Social Security Administration, disability programmes run through the Veterans Administration system, private disability programmes, and welfare programmes. It is not uncommon for a disabled person to interact with several of these—e.g. he might start with a workers’ compensation claim, but later receive Social Security Disability Insurance benefits.

For simplicity, this chapter focuses on individuals who sustain injuries at work and receive benefits through a WC system in the USA. Several other caveats are in order. First, it should be noted that the majority of work injuries (approximately 70%) (Bureau of Labor Statistics 2008) resolve uneventfully, and do not lead to work disability. A WC system is more likely to affect the recovery of an injured worker (IW) if the worker has a significant amount of contact with it. Thus, this chapter focuses on work injuries that lead to work disability, and especially ones associated with protracted work disability. Second, there are workers’ compensation systems for each of the 50 states, as well as federal systems (Williams 1991). These systems vary substantially. It is beyond the scope of this chapter to explore this variation (Analysis of workers’ compensation laws 1996). But it is important to note that an IW’s behaviour is likely to be influenced by specific rules and regulations pertaining to the WC system with which he/she interacts.

Two basic questions need to be asked regarding the influence of the WC system on IWs: (1) are IWs affected by their interactions with the WC system, and if so, (2) what are the mechanisms by which the effects take place?

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