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A Bailout for Workers' Compensation
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A Bailout for Workers' Compensation

Occupational Dieasese

The issues facing the present economic downturn are not necessarily the same that existed during the great depression, and therefore the outcome may not be the same. The US workers' compensation system, a patchwork of State programs, is seriously challenged during tough economic times. The past does identify a pattern that may require similar solutions. 

It has been reported that the US government is contributing vast sums to bring the economy out of the ditch. "In the last year, the government has assumed about $7.8 trillion in direct and indirect financial obligations. That is equal to about half the size of the nation’s economy and far eclipses the $700 billion Congress authorized for the Treasury’s financial rescue plan."

Workers’ compensation is not necessarily an anti-cyclical market. It is a politically entrenched program. The present economic crisis will change the social and economic fabric of the country."....the most troublesome unknowns are how the maze of protections for investors and consumers will change economic and political behavior in the future." The NY Times reported that levels of unemployment might reach 10%, a number used to define depression.


During The Great Depression, the US workers’ compensation system had an additional unique challenge. Silicosis claims were challenging Industry with uncertain economic outcomes. The insurance industry rushed to the rescue by advocating that silicosis and other occupational diseases be brought within the umbrella of the workers’ compensation system.


Activity soared within the workers’ compensation arena. The pace continued through the pre and post-World War 2 years as the legacy of disease and death continued. Asbestos claims and other toxic tort claims continued the spiral. When workers’ compensation could not fully compensate the victims, the activity switched to the liability arena, claims proliferated, and activity soared. Insurance exhaustion, corporate bankruptcy, an aging workforce, lack of manufacturing in the US, and Federal Multi-District litigation. Soon led to a decline in litigation activity.

Confronting the present workers’ compensation programs are the residual issues generated by the expansion of the occupational disease litigation program of the 1930s. Cost shifting from workers’ compensation to other programs has resulted in the workers’ compensation system becoming a collection agency and in bureaucratic stagnation. Occupational disease claims created major cost shifting of medical costs to other systems, including temporary disability benefits, significant medical and Medicare and Medicaid, disability pension, and Social Security.

 In the 1930s, the Federal government, through the Department of Labor, stepped in to save the system. In their volume, Deadly Dust, David Rosner and Gerald Markowitz point out that without national standards and a uniform approach, the 1930s system would not survive that moment.  They also explore the interlocking relationships of public health, labor, business, and government to discuss who should assume responsibility for occupational disease.


The economic factors of The Great Depression now hover over the present workers’ compensation system. The Federal Government now needs to intervene and bail out the State systems and rethink the medical delivery system that has generated tension in medical and reimbursement programs. 


The author, Jon L. Gelman, practices law in Wayne, NJ. He is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman  1.973.696.7900 have represented injured workers and their families who have suffered occupational accidents and illnesses.

© 2008-2020 Jon L Gelman. All rights reserved.

Recommended Citation: Gelman, Jon L.,  A Bailout for Workers' Compensation, (2008),

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