Opinion ID: 2083424
Heading Depth: 3
Heading Rank: 1

Heading: National Workers' Compensation Reform

Text: Beginning in the early 1990's, major reform efforts were undertaken in several states to introduce or expand alternate dispute resolution mechanisms in the workers' compensation system. These efforts, often referred to as the privatization of workers' compensation, were designed to reduce the cost of the system without decreasing benefits, by offering an alternative to the formal hearing process. [2] The formal process was perceived to be too complex, too expensive and too slow. [3] Although there were some variations in the several state reform measures, all shared a common format of introducing ADR mechanisms to streamline the process. Some states provided broadly for voluntary mediation or arbitration when agreed to by an individual claimant and the employer. See, e.g., Mass. Gen. Laws Ann. ch. 152, §§ 10B-10C (2004); Mo.Rev.Stat. § 287.460 (2004); S.D. Codified Laws § 62-7-37 (2004). [4] Other states more narrowly authorized workers to opt out of the formal claims process by creating ADR systems in collective bargaining agreements made by the workers' union with qualified employers. To date, eleven states, including Minnesota, have adopted this latter mechanism. [5] Until today, none of these states has upheld any challenge to the authority of its legislature to enact such a reform or to the constitutionality of the private ADR mechanisms that have been created by the various collective bargaining agreements. For example, in California, a claimant alleged that the denial of access to the formal claim process violated the state constitution by creating an encumbrance on the workers' compensation system. Costa v. Workers' Comp.App. Bd., 65 Cal.App.4th 1177, 77 Cal.Rptr.2d 289 (1998). The court rejected that challenge, holding that the legislature's broad powers to create a compensation system included the power to reform the system by authorizing the creation of ADR systems in collective bargaining agreements. Costa, 77 Cal.Rptr.2d at 294.