Political CasualtiesBy Curt
Guyette Inside Gov. John Engler's war against workers' compensation
Related
link "What they are really
out to do," warns Ron Glotta, "is dismantle the workers'
comp system."
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INVESTIGATIVE REPORT Denise Johnson-Jackson spreads a stack of photographs across her dining room table and summons up memories of a life snuffed out. Every picture tells a story, each one kindling recollections of good times past. Like the festive gatherings she and her husband Mark would hold every Christmas, with family and friends by the dozens pouring into the big brick Victorian the couple was restoring room by room. "If there's such a thing as a real Norman Rockwell family, we were it," says Johnson-Jackson, a wistful smile creasing her face as she comes across a fading snapshot of Mark and their infant son playing in the yard of their Detroit home. This picture of contentment shattered forever the night of January 13, 1991, when robbers burst into the Detroit nightclub where Mark Jackson worked, gunning down the newly hired accountant. As if her husband's death weren't tragedy enough, during the days when Johnson-Jackson should have been coming to terms with the loss, she was struggling to get the state to ante up the modest settlement they needed to survive. The widow and her son, then 4 years old, were about to become an extreme example of what critics say is Gov. John Engler's growing indifference toward the welfare of Michigan's workers. FOR years, Michigan carried the reputation of being one of the nation's most sympathetic states when it came to dealing with work-related injuries and deaths. Big labor long wielded its clout, leading employers to claim that they were saddled with a system that coddled workers, rewarded fraud and put business at a competitive disadvantage with other states. That image still lingers, though the reality has long since changed. Reforms enacted during the 1980s pushed the pendulum from left to center, putting Michigan into line with the rest of the nation. But those reforms haven't appeased conservatives. When it comes to Michigan's injured workers, the Engler administration is pushing an agenda that critics say has more to do with opportunism and greed than fair play and compassion. Workers' compensation is the insurance employers are required to carry to pay the medical bills for workers' on-the-job injuries, to replace the resulting lost income and as a safety net in case of permanent disability or death. The system is supposed to protect both workers and employers: Workers are guaranteed they'll be cared for while employers are, for the most part, shielded from massive personal injury lawsuits. Nonetheless, many businesses still complain about the cost of workers' compensation insurance. Michigan now ranks 37th in the nation in terms of workers' comp costs, according to the Michigan Department of Labor. Coverage here costs employers $1.40 for every hundred dollars of wages paid, which is more than 20 percent below the national average. And things continue to improve -- rates dropped more than 5 percent in 1995, and are expected to fall 15 percent this year. Despite the rate cuts, profits are up for insurance companies, which have seen profits rise 17 percent in Michigan between 1991 and 1994, according to figures recently released by the National Association of Insurance Commissioners. So with costs dropping and insurers' profits rising, why push for more changes designed to benefit employers and insurers? "The problem with the corporate bottom line is that it has no bottom," observes Darrell Tennis, a labor lobbyist in Lansing. "When are they going to be satisfied? When Michigan is ranked 50th out of 50 states? Or maybe it will be when we're 51st, behind Guam." For her part, Denise Johnson-Jackson doesn't care what statistics illustrate the current plight of injured workers. All she knows is that neither she nor her son have seen a cent from the state fund that was supposed to get them back on their feet. JUST five years ago, everything seemed to be falling into place for Johnson-Jackson and her husband. After getting a degree in accounting from the University of Michigan, and then struggling through a couple of dead-end jobs, Mark Jackson had finally found the break he'd been looking for. Jackson started working as an accountant for a nightclub owner he met while teaching a computer class. At $700 a week, it was the most money he'd ever made. Once Jackson got a look at his new employer's records, his widow says, he realized the club had no workers' comp insurance. Jackson never got the chance to correct the problem. His third week on the job, the day his son turned four, robbers burst into the club and fired a shotgun at Jackson. He bled to death on the floor of the bar. There was at least one consolation in this tragedy: The state had a program in place to help out in such situations. At least, that's what Denise Johnson-Jackson was told. In 1990, seeing the problems faced by injured employees of companies which had no insurance, the Legislature devised a way to help. Money would come from a government-run agency that provided low-cost workers' comp insurance to employers. The agency, the Michigan Accident Fund, would contribute part of its profits to the newly created Workplace Health and Safety Fund, with half the money going toward research and workplace safety programs, and half to uninsured workers hurt (or killed, like Mark Jackson) on the job. At least that's how it was supposed to work. Although the Legislature appropriated money for the fund in 1991, 1992 and 1993, in all three years Engler issued vetoes stopping the expenditures. Moreover, Engler never appointed the board required to oversee distribution of the money. In 1994, the Legislature, by then under Republican control, didn't even bother making the appropriation. So there was no money for Denise Johnson-Jackson to collect. Meanwhile, she watched her life go from bad to worse. Unable to keep up payments on their house, which was being purchased through a land contract, she had to move. And then there were the creditors. "They'd tell me, 'it's too bad about your husband, but you still owe us that money,'" she recalls. "Things got so bad, I was thinking about killing myself, until the day my son said, 'Mom, if something happens to you, I'm gong to be all by myself.'" In 1995, as part of his government downsizing, Engler engineered the sale of the Michigan Accident Fund to Blue Cross/Blue Shield for $255 million. "If people were actually being helped by the fund, that would have made it more difficult to convince the Legislature that it should be sold," observed Tennis. It's that sale, he and other critics claim, that motivated Engler to withhold payment to Denise Johnson-Jackson. "It's almost as if I would have been better off if no one had ever told me about that money from the Accident Fund supposedly being there for me," says Johnson Jackson. "Waiting like this, and fighting to get what's yours, it wears you down." STARTED in 1912, the Accident Fund was far from being a costly social welfare program. Rather it was so successful that, during its last year of operation, it produced a $36 million surplus. "People were coming here from other states to see what we were doing," recalls Tennis, noting that elsewhere the trend has been toward establishing state-supported workers' compensation systems, not abolishing them. But the fund's success rankled its commercial competitors in the insurance industry, who complained that the fund enjoyed an unfair advantage. In response, in 1990 the Blanchard administration set in motion a plan to cut back the fund's profits. A portion of its surplus equal to the amount that would have gone toward federal taxes had the fund been privately run was set aside to support injured workers whose employers had no insurance, and to pay for workplace safety programs. That's the money that was to have helped Johnson-Jackson and her son get back on their feet. However, the insurance industry continued to call for the sale of the Accident Fund. And it was John Engler, then a state senator, who heard their call. In 1987, Engler, along with two other political allies, established the Mackinac Center for Public Policy, a Midland-based think tank that focuses on free-market economics. The think tank grew to be one of Engler's closest allies during his gubernatorial campaign three years later, often generating public support for his reforms. One of the center's co-founders was D. Joseph Olson, an industry lobbyist and longtime executive with Citizens Insurance. As one of the leading providers of workers' compensation insurance in the state, Citizens had a direct interest in the Accident Fund. The company also anted up $167,000 in contributions to the Mackinac Center between 1987 and 1994. The result was twofold: In 1987, the Mackinac Center published its debut report, "The Michigan Accident FundÉA Need for Privatization." Three years later, gubernatorial candidate John Engler, who had since severed his official ties with the center, declared that as governor, he would "get the state out of the business of writing workers' compensation insurance and (put) the Accident Fund in the hands of private entrepreneurs." The insurance industry finally had its champions. Engler and the Midland-based think tank spent the next eight years systematically chipping away at the Accident Fund and the Michigan's workers' compensation system. In 1992, Mackinac President Lawrence Reed pointed out that other state-run insurance programs "are almost routinely subjected to political abuse and manipulation; they often run substantial operating losses; they have boosted insurance costs to employers; and they undermine effective competition from better-managed private insurers." Indeed, many states had experienced problems with publicly funded workers' compensation programs; problems which were anticipated and corrected by the Blanchard administration. The Michigan fund never operated at a loss and succeeded in driving down the cost of insurance statewide. And after Blanchard ordered a 20 percent cut in Accident Fund premiums, private insurers had to cut their rates to remain competitive. Reed was correct on one point, however. The Michigan program was unable to avoid some of the "political abuse and manipulation" experienced in other states. In negotiating the sale of the Accident Fund, John Engler enlisted the help of one of his closest political advisers, Richard McLellan. McLellan, along with Olson and Engler, was a co-founder of the Mackinac Center. The Engler administration eventually awarded Dykema Gossett a $250,000 state contract to navigate the legal technicalities of selling off the fund. Richard McLellan is a partner at Dykema Gossett. LAST year, when the Accident Fund was sold, $52 million intended for injured workers of uninsured businesses and for workplace safety programs was still sitting there. The half that was supposed to go to research and safety is now gone-"stolen," say critics. "It went into the state's general fund to help pay for Engler's tax cuts," says state Sen. Gary Peters (D-Pontiac). "It's like a piggy bank the governor raided." The other half- $26 million- remains in limbo. Becasue of the sale, new legislation was needed to distribute the money. Meanwhile, at least 4,500 people like Johnson-Jackson are lined up, waiting for help. A bill now working its way through the Legislature could finally start putting that money into the hands of the people for whom it was intended. That's the good news. The bad news is that, upon Engler's insistence, the fund is closed-ended. Because there is a limited amount of money to go around, no one injured after June 1995 is eligible for benefits. "If the owner doesn't have insurance the day you are killed or injured on the job," explains Southfield attorney Barrie Bratt, "then you and your family are out of luck." Just how many people will be caught in the uninsured trap is difficult to assess. The most current information comes from a state audit that compared tax records with workers' comp information. That examination found that about 72,000 employers who paid state withholding taxes did not have workers' comp insurance in 1993 and 1994. Engler administration officials dispute the analysis, claiming that the actual number of uninsured employers is closer to 6,000. Considering the number of injured workers who have applied for help from the state, that estimate seems staggeringly low. "Those 4,500 people are just what we have so far," says Peters, who wrote the legislation attempting to force disbursal of the money. "There's going to be even more people coming forward once the bill is passed and word gets out that the money is available." ONE point that can't be disputed is the hardship Engler's tactics have caused. Just ask Denise Johnson-Jackson. Since 1991, she's been through four hearings in an attempt to claim her benefits. The state failed to attend any of them, so the case kept getting postponed. Finally, in November 1995, a magistrate awarded Johnson-Jackson $450 a week for 500 weeks. Even so, a single check has yet to show up in her mailbox. Were that money available back when her husband had just been killed, she probably wouldn't have lost the three-story brick home in Detroit they were restoring. But lose it she did, along with her good credit rating. "People were garnisheeing the hell out of me," she recalls. She scrambled to keep her world from completely falling apart, filing for bankruptcy and working in marketing part time in addition to holding down her full-time job as a social worker. Eventually, she quit that job and went to work in sales for a radio station. Under the law, she could have sued the bar owner for damages, but he suffered massive brain injuries when attacked with an ax during the robbery. Permanently debilitated, his assets quickly evaporated. For a time Johnson-Jackson and her son, now 9, bounced from apartment to apartment, trying to find one she considered safe. "We've moved three times in the past two years," she says, sitting in a small but tidy Southfield house she and her son have finally landed in. "It's not bad, but it sure isn't what we used to have." Meanwhile, they continue to wait for payment from the state. Despite winning the settlement, she and others like her aren't going to get paid unless Peters' legislation passes and Engler signs it into law. STORIES of hardship like Johnson-Jackson's -- and there are literally thousands of them in Michigan -- seem to have had little effect on the current administration. Her struggle and those of others who have been left to suffer because of the Accident Fund maneuverings may be the most poignant example of the administration's attitude injured workers, but critics contend it is far from the only one. Starting at the top, Engler appointed Jack Wheatley, an attorney who used to dispute workers' compensation cases for General Motors, to head the state's Bureau of Workers' Disability Compensation. According to resumes and job applications obtained through the Freedom of Information Act, 12 of the 34 magistrates who administer disputed workers comp claims are attorneys who previously defended employers and insurance companies in such cases. Their former employers include Amerisure, Citizens Insurance, Liberty Mutual, Wausau, Hartford, Lake States Insurance, and Transamerica Insurance Group. Other Engler appointees include five former corporate attorneys representing the likes of Chrysler and Kresge; and three Republican legislative staffers. None listed the representation of injured workers as their legal specialty, although one did have experience with firms that specialized in representing injured workers. And with Republicans in control of the Legislature, no one's likely to challenge Engler's judicial choices. "It is a rubber-stamp Senate," contends Garry Goolsby, a former appellate commission magistrate who was replaced by Engler. "John Engler is getting whoever he wants." In this increasingly conservative climate, workers and their attorneys claim it is becoming more and more difficult to get a fair shake. Workers' comp Director Wheatley points out that the vast majority of claims, which number 80,000-90,000 a year, are undisputed. Only about 5 percent ever end up before a magistrate. Only 24 percent of the 2,300 workers who appeared before a magistrate in 1995 won a clear-cut victory -- an "open award" in the parlance of workers comp. Compare that to what Wheatley laughingly calls the "bad old days" of the 1970s, when he was at General Motors: Workers won 70 percent of their cases. How much have things changed as a result of Engler's appointments and reforms enacted during the 1980s? Ed Welch, who ran the workers comp bureau under Blanchard, now publishes a newsletter on the subject. He found that between 1990 and 1994, the pendulum definitely swung in favor of employers at the magistrate level. During that time period, denials of workers comp claims jumped from 29 percent to 36 percent. The situation is even more dramatic at the appellate commission -- where either party unhappy with a decision at the magistrate level can take their case. According to a study of appellate decisions Welch conducted, workers at that level were losing 65 percent of the time. "Those commissioners are there to do the bidding of the governor," alleges Goolsby. Wheatley defends the bureau, saying that it's true employers are now winning more cases than they were previously, "but that's only because the playing field has been leveled." Plaintiff's attorneys disagree, saying the system has been so heavily politicized that they now face an uphill battle. "There are just some judges you absolutely cannot win against," contends attorney Ron Glotta, who represents injured workers. He says the result has been a chilling effect. He points to the case of a man who dropped dead of a heart attack while changing machine parts at the Detroit foundry where he worked. Even though two doctors testified that the labor contributed to his death, a magistrate denied the widow workers' comp benefits. "You're not supposed to have trouble with cases where a guy dies right there on the job," says Glotta. "This is a rock-bottom case, one we should not lose. If I can't win that case, what kind of case am I supposed to win?" Because of rulings like that, Glotta says "there is a whole series of cases that I've refused to take on, cases that I would have taken before." It is not just the attorneys for injured workers who say there's a problem. In a recent state appellate decision, judge P.J. Jansen blasted the Engler appointees on the workers' compensation Appellate Commission (WCAC). Pointing to a pattern of improper review favoring employers, he concluded that the law is intended to be "liberally construed to provide broad coverage for injured workers." "The growing trend of the WCAC is particularly troubling in light of the purposes of the workers' compensation act," he warned. Unlike magistrates and appellate commissioners, Jansen is an elected official. Workers' comp Director Wheatley disagrees with Jansen. "We studied the situation and determined that criticism isn't valid." If he's wrong and advocates for worker protections are right, we're quickly headed toward a day when the fundamental nature of workers' comp insurance will be radically altered, guarding the interests of employers while shredding the safety net for workers. THE way Denise Johnson-Jackson sees it, she's just trying to get what she deserves. It's not like she and her son would be living on Easy Street or raking in a windfall if the state finally paid up. Rather, the payments the family is entitled to don't nearly make up for the income Mark Johnson would be bringing home if he hadn't been murdered. "It's been really hard," says Johnson-Jackson. "We've had to move four times.... I worry about how I'll pay for Mark's college education. Everything is a struggle." She and other critics of Engler's ongoing campaign to curtail workers' rights dispute Republican assertions that the problem with workers' comp is people trying to cheat the system. How many people would jump through all of the hoops the system throws up for such a small payoff? "They talk about fraud," says Sandy Ulin, head of the nonprofit group Michigan Injured Workers. "They claim 'untold millions' is being lost because of it. I say, where's the proof?" Ulin says fraud does occur, but the vast majority of the abuse he witnesses is the "untold amount of human suffering" experienced by those caught in the wheels of Michigan's workers' compensation system. But these days in Lansing, when there's talk of "reforming" the system, it's almost always with the intent of improving the lot of employers, not employees. There is one piece of legislation pending that would make it easier to prosecute employers who don't purchase workers' compensation insurance, but don't expect to see it passed soon. "The Legislature is pretty busy," says Wheatley. "I don't think they'll be able to get to it this year." At the other end of the spectrum is a bill sponsored by Rep.Walter DeLange (R-Grand Rapids). It failed to make it out of committee last October, in large part because it was too regressive even for most Republicans. Among other things, it would have forced everyone now on workers' comp to be re-evaluated after one year and judged under new standards that weren't even in effect when their cases were decided. For the first time, workers' comp recipients mobilized to battle the legislation, mounting a letter-writing campaign that stalled the bill before it could get out of committee. Having failed to sell its agenda on either a philosophical or fiscal level, the state's insurance industry is taking a new tack in pushing this bitter pill. The new rallying call? workers' compensation needs even more reforms because it's being exploited by workers filing fraudulent claims. Advocates urging a crackdown allege that the fraud rate may be as high as 20 percent or more. But studies in other states indicate the effect of fraud is almost nil. In 1994, the state of Wisconsin implemented a program to track and prosecute worker fraud. Of the 200,000 work-related injuries- 70,000 of which were considered serious- only 95 allegations of fraud were reported. Following investigation, five cases were referred to district attorneys, who decided to prosecute two cases. The following year, the same program referred 22 cases to prosecutors. These facts aren't deterring either Engler or the insurance industry. Nancy McKeague of the Michigan State Chamber of Commerce says a recent poll of members showed that employers consider eliminating fraud from the sytem a top priority. "Those are the people on the front lines," says McKeague. "They should know." As in the past, Engler has also found an ally in the Mackinac Center on this issue. "If people find that it is easy to collect just for alleging that they are unable to work, some will do so," the center declared in a position paper last year. "Michigan's system can still be made more efficient." Advocates for injured workers say the issue is a red herring. "I'm not saying there isn't fraud out there," says activist Ulin. "And when they catch those people, they ought to hang 'em up by the balls. But that's not where the real problem is. Show me the fraud, and I guarantee you for every case I can point to 100 people who have been abused by employers and insurance companies." New workers' comp legislation introduced this year is meeting fierce opposition from organized labor, which says SB 895 is an attempt to "scapegoat workers." Chamber officials say the bill covers everyone involved in the filing of workers' comp claims, including employers and insurance companies, but their opponents find that claim laughable. "This is an insurance industry bill pure and simple," says Tim Hughes of the AFL-CIO. As just one example, he points to a provision that would require plaintiffs' attorneys to post warnings that filing a fraudulent claim is a felony, but imposes no equivalent responsibility on insurers or defense attorneys. Beyond that, says Hughes, much of the bill has nothing to do with fraud, "but simply makes it harder for injured workers to receive the benefits they deserve." Mental stress claims have been singled out, for example. Groundwork for following that track was laid last year, when appellate commissioner Jurgen Skoppek, an Engler appointee, wrote an analysis of the subject for the Mackinac Center. Skoppek's report claimed that unlike other health problems, in mental stress claims both the cause and extent of disability often can't be determined. Critics dispute this, arguing that Skoppek's study helped open the way for SB 895. "The provisions of SB 895 would preclude the payment of benefits for mental disabilities that have nothing to do with fraud, unless one believes that every such claim is not only without merit, but fraudulent as well," argues Hughes. "What they are really out to do," warns Glotta, "is dismantle the workers' comp system. First they wanted to eliminate abuses, then they wanted to eliminate costs. Now they just want to eliminate workers' comp altogether." Denise Johnson-Jackson, meanwhile, continues her struggle. For a little while, it seemed like her settlement would come through, thanks to Peters' bill, which has been passed by the Senate and is now in the House. But a new problem looms on the horizon. The state is indicating that it won't abide by the judgments Johnson-Jackson and others have been awarded. "The state is saying now that it's going to try and make us renogtiate the settlements," says lawyer Barrie Bratt, who represents several employees hurt while working at uninsured companies. It seems that Denise Johnson-Jackson's fight is far from over. "It is like they are saying we don't exist," she says, her voice weary. "I've always been a very resourceful person, but this is wearing on me. Lord knows, I'm tired. "I'm tired." |