Workers’ compensation was designed as a no-fault insurance program to limit legal combat between injured workers and their employers. However, the system is complex and bureaucratic, and the extent of compensation is limited by law. It is well known that injured workers often do not feel the system adequately addresses their needs, and they resort to legal action. Lawsuits are costly and time-consuming for workers and insurers, and large settlements lead to higher premiums for employers. It is a system about which all sides have just complaints.

“Our ability to cooperate with management to reduce these costs,” says General President Terence M. O’Sullivan, “gives us an edge in the battle for market share with the non-union sector. We need to explore every angle and find ways to make ourselves more competitive in this area, but we can’t do it at the expense of the injured worker.”

One of the more promising angles is alternative dispute resolution (ADR) which currently is authorized by law in ten states and partially authorized in five others. In several other states it is under consideration. Because ADR programs are only legal in the context of a collective bargaining agreement, they are available only to workers and management in the union sector.

ADR States

New York

In California, where the Southern California Laborers’ District Council entered into an ADR agreement with construction contractors, preliminary data show a remarkable reduction in expected compensation costs. According to data in a January, 2001, report by Richard Gannon, the Administrative Director for the state’s Division of Workers’ Compensation, incurred losses under the Southern California Laborers’ agreement were only 13.8 percent of the losses projected based on past, typical performances of California contractors with the same balance of job classifications. The Laborers’ performance was the third best among the state’s 11 ADR programs.

“Our members, the injured workers, were not slighted in order to achieve these results,” says Southern California District Council of Laborers’ Business Manager and LIUNA Vice President At-Large Mike Quevedo, Jr. “If anything, I think they are more satisfied. Claims are handled faster. Compensation comes quicker. And the medical care is top-notch.”

Partial ADR States


“One of the main reasons that workers’ compensation claims blow up into full scale legal warfare,” says LHSFNA Executive Director Joe Fowler, “is the failure of anyone to take responsibility for ensuring that the injured worker gets prompt, understanding attention. If no one expresses interest and concern, who can blame them for heading straight for a lawyer? ADR offers another approach.”

Typically, under an ADR agreement, an injured worker is put in contact with a designated ombudsman. Trained to assist workers in negotiating the maze of paperwork and regulations that govern workers’ compensation, the ombudsman is not a lawyer and does not work for management or the union (but may work for both, jointly). Rather, he or she helps the injured worker file the claim and secure the necessary medical care from providers designated in the ADR agreement. If a dispute develops, the ombudsman attempts to work out a resolution that is satisfactory to all parties. If not satisfied, the injured worker may pursue mediation and, if necessary, arbitration, following procedures summarized in the ADR provisions. The agreement cannot diminish an injured worker’s entitlement to compensation, and workers retain the right to appeal an arbitration decision to the state’s workers’ compensation appeals board.

“I think the ombudsman makes all the difference in the world,” says Angie King, Director of the Midwest Regional Laborers’ Health and Safety Fund (MRLHSF), who is pursuing ADR programs in Illinois, Missouri, Kansas and Indiana. “Our business managers can say, ‘Here’s the phone number for someone who’ll help you get through this process. Meanwhile, here’s the place to go to get the treatment you need from someone that’s trained to deal with Laborers.’ That kind of concern and support goes a long way to control distrust and animosity.”

The cost savings in an ADR program come from a variety of sources. By requiring joint labor-management safety committees, the program improves on-site safety performance and reduces claims. By use of prescribed medical treatment and evaluation services, the agreement channels injured workers to facilities and professionals who are specially-trained and assigned to handle claims made by Laborers-accelerating the process, ensuring better communication and often allowing more rapid recovery. By establishing light-duty, modified job or return-to-work programs, the agreement reduces lost time costs and accelerates recovery. Vocational rehabilitation and retraining programs also reduce the cost of debilitating injuries. Most significantly, an ADR program eliminates the huge costs and long waits of legal action.

The cost of ombudsman services-as well as mediation and arbitration services-is covered by the collective bargaining agreement. While this, ultimately, is borne by the employers, it is more than made up for by long-term reductions in employer X-Mod ratings and the consequent reduction in workers’ compensation premiums.

“The union sector’s strength is our capacity for cooperation with management to reduce costs and improve quality,” says O’Sullivan. “In states that allow ADR we should use it to our mutual advantage. It’s the most promising tool available to address everyone’s concerns with the current system.”

[Steve Clark]