Monday, March 17, 2014

A Poor Man's Process

An interesting anecdote provides a glimpse into the connection between workers' compensation and immigration policy, and how workers' compensation is used as a backstop for medical care and dispute resolution.

A Northern California manufacturer told local media after filing for reorganization in bankruptcy court that its workers' compensation costs quadrupled after a U.S. Immigrations and Customs Enforcement audit forced it to lay off a third of its workers in 2011.

Pacific Steel in Berkeley, Calif., filed for Chapter 11 bankruptcy at the U.S. District Court in Oakland on March 10, according to KQED News. Many of the 200 workers who were forced to leave their jobs because of invalid Social Security numbers filed workers' compensation claims, the company told KQED, a National Public Radio affiliate.

Another media source says that the immigration enforcement action occurred in 2011, and that many of the 200 workers laid off had been at the foundry for 20 or even 30 years - obviously vested in American life, paying taxes, sending their children to local schools.

The company manufactures castings used mostly in commercial trucks and construction equipment and is described as the third largest foundry in the United States.

It listed workers' comp carrier Sentry Insurance in Milwaukee as one of its top 20 creditors, with an outstanding debt of $882,775.19, according to Pacific Steel's bankruptcy petition.

According to local news Berkeleyside, the firm's workers' compensation costs quadrupled following the immigration action and subsequent layoff.

Typically known as "plant closing" cases, a mass of workers gets laid off or displaced because of the closing of plant operations (though in this case it was lay offs due to immigration policy) and, having no re disincentive, the displaced workers seek indemnity to keep them going to the next job, and also treatment and remuneration for what ever they believe ailed them as a consequence of working at that plant.

At a foundry there are all sorts of potential exposures that could be claimed in the workers' compensation world: noise, fumes, toxic materials.

We could bemoan these filings as fraudulent - after all, why would workers wait until after they were relieved of duty to file injury claims?

Or we could criticize applicant attorneys, or physician practices, or any number of other professionals in the system for perpetuating mass filing of questionable claims.

We could criticize the United State's immigration policy as counter productive to economic growth by displacing workers that otherwise contribute to productivity.

Or we could just acknowledge that the workers' compensation system is possibly the only way an immigrant worker can get any "justice," demonstrating again how workers' compensation often ends up as the poor man's dispute resolution process.

And I wonder if that $882,775.19 owed Sentry Insurance would have been much, much less if the claimants were quickly, albeit perhaps not entirely "documented" or "legitimate," provided a settlement without the usual back and forth between attorneys and doctors.

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