Mr. BEARD. Thank you very much for your statement, Congressman Long.

Mr. LONG. Thank you.

Mr. BEARD. Mr. Crolius?

STATEMENT OF NEWELL T. CROLIUS, MANAGER, INSURANCE SAFETY AND TRAINING, FLINTKOTE STONE PRODUCTS CO., AND CHAIRMAN, OPERATIONS DIVISION, THE NATIONAL CRUSHED STONE ASSOCIATION

Mr. CROLIUS. Thank you, Mr. Long, for your courtesy in taking time from your busy schedule.

Mr. Chairman, members of the Subcommittee on Labor Standards, your invitation to the National Crushed Stone Association to give testimony on H.R. 5482, the proposed National Workers' Compensation Act, is greatly appreciated.

As Mr. Long has indicated, I am with the Flintkote Stone Products Co., in Hunt Valley, Md., much involved in workman's compensation with the company-and you will excuse me if continue to call it "workman's compensation" because in Maryland it is still called "workman's compensation." I will try to keep to the right terminology.

In addition to the work at the Flintkote Stone Products Co., I am the past president and current legislative committee chairman of the Maryland Self-Insurers and Employer's Compensation Association, and have worked with the Maryland General Assembly for many years in connection with compensation legislation.

Testimony before the legislature also includes bills of interest to other business groups, including the Maryland State Chamber of Commerce and the Maryland Motor Truck Association.

It is my honor today to appear before this subcommittee on behalf of the National Crushed Stone Association.

For the record, NCSA is an international trade association, representing companies which quarry and process rock into numerous crushed stone products and companies which manufacture equipment and provide services for quarrying operations. NCSA's membership accounts for approximately 70 to 75 percent of the construction aggregates production in the United States. The total U.S. crushed stone production in 1979 was 1.037 million tons, valued at $2.98 billion.

At the outset, let me say that NCSA has always supported the concept of an equitable and effective system of workers' compensation. Since stone quarries usually have very few employees, each of whom is essential to maintaining safe, efficient daily operations, it is imperative that employers in the crushed stone industry support the best interests of their workers.

NCSA is basically opposed to the concept included in the statement of "Findings and Purposes" in H.R. 5482. that "there is a need for the Federal Government to encourage and assist the States in meeting this responsibility" by means of a Federal uniform standards act.

In 1972, the National Commission on State Workmen's Compensation Laws issued a report listing among its suggestions, 19 recommendations designated as essential and citing an urgent need for further study, documentation and evaluation of several aspects of the compensation process. That commission recommended the creation of a second commission to develop more thoroughly the work which it had begun. Since the release of the commission's report in 1972, the Federal Government has done nothing to act upon its

recommendations.

No second study commission has since been established to systematically identify and address specific problems in the State workers' compensation system. No attempt has been made to maintain the work of the 1972 commission or to determine the State-by-State applicability of its findings and recommendations now, 8 years later.

Nonetheless, Congressmen have proposed to make the workers' compensation system subject to uniform, Federal standards annually for the last 5 years. Each of these legislative proposals has claimed the recommendations of the 1972 commission as definitive documentation of the need for such legislation. In fact, Federal control of the State workers' compensation system was, expressly, not recommended by the commission.

Moreover, congressional sponsors have never been able to muster sufficient support for these bills to get them out of committee.

The States, on the other hand, have acted responsibly on their own, responding to the legitimate and applicable recommendations of the 1972 commission. Most of the States now have, at the very least, an acceptable workers' compensation law. The maximum weekly benefit in 41 States is now 662 percent of statewide average weekly wage for temporary total disability. Twenty-eight of these States pay at least 100 percent. Forty-eight jurisdictions raised indemnity benefits recently, with 39 of them adjusting benefits automatically each year according to statewide average weekly wage.

Medical treatment is unlimited in every jurisdiction, and occupational disease is also addressed in broad terms in every jurisdiction. Of the 53 jurisdictions, coverage under workers' compensation is compulsory in all but three.

Attached to our statement, which was given to you, is a series of statistical references which have been derived from the analysis of State workman's compensation laws which is published by the United States Chamber of Commerce. This is effective in 1980.

I urge that you read applicable portions of that particular book. which we consider a bible in our business, and if any of the committee members desire a copy of that booklet, we will be very glad to arrange that they be provided.

The sum and substance of the activity in the States in the past several years means that they have made remarkable improvements in their workman's compensation laws in what they perceive to be a genuine need.

In 1979, almost 200 laws were enacted in State legislatures extending coverage and medical treatments under workman's compensation, increasing the level of benefits, and providing for more efficient administration of the laws. The State workers' compensation system has

built into it the means to correct problems and to make appropriate adjustments according to the legitimate needs of specific situations in each State.

I stress "specific situations" because economic factors in each State can, we believe, be best addressed locally through a State's particular legislative process. It should also be noted that the so-called "19 recommendations" of the National Commission on State Workmen's Compensation Laws have been subject to wide interpretation by different interests.

Moreover, I repeat, the Commission recommended a permanent study group to examine its findings. They recognized that the dynamics of society require constant review and, consequently, require institutional changes and variations.

The purpose of workers' compensation is to provide adequate income and health care for the injured worker so that he can recover quickly and return to a self-supporting, productive capacity. However, the mandatory, uniform provisions of a Federal standards law such as H.R. 5482 would almost certainly prove to absorb a subsequent increase in the number of workers' compensation claimants. Many of these, of course, would be absolutely legitimate. But it is more likely that many would represent abuses of the compensation system.

H.R. 5482, like the bill before it, does not address the questions involved in the presumptions under occupational disease or in the determination of permanent partial disability. Those are the two most troublesome areas in workman's compensation today.

In the absence of the further study recommended by the Commission, all that Federal legislation can do is to continue adding cash benefits on top. As a matter of information, the concept of economic loss as a basis for judging permanent disability is now being tested under the new Florida law-effective July 1, 1979-and, I think, deserves careful study. Already, with the extension of coverage and medical treatment and the increases in benefits that have occurred in recent years, the costs of workers' compensation have become exorbitant.

Since 1973, just 1 year after the release of the Commission's report, workers' compensation costs have increased in excess of 100 percent; in fact, I have seen figures to indicate in certain States where the increase has amounted to 192 percent. Between 1975 and 1976, costs increased 22.5 percent; between 1976 and 1977-the most recent year for which figures are available-the cost for employers to protect themselves and their workers against work-related injuries rose 27 percent $3 billion-to a total of $14 billion.

Granted, inflation accounts for some of the increase, yet the proposed legislation's uniform but arbitrary increase in the maximum level of income benefits to 250 percent of the statewide average weekly wage, combined with yearly 12- to 15-percent increases in medical costs, would make it impossible for many States to maintain workers' compensation on their own. Many States and particularly many industries simply cannot afford such increases. The concept underlying the very existence of H.R. 5482-that there is something "bad" in the State system-would thus become a self-fulfilling prophecy.

And what of the Federal Government operating workers' compensation? We need only look at the situation with the Federal Employees' Compensation Act, in addition to the District of Columbia Compensation Act, the Longshoremen's and Harbor Workers Compensation Act, or the Black Lung Act. Attached to your written statement is an article that appeared in the Baltimore Sun, April 6, 1980, that details the number of cases that were placed under the U.S. law and I suggest that those cases, as described in the article, are no advertisement for Federal administration whatsoever. [The material referred to follows:]

[From the Baltimore Sun, Apr. 6, 1980]

DELAY IN BENEFITS COMMON IN HARBOR INJURY DISPUTES

(By David Ress)

Martin Spindler, a Baltimore longshoreman, had to wait nearly a year after surgery on a job-related hernia, an injury that kept him from working for two months, before receiving any workers' compensation benefits.

Under the federal Longshore and Harbor Workers' Compensation Act-attacked regularly by stevedore and shipyard industry lobbyists for its unusually generous benefits schedule-he should have received disability benefits within two weeks of his injury.

But he didn't. His claim, filed in March, 1979, under the supposedly no-fault provisions of the compensation act, was contested. It wasn't until the last week of January, 1980, that he received his disability benefits.

The harbor workers' compensation act is supposed to guarantee prompt pay. ment of disability benefits to injured longshoremen and shipyard workers or to the survivors of waterfront workers killed on the job.

But it doesn't work that way in cases where a waterfront employer or his insurance company contest the extent of disability or the medical care taken to treat a work-related injury.

Mr. Spindler, in fact, was lucky, he eventually was able to reach a settlement of his claim. If he hadn't been able to settle, he might have had to wait another four to six months for his benefits. But in any event, the delays he experienced were not untypical. For example:

In June, 1979, Charles T. Gales received a severe blow to the back of his head from a heavy piece of metal while working on the Baltimore docks; for a time doctors suspected a neck fracture. In October, the Baltimore deputy com. missioner of the federal Office of Workers' Compensation Programs recommended payment of disability benefits.

No payments have yet been made. And, although a formal hearing on his employer's failure to abide by the recommendation was made in November, no hearing has yet been scheduled.

Baltimore longshoreman Joseph C. Iner injured his right arm June 14, 1979, while at work. Although the deputy commissioner recommended payment of disability benefits, Mr. Iner has not received a dime.

Longshoreman Linton V. Stanson injured his hand on June 14 also, in another accident. Again, although the deputy commissioner recommended payment of benefits, he has not yet been paid.

In January, 1979, while working on the docks, John C. Cox strained his previ. ously injured back. His employer contests Mr. Cox's choice of a doctor to treat his back, and the result is that Mr. Cox has received no money to compensate him for the costs of his medical care.

Glen Burnie longshoreman Michael A. Sansone's decision to have back surgery necessitated by a January, 1980, injury, was also contested; surgery was delayed, although a operation has finally been scheduled, under a special authorization of the deputy commissioner.

In February, 1978, Edward Hurley injured his right forearm while working on the Baltimore waterfront, to the extent of requiring surgery. Mr. Hurley, who could not work for six months, received his first compensation benefits 49 weeks after his injury, following a lengthy process of medical examinations, lawyers' conferences, hearings and filings of legal brief.

Neil Montone, associate director of the Longshore and Harbor Workers Division of the Office of Workers' Compensation Programs, acknowledges the problem. "It only involves a small number of cases, but it is a serious problem, and we're quite concerned," he said. "We've been adding additional staff and the performance has been much improved, but there's still room for further improvements."

Bruno DiSimone, deputy commissioner of the Office of Workers' Compensation Programs for Baltimore, also thinks there is a problem. He is responsible for settling the 1,000 harbor workers' act compensation claims filed annually in Baltimore, and for making recommendations in the small number of contested compensation claims here.

In a recent interview, he said that "it takes, on average, nine months from the time I get a contested case until the time payment is finally made.”

The problem is not limited to Baltimore. In hearings before the House Labor Standards Subcommittee, Representative Michael O. Myers (D. Pa.) told the Office of Workers' Compensation Programs that longshoremen in his Philadelphia district regularly complain of delays in the processing of compensation act claims. Thomas Wilcox, executive director of the National Association of Stevedores, a trade association representing longshoremen's employers, said his group's members "are concerned about the delays," but said that since most cases are not contested, the delays are not that serious a problem.

Bernard J. Sevel, attorney for the International Longshoremen's Association in Baltimore, contends that the problem results from the 1972 amendments to the harbor workers' compensation act, which, he said, "set up another layer of bureaucracy in the comp system."

Mr. Sevel handles one of the largest caseloads of longshore compensation act claims in the United States, and is staging a one-man battle to reform the act to reduce waiting periods in cases of contested claims.

"When a longshore comp act claim is contested, it means it will take a year or more before a single penny is paid," Mr. Sevel said. "This can mean delays in medical care, it can mean months without any income except for welfare, and it's a disgrace to the comp program."

Until 1972, deputy commissioners of the Department of Labor's Office of Workers' Compensation Programs-stationed in most major ports were authorized to order settlements in cases where a harbor worker's compensation claim was contested.

Today, deputy commissioners are still responsible for much of the basic in vestigation of contested claims, and can make recommendations for settlements. But they have no authority to order a settlement.

Instead, if their recommendation is not accepted, the claim must be heard by one of the Department of Labor's overworked administrative law judges.

"No employer is going to accept a recommendation that he pay a comp claim, if there's a chance he can get the deputy commissioner's recommendation overturned. And, should they lose before the law judge, the 6 percent interest they pay does not constitute any kind of penalty to induce them to settle quickly," Mr. Sevel said.

The timetable for a contested claim normally includes a 30-to-45 day wait after an injury before the first conference between the deputy commissioner, lawyers for the claimant and his employer is scheduled, Mr. Sevel told the House Labor Standards Subcommittee in December.

Then, once the commissioner makes his recommendation, the employer has 15 days to decide whether to accept the ruling. The claimant's lawyer then requests an "LS-18" form-a request for a hearing by a Department of Labor administrative law judge.

There is a 21-day deadline for both sides to fill out the form, and an average wait of 60 days before a hearing is scheduled. Mr. Sevel said.

After the hearing, there is another 30-to-40 day wait before briefs are filed with the law judge.

And after that, a five-to-six-month wait before the law judge issues his ruling, Mr. Sevel told the subcommittee.

Mr. Montone, of the Office of Workers' Compensation Programs, said that "it takes five to six months to get through the administrative law judge process, on average. Sometimes, it can take four months, sometimes as much as eight months. I've never seen it take more time than that, as disturbing as that is to us."