months ago and was backed by a report, by the best available engineers appointed by the provincial engineering association, to the effect that even at pre-war costs the section of the system for which Hamilton was being asked to take responsibility would mean a loss of about $500,000 a year. That by-law was opposed by every intelligent body and force in the city, as well as by all the newspapers. It was carried in the face of this opposition by Sir Adam Beck's appeal to the masses, an appeal which has so far never failed to arouse public enthusiasm and support. His reply to the experts was that people could make their own road pay if they wanted to. The fact that this might be so and that the public might suffer if other roads were run into the ground by unfair competition was something which he did not for a moment consider and which those who answered his appeal could not grasp. That something has not been done and that something more effective is not being. done to bring the true situation to the attention of the Ontario taxpayers is to be regretted. As it is, it may be that Sir Adam Beck will be able to lead the public forces whither he desires while he can remain in the saddle, but if any change is madeand he rides high who rides to a fall - it is safe to say that there will be some real effort made to bring the whole enterprise to a business basis. Whether it will be found to have been more successfully conducted than others of a similar character remains to be seen. DEFECTS IN WORKMEN'S COMPENSATION Governor's investigator of the State industrial commission calls attention to evils in the law to be remedied - Direct settlements, he says, should be prohibited Jeremiah F. Connor L BY JEREMIAH F. CONNOR AWS providing compensation to workmen who have become the victims of industrial accidents are of comparatively recent origin. The basic principle of the compensation statute is to pay the workman without regard to fault as a contributing cause of the injury. The burden of the industrial accident is shifted from the employee to his employer, who in turn passes the burden along to the community at large as one of the elements which makes up the cost of production. When the system was first proposed, it was met with the constitutional objection that property of the employer was taken without due process of law. This constitutional objection has been definitely settled by decisions of our courts including the supreme court of the United States. This humanitarian legislation has now become so fully established as a branch of our industrial jurisprudence that administration features in connection therewith have become one of the timely topics. It is my purpose to point out briefly a few of the features connected with the workmen's compensation law of the State of New York as revealed by the investigation which I am conducting for the governor of the State under section 8 of our executive law. Before taking up these matters in detail, I desire to call your attention to the following statement in relation to " claim settlements contained in the recent report of E. H. Downing, special deputy of the Pennsylvania insurance department, in relation to the compensation law of the State of Ohio. I am making this quotation because to my mind it conveys the ideal to be attained in the adjustment of compensation cases: "The two great desiderata in the handling of compensation claims are prompt and full payment of the benefits provided by law. Workmen's compensation acts are placed upon the statute books for the relief of injured workmen and their dependents. Such legislation being humanitarian in purpose, public policy requires that the law shall be liberally construed and reasonable doubt resolved in favor of the claimant. Any attempt to withhold compensation on mere technicalities, to cut off payment before disability has ceased, to harass claimants with procedural delays or to coerce them into accepting less than the full legal benefits-is contrary to the whole spirit and intent of workmen's compensation. But it is not enough that every equitable claim shall ultimately be paid in full. Delay is emphatically a denial of justice. Few workmen have such surplus of income that they can afford to wait weeks or months for the commencement of compensation. When the weekly pay check stops destitution is never far away. Promptness in bringing relief to the sufferers is of the very essence of any sound scheme of social insurance." In most jurisdictions the amount of compensation is adjusted directly between the employer and the employee. In most cases the adjustment is made for the employer by an insurance carrier. The New York State law provides a State insurance fund, permits insurance with stock and mutual companies, and also permits employers in certain cases to carry their own insurance. In its original form there was no provision for settlements directly between the claimant and the employer. All claims were determined by the commission and payments were made directly by the commission out of funds deposited by the insurance carriers. In 1915 the law was amended permitting what we term "direct settlements." Under this system the claimant and the employer made an agreement as to the amount of compensation, and in a great majority of cases the agreement was approved by the industrial commission pro forma without hearing. This change in the law became the subject of political discussion and as a result of many complaints Governor Alfred E. Smith directed an investigation of the management and affairs of the State industrial commission, one purpose of which was to find out whether the change in the law resulted to the disadvantage of the injured workman. To determine this latter question 1,000 direct settlement cases were taken in chronological order and with the assistance of employees of the industrial commission, about 350 cases were selected in which the description of the injury indicated a permanent partial disability. The compensation law of New York under an amendment which became effective July 1, 1917, authorizes a specific award for permanent partial disability which results in partial loss of use of the hand, arm, foot, leg, etc. It was immediately found that this class of cases were almost entirely covered up by the direct settlement system. The claimants were only paid until such time as they were able to resume work. When these test cases were reheard by the injured workman enter into an agreement on their own commission, additional awards were made in sums ranging from a small amount to $2,500. In a single direct settlement case brought to my attention as a result of the publicity resulting from the investigation, an additional award was made amounting to $3.500. discovered in which the disability extended beyond forty-nine days, and the claimant received no compensation for the first two weeks. There were numerous cases in which the claimant lost one or two weeks' compensation upon a report from the physician employed by the insurance company to the effect that the claimant was able to work, upon which statement compensation was terminated. There was also a case in which the claimant was entitled to compensation for disfigurement. The conditions were so bad that when the report was transmitted to the legislature, not a voice was heard in the State of New York in support of the direct settlement plan. A law was unanimously passed and signed by the governor requiring the industrial commission to hold a hearing in every case. And while direct settlements are still permitted it is only for the purpose of expediting payments, with a hearing by the industrial commission before the case is closed. The investigation also revealed many other methods by which claimants were unfairly treated. In some cases the wages were incorrectly reported, and where the claimant was a minor, the fact that his wages might increase was not taken into consideration as provided by subdivision 5 of section 14 of the New York law. Many cases were In connection with my investigation, William C. Archer, deputy Commissioner in charge of the bureau of compensation, sent out the following questionnaire to the industrial commissions in other states: Question: Speaking of agreement compensation cases in which the employer (or insurance carrier) and the motion for the payment and receipt of compensation, which agreement ordinarily has a pro forma approval, I desire to inquire what percentage of such cases afterwards actually come to trial before the compensation commission (or other administrative body) or deputy commissioner for the official determination of one or more facts pertaining to the case. If figures are not just at hand, please approximate as close as possible. The following replies have so far been received: MAINE. Out of 4,000 compensation cases last year there were probably 100 hearings held in connection with the adjudication of whatever compensation might be payable. (This was signed by the secretary of the commission.) KENTUCKY.— Out of 36,157 accidents reported to our office since the act became effective on August 1, 1916, we have had filed 393 claims and these claims cover the entire field of litigation under our act since it became effective. (This signed by C. J. Howes, officially connected with the compensation board.) ILLINOIS. As I have stated in my former letter to you, we do not have a form agreement where compensation is paid without contest. The duplicate receipts of payments made are sent in, which of course indicates an agreement. We may be wrong, but we have never been able to see how a form agreement would give us any further information than we have by the receipts, or how it would accomplish any useful purpose. (This signed by the chairman of the commission.) MINNESOTA. We would estimate that about two per cent of these cases are reopened because of errors discovered in checking in the statistical division in the department of labor and industries. PENNSYLVANIA. My question was not answered except by the receipt of a little report which is attached. I have marked items on pages 9 and 12. MASSACHUSETTS.—I had occasion yesterday to talk to Mr. Dudley S. Holman, who was for a long time on the Massachusetts commission. He tells me that ninety per cent of the cases have a pro forma treatment and that ten per cent come up for adjudication. By the way, do you know that in Massachusetts the insurance company cannot cease to pay if there be a dispute about the return to work as long as the claimant really does not return to work, but has to go before the commission to obtain a "discontinuance of award?" SOUTH DAKOTA.- Have had but two such cases as yet, in one of which the insuring company of their own motion resumed payments, and in the other on the suggestion of this department they investigated the case, and resumed payments without a hearing for reopening of the case." (This signed by the deputy industrial commissioner.) CONNECTICUT.- 1890 hearings, 600 of which are settled without a finding by the commission; hence, 1,291 adjudications. INDIANA.— I wish to say that it is impossible to give you an absolutely accurate statement of the percentage of cases settled by agreement which afterward come before the industrial board for consideration. However, the percentage is very small, etc. COLORADO.- Replying to your letter of March 12th. For the fiscal year ending December 1st, 1918, our records and 71 cases arbitrated, only 6 were reopened and officially determined by the commissioner. MICHIGAN. It is a little difficult to answer your question, but I think we may safely say that from 90 to 95 per cent of the agreement cases dispose of themselves automatically, or are disposed of by the office force without actual action by the industrial accident board. NEW JERSEY. You of course recognize the fact that New Jersey is not as large as New York and also that we do not require reports of any accident causing less than two weeks disability, and having this in mind you will more fully understand why we have received about nine thou sand reports during the nine months of the present fiscal year. During this time, there have been about two hundred petitions filed for adjudication. This represents only two per cent. As stated above, I do not know that any of these two hundred petititions had reference to cases where agreements had been entered into, but assuming for the sake of figures that there might be one in twenty, the percentage asked for in your letter would reduce to two-tenths of one per cent. Personally, I think the figure is even less than that. In the State of New York the percentage of direct settlement cases which came on for hearing, either upon recommendation of the claims examiner, or by complaint of the injured workman was about twenty per cent. This is a high percentage compared with the average in other states. None of this class of cases were included in the 1,000 test cases which I examined. At the present time the commission, at my request, is completing an investigation of each of the 1,000 cases which I selected, and within a short time I will have a report upon each case which will give the total amount paid under the direct settlement plan and the total awarded as a result of the rehearing. These figures will fully justify everything which I said in my report to the governor in condemnation of the direct settlement show that we were required to try twenty-two (22) plan. They will make a very interesting cases out of a total number of three thousand four hundred and seventy-eight (3,478) agreements theretofore approved. VERMONT. If all minor questions and all formal and informal hearings were taken into consideration, certainly fifty per cent of the cases in which compensation is paid involve a hearing or trial of some kind or another. It must be borne in mind, however, that many of these cases involve but one question and that the hearings are, of necessity, very short. IOWA. During the year from July 1st, 1917, to June 30th, 1918, out of 4,367 compensation settlements reported and instructive exhibit. In addition, the industrial commission, at the request of the governor, is investigating all direct settlement cases settled pro forma since 1915 and is granting rehearings when necessary. The additional payments to be made as a result of these rehearings will, I am sure, total a huge amount. An interesting feature of my investigation was the discovery that the most serious cases of underpayment occurred in the metropolitan district. This, I believe, is due to the fact that the workingman in the outlying districts is more familiar with the compensation law and has more persons interested in seeing that he receives the full protection of the statute. I am firmly convinced that the settlement of compensation claims directly between employer and employee should be abolished in every jurisdiction. I believe that an investigation in any State will show that the claimants are underpaid. The workingman cannot cope with a trained insurance adjuster. The most serious defect in our present compensation scheme is the fact that in a great majority of cases the persons for whose benefit the law was enacted never has his day in court. I have considered all of the arguments in favor of direct settlements. To my mind, none of these arguments weigh in the slightest against what Professor Downey says in relation to full payment of the benefits provided by the compensation law. The industrial commission of New York has worked out a novel system for the adjustment of claims against the State insurance fund under what is known as a "facts agreed calendar." Under this system, a representative of the state insurance fund and a representative of the claims bureau of the State industrial commission agree on the facts as disclosed by the papers which make up the case, and the claimant is sent notice of the amount he is to receive, no hearing being held. This system enables the commission to dispose of the case promptly. It works to advantage as against employers in the State fund generally. The State insurance fund, however, has several special groups, some of which are made up of individual employers. Most of these employers, or the agents representing them are directly interested in keeping down the amount of compensation. I have this matter still under investigation and it would not be proper for me to go into the matter in detail before reporting to the governor. I think I can say with propriety, however, that the "facts agreed calendar" system will be greatly modified as against employers in special groups in the State insurance fund. A troublesome feature connected with the administration of the New York law is the medical question. Out of the 1,000 direct settlement cases which I examined, the report of the attending physician was missing in 714 and most of the reports filed were misleading. Under the New York law, the employer is permitted to select the attending physician unless the claimant desires to pay for his own physician. This means that in the great majority of cases the physician is selected by the insurance company. The claimant is thus left in a position in which the doctor who treats his wounds and restores him to health later appears as a witness against him when he attempts to secure compensation. One man who has been suffering from a back injury for a period of two years informed me that he had been examined by thirty-two physicians at the instance of his employer. Not one of these physicians regarded his relations with the employee as confidential. Not one of them would be "his witness" upon a contest. A system which permits your physician to "cure your hurts and kill your case" ought not to be permitted. An interesting feature developed in connection with the administration of the New York law is the final adjustment calendar. These adjustments cover cases in which the claimant suffers from a permanent partial disability which may or may not reduce his future earning capacity. In a large number of cases a lump sum is granted to cover all future compensation. This system, I believe, is wrong for two reasons: In the first place, a man receives a considerable sum of money |