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Monday, February 27, 2012

The Religious Opt-Out Scheme: A New Approach to Eliminate Workers' Compensation

Alex Berman
Ed Note:
Over a decade ago Bechtel Corporation initiated an opt-out program that took workers' compensation out of the adversarial system entirely. Shortly thereafter, the concept of universal healthcare emerged as a concept to remove all healthcare delivery and benefits from workers' compensation. Recently Republican presidential candidates have pledged to merge the system into an employee paid for program. Now, legislators in the State of Michigan, where unemployment soared to over 14% in 2009, are suggesting yet another approach to opt-out of workers' compensation based on a religious exemption.
Jon L Gelman

Guest post by
Alex Berman of the Michigan Bar

Representatives Earl Poleski (primary), Matt Lori, Joe Haveman, and Margaret O’Brien have introduced new legislation that would exempt religious organizations from the Michigan workers compensation system.

House Bill No. 5371 provides that: “An individual is not an employee subject to this act if he or she is a member of a religious sect or division that is an adherent of established tenets or teachings by reason of which members are conscientiously opposed to accepting the benefits of any public or private insurance that makes payments in the event of death, disability, old age, or retirement or makes payments toward the cost of, or provides services for, medical bills, including the benefits of any insurance system established by the social security act, 42 USC 301 to 1397mm, and has the practice established for 10 or more years, for members of the sect or division to make reasonable provision for their dependent members. An employer shall retain a copy of the employee’s internal revenue service form 4029 that has been approved by the federal social security administration to assert an exemption under this subdivision.”

This legislation would take away protections that have been in place since the original workers compensation act was passed in 1912. It would allow religious organizations to exempt their employees from the workers compensation system if they are members of the same faith. The idea seems to be that religious groups who are conscientiously opposed to public or private insurance should not be forced to participate in the state workers compensation system.

We believe this legislation is awful and will lead to many unintended consequences. It is also unlikely to survive a constitutional challenge in the courts.
Michigan Workers Compensation Law 101

Workers compensation is a type of insurance that employers are required to purchase under Michigan law. It is intended to protect both employees and employers in the event of a work-related injury.

An employee who suffered a work injury before 1912 used to have to show that their employer was at fault to receive compensation. If the injured worker could prove fault, he or she was entitled to any damages that a jury could award. This included pain and suffering. The problem with this approach was that some employees were overcompensated for their injuries while others received nothing. Employers could also be forced to pay substantial damages for relatively minor injuries.

Michigan adopted its first workers compensation law in 1912. The law was a compromise between employee and employer interests. Employees gave up the right to sue in civil court in exchange for what are essentially no-fault benefits.

Workers compensation now pays wage loss, medical treatment, and vocational rehabilitation. Employers receive protection from civil lawsuits including actions for negligence. The amount of benefits that employers must pay are limited.

Michigan’s workers compensation system has worked for over 100 years and has served as a model for other states. It provides injured workers with fair compensation while protecting employers and business interests.

Unintended consequences

Exempting religious organizations from the workers compensation system creates a slippery slope and sets a bad precedent. Soon other groups will seek to be exempted and the entire system will be put in jeopardy.

Employees gave up their common law rights in exchange for limited workers compensation benefits. If an employer is exempted from the workers compensation system, presumably its employees would be free to file a tort action and seek civil damages. This is exactly what the workers compensation system was designed to prevent in the first place.

Just because someone has a religious belief does not mean they should be exempted from Michigan law. You could give religious organizations total immunity but the last time we checked this was not the middle ages.

Changes to the workers compensation law should not be done hastily

Any changes to Michigan’s workers compensation law should not be done without serious thought and consideration. All stakeholders need to be brought together to ensure continuing viability of the system.

Alex Berman is the founding member of the Law Office of Alex Berman, P.C., of Farmington Hills, Michigan. For over 30 years he has handled workers' compensation claims for employees who had injuries or disabilities and has battled successfully against employers including automobile suppliers. He is a member of the State Bar of Michigan and the Michigan Association for Justice.