History

The Early Years of Workers’ Compensation
A transition from common law into the statutory system we know today occurred in 1915. Under our common law tort system, an injured worker had to sue his employer and prove fault to obtain compensation. Workers’ compensation was conceived as an alternative to the tort system for injured workers. Instead of litigating fault, under this “new” system, injured workers would receive statutorily determined compensation for lost wages and medical treatment. Employers gave up legal defenses such as assumption of risk or contributory negligence. Injured workers gave up remedies beyond lost wages and medical treatment such as pain and suffering and punitive damages. This “grand bargain,” as it is sometimes called, remains a fundamental feature of workers’ compensation. Perhaps because of the time period, financing and administration of benefit payments remained in the private sector, either through insurance policies or self-insurance. Workers’ compensation disputes still occur in a no fault system. For example, disputes arise as to whether an incapacity is related to work; how much in weekly benefits is due the injured worker; and what, if any, earning capacity has been lost. Maine, like other states, established an agency to process these disputes and perform other administrative duties. Disputes were simpler. Injured workers rarely had lawyers. Expensive, long term, and medically complicated claims, such as carpal tunnel syndrome or back strain, were decades away.

Adjudicators as Fact Finders
In 1929, the Maine Federation of Labor and an early employer group listed as “Associated Industries” opposed Commissioner William Hall’s re-nomination. Testimony from both groups referred to reversals of his decisions by the Maine Supreme Court. This early feature of Maine’s system, review of decisions by the Supreme Court, still exists, although today appeals are discretionary. The Supreme Court decides issues of legal interpretation; it does not conduct a hearing de novo. In Maine, the state agency adjudicator is the final fact finder.

Until 1993, Commissioners were gubernatorial appointments, subject to confirmation by the legislative committee on judiciary. The need for independence of its quasi-judicial function was one of the reasons why it was established as an independent agency, rather than as a part of a larger administrative department within the executive branch. The small scale of state government in 1916 no doubt also played a role.

Transition to the Modern Era
Before 1974, workers’ compensation coverage was voluntary. In 1974 it became mandatory. This and other significant changes to the statute were passed without an increased appropriation for the Industrial Accident Board. In 1964, insurance carriers reported about $3 million in direct losses paid. By 1974, that number grew to about $14 million in paid direct losses. By 1979, direct losses paid by carriers totaled a little over $55 million. By 1984, this number grew to almost $128 million. These figures do not reflect benefits paid through self-insurance. The exponential growth of the system resulted from legislative changes during the 1970s and set the stage for a series of workers’ compensation crises that occurred throughout the 1980s, into the early 1990s and some of the vestiges are still felt today.

In the early 1970s, time limits were removed for both total and partial wage loss benefits. Inflation adjustments or cost of living adjustments (COLAs) were added. The maximum weekly benefit was set at 200% of the state average weekly wage. Also, legislation was enacted making it easier for injured workers to secure the services of an attorney. The availability of legal representation greatly improved an injured worker’s likelihood of receiving benefits, especially in a complex case.

Statutory changes and evolving medical knowledge brought a new type of claim into the system. The law no longer required an injury happen “by accident.” Doctors began to connect injuries such as carpal tunnel syndrome or repetitive overuse conditions to work and thus brought these conditions within the coverage of workers’ compensation. This type of injury frequently required benefit payments for longer periods than many accidental injuries. These claims were more likely to involve litigation.

Over the course of time, rising costs quickly transformed workers’ compensation into a contentious political issue in the late 1980s and early 1990s. In the 1980s, Commissioners became full-time and an informal conference process was introduced in an attempt to resolve disputes early in the claim cycle, before a formal hearing. Additionally, regional offices were established in Augusta, Bangor, Caribou, Lewiston, and Portland supported by the central administrative office in Augusta.

In 1987, three full-time Commissioners were added, bringing the total from 8 to 11, in addition to a Chair. Today, the Board has nine Hearing Officers.

The political environment of the 1980s and early 1990s was extraordinary for Maine’s workers’ compensation system. Contentious legislative sessions directly related to workers’ compensation occurred in 1982, 1985, 1987, 1991, and 1992. In 1991, then Governor John McKernan tied his veto of the state budget to changes in the Workers’ Compensation Act. The consequence of this action was the shutdown of state government for three weeks.

In 1992, a Blue Ribbon Commission was created to examine and recommend changes. The Commission’s report made a series of proposals which were ultimately enacted. Inflation adjustments for both partial and total benefits were eliminated. The maximum benefit was set at 90% of state average weekly wage. A limit of 260 weeks of benefits was established for partial disability. These changes represented reductions in benefits for injured workers, particularly those with long term incapacity. Additionally, the provision of the statute concerning access to legal representation was changed making it more difficult for injured workers to secure the services of private attorneys.

In January of 1993 Maine Employers’ Mutual Insurance Company (MEMIC) was established. It replaced the assigned risk pool and offered a permanent source of coverage. Despite differing views on the nature of the problems within the system, virtually all observers agree MEMIC has played a critical role in stabilizing the workers’ compensation environment in Maine.

Based on a recommendation of the Blue Ribbon Commission, the Workers’ Compensation Board was created directly involving labor and management members in the administration of the agency.

The Board of Directors was initially comprised of four Labor and four Management members, appointed by the Governor based on nomination lists submitted by the Maine AFL-CIO and Maine Chamber of Commerce. The eight Directors hired an Executive Director who ran the agency. In 2004, legislation was enacted reducing the Board to three Labor and three Management members. The Executive Director was made a gubernatorial appointment, confirmed by the Senate and serving at the pleasure of the Governor.

The Board appoints Hearing Officers who hear and decide formal claims. A two-step process replaced informal conferences: troubleshooting, and mediation.

In 1997, legislation was passed providing more structure to the claims monitoring operations of the Board and created the Monitoring, Audit, and Enforcement (MAE) program. Also in 1997, a worker advocate program, created by the Board, was expanded by the Legislature. This program provides injured workers with legal counsel who provide guidance and prosecute any claims.
In recent years, both the regulatory and dispute resolution operations of the Board have experienced significant accomplishments. The dispute resolution function has evolved into an efficient informal process. Between troubleshooting and mediation, approximately 75% of initial disputes are resolved within 80 days from the date a denial is filed. An efficient formal hearing process has reduced timelines to an acceptable 10 months for processing average claims.

The Board of Directors was gridlocked when appointing Hearing Officers in 2003 and 2004 resulting in slower claims processing at the formal level. This problem was further exacerbated when the Law Court decided Lydon v. Sprinkler Systems. This decision significantly reduced the number of independent medical examiners (IME). The pool went from 30 to 11. We now have 25 active examiners and are constantly recruiting. The appointment of Hearing Officers gridlock was broken as Hearing Officers are now appointed to seven year terms. The IME problem has improved through the addition of better compensation for independent medical examiners and making it easier to qualify as an IME doctor.

In an apples-to-apples comparison, matching the complexity of the dispute and the type of litigation, the Board’s average time frame for formal hearings is reasonable compared to other states, and is quite good if compared to the civil court systems for comparable personal injury cases.

The agency was criticized for not doing more with its data gathering and regulatory operations during the late 1980s and early 1990s. The Board installed a relational database in 1996, and a modern programming language; the result was an improvement in data collection. Today, filings of First Reports and first payment documents are systematically tracked. Significant administrative penalties have been pursued in some cases. Better computer applications and the Abuse Unit have improved the task of identifying employers, typically small employers, with no insurance coverage. No coverage hearings are regularly scheduled. The Board mandated the electronic filing of First Reports beginning on July 1, 2005. The Board has also mandated the electronic filing of claim denials; this became effective in June 2006.

During the late 1990s, the Board of Directors deadlocked on important issues such as the appointment of Hearing Officers, adjustments to the partial benefit structure under  � 213, and the agency budget. By 2002, this became a matter of legislative concern. Finally, in 2004, legislation was proposed and enacted to make the Board’s Executive Director a tie-breaking member of the Board and its Chair. The Executive Director became a gubernatorial appointment, subject to confirmation by a legislative committee and Senate. As noted earlier, the Chair serves at the pleasure of the Governor. With the new arrangement, gridlock due to tie votes is no longer an issue. The Executive Director casts deciding votes when necessary. However, the objective is still to foster cooperation and consensus between the Labor and Management caucuses. This now occurs regularly.

Chapter 208, A Resolve to Appoint Members To and Establish Terms for the Workers’ Compensation Board, was enacted during the second session (2008) of the 123rd Legislature. The purpose of the Resolve was to change the membership on the Board while maintaining continuity. Governors have appointed new members to the Board since the adoption of this resolve.

On October 15, 2015, per LD 1119, the title "Hearing Officer" was changed to "Administrative Law Judge" to reflect the role and duties of the position.