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more private sectors of the economy is an invitation to reckless, wasteful, and irresponsible fiscal policies.

We look upon these proposals with the utmost concern, and we urge their deletion from the proposed amendments set forth in S. 2485.

AFFIRMATIVE PROPOSALS

It is obvious that this honorable body and its counsel have given serious and knowledgeable attention to these matters and to the problems raised by some inadequacies, perhaps, in the present provision of the Longshoremen's Act. We would not presume to rush forward with easy answers to obviously complex questions. There are, however, areas of common interest and similarity between the Federal and 'State compensation programs, and we believe, in general, the goals sought by each are, or should be, identical—the best available medical care for the injured worker, an adequate system of income replacement while he is totally disabled, and an adequate system of evaluating and compensating for permanent disability residuals resulting in loss of earnings. We believe that every compensation act needs to be reexamined from time to time to insure that it keeps pace with economic changes.

We believe the following areas should be reexamined and appropriate changes effected if they are indicated :

(1) Total temporary compensation payments should probably be increased. We see no valid reason for an increase in the rate of permanent disability payments.

(2) Rehabilitation programs should receive wider recognition and acceptance by both the injured worker and the employer or carrier, taking emphasis off of the “damage" concept of compensation and stressing the really legitimate ultimate goal of returning the worker to full and productive employment at the earliest possible date following an injury. Consistent with this philosophy, we believe that permanent disability payments should be deferred in some cases until and unless an actual injury-related wage loss is demonstrated.

(3) We believe that the workmen's compensation system should not place an undue burden upon handicapped workers in seeking employment, and consistent with this philosophy we believe the compensation laws should provide for realistic and substantive apportionment to preexisting pathology as well as to preexisting disability in evaluation of permanent disability. At the present time and under the present laws, as they have been interpreted by the courts, many employers are extremely reluctant to hire or to rehire workers who have any physical handicaps because of the near certainty, in the event of injury, of increased liability due to the combination of injury and preexisting conditions. The so-called subsequent injuries funds fail to fully answer this problem at the present time, and we believe a redefinition and reapplication of the concept of “apportionment" is overdue.

(4) We believe that any increase in benefits, however, should be adopted only after a careful and technical analysis is made to determine as precisely as possible the proper amount and extent of such increases and their anticipated impact upon the economy in terms of costs. Both sides of the coin need to be studied carefully before increases or other changes are rushed into.

And now I want to thank you for allowing me to appear before you and present these views and for your courteous attention.

I will be glad to answer any questions that you may have.
Senator YARBOROUGH. Thank you for a precise statement.
Senator Morse, do you have any questions?

Senator MORSE. It is a very able statement. It is the kind of document I like to read and study and give staff asignments from.

As you were discussing this matter of partial permanent disability I recognized what I think is going to be a fact developed in our discussion and developed in the record before it is complete. I want to give you an opportunity to comment on my observation and file any statement you want to supplement what you have already said in your discussion on partial permanent disability.

Here in Oregon if a man is injured working for a stevedoring company and it results in a partial permanent disability the question is raised, Why shouldn't he receive, for life, some amount of pension for that degree of permanent disability? The argument, I think, will go on with the premise that the approximate cause of his injury produces the partial disability for life and the social objective of these pension plans that are involved in such legislation as this, not knowing how long you are going to live, is simply to provide an amount to determine what should be equitable as a pension for the period of time that he does live.

What is wrong with that theory?

Mr. Twohy. I would say this, Senator, that there is nothing wrong with the theory, if it is the theory upon which workmen's compensation is based. I think that if we are going to adopt that theory, or were we to adopt it, that we would have to logically abandon the system of permanent disability rating because I think the two concepts are mutually exclusive. As I understand the theory, philosophy of the permanent disability rating, it is to try to establish a rating or a level of disability commensurate with the man's actual condition and try, as far as possible, to translate that level of disability into dollars and cents. If this manent disability ratings because I think the two concepts are mutually turns out to be a 40-percent disability, or 50 percent, or turns out to be $10,000 or $12,000, whatever it might be, that we have then established-as far as humanly possible correlation between the man's disability and the amount of remuneration he should have.

Now, if we add to that, a concept of then continuing to pay him either a life pension or on some other basis, we have abandoned the concept of the permanent disability rating, as I understand it.

Senator MORSE. I will study the application provision of the bill that we are talking about, but I still think it is proper for me to throw out another hypothetical or two so you can shoot at them, so to speak.

You spoke about the handicapped. Say a man is injured, but even with some handicap he still can perform some stevedoring work. So the employer hires him, after he is recovered to the extent that he can recover from the partial disability that he suffered, and then he has another injury and that injury, added to the first, ends up with him being totally disabled. As you point out, that causes employers to be rather hesitant about hiring people that are partially disabled. But if you followed the theory of those that I proposed in the first hypothetical I gave you, where his first permanent partial disability

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would result not in a lump-sum settlement for him but in an arrangement of a pension for life for that disability, then you might have a working basis for writing only the additional pension. The basis of the second injury would be computed on the basis of that injury, separate from the first, where he only had the second one and never had the first. You add that partial disability pension to his first, which might very well not add up. Otherwise, it would be a total disability.

Quite hypothetical, but if you follow the first premise I have laid down that you rae going to go to the pension route for life, x number of years, what would be wrong with that approach?

Mr. Twohy. I don't understand, exactly. I lost you there. . Senator MORSE. I am trying to get into discussion on this argument of yours that we shouldn't look on partial permanent disability from a pension standpoint but, as I assume, from a lump-sum standpoint, that looking at possible social consequences of that x dollars-let's pull one out of the air and say $10,000 lump-sum settlement and maybe 12 months from then he will be on public welfare.

Nr. Twouy. If I understand you correctly, the hypothetical case you are putting forward is one where a man has had one injury, par. tially recovers, goes back to work, has another injury, and the combined effect of the two injuries is total disability.

Senator MORSE. But we look on that second injury separate from the first, because we base his compensation on a whole man, not a man already partially disabled.

As I understand the thrust of your argument, we aren't going to hire the handicapped man if we consider him potentially disabled and permanently disabled because then he would get the full compensation, just as he would if he had a permanent disability injury all at once.

Mr. Twohy. Yes, I understand. That was not the intended thrust of my argument, Senator, because, again, if I understand you correctly, what we would have in a case of this kind would be a man who may wind up with an 85- or 90-percent disability as a result of the two combined injuries.

I can only speak, again, with any degree of knowledge at all from the başis of what we have in California, and under that system, what we call the subsequent injury fund, which, as I understand it, is somewhat analogous to the special fund under section 44(a), if the two combined injuries result in a disability of 70 percent or more under certain circumstances there will be a pension payable because even under our law there is a pension payable under these extremely high levels of disability-and I believe very properly so. Where the level of California, or where the pension begins, even followed in one injury is 70 percent, and if a man rates 70 percent permanent disability he is going to have a very demonstrable disability which will cause a very definite lowering of his wage-earning capacity, so that there is no question, certainly, that he would be entitled, and should have, a continuing pension after his permanent disability payments have been paid out. We do believe that this pension system, however, should operate only at these extremely high levels of disability, because what happened, as a practical matter, in so many, many of the cases, particularly at the lower levels of disability, a man will return to work and have actually not only no wage loss but no loss of earning capacity

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and will live out the rest of his life with no disability as a result of his injury.

We would have no objection to providing some kind of a pension program for men in these very high disability ranges. The thrust of my argument was the reluctance of employers to hire a person stems from a different problem, and I confess that most, most quickly summarize it by using a specific example of a man with a heart condition who becomes employed by employer A and then suffers a heart attack which disables him. Under the present law, or at least under the present interpretation of the law, the employer is totally responsible for all of the man's disability, even though he may have had a preexisting pathology or disability. This is the type of portion I was referring to and the type of problem I had in mind when I was referring to what we feel to be the desirability of some really meaningful apportionment of the statute.

Senator MORSE. I certainly owe it to you to study what you had to say about permanent partial disability and your comments in regard to pension relative thereto. My interpretation was that you thought pension was one thing for permanent disability, but you did not favor pensions for partial permanent disability, and it may very well be that there would be some point where the partial permanent disability should be the starting point for a pension, and that all pensions not be dismissed.

Mr. Twohy. Precisely.

Senator MORSE. I think we have a serious injury that has resulted in partial permanent disability, injury job-connected. We are bound as a committee to face up to the question of whether or not we would support the principle of pensions in those cases in some amount for the life of the injured person. That is why I raised it for the record so you could have the opportunity to give the explanation that you have given and any further explanation you want to give by way of written supplement.

Senator YARBOROUGH. Thank you very much, Mr. Twohy, for your statement. You have great knowledge of this subject.

Senator MORSE. I have no further statement to make. I just want my chairman to tell me when we are going to reconvene in the morning.

Senator YARBOROUGH. The chairman would like very much to reconvene at 9:30, and with the approval of the senior Senator here, the meeting is now recessed until 9:30 o'clock tomorrow morning.

(Whereupon, at 5:30 p.m., the committee adjourned until 9:30 the following morning.)

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