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that further study will be given to this section so that increases may be provided, particularly in view of the small number of cases involved: only 0.2 percent of all compensable cases, according to a report issued by the U.S. Department of Labor, Bureau of Employees Compensation, dated September 1967.
At this juncture, Mr. Chairman, I would like to refer to a question that was raised by Senator Wayne Morse when he asked my good friend, Dennis J. Lindsay, what his opinion was in regard to the feeling among many that the right to file third-party suits has a beneficial and stimulating effect upon seeing to it that an adequate safety program is carried out. As I recall Mr. Lindsay's answer, he stated that he did not feel that such was the case, but yet in the same answer he did say that it is possible that it does cause a more successful pursuit of such safety programs. As far as I am concerned, Senators, the latter part of his answer is quite adequate. I am convinced that this does have a stimulating effect. It is like a sword of Damocles hanging over the heads of those who are callous employers who may not be so enthusiastic about following a safety program.
I as a worker must compliment the Pacific Maritime Association here on the Pacific coast for the efforts they have made in stimulating and furthering safety programs in cooperation with our union. In this cooperative endeavor now we are aided by the Bureau of Labor Standards, which does an outstanding job. The only limitation to the work they do is the fact that they are limited by the funds appropriated for the Bureau, which, in effect, if they had more would enable them to put on more inspectors and men who police the section of the Federal Code and the code that the PMA and the ILWU have jointly agreed to on the Pacific coast.
So, in my opinion, unless there is something more concrete shown by those who appear against this proposal or suggest revisions which, in my opinion, would be harmful to the interests of workers, I think that this is a very important factor to be considered by this committee.
Statistics were presented in Washington, D.C., and now in the present hearings here in Portland. Firstly, if the cost is greater to employers to insure safety on the ships and proper benefits for our injured members, then I say these are the two goals and not savings to the employer. Secondly, because of the manner in which the act, in fact, works, these statistics I know from personal experience are meaningless. I am aware that each third-party case would have to be analyzed in order to determine whether or not the worker in that individual case was better off to have filed the third-party case or not to have filed it.
In conclusion, I want to thank this Senate subcommittee for taking steps to improve this act which means so much to the workers of America. The improvement of benefits for those who suffer injuries in the course of productive work will enable them and their dependents to live in dignity and security.
Senator YARBOROUGH. Mr. Stern, I will call on you next.
Thank you, Mr. Murnane, for your fine statement.
It might be best to hear each of you and then we will ask both of you questions together.
STATEMENT OF JULIUS STERN, WELFARE DIRECTOR, INTERNATIONAL LONGSHOREMEN'S & WAREHOUSEMEN'S UNION,
SAN FRANCISCO, CALIF.
Mr. STERN. My name is Julius Stern. I am the welfare officer, director, for the Longshoremen's Union in San Francisco, and I am representing the international union, as you heard from Mr. Murnane, on behalf of increases in workmen's compensation benefits.
First, I might say that I am happy to be in Portland.
Senator Yarborough, I might say you have an excellent reputation among people in organized labor and your record speaks for itself. The record shows you have been sympathetic to our cause, especially where injuries are concerned. Of course, as far as Senator Morse is concerned, it goes without saying that he is one of the finest Senators we have ever had. We hope he stays in the Senate as long as he wants to.
Last night I had to reminisce a little bit. I have a copy in my hand of hearings from the Longshoremen's Compensation Act, 1955, the Morse-Magnuson bill. Nothing has changed but the dates. At that time the compensation benefits were $35 a week and we wanted an increase. to $54. The employers used the same arguments and the unions used the same arguments. Now we are back again, 13, 14 years later, the same situation. In 1955, and this is proven by the records, the average longshoreman earned $100 a week on the west coast. We knew we had a case to increase the benefits from $35 to $54 a week. Now the average longshoreman on the west coast earns $10.000 a year and we are stuck with the $70 a week maximum compensation benefits.
The reason we are asking for $121 a week is, we know the arguments that were used as to the Federal employees, who in 1949 received an increase up to $121 a week, and a couple of years ago it went up to around $250 a week. What is the difference between the living standards of a Federal employee who gets injured on the job and a longshoreman? None. They are both American citizens, and in some instances where Federal employees are doing stevedoring work, civil service employees, they have the same problems. Why should there be such a fantastic difference in compensation benefits? We feel the same arguments that were used then and we feel that the same arguments that were granted by the Senate, Congress, and signed by the President hold true as far as longshoremen are concerned.
As Senator Yarborough pointed out, we have kind of a unique problem on the west coast. We do. We make more money than other workers in the same industry throughout the United States. The bargaining agreements are better, the conditions are better. When a man makes more money his living standards obviously are higher. Then the problem arises. We can't cope with the situation when a man gets injured. We can't cope with the $70-a-week compensation benefit. We simply have to have more, and that, of course, is one of the reasons why we are here today.
You have heard the last few days what happens to the employers when a man gets hurt; you have heard about compensation rates; you have heard about premiums. In northern California, where I represent injured longshoremen, probably about 85 percent of the injured cases go through my hands. The premiums are $12 a hundred compared to $30 and $40 to a hundred on the east coast. That is a union accomplishment.
A man, a college professor by the name of Nathan Findsinger, on behalf of the Government, made a survey in 1964 on the west coast to see what happened to injured longshoremen. On the basis of his survey the union took it upon themselves to select men from the ranks to see what they could do under the Longshoremen's and Harbor Workers' Compensation Act, to get attorneys to see that the act functioned the way it should. In return for a man building up his life, he is entitled to speedy, fast, and quick benefits under the act, two-thirds of his average weekly wage.
What happens when an injured worker gets hurt? In some instances back East a lawyer gets a client. On the west coast, particularly in larger ports, I see the man, I see the man when he is working, I see him when he is hurt, and I see him after he recovers and goes back to work. He comes in my office and I file a claim. That is one of the reasons I don't care whether the statute of limitations is a year or 2 years. I file a claim for everybody. I have to. If I don't file a claim and a year elapses, insurance carriers say, "You didn't file a claim within a year, I'm sorry." We are not sorry, so we file a claim for everybody. We see that he gets proper medical treatment. Sometimes that is not easy.
In any event, around a year, year and a half, we have a conference. At the conference the man asks me-let's assume he sprains his wrist, he is off about 10 weeks, he loses about $2,000 in wages, receives $700 in compensation, there is $1,300, there is a gap of $1,300. Maybe he gets 5 percent of the risk, eight hundred and some odd dollars, granted for a permanent partial disability. He is out $700. So when a man comes in my office I say, "You don't get paid for getting hurt, you don't get paid for pain and suffering, and you don't get two-thirds of your average weekly wage because it can't exceed $70 a week." He says, "What kind of a bill are we working on? I will do the best I can." He says, "What are we really going to do about it?" We are going to ask for remedial legislation like we always have done. That is another reason we are here now.
One of the many reasons for third-party suits is simple, the man can get more money. Even though if a third-party suit hasn't been brought out here, the employer, insurance carrier, is going to get back his medical and comp., he is going to get back his money he put out. Even then the injured man gets more money. For example, a longshoreman will come to me and say, "I have a good employer. I want to work. The employer saw to it that the job was safe, but I was walking over something and a hatch was short. I fell through the hatch and hurt my leg. It wasn't my employer's fault. What does the act say?" The act says that you can sue people other than your employer. He says, "Will I get more money?" I don't know, sometimes you lose cases." But because we are restricted on $70 a week and on the ratings that follow, then I have no alternative but to tell the injured man you may get more money.
Now, it is true that the Supreme Court has broadened the concept of liability. It may well be that if the carriers use claimant attorneys on pleadings to the Supreme Court the decisions might be different, I don't know. But because of lack of competent counsel why should longshoremen lose something on account of that? How can we tell a longshoreman, deprive him of a constitutional right, how can we tell a longshoreman, on the one hand, that he cannot sue his employer and, on the other, he can't sue a party other than his employer? It
would put us in a special class if we went along with a program like that. No. 1, I know what the plaintiffs' attorneys would do. They would tell the union, we are taking something away from the man that is a constitutional right. We know what happens when you try to take bread and butter away from palintiffs' attorneys. We are not going to attempt that. We know that the industry needs a remedy. We know third-party suits have reached a point now where they are hurting the industry. We also know that the remedy doesn't lie in trying to see to it that the shipowners, the smployers, for the purpose of eliminating third-party suits, are responsible. We think the remedy lies in some other direction. There are other remedies. We are willing to work along those lines.
For example, the policy of the international union is that workmen's compensation is our remedy. We don't advocate and we don't try in any way to encourage third-party suits. Our principle has been the same throughout the years. We fought for workmen's compensation. The bill under discussion now is our bill. The employers didn't raise this bill, we did. We always do. We want compensation to be the remedy. We also want something in the bill that will enable our people, if it is in their best interest, to sue somebody else. We also want to see that the industry has solved it. We think we can do all of these things within the framework, but we operate from one premise, what is best for the injured man. The best thing is no accidents. So we fought for a Federal safety program. The same people that are opposing the amendments of this bill opposed the Federal safety program. It is functioning. We don't want accidents because no money in the world is going to replace a man that loses a finger, an eye, or something else. We don't want it. We know we are in a hazardous industry
The second step we do when a man gets hurt is to see that he gets paid promptly. We don't advocate huge settlements. We don't advocate a man can earn a living by fighting insurance companies and using trickery and deceit. That wouldn't work, and we proved it by handling these welfare offices up and down the coast, for one thing, to eliminate all these attorneys to come around to do this, that, and the other thing. We advocate that the insurance dollar, the premium dollars, either stays with the insurance company to make the premiums lower or give it to the injured man. We, again, will cooperate with any group in order to rectify what we think is an unfortunate situation, but we are certainly opposed to using the Compensation Act as a vehicle for it.
I just wanted to add one thing. The other amendments to the act we are not particularly concerned with. Our main thrust is to get the benefits high enough so a man can come near the two-thirds of his average weekly wage. We are firmly convinced, gentlemen, that if compensation was high enough the incentive to sue a third party is gone, and we don't care how many attorneys are hanging around union halls or offices, if the injured man can do better on workmen's compensation, he will certainly do it.
Another thing you haven't heard of are the cases that are lost. I happen to be in a position where a longshoreman will go to some attorney. He has a back injury. The Federal judge-some Federal judges are liberal and some aren't-awards him $5,000 for a back
injury. He owes the insurance company $4,000 in medical and comp. The lawyer takes out his fee. He has nothing. This has happened. So under the Federal act we can come in for a deficiency providing the suit was not settled without the consent of the employer. Some insurance companies-none here fortunately-encourge longshoremen to settle suits out of court without the consent of the employer, which totally destroys their rights to future compensation and future benefits. We are on guard for these things. And in an attempt to do one thing, we think the union can do a better job in protecting a man and getting benefits providing he gets two-thirds of his average weekly wage. The figures you have for the Bureau of Employees Compensation, Department of Labor, we think are correct. We don't have to spend too much time to make a case for the increased benefits. Again, we think the two-thirds, $121 a week, is fair and we are willing to cooperate, to see to it that third-party suits are eliminated, one, by higher benefits or working out something with the employer. That we are willing to do. And in all fairness, I think we ought to have these benefits. We think the industry will be better off, both for the plaintiffs' side and the carriers' side, to make compensation function effectively.
Senator YARBOROUGH. Thank you, Mr. Stern, and you, Mr. Murnane, for these very illuminating statements on how these laws actually affect an injured workman in your particular line of work. I think your statements have given us a great deal of information here.
Mr. Stern, I will order that your prepared statement be made a part of the record.
(The joint prepared statement of Mr. Stern and Mr. Murnane follows:)
JOINT PREPARED STATEMENT OF JULIUS STERN AND FRANCIS J. MURNANE, REPRESENTING INTERNATIONAL LONGSHOREMEN'S & WAREHOUSEMEN'S UNION, SAN FRANCISCO, CALIF.
Julius Stern of Local 10, San Francisco, and Francis J. Murname of Local 8, Portland, Oregon, representing the International Longshoremen's and Warehousemen's Union, which includes longshoremen and related maritime workers in all the principal ports of the West Coast, including Alaska and Hawaii, welcome the opportunity to appear before this Senate Subcommittee in support of badly needed legislation to update the benefits structure of the Longshoremen's and Harbor Workers' Act. Not long ago, this Subcommittee approved legislation to revise the benefits of the Federal Employees' Compensation Act, and we are of the opinion that the same reasons which motivated improvements in the Federal Employees' Compensation Act apply with even greater force to the Longshoremen's and Harbor Workers' Act.
The proposed Bill, S. 2485, would increase the present maximum benefits from $70.00 per week to $105.00 per week. Based on the average earnings of West Coast longshoremen for the years 1966 and 1967, this figure is much too low. All available data now indicates that West Coast earnings now approximate nearly $10,000 per year. We respectfully recommend the sum of $121.00 per week, formerly the maximum under the FECA instead of the $105.00 per week. The figure of $121.00 would be about 50 per cent of the West Coast average weekly wage, much less than the original intent of Workmen's Compensation which calls for two thirds of injured worker's average weekly wage.
Higher earnings on the West Coast should not preclude workers from higher compensation benefits.
It may be true that a compensation rate of $105.00 per week, more or less, reflects two thirds of average weekly earnings on a national basis, but in all equity, why should those with higher earnings be penalized!