Your Life is Their Toy - Emanuel Josephson

State Medicine and Social Security:
The Workmen's Compensation Racket


His plea was addressed to Miss Frances Perkins, then Commissioner of Labor of the State of New York and now "New Deal" U.S. Secretary of Labor, by William F.B. Coston of Rahway, New Jersey, at a hearing on the fifteenth of April 1931 of Governor F.D. Roosevelt's Committee to Review Medical and Hospital Problems in Connection With Workmen's Compensation Insurance. Mr. Coston testified as follows:

"He had sustained an injury to his head four years prior while working. He was taken to a hospital on Staten Island and treated there four days, until the employer's insurance company notified the hospital that it would not pay the bill because it did not regard hospitalization as necessary for his case.

"With the consent of the Commission but in violation of the law, the insurance company hastened to settle fraudulently the claim for an injury that it knew to be serious for two and one half weeks' compensation. Two weeks later the injured man developed paralysis as a result of the neglect of his condition compelled by the insurance company's action.

"For four years the claim pended before the various appeal boards of the State Industrial Department. Impoverished, he was unable to raise sufficient money to secure minutes of the case required by the law to enable him to fight the resourceful insurance company sharps."


The pathetic plea of paralyzed Mr. Coston fell on the deaf ears of Frances Perkins, the self-confessed revolutionist, the social service leader, the "great humanitarian," the intimate of Eleanor Roosevelt and the professional champion of the abstraction "The Working Classes." Proletarian sympathizers are apt to value workers in mass for their power to perpetuate their jobs and for their voting strength. The only individuals who command Miss Perkins' personal sympathy are such masters of votes and "outstanding leaders of men" as Harry Bridges and John L. Lewis; and for them she fights to the last ditch. She evidently values them more than the lives of thousands of refugees whom she off-handedly denies haven in this country at the behest of the autocrats of Labor.

To William Coston's pitiful plea for help in securing transcript of the minutes of his case in order to right a shameful injustice, Madame Perkins testily countered with the alibi that she had not enough stenographers in her division to help him. She had plenty stenographers to enable her to Rood the country with reports of how well her Department was administered; but she had none to serve justice and help a tragic victim of its "perfection." Sensing in this plea an attack, la Perkins with true feminine inconsistency indignantly asserted that the New York Workmen's Compensation Act was "the best in existence;" and her administration of it she defended as perfect.

It was quite clear that Commissioner Perkins evaluated the New York Compensation situation from the social service viewpoint. From that perspective it was "the best;" for it paid her the highest salary available in the field. It mattered not that in the administration of the law there had been introduced fraud and abuses on a widespread scale or that all the professed objectives of the law were frustrated. Despite thousands of cases like Coston's, all was perfect from the viewpoint of social service.


A measure of what benevolence the public can expect of social service and all its "liberal," radical and commercial allies is revealed in the administration of the Workmen's Compensation Acts. For these insurance acts were the first concrete results of the activities of Organized Social Service in the United States. This followed its adoption of the "Made in Germany" labor program and "New Deal," and its alignment with German propagandists of the International Association for Labor Legislation. It became a catspaw of foreign agents provocateurs, who were bent upon imposing on American industry the same items of cost as handicapped German industry. The formation of the American Association for Labor Legislation in 1906 marked its start.

Among the original founders of the Association were Richard T. Ely, Edward T. Devine, Mary K. Simkovitch, R. O. Love joy, Mary van Kleeck and John B. Andrews. Later joiners were Frances Perkins, Harry L. Hopkins, John A. Kingsbury, Charles C. Burlingham, William Hodson, Ida M. Tarbell and Homer Folks.

In the following decade the social service forces of the country intensified their activities on labor legislation. They agitated and engineered the passage of Workmen's Compensation bills throughout the nation. Their agitation was crowned with success; forty-six states in the Union have adopted Workmen's Compensation Insurance Acts which are more or less uniform and standardized as a result of these "social service" activities.


The pretended objectives of the Workmen's Compensation Acts were quite laudable. They included the following:

  • Fair, prompt compensation and competent medical care for the injured employee.
  • Elimination of the expense and delays of litigation.
  • Elimination of congestion of court calendars.
  • Stimulation of accident prevention.
  • Distribution of industry's cost of workmen's liability.
  • Elimination of the unwarranted burden which had been placed upon communities in the care of disabled veterans of industry.

In the drafting of the bill's propagandists who assumed the guise of "liberal" professors of economics and "authorities" on workmen's compensation insurance, steeped in the lore of the original German model, helped to give the bills introduced the full destructive value to commerce and industry that had been anticipated by Bismarck.


This is illustrated by the Workmen's Compensation Law of the State of New York enacted in 1914. Its administration constitutes a model upon which the laws of many states, as well as that of the Federal Government, have been patterned. Consideration of the consequences of the law, therefore, has a wide and valid application.


The defective and unjust character of the Workmen's Compensation Act was made clear in an attack made on the law by a referee of the Workmen's Compensation Division, Justine Wise Tulin, when she was appointed New York City Magistrate, in an article that appeared in the February 10, 1935, issue of the New York Times. She stated that:

  • The insurance companies employed a group of physicians who made a monopoly of Compensation practice.
  • The insurance companies regarded the control of the selection of physicians as a means of controlling medical testimony.
  • That the testimony of the physicians with regard to causal relationship between an accident and subsequent disability was closely correlated to the economic interests of those who employed them, and that the physicians did not hesitate to render biased testimony on the question of causal relationship and extent of disability.
  • That the physicians thus employed refused to give adequate medical attention and ordered the injured back to work before they had recovered, in order to cut down compensation costs.
  • That the control of medical care has been used by insurance companies to limit compensation awards, and not to keep down medical costs.
  • That the physicians authorized by the insurance companies to treat the injured, and who were willing to aid the companies in defrauding the injured, were highly paid by the companies through the device of padded bills, and that the fees thus derived were split with corrupt insurance adjusters.

She pointed out also that the New York State Insurance Fund, "although a non-profit-making State organization, has considered itself in competition with the private companies to such as extent that it has adopted the same devices, and has failed to raise the standards of medical practice,"

Judge Tulin was one of the honest and principled referees of the Division. It is said to be the custom of the insurance companies to secure judgeships for the referees that can not be "fixed" and who therefore cost them too many costly awards. Her accusations are therefore significant especially in view of the importance of the law to industry and to the community.


Few of the pretended advantages to the injured worker have been attained, A majority of serious injuries are denied compensation through chicanery and fraud which generally revolve about the plea of "causal relationship," a practice created by the Commission. Many claimants are unmercifully thrown out of "court" and denied compensation which the law intended them to have; contested claims often take months and sometimes years before an adjudication. In the meanwhile he is compelled to waste many days of his time attending futile hearings designed to tire his memory or to trap him into making some erroneous admission and possibly to confuse the presiding referee, in the hope that it will save the insurance company from paying any compensation.


In a very significant manner the practices set up by the Commission violate the letter and the spirit of the law. To eliminate chicanery and sharp practices, the law provides that the proceedings before the Commission and its referees shall be fact finding hearings instead of legal skirmishes. This section is more honored by its breach than its observance.

The injured employee of an insured employer is automatically deprived by the law of the right to trial by a jury of peers, clearly in violation of the Constitution. He is also deprived of the right of effective representation by an attorney, except at the will of the Commission, through its power to dictate legal fees. The fees generally allowed by the Commission, even though paid out of the award of the injured and a lien on it, are so small and inadequate that few competent attorneys are willing to handle compensation cases except as a matter of charity or accommodation.

The injustice of discouraging competent legal representation of the injured is made dear by the large volume of regulations, decisions and precedents accumulated about the law and its administration, and by their extreme, pettifogging technicalities. The insurance carriers are invariably represented by shrewd and unscrupulous agents who are experts in the law in all its ramifications and are supported by a costly legal staff that makes the law and its evasion its sole study.


Fairness and honesty would impel the ruling that in every case which the insurance company chooses to contest, the injured must be represented by an attorney who will be paid on the customary basis of a percentage of the award. In fairness to the injured, the insurance company and. not the injured, as at present, should be compelled to pay the fee of the attorney and all costs including those of medical experts. The fee scale allowed the professional talent of the injured should be on the same level as that paid by the insurance company to its professional aids. This would do much to discourage needless appeals and litigation.

Theoretically, the lone and lowly-paid referee of the Commission, before whom the hearing is held, should be both the unbiased arbiter and the skilled advocate for the injured plaintiff. Rule 6 of the Industrial Board provides in part:

"Where claimant is not represented the referee shall examine the claimant and his witnesses and cross-examine the employer or carrier's witnesses on claimant's behalf."

It is clearly impossible to be a neutral, unbiased and non-partisan judge and a partisan attorney for the injured plaintiff at the same time.


It is not meant to imply that there are not some honest, competent and public spirited referees in the employ of the Compensation Division of the State Labor Department. The standards of fairness and honesty demanded by the law of the referees, however, have not been very high. It was only in 1927, after the law had been in force for 13 years, that it was amended to bar physicians and surgeons employed in the Department from working for insurance companies while acting as referees and medical examiners. Prior to that time, it was not unusual for a medical examiner or referee to examine and treat injured persons for insurance companies whose cases they refereed. It is proverbially hard to serve two masters; and it is difficult to believe that there was no bias in the decisions of those referees in cases involving the insurance companies by which they were employed.


The amendment to the law arose from a flagrant case of bribery of a medical examiner of the Commission, who was caught red-handed in the process of fraudulently falsifying the report of seriously injured employees in the favor of insurance companies which had bribed him. Curiously enough, this same physician, who was discharged by the Commission because of this and other corrupt acts, continues to prowl about the corridors of the Department soliciting from insurance carriers the opportunity of testifying in their favor for high fees without regard to facts. In the past ten years this physician has been responsible for defrauding seriously injured employees out of many millions of dollars. Many of these injured have become charges of public charities as a consequence of his activities.

Repeatedly this physician has been brought before the Grievance Committee of the New York State Board of Medical Regents for frauds perpetrated upon injured employees. He was found guilty in at least one case and, though threatened with the loss of his license to practice medicine, he was let off with a warning. He continues to repeat the offense with impunity.

The Commission continues to accept his perjured evidence, and to deny compensation to seriously injured employees on the basis of his evidence. The physician in question complains that it cost him ten thousand dollars, on one occasion, to square himself with the authorities. Obviously he finds his practice a profitable one and his political allies must be influential. The insurance companies still hire him to do their dirty work.

The attitude of the Commission toward this physician and his type is expressed in a letter of former Commissioner Zimmer, replying to an injured employee who protested to the Commission that the doctor whom he had never seen before had falsely testified that he had examined him. The letter reads as follows:

"Under the statute we cannot bar him from participating in examinations when employed to do so by carriers or claimants. Long ago the Department took necessary steps to be sure that he does not examine claimants, except when previously retained for the purpose. I am sure that your attorney, at least, will appreciate that neither the Commissioner nor myself can, with propriety, instruct the referees not to permit the introduction of Dr. S___'s 'expert testimony.'"

The credibility of the witness in question could be destroyed in any court. But in compensation practice his evidence is accepted at face value by the referee and the Commission though they are fully aware of the witness' dishonest and disreputable character and activities. On the basis of his evidence, which often is known to the referee to be perjured, numerous injured workers have been defrauded out of compensation awards.


In order to secure any award from the Commission, the injured must prove "causal relationship" between the accident and his injury. The proof of "causal relationship" devolves on the injured. It does not suffice to prove that he was healthy and sound, and capable of doing his work immediately before the injury, to prove that an accident occurred which promptly followed by an injury, and that the injury was promptly followed by disability. Even when the injured can completely prove all these points, "causal relationship" has not been fully established to the satisfaction of the Commission. He must be able to prove that the injury might not have occurred as a result of bodily disorders or as an act of God.


The injured is further handicapped by the adoption of the administration of the attitude that the injured is guilty of malingering until he proves himself innocent. This attitude had been eliminated from American jurisprudence until introduced into many phases of law administration by the "liberal" and "New Deal" agencies. This practice is good proof of the alien origin of the "reform."

The presumption of guilt of the injured is as powerful an influence in the disposition of the case as it is absurd No consideration is given by the Commission to the fact that it would be stupid for any sane person to malinger. For he cannot possibly profit by it. The awards under the Compensation law are only a fraction of the wages of the man when he is uninjured and able to work.

Clearly this practice is merely a device to defraud the injured of compensation justly due, in the great majority of cases. The Commission and its referees usually disregard the provision of the law which states that aggravation of a previously existing disability is compensable. Abuses are especially frequent in cases involving serious and disabling injuries to the eyes and damage or loss of vision.


The proof of "causal relationship" under the practice evolved by the Commission, is entirely based on opinions expressed by physicians who testify either as medical attendants or as experts. They are generally elicited as responses to hypothetic questions, asking the physician whether in his opinion specified injuries could occur under specified circumstances and whether such injuries could cause the disabilities in question. These questions are drawn up with due regard to the rules of evidence and often with an eye to suppressing the truth. A favorite trick is to demand a "yes or no" answer.

Hypothetic questions are a part of the chicanery of the law. But they are downright dishonest when used in these medical cases. For they imply an omniscience which neither the medical profession nor any of its members possess. There is so much that it not known about physiology that it is utterly impossible for any honest physician to say that any disease or physiologic derangement may or may not follow on any specific injury. The honest physician can merely testify that in his knowledge or opinion the consequences of a specific injury are usual or unusual. If he says more, the physician is either stupid or he lies.

In final analysis, the only positive proof that an injury may occur under specified circumstances or may cause a specific disability is the fact that it has done so. The opinions of doctors that it should or should not have happened do not alter the fact that it has happened. It merely proves the limitations of medical knowledge and of the experience of the physician. Nevertheless, it is on the basis of such false medical testimony that the disposition of compensation cases generally depends. And it is the habit of the referees to give greatest weight to the evidence of doctors favoring the insurance companies, no matter how disreputable they may be.


Since the granting of disability compensation depends almost entirely on the reports and opinions of doctors, the importance of control of doctors treating injured workers to insurance companies intent upon fraud is readily appreciated. Under the original version of the law, the employer nominally chose the physician or institution that cared for his injured employees. In actual practice the insurance companies generally intimidated the employers to select physicians in their employ or chosen by them. With the aid of the Commission and its administration of the law, the insurance companies developed numerous technical devices to discourage or bar doctors not under their control from treating the injured. Physicians who had not "authorizations" drawn up in technically proper form were denied payment for their services.

How far the referees went in this matter was illustrated by a case which I witnessed about a decade ago. The referee denied the small bill of a competent ophthalmologist because the employer testified that he had ordered his employee suffering from a serious eye injury, to go to the corner druggist for medical attention. This jeopardized the eyes and vision of the injured and violated the Medical Practice Act. The referee ruled that the employer had provided "adequate medical care," and denied a fee to the physician who had saved the man's eye.


The low medical fee schedule which the Commission allows under its interpretation of the law discourages many physicians, thus leaving the field to men chosen by the insurance companies to whom they generally agree to pay more liberal fees.

The Commission has fixed the fee scale at the level of clinic fees. The consequence thereof was that the majority of competent physicians refused to render service to compensation cases. Some idea of the inadequacy of the fee scale can be gained from the fact that it is no higher than prevailed one hundred and fifty years ago. Even these inadequate fees, the private physician often fails to get or gets only after endless delays and waste of time that involve considerably higher loss than the sums involved.


An endless array of technicalities stands between the doctor and his fees in these cases. He must have a legally valid "authorization" from the employer that has not been revoked in the interim. He then must have filed several reports of the case with both the insurance company and the Commission, which must be made under oath before a notary and placed in the files of the Commission in a manner that does not permit denial of receipt within a specified time after the injury. For the denial of the receipt of the report on time may constitute grounds for rejection of bills for medical services. The Commission does not acknowledge the filing of such reports, as is done by the courts with other legal documents. There are cases on record of the theft of sheaves of medical reports by representatives of insurance companies for the purpose of barring claims for compensation and medical fees.

The doctor must then appear before the referee in reply to subpoenas at numerous hearings which generally involve the loss of practice and income, for which he was not paid. These hearings generally are repeatedly adjourned by the referee at the instance of the insurance company representative. This is done for the purpose of tiring out or "shaking" the doctor and the injured.

At the hearing the physician is badgered by attorneys of the insurance company with endless legal cross-examinations which, with the demand for "yes or no" answers, are generally designed to subvert and suppress the truth and to destroy the case by some legal technicality.

In the end, after averting all the traps and pitfalls that beset the way, the physician often never receives payment of his fee even though the Commission grants compensation to the injured. After years of effort on behalf of the injured, a physician was denied his fee by the Commission on the technicality that the employer had agreed to pay it in his original authorization and request for treatment. This the Commission interpreted as a contract and it therefore denied its jurisdiction. When an attempt was made to take the case before the Courts, it was found that under the law the agreement was not a contract. Therefore by chicanery of the referee the fee for years of service to the injured could not be collected either under Compensation or civil law.


The consequence of the dishonest and in competent administration of the law has been corruption and fraud on a wholesale scale and the perpetration of the grossest brutality and malpractice on the injured. This is borne out by the findings of the Moreland Commission, appointed by Governor Franklin D. Roosevelt, in 1931, to investigate the administration of Workmen's Compensation. It reported that the majority of compensation cases fell into the hands of commercial compensation clinics of the lowest order.

The State Industrial Council reported in its investigation of the compensation clinics, which was instituted primarily for the benefit of the business of voluntary hospitals that had suffered severely during the depression, as follows:

"We have found clinics located in unsanitary tenement houses in space wholly unsuitable to the purpose, dark, ill- ventilated and with floors, ceilings and walls wholly incapable of being maintained in the condition of cleanliness required of a surgical establishment.

"Aside from the suitability of the quarters occupied, we have found apparently complete disregard of ordinary standards of cleanliness. As an instance of dangerous equipment in use, we found an X-ray apparatus entirely devoid of any protective screen."

The Chairman of the Committee, Mr. Max Meyer, reported to Commissioner Francis Perkins in further detail. Compensation clinics were found in charge of lay secretaries who gave all routine treatment and summoned the doctor only in emergency. Patients were treated with regard to asepsis.

"It was as if Lister and Pasteur had never lived," stated Mr. Meyers.


These clinics generally were rendered profitable to their proprietors as a result of collusion with the adjusters of insurance companies, involving the payment to them of graft or of a percentage of the bills allowed by them. A number of insurance adjusters have been prosecuted and sent to jail in recent years for defrauding their companies. There is now pending in Brooklyn an indictment of a group of employees of the New York State Insurance Fund alleging wholesale frauds perpetrated by them.

There are a few physicians who engage in compensation work who have remained scrupulously honest But the majority of them have matched the injustice and fraud of the Workmen's Compensation Commission and the insurance companies, and have resorted to padding bills, falsifying records and other fraudulent practices. The situation has been aptly depicted by Assistant District Attorney Bernard Botem of New York in his report of November 1937 to the Appellate Division and the Bar Association on accident fraud. He blamed not only the insurance men who had been indicted but insurance companies in general. He reported that their unfair and unethical opposition to payment of legitimate claims make exaggeration of claims a practice acquiesced in by both sides.


The grossness of the brutality and malpractice that has arisen under the law and its maladministration is illustrated by the following case.

In 1927, one of my patients, L. M., sustained a severe lime burn in one eye. Treatment was being rendered by me under proper written authorization by the employer. The insurance company involved did its utmost, as is the usual practice, to induce the injured to leave my care and accept the care of its physician, but he refused. Finally a representative of the insurance company approached me with a proposition:

Since the treatment of the injured eye would be very prolonged and expensive, and it was obvious that, even after treatment was completed, one could not feel certain that the man's vision would be better than ten percent, the insurance company would be compelled to pay for the loss of the eye, as well as an additional sum for facial disfigurement. If I would remove the eye without regard to the possibility of recovery of vision, he offered to pay me half of the estimated resultant savings in hospital and treatment expenses. Gouging out an eye was for them simply a matter of profit—dollars and cents. This case makes one shudder to think of the injured victims of some physicians controlled by the insurance companies who are compelled to do as bid, instead of ordering the adjuster off the premises, as I did.


Prominent among the advantages which Organized Social Service and its propagandists represented as offered by the Workmen's Compensation Act were elimination of legal delays and prompt payment of disability allowances. These have failed to materialize.

The delays of Compensation procedure dwarf court delays, have involved great hardship on the injured. Often they have meant neglect of treatment and sometimes death. In cases of serious injuries, years might elapse before the injured have received a penny disability allowance, if ever. Hearings have been adjourned for months, and sometimes for years. Usually the testimony has not been transcribed unless paid for. When made they have been in accurate and often falsified, particularly in the matter of testimony favorable to the injured.


All the safeguards which surround testimony and records in the courts: non-partisanship of the judge, accuracy of records and their transcription and safekeeping, representation by competent attorney—have been denied the injured by the Compensation Commission.

This has aided materially the perpetration of frauds by the highly skilled legal representatives of the insurance carriers who are bent upon taking advantage of the numerous technicalities of the law. In minor cases, which involve little or no expense to the insurance companies, there is usually little contest. But in serious cases, involving loss of life or incapacitating disability, the insurance companies avail themselves of every subterfuge of the law.


Repeated rehearings are held on the same phase of the testimony. At each hearing the skilled representatives of the insurance companies seek to break down the evidence of the undefended, injured claimant and to tire out his witnesses. Not infrequently evidence giving proof of the accident may not be called for until months or years have elapsed. In the meantime, pressure is brought to bear upon witnesses, and fellow employees are bulldozed and coached into rendering testimony favorable to the employer and his insurance carrier.

If the injured be granted compensation by the Commission, appeals involve interminable delays. The insurance company is encouraged to appeal. The injured is discouraged and lacks resources. In cases which have been pending for seven years or more, awards are not paid by the insurance company (except a nominal fixed amount) but are paid by the State from a special reserve fund, thus encouraging delay.

When an award has been granted by the Commission not infrequently it has been for but a fraction of the amount which is due the injured under the law. Thus if he has suffered from blindness and slight facial disfigurement as a result of his injury, a nominal grant is made for one and not the other. Hearings are permitted to drag out. The repeated hearings result in loss of workdays and so often threaten loss of employment that the injured prefer to neglect them and hold their jobs. Upon this the insurance companies depends for defrauding many injured,


The Workmen's Compensation Division publishes a veritable avalanche of statistics prepared by its ample statistical staff. But by a most curious chance, it does not publish any statistical analysis of the cases denied compensation detailing the nature of injuries which they sustained, the reasons for denial of compensation, the time which elapsed between the filing of claims, their settlement, and the payment of compensation. There is no data more vital for an evaluation of the administration of the law.

A request forwarded to the Director of the Workmen's Compensation Division for a statistical analysis of rejected cases brought the following reply, under date of December 10, 1935:

"In reply to your letter of November 29th, I wish to advise that we do not have a statistical analysis on which claims have been denied. We, of course, can obtain that information, but I do not feel justified in making the study without some indication of a need for it.

"When I spoke to you recently on the phone you informed me that you had a record of some thirty cases in which compensation had been denied, and, as I informed you at that time, I would appreciate it if you would submit a list of the cases so that I may make a study of them. If the thirty cases you mention indicate that a study of all our discontinued cases should be made, you may rest assured it will be done promptly.

"Very truly,
(Signed) M. J. Murphy, Director.
Division of Workmen's Compensation.

The obvious interest of such statistics of rejected cases is borne out by the fact that the Director himself had ordered a survey of rejected cases for his own private use, which was carefully suppressed. This survey, according to the statistician of the Department, revealed the following:


In other words, could not prove to the satisfaction of an antagonistic referee that he would not have suffered disability from an act of God bad the accident not occurred.

In short, the Commission's statistician acknowledged in effect that one-quarter of the injured applicants for compensation probably were defrauded out of compensation and consequently thrown out as charges upon the community. From personal observation, I hazard the statement that the twenty-five percent of the cases which were rejected on the ground of "causal relation" include the great majority of serious injuries which would have involved a large cost to the insurance companies.

I here outline a number of cases included in the rejected group, from among those which have come under my personal observation:


A. G. Case No. 3231644, Injured August 8, 1932, by rim of tire striking right ridge of forehead, causing a lacerated wound on the forehead, a fracture of the margin of the orbit and blindness of the right eye. The injured had been continuously employed up to the time of the accident and had been efficient. But the insurance company alleged, without any proof, that he had been suffering from a disease of the eye which purely as a matter of coincidence resulted in blinding at the time of the accident. The injured was as unable to disprove this allegation as the insurance company was to prove it. The referee denied compensation and saved the company three thousand dollars.

The injured was ousted by his employer at the behest of the insurance company on the ground of his disability, was denied W.P.A. employment for the same reason, and became a public charge. The referee's technical ground for denying compensation was "CAUSAL RELATIONSHIP NOT PROVED."


P. deK, Case No. 3331 1099. Injured October 29, 1933, in left eye, his only good eye, by intense electric are due to short circuiting of electric cable. Employer witnessed the injury and rendered first aid. Subsequently the injury was treated for a number of months by a physician employed by the insurance company. When it became apparent that there would be a permanent loss of vision, the doctor altered his diagnosis and reported to the Commission that it was not due to injury, but to a pre-existing syphilitic condition. Compensation was denied on the basis of the insurance company physician's statement.

Subsequent examination of the man's eye revealed a typical burn and a cataract of the type caused by intense electric arcs. His vision was severely impaired. He lacked the funds to fight the insurance company before the Commission. His attorney would not continue with the case because the Commission denied him payment since compensation had not been granted. The referee's technical ground for denying compensation was "CAUSAL RELATIONSHIP NOT PROVED".


M. R. Case No. 31613949. Injured May 13, 1932, by chip of stone flying from slab under hammer blow and striking his eye. Treatment was rendered by insurance company ophthalmologist. When it became apparent that the eye condition was not due to injury, but to pre-existing disease of chronic nature affecting both eyes; and that the immediate cause of the impending loss of the eye was the blocking of the central retinal vein.

Several physicians testified that the condition causing the loss of the eye arose from injury, and that systemic condition reported by the insurance company did not exist in other eye as alleged. This was also borne out by photographs of that eye taken a long time after injury, which showed none of the permanent changes, thrombosis, described by the insurance company physicians. But this absolute proof of the falseness of the diagnosis was kept out of the record of the case by technicalities of rules of evidence which were brought into play by the attorneys of the insurance company. The pathologist who examined the removed eye, at the Manhattan Eye and Ear Hospital, might have introduced the truth into evidence. He refused to do so, because his boss at the hospital was the insurance company's physician.

Dr. Arnold Knapp, who was "chief" of the Knapp Memorial Hospital which treated a large number of compensation cases for the insurance companies, was selected by the Commission as "unbiased" medical referee in the case. In spite of the fact that sections of the removed eye were available for determination of the exact condition causing its removal, Dr. Knapp hypothesized on the basis of the false diagnosis of the insurance company physicians. He ruled that the loss of the eye was not due to the injury. Compensation was denied, saving the insurance company several thousand dollars. Verdict of referee and Commission: "CAUSAL RELATIONSHIP NOT PROVED."


P.C. Case No. 3328471. Injured September 6, 1933. While driving truck he was forced to swerve into a ditch to avert collision and was jolted and struck forcibly on back of head by the steel hood of his truck. He managed to finish his day's work and to drive the truck back to the garage. He reported himself injured and suffering from intense pain in the head and unable to walk without pain. He entered the hospital on the following day. There a diagnosis of intra-cranial hemorrhage was made. The insurance company asked his transfer to the Neurological Institute at its expense for further diagnosis and treatment.

Although he was found to be very sick, the physician at the Neurological Institute obliged the insurance company by finding a tumor of the skull and asserting that the man's disability ad nothing whatsoever to do with the accident. The company refused any further aid than to refer him to a city hospital for X-ray treatment.

(Insurance companies have found it well worth their while to place the roentgenologists of municipal hospitals on their payrolls. The companies send them large volumes of X-ray work in their private practices, which they conduct in spite of the fact that they are supposedly full-time employees of the city.)

At the hospital, the injured was so maltreated with X-rays that he developed terrific X-ray burns of the head and neck. Intense X-raying of the acutely burned area was persisted in, until I advised the victim to refuse further treatment because of the danger of developing cancer. It is well known that burning by X-ray, and especially persistent X-raying of a burnt area, causes cancer.

The insurance company, however, importuned the man to return for further X-raying, threatening that there would be no possibility of a compensation award unless he continued treatment. He finally returned to the hospital and was given an uglier X-ray burn than the first and maltreated until, in his agony, he refused to submit any longer. Within a year following, this victim died of generalized cancer of an entirely different type from that originally diagnosed, which without much question had been caused by the X-raying.

This is the most horrible and deliberately perpetrated bit of malpractice that has ever come to my notice. But patients may not recover for malpractice perpetrated in municipal, charitable hospitals.

The man never received compensation, because the referee denied that there was any causal relationship between the injury and the mans inability to work, which immediately followed. When he died and cancer was found at autopsy, the Commission closed the case, and denied compensation to his widow. This deliberate and cold-blooded killing within the law saved the insurance company over five thousand dollars.

It eloquently bespeaks the corruption of some of the examiners in the Commission's medical division that on June 3, 1934, at a time when the injured man could no longer walk because of paralysis, a report was rendered by one of its members to the effect that he had found no evidence of paralysis; and that this report was made the basis of the rejection of a request for an appeal. The decision of the referee and Commission was that the injured had shown "NO CAUSAL RELATIONSHIP" between the accident and THE DISABILITY IMMEDIATELY FOLLOWING THEREON.



The outrageous abuse and swindling of the injured under the Workmen's Compensation Act reached their highest level during the period that Madame Frances Perkins was at the head of the New York State Labor Department. Neither she, nor her fellow-travelers of the American Association for Labor Legislation, nor their social service allies, nor the bosses of labor unions had any fault to find with the law or its administration at that time. On the contrary, some labor union officials profited hugely from perpetration of swindles on the injured members of their own unions, on the pretense of "influence" and "fixing." In some cases of influential persons and friends, a "fix" was arranged; but in the majority the hundreds of dollars collected was pocketed by the union representative and his confederates.


The compensation hospital and surgical business is a cheap trade and was regarded with scorn by the more snooty hospitals and their surgeons. During the era of prosperity they were well satisfied to relegate these cases to municipal hospitals and clinics, generally to be treated as public charges and at no cost to the insurance companies. This arrangement greatly reduced the expenses and increased the profits of the companies, at the cost of the tax-payers.

It mattered little to the medical bosses that they were thereby destroying a legitimate source of income for the rank and file of the medical profession. For in the municipal hospitals members of the medical staffs were barred from collecting from insurance companies for the treatment of their compensation cases. The bosses of medicine viewed the situation with malicious glee. They were well content with the ruling of the New York State Attorney General that permitted admission of injured charges of the insurance companies as free charity cases to municipal hospitals and with the hospital regulations which barred the lesser fry physicians from collecting for services rendered.

They also viewed with tolerant scorn the development of compensation clinics of the type described in the quoted Moreland report, Some influential physicians banded together and formed a corporation, the Wolf Industrial Service, that exploited chains of these compensation clinics. They wielded a powerful influence over the New York State Labor Department and were able to roll up large profits; and were well satisfied with the law as it stood and vigorously opposed any change in the status quo.

For almost a decade I had written, agitated and fought for reforms in Workmen's Compensation administration and for correction of abuses. Though I rarely handled any of the cases other than those in which outrageous frauds had been perpetrated, when my help had been sought to correct the injustice, the corruption and inhumanity of the situation stirred me. I sought to induce the social service and labor organizations to fight for correction of the abuses arising from the law, but was turned down by them with amusement and scorn.


When depression arrived the business of voluntary hospitals slumped badly. This seriously threatened the jobs of those engaged in hospital social service activities and their allies among the medical bosses. The social service clique, no matter how treacherous they may be with others, do hang together and rise to each other's defense and aid.

These gentry are always interested in public welfare when such interest fills their purses. They suddenly awoke to the discovery that depression had made the lowly Workmen's Compensation business one of the most profitable phases of medical and hospital business. They coveted that business for themselves. Compensation cases looked like sure and easy pickings although meagre. Suddenly they conceived an immense sympathy for the injured workmen. Calling together their publicity men and their allies, they promptly proceeded to remedy the situation. The New York Academy of Medicine and the American College of Surgeons whose members previously had scorned Compensation work, eagerly participated in the campaign.


The remedy which the medical bosses desired was quite obvious. They sought to have compensation cases referred to their own hospitals to boost their business and incomes. The barring of compensation cases from the charity wards of the municipal hospitals was readily obtained by a regulation of the Commissioner of Hospitals. The voluntary hospitals eagerly competed for the Compensation business. But in order to get the maximum result from this direction, they found it necessary to eliminate competition of the compensation clinics.

A campaign of righteous indignation was launched by the social service and hospital forces against the compensation clinics. In its course the injured employees and their rights were incidentally mentioned. In 1931 Governor Franklin D. Roosevelt, at the instance of these forces, appointed the Moreland Commission, from the report of which I already have quoted, to investigate the Compensation situation. At its head he placed Howard Cullman, who is closely identified with the social service and hospital groups of New York City and was an executive of the Broad Street Hospital which did a thriving business in the Wall Street section of the city. A supplemental committee of medical bosses from among the membership of the New York Academy of Medicine was also appointed by the Governor to report on the situation. Both reports failed to emphasize or ignored the swindling of the injured by the insurance companies; but they stressed the defrauding of the insurance companies by the compensation clinics.


Taking advantage of the spotlighting of the question, I offered a solution of the problem to Mr. Stone, of the Insurance Adjusters' Association, at a meeting of the Bronx County Medical Society, which embodied protection for all the parties involved.

The fairness of this plan pleased neither the insurance companies, their social service allies, the hospitals nor the medical bosses. The medical societies and the insurance companies adopted five years later the parts of the plan which protects the incomes of medical bosses and their hospitals. But the adopted plan betrays both the injured and the rank and file of the medical profession. It has placed the insurance companies more firmly in control of the medical care of the injured than they had been before, and has made the defrauding of the injured more simple and inevitable than it had been under the original law. This plan was embodied in several amendments to the Workmen's Compensation Act that were passed by the New York State Legislature in 1935 and still remain in force.


The amended law pretends to establish for the injured worker freedom of choice of physician. Actually, this freedom is restricted to a list of physicians drawn up by the County Medical Societies. This was done on the pretext that industrial injury differs from other injuries and is a super-specialty. How this provision of the law is being used by the Societies to coerce physicians into membership and to intimidate them into doing their bidding has been related.

As is the vogue in all social service and "New Deal" agencies, there is vested in the Workmen's Compensation Board of each County Medical Society legislative, executive and judicial power. The power of the Societies to exclude physicians from the treatment of compensation cases is arbitrary and absolute. No appeal can be made to the Courts. The Societies have demanded of their members as a condition for listing that they sign away their civil and constitutional rights and that they waive any redress for injuries which they may sustain as a result of the action of the Boards.

The powers of these Boards exceed those vested in the State and restrict the license to practice medicine that is granted by the State They arbitrarily dictate, on the basis of their own desires, inclinations and interests, the qualifications for practice of the medical and surgical specialties on compensation cases and the physicians who may engage in them. Physicians who are not submissive to the medical bosses and refuse to pay tribute to their organizations are barred from listing in the panel no matter how distinguished or competent they may be. Without listing, the law bars them from collecting for the services which they render. In short, there has been created a grand and glorious racket that is extraordinarily profitable for the unscrupulous medical bosses.


The insurance companies have been able to retain the control over the doctors and their testimony that is so essential for their illicit activities, through circumvention of the amended law in several manners. First they have strengthened their hold on the County Medical Societies by placing the key officers on their payrolls or on their consultant staffs. The medical members of the County Medical and of the New York State Medical Society Boards on Workmen's Compensation, and of the Industrial Council, and the inner clique of about forty "specially trained" physicians who alone may serve as "neutral" arbitrators, are all part time workers in their respective positions. Most of them are employees or consultants of insurance companies. All of them are free to act as consultants and to do other chores for the insurance companies on whose cases they pass judgment. Arbitrators who show an inclination to be fair are generally dropped.

Dr. David J. Kaliski, Director of the Committee on Workmen's Compensation, is paid a salary of five thousand dollars a year for part-time service out of the two dollars per head contributed by the members of the New York State Medical Society. Nevertheless, he has spent hours in court on some occasions to testify on behalf of insurance companies against members of the Society who were suing for payment of just charges for service rendered.

Likewise, his predecessor, Dr. Morris Rosenthal, a number of years ago spent a full day in court to testify on behalf of an insurance company in a case involving a contract between a physician and an insured employer. Under direct examination Dr. Rosenthal denied that he had been employed ever before by an insurance company in any capacity. Under cross-examination, he belied his testimony and acknowledged that he had been employed as consultant by a specific insurance company as recently as the day before. The magazine of the New York County Medical Society, the Medical Week, refused to publish a report of this incident.

The insurance companies are well aware that the medical boss absolutely dominates his hospital and his medical society, and is entirely willing to exploit both against his colleagues—for a consideration. They quickly place him under obligation by making him a consultant. A physician on the staff of a hospital who testifies against his superior does not long survive on the staff; and it is well nigh impossible to extract the truth from him when he knows that the "boss" is in the employ of the defendant insurance carrier. The law perpetuates abuses which the amendment was supposed to eliminate.

So long as this fraud-laden law remains on the statute-books, some protection of the injured should be set up against those prostituted medical experts into whose hands so much power has been placed. The Commission should compel the publication and posting of the total payments made by insurance companies to physicians. In this manner the injured may learn to what extent the doctor's testimony may be influenced by his earnings from the insurance companies.


Hospitals controlled by the American College of Surgeons play important roles in aiding insurance companies to circumvent the amended Workmen's Compensation Act. And the booty of Workmen's Compensation cases plays an important part in the bitter battles for control of hospitals that have hit the headlines of New York newspapers.

In the closed hospitals of New York City, a patient is compelled to accept the services of the doctors on its staff. The insurance companies arrange to gain ascendency over hospital staffs in the manner already noted. In some cases they go even further. They purchase hospital positions for the medical hirelings who do their dirty work. Not infrequently they gain control of smaller and financially weaker hospitals. They fill them with compensation cases for which nominal or no payment is made. They use them until a large deficit results. The hospital is then forced into bankruptcy, reorganized and used over again for the same purpose.

Injured employees that enter these hospitals are more at the mercy of the corrupt insurance companies than they ever were under the original law which gave the companies openly the right of choice of physicians. In some of these hospitals there may be found the most unscrupulous and brutal of the medical agents of insurance companies who place an infinitely higher value on their own purses than on human lives. Through this device there are being perpetrated some of the most outrageous and heinous activities.

The role of the American College of Surgeons in these activities cannot be overestimated. It aids its Fellows in capturing the hospitals by compelling their appointment on the penalty of withdrawing "approved" listing; throws a halo of sanctity over their staffs, however corrupt; and shields their malodorous practices.


Organized Social Service, Organized Labor and the International Association for Labor Legislation, which have played so prominent a role in engineering this ugly set-up, are no longer interested in the abuse and swindling that now flourish in Workmen's Compensation. Equally indifferent are the members of the Industrial Council, the Industrial Board or the Industrial Commissioner. They deliberately ignore complaints and evidence of fraud placed before them. They shift the full burden of proof on the complainant and then proceed to whitewash the accused. Even the notorious Dr. S whose activities have been recounted is undisturbed by them in his frauds and perjuries.

Abuses in the administration of the law are obvious and matters of common knowledge. They have been, the subject of several investigations and public hearings, and of publicity and campaigning in the New York newspapers. Organized Social Service cannot claim that it is not fully aware of the extent and the nature of the fraud perpetrated upon the injured nor can the officials involved claim that they are not acquainted with the corrupt and dishonest administration of the law.


The burden of compensation insurance has become so heavy in New York that some industries have been compelled to close down and throw their workers into the rank of the unemployed. Many workers, especially those who have had injuries or those over forty years of age, are barred from employment by the rigid examinations required by insurance companies since the law has been amended to make diseases compensable. The State Insurance Fund does not require these examinations, but its rates are excessive and penalize severely employers whose risks are bad. This compels the employer to reject the same group of employees to avoid excessive insurance costs,

A number of striking examples of stimulation of unemployment by Workmen's Compensation insurance costs have come to public attention. Thus Mr. George J. Atwill, a New York builder, filed a complaint with the N.Y. State Department of Labor asserting that insurance company examinations had forced into unemployment sixty-five of three hundred and sixty-five employees. The State Industrial Commissioner, Elmer F. Andrews, replied to the complaint in the press with the statement that the State Insurance Fund would have required no examination; but he did not explain to the public that the cost of this insurance would have been tremendously higher and prohibitive. A Walkill farmer stated in a letter to the New York Times on January 3, 1933, that farm insurance rates of the State Fund are so high as to prohibit employing men for needed work.


New York State Industrial Commissioner Frieda S. Miller, at the annual luncheon of the Beekman Street Hospital in January 1940, sang the praises of Workmen's Compensation Laws. She said: "labor accidents are now put where they belong as one of the charges on industry,"

She proceeded to say that similar progress must be made during the succeeding twenty-five years in cooperation between the government and private hospitals in such matters as sickness during involuntary unemployment and social health problems. It is clearly the attitude of herself and her clique that "Socialized Medicine" is to serve the purpose of burdening industry with added charges. With their propaganda Bismarck's "New Deal" marches on to new achievements in disrupting our industry and commerce, throwing our workers out of employment and "hastening the Revolution."

In all these things we can discern the extent of the beneficence of Organized Social Service, and the blessing which it confers upon the nation. They clearly presage what benefits can be expected by the public from "Socialized" Medicine which is advocated by the same group.