$17 million in death benefits wasn't paid to Texas families

Donald Coit Smith, his grief fresh and raw, believes that Texas insurance companies profited after his 22-year-old son was electrocuted in an industrial accident in Bryan — all because of state laws that regulate the payment of death benefits through workers' compensation.

For his loss, Smith got $6,000 to bury his son. But Smith was told that the workers' comp death benefit — $100,500 — would not be paid to grieving family members because his oldest child, Donald W. Smith, a student at Sam Houston State University, had no wife or children.

Instead, the money, paid by his employer's insurance company, went to a state workers' comp fund in a case that shows just what happens in Texas when mostly young, unmarried or childless workers die in workplace accidents.

More than $17 million in workers' compensation benefits bypassed the relatives of as many as 140 dead workers from 2003 to 2006. All of that money ended up in a workers' comp fund where $10 million was then funneled back to insurance companies, according to a Houston Chronicle analysis of state data.

Coit Smith, who has 20 years of experience as an industrial safety specialist, calls the payments "blood money."

About 450 people are killed in workplace accidents in Texas each year. Yet many families of dead workers collect nothing. That's because historically, workers' compensation benefits have been reserved only for those who depended on those wages to live.

Death benefits are typically paid only to spouses and children younger than 18. Spouses who remarry and children who come of age lose the benefits. Parents and older children also are denied unless they were financially dependent on the worker killed, according to state law.

When no family members qualify, the lump-sum death benefit, often more than $100,000 per worker, goes to the state Division of Workers' Compensation and into the so-called "Subsequent Injury Fund."

The fund was meant to provide a safety net for workers who needed extra help after suffering multiple injuries on the job. But because of changes in the law in 1991, most of that money now goes back to insurance companies who underwrite workers' compensation.

Workers' compensation, an optional employer-funded insurance plan administered by the state of Texas, is designed to assist injured workers and the families of those killed on the job.

Joe Anderson, an Austin-based lawyer who represents insurance companies involved in workers' compensation, said most would prefer to pay the money to surviving parents. But the law does not allow it unless parents can prove they are dependent on their child's salary.

"No one is going to argue about an insurance company paying money to a parent of the dead kid instead of to the (state)," he said.

Still, Anderson said the fund serves an important purpose by allowing insurance companies to recoup losses when benefits are overturned in the workers' compensation appeals process.

John Casseb, who administers the Subsequent Injury Fund for the state, decides just how much money, if any, is paid back to insurers. He said he carefully scrutinizes each company's request for payouts. Some are turned down.

More than 250 companies collected from the fund in recent years — one company got more than $400,000 in a single payment, the Chronicle analysis showed. The insurance companies are reimbursed as a way to recover money from unrelated cases in which injured workers were paid benefits that later were successfully challenged by the insurers.

Anderson pointed out that insurance companies usually pay much more into the Subsequent Injury Fund than they receive later in unrelated refunds.

Among the nine largest states, only Texas relies exclusively on uncollected death benefits to support its Subsequent Injury Fund.

Much of the money comes from workers who were killed before their 30th birthday.

Smith electrocution On March 26, the Saturday before Easter 2005, Donald W. Smith, a college senior working as a $9.40-an-hour maintenance apprentice at a Bryan chicken plant, was asked to disconnect a heavy motor from a water-chilling unit. Though the production line was shut down that day, the air hung heavy with the scent of chicken guts.

Earlier that day, he had sent a text message to his father's cell phone, asking about his golf game, sending his love and promising to be home for Easter the next day. It was a trip he would never make.

As the younger Smith crouched behind the chilling unit at Sanderson Farms, he pulled a wire stripper from his tool canvas bag and began to cut one of the cords on the motor. Instantly, as much as 240 volts of electricity flowed into his body, boring silver dollar-sized holes into the heels of his hands and locking him in a lethal embrace.

According to Occupational Safety and Health Administration records, Smith might not have known he needed to shut down electrical power in two locations; one switch was in another room. Known as an intelligent "go-getter," Smith had limited training in electrical equipment and normally worked alongside his boss, according to documents and an interview with Sanderson Farms.

About the same time, Donald Coit Smith was driving a few miles from his hay farm outside Temple to shop for vinyl siding at Lowe's.

Coit Smith forgot his cell phone as he ran inside the store. Left in the pickup, it rang and rang.

A message was waiting when he climbed back inside the cab. It was his son's boss.

At the funeral, hundreds turned out to mourn him. Photos that flashed across a big screen during the ceremony showed a smiling boy holding up his first tiny fish; and later in cammies with his first deer; as an all-district football player for the Academy Bumblebees; as a guitarist and songwriter and freckled-faced kid whose friends called him "Diggity Dank."

He died less than a year from getting the credits he needed to graduate from Sam Houston State University.

"We should have been selecting his best man — not his pallbearers," his grieving mother, Tricia Smith, said.

Among the forms his parents filled out in those first days was one for death benefits under Texas workers' comp.

Similar account The same thing happened to Lindy Schmidt, a Pearland hospital employee, who lost her 22-year-old son in a construction accident at a Montrose condo in 2003.

Just before noon on April 30, a crane operator working for subcontractor Postel Industries blacked out and a ton of scrap metal fell on Brandon Shay, crushing him to death.

Schmidt got $6,000 in burial benefits but was ineligible for death benefits. Her attempts to sue his employer also went nowhere.

"Until something like this happens to someone who [is] not familiar with Texas laws regarding safety and wrongful death, a person would never believe that something like this could happen. ... I am not interested in money but justice," she wrote in e-mail to another grieving parent whose story she read on a local newspaper Web site.

Not forgotten The Smith family farmhouse in the Brazos Valley near Temple is filled with photos and mementos. Out front in a hayfield, a white cross reads simply "Son."

Two years after the electrocution, Coit Smith wears his son's school ring. He took up guitar again to learn to play his son's songs, and he visits his son's grave once or twice every day. He endlessly replays the accident in his head.

Smith, head of safety for a division of an international manufacturing company, has reconstructed what happened from accident-scene photos of the splayed tools, viewing the work site, inspecting the wounds on his son's body and dogging investigators.

"I've been very successful in what I've been doing for 20 years. My job is to prevent what happened to my son," he said. "I know what led up to it. A blind man could see it."

His son's death prompted an ongoing criminal investigation of the accident by the Brazos County Sheriff's Department. The Occupational Safety and Health Administration also fined Sanderson Farms $12,000 for failing to conduct proper inspections and neglecting to adequately train employees on the shutdown of electrical equipment. Sanderson Farms accepted the fine and provided workers additional training as part of its settlement agreement with OSHA.

"If we have an accident ... it is our practice to self-report and do everything we can — especially in a situation like this," said Mike Cockrell, chief financial officer for Sanderson Farms, Inc. in Laurel, Miss. "This particular situation was so tragic, and I cannot imagine what the family goes through."

Cockrell said as an employer, he supported Smith's argument that death benefits should go to family members — and not to the state. "I'm sympathetic to his position," he said.

Still, just about every day, Coit Smith sends e-mail messages and makes phone calls to people who could change things. In one missive to state lawmakers, he wrote:

"It is distasteful to know that our government allows the negligent employers of this state to get away with the deaths of unmarried workers who leave no dependents of their own. Who brings these people to real justice? Who speaks for my son? Who speaks for other sons and daughters killed in this fashion?"

State law shifts bulk of money to insurers if victim has no dependents

More than $17 million in workers' compensation benefits bypassed the relatives of as many as 140 dead workers from 2003 to 2006. All of that money ended up in a workers' comp fund where $10 million was then funneled back to insurance companies, according to a Houston Chronicle analysis of state data.

Employers pay the Workman Comp premiums and the beneficiaries are predetermined. Workmans Comp is but one remedy and it addresses the needs of the immediate family.

Life insurance policies paid for by the employee or others allow for death benefit payment to specified or legal heirs. That would include extended family members or anybody named by the policy holder. Family of the decedent also have rights of litigation.

Obviously this person has not talked to an attorney. Wrongful death suits are taken on a contingency basis when warranted.

Schmidt got $6,000 in burial benefits but was ineligible for death benefits. Her attempts to sue his employer also went nowhere. "Until something like this happens to someone who [is] not familiar with Texas laws regarding safety and wrongful death, a person would never believe that something like this could happen. ... I am not interested in money but justice," she wrote in e-mail to another grieving parent whose story she read on a local newspaper Web site. "My heart aches for my son every day as I know yours does."

This is a tragedy, but wrongful death has nothing to do with work comp insurance. If the liability for wrongful death has to be changed, that is a separate issue from workers compensation.

Workman’s comp laws generally have the effect of immunizing employers from civil suits for injuries suffered by employees (they are however strictly liable usually for the injury, so even if the employee is a chucklehead, the employer still bears the cost of his injury). However as this is a possible wrongful death matter, someone who knows TX law should comment.

All of that money ended up in a workers' comp fund where $10 million was then funneled back to insurance companies, according to a Houston Chronicle analysis of state data.

The ten million is unrelated to the death benefits "paid back" into state coffers.

Say someone claims they injured themselves on the job. The insurance company has to pay disability payments to the employee. They must begin paying as soon as the claim is made, not as soon as the injury & insurance company's liability is proved. Later, after the employee has received monies, it is proved that the injury was not work related. The state pays the insurance back monies they should not have paid out in the first place.

I think most states have work comp set up this way, in order to expedite disability payment to injured workers. If insurance companies held full liability, they would demand investigatory powers *before* they paid out. Also, rates to employers would be higher, cuz getting money back from the small fry that made the claim is probably near impossible.

The only thing motivating employers to challenge work comp is increases in premiums, which are directly related to insurance company pay outs.

The article says that work comp is voluntary. My state mandates employers provide it, tho I don't know if employees can opt out. Why would they anyway, since it is paid by employers? Do Texas employees buy it or not buy it themselves, leaving employers out of the whole equation?

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.