North Dakota has a $1.2 billion workers’ compensation surplus, the lowest employer premiums in the country, and exactly two lawyers left who will take an injured worker’s case. The state calls this a well-functioning system. The paralyzed man who had to fight to the state Supreme Court for coverage of his twice-monthly psychotherapy appointments, which cost about $250 each, calls it something else.
There is an honest case for the other side. North Dakota’s Workforce Safety and Insurance fund was in trouble in the 1990s: a $240 million deficit, rising medical costs, expanded benefits, and insurers threatening to leave. The state tightened eligibility, reduced payouts, and lowered premiums. WSI now approves 90% of initial claims, and workers give its customer service a 4.22 rating out of 5. A declining number of claims can also mean fewer people are getting hurt. Safer workplaces are not nothing.
But a workers’ compensation system is not judged only by how cheaply it processes easy claims. It is judged by what happens when a worker suffers a catastrophic injury, when treatment is disputed, or when an agency gets the answer wrong.
Oak Reile broke two vertebrae in a 2020 workplace fall and was paralyzed from the armpits down. WSI denied coverage for his depression, arguing it was not a physiological consequence of the injury. He later fought for coverage of psychotherapy that cost about $250 per session. He and his wife took that case through an administrative hearing, a district-court appeal, and the North Dakota Supreme Court—and won. For all that work, his lawyer earned $14,595, by his estimate about half the value of his time.
That is not a legal market. It is a warning label.
The state pays attorneys only when workers win. It caps fees for a successful administrative hearing at $7,455. The result is predictable: lawyers cannot afford to take complicated cases unless they are willing to subsidize them personally. Dan Phillips receives more than 25 calls a week from injured workers seeking help. He takes about one for every six.
The other five do not vanish. Their injuries remain. Their bills remain. Their lost wages remain. The appeal simply never happens.
Jesse Jerger fractured his elbow and suffered permanent nerve damage after falling from a wall at a construction job. Two lawyers turned him down. He eventually cashed out a life-insurance policy and drained his savings to catch up on bills. WSI can count that as a case that never reached a hearing. Jerger experiences it as a system that left him alone.
The agency’s own satisfaction score is 4.22 out of 5. This is the same agency that made a paralyzed man fight six months for a $150 wheelchair cushion. A survey of the people still inside the system cannot measure the workers who were denied, could not find counsel, and stopped appealing. When the only people left in the room are the ones who have not yet been denied, the satisfaction numbers are measuring exhaustion, not contentment.
Notice the accounting trick. The surplus is treated as proof that the system works. The low premium is treated as proof that employers are being protected. The decline in hearings is treated as proof that the law has become clearer. The state paid $40 million in lost-wage benefits last year, down from $79.4 million in 2016. Average payments for active claims fell from about $4,600 to $4,100. WSI ended fiscal 2025 with $2.3 billion in assets and has returned about $1.8 billion to North Dakota businesses over two decades. North Dakota charges employers fifty cents per hundred dollars of payroll, the lowest rate in the nation.
That is a remarkable financial position. It is also the suppressed question: who is the surplus for?
Workers’ compensation was supposed to be a bargain. Workers gave up the right to sue employers in exchange for prompt medical care and wage replacement after workplace injuries. Employers received protection from unpredictable lawsuits. The state received a system designed to resolve claims without forcing injured people into ordinary civil litigation.
If the worker cannot obtain counsel, the bargain has been rewritten. The employer still receives immunity. The agency still controls the claim. The injured worker receives a phone number and a denial letter.
North Dakota has also made the conflict unusually plain. Many legislators are business owners who pay premiums to WSI while regulating the agency. One state representative, Dan Ruby, said his annual premiums fell from roughly $100,000 for 25 workers in the early 2010s to a little over $10,000 for twice as many employees last year. He says workers should be cared for after they are hurt. Good. The structure still gives lawmakers a direct financial interest in keeping the system cheap.
After Oak Reile won his Supreme Court case for therapy coverage, a state senator, at the agency’s request, added an amendment to a bill that bars future claims for the psychological effects of a work injury. This is the opposite of self-correcting governance. It is institutionalized cost-shifting from the insurer to the worker, enforced by a part-time legislature in which many lawmakers are business owners and whose businesses can benefit from the fund’s refunds and discounts.
A right that cannot be exercised without professional help is not much of a right for the people least able to pay. We have already covered what happens when the state expects vulnerable people to navigate legal systems alone, including in the collapse of legal-aid funding for migrant children.
The grand bargain was simple: workers give up their right to sue; in exchange, they get swift, sure compensation. North Dakota has kept the no-lawsuits part. It sharply reduced what it pays.
What North Dakota has engineered is a captive insurance arrangement that extracts premiums from employers, keeps payouts low enough to generate a surplus, returns the surplus to those same employers, and then—when an injured worker tries to push back—slams a door that the legislature promptly nails shut.
The fix is not to attract more lawyers. It is to point the existing machinery at the worker instead of the employer. North Dakota already runs a public institution that handles this exact money competently: WSI administers a $2.3 billion fund, pays claims, and returns the surplus to employers at the lowest premiums in the country. The competence exists; it is just pointed at the wrong customer. Point it the other way, and you get what is missing: benefits set high enough to actually cover lost wages and medical care, an incentive to pay claims promptly rather than to grow a surplus, and an independent advocate—publicly funded, permanently staffed, with no fee cap engineered to chase lawyers out of the practice—representing the worker from the first denial. Attorney-fee caps should rise with the complexity of the case, not freeze compensation below the cost of doing the work. The legislature should disclose its members’ financial ties to the system when changing benefits or fees.
The agency can still protect employers from frivolous claims. It can still reward safer workplaces. It can still maintain low premiums. But the purpose of insurance is not to make the balance sheet look healthy while the person covered by it sells a life-insurance policy to pay medical bills.
The surplus is real. So is the injury. Build the system around both.