connection with the manufacture, was injured because of a defect of the chair in which he was sitting at work. The Legislature may have had the best of reasons for believing that others as strange were happening rather frequently in the great, busy, bustling population of the Empire State; that while an individual clerk's or salesman's life and limb perhaps were less in danger than an individual machinist's, yet they were in appreciable danger; there were more clerks and salesmen than machinists; many times, naturally, they would be employed in the same business with machinists or other workmen or operatives;" any seeming incongruity or unfairness in grouping them together under the Compensation Law may be taken care of through the operation of the law itself, according to the test of experience; second group 45 will cost nothing, in the large sense, beyond expenses of administration, if it should happen to reach where industrial hazard is non-existent; it will not be more burdensome than the industrial losses prove to be where such hazards do exist.

This, then, changes the entire theory upon which our law has been framed and would seem to do away with the necessity for the artificial and arbitrary classification of hazardous employments.

Whenever the question has come up of making the Compensation Law a general all inclusive law we have been met with the fear that the courts would not sustain the law unless the employments brought within its terms by compulsion were really and actually hazardous. This fear would seem to be laid at rest by this latest Supreme Court decision. It is proper, therefore, that I should bring before your notice this matter and invite consideration of the question whether it would not be wiser to amend the law by striking out all the various groups of employments to which the law applies, and declare that all employments, in which one or more persons are employed, shall come under the provisions of the Compensation Law, and to specifically exclude those employments that policy might dictate should not be included. Of course those employments not carried on for the purpose of pecuniary gain should be excluded, probably necessarily so in view of the wording of the constitutional provision with regard to compensation. (Art. I, Sec. 19.) But the objections that I have heretofore urged to such a course have no weight under the interpretation of the court just cited.

FARM LABOR

The same exceptions that are now embraced in the law, namely farm laborers and domestic servants, might still be excepted, but I call your attention to the fact that with the ever increasing use of machinery on farms, not alone for motive power, but geared and cutting and swiftly rotating machines, the time is rapidly approaching when the provisions of the Compensation Law should be extended to cover farm laborers. If not extended to cover all farm labor, at least it should be extended to cover the larger farm operations where four or more farm hands, other than members of the farmer's immediate family, are employed.

There would seem to be no logical reason why the farm laborer should not be entitled to the same beneficent statute, for his

relief in case of accident, that now extends to his brother in industrial and trade life. In our experience we see very many cases of maimings, of lost fingers or hands, fractured limbs and other serious injuries for which there is at present no relief.

COMPENSATION REFEREES

In one respect I believe experience has demonstrated a fundamental weakness of our system in respect of the tenure of office of referees who are appointed to hear and determine compensation claims. These referees, or deputy commissioners as they formerly were designated, are judicial officers appointed by the commissioner to hold office during his pleasure. While the commissioner, under the law, may not review the decision of a referee, he may remove the referee if he does not like his decisions. And if perchance the Governor should not like the attitude or decisions of a referee he might direct the commissioner to remove him. All this leads to a certain subservience of the judicial power to the executive, which does not make entirely easy a perfectly independent and impartial attitude on the part of the referee.

As has been said, these officers are judicial officers. They take testimony and must determine the law and the facts in the cases coming before them. Their decisions often involve large sums of money, and the all important questions of the support and maintenance of injured workers and their families. In the aggregate their awards dispose of many millions of dollars annually and their decisions are reviewable by the Appellate Division of the Supreme Court, in much the same manner as a judgment of the Supreme Court. In many ways the authority and jurisdiction of a referee in this Department is superior to that of a city magistrate in the City of New York. Yet their compensation is only half that of a magistrate and their tenure of office is in no way assured.

One inevitable result is informal appeals to the Commissioner or to the Governor, rather than formal appeals to the courts. It is an every day occurrence to hear such appeals threatened publicly, even vociferously, in the hearing room.

And further, every change of political power is apt to have an immediate and unfortunate effect upon the judicial offices of the Department.

I recommend, therefore, that section 19 of the Labor Law be so amended as to provide that referees shall be appointed by the Industrial Commissioner for terms of ten years, that their salaries be fixed at $5,000, and that they be removable only upon charges after a hearing by the judges of the Appellate Division of the Third Department. If so established the position of referee will offer a certain career to those who occupy the position, will attract a high type of person and will establish them as branch of the judiciary independent of executive interference and fearless in decisions. While I have never known of an instance where the

judicial power of the Department has been coerced, still the system is one that might easily lead to such, and the judicial officers should be freed from the fear that they may be called upon to yield to any power or influence to decide a case other than upon the law and the facts.

MEDICAL TREATMENT

No subject has been more difficult nor given rise to more controversy than the question of medical treatment under the Compensation Law. This has been just as true in other jurisdictions as it has in New York. The law now provides that the employer shall furnish to the injured workman such medical and surgical care as the nature of the injury requires, during such period of time as may be necessary. Since the responsibility for the expense is upon the employer and since he likewise, either himself or through his insurance carrier, must pay in compensation for the results of the injury, it has been deemed a necessary and proper function for the employer to have the right to select the physician who is to render treatment, and the workman may not select any physician of his own choice unless the employer fails to provide promptly adequate treatment, or unless, as frequently happens in minor cases, the employer tells the workman to get his own physician.

A certain portion of the medical profession, however, resenting the right of the employer to designate the physician or his right to delegate such power to his insurance carrier, demands that the law be made to permit the employee to exercise the free choice of his physician in every case, and charge the expense thereof to the employer.

Other questions had arisen, such as delays in payment of bills of doctors and their arbitrary reduction, and the so-called "lifting" of cases, by which practice an employer or carrier directed unreasonably the transference of a case from one doctor to another.

Accordingly, I appointed a committee to take up and study the question of medical administration. This committee consisted of representatives of stock and mutual insurance companies, the State Fund, self-insurers, employers, the State Federation of Labor, and four physicians. These gentlemen made a thorough investigation of the subject, their inquiries extending over more than a year. They held hearings in every large city of the state and opportunity was offered for doctors, employers, hospital executives. representatives of labor, insurance companies and others to come. before the committee.

The committee has recently made a report which will be published as a document of the Department. The report was adopted. by the committee unanimously.

One of the greatest benefits of the committee's work was in bringing closer together the various conflicting interests, getting a better understanding of the problem and bringing to an end

some of the abuses that were found to exist. Various recommendations were made that if carried out will make for a more efficient administration of the law and the elimination of much of the friction that has existed.

On the question of the free choice of physicians the committee was unable to agree and that matter was referred to an advisory committee to consider further. If the other recommendations of the committee are carried out they will have an important bearing upon the necessity for free choice.

I recommend, therefore, that nothing be done about free choice of physician until a fair opportunity has been had to try out the rules recommended by the committee.

STATE INSURANCE FUND

The State Fund has continued to fairly maintain its volume of business. It has not, however, increased its percentage of the whole business. It is fundamentally sound and its solvency is beyond question. It is too soon for us to have available the complete experience for the year ended Dec. 31, 1922, so that I cannot now submit a full statement as of that date. There will be submitted to you, however, as soon as possible a statement of the Fund as of Dec. 31, 1922, as has been done in other years, together with any comments that may be submitted by the manager.

The volume of business of the Fund may be judged by the fact that on Dec. 31, 1922, there were outstanding in force 11,401 policies. During the year 1,851 policies were cancelled, and 2,496 new policies were written, being an increase in new policies of 645. Its estimated premium income for the year ending Dec. 31, 1922, was $2,800,000.

By chapter 615, Laws of 1922, effective July 1, 1922, the State Fund was given certain advantages that theretofore it had not had.

In the first place, the Fund was given the right to pay its own expenses directly out of premium income, on quarterly estimates approved by the State Board of Estimate and Control, but with the proviso that such expenses should not exceed 15 per cent of the premium income in any year.

This change in the fiscal administration of the Fund is a great forward step. It is already apparent, however, that the 15 per cent limitation upon expenses should be modified or altogether taken out of the law. If the Fund is to be a really vigorous competitor it must not be hampered in its organization by any such limitation. After it has built up an organization, however, and obtained a sufficiently large volume of business to absorb the overhead expense, the percentage would be expected to drop.

Moreover, the Board of Estimate and Control has ruled that the assessment upon the Fund of its proportion of the expense of administering the whole Compensation Law, in accordance wit'

Section 77 (numbered Sec. 126, L. 1922, Chap. 615) is to be charged against the 15 per cent limitation. The statute should expressly except this assessment in computing the expense of administering the Fund.

ADVISORY COMMITTEE

New Section 106 of the Law, added by L. 1922, Chap. 615 creates an advisory committee of the State Fund, composed of 9 members, all employers insured in the Fund, and the Commissioner is chairman of the Committee. Appointments to the Committee are made by the Governor.

In July, Governor Miller appointed the following members of the Advisory Committee:

Edmund N. Huyck, Albany, N. Y.

F. L. Morse, Pres., Morse Chain Co., Ithaca, N. Y.
Henry J. Wright, Editor, The Globe, N. Y. City.
Thomas W. Larkin, LeRoy Plow Co., LeRoy, N. Y.

J. Charles Andrews, Turner Construction Co., N. Y. City.
John F. Weis, Rochester, N. Y.

Saul Singer, c/o Singer Bros. Inc., N. Y. City.

Philip T. Dodge, International Paper Co., N. Y. City.
W. H. Dupka, Lackawanna Steel Co., Buffalo, N. Y.

The Committee has met monthly and has considered the business of the Fund and various questions of policy involved in its management. The members of the Committee have given wholehearted service and trained business experience to the problems of the Fund.

The Advisory Committee now has only the right to consider and advise in regard to the budget of the Fund. I believe the law should be amended to give the Committee the final say in regard to the budget. So long as the members of the Committee represent important business interests insured in the Fund, and, therefore, have a direct financial interest in it, their business judgment will not permit an excessive use of its funds for administration to the detriment of the Fund itself.

One of the great benefits to be obtained by the provision for a policyholders' Advisory Committee was the creating of a better understanding between policyholders and management and a greater degree of confidence in the wisdom and integrity of the management. Another, and equally important benefit was the assurance that by such a committee the management and control of the Fund would not become political or governed by questions of political expediency. I believe both of these objects would be obtained by establishing the State Fund as a separate Department of the State government creating a real board of managers of policyholders, instead of an Advisory Committee, such board to be appointed by the Governor, by and with the advice and consent of the Senate, and committing to such board the power to appoint