To the usual telephone salutation, "Hello, how are you?" Johnny E. Smith, 36, has fallen into the habit over the years of answering, "Not too good."

Since Sept. 5, 1974, the day he says he strained his lower back pushing a wheelbarrow of mortar up a ramp at Gallaudet College, Smith has retained four different lawyers, seen at least 18 doctors who failed to find a physical defect in his back and shooed away two private detectives sent by the insurance company to catch him doing something strenuous in the yard.

Smith's case is one of 12,000 open cases in the federally administered D.C. worker's compensation program for injured employes. And the reason Smith has been getting a lot of attention since the date he says he was injured is a matter of economics -- actuaries at American Mutual Liability Insurance Co. figure that over about the next 40 years Smith's claim would cost them $1 million.

American Mutual held the policy insuring Smith's employer against job-related injuries to workers. A spokesman for the Philadelphia-based construction company notes that of insurance costs in seven states in which it does business, those in Washington are by far the highest.

But Smith, who says he lives in constant pain, is not sympathetic to the businessman's lament.

"I told my lawyer that I would settle for $25,000," Smith told a visitor to his Palmer Park home, where his 34-year-old wife, Doris, and their six children have settled intoa six-year routine of taking care of father.

Presented with the insurance company's suggestion that there may be nothing wrong with his back, Smith stares up from his supine position on the double bed, pulls the green coverlet and orange blanket tight under his chin and replies, "That insurance company treatsme worse than a dog. They know I got hurt. They get their doctors to lie."

Smith currently receives -- tax free -- about $820 a month in workers' compensation benefits from the insurance company. At the time of his injury, he was making about $1,200 a month but had to pay taxes. Moreover, the insurance company has paid more than $70,000 in medical bills for Smith, an American Mutual spokesman said.

The case of this seventh-grade educated sharecropper's son from Snow Hill, N.C., illustrates the two most hotly contested points in the D.C. City Council debate over whether to rewrite the workers' compensation law.

First under the current law ". . . It shall be presumed, in the absence of substantial evidence to the contrary . . ." that workers who claim they are injured on the job -- even though they cannot prove the exact nature or circumstances of the injury --are entitled to workers' comp benefits. This is called the "presumption" section of the law.

Secondly, an injured worker currently has the freedom to choose his own doctor in making a workers' comp claim. Business officials who pay the high D.C. premiums contend that this provision leads to "doctor shopping" by workers seeking the worst diagnosis to support their claim.

Spokesmen for organized labor defend both sections of the law:

The presumption section, they say, is part of a social contract in which workers give up their right to sue employers for negligence in job-related injuries. This trade off makes workers' comp a no-fault system designed to be weighed in favor of the worker, to cut down on litigation and give swift compensation for lost wages.

Freedom to choose one's own physician is a basic right, labor officials say. And, as Mayor Marion Barry's legislative staff has pointed out, the contention that workers have abused the system by shopping for the worst diagnosis has not been documented.

A bill proposed by City Council member Willie J. Hardy (D-Ward 7) would ease the legal burden of employerswho want to challenge what they consider exaggerated or unwarrantedclaims.

Hardy's bill would also require injured workers to chose from a panel of physicians selected by the employer following an injury.

To the small cadre of lawyers who represent injured workers, the presumptions and built-in advantages of the current law are reverted because they give the worker a virtually insurmountable advantage over the Connecticut Avenue law firms that often represent large insurance companies.

The advantage in Johnny Smith's case comes from the diagnosis of his treating physician, psychiatrist Richard H. Kastner, who said in a Jan. 26 medical report that Smith is suffering from "severe depression with anxiety features . . . [and] concurrently experiencing severe physical problems which have to be remedied by a proper orthopedist and neurologist."

Last March, a U.S. Department of Labor administrative judge, J. F. Greene, heard Smith's case and concluded: "There is some tentative evidence that the claimant may suffer from intermittent mild lumbar (lower back) pain, but . . . the evidence is rather more persuasive that he has no significiant disability relating to his back. However, the evidence, particularly theclaimant's own testimony, clearly shows that this claimant does genuinely believe that he is in constant pain and that he thinks he is unable to do anything at all."

Indeed, at one point in her opinion, Greene noted that ". . . certain medical reports urge that the claimant [Smith] be returned to work for his own good on he ground that failure to doso may result in a permanent psychological condition."

The judge rejected this advice, however, pointing out that it was only her job to determine whether, and to what degree, a worker is disabled and then to order or deny compensation.

On the basis of Kastner's testimony the judge awarded Smith total disability -- about $820 a month -- until his condition either improves or he applies for lifetime benefits.

"Even though nine doctors say he should go back to work and one says that he should not, the judge has a right to believe that one doctor and the [appeals] board can't reverse it,"said Norman Jackson, assistant deputy commissioner in the U.S. Department'soffice of D.C. compensation.

In the parlance of workers' comp, Smith's case is characterized as a "psychological overlay." That means that aside from his alleged injury, his mental state has deteriorated to the point that it has become a disability in its own right.

In an interview, Smith said he still has nightmares about working as a bricklayer's helper, about walking tightrope-fashion on the metal pipes on which boards were laid to buildscaffolding.

"I have terrible nightmares," he said, "about stepping on nails, getting hit, heavy boards hitting you in the sides, blocks falling on my toes. . . ."

Over the years, more than one psychiatrist has delved into Smith's basic attitudes toward work in an attempt to discover the root of his depression.

According to Doris Smith, one of the insurance company psychiatrists who testified at a hearing, Smith recounted an incident from his childhood in which his father had beat him with a tobacco stalk to make him work.

In fact, Doris Smith insists, her husband told the psychiatrist that it was the family mule that got the beatingand not young Smith.

A round-faced woman who -- as a teen-ager -- followed her husband-to-be north to Washington in 1965, Doris Smith has undergone a complete role reversal since her spouse came home ailing in 1974.

The workers' comp benefits have not been paid consistently. During the years the insurance company was challenging Smith's claim, his benefits were as low as $80 a month.It wasn't until the court hearing last year that he began to collect his full disability pay -- two thirds of the $283 weekly average he had collected at work.

In the intervening years, Doris Smith went to work. During the day, she works at an elementary school cafeteria and at night, she cleans office suites in nearby College Park.

"All of this is on me and I feel like I'm going to break," she says bitterly. "If the insurance company only knew the suffering we have been through."

She said that she and her husband have been hurt deeply by the insurance company's insinuation that her husband is malingering.

"Maybe some people can make it seem like they're hurt," she said. "I cannot live a lie, maybe some people can."

As for her husband, he cannot say whether he will ever go back to work. "I don't see no improvement," he said. "i don't know what will hapen in the years to come . . . unless a miracle happens."

The American Mutual claims supervisor who handles Smith's case, Donald Tesno, said his most recent strategy "was to offer him a lump sum settlement of $100,000, but he [Smith] doesn't know what he wants."

Continued Tesno: "His wife told me that they were thinking about going back to North Carolina to live on a farm. I told her that I'll buy the farm, but that didn't work."

(Smith denies that he was offered a $100,000 lump sum settlement and his wife denied that the offer of the farm was made.)

In the short run, Smith is trying toget the insurance company to buy a $520 portable vibrator unit that he can wear on his back, "but the insurance company don't want to pay for it."

"I might as well be in jail the way I been treated," Smith said.