Workers Compensation and Employers Liability

1
Workers Compensation and Employers Liability

• Ch. 8

2
Examples of Workplace Injuries

• Hurt Fingers
• ?
• ?
• ?

3
WComp Major Issue

• 1 Concern of Risk Managers, often
• State by State Program
• No-fault system where employer held strictly
  liable for work-related injuries
• Common purchase insurance
• Anyone had WC claim?

4
Benefits of WComp

• Four Benefits
• Unlimited Medical
• Rehabilitation
• Replace lost income (2/3)
• Death Benefit
• Average WC claims
• Medical 12,000
• Income 20,000

5
WComp High Cost Item

• Firms pay much in premiums for WC Ins
• Large Residual Market
• Firms who cant get coverage in voluntary mkt
• Assigned Risk Plans 25 of firms
• Firms in voluntary mkt pay RML, 10-300
• Leads to Self Insurance by some firms
• Double blow to insurers
• One lose ?
• Two keep ?
• Rate Suppression by ? has inhibited IR success
• Large writers Liberty Mutual, AIG, Travelers

6
NCCI

• Rating Bureau
• Collects data
• Lobbies for rates
• 32 state members

7
Moral Hazard in WComp

• Frequency of accidents is higher in states with
  higher benefit levels
• Many states reforming their system
• Small firms often lease employees to attempt to
  mitigate WC exposure

8
Big Issue

• Stress Claims
• Covered?
• Not covered?

9
WC History

• US lt 1911
• Little comp for injury
• Ee had to sue
• Expensive, long process, hard to recover
• Er Defenses
• Contrib Neg
• Assumpt of Risk
• Fellow Servant Rule

10
WComp Development in US

• European roots
• Price of product should include.
• Exclusive Remedy Rule comp without regard to
  fault, but may not sue
• 1911 first state with WC law

11
Breakdown of Exclusive Remedy

• 1. In theory, worker gives up right to sue
• In 1940s, unheard of to sue employer
• Today, common to double dip
• Theory
• Ee give up right to sue, for prescribed benefits
• Er give up defenses, for preclusion of suits
• 2. Dual Capacity leads to suits
• 3. Large Punitive Damages

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Mind Breathers

• A C U M
• E N T U R Y

13
Benefits

• Weekly Benefits
• Not Taxable Income
• 2/3 of income replaced, with caps
• Types of disability
• Temporary total
• Temporary partial ( of difference in earnings)
• Permanent total
• Permanent partial (ex lost finger, hand)
• Scheduled vs. nonscheduled
• Presumed vs actual lost earnings

14
Injuries / Diseases Covered

• Accidental from viewpoint of employee
• Arising out of and in the course of employment
• Parking lots entering building lunchroom
• Driving to/from workNot covered
• Unless using a company car that employee must use
  to and from work

15
Second Injury Funds

• To provide employers with incentive to hire
  persons with existing injuries/disabilities
• EXAMPLE
• Lose one eye, scheduled amount 20,000
• Lose second eye, scheduled amount 100,000
• If person with one eye is hired, and loses second
  eye, S.I.F. pays ??????

16
Benefits

• Vary widely across states
• Period varies from 208 weeks to lifetime
• Unlimited medical
• Excluded employees or employers
• Agricultural and domestic employees

17
Operation of State WC

• Monopolistic State Fund
• OH, WV, NV, ND, WA, WY
• Competitive State Fund Private Insurers
• 13 states
• Private Insurance Only
• Retention (where allowed)

18
Third Party Involvement

• If employee is injured by negligent third party
  while delivering product to customer
• Accept WC (Er and IR gain right to subrogate
  against third party
• Sue third party
• If unsuccessful, can still file for WC
• Sue third party and accept WC
• WC IR has lien on net recovery for any payments
  made (minus legal fees paid by Ee)
• EXAMPLE next page

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Example

• Employee injured by negligent third party
• WC pays 10,000
• Legal fees for Ee 7,000
• Ee sues and recovers 25,000 (net 18,000)
• WC IR entitled to 10,000
• Ee gets to keep (18,000 - 10,000)
• 8,000 (plus the 10,000 already received)

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Issues

• Loaned employees
• Who has greater control?
• Borrower (special Er) vs. Loaner (general Er)
• Suits by Employees
• Occupations not covered (Ag and domestic)
• Assault by Employer (not an accident)
• Can take WC or sue
• Retaliatory Discharge
• Dismissing employee because of WC claim
• Against public policy
• Dual Capacity Doctrine

21
Employers Liability (part of WC EL Policy)

• Covers Employer against certain suits
• Exclusions
• Contractual liability
• Punitive or damages because of BI to Ee in
  violation of the law
• Obligations imposed by WC law
• BI intentionally caused
• Damages arising out of coercion, demotion,
  harassment, discrimination, etc.
• BI subject to Longshore and Harbor WC Act