Workers' Compensation Insurance

Introduction

Employers in nearly every state need workers' compensation insurance to cover their employees' medical expenses and lost wages if the employees are hurt on the job. Each state mandates how much coverage employers must have, and what percentage of the employee's salary will be paid if he or she misses work due to an on-the-job injury. In most states, businesses of a certain size have the option of being self-insured, which means taking on the risk of paying for work-related injuries themselves rather than paying an insurance company to do so.

Many attorneys throughout the country specialize in workers' compensation defense law. An attorney who is familiar with the workers' compensation system can be invaluable to an employer/insurer in resolving the complex issues raised in workers' compensation cases and in minimizing exposure and damage payouts. Workers' compensation defense attorneys can play both a proactive role, advising clients on how to avoid litigation, as well as a defensive role, providing zealous representation throughout the entire legal process, should workers' compensation litigation arise.

Workers' Compensation Basics

Workers' compensation provides a compromise: benefits are limited, but they are generally paid regardless of who is to blame, and without requiring litigation. In other words, workers' compensation is a system of compensation in which employees who are injured during the course and scope of their employment obtain payment for lost wages, medical costs, and occupational rehabilitation expenses without regard, in most cases, to their personal negligence or fault. In exchange for this advantage, employees give up their right, in almost every circumstance, to sue their employers directly for negligence and other damages. An employee is not prohibited from suing the employer, however, based on intentional tort theories, or for nonphysical torts (such as emotional distress), despite the exclusivity provisions of workers' compensation law.

Employers also experience a "trade-off." Workers' compensation serves, in many instances, to insulate the employer from the possibility of paying large tort verdicts to injured employees in civil actions, but in exchange for that protection the employer surrenders many of the common-law defenses that otherwise would be available in civil litigation.

Injured employees are entitled to recover compensation for wage loss due to the inability to perform job duties as a result of a work-related injury and for medical expenses that are incurred in order to treat the injury or condition. Wage-loss benefits are generally tied to the earnings of the employee in the relevant time period prior to the injury. Depending on the severity of the injury and the consequential total inability to work (or ability to work only restrictions), the employee will often be compensated based on some percentage of the difference between pre-injury wages and post-injury earnings, if any. This percentage, and how it is calculated, vary from state to state.

Available Defenses

An employer does not, merely by hiring an employee, guarantee to compensate that person for any wage loss or medical expense incurred as a result of a work-related injury. Rather, certain defenses are available in appropriate cases. The success of any particular defense depends greatly on the laws of the state where the injury occurred, the nature of the employer-employee relationship, and the facts and circumstances of the accident in question.

A basic defense that an employer may assert is that the injured individual was not an employee and, hence, is not entitled to workers' compensation benefits. The very purpose of workers' compensation is to provide protection to injured employees. Individuals who are not employees are not entitled to workers' compensation benefits. A typical definition of an employee is a person who works for another, under the other's control, for hire. Thus, an independent contractor is distinguishable from an employee; the latter is entitled to workers' compensation benefits, the former is not. Similarly, volunteers are not entitled to workers' compensation benefits in most cases, nor are "casual" employees. Casual employment is generally viewed as employment that is temporary in nature or that is incidental or irregular. The determination of whether a particular individual is a casual employee is very fact specific.

Many state statutes specifically exclude agricultural workers and members of family farm enterprises from workers' compensation coverage, while minors who are injured in the course of employment are generally afforded coverage. Again, a determination of whether workers' compensation benefits are appropriate in these circumstances is extremely fact specific and depends on state statutory law.

In addition to questioning the status of the individual as an employee, an employer may also defend a claim based on the specific manner in which the injury occurred or is alleged to have occurred. Generally, an injury must arise out of and in the course of employment in order to be covered by workers' compensation benefits. For example, in most states, when the injury results from an assault, coverage is not afforded, because such injuries generally do not "arise out of" employment, unless the nature of the employment is related to the likelihood of the assault occurring, such as in the case of police officers. In certain states, even when the assault was prompted by personal feelings of ill will on the part of the offender toward the injured individual, benefits may be available if the nature of the work somehow contributed to the occurrence of the assault.

When an injury occurs as a result of horseplay in the workplace and the party injured is the instigator of the horseplay, a claim for workers' compensation benefits may be defeated as not arising out of the employment. An injury occurring during the commission of a serious crime also may not be compensable. Similarly, an employer may defeat a claim for workers' compensation benefits if it is shown that the alleged injury or condition was the sole result of a pre-existing condition not related to the employment. However, when a pre-existing condition is aggravated or exacerbated by the employment, coverage may be afforded as it is deemed to be an injury "arising out of" the employment.

An employer may also defeat a claim by arguing that an injury did not occur in the "course and scope" of the employment. For example, most states have a "coming-and-going rule" that provides that injuries occurring while an employee is traveling to and from work are not compensable unless they occur on the employer's premises. Exceptions that may allow for compensation include situations in which the employer has provided transportation to the employee, when travel time is a compensated portion of the employee's workday, and when the nature of the employer's business necessitates the travel.

Similarly, employee intoxication and an employee's willful misconduct may bar receipt of benefits. These defenses are rather narrow and require strict proof. In some jurisdictions, for example, recovery may be denied only if the employee's intoxication was the sole cause of the injury.

Additional defenses to a workers' compensation claim may be available to employers in some states. The availability of these defenses, and the potential for success, depends on the jurisdiction and the facts of the particular case. An experienced workers' compensation defense attorney is the best source of information on workers' compensation defenses.

Conclusion

Workers' compensation insurance covers claims made by employees for injuries that arise out of and in the course of their employment. Not all claims are compensable, however, and it is therefore prudent to seek legal counsel to determine whether a valid claim exists and/or whether certain defenses may be available. Experienced workers' compensation defense attorneys can provide not only zealous representation when a claim ensues, but they can also offer proactive representation to help employers avoid claims in the first place.

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