Workers' Compensation(redirected from Workers' Compensation Insurance)
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A system whereby an employer must pay, or provide insurance to pay, the lost wages and medical expenses of an employee who is injured on the job.
Workers' compensation law is governed by statutes in every state. Specific laws vary with each jurisdiction, but key features are consistent. An employee is automatically entitled to receive certain benefits when she suffers an occupational disease or accidental personal injury arising out of and in the course of employment. Such benefits may include cash or wage-loss benefits, medical and career rehabilitation benefits, and in the case of accidental death of an employee, benefits to dependents. The Negligence and fault of either the employer or the employee usually are immaterial. Independent contractors are not entitled to workers' compensation benefits, and in some states domestic workers and agricultural workers are excluded or only partially covered.
It is the goal of workers' compensation to return the injured employee quickly and economically to the status of productive worker without unduly harming the employer's business. A worker whose injury is covered by the workers' compensation statute loses the common-law right to sue the employer for that injury, but injured workers may still sue third parties whose negligence contributed to the work injury. For example, a truck driver injured in a rear-end collision by an unemployed third party would be entitled to collect workers' compensation and also to sue the third party for negligence. In such cases a plaintiff who recovers money from a third-party lawsuit must first repay the employer or insurer that paid workers' compensation benefits. The plaintiff may keep any remaining money. Many jurisdictions permit the employer or its insurer to sue negligent third parties on the employee's behalf to recover funds paid as workers' compensation benefits.
In most states parties to workers' compensation disputes resolve them in an administrative, rather than judicial, tribunal. Courts usually relax the standard rules of procedure, evidence, and conflict of laws to allow for expediency and simplicity in keeping with the goal of getting an injured worker the benefits necessary to return to work.
Workers' compensation statutes require most employers to purchase private or state-funded insurance, or to self-insure, to make certain that injured workers receive proper benefits. The cost of insurance is reflected in the cost of goods or services produced by the employer; thus the cost of workers' compensation liability is passed ultimately to consumers.
Workers' compensation law is somewhat unique in that negligent acts of either the employer or the injured employee generally are irrelevant to the determination of compensability. Victims of injuries not related to work in most cases must prove the negligence of another party before recovering money in a lawsuit. Conversely, a defendant in a personal injury lawsuit may avoid or mitigate liability to a plaintiff whose own negligence caused or contributed to the personal injury. Yet workers' compensation is a no-fault law, and an employee's negligence or an employer's lack of negligence is usually not a factor.
The underlying social philosophy of this no-fault system is evident when one considers what would happen without workers' compensation. For example, assume a responsible employer encourages a safe workplace and implements a rule requiring workers to obtain the assistance of a coworker before climbing a tall ladder to a storage area. One employee, hurrying to get her work done for the day, ignores this rule and climbs the ladder without assistance. When she reaches the top of the ladder, it shifts and she falls, injuring her spine and paralyzing her legs.
Society could choose to treat this injured worker in one of three basic ways. It could refuse to render any aid, instead forcing the injured worker to seek help from friends or family. If the worker was without ties to persons both willing and able to assist, this plan would leave her destitute. A second option would be to give her government aid, or Welfare, such as Medicaid or food stamps. This alternative would be less speculative but still not ideal because it would force local taxpayers to pay for the worker's benefits regardless of whether they had any connection to the injury.
The third solution is the workers' compensation system. This system preserves the injured worker's dignity and well-being by providing an income and medical care and keeping her off welfare. The system passes the cost of compensating injured workers to consumers of products that, through their manufacture, cause the workers to get injured. Thus the social philosophy underlying workers' compensation is the efficient and dignified provision of financial and medical benefits to those injured on the job and the allocation of the expense to an appropriate source: the consumer.
Workers' compensation is also distinguishable from other personal injury laws where negligence is a factor because although the employer is liable for paying injured workers' benefits, the purpose of workers' compensation is not to punish or hurt the employer. For this reason, an integral component of workers' compensation is the requirement that employers purchase workers' compensation insurance, or provide a self-insured fund, to pay the benefits. This way, the employer can pass along the cost of insurance to the purchasers of the employer's product.
Workers' compensation laws in the United States developed during the early 1900s as a result of the industrial age and growing numbers of industrial injuries. Before these laws were developed, workers injured on the job often found themselves without remedy against their employer or their fellow workers.
The law of Vicarious Liability developed in England in approximately 1700 to make the master, or employer, liable for the acts of the servant, or employee. In 1837, however, the English case Priestly v. Fowler, 3 M. & W. 1, 150 Reprint 1030, created the fellow servant exception to the general rule of a master's vicarious liability; no longer would the master be held liable for an employee's negligence in causing injury to a coworker.
After Priestly, courts in the 1800s continued to develop employer defenses to liability for injured workers. One such defense, assumption of the risk, allowed employers to escape liability with the questionable logic that employees could avoid or decline dangerous work duties. Another defense, contributory negligence, allowed employers to escape liability, notwithstanding the employer's negligence, where the employee was also negligent. Therefore, during a century of burgeoning industry and its inherent risk of work-related accidents, workers faced nonexistent or inadequate remedies for their injuries.
At the end of the nineteenth century, state lawmakers recognized the problem and began studying the compensation system developed in Germany in 1884. Rooted largely in its socialistic tradition, Germany's compensation system mandated that employers and employees share in the cost of paying benefits to workers disabled by sickness, accident, or old age. Britain followed suit in 1897 with the British Compensation Act, which later became the model for many state workers' compensation laws in the United States.
In 1910, representatives of various state commissions met at a conference in Chicago and drafted the Uniform Workmen's Compensation Law. Although not overwhelmingly adopted, this uniform law became the blueprint for state workers' compensation statutes. All but eight states had adopted a workers' compensation law by 1920, and, in 1963, Hawaii became the last state to do so.
Accident and Injury
Workers' compensation benefits are most commonly provided to workers who are injured by a specific accident on the job, such as the worker who trips and falls down the employer's staircase, or the worker who gets a hand caught in factory machinery. But a compensable accidental injury might also include an occupational disease, such as lung disease that resulted from an employee's exposure to asbestos in the workplace. Cumulative trauma associated with work duties, such as carpal tunnel syndrome caused by repetitive keyboard work, also can be compensable.
Jurisdictions differ as to whether work-related mental illness is compensable. In the majority of states, mental illness caused by work, such as stress, anxiety, or depression, is not compensable. A common exception to this rule exists when a specific accident or injury at work leads to mental illness. For example, an employee who suffers from panic attacks upon hearing the phone ring at work generally will not be entitled to workers' compensation benefits. But an employee who witnesses a vicious Assault and Battery at work, and who then develops anxiety and panic attacks as a result, would be entitled to compensation in most jurisdictions.
Requirements for Benefits
An injured worker is entitled to workers' compensation benefits only if the injury arose out of and in the course of employment. The first part of this requirement, "arising out of employment," ensures that there is a causal connection between the work and the injury. Usually the employee has the burden of proving that the injury was caused by exposure to an increased risk from employment.
In determining whether an injury is compensable, it is helpful to categorize the risk causing the injury in one of three ways. First, there is the risk that is associated distinctly with the employment. An example would be a house painter injured in a fall from a scaffold; the house painter would not have been on the scaffold but for his employment. This type of injury is always compensable as arising out of employment.
The second category of risk is risk that is personal to the claimant. An example is a worker who develops lung cancer due to years of smoking. Assuming this cancer was not caused by carcinogens in the workplace and would have developed notwithstanding employment, the disease would be considered personal and not arising out of employment. Injuries from purely personal risks are never compensable.
The third category of risk, neutral risk, is the most problematic in determining the compensability of a work injury. Neutral risks are neither distinct to the employment nor distinctly personal. Examples would include a teacher shot in a drive-by shooting while standing in his classroom; an auto mechanic bitten by a stray dog while dumping oil into an outdoor receptacle; and an executive struck by lightning when walking to his car after a meeting.
Whether an injury resulting from a neutral risk is compensable is difficult to predict and often depends on the jurisdiction of the tribunal, the nature of the injury, and the precise facts surrounding the accident. For example, injuries caused by lightning are usually compensable if the claimant can show that the work conditions increased the risk of being struck. An employee struck while working atop a metal electric pole likely would receive workers' compensation benefits for a lightning injury or death, whereas an employee struck while walking to her car after her work shift would have a more difficult time collecting benefits. In Reich v. A. Reich & Sons Gardens, Inc., 485 S.W. 2d 133 (Mo. Ct. App. 1972), the employee was killed by lightning while standing next to several vehicles in a wheat field. The court deemed the death compensable, citing testimony that the employee's risk of being hit by lightning was greater than that of other people in the vicinity, who were sheltered in cars and buildings and were not standing in an open field.
Using the same logic, injuries from sun-stroke, freezing, and other effects of heat and cold exposure arise out of the course of employment if the employee can show that such exposure was greater than that to which the general public was exposed. Workers who contract contagious diseases at work will receive benefits upon a showing that the workplace offered an increased risk of exposure.
Another type of neutral-risk injury is an assault. Most courts will deem an assault as arising out of the course of employment if the nature or setting of the work increased the risk of assault or if a quarrel that led to the assault originated at work. In Bryan v. Best Western/Coachman's Inn, 885 S.W.2d 28 (Ark. 1994), the claimant worked as a security guard at a motel. The claimant and the motel night clerk were involved in a personal dispute, which led to a fight between the claimant and the night clerk's boyfriend, injuring the claimant. The court held that even though the dispute was personal and not related to work, the claimant, because of his job, faced an increased risk of assault. His injuries therefore were compensable.
Even idiopathic injuries, or injuries resulting from risks personal to the employee as opposed to risks associated with the job, may be compensable if the job contributes to the risk or aggravates the injury. An employee who misses breakfast and suffers a fainting spell ordinarily will not be entitled to workers' compensation, because the fainting spell does not arise out of employment. But if the same worker faints and in so doing hits her head on her desk and fractures her skull, her injury will be compensable. In Silverman v. Roth, 9 A.D. 2d 591, 189 N.Y.S.2d 311 (1959), the employee died of heart failure after suffering a heart attack and falling from a ladder. The precise sequence of events was impossible to determine. Nevertheless, the court awarded benefits, citing evidence that even if the heart attack occurred before the fall from the ladder, the heart condition would have been aggravated by the shock of the fall, and thus the fall from the ladder was a contributing factor in the employee's death.
In addition to the requirement that an injury arise out of employment, the employee seeking workers' compensation also must show that the injury arose "in the course of employment." To arise in the course of employment, the injury must take place within the employment period, in a location where it is reasonable for the employee to be, and while the employee is fulfilling work duties. This does not mean that the employee must actually be doing his job, or doing it within the precise work hours, when the injury occurs for it to be compensable. Distinguishing between injuries that do or do not arise out of the course of employment is often a difficult and confusing task.
One common issue arises when an employee is injured going to or from work. Clearly, employment necessitates that an employee travel to work and home again. Yet it is not the purpose of workers' compensation to protect the employee from the risk of travel. Courts have, through the years, reached a compromise: an employee with fixed hours and work locale going to or coming from work generally is covered by workers' compensation if the injury occurs on the employer's premises.
This rule can lead to rather harsh results, as in Heim v. Longview Fibre Co., 41 Wash. App. 745, 707 P.2d 689 (1985). There, the claimant was driving his motorcycle through the usual exit from his employer's premises when a coworker turning into the premises hit the claimant, killing him. The precise location of the crash was fewer than five feet from the employer's property, on a public access road to the plant used by company personnel. Nevertheless, the court held that the injury did not arise in the course of employment and denied death benefits. Employees injured off work premises may still recover damages in tort against any persons whose negligence caused them harm.
Some courts, recognizing the harshness of the premises rule, have attempted to extend the premises rule to include injuries that occur within a reasonable distance of the employer's premises. And most courts recognize the compensability of an injury that occurs off the employer's premises when an employee is going to or coming from work, where the trip itself is a substantial part of the employee's service to the employer. In Urban v. Industrial Commission, 34 Ill. 2d 159, 214 N.E.2d 737 (Ill. App. Ct. 1966), the employee, a traveling salesperson, was killed in a car accident while driving in the direction of his home, although the evidence was not clear that he was actually returning home. The court ruled the death to be compensable.
Workers' compensation provides two general categories of benefits to injured workers: indemnity benefits and medical benefits. Indemnity benefits compensate for the worker's loss of income or earning capacity resulting from the work-related injury. Depending on the employee's medical status and ability to work following the injury, she may be entitled to different types of indemnity benefits. A worker whose injury is only temporary and does not preclude her ability to work her normal job duties and hours typically will not receive indemnity benefits because her injury has no effect on her ability to earn a living. A worker whose injury temporarily causes him to miss time from work will be entitled to payment of all or a portion of his lost wages, known as temporary partial disability benefits. A worker whose injury temporarily renders him unable to work at all may receive temporary total disability, which is usually a portion of the worker's average wage. A worker who is able to work at least part time but who has a work-related permanent disability may be entitled to permanent partial disability benefits. The formula for permanent partial disability benefits varies from jurisdiction to jurisdiction but usually considers the employee's average weekly wage combined with the degree of permanent disability. Finally, a worker who is permanently disabled from working at all may be entitled to permanent total disability benefits.
A frequently disputed issue between an employer and an injured employee is the degree that the employee's injury restricts her from returning to suitable employment, mitigating the need for indemnity benefits. Some state statutes permit or require the employer to provide an injured employee with vocational rehabilitation, job search assistance, or job retraining if the injury would otherwise prevent the employee from returning to gainful work.
In the case of a compensable work-related death, the decedent's spouse, dependent children, or both spouse and children may be entitled to dependency benefits. Most jurisdictions pay death benefits to a spouse until the spouse dies or remarries, and to children until they reach age 18. Other jurisdictions place limits on benefit amount or duration.
Employees injured on the job also may receive reasonable and necessary medical benefits that are related to the work injury. Such benefits are compensable if they serve to cure the injury, or, if the injury is incurable, relieve its effects. These benefits may include medical treatments such as sutures, casts, or surgery; psychiatric or psychological treatments; hospital, nursing, and physical therapy treatments; chiropractic or podiatric treatments; prescription medications; supplies such as wheelchairs or wrist braces; orthopedic mattresses; or attendant care services. Most workers' compensation statutes also provide for the reimbursement of the employee's travel expenses incurred in obtaining medical services.
The System Today
Workers' compensation has been criticized as an expensive component of doing business and a system made more expensive by undetected Fraud. What was intended to provide the employer and the injured worker with an amicable and humane resolution of a work injury often results in contentious disputes and costly litigation. Some employees feign injury to receive wage-loss benefits, and some employers balk at providing benefits to legitimately injured workers for fear that insurance premiums will rise. But the system has been effective in keeping injured employees employed and promoting the importance of a safe workplace.
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