GT Insurance Blog

Insurance problems and cures

Managing Workers Compensation Claims

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Here’s our Workers Compensation Insurance link:

An issue for employers: Why would an employee not take Workers Compensation if injured on the job?
Employers should keep an eye on situations where injuries occur on the job but no claim is filed. For a number of reasons those claims can pop back up.

A) An injured employee may think that it is in his or her best interest to pursue a tort claim against a third party.
Particularly in states, like New Jersey, where Workers Compensation treatment is under control of the employer/carrier, an employee may perceive it to be better (or be advised by an attorney that it is better) to seek treatment that may increase the chance of a lawsuit against someone other than the employee. Or in a state where the WC carrier can recover medical and compensation losses from successful third party claims, employees may perceive a value in staying out of the WC system. In small claims, a manipulative attorney and compliant physician can generate a lot more evidence and expense than they could under the controls of many WC systems. Then, if the claim does not progress or looks like it may not be successful, it may be possible to open a WC claim instead.

As a real-life example of a case where an employee might avoid WC to pursue third party claims, consider the following.
A laborer is working on a large construction site. He works for Subcontractor A and is covered by WC. He is putting in supports for a trench. Subcontractor B is responsible for the machine digging the trench.
Our laborer example is severely injured by the trenching machine. He can stay in the WC system, or try for a claim against Subcontractor B, or even a claim against the manufacturer of the trenching machine. (This is a real case.) The WC system is good for the medical costs but not necessarily for the lost wages, and certainly not for the pain, suffering, and loss of consortium issues available under the tort system. For truly severe cases, the employee may want to take a dual track, pursuing both WC and tort. The employer and carrier will want to keep an eye on progress in both cases, and any awards in the tort system.

B) In a less threatening situation, an employee may not be an eligible employee for Workers Compensation.
In some states some employers do not have to take Workers Compensation because they have too few employees. Then a Comp claim would not be covered.
Generally, Sole Proprietors and LLC members are not automatically covered and must elect coverage. Most small business owners do not elect coverage when it is not mandatory for their business structure.
In some states some specific classes of employees are not mandated for coverage. However, your insurance advisor should be able to tell you if those excluded classes can still sue the employer for injury.

For more background, Rebecca Shafer has an excellent blog dealing with WC cost reduction.

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