Workers’ Compensation: COVID-19 Could Change Workers’ Compensation Part B For Good | Blog | MMA

Workers’ Compensation: COVID-19 Could Change Workers’ Compensation Part B For Good

September 7, 2021

It’s always been difficult to prove employer liability but could the pandemic change that?

Workers' Compensation Coverage B is an insurance policy that covers medical care, lost income and rehabilitation costs for employees who are injured on the job. It provides coverage to employees when the employer is liable.

Employer’s Liability insurance is included with most workers' compensation policies. It protects them from employee-related litigation arising from their negligence. While Part A of a workers’ compensation policy pays out a limited amount for lost wages and medical expenses per jurisdiction and Part B (employers liability) insures employers if an employee sues for additional damages, Employers Liability can pay legal expenses such as court costs, attorney defense fees and even settlements.

This coverage protects employers against costs and claims by employees not covered under workers’ compensation Part A. Part B may include punitive damages such as pain and suffering, depending on jurisdiction.

Other considerations include:

Third-party lawsuits. An employee may be injured by a piece of equipment, sues the manufacturer who then sues the employer.

Loss of consortium lawsuits. These are suits filed by family members of employees who are deceased or disabled requesting compensation for the loss of the relative and/or their income.

Consequential bodily injury lawsuits. Filed by non-employees such as the spouse of an injured employee who develops health problems due to caring for the employee.

Dual-capacity lawsuits. Employee sues the employer both as employer and for being either the product manufacture, service provider, landlord, etc. Example: Employee is injured by something falling on them in the workplace and they sue the company as employer and owner of the premises.

Employer liability due to negligence is rarely ever proven…so why worry about COVID?

Determining when and where COVID-19 was contracted is extremely difficult. To make that determination, OSHA requires an employer to investigate and consider employees statements as to how they believe they contracted COVID-19. Did the employee interact with the general public for work? If so, this could be viewed as suggesting that the illness was work-related.

The employer should also consider any other cases in the workplace or whether the employee had close, continuous contact with another employee diagnosed with COVID-19. The bottom line is that the employer’s best defense is to limit COVID-19 exposure in the workplace, including providing the proper Personal Protective Equipment (PPE), creating social distancing and appropriate barriers and requiring masks.

Everyone has opinions how COVID might affect workers’ compensation, but no one is sure

Now that some employees are returning to work — although not in droves as originally predicted — and the lockdowns have mostly ended (for now), it becomes more difficult to isolate the causes of contracting the virus. Did it happen at work? Or perhaps at a restaurant or while attending an event or church?

There are also questions now around how much liability employers will have for allowing or encouraging remote work. How do you prescribe and enforce safety protocols when employees are working at home? Does your business insurance cover it and are you sure you’re protected against losses from injuries, data loss, property damage…and the effects of COVID 19?

Workers’ compensation laws vary from state to state, but the insurance usually covers “telecommuters.” If an employee working remotely is injured at home and files a claim, did the injury occur during work hours while performing work duties. Proving a claim may be extremely difficult if it’s COVID-related. But it would be prudent to talk with your insurance carrier to verify what your state’s workers’ compensation laws provide, what kind of investigation procedures to employ, rates of denial and more.

Even frontline workers’ exposure can come from community spread

Nurses, health care staff, EMTs, grocery store employees, police, fire fighters — all essential workers who were required to interact with the public during the height of the pandemic — were potentially exposed to the coronavirus.

First responders were provided “line of duty” benefits, which helped them get coverage from workers’ compensation. But for the rest, there would always be a question of where did the exposure occur? Did a hospital worker attend a wedding during the pandemic? Did someone working at a grocery store go to church? Did they wear a mask and social distance? That potential confusion makes it extremely difficult for employees to claim they contracted COVID from the workplace.

That said, some states identify certain frontline workers as “Tier 1” which presumes that any COVID contraction is work related.

There is also the possibility of rebutting any presumption laws (see next section). For example, in Minnesota if an employee has contracted COVID-19 and is employed in a particular occupation, the illness is presumed to be a workers’ compensation occupational disease. This makes it compensable unless the employer rebuts (disproves) that presumption. The employer may only do this by proving that the employee’s employment was not a direct cause of the disease. In that case, the employer has the burden of proof to show a preponderance of evidence that the employee was not exposed to COVID-19 while performing the job duties or that the exposure to the virus could not have been the cause of the employee’s illness.

Employers need to ask the infected employee questions that fall outside typical work injury investigations to do due diligence on finding out where the transmission occurred.

  • Ask the employee limited questions about how COVID-19 might have been contracted
  • Inquire about both work and non-work activities
  • Investigate the employee's work environment to determine whether COVID-19 exposure was possible. Did other employees in the work area test positive? What were the employee’s job duties, including any exposure to the public and whether the work area provided for social distancing

It’s reasonable to conclude that a case is likely not work-related if an employee is the only worker to contract COVID-19 in his or her work area and the employee's duties don't include contact with the public. But the employer is also required to update any investigation if more information is discovered related to the employee’s COVID illness.

Will new laws change how Part B works?

COVID-19 workers’ compensation presumption laws were put in place last year — and many are set to expire. Now, a growing number of states are considering making them permanent for infectious diseases. Industry experts believe that this could change the way carriers view and pay for occupational injuries. 

In a sense, this is in preparation for the next pandemic, which many feel is inevitable. And most of the measures are designed to only go into effect if there is a state of emergency or another pandemic.

Legislation is also being considered to shield specific businesses from liability resulting from claims for injury caused by exposure to COVID-19. Generally, the laws require that the business comply with relevant guidelines at the federal, state or local level in order for the protection to apply. Most state laws do not shield liability where the injury was caused by wanton, reckless, willful or intentional misconduct. Some states have only shielded health care professionals or other essential businesses. But some are proposing expanding liability protections to all businesses and premise owners.

OSHA (Occupational Safety and Health) has instituted National Emphasis Programs (NEPs), temporary programs focusing OSHA resources on particular hazards and high-hazard industries.

The COVID-specific program are designed to ensure that employees in these high-hazard industries are protected from contracting COVID-19. That includes social distancing, transmission mitigation such as barriers, onsite protocols and Personal Protection Equipment such as masks and shields.

Even if it’s difficult to prove liability for COVID, litigators will be trying

There has been a definite concern that claimant counsel cases will be filed where it’s alleged that the employer was negligent about COVID-19 protections. But there are also a wealth of cases accusing the employer of not “accommodating physical and/or mental disabilities” under the ADA (Americans with Disabilities Act), especially in states like California.

A recent lawsuit filed in California by an employee against his former employer alleging that the company failed to accommodate him after he suffered an anxiety attack related to COVID-19. The employee states that his requests were not properly considered and that the employer eventually terminated him for even requesting accommodations. The outcome is currently unknown but the case is in court, which gives it some legitimacy.

Legal experts say litigation where a worker or a surviving family member sues an employer over a COVID-19 infection or death is likely to continue as courts continue to reopen.

According to the National Law Review, more than 335 decisions as of this writing were issued as of early May 2021 — and it appears that more rulings are for policyholders than for insurers. In more than 50 decisions courts have either granted summary judgments to policyholders or they have denied insurance company motions to dismiss. Granted, the earlier decisions favored the carriers but recent decisions have seen courts rejecting arguments from the carriers or denying motions altogether.

Defending yourself when the inevitable law suits hit

In most cases, employers are thought to be immune from liability. But that doesn’t mean you’re immune from litigation. And the result of that can be years of lost time, resources needlessly tied up and, whether or not the employer is found responsible, litigation can still cost an enormous amount in money, time and energy.

Lawyers are lining up to take on or initiate class action suits against employers. It’s to be expected that plaintiffs will sue when a loved one has died from COVID. But how do you shield yourself?

First of all, you need to make sure you have instituted appropriate protocols and safety measures for employees at your work place. This includes wearing masks, social distancing and appropriate safety barriers.

The PREP Act (Public Readiness and Emergency Preparedness Act) was enacted back in 2005 and provides liability immunity against COVID-19 law suits, but only to “covered persons” for activities related to COVID-19.

Have you been doing due diligence when it comes to COVID?

Even allowing for how scientific learning has changed since COVID-19 first hit the United States and the world, OSHA and the CDC (Centers for Disease Control) have been reasonably consistent regarding safety protocols for work environments.

What they require — and what your insurance and legal liability is based on — is:

  • Having a formal written plan you have followed faithfully since COVID began
  • Putting someone in charge of communicating and managing protocols
  • Employing masks
  • Creating social distance
  • Cleaning and disinfecting
  • Using barriers when necessary to separate workers
  • Follow up policy for infected workers
  • Investigation protocols to track causation and spread

What can MMA do to help, now and in the future?

Marsh McLennan Agency has tools and resources to help you stay current and avoid problems. Our experts can help review your processes, communicate with employees, institute control measures and document everything.

The Marsh McLennan COVID-19 Pandemic Risk Hub features:

  • Legislative alerts
  • Employer information
  • Employee information
  • Vaccine updates and information
  • Answers to commonly asked questions
  • And more to help you navigate the ever-changing course of the pandemic and its effects on your business.

To learn more, contact your MMA representative today.